Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

The Company had goodwill of $901.2 million and $808.3 million at June 30, 2020 and December 31, 2019, respectively. During the six months ended June 30, 2020, the additions to goodwill include $92.8 million associated with the acquisition of Opus. During the six months ended June 30, 2019, adjustments to goodwill in the amount of $404,000 for Grandpoint Capital, Inc. were recorded during the one-year measurement period subsequent to the acquisition date.


	June 30,		June 30,
	2020		2019
	(Dollars in thousands)
Balance, beginning of year	$	808,322	$	808,726
Goodwill acquired during the year	92,844		—
Purchase accounting adjustments	—		(404)
Impairment losses	—		—
Balance, end of year	$	901,166	$	808,322
Accumulated impairment losses at end of year	$	—	$	—

The amount of goodwill is subject to change, as the Company’s fair value estimates associated with the Opus acquisition are considered preliminary estimates and are subject to refinement for a period of one year after the closing date of the acquisition. Acquisition date fair values of assets acquired and liabilities assumed in the Opus acquisition may be further refined as potential additional information related to those fair value estimates become available and such information is considered final.

The Company’s policy is to assess goodwill for impairment on an annual basis during the fourth quarter of each year, and more frequently if events or circumstances lead management to believe the value of goodwill may be impaired. Given the recent volatility in the economy triggered by the outbreak of the COVID-19 pandemic, the Company performed an analysis of goodwill during the second quarter of 2020 that consisted of a qualitative assessment to first determine if it is more likely than not that the carrying value of the Company exceeds its estimated fair value. The results of this analysis indicated no impairment of goodwill as of June 30, 2020. Additionally, as part of the Company’s qualitative analysis, the Company looked at market related data as additional corroborated evidence in its assessment of whether it was more likely than not the estimated fair value of the Company exceeds its carrying value. This assessment of market related data included an initial assessment of the fair value of the Company’s equity as compared to its carrying value with the assistance from an independent third party. The assessment of market related data included factors such as: the Company’s stock price on an actual, 15-day and 30-day average basis as of June 30, 2020, and an implied 40% market participant acquisition premium, which was based upon control premiums for regional banks during the 2008 and 2009 financial crisis. This initial assessment of the fair value of the Company’s equity through observations of market related data provided additional supporting evidence as of June 30, 2020 that the carrying value of goodwill was not impaired.

The Company had other intangible assets of $94.6 million at June 30, 2020, consisting of $91.4 million in core deposit intangibles and $3.2 million in customer relationship intangibles. The Company had core deposit intangibles of $83.3 million at December 31, 2019. The additions of $16.1 million to core deposit intangibles and $3.2 million of customer relationship intangibles during the second quarter of 2020 was the result of the acquisition of Opus. The change in the gross balance of core deposit intangibles and customer relationship intangibles, and the related accumulated amortization consisted of the following for the periods indicated:


	Three Months Ended										Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2020		2020		2019		2020		2019
	(Dollars in thousands)
Gross amount of intangible assets:
Beginning balance	$	125,945	$	125,945	$	125,945	$	125,945	$	125,945
Additions due to acquisitions	19,267		—		—		19,267		—
Ending balance	145,212		125,945		125,945		145,212		125,945
Accumulated amortization:
Beginning balance	(46,596)		(42,633)		(29,824)		(42,633)		(25,388)
Amortization	(4,066)		(3,963)		(4,281)		(8,029)		(8,717)
Ending balance	(50,662)		(46,596)		(34,105)		(50,662)		(34,105)
Net intangible assets	$	94,550	$	79,349	$	91,840	$	94,550	$	91,840

The Company amortizes core deposit intangibles and customer relationship intangibles based on the projected useful lives of the related deposits in the case of core deposit intangibles, and over the projected useful lives of the related client relationships in the case of customer relationship intangibles. The amortization periods typically range from six to eleven years. The estimated aggregate amortization expense related to our core deposit intangible and customer relationship intangible assets for each of the next five years succeeding December 31, 2019, in order from the present, is $17.1 million, $15.9 million, $14.0 million, $12.3 million and $11.1 million. The Company’s analyzes core deposit intangibles and customer relationship intangibles annually for impairment, or sooner if events and circumstances indicate possible impairment. Factors that may attribute to impairment include customer attrition and run-off. Management is unaware of any events and/or circumstances that would indicate a possible impairment to the core deposit intangibles or customer relationship intangibles as of June 30, 2020.