Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2011

Note 7 Goodwill and Other Intangible Assets

Information regarding the carrying amount and the amortization expense of the Company’s acquired intangible assets are disclosed in the tables below.

	Gross Carrying		Accumulated		Net Carrying
December 31, 2011 (in thousands)	Amount		Amortization		Amount
Amortized intangible assets:
Core deposit intangible	$	7,891	$	6,859	$	1,032
Other intangibles		7,626		4,562		3,064
Subtotal amortized intangible assets		15,517		11,421		4,096
Goodwill - Banking segment		25,323		1,723		23,600
Goodwill - Financial Services segment		20,599		301		20,298
Subtotal goodwill		45,922		2,024		43,898
Total intangible assets	$	61,439	$	13,445	$	47,994

	Gross Carrying		Accumulated		Net Carrying
December 31, 2010 (in thousands)	Amount		Amortization		Amount
Amortized intangible assets:
Core deposit intangible	$	7,891	$	6,535	$	1,356
Other intangibles		6,857		4,006		2,851
Subtotal amortized intangible assets		14,748		10,541		4,207
Goodwill - Banking segment		25,323		1,723		23,600
Goodwill - Financial Services segment		18,350		301		18,049
Subtotal goodwill		43,673		2,024		41,649
Total intangible assets	$	58,421	$	12,565	$	45,856

The changes in the carrying amount of goodwill for the year ended December 31, 2011 are provided in the following table. The changes in goodwill were in the Financial Services segment.

	Gross Carrying			Net Carrying
(in thousands)	Amount			Amount
Balance as of January 1, 2011	$	43,673		$	41,649
Goodwill acquired during the year		2,309			2,309
Goodwill related to the sale of a portion of a business during the year		(60	)		(60	)
Balance as of December 31, 2011	$	45,922		$	43,898

At December 31, 2011, the Company had unamortized goodwill related to its various acquisitions totaling $43.9 million compared with $41.6 million at December 31, 2010. During 2011, the Company recorded additional goodwill of $2.3 million related to the acquisition of Olver & Associates, Inc., a property and casualty insurance agency located in Ithaca, New York. The acquisition of Olver & Associates, Inc. did not significantly impact the Company’s consolidated financial statements. During 2011, the Company sold a business within its Financial Services segment, which reduced goodwill by $60,000.

At December 31, 2011, the Company had core deposit intangible assets related to various acquisitions of $1.0 million compared to $1.4 million at December 31, 2010. Amortization of core deposit intangible assets amounted to $324,000 in 2011, $378,000 in 2010, and $485,000 in 2009.

At December 31, 2011, other intangible assets, consisting of mortgage servicing rights, customer lists and contracts, and covenants-not-to-compete, totaled $3.1 million compared with $2.9 million at December 31, 2010. During 2011, the Company recorded additional customer related intangibles of $403,000 and a covenant-not-to-compete of $190,000. The values of the customer related intangible and covenant-not-to-compete are being amortized over 15 years and 5 years, respectively.

The Company reviews its goodwill and intangible assets annually, or more frequently if conditions warrant, for impairment. In testing goodwill for impairment, the Company compares the estimated fair value of each reporting unit to their respective carrying amounts, including goodwill. Based on the Company’s 2011 review, there was no impairment of its goodwill or intangible assets. The Company’s estimated fair value significantly exceeds the carrying value for all reporting units. The Company’s goodwill impairment testing is, however, highly sensitive to certain assumptions and estimates used. In the event that further significant deterioration in the economy and credit conditions beyond the levels already reflected in our cash flow forecasts occur, or changes in the strategy or performance of our business or product offerings occur, additional interim impairment tests may be required.

Amortization expense related to intangible assets totaled $589,000 in 2011, $762,000 in 2010, and $915,000 in 2009. The estimated aggregate future amortization expense for intangible assets remaining as of December 31, 2010 is as follows:

Estimated amortization expense:*
For the year ended December 31, 2012	$	490
For the year ended December 31, 2013		402
For the year ended December 31, 2014		343
For the year ended December 31, 2015		286
For the year ended December 31, 2016		268

*Excludes the amortization of mortgage servicing rights. Amortization of mortgage servicing rights was $257,000, $262,000, and $245,000 in 2011, 2010, and 2009, respectively

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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