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GOODWILL AND OTHER INTANGIBLES

6 Months Ended

Jun. 30, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

NOTE 14 – GOODWILL AND OTHER INTANGIBLES

Goodwill as of June 30, 2020 and December 31, 2019 amounted to $28.1 million, which was recognized as part of Other Assets in the consolidated statements of financial condition. The Corporation’s goodwill is related to the Florida reporting unit. The Corporation conducted its annual evaluation of goodwill and other intangibles during the fourth quarter of 2019. Such analysis indicated that it was more likely than not that the reporting unit’s fair value was greater than its carrying value based on a qualitative assessment of events and circumstances that could impact the latest quantitative estimate of fair value of the reporting unit performed in the fourth quarter of 2018. During 2020, the COVID-19 pandemic broadly impacted the operating environment, notably since March, causing a sharp contraction in global economic activity and increased market volatility affecting both equity and credit markets. During the first and second quarters of 2020, the Corporation performed qualitative assessments to determine whether the continued effects of the COVID-19 pandemic constituted a triggering event that would indicate that it was more likely than not that the reporting unit was impaired. Although the market volatility resulting from uncertainties around the COVID-19 pandemic had a broad negative effect on macroeconomic and equity market indicators, the duration and extent of the effects of the COVID-19 pandemic are still highly uncertain at this time and its ultimate effect could be affected by measures implemented by central banks and governments intended to mitigate the contraction in economic activity and market concerns. There were no other events specific to the performance of the reporting unit that would have had a significant negative impact on the valuation of the reporting unit. Ultimately, the Corporation concluded the COVID-19 event was not a triggering event that required the performance of a quantitative test. As a result, no impartment charges for goodwill were recorded during the first six months of 2020.

In connection with the acquisition of the FirstBank-branded credit card loan portfolio, in the second quarter of 2012, the Corporation recognized a purchased credit card relationship intangible of $24.5 million ($2.7 million as of June 30, 2020 and $3.6 million as of December 31, 2019), which is being amortized over the remaining estimated life of 1.4 years on an accelerated basis based on the estimated attrition rate of the purchased credit card accounts, which reflects the Corporation’s estimate that it will realize the economic benefits of the intangible asset as the revenue stream generated by the cardholder relationship is realized.

The core deposit intangible of $3.1 million as June 30, 2020 (December 31, 2019 - $3.5 million) primarily consists of the core deposit acquired in the February 2015 Doral Bank transaction described in Note 1, – Basis of Presentation and Significant Accounting Policies, above.

In the first quarter of 2016, FirstBank Insurance Agency acquired certain insurance customer accounts and related customer records and recognized an insurance customer relationship intangible of $1.1 million ($0.4 million as of June 30, 2020 and $0.5 million as of December 31, 2019). The acquired accounts have a direct relationship to the previous mortgage loan portfolio acquisitions from Doral Bank and Doral Financial in 2015 and 2014.

The following table shows the gross amount and accumulated amortization of the Corporation’s intangible assets recognized as part of Other assets in the consolidated statements of financial condition as of the indicated dates:

	As of		As of
	June 30,		December 31,
	2020		2019
(Dollars in thousands)
Core deposit intangible:
Gross amount	$	51,664	$	51,664
Accumulated amortization ⁽¹⁾		(48,578)		(48,176)
Net carrying amount	$	3,086	$	3,488

Remaining amortization period (in years)		4.6		5.1

Purchased credit card relationship intangible:
Gross amount	$	24,465	$	24,465
Accumulated amortization ⁽²⁾		(21,797)		(20,850)
Net carrying amount	$	2,668	$	3,615

Remaining amortization period (in years)		1.4		1.9

Insurance customer relationship intangible:
Gross amount	$	1,067	$	1,067
Accumulated amortization ⁽³⁾		(673)		(597)
Net carrying amount	$	394	$	470

Remaining amortization period (in years)		2.5		3.0

For the quarter and six-month period ended June 30, 2020, the amortization expense of core deposit intangibles amounted to $0.2 million and $0.4 million, respectively (2019 - $0.2 million and $0.4 million, respectively).For the quarter and six-month period ended June 30, 2020, the amortization expense of the purchased credit card relationship intangible amounted to $0.5 million and $0.9 million, respectively (2019 - $0.5 million and $1.0 million, respectively).For the quarter and six-month period ended June 30, 2020, the amortization expense of the insurance customer relationship intangible amounted to $38 thousand and $76 thousand, respectively (2019 - $38 thousand and $76 thousand, respectively).

The estimated aggregate annual amortization expense related to the intangible assets for future periods was as follows as of June 30, 2020:

			Amount
			(In thousands)
	2020	$	1,426
	2021		2,656
	2022		915
	2023		622
	2024		457
	2025 and after		72