GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2014

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 11 — GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

As of December 31, 2014 and 2013, the carrying amounts of goodwill were $469.4 million and $337.4 million, respectively. The increase of $132.0 million to goodwill was due to the acquisition of MetroCorp as discussed in Note 2 to the Company’s consolidated financial statements.

The Company has identified three business divisions, Retail Banking, Commercial Banking, and Other, that meet the criteria of an operating segment in accordance with GAAP. The Company determined that there were no additional reporting units below each operating segment and therefore the reporting units are equivalent to the operating segments. For complete discussion and disclosure see Note 20 to the Company’s consolidated financial statements presented elsewhere in this report.

The Company performed its annual impairment test as of December 31, 2014 to determine whether and to what extent, if any, recorded goodwill was impaired. The Company uses a combined income and market approach to determine the fair value of the reporting units. Under the income approach, the Company provided a net income projection for the next three years plus a terminal growth rate that was used to calculate the discounted cash flows and the present value of the reporting units. Under the market approach, the fair value was calculated using the current fair values of comparable peer banks of similar size, geographic footprint and focus. The market capitalizations and multiples of these peer banks were used to calculate the market price of the Company and each reporting unit. The fair value was also subject to a control premium adjustment, which is the cost savings that a purchaser of the reporting units could achieve by eliminating duplicative costs. Under the combined income and market approaches, the value from each approach was weighted based on management's perceived risk of each approach to determine the fair value. As a result of this analysis, the Company determined that there was no goodwill impairment as of December 31, 2014 as the fair values of all reporting units exceeded the current carrying amounts of the goodwill. No assurance can be given that goodwill will not be written down in future periods.

The following table presents changes in the carrying amount of goodwill for the years ended December 31, 2014 and 2013:



	Year Ended December 31,
	2014		2013
	(In thousands)
Beginning balance	$	337,438	$	337,438
Addition from the MetroCorp acquisition⁽¹⁾	131,995		—
Ending Balance	$	469,433	$	337,438

(1) Includes $11.0 million of tax and BOLI adjustments recorded in the fourth quarter of 2014.

Premiums on Acquired Deposits

Premiums on acquired deposits represent the intangible value of depositor relationships resulting from deposit liabilities assumed in various acquisitions. These intangibles are tested for impairment on an annual basis, or more frequently as events occur, or as current circumstances and conditions warrant. As of December 31, 2014 and 2013, the gross carrying amount of premiums on acquired deposits were $108.8 million and $100.2 million, respectively, and the related accumulated amortization totaled $63.5 million and $53.3 million, respectively. A premium on acquired deposits of $8.6 million was recorded due to the acquisition of MetroCorp as discussed in Note 2 to the Company’s consolidated financial statements. The weighted-average amortization period related to MetroCorp's premium on acquired deposits is eight years.

The Company amortizes premiums on acquired deposits based on the projected useful lives of the related deposits. Amortization expense of premiums on acquired deposits was $10.2 million, $9.4 million and $10.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. The Company did not record any impairment write-downs on deposit premiums for the years ended December 31, 2014, 2013 and 2012.

The following table presents the estimated future amortization expense of premiums on acquired deposits for the succeeding five years and thereafter:



Estimates For The Years Ending December 31,	Amount
	(In thousands)
2015	$	9,234
2016	8,086
2017	6,935
2018	5,883
2019	4,864
Thereafter	10,307
Total	$	45,309

- 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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