Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Total goodwill was $465.7 million and $465.5 million as of December 31, 2019 and 2018, respectively. Goodwill represents the excess of the purchase price over the fair value of net assets acquired in an acquisition. The Company assesses goodwill for impairment at the reporting unit level (at the same level as the Company’s business segments) on an annual basis as of December 31 each year, or more frequently if events or circumstances, such as adverse changes in the economic or business environment, indicate there may be impairment. The Company organizes its operation into three reporting segments: (1) Consumer and Business Banking; (2) Commercial Banking; and (3) Other. For information on how the reporting units are identified and components are aggregated, see Note 21 — Business Segments to the Consolidated Financial Statements in this Form 10-K.

There was no change in the carrying amount of goodwill during the year ended December 31, 2017. The following table presents changes in the carrying amount of goodwill by reporting unit during years ended December 31, 2019 and 2018:




($ in thousands)	Consumer and Business Banking			Commercial Banking		Total
Balance, January 1, 2018	$	357,207		$	112,226	$	469,433
Disposition of the DCB branches	(3,886		)	—		(3,886		)
Balance, December 31, 2018	$	353,321		$	112,226	$	465,547
Balance, January 1, 2019	$	353,321		$	112,226	$	465,547
Acquisition of Enstream Capital Markets, LLC	—			150		150
Balance, December 31, 2019	$	353,321		$	112,376	$	465,697

Impairment Analysis

The Company conducts a two-step goodwill impairment test at the reporting unit level on an annual basis, or more frequently as events occur or circumstances that change the economic or business environment that may reduce the fair value of a reporting unit below carrying amount. For the two-step goodwill impairment test, the first step is to identify potential impairment by determining the fair value of each reporting unit and comparing such fair value to its corresponding carrying amount. If the fair value of a reporting unit is less than its carrying amount, the second step is performed to measure the amount of impairment loss, if any, by comparing the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined as if the reporting unit were being acquired in a business combination. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying amount of goodwill.

The Company completed the quantitative step one analysis of goodwill impairment test as of December 31, 2019 using a combined income and market approach to determine the fair value of the reporting units. Under the income approach, the Company projected future cash flows based on appropriate growth expectation and used appropriate discount rate assumption to calculate the discounted cash flows and the present value of the reporting units. Under the market approach, the fair value was calculated using price multiples of relevant peer banks with a control premium adjustment, which represents the cost savings that a purchaser of the reporting units could be achieved by eliminating duplicative costs. Under the combined income and market approach, the Company applied weighted average to determine the fair value of each reporting unit. As a result of this analysis, the Company determined that there was no goodwill impairment as of December 31, 2019 as the fair value of all reporting units exceeded the carrying amount of their respective reporting unit.

Core Deposit Intangibles

Core deposit intangibles represent the intangible value of depositor relationships resulting from deposit liabilities assumed in various acquisitions and are included in Other assets on the Consolidated Balance Sheet. These intangibles are tested for impairment on an annual basis, or more frequently as events occur or current circumstances and conditions warrant. Core deposit intangibles associated with the sale of the Bank’s DCB branches with a net carrying amount of $1.0 million were written off in the first quarter of 2018. There were no impairment write-downs on the remaining core deposit intangibles for the years ended December 31, 2019, 2018 and 2017.

The following table presents the gross carrying amount of core deposit intangible assets and accumulated amortization as of December 31, 2019 and 2018:




($ in thousands)	December 31,
($ in thousands)	2019			2018
Gross balance ⁽¹⁾	$	86,099		$	86,099
Accumulated amortization ⁽¹⁾	(76,088		)	(71,570		)
Net carrying balance ⁽¹⁾	$	10,011		$	14,529


(1)	Excludes fully amortized core deposit intangible assets.

Amortization Expense

The Company amortizes the core deposit intangibles based on the projected useful lives of the related deposits. The amortization expense related to the core deposit intangible assets was $4.5 million, $5.5 million and $6.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The following table presents the estimated future amortization expense of core deposit intangibles as of December 31, 2019:




($ in thousands)	Amount
2020	$	3,634
2021	2,749
2022	1,865
2023	1,199
2024	553
Thereafter	11
Total	$	10,011