Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill

Total goodwill was $465.7 million as of both September 30, 2020 and December 31, 2019. 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, equivalent to the same level as the Company’s business segments. This assessment is performed 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 operations 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 the components are aggregated, see Note 15 — Business Segments to the Consolidated Financial Statements in this Form 10-Q.

There were no changes in the carrying amount of goodwill during the three and nine months ended September 30, 2020. The following table presents changes in the carrying amount of goodwill by reporting unit during the nine months ended September 30, 2019:

($ in thousands)	Consumer and Business Banking		Commercial Banking		Total
Beginning balance, January 1, 2019	$	353,321	$	112,226	$	465,547
Acquisition of East West Markets, LLC	—		150		150
Ending balance, September 30, 2019	$	353,321	$	112,376	$	465,697

Impairment Analysis

The Company performed its annual impairment analysis as of December 31, 2019, and concluded that there was no goodwill impairment as the fair value of all reporting units exceeded the carrying amount of each respective reporting unit. Given the economic and market deterioration as a result of the COVID-19 pandemic and public health response to contain it, the Company performed a goodwill impairment analysis as of March 31, 2020, and concluded that no impairment was warranted: the fair value of all reporting units exceeded the carrying amount of the respective reporting units. As of September 30, 2020, while there continued to be uncertainty about the duration of the COVID-19 pandemic, and its impact on the economic recovery, the Company did not note further stress to adverse macroeconomic and market conditions, deterioration of the Company’s financial performance, or any other significant events that would negatively impact the fair value of its reporting units as of September 30, 2020. Based on this, the Company concluded that there was no goodwill impairment. Refer to Note 9 — Goodwill and Other Intangible Assets to the Consolidated Financial Statements of the Company’s 2019 Form 10-K for additional details related to the Company’s annual goodwill impairment analysis.

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. There were no impairment write-downs of the core deposit intangibles for each of the three and nine months ended September 30, 2020 and 2019.

The following table presents the gross carrying amount of core deposit intangible assets and accumulated amortization as of September 30, 2020 and December 31, 2019:

($ in thousands)	September 30, 2020		December 31, 2019
Gross balance (1)	$	86,099	$	86,099
Accumulated amortization (1)	(78,899)		(76,088)
Net carrying balance (1)	$	7,200	$	10,011

(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 $927 thousand and $1.2 million for the three months ended September 30, 2020 and 2019, respectively, and $2.8 million and $3.5 million for the nine months ended September 30, 2020 and 2019, respectively.

The following table presents the estimated future amortization expense of core deposit intangibles as of September 30, 2020:

($ in thousands)	Amount
Remainder of 2020	$	823
2021	2,749
2022	1,865
2023	1,199
2024	553
Thereafter	11
Total	$	7,200