Goodwill and Other Intangibles

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

The following tables set forth the carrying amount of goodwill and other intangible assets, net of accumulated amortization, by reporting unit as of the dates indicated below:


	As of June 30, 2023
	Banking Business		Insurance Agency Business		Net Carrying Amount
	(In thousands)
Balances not subject to amortization
Goodwill	$	557,635	$	82,587	$	640,222
Balances subject to amortization
Insurance agency (1)	—		9,193		9,193
Core deposit intangible (2)	9,578		—		9,578
Total other intangible assets	9,578		9,193		18,771
Total goodwill and other intangible assets	$	567,213	$	91,780	$	658,993

(1)Insurance agency intangible assets include customer list and non-compete agreement intangible assets.

(2)Management performs an assessment of the remaining useful lives of the Company’s intangible assets on a quarterly basis to determine if such lives remain appropriate. As a result of the assessment performed during the second quarter of 2023, management reduced the remaining useful life of its core deposit intangible to five years which resulted in an increase in quarterly amortization expense. The effect of the increase on annual amortization expense was not material.


	As of December 31, 2022
	Banking Business		Insurance Agency Business		Net Carrying Amount
	(In thousands)
Balances not subject to amortization
Goodwill	$	557,635	$	82,587	$	640,222
Balances subject to amortization
Insurance agency (1)	—		10,530		10,530
Core deposit intangible	10,374		—		10,374
Total other intangible assets	10,374		10,530		20,904
Total goodwill and other intangible assets	$	568,009	$	93,117	$	661,126

(1)Insurance agency intangible assets include customer list and non-compete agreement intangible assets.

The Company quantitatively assesses goodwill for impairment at the reporting unit level on an annual basis or sooner if an event occurs or circumstances change which might indicate that the fair value of a reporting unit is below its carrying amount. The Company has identified and assigned goodwill to two reporting units - the banking business and insurance agency business.

In accordance with the accounting guidance codified in ASC 350-20, the Company performs a test of goodwill for impairment at least on an annual basis. An assessment is also required to be performed to the extent relevant events and/or circumstances occur which may indicate it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. The failure of several banks in early 2023 led to economic uncertainty and an increase in volatility in the capital markets, particularly in the banking industry. Accordingly, the Company performed a qualitative assessment as of March 31, 2023 which included an assessment of current industry conditions and the impacts of those conditions on the Company’s financial position and results of operations. As a result of that assessment, the Company determined it was not more-likely-than-not that the carrying value was greater than the fair value of either reporting unit subject to the Company's analysis as of March 31, 2023. Therefore, a quantitative goodwill impairment test was not considered necessary at that time.

During the three months ended June 30, 2023, as the economic uncertainty impacting the banking industry persisted, the Company exercised the option afforded by ASC 350-20 and bypassed the qualitative assessment, opting to perform the quantitative impairment assessment irrespective of qualitative factors. The assessment for the banking business included a comparison of the banking business’ book value to the implied fair value using a pricing multiple of the Company’s tangible book value as well as a comparison of the banking business’ book value to its discounted cash flows. The assessment for the insurance agency business included a price-to-earnings analysis, as well as an earnings before interest, taxes, depreciation, and amortization (“EBITDA”) multiplier valuation based upon recent and observed insurance agency mergers and acquisitions. The assessment also included a market capitalization analysis. Based upon the assessment, it was determined there was no impairment of the Company’s goodwill as of June 30, 2023.

Similarly, other intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Management performed a review of the Company’s intangible assets as of March 31, 2023 and June 30, 2023 in response to the circumstances indicated above. Based upon those reviews, the Company concluded that it was not more-likely-than-not that the carrying amount of the core deposit intangible and other intangible assets may not be recoverable. Management had also previously performed an assessment as of December 31, 2022 and determined there was no indication of impairment related to intangible assets.