Goodwill and Core Deposit Intangible Asset

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Core Deposit Intangible Asset

The table below sets forth the carrying amount of goodwill and other intangible assets, net of accumulated amortization, for the banking business as of the dates indicated below. The information presented within this Note excludes discontinued operations. Refer to Note 23, “Discontinued Operations” for further discussion regarding discontinued operations.


	As of December 31,
	2023		2022
	(In thousands)
Balances not subject to amortization
Goodwill	$	557,635	$	557,635
Balances subject to amortization
Core deposit intangible	8,570		10,374
Total goodwill and other intangible assets	$	566,205	$	568,009

The changes in the carrying value of goodwill for the periods indicated were as follows:


	For the Years Ended December 31,
	2023		2022
	(In thousands)
Balance at beginning of year	$	557,635	$	557,635
Goodwill recorded during the year	—		—
Balance at end of year	$	557,635	$	557,635

The following table sets forth the carrying amount of the Company’s core deposit intangible asset, net of accumulated amortization, as of the dates indicated below:


	As of December 31,
	2023						2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(In thousands)
Core deposit intangible	$	11,633	$	(3,063)	$	8,570	$	15,969	$	(5,595)	$	10,374
Total	$	11,633	$	(3,063)	$	8,570	$	15,969	$	(5,595)	$	10,374

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 one reporting unit - the banking business unit.

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 of goodwill was greater than the fair value as of March 31, 2023. Therefore, a quantitative goodwill impairment test was not considered necessary at that time.

During the second quarter of 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 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 estimated fair value based upon its discounted cash flows. 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.

The Company performed its annual assessment for the banking business as of September 30, 2023. Similar to the assessment performed as of June 30, 2023, the assessment 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 estimated fair value based upon its discounted cash flows. 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 September 30, 2023. Management performed an additional qualitative assessment as of December 31, 2023, to analyze changes in factors impacting assumptions used in its September 30, 2023 assessment. Based upon that assessment, management concluded that it was not more-likely-than-not that the carrying value of the goodwill of the banking business unit was greater than the fair value as of December 31, 2023 and a quantitative goodwill impairment test was not necessary as of December 31, 2023.

The amortization expense of the Company’s core deposit intangible asset was $1.8 million, $1.2 million, and $0.2 million during the years ended December 31, 2023, 2022, and 2021, respectively.

The original amortization period and remaining useful life of the Company’s core deposit intangible asset is 10.0 years and 4.3 years, respectively. 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 asset to five years which resulted in an increase in quarterly amortization expense. The effect of the increase on annual amortization expense was not material.

The estimated amortization expense for the remaining useful life of the Company’s core deposit intangible asset is as follows:


Year	(In thousands)
2024	$	2,017
2025	2,017
2026	2,017
2027	2,017
2028	502
Total amortization expense	$	8,570