Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Note 5 - Goodwill and Other Intangible Assets

Goodwill allocated to each reporting unit at September 30, 2020 and December 31, 2019 is presented as follows (the FMS reportable segment includes two reporting units of Consumer Mortgage and Wealth Management):


(in thousands)	Community Banking Reporting Unit		Wholesale Banking Reporting Unit		Consumer Mortgage Reporting Unit		Wealth Management Reporting Unit		Total
Balance as of December 31, 2019	$	256,323	$	171,636	$	44,877	$	24,431	$	497,267
Goodwill impairment	—		—		(44,877)		—		(44,877)
Balance as of September 30, 2020	$	256,323	$	171,636	$	—	$	24,431	$	452,390

Goodwill is evaluated for impairment on an annual basis or whenever an event occurs or circumstances change to indicate that it is more likely than not that an impairment loss has been incurred (i.e., a triggering event). Synovus conducted a goodwill impairment assessment as of December 31, 2019, following Synovus' reorganization, applying ASC 350-20-35-3A Goodwill Subsequent Measurement - Qualitative Assessment Approach and concluded that goodwill was not impaired. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 19 -Segment Reporting" to the consolidated financial statements of Synovus' 2019 Form 10-K for information on Synovus' reorganization during 2019.

During 2020, Synovus performed interim goodwill impairment tests as of September 30, 2020, June 30, 2020 and March 31, 2020 based on quarterly assessments of triggering events that included Synovus' stock price trading below book value, an extremely low interest rate environment, as well as general recessionary economic conditions caused by the COVID-19 pandemic. Quantitative assessments of goodwill impairment include determining the estimated fair value of each reporting unit, utilizing a combination of discounted cash flow and market-based approaches, and comparing that fair value to each reporting unit's carrying amount. The discounted cash flow method included updated internal forecasts, long-term profitability targets, growth rates and discount rates. The market approach was based on a comparison of certain financial metrics of Synovus' reporting units to guideline public company peers. The income-based discounted cash flow approach was more heavily weighted (60%) than the market-based approach (40%) due to significant volatility in the market since the pandemic was declared a National Emergency.

Based on the assessment performed at September 30, 2020, Synovus recognized a $44.9 million goodwill impairment charge representing all goodwill allocated to the Consumer Mortgage reporting unit, while the fair values of the Community Banking, Wholesale Banking and Wealth Management reporting units continued to exceed the respective carrying values. The projected cash flows of the Consumer Mortgage reporting unit declined from the prior period valuations due to significant mortgage refinance activity at record-low mortgage rates and the FOMC's updated guidance in the third quarter of 2020 regarding inflation targeting and their expectations for interest rates to remain low for an extended period of time. The primarily fixed rate, longer duration nature of Synovus’ mortgage portfolio especially impacted the Consumer Mortgage reporting unit. In addition, the excess of fair value over the carrying amount for the Community Banking and Wholesale Banking reporting units was less than 10% at September 30, 2020.

Due to the high degree of subjectivity involved in estimating the fair value of Synovus' reporting units, a decline in Synovus' expected future cash flows or estimated growth rates due to further deterioration in the economic environment, or continued market capitalization of Synovus below book value, could result in an additional goodwill impairment charge that is material to Synovus' results from operations, but would not materially impact our financial condition.

The following table shows the gross carrying amount and accumulated amortization of other intangible assets as of September 30, 2020 and December 31, 2019, which primarily consist of core deposit intangible assets acquired in the FCB acquisition. The CDI is being amortized over its estimated useful life of approximately ten years utilizing an accelerated method. Aggregate other intangible assets amortization expense for the three and nine months ended September 30, 2020 was $2.6 million and $7.9 million, respectively. Aggregate other intangible assets amortization for the three and nine months ended September 30, 2019 was $2.9 million and $8.7 million, respectively.


(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
September 30, 2020
CDI	$	57,400	$	(17,481)	$	39,919
Other	12,500		(4,667)		7,833
Total other intangible assets	$	69,900	$	(22,148)	$	47,752
December 31, 2019
CDI	$	57,400	$	(10,436)	$	46,964
Other	12,500		(3,793)		8,707
Total other intangible assets	$	69,900	$	(14,229)	$	55,671