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

In performing our quarterly goodwill impairment assessment, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors include, among other things, macroeconomic conditions, industry and market considerations, financial performance of the respective reporting unit and other relevant entity- and reporting-unit specific considerations. If we conclude it is more likely than not that the fair value of a reporting unit is less than its carrying value, a quantitative assessment is performed. If the quantitative assessment results in the fair value of the reporting unit exceeding its carrying value, goodwill of the reporting unit is considered not impaired; however, if the carrying value of the reporting unit exceeds its fair value an impairment charge is recorded for the excess, limited to the amount of goodwill assigned to a reporting unit.

In connection with the preparation of the third quarter 2020 financial statements, we concluded that it was more likely than not that the fair value of our Community Banking reporting unit was below its carrying amount due to a sustained decline in bank stock valuations, which was primarily attributable to the systemic near-term uncertainty of COVID-19 and its full impact on the global economy which caused an unprecedented shock in interest rates and equity valuations. Therefore, we performed an interim quantitative assessment of our Community Banking reporting unit as of September 30, 2020. Factors considered in the interim quantitative analysis included: the uncertainty due to the COVID-19 pandemic on our customers and our businesses and revisions to our 2020 annual operating plan due to the COVID-19 pandemic, which established revised expectations and priorities for the remainder of 2020 in response to current market factors, such as lower revenue growth and net interest margin expectations.

The September 30, 2020 interim quantitative assessment for our Community Banking reporting unit, with $2.2 billion of allocated goodwill, resulted in an excess fair value over its carrying amount of less than 5%, which is stable from June 30, 2020. Based on the results of the interim quantitative impairment assessments, there were no impairments for the periods presented. Although not impaired, the fair value of our Community Banking reporting unit remains relatively close to carrying value. As margins for fair value over carrying amount decline, the risk of future impairment increases if any assumptions, estimates, or market factors change in the future. The annual test for impairment is performed in the fourth quarter each year and will include an update to our long-range forecast.

Other intangible assets are tested annually for impairment, and more frequently if events or changes in circumstances indicate the carrying value may not be recoverable. We completed this annual test in 2019 and determined that our other intangible assets are not impaired. There were no impairment indicators for other intangible assets as of September 30, 2020.