Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

NOTE 11—GOODWILL AND OTHER INTANGIBLE ASSETS

The following table shows the changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2013 and 2012:


(dollars in thousands)	Community Banking		Other		Total
Balance, January 1, 2013	$	297,055	$	41,765	$	338,820
Goodwill acquired during the period		13,909		—		13,909

Balance, September 30, 2013	$	310,964	$	41,765	$	352,729

Balance, January 1, 2012	$	212,412	$	40,765	$	253,177
Goodwill acquired during the period		85,706		1,000		86,706

Balance, September 30, 2012	$	298,118	$	41,765	$	339,883

Goodwill is reviewed annually for impairment. Old National completed its most recent annual goodwill impairment test as of August 31, 2013 and concluded that, based on current events and circumstances, it is not more likely than not that the carry value of goodwill exceeds fair value. During the third quarter of 2013, Old National recorded $13.3 million of goodwill associated with the acquisition of 24 retail bank branches from Bank of America NA. This was allocated to the “Community Banking” segment. During the second quarter of 2013, Old National recorded $0.6 million of goodwill primarily related to the final pension settlement associated with the Indiana Community Bancorp acquisition. This was allocated to the “Community Banking” segment. The final purchase price allocation resulted in goodwill of $86.2 million associated with the Indiana Community Bancorp acquisition. During the third quarter of 2012, Old National had recorded $86.7 million of goodwill associated with the acquisition of Indiana Community Bancorp, of which $85.7 million was allocated to the “Community Banking” segment and $1.0 million to the “Other” segment.

The gross carrying amount and accumulated amortization of other intangible assets at September 30, 2013 and December 31, 2012 was as follows:


(dollars in thousands)	Gross Carrying Amount		Accumulated Amortization and Impairment			Net Carrying Amount
September 30, 2013
Amortized intangible assets:
Core deposit	$	44,021	$	(29,987	)	$	14,034
Customer business relationships		26,549		(19,444	)		7,105
Customer trust relationships		5,352		(1,633	)		3,719
Customer loan relationships		4,413		(2,675	)		1,738

Total intangible assets	$	80,335	$	(53,739	)	$	26,596

December 31, 2012
Amortized intangible assets:
Core deposit	$	40,559	$	(25,908	)	$	14,651
Customer business relationships		26,411		(18,153	)		8,258
Customer trust relationships		5,352		(1,080	)		4,272
Customer loan relationships		4,413		(2,374	)		2,039

Total intangible assets	$	76,735	$	(47,515	)	$	29,220

Other intangible assets consist of core deposit intangibles and customer relationship intangibles and are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of 5 to 15 years. During the third quarter of 2013, Old National increased core deposit intangibles by $3.5 million related to the acquisition of 24 retail bank branches from Bank of America NA, which is included in the “Community Banking” segment. During the second quarter of 2013, Old National increased customer business relationships by $0.1 million related to the purchase of an insurance book of business, which is included in the “Other” segment. During the third quarter of 2012, Old National increased core deposit intangibles by $1.3 million related to the acquisition of Indiana Community Bancorp, which is included in the “Community Banking” segment. Also during the third quarter of 2012, Old National increased customer relationship intangibles by $1.7 million associated with the trust business of Indiana Community Bancorp, which is included in the “Other” segment. During the second quarter of 2012, Old National increased customer business relationships by $0.5 million relating to the purchase of an insurance book of business, which is included in the “Other” segment.

Old National reviews other intangible assets for possible impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. No impairment charges were recorded in 2013 or 2012. Total amortization expense associated with other intangible assets for the nine months ended September 30 was $6.2 million in 2013 and $5.9 million in 2012. Included in expense for the first quarter of 2013 is $0.6 million related to the branch sales that occurred in the first quarter.

Estimated amortization expense for future years is as follows:


(dollars in thousands)
2013 remaining	$	1,919
2014		6,638
2015		5,399
2016		4,352
2017		2,982
Thereafter		5,306

Total	$	26,596

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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