Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

The changes in the carrying amount of goodwill as allocated to Valley's business segments, or reporting units thereof, for goodwill impairment analysis were:


	Business Segment / Reporting Unit*
	Wealth Management		Consumer Lending		Commercial Lending		Investment Management		Total
	(in thousands)
Balance at December 31, 2019	$	21,218	$	306,572	$	825,767	$	220,068	$	1,373,625
Goodwill from business combinations	—		121		1,654		9		1,784
Balance at September 30, 2020	$	21,218	$	306,693	$	827,421	$	220,077	$	1,375,409

* Valley’s Wealth Management Division is comprised of trust, asset management and insurance services. This reporting unit is included in the Consumer Lending segment for financial reporting purposes.

During the nine months ended September 30, 2020, Valley recorded additional goodwill as set forth in the table above related to the Oritani acquisition, reflecting the effect of the combined adjustments to the fair value of certain loans and deferred tax assets as of the acquisition date. Certain estimates for acquired assets and assumed liabilities are subject to change for up to one year after the acquisition date. See Note 2 for further details.

During the second quarter 2020, Valley performed the annual goodwill impairment test at its normal assessment date. There was no impairment of goodwill recognized during the three and nine months ended September 30, 2020 and 2019.

The following table summarizes other intangible assets as of September 30, 2020 and December 31, 2019:


	Gross Intangible Assets		Accumulated Amortization		Valuation Allowance		Net Intangible Assets
	(in thousands)
September 30, 2020
Loan servicing rights	$	100,456	$	(77,404)	$	(1,013)	$	22,039
Core deposits	101,160		(50,472)		—		50,688
Other	3,945		(2,799)		—		1,146
Total other intangible assets	$	205,561	$	(130,675)	$	(1,013)	$	73,873
December 31, 2019
Loan servicing rights	$	94,827	$	(70,095)	$	(47)	$	24,685
Core deposits	101,160		(40,384)		—		60,776
Other	3,945		(2,634)		—		1,311
Total other intangible assets	$	199,932	$	(113,113)	$	(47)	$	86,772

Loan servicing rights are accounted for using the amortization method. Under this method, Valley amortizes the loan servicing assets over the period of the economic life of the assets arising from estimated net servicing revenues. On a quarterly basis, Valley stratifies its loan servicing assets into groupings based on risk characteristics and assesses each group for impairment based on fair value. Impairment charges on loan servicing rights are recognized in earnings when the book value of a stratified group of loan servicing rights exceeds its estimated fair value. Valley recorded net impairment charges on its loan servicing rights totaling $188 thousand and $966 thousand for the three and nine months ended September 30, 2020, respectively. Valley recorded net impairment charges on its loan servicing rights totaling $64 thousand and net recoveries of impairment charges on its loan servicing rights totaling $20 thousand for the three and nine months ended September 30, 2019, respectively. See the “Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis” section of Note 6 for additional information regarding the fair valuation.

Core deposits are amortized using an accelerated method and have a weighted average amortization period of 8.9 years. The line item labeled “Other” included in the table above primarily consists of customer lists and covenants not to compete, which are amortized over their expected lives generally using a straight-line method and have a weighted average amortization period of approximately 7.6 years. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the three and nine months ended September 30, 2020 and 2019.

The following table presents the estimated future amortization expense of other intangible assets for the remainder of 2020 through 2024:


	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2020	$	1,477	$	3,275	$	55
2021	4,980		11,607		206
2022	3,789		9,876		191
2023	2,869		8,146		131
2024	2,205		6,537		117

Valley recognized amortization expense on other intangible assets, including net impairment (or recovery of impairment) charges on loan servicing rights, totaling approximately $6.4 million and $4.7 million for the three months ended September 30, 2020 and 2019, respectively, and $18.5 million and $13.2 million for the nine months ended September 30, 2020 and 2019, respectively.