Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

GOODWILL AND OTHER INTANGIBLE ASSETS (Note 8)

The changes in the carrying amount of goodwill as allocated to our 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, 2018	$	21,218	$	287,025	$	557,850	$	218,572	$	1,084,665
Goodwill from business combinations	—		19,547		267,917		1,496		288,960
Balance at December 31, 2019	$	21,218	$	306,572	$	825,767	$	220,068	$	1,373,625
Goodwill from business combinations	—		597		8,175		45		8,817
Balance at December 31, 2020	$	21,218	$	307,169	$	833,942	$	220,113	$	1,382,442

*    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.

Certain estimates for acquired assets and assumed liabilities are subject to change for up to one year after the acquisition date. During 2020, goodwill from business combinations reflects the effect of the combined adjustments to the estimated fair values of certain loans, current taxes payable and deferred tax assets as of the acquisition date. See Note 2 for further details.

There was no impairment of goodwill during the years ended December 31, 2020, 2019 and 2018.

The following tables summarize other intangible assets as of December 31, 2020 and 2019: 

	Gross Intangible Assets		Accumulated Amortization		Valuation Allowance		Net Intangible Assets
	(in thousands)
December 31, 2020
Loan servicing rights	$	103,150	$	(80,340)	$	(865)	$	21,945
Core deposits	101,160		(53,747)		—		47,413
Other	3,945		(2,854)		—		1,091
Total other intangible assets	$	208,255	$	(136,941)	$	(865)	$	70,449
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

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 which are amortized over their expected lives generally using a straight-line method and have a weighted average amortization period of 7.6 years. Valley recorded $20.7 million of core deposit intangibles resulting from the Oritani acquisition. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the years ended December 31, 2020, 2019 and 2018.

The following table summarizes the change in loan servicing rights during the years ended December 31, 2020, 2019 and 2018: 

	2020		2019		2018
	(in thousands)
Loan servicing rights:
Balance at beginning of year	$	24,732	$	24,193	$	22,084
Origination of loan servicing rights	8,322		7,473		8,216
Amortization expense	(10,244)		(6,934)		(6,107)
Balance at end of year	$	22,810	$	24,732	$	24,193
Valuation allowance:
Balance at beginning of year	$	(47)	$	(83)	$	(471)
Impairment adjustment	(818)		36		388
Balance at end of year	$	(865)	$	(47)	$	(83)
Balance at end of year, net of valuation allowance	$	21,945	$	24,685	$	24,110

Loan servicing rights are accounted for using the amortization method. As shown in the above table, Valley recorded net impairment charges on its loan servicing rights totaling $818 thousand for the year ended December 31, 2020 and net recoveries impairment charges totaling $36 thousand and $388 thousand for the years ended December 31, 2019 and 2018, respectively.

The Bank is a servicer of residential mortgage loan portfolios, and it is compensated for loan administrative services performed for mortgage servicing rights of loans originated and sold by the Bank, and to a lesser extent, purchased mortgage servicing rights. The aggregate principal balances of residential mortgage loans serviced by the Bank for others approximated $3.5 billion, $3.4 billion and $3.2 billion at December 31, 2020, 2019 and 2018, respectively. The outstanding balance of loans serviced for others is not included in the consolidated statements of financial condition.

Valley recognized amortization expense on other intangible assets, including net recoveries of impairment charges on loan servicing rights (reflected in the table above), of $24.6 million, $18.1 million and $18.4 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The following table presents the estimated amortization expense of other intangible assets over the next five-year period: 

Year	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2021	$	5,391	$	11,607	$	206
2022	3,969		9,876		191
2023	2,933		8,146		131
2024	2,210		6,537		117
2025	1,688		4,929		103