Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2021

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, 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
Goodwill from business combinations	13,097		1,079		62,073		317		76,566
Balance at December 31, 2021	$	34,315	$	308,248	$	896,015	$	220,430	$	1,459,008

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

The goodwill from business combinations set forth in the table above during 2021 related to the Westchester and DV acquisitions and totaled $63.5 million and $13.1 million, respectively. Goodwill resulting from the DV acquisition was allocated entirely to the Wealth Management reporting unit. During 2020, goodwill from business combinations reflected the effect of the combined adjustments to the estimated fair values of certain loans, current taxes payable and deferred tax assets related to the Oritani acquisition on December 1, 2019. See Note 2 for further details related to these acquisitions.

There was no impairment of goodwill during the years ended December 31, 2021, 2020 and 2019.

The following tables summarize other intangible assets as of December 31, 2021 and 2020: 

	Gross Intangible Assets		Accumulated Amortization		Valuation Allowance		Net Intangible Assets
	(in thousands)
December 31, 2021
Loan servicing rights	$	114,636	$	(90,951)	$	—	$	23,685
Core deposits	109,290		(65,488)		—		43,802
Other	6,092		(3,193)		—		2,899
Total other intangible assets	$	230,018	$	(159,632)	$	—	$	70,386
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

Core deposits are amortized using an accelerated method and have a weighted average amortization period of 9.2 years. The line item labeled “Other” included in the table above primarily consists of certain financial asset servicing contracts, 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 6.0 years. Valley recorded $8.1 million of core deposit intangibles resulting from the Westchester 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, 2021, 2020 and 2019.

The following table summarizes the change in loan servicing rights during the years ended December 31, 2021, 2020 and 2019: 

	2021		2020		2019
	(in thousands)
Loan servicing rights:
Balance at beginning of year	$	22,810	$	24,732	$	24,193
Origination of loan servicing rights	11,486		8,322		7,473
Amortization expense	(10,611)		(10,244)		(6,934)
Balance at end of year	$	23,685	$	22,810	$	24,732
Valuation allowance:
Balance at beginning of year	$	(865)	$	(47)	$	(83)
Impairment adjustment	865		(818)		36
Balance at end of year	$	—	$	(865)	$	(47)
Balance at end of year, net of valuation allowance	$	23,685	$	21,945	$	24,685

Loan servicing rights are accounted for using the amortization method. As shown in the above table, Valley recorded net recoveries of impairment charges totaling $865 thousand and $36 thousand for the years ended December 31, 2021 and 2019, respectively, and net impairment charges on its loan servicing rights totaling $818 thousand for the year ended December 31, 2020.

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 $3.6 billion, $3.5 billion and $3.4 billion at December 31, 2021, 2020 and 2019, 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 $21.8 million, $24.6 million and $18.1 million for the years ended December 31, 2021, 2020 and 2019, 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)
2022	$	4,234	$	11,401	$	705
2023	3,433		9,510		572
2024	2,817		7,740		484
2025	2,321		5,970		396
2026	1,917		4,225		304