Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

The carrying amounts of goodwill allocated to Valley's reporting units at December 31, 2022, as reflected in the table below, were adjusted for the correction of an immaterial error related to the reallocation of goodwill resulting from a change in operating segments during the second quarter 2022. As a result of the segment change in the second quarter 2022, the goodwill balance of $220.5 million from the former Investment Management reporting unit was allocated to the Consumer Banking (formerly Consumer Lending) and Commercial Banking (formerly Commercial Lending) reporting units, on a relative fair value basis, in the amounts of $41.3 million and $179.2 million, respectively.

The following table summarizes the effects of the adjustment on the amounts previously reported in the goodwill allocation table and the corrected (or “as adjusted”) amounts presented herein for each period presented.


	Reporting Unit *
	Wealth Management		Consumer Banking		Commercial Banking		Total
	(in thousands)
December 31, 2022, as reported	$	49,767	$	284,873	$	1,534,296	$	1,868,936
Adjustment	28,375		64,773		(93,148)		—
December 31, 2022, as adjusted	$	78,142	$	349,646	$	1,441,148	$	1,868,936
September 30, 2023	$	78,142	$	349,646	$	1,441,148	$	1,868,936

* The Wealth Management and Consumer Banking reporting units are both components of the overall Consumer Banking operating segment, which is further described in Note 16.

During the second quarter 2023, Valley performed the annual goodwill impairment test at its normal assessment date. The results of the 2023 annual impairment test resulted in no impairment of goodwill. During the nine months ended September 30, 2023, there were no triggering events that would more likely than not reduce the fair value of any reporting unit below its carrying amount. There was no impairment of goodwill recognized during the three and nine months ended September 30, 2022, and the correction of the error in allocation of goodwill to reporting units described above had no impact on this conclusion.

The following table summarizes other intangible assets as of September 30, 2023 and December 31, 2022:


	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
	(in thousands)
September 30, 2023
Loan servicing rights	$	121,825	$	(99,513)	$	22,312
Core deposits	215,620		(106,201)		109,419
Other	50,393		(12,858)		37,535
Total other intangible assets	$	387,838	$	(218,572)	$	169,266
December 31, 2022
Loan servicing rights	$	119,943	$	(96,136)	$	23,807
Core deposits	223,670		(92,486)		131,184
Other	51,299		(8,834)		42,465
Total other intangible assets	$	394,912	$	(197,456)	$	197,456

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. There was no net impairment recognized during the three and nine months ended September 30, 2023 and 2022.

Core deposits are amortized using an accelerated method over a period of 10.0 years. The line item labeled “Other” included in the table above primarily consists of customer lists, certain financial asset servicing contracts 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 13.4 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, 2023 and 2022.

The following table presents the estimated future amortization expense of other intangible assets for the remainder of 2023 through 2027:


Year	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2023	$	793	$	6,982	$	1,591
2024	2,918		24,897		5,951
2025	2,562		21,048		5,380
2026	2,235		17,223		4,805
2027	1,940		13,544		4,205

Valley recognized amortization expense on other intangible assets totaling approximately $9.7 million and $11.1 million for the three months ended September 30, 2023 and 2022, respectively, and $30.1 million and $26.9 million for the nine months ended September 30, 2023 and 2022, respectively.