Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill and Other Intangible Assets [Abstract]

Note 5. Goodwill and Other Intangible Assets

Goodwill represents the excess of the consideration exchanged over the fair value of the net assets acquired in purchase business combinations. The carrying amount of goodwill was $621.2 million at both December 31, 2016 and 2015. The Company completed its annual goodwill impairment test as of September 30, 2016 and concluded that there was no impairment of goodwill.

The Company used multiple approaches to measure its fair value at September 30, 2016. These included an income approach using the discounted net present value of estimated future cash flows, a price to earnings ratio approach using the estimated 2017 EPS multiplied by the Company’s current peer group average PE ratio and adjusted for a control premium, a transaction or price-to-book multiple approach using the actual price paid by similar companies in recent acquisition transactions, and a market capitalization approach using the Company’s actual market capitalization.

The results from each of the approaches were relatively similar with little disparity and were combined and weighted to derive an estimated fair market value for the Company. Equal weightings were given to all of the approaches. The weighted approach resulted in a fair market value approximately 23% higher than book at September 30, 2016.

Each of the valuation techniques used by the Company requires significant assumptions. Depending upon the specific approach, assumptions are made concerning the economic environment, expected net interest margins, growth rates, discount rates for cash flows, control premiums, price-to-earnings multiples, and price-to-book multiples. Also, assumptions are made to determine the appropriate individual weighting to be used for each approach in determining the fair market value. Changes to any one of these assumptions could result in significantly different results.

No goodwill impairment charges were recognized during 2016, 2015, or 2014.

Identifiable intangible assets with finite lives are amortized over the periods benefited and are evaluated for impairment similar to other long-lived assets. In 2015, the Company eliminated the $1.1 million remaining carrying value of CDI in conjunction with the sale of four Houston, Texas branches on March 27, 2015. The carrying value of intangible assets subject to amortization was as follows.



	December 31, 2016
	Purchase		Accumulated		Carrying
(in thousands)	Value		Amortization		Value
Core deposit intangibles	$	190,655	$	113,436	$	77,219
Credit card and trust relationships		22,400		14,907		7,493
Merchant processing relationships		10,000		6,955		3,045
	$	223,055	$	135,298	$	87,757



	December 31, 2015
	Purchase		Accumulated		Carrying
(in thousands)	Value		Amortization		Value
Core deposit intangibles	$	190,655	$	97,026	$	93,629
Credit card and trust relationships		22,400		12,735		9,665
Trade name		11,722		11,722		—
Merchant processing relationships		10,000		5,756		4,244
	$	234,777	$	127,239	$	107,538



	Years Ended December 31,
(in thousands)	2016		2015		2014
Aggregate amortization expense for:
Core deposit intangibles	$	16,411	$	18,031	$	19,897
Credit card and trust relationships		2,172		2,369		2,566
Value of insurance business acquired		—		—		34
Non-compete agreements		—		—		100
Trade name		—		2,388		2,605
Merchant processing relationships		1,198		1,396		1,595
	$	19,781	$	24,184	$	26,797

The weighted-average remaining life of core deposit intangibles is 9 years. The weighted-average remaining life of other identifiable intangibles is 6 years.

The following table shows estimated amortization expense of other intangible assets for the five succeeding years and thereafter, calculated based on current amortization schedules.

(in thousands)



2017	$	17,815
2018		16,062
2019		13,747
2020		10,124
2021		8,452
Thereafter		21,557
	$	87,757

- 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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