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Goodwill and Intangible Assets
 12 Months Ended
Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets
Note 5 Goodwill and Other Intangible Assets
Goodwill
Goodwill is not amortized but is instead subject to impairment tests on at least an annual basis, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. See Note 1 for the Corporation’s accounting policy for goodwill and other intangible assets.
The Corporation conducted its most recent annual impairment testing in May 2020, utilizing a quantitative assessment of goodwill impairment which included determining the estimated fair value of each reporting unit, utilizing an equally weighted combination of discounted cash flow and market-based approaches, and comparing that fair value to each reporting unit’s carrying amount (including goodwill). An impairment loss is recognized if the carrying amount of a reporting unit exceeds its fair value. Based on the quantitative assessment, management concluded that the estimated fair value exceeded the carrying value (including goodwill) for each reporting unit. Therefore, based on the step one quantitative analysis, no impairment was required. There were no events since the May 2020 impairment testing that have changed the Corporation's impairment assessment conclusion. There were no impairment charges recorded in 2020, 2019, or 2018.
Each of the valuation techniques employed by the Corporation requires significant assumptions. Depending upon the specific approach, assumptions are made regarding the economic environment including forecasted cash flow projections, expected net interest margins, long-term growth rates, discount rates used for cash flows, control premiums, and price-to-forward earnings
multiples. Changes to any one of these assumptions could result in significantly different results. A sustained decline in the Corporation’s expected future cash flows or estimated growth rates, or a prolonged decline in the price of the Corporation’s common stock due to further deterioration in the economic environment, may necessitate additional interim testing, which could result in an impairment charge to goodwill in future reporting periods.
The Corporation had goodwill of $1.1 billion at December 31, 2020 and $1.2 billion at December 31, 2019. As of December 31, 2020, there was an increase of $15 million relating to the First Staunton acquisition, and an $82 million reduction related to the disposition of ABRC. Goodwill increased $7 million in 2019, due to the Huntington branch acquisition. See Note 2 for additional information on the Corporation's acquisitions and dispositions.
Other Intangible Assets
The Corporation has other intangible assets that are amortized, consisting of CDIs, other intangibles, and MSRs. Other intangibles decreased $19 million from December 31, 2019, primarily driven by a $17 million decrease due to the sale of ABRC during the second quarter of 2020. For CDIs and other intangibles, changes in the gross carrying amount, accumulated amortization, and net book value were as follows:
($ in Thousands)202020192018
Core deposit intangibles
Gross carrying amount at the beginning of the year$80,730 $58,100 $— 
Additions during the period7,379 22,630 58,100 
Accumulated amortization(21,205)(12,456)(5,326)
Net book value$66,904 $68,274 $52,774 
Amortization during the year$8,749 $7,130 $5,326 
Other intangibles
Gross carrying amount at the beginning of the year$38,970 $44,887 $34,572 
Additions during the period200 — 10,359 
Reductions due to sale(17,435)(217)(43)
Accumulated amortization(20,385)(24,643)(21,825)
Net book value$1,350 $20,027 $23,062 
Amortization during the year$1,443 $2,818 $2,833 
Mortgage Servicing Rights 
The Corporation sells residential mortgage loans in the secondary market and typically retains the right to service the loans sold. MSRs are amortized in proportion to and over the period of estimated net servicing income and assessed for impairment at each reporting date. See Note 1 for the Corporation’s accounting policy for MSRs. See Note 16 for a discussion of the recourse provisions on sold residential mortgage loans. See Note 18 which further discusses fair value measurement relative to the MSRs asset.
A summary of changes in the balance of the MSRs asset and the MSRs valuation allowance is as follows:
($ in Thousands)202020192018
Mortgage servicing rights
Mortgage servicing rights at beginning of year$67,607 $68,433 $59,168 
Additions from acquisition1,357 — 8,136 
Additions13,667 11,606 10,722 
Amortization(22,664)(12,432)(9,594)
Mortgage servicing rights at end of year$59,967 $67,607 $68,433 
Valuation allowance at beginning of year(302)(239)(784)
(Additions) recoveries, net(17,704)(63)545 
Valuation allowance at end of year(18,006)(302)(239)
Mortgage servicing rights, net$41,961 $67,306 $68,193 
Fair value of mortgage servicing rights$41,990 $72,532 $81,012 
Portfolio of residential mortgage loans serviced for others (“servicing portfolio”)7,743,956 8,488,969 8,600,983 
Mortgage servicing rights, net to servicing portfolio0.54 %0.79 %0.79 %
Mortgage servicing rights expense(a)
$40,369 $12,494 $9,049 
(a) Includes the amortization of mortgage servicing rights and additions / recoveries to the valuation allowance of mortgage servicing rights, and is a component of mortgage banking, net on the consolidated statements of income.
The projections of amortization expense are based on existing asset balances, the current interest rate environment, and prepayment speeds as of December 31, 2020. The actual amortization expense the Corporation recognizes in any given period may be significantly different depending upon acquisition or sale activities, changes in interest rates, prepayment speeds, market conditions, regulatory requirements, and events or circumstances that indicate the carrying amount of an asset may not be recoverable. The following table shows the estimated future amortization expense for amortizing intangible assets:
($ in Thousands)Core Deposit IntangiblesOther IntangiblesMortgage Servicing Rights
Year ending December 31,
2021$8,811 $200 $12,895 
20228,811 200 14,372 
20238,811 200 10,178 
20248,811 200 7,502 
20258,811 200 5,726 
Beyond 202522,849 350 9,295 
Total Estimated Amortization Expense$66,904 $1,350 $59,967