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Goodwill and Intangible Assets
 12 Months Ended
Dec. 31, 2021
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 2021, utilizing a qualitative assessment. Factors that management considered in this assessment include macroeconomic conditions, industry and market considerations, overall financial performance of the Corporation and each reporting unit (both current and projected), changes in management strategy, and changes in the composition or carrying amount of net assets. In addition, management considered the changes in both the Corporation's common stock price and in the overall bank common stock index (based on the S&P 400 Regional Bank Sub-Industry Index), as well as the Corporation's earnings per common share trend over the past year. Based on the these assessments, management concluded that it is more likely than not that the estimated fair value exceeded the carrying value (including goodwill) for each reporting unit. Therefore, a step one quantitative analysis was not required. There have been no events since the May 2021 impairment test that have changed the Corporation's impairment assessment conclusion. There were no impairment charges recorded in 2021, 2020, or 2019.
The Corporation had goodwill of $1.1 billion at both December 31, 2021 and 2020. During the second quarter of 2020, there was a reduction of $82 million of goodwill related to the sale of ABRC. Throughout 2020, there was a net increase in goodwill related to the First Staunton acquisition of $15 million. During the first quarter of 2021, there was a reduction of $4 million of goodwill related to the sale of Whitnell. See Note 2 for additional information on the Corporation's acquisitions and dispositions.
Other Intangible Assets
The Corporation has other intangible assets that are amortized, consisting of CDIs and MSRs. For CDIs and other intangibles, changes in the gross carrying amount, accumulated amortization, and net book value were as follows:
($ in Thousands)202120202019
Core deposit intangibles
Gross carrying amount at the beginning of the year$88,109 $80,730 $58,100 
Additions during the year— 7,379 22,630 
Accumulated amortization(30,016)(21,205)(12,456)
Net book value$58,093 $66,904 $68,274 
Amortization during the year$8,811 $8,749 $7,130 
Other intangibles
Gross carrying amount at the beginning of the year$2,000 $38,970 $44,887 
Additions during the year— 200 — 
Reductions due to sale(1,317)(17,435)(217)
Accumulated amortization(683)(20,385)(24,643)
Net book value$— $1,350 $20,027 
Amortization during the year$33 $1,443 $2,818 
Mortgage Servicing Rights 
The Corporation sells residential mortgage loans in the secondary market and typically retains the right to service the loans sold. MSRs are amortized in proportion to and over the period of estimated net servicing income and assessed for impairment at each reporting date. See Note 1 for the Corporation’s accounting policy for MSRs. See Note 16 for a discussion of the recourse provisions on sold residential mortgage loans. See Note 18 which further discusses fair value measurement relative to the MSRs asset.
A summary of changes in the balance of the MSRs asset and the MSRs valuation allowance is as follows:
($ in Thousands)202120202019
Mortgage servicing rights
Mortgage servicing rights at beginning of year$59,967 $67,607 $68,433 
Additions from acquisition— 1,357 — 
Additions16,151 13,667 11,606 
Amortization(19,436)(22,664)(12,432)
Mortgage servicing rights at end of year$56,682 $59,967 $67,607 
Valuation allowance at beginning of year(18,006)(302)(239)
(Additions) recoveries, net16,186 (17,704)(63)
Valuation allowance at end of year(1,820)(18,006)(302)
Mortgage servicing rights, net$54,862 $41,961 $67,306 
Fair value of mortgage servicing rights$57,259 $41,990 $72,532 
Portfolio of residential mortgage loans serviced for others (“servicing portfolio”)6,994,834 7,743,956 8,488,969 
Mortgage servicing rights, net to servicing portfolio0.78 %0.54 %0.79 %
Mortgage servicing rights expense(a)
$3,250 $40,369 $12,494 
(a) Includes the amortization of mortgage servicing rights and additions / recoveries to the valuation allowance of mortgage servicing rights, and is a component of mortgage banking, net on the consolidated statements of income.
The projections of amortization expense are based on existing asset balances, the current interest rate environment, and prepayment speeds as of December 31, 2021. The actual amortization expense the Corporation recognizes in any given period may be significantly different depending upon acquisition or sale activities, changes in interest rates, prepayment speeds, market conditions, regulatory requirements, and events or circumstances that indicate the carrying amount of an asset may not be recoverable. The following table shows the estimated future amortization expense for amortizing intangible assets:
($ in Thousands)Core Deposit IntangiblesMortgage Servicing Rights
Year ending December 31,
2022$8,811 $8,901 
20238,811 9,614 
20248,811 7,811 
20258,811 6,490 
20268,811 5,423 
Beyond 202614,038 18,444 
Total Estimated Amortization Expense$58,093 $56,682