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Goodwill And Other Intangible Assets

12 Months Ended

Dec. 31, 2014

Goodwill and Other Intangible Assets [Abstract]

NOTE 4 GOODWILL AND INTANGIBLE ASSETS:

Goodwill: Goodwill is not amortized but, instead, is 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 annual impairment testing in May 2014, utilizing a qualitative assessment. Factors that management considered in this assessment included 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 increases in both the Corporation's common stock price and in the overall bank common stock index (based on the NASDAQ Bank Index), as well as the Corporation's earnings per common share trend over the past year. Based on these assessments, management concluded that the 2014 annual qualitative impairment assessment indicated 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 were no impairment charges recorded in 2014 or 2013.

At December 31, 2014, the Corporation had goodwill of $929 million. There was no change in the carrying amount of goodwill for the years ended December 31, 2014, 2013 or 2012.

Other Intangible Assets: The Corporation has other intangible assets that are amortized, consisting of core deposit intangibles, other intangibles (primarily related to customer relationships acquired in connection with the Corporation's insurance agency acquisitions), and mortgage servicing rights. For core deposit intangibles and other intangibles, changes in the gross carrying amount, accumulated amortization, and net book value were as follows.

		2014		2013		2012
	($ in Thousands)
Core deposit intangibles:
Gross carrying amount	$	36,230	$	36,230	$	41,831
Accumulated amortization		(34,433)		(31,565)		(34,044)
Net book value	$	1,797	$	4,665	$	7,787
Amortization during the year	$	2,868	$	3,122	$	3,229
Other intangibles:
Gross carrying amount	$	19,283	$	19,283	$	19,283
Accumulated amortization		(13,643)		(12,764)		(11,843)
Net book value	$	5,640	$	6,519	$	7,440
Amortization during the year	$	879	$	921	$	966

The Corporation sells residential mortgage loans in the secondary market and typically retains the right to service the loans sold. Mortgage servicing rights 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 mortgage servicing rights. See Note 15 for a discussion of the recourse provisions on sold residential mortgage loans. See Note 17 which further discusses fair value measurement relative to the mortgage servicing rights asset.

A summary of changes in the balance of the mortgage servicing rights asset and the mortgage servicing rights valuation allowance was as follows.

		2014			2013				2012
		($ in Thousands)
Mortgage servicing rights
Mortgage servicing rights at beginning of year		$	64,193		$	61,425		$	75,855
	Additions		8,253			18,256			23,528
	Amortization		(11,067)			(15,488)			(23,348)
	Other-than-temporary impairment		―			―			(14,610)
Mortgage servicing rights at end of year		$	61,379		$	64,193		$	61,425
Valuation allowance at beginning of year			(913)			(15,476)			(27,703)
	(Additions) recoveries, net		(321)			14,563			(2,383)
	Other-than-temporary impairment		―			―			14,610
Valuation allowance at end of year			(1,234)			(913)			(15,476)
Mortgage servicing rights, net		$	60,145		$	63,280		$	45,949
Fair value of mortgage servicing rights		$	66,342		$	74,444		$	45,949
Portfolio of residential mortgage loans serviced for others
	("servicing portfolio")	$	7,999,294		$	8,084,000		$	7,453,000
Mortgage servicing rights, net to servicing portfolio			0.75	%		0.78	%		0.62	%
Mortgage servicing rights expense⁽¹⁾		$	11,388		$	925		$	25,731

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 in the consolidated statements of income.

The following table shows the estimated future amortization expense for amortizing intangible assets. The projections of amortization expense are based on existing asset balances, the current interest rate environment, and prepayment speeds as of December 31, 2014. 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.

Estimated Amortization Expense	Core Deposit		Other			Mortgage Servicing
	Intangibles		Intangibles			Rights
Year ending December 31,		($ in Thousands)
2015	$	1,404	$	839	$	10,733
2016		281		803		8,787
2017		112		770		7,184
2018		―		740		5,895
2019		―		441		4,860
Beyond 2019		―		2,047		23,920
Total Estimated Amortization Expense	$	1,797	$	5,640	$	61,379

- 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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