Goodwill

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Note 11 – Goodwill

At March 31, 2020, goodwill totaled $2.7 million, after a goodwill impairment of $1.8 billion was taken during the quarter, as compared to goodwill of $1.8 billion at December 31, 2019. Goodwill is required to be allocated to reporting units, which the Company has determined to be the same as its operating segments.

The following table summarizes the change in the Company's goodwill for the three months ended March 31, 2020:


	Goodwill
(in thousands)	Gross		Accumulated Impairment		Total
Balance, December 31, 2019	$	1,900,727	$	(113,076)	$	1,787,651
Goodwill impairment	—		(1,784,936)		(1,784,936)
Balance, March 31, 2020	$	1,900,727	$	(1,898,012)	$	2,715

As of March 31, 2020 and December 31, 2019, goodwill was allocated to the reporting units as follows:


	Goodwill
(in thousands)	Wholesale Bank		Wealth Management		Retail Bank		Total
Allocated goodwill, December 31, 2019	$	1,033,744	$	2,715	$	751,192	$	1,787,651
Goodwill impairment	(1,033,744)		—		(751,192)		(1,784,936)
Allocated goodwill, March 31, 2020	$	—	$	2,715	$	—	$	2,715

The Company updated its goodwill assessment for the Wholesale Bank and Retail Bank reporting units at March 31, 2020, due to events and circumstances indicating potential impairment. Impairment of goodwill is the condition that exists when the carrying amount of a reporting unit that includes goodwill exceeds its fair value. A goodwill impairment is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit.

The Company assessed qualitative factors that indicated that it was more likely than not that goodwill was impaired. Based on that assessment, the Company determined that for the Wholesale Bank and Retail Bank reporting units, the qualitative analysis determined that there were negative indicators that would require a quantitative assessment of goodwill due to the decline in the current economic environment, specifically interest rates and the Company's stock price, as well as decreasing cash flow projections for these reporting units based on the low interest rate environment and potentially higher credit losses.

The Company performed a quantitative analysis of the Wholesale Bank and Retail Bank reporting units, by comparing the fair value of these reporting units with their carrying amount. The Company estimated the fair value of its Wholesale Bank and Retail Bank reporting units using an income approach to estimate the fair value of both reporting units. The income approach estimates the fair value of the reporting units by discounting management's projections of the reporting units' cash flows, including a terminal value to estimate the fair value of cash flows beyond the final year of projected results, discounted using an estimated cost of capital discount rate. The Company also considered the market and cost approaches when determining the fair value of the reporting units.

The projected cash flows used to estimate fair value of the reporting units was lower than previous projections due to declining interest rate forecasts for a prolonged low-interest rate environment, due to the significant impact of the Federal Reserve's rate cuts and the impact of the COVID-19 pandemic on the economy. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual reporting units requires management to make assumptions and estimates regarding the Company's future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, income tax rates, discount rates, growth rates, and other market factors.

Upon completing the quantitative impairment analysis, the Company recorded a goodwill impairment of $1.8 billion, which represented the entire amount of goodwill allocated to the Wholesale Bank and Retail Bank reporting units. The remaining goodwill of $2.7 million after the impairment relates to the Wealth Management reporting unit.