GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2011

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 2—GOODWILL AND OTHER INTANGIBLE ASSETS

        Goodwill arises from business combinations and represents the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired. Goodwill and other intangible assets deemed to have indefinite lives generated from purchase business combinations are not subject to amortization and are instead tested for impairment no less than annually. Impairment is determined in accordance with ASC 350, "Intangibles—Goodwill and Other" and is based on the reporting unit. Impairment exists when the carrying value of goodwill exceeds its implied fair value. An impairment loss would be recognized in an amount equal to that excess and would be included in noninterest expense in the consolidated statement of earnings (loss). Our annual impairment test of goodwill resulted in no impact on our results of operations and financial condition.

        Goodwill in the amount of $46.8 million was recorded in the Los Padres acquisition. During the second quarter of 2011, we reduced goodwill by $7.6 million as the matter with the FDIC regarding the settlement accounting for a wholly-owned subsidiary in the Los Padres acquisition was resolved. A receivable for such amount was included in the FDIC loss sharing asset at June 30, 2011 and is expected to be received during the third quarter.

        Our intangible assets with definite lives are core deposit intangibles, or CDI, and customer relationship intangibles, or CRI. These intangible assets are amortized over their useful lives to their estimated residual values and reviewed for impairment at least quarterly. The amortization expense represents the estimated decline in the value of the underlying deposits or loan customers acquired.

        The following table presents the changes in CDI and CRI and the related accumulated amortization for the periods indicated:

			Three Months Ended									Six Months Ended June 30,
			June 30, 2011			March 31, 2011			June 30, 2010
												2011			2010
			(In thousands)
Gross amount of CDI and CRI:
	Balance, beginning of period		$	76,319		$	76,319		$	75,911		$	76,319		$	75,911
	Fully amortized portion			(2,690	)		—			—			(2,690	)		—
		Balance, end of period		73,629			76,319			75,911			73,629			75,911
Accumulated amortization:
	Balance, beginning of period			(52,783	)		(50,476	)		(45,039	)		(50,476	)		(42,615	)
	Amortization			(2,308	)		(2,307	)		(2,424	)		(4,615	)		(4,848	)
	Fully amortized portion			2,690			—			—			2,690			—
		Balance, end of period		(52,401	)		(52,783	)		(47,463	)		(52,401	)		(47,463	)
Net CDI and CRI, end of period			$	21,228		$	23,536		$	28,448		$	21,228		$	28,448

        The aggregate amortization expense related to the intangible assets is expected to be $8.4 million for 2011. The estimated aggregate amortization expense related to these intangible assets for each of the subsequent four years is $6.1 million for 2012, $4.5 million for 2013, $2.9 million for 2014, and $2.7 million for 2015.