Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

The Corporation has the following types of intangible assets: goodwill, core deposit intangible assets, non-compete intangible assets and mortgage servicing rights (MSRs). Goodwill, core deposit intangible assets, and non-compete intangible assets arose as a result of business combinations or other acquisitions. MSRs arose as a result of selling residential mortgage loans in the secondary market while retaining the right to service these loans and receive servicing income over the life of the loan and from acquisitions of other banks that had MSRs. Amortization is recorded on the core deposit intangible assets, non-compete intangible assets and MSRs.

Goodwill recorded is primarily attributable to the synergies and economies of scale expected from combining the operations of the Corporation and other acquisitions. The Corporation recorded additional goodwill in the first quarter of 2016 of $0.5 million related to the 2015 acquisition of Lake Michigan resulting from adjustments to the original acquisition date valuation of acquired assets and liabilities. Goodwill is not amortized but is evaluated at least annually for impairment. The Corporation’s most recent annual goodwill impairment test performed as of October 31, 2015 did not indicate that an impairment of goodwill existed. The Corporation also determined that no triggering events have occurred that indicated impairment from the most recent valuation date through June 30, 2016 and that the Corporation's goodwill was not impaired at June 30, 2016.

The following table shows the net carrying value of the Corporation’s intangible assets:



	June 30, 2016		December 31, 2015		June 30, 2015
	(In thousands)
Goodwill	$	286,867	$	287,393	$	285,512
Other intangible assets:
Core deposit intangible assets	$	24,429	$	26,654	$	28,353
Non-compete intangible assets	164		328		541
Mortgage servicing rights	9,677		11,122		12,307
Total other intangible assets	$	34,270	$	38,104	$	41,201

The following table sets forth the carrying amount, accumulated amortization and amortization expense of core deposit intangible assets that are amortizable and arose from business combinations or other acquisitions:



	June 30, 2016		December 31, 2015		June 30, 2015
	(In thousands)
Gross original amount	$	40,055	$	40,055	$	39,355
Accumulated amortization	15,626		13,401		11,002
Carrying amount	$	24,429	$	26,654	$	28,353
Amortization expense for the three months ended June 30	$	1,113			$	952
Amortization expense for the six months ended June 30	$	2,225			$	1,743

The estimated future amortization expense on core deposit intangible assets for periods ending after June 30, 2016 is as follows: 2016 — $2.1 million; 2017 — $3.8 million; 2018 — $3.6 million; 2019 — $3.4 million; 2020 — $2.9 million; 2021 and thereafter — $8.6 million. The non-compete intangible assets will be fully amortized during 2016.

The following shows the net carrying value and fair value of MSRs and the total loans that the Corporation is servicing for others:



	June 30, 2016		December 31, 2015		June 30, 2015
	(In thousands)
Net carrying value of MSRs	$	9,677	$	11,122	$	12,307
Fair value of MSRs	$	12,493	$	15,542	$	16,602
Valuation allowance	$	412	$	—	$	—
Loans serviced for others that have servicing rights capitalized	$	2,014,986	$	2,082,899	$	2,193,067

MSRs are stratified into servicing assets originated by the Corporation and those acquired in acquisitions of other institutions and further stratified into relatively homogeneous pools based on products with similar characteristics. There was a valuation allowance of $0.4 million as of June 30, 2016 related to impairment within certain pools attributable to the Corporation's servicing portfolios that were acquired in the Northwestern and Monarch transactions. There was no impairment valuation allowance recorded on the Corporation's MSRs at and December 31, 2015 and June 30, 2015.

The following table shows the activity for capitalized MSRs:



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(In thousands)
Balance at beginning of period	$	10,478		$	11,583		$	11,122		$	12,217
Acquired in Monarch acquisition	—			1,284			—			1,284
Additions	586			415			917			815
Amortization	(975		)	(1,175		)	(1,950		)	(2,209		)
Change in valuation allowance	(412		)	200			(412		)	200
Balance at end of period	$	9,677		$	12,307		$	9,677		$	12,307

- 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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