Intangible Assets

6 Months Ended

Jun. 30, 2011

Note 5: Intangible Assets

The Corporation has recorded four types of intangible assets: goodwill, core deposit intangible assets, mortgage servicing rights (MSRs) and non-compete agreements. Goodwill, core deposit intangible assets and non-compete agreements arose as the result of business combinations or other acquisitions. MSRs arose as a result of selling residential real estate mortgage loans in the secondary market while retaining the right to service these loans and receive servicing income over the life of the loan, as well as a result of the OAK acquisition. Amortization is recorded on the core deposit intangible assets, MSRs and non-compete agreements. Goodwill is not amortized but is evaluated at least annually for impairment. The annual goodwill impairment review was performed as of September 30, 2010 and no impairment was indicated. No triggering events have occurred since the annual goodwill impairment review that would require an interim valuation.

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


	June 30,		December 31,		June 30,
	2011		2010		2010
	(In thousands)
Goodwill	$	113,414	$	113,414	$	109,149
Core deposit intangible assets		8,643		9,406		10,791
Mortgage servicing rights		3,577		3,782		3,641
Non-compete agreements		107		333		591

Total intangible assets	$	125,741	$	126,935	$	124,172

In conjunction with the OAK acquisition, the Corporation recorded $43.5 million of goodwill, $8.4 million in core deposit intangible assets, $0.7 million of mortgage servicing rights and $0.7 million of non-compete agreements as of the acquisition date.

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,		December 31,		June 30,
	2011		2010		2010
	(In thousands)
Gross original amount	$	26,468	$	26,468	$	26,978
Accumulated amortization		17,825		17,062		16,187

Carrying amount	$	8,643	$	9,406	$	10,791

Amortization expense for the three months ended June 30	$	381			$	336

Amortization expense for the six months ended June 30	$	763			$	485

At June 30, 2011, the remaining amortization expense on core deposit intangible assets that existed as of that date was estimated as follows (in thousands):


2011	$	764
2012		1,469
2013		1,309
2014		1,146
2015		1,066
2016 and thereafter		2,889

Total	$	8,643

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,		December 31,		June 30,
	2011		2010		2010
	(In thousands)
Net carrying value of MSRs	$	3,577	$	3,782	$	3,641

Fair value of MSRs		6,000		5,674		4,788

Loans serviced for others that have servicing rights capitalized		904,468		891,937		865,613

The following table shows the activity for capitalized MSRs:


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(In thousands)
Balance at beginning of period	$	3,832		$	3,059		$	3,782		$	3,077
Acquired in OAK transaction		—			691			—			691
Additions		203			269			711			626
Amortization		(458	)		(378	)		(916	)		(753	)

Balance at end of period	$	3,577		$	3,641		$	3,577		$	3,641

There was no impairment valuation allowance recorded on MSRs as of June 30, 2011, December 31, 2010 or June 30, 2010.

Amortization expense on non-compete agreements totaled $0.1 million during the three months ended June 30, 2011 and 2010 and $0.2 million and $0.1 million during the six months ended June 30, 2011 and 2010, respectively. Remaining amortization expense on non-compete agreements that existed at June 30, 2011 was $0.1 million.

- 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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