Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill totaled $1.4 billion at both September 30, 2021 and December 31, 2020. There were no changes to the carrying amounts of goodwill allocated to Valley’s business segments, or reporting units thereof, for goodwill impairment analysis (as reported in Valley’s Annual Report on Form 10-K for the year ended December 31, 2020).

During the second quarter 2021, Valley performed the annual goodwill impairment test at its normal assessment

date. There was no impairment of goodwill recognized during the three and nine months ended September 30, 2021 and 2020.

The following table summarizes other intangible assets as of September 30, 2021 and December 31, 2020:


	Gross Intangible Assets		Accumulated Amortization		Valuation Allowance		Net Intangible Assets
	(in thousands)
September 30, 2021
Loan servicing rights	$	111,978	$	(89,039)	$	—	$	22,939
Core deposits	101,160		(62,511)		—		38,649
Other	3,945		(3,008)		—		937
Total other intangible assets	$	217,083	$	(154,558)	$	—	$	62,525
December 31, 2020
Loan servicing rights	$	103,150	$	(80,340)	$	(865)	$	21,945
Core deposits	101,160		(53,747)		—		47,413
Other	3,945		(2,854)		—		1,091
Total other intangible assets	$	208,255	$	(136,941)	$	(865)	$	70,449

Loan servicing rights are accounted for using the amortization method. Under this method, Valley amortizes the loan servicing assets over the period of the economic life of the assets arising from estimated net servicing revenues. On a quarterly basis, Valley stratifies its loan servicing assets into groupings based on risk characteristics and assesses each group for impairment based on fair value. Impairment charges on loan servicing rights are recognized in earnings when the book value of a stratified group of loan servicing rights exceeds its estimated fair value. Valley recorded net recoveries of impairment charges on its loan servicing rights totaling $32 thousand and $864 thousand for the three and nine months ended September 30, 2021, respectively. Valley recorded net impairment charges totaling $188 thousand and $966 thousand for the three and nine months ended September 30, 2020, respectively. See the “Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis” section of Note 6 for additional information regarding the fair valuation.

Core deposits are amortized using an accelerated method and have a weighted average amortization period of 8.9 years. The line item labeled “Other” included in the table above primarily consists of customer lists and covenants not to compete, which are amortized over their expected lives generally using a straight-line method and have a weighted average amortization period of approximately 7.6 years. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the three and nine months ended September 30, 2021 and 2020.

The following table presents the estimated future amortization expense of other intangible assets for the remainder of 2021 through 2025:


	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2021	$	1,063	$	2,843	$	51
2022	3,705		9,876		191
2023	3,015		8,146		131
2024	2,473		6,537		117
2025	2,047		4,929		103

Valley recognized amortization expense on other intangible assets, including net (recoveries of) impairment charges on loan servicing rights, totaling approximately $5.3 million and $6.4 million for the three months ended September 30, 2021 and 2020, respectively, and $16.8 million and $18.5 million for the nine months ended September 30, 2021 and 2020, respectively.