Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2012

Note 9. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill as allocated to our business segments, or reporting units thereof, for goodwill impairment analysis were:


	Business Segment / Reporting Unit*
	Wealth Management		Consumer Lending		Commercial Lending		Investment Management		Total
	(in thousands)

Balance at December 31, 2011	$	20,517	$	98,999	$	117,689	$	80,757	$	317,962
Goodwill from business combinations		-		27,371		53,040		22,070		102,481

Balance at June 30, 2012	$	20,517	$	126,370	$	170,729	$	102,827	$	420,443

Valley’s Wealth Management Division is comprised of trust, asset management, and insurance services. This reporting unit is included in the Consumer Lending segment for financial reporting purposes.

During the six months ended June 30, 2012, goodwill from business combinations primarily related to acquisition of State Bancorp (see Note 3 for further details). There was no impairment of goodwill during the three and six months ended June 30, 2012 and 2011.

The following table summarizes other intangible assets as of June 30, 2012 and December 31, 2011:


	Gross Intangible Assets		Accumulated Amortization		Valuation Allowance		Net Intangible Assets
	(in thousands)
June 30, 2012
Loan servicing rights	$	54,363	$	(41,199)	$	(2,651)	$	10,513
Core deposits		35,194		(22,369)		-		12,825
Other		5,878		(2,399)		-		3,479

Total other intangible assets	$	95,435	$	(65,967)	$	(2,651)	$	26,817


December 31, 2011
Loan servicing rights	$	52,046	$	(39,146)	$	(2,670)	$	10,230
Core deposits		27,144		(20,363)		-		6,781
Other		6,121		(2,314)		-		3,807

Total other intangible assets	$	85,311	$	(61,823)	$	(2,670)	$	20,818

Loan servicing rights are accounted for using the amortization method. Under this method, Valley amortizes the loan servicing assets in proportion to, and over the period of, 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 amortized cost value of a stratified group of loan servicing rights exceeds its estimated fair value. Valley recorded net impairment charges on its loan servicing rights totaling $401 thousand as compared to net recoveries of impairment charges totaling $49 thousand for the three months ended June 30, 2012 and 2011, respectively, and net recoveries of impairment charges totaling $19 thousand and $101 thousand for the six months ended June 30, 2012 and 2011, respectively.

Core deposits are amortized using an accelerated method and have a weighted average amortization period of 10 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 16 years. During the quarter ended March 31, 2012, Valley recorded $8.1 million in core deposits intangibles resulting from the State Bancorp acquisition. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the three and six months ended June 30, 2012 and 2011.

The following presents the estimated future amortization expense of other intangible assets for the remainder of 2012 through 2016:


	Loan
	Servicing		Core
	Rights		Deposits		Other
	(in thousands)

2012	$	848	$	1,791	$	328
2013		2,611		3,078		541
2014		1,994		2,359		466
2015		1,423		1,758		434
2016		1,063		1,195		233

Valley recognized amortization expense on other intangible assets, including net impairment charges and recoveries on loan servicing rights, totaling approximately $2.5 million and $1.8 million for the three months ended June 30, 2012 and 2011, respectively, and $4.5 million and $3.8 million for the six months ended June 30, 2012 and 2011, respectively.

- 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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