Goodwill And Intangible Assets

9 Months Ended

Sep. 30, 2013

Goodwill And Intangible Assets [Abstract]

NOTE 11 – Goodwill and Intangible Assets

We test goodwill for impairment on an annual basis and on an interim basis when certain events or circumstances exist. We test for impairment at the reporting unit level, which is generally at the level of or one level below our company’s business segments. For both the annual and interim tests, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing the two-step impairment test is not required. However, if we conclude otherwise, we are then required to perform the first step of the two-step impairment test. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired. If the estimated fair value is below carrying value, however, further analysis is required to determine the amount of the impairment. Additionally, if the carrying value of a reporting unit is zero or a negative value and it is determined that it is more likely than not the goodwill is impaired, further analysis is required. The estimated fair values of the reporting units are derived based on valuation techniques we believe market participants would use for each of the reporting units. Our annual goodwill impairment testing was completed as of July 31, 2013, with no impairment identified.

The carrying amount of goodwill and intangible assets attributable to each of our reporting segments is presented in the following table (in thousands):


	December 31, 2012		Net additions		Impairment losses		September 30, 2013
Goodwill
Global Wealth Management	$	144,377	$	10,868	$	-	$	155,245
Institutional Group		275,016		312,393		-		587,409
	$	419,393	$	323,261	$	-	$	742,654


	December 31, 2012		Net additions		Amortization		September 30, 2013
Intangible assets
Global Wealth Management	$	16,377	$	-	$	(1,697)	$	14,680
Institutional Group		12,590		3,256		(2,448)		13,398
	$	28,967	$	3,256	$	(4,145)	$	28,078

The adjustments to goodwill and intangible assets during the nine months ended September 30, 2013 are primarily attributable to our acquisitions of KBW, Inc and Miller Buckfire. The allocation of the purchase price of KBW, Inc. is preliminary and will be finalized upon completion of the analysis of the fair values of the net assets of KBW, Inc. as of the acquisition date and the identified intangible assets. The final goodwill recorded on the consolidated statement of financial condition may differ from that reflected herein as a result of future measurement period adjustments and the recording of identified intangible assets. See Note 3 in the notes to our consolidated financial statements for additional information regarding the acquisition of KBW, Inc.

Amortizable intangible assets consist of acquired customer relationships, trade name, and investment banking backlog that are amortized over their contractual or determined useful lives. Intangible assets subject to amortization as of September 30, 2013 and December 31, 2012 were as follows (in thousands):


	September 30, 2013				December 31, 2012
	Gross carrying value		Accumulated amortization		Gross carrying value		Accumulated amortization

Customer relationships	$	40,166	$	21,138	$	40,166	$	18,648
Trade name		11,560		2,782		9,442		2,023
Investment banking backlog		3,388		3,116		2,250		2,220
	$	55,114	$	27,036	$	51,858	$	22,891

Amortization expense related to intangible assets was $1.3 million and $1.2 million for the three months ended September 30, 2013 and 2012, respectively. Amortization expense related to intangible assets was $4.1 million and $3.7 million for the nine months ended September 30, 2013 and 2012, respectively.

The weighted-average remaining lives of the following intangible assets at September 30, 2013 are: customer relationships, 5.4 years; and trade name, 6.6 years. The investment banking backlog will be amortized over its estimated life, which we expect to be within the next 12 months. As of September 30, 2013, we expect amortization expense in future periods to be as follows (in thousands):


Fiscal year
Remainder of 2013	$	2,038
2014		4,562
2015		3,835
2016		2,829
2017		2,447
Thereafter		12,367
	$	28,078

- 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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