Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

The changes in goodwill for the years ended December 31, 2015 and 2014 for each reporting unit are shown in the table below:



	Banking		Financial Services			Total
December 31, 2013:
Goodwill	$	40,902	$	7,474		$	48,376
Accumulated impairment losses	—		(3,570		)	(3,570		)
Reported goodwill	40,902		3,904			44,806
2014 activity	—		—			—
December 31, 2014:
Goodwill	40,902		7,474			48,376
Accumulated impairment losses	—		(3,570		)	(3,570		)
Reported goodwill	40,902		3,904			44,806
2015 activity⁽¹⁾	50,851		—			50,851
December 31, 2015:
Goodwill	91,753		7,474			99,227
Accumulated impairment losses	—		(3,570		)	(3,570		)
Reported goodwill	$	91,753	$	3,904		$	95,657


(1)	On October 16, 2015, the Company completed its acquisition of SBM and goodwill of $50.9 million was generated. Refer to Note 2 for additional details and discussion.

The Company performs its annual goodwill impairment assessment as of November 30^th, and at interim periods if indicators of potential impairment exist. The Company's annual goodwill impairment assessment as of November 30, 2015 included the goodwill generated from the SBM acquisition of $50.9 million for the banking reporting unit. The Company completed its annual goodwill impairment test as of November 30, 2015 and 2014 for each reporting unit and passed step one. As such, step two of the goodwill impairment test was not performed and no goodwill impairment was recognized for the years ended December 31, 2015 or 2014.

For the year ended December 31, 2013, the Company recorded a goodwill impairment charge of $2.8 million associated with its financial services reporting unit. The Company engaged an independent valuation firm to assist with its November 30, 2013 goodwill impairment assessment for the financial services reporting unit as qualitative factors suggested that it was more-likely-than-not that the fair value of the reporting unit was less than its carrying amount. These qualitative factors included a decline in the revenue base as the result of (i) a decision to focus on the Company’s core business of managing assets and administering trusts for families and local nonprofit organizations resulting in a lower revenue base by increasing account minimums and transferring smaller relationships to affiliates; and (ii) divesting the employee benefits product line. Also in the fourth quarter of 2013, new information became available resulting in the Company refining its approach of who represents a market participant for the financial services reporting unit and reassessing the valuation implications imposed by the required regulatory capital requirements.

The Company performed the two-step goodwill impairment test in accordance with GAAP. In performing step one, two separate valuation methodologies were used to determine the fair value of the financial services reporting unit: (i) a discounted cash flow valuation technique (income approach); and (ii) a comparison of the price to revenue and assets under management of comparable market participant transactions (market approach). Both methods indicated the fair value of the financial services reporting unit was less than its carrying value. Step two of the analysis was then performed, and the results indicated the financial services reporting unit goodwill was impaired as the implied fair value of goodwill was less than its carrying value. As a result, the Company recorded a non-cash goodwill impairment charge of $2.8 million related to the financial services reporting unit included within non-interest expense in the consolidated statements of income for the year ended December 31, 2013. The impairment was caused by lower forecasted revenue, an increase in the discount rate, the anticipated market participants and increased regulatory driven operating costs and capital levels required by potential market participants which impacts the valuation metrics.

7. Other Intangible Assets

The changes in core deposit intangible and trust relationship intangible assets for the years ended December 31, 2015 and 2014 are shown in the table below:



	Core Deposit Intangible								Trust Relationship Intangible
	Total		Accumulated Amortization			Net			Total		Accumulated Amortization			Net
Balance at December 31, 2013	$	17,300	$	(13,088	)	$	4,212		$	753	$	(452	)	$	301
2014 activity	—		(1,073		)	(1,073		)	—		(75		)	(75		)
Balance at December 31, 2014	17,300		(14,161		)	3,139			753		(527		)	226
2015 activity	6,608		(1,231		)	5,377			—		(75		)	(75		)
Balance at December 31, 2015	$	23,908	$	(15,392	)	$	8,516		$	753	$	(602	)	$	151
Total carrying value of other intangible assets at December 31, 2014														$	3,365
Total carrying value of other intangible assets at December 31, 2015														$	8,667

On October 16, 2015, the Company completed its acquisition of SBM and, in doing so, recorded core deposit intangible assets of $6.6 million. The core deposit intangible assets will amortize over a 10 year period using an accelerated depreciation method that aligns with the estimated economic benefit of the asset. The weighted-average amortization period for these intangible assets was 4.9 years.

For the years ended December 31, 2015, 2014 and 2013, the Company recorded amortization expense of $1.3 million, $1.1 million and $1.2 million, respectively.

The following table reflects the expected amortization schedule for intangible assets over the period of estimated economic benefit (assuming no additional intangible assets are created or impaired):



	Core Deposit Intangible		Trust Relationship Intangible		Total
2016	$	1,828	$	75	$	1,903
2017	1,735		76		1,811
2018	725		—		725
2019	705		—		705
2020	682		—		682
Thereafter	2,841		—		2,841
Total	8,516		151		8,667

- 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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