GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

10. GOODWILL AND INTANGIBLE ASSETS

In accordance with ASC 805, Business Combinations (ASC 805) and ASC 350, Intangibles - Goodwill and Other (ASC 350), all assets acquired and liabilities assumed in purchase acquisitions, including goodwill, indefinite-lived intangibles and other intangibles are recorded at fair value as of acquisition date.

WSFS performs its annual goodwill impairment test on October 1 or more frequently if events and circumstances indicate that the fair value of a reporting unit is less than its carrying value. In between annual tests, management performs a qualitative review of goodwill quarterly as part of the Company's review of the overall business to ensure no events or circumstances have occurred that would impact its goodwill evaluation. During the three months ended March 31, 2022, management determined based on its qualitative assessment that it is not more likely than not that the fair values of our reporting units are less than their carrying values. No goodwill impairment exists during the three months ended March 31, 2022.

The following table shows the allocation of goodwill to the reportable operating segments for purposes of goodwill impairment testing:


(Dollars in thousands)	WSFS Bank		Cash Connect		Wealth Management		Consolidated Company
December 31, 2021	$	452,629	$	—	$	20,199	$	472,828
Goodwill from business combinations	297,646		—		116,691		414,337

March 31, 2022	$	750,275	$	—	$	136,890	$	887,165

ASC 350 requires that an acquired intangible asset be separately recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the asset can be sold, transferred, licensed, rented or exchanged, regardless of the acquirer’s intent to do so. The following table summarizes the Company's intangible assets:


(Dollars in thousands)	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets		Amortization Period
March 31, 2022
Core deposits	$	104,751	$	(32,599)	$	72,152	10 years
Customer relationships	72,381		(9,218)		63,163		7-15 years
Non-compete agreements	500		(125)		375		1 year
Tradename	2,800		—		2,800		indefinite
Loan servicing rights(1)	10,321		(3,787)		6,534		10-25 years
Total intangible assets	$	190,753	$	(45,729)	$	145,024
December 31, 2021
Core deposits	$	93,811	$	(30,103)	$	63,708	10 years
Customer relationships	15,281		(7,876)		7,405		7-15 years

Loan servicing rights(2)	6,671		(3,381)		3,290		10-25 years
Total intangible assets	$	115,763	$	(41,360)	$	74,403

(1)Includes reversal of impairment losses of less than $0.1 million for the three months ended March 31, 2022.

(2)Includes reversal of impairment losses of $0.3 million for the year ended December 31, 2021

In connection with the BMBC Merger on January 1, 2022, the Company recorded $10.9 million of core deposit intangibles, $57.1 million of customer relationships, $2.8 million for the Bryn Mawr Trust tradename, $0.5 million in non-compete agreements, and $3.3 million of loan servicing rights. See Note 3 to the unaudited Consolidated Financial Statements for additional information on intangible assets recorded in connection with the BMBC Merger.

The Company recognized amortization expense on intangible assets of $4.0 million for the three months ended March 31, 2022, compared to $2.7 million for the three months ended March 31, 2021.

The following table presents the estimated future amortization expense on definite life intangible assets:


(Dollars in thousands)	March 31, 2022
Remaining in 2022	$	13,249
2023	16,830
2024	16,558
2025	16,218
2026	15,551
Thereafter	63,818
Total	$	142,224

Servicing Assets

The Company records mortgage servicing rights on its mortgage loan servicing portfolio, which includes mortgages that it acquires or originates as well as mortgages that it services for others, and servicing rights on Small Business Administration (SBA) loans. Mortgage servicing rights and SBA loan servicing rights are included are in Intangible assets in the accompanying Consolidated Statements of Financial Condition. Mortgage loans which the Company services for others are not included in Loans and leases, net of allowance in the accompanying Consolidated Statements of Financial Condition. Servicing rights represent the present value of the future net servicing fees from servicing mortgage loans the Company acquires or originates, or that it services for others.

The value of the Company's mortgage servicing rights was $2.4 million and $0.5 million at March 31, 2022 and December 31, 2021, respectively, and the value of its SBA loan servicing rights was $4.1 million and $2.8 million at March 31, 2022 and December 31, 2021, respectively. In connection with the BMBC Merger, the Company acquired $2.0 million of mortgage servicing rights and $1.3 million of SBA loan servicing rights. Changes in the value of these servicing rights resulted in a reversal of impairment losses of less than $0.1 million three months ended March 31, 2022 and reversal of impairment loss of $0.1 million three months ended March 31, 2021. Revenues from originating, marketing and servicing mortgage loans as well as valuation adjustments related to capitalized mortgage servicing rights are included in Mortgage banking activities, net in the Consolidated Statements of Income and revenues from the Company's SBA loan servicing rights are included in Loan and lease fee income in the Consolidated Statements of Income.

Besides the impairment on loan servicing rights noted above, there was no impairment of other intangible assets as of March 31, 2022 or December 31, 2021. Changing economic conditions that may adversely affect the Company's performance and could result in impairment, which could adversely affect earnings in the future.