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GOODWILL, OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS
 12 Months Ended
Dec. 31, 2021
Other Intangible Assets and Mortgage Servicing Rights [Abstract]  
OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS GOODWILL, OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS
Goodwill and Other Intangible Assets: At December 31, 2021, intangible assets are comprised of goodwill and CDI acquired in business combinations. Goodwill represents the excess of the purchase consideration paid over the fair value of the assets acquired, net of the fair values of liabilities assumed in a business combination, and is not amortized but is reviewed at least annually for impairment. Banner has identified one reporting unit for purposes of evaluating goodwill for impairment. At December 31, 2021, the Company completed an assessment of qualitative factors and concluded that no further analysis was required as it is more likely than not that the fair value of Banner Bank, the reporting unit, exceeds the carrying value.

CDI represents the value of transaction-related deposits and the value of the client relationships associated with the deposits. At December 31, 2018 intangible assets also included favorable leasehold intangibles (LHI). LHI represented the value ascribed to leases assumed in an acquisition in which the lease terms are favorable compared to a market lease at the date of acquisition. LHI was reclassified to the right of use lease asset in connection with the adoption of Lease Topic 842 on January 1, 2019. The Company amortizes CDI assets over their estimated useful lives and reviews them at least annually for events or circumstances that could impair their value.  The CDI assets shown in the table below represent the value ascribed to the long-term deposit relationships acquired in various bank acquisitions. These intangible assets are being amortized using an accelerated method over estimated useful lives of eight years to ten years.  The CDI assets are not estimated to have a significant residual value.

The following table summarizes the changes in the Company’s goodwill, CDI and LHI for the years ended December 31, 2021, 2020 and 2019 (in thousands):
 GoodwillCDILHITotal
Balance,  January 1, 2019$339,154 $32,699 $225 $372,078 
Additions through acquisition(1)
33,967 4,610 — 38,577 
Amortization— (8,151)— (8,151)
Adjustments(2)
— — (225)(225)
Balance, December 31, 2019373,121 29,158 — 402,279 
Amortization— (7,732)— (7,732)
Balance, December 31, 2020373,121 21,426 — 394,547 
Amortization— (6,571)— (6,571)
Balance, December 31, 2021$373,121 $14,855 $— $387,976 

(1)    The additions to Goodwill and CDI in 2019 relate to the acquisition of AltaPacific.
(2)     The adjustment to LHI represents a reclassification to the right-of-use lease asset in connection with the implementation of Lease Topic 842.
Estimated amortization expense in future years with respect to CDI as of December 31, 2021 (in thousands):
Year ended:Estimated Amortization
2022$5,317 
20233,814 
20242,659 
20251,575 
2026904 
Thereafter586 
Net carrying amount$14,855 

Mortgage and SBA servicing rights are reported in other assets.  SBA servicing rights are initially recorded and carried at fair value. Mortgage servicing rights are initially recognized at fair value and are amortized in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.  Mortgage servicing rights are subsequently evaluated for impairment based upon the fair value of the rights compared to the amortized cost (remaining unamortized initial fair value).  If the fair value is less than the amortized cost, a valuation allowance is created through an impairment charge to servicing fee income.  However, if the fair value is greater than the amortized cost, the amount above the amortized cost is not recognized in the carrying value.  In 2021, 2020 and 2019, the Company did not record any impairment charges or recoveries against mortgage servicing rights. Unpaid principal balance of loans for which mortgage and SBA servicing rights have been recognized totaled $2.77 billion and $2.64 billion at December 31, 2021 and 2020, respectively.  Custodial accounts maintained in connection with this servicing totaled $3.2 million and $3.8 million at December 31, 2021 and 2020, respectively.
 
An analysis of the mortgage and SBA servicing rights for the years ended December 31, 2021, 2020 and 2019 is presented below (in thousands):
 Years Ended December 31
 202120202019
Balance, beginning of the year$15,223 $14,148 $14,638 
Amounts capitalized7,260 8,572 4,392 
Additions through purchase159 175 168 
Amortization (1)
(6,580)(7,672)(5,050)
Fair Value adjustments1,144 — — 
Balance, end of the year (2)
$17,206 $15,223 $14,148 

(1)    Amortization of mortgage servicing rights is recorded as a reduction of loan servicing income. Any unamortized balance is fully written off if the loan repays in full.
(2)    There was no valuation allowance on mortgage servicing rights as of both December 31, 2021 and 2020.