Goodwill And Other Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Note 7 - Goodwill and Other Intangible Assets

Business segments are based on segment leadership structure, which reflects how segment performance is monitored and assessed. Synovus has three major reportable business segments: Community Banking, Wholesale Banking, and Financial Management Services (FMS). These reportable segments were established in connection with the reorganization of Synovus' management structure during the fourth quarter of 2019, with goodwill allocated to the new reporting units based on a relative fair value approach.

Goodwill allocated to each reporting unit at December 31, 2020 and December 31, 2019 is presented as follows (the FMS reportable segment includes two reporting units of Consumer Mortgage and Wealth Management):


(in thousands)	Community Banking Reporting Unit		Wholesale Banking Reporting Unit		Consumer Mortgage Reporting Unit		Wealth Management Reporting Unit		Total
Balance as of December 31, 2018	$	17,825	$	11,936	$	3,123	$	24,431	$	57,315
Goodwill acquired	238,498		159,700		41,754		—		439,952
Balance as of December 31, 2019	$	256,323	$	171,636	$	44,877	$	24,431	$	497,267
Goodwill impairment	—		—		(44,877)		—		(44,877)
Balance as of December 31, 2020	$	256,323	$	171,636	$	—	$	24,431	$	452,390

Effective January 1, 2019, Synovus acquired FCB. In connection with the acquisition, Synovus recorded $440.0 million of goodwill and $57.4 million of core deposit intangible assets.

Goodwill is not amortized but is evaluated for impairment on an annual basis or whenever an event occurs or circumstances change to indicate that it is more likely than not that an impairment loss has been incurred (i.e., a triggering event). During 2020, Synovus performed interim goodwill impairment tests as of November 30, 2020, September 30, 2020, June 30, 2020 and March 31, 2020 based on quarterly assessments of triggering events that included Synovus' stock price trading below book value during certain periods following the COVID-19 outbreak, an extremely low interest rate environment, as well as general recessionary economic conditions caused by the COVID-19 pandemic. Quantitative assessments of goodwill impairment include determining the estimated fair value of each reporting unit, utilizing a combination of discounted cash flow and market-based approaches, and comparing that fair value to each reporting unit's carrying amount. The discounted cash flow method included updated internal forecasts, long-term profitability targets, growth rates and discount rates. The market approach was based on a comparison of certain financial metrics of Synovus' reporting units to guideline public company peers. The income-based discounted cash flow approach was more heavily weighted (60%) than the market-based approach (40%) due to significant volatility in the market since the pandemic was declared a national emergency.

Based on the assessment performed at September 30, 2020, Synovus recognized a $44.9 million goodwill impairment charge representing all goodwill allocated to the Consumer Mortgage reporting unit. The projected cash flows of the Consumer Mortgage reporting unit were negatively impacted by significant mortgage refinance activity at record-low mortgage rates and the FOMC's updated guidance in the third quarter of 2020 regarding inflation targeting and their expectations for interest rates to remain low for an extended period of time. The primarily fixed rate, longer duration nature of Synovus’ mortgage portfolio especially impacted the Consumer Mortgage reporting unit.

During the fourth quarter of 2020, Synovus performed an additional quantitative assessment of goodwill impairment for each reporting unit with a remaining goodwill balance, Community Banking, Wholesale Banking and Wealth Management, using the test date of November 30, 2020. Based on the results of the quantitative assessment, the fair value of each of these reporting units exceeded its respective carrying value. Additional qualitative analysis through year-end demonstrated that goodwill is not impaired as of December 31, 2020.

The following table shows the gross carrying amount and accumulated amortization of other intangible assets as of December 31, 2020 and 2019, which primarily consist of core deposit intangible assets acquired in the FCB acquisition. Core deposit intangible assets were $37.6 million at December 31, 2020. The CDI is being amortized over its estimated useful life of approximately ten years utilizing an accelerated method. A recoverability test was performed during the fourth quarter due to the extremely low interest rate environment, resulting in a conclusion that CDI is not impaired as of December 31, 2020. Aggregate other intangible assets amortization expense for the years ended December 31, 2020, 2019, and 2018 was $10.6 million, $11.6 million, and $1.2 million, respectively.


(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
December 31, 2020
CDI	$	57,400	$	(19,829)	$	37,571
Other	12,500		(4,959)		7,541
Total other intangible assets	$	69,900	$	(24,788)	$	45,112
December 31, 2019
CDI	57,400		(10,436)		$	46,964
Other	12,500		(3,793)		8,707
Total other intangible assets	$	69,900	$	(14,229)	$	55,671

The estimated amortization expense of other intangible assets for the next five years is as follows:


(in thousands)	Amortization Expense
2021	$	9,516
2022	8,472
2023	7,429
2024	6,366
2025	5,266