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Goodwill and Other Intangible Assets | 9 Months Ended
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Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets | Note 4 - Goodwill and Other Intangible Assets Effective April 1, 2023, Synovus changed its internal management reporting structure to transfer Capital Markets activities and related personnel from the Financial Management Services segment to the Wholesale Banking segment. See Note 10 - Segment Reporting for additional information. In connection with the transfer, management reallocated a portion of the Wealth Management goodwill that was attributable to the Financial Management Services segment to Wholesale Banking using a relative fair value approach, and no indicators of impairment were identified. On June 1, 2023, Synovus acquired a 60% equity interest and a majority of the Board seats in Qualpay, which constituted a business combination. In connection with the acquisition, Synovus initially recorded $23.2 million of goodwill and $38.7 million of other intangible assets based on preliminary fair value estimates of the assets acquired and liabilities assumed in the transaction. During the three months ended September 30, 2023, there were valuation adjustments that primarily included increasing goodwill by $6.7 million and decreasing other intangible assets by $9.4 million. Synovus will continue to record any adjustments to the preliminary fair value estimates in the reporting period in which the adjustments are determined upon receipt of final fair value estimates during the measurement period, which must be within one year of the acquisition date. See Note 1 - Basis of Presentation and Accounting Policies for additional information on the Qualpay transaction. During the three months ended September 30, 2023, Synovus sold its GLOBALT asset management firm to its management team. The divestiture resulted in a reduction in goodwill of $2.5 million and a gain on sale of $1.9 million, representing the difference in the fair value of consideration received and assets sold, and no indicators of impairment were identified. Goodwill allocated to each reporting unit at September 30, 2023 and December 31, 2022 is presented as follows:
(in thousands) | Wholesale Banking Reporting Unit |  | Community Banking Reporting Unit |  | Consumer Banking Reporting Unit |  |  |  | Wealth Management Reporting Unit |  | Total Goodwill
Balance at December 31, 2022 | $ | 171,636 |  |  | $ | 141,622 |  |  | $ | 114,701 |  |  |  |  | $ | 24,431 |  |  | $ | 452,390 |
Changes during the period from: |  |  |  |  |  |  |  |  |  |  |
Reallocation | 4,197 |  |  | — |  |  | — |  |  |  |  | (4,197) |  |  | — |
Acquisition | — |  |  | 29,923 |  |  | — |  |  |  |  | — |  |  | 29,923 |
Divestiture | — |  |  | — |  |  | — |  |  |  |  | (2,462) |  |  | (2,462) |
Balance at September 30, 2023 | $ | 175,833 |  |  | $ | 171,545 |  |  | $ | 114,701 |  |  |  |  | $ | 17,772 |  |  | $ | 479,851 |
Goodwill 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). Synovus performs its annual evaluation of goodwill impairment during the fourth quarter of each year. During the second quarter of 2023, Synovus assessed the events and circumstances that have generated significant market trading volatility in the banking industry, particularly for regional banks like Synovus. Due to the uncertain environment as well as Synovus' stock price trading below book value during the month of May 2023, Synovus elected to perform a quantitative assessment of goodwill impairment as of May 31, 2023, which included determining the estimated fair value of each reporting unit containing goodwill, 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. Based on the quantitative assessment performed as of May 31, 2023, the fair value of each of these reporting units exceeded their respective carrying values; therefore, we concluded goodwill was not impaired as of our May 31, 2023 test date. During the third quarter of 2023, we qualitatively assessed the events and circumstances that have continued to generate significant market trading volatility. This assessment included reviewing the impact of company-specific factors such as recent operating performance and financial projections, changes in market capitalization as well as trends in the banking industry. After assessing the indicators above, Synovus determined it was not more likely than not that the fair value had declined below the carrying value at the reporting unit level as of September 30, 2023, and a test of goodwill impairment was not required. The following table shows the gross carrying amount and accumulated amortization of other intangible assets as of September 30, 2023 and December 31, 2022. The CDI is being amortized over its estimated useful life of approximately ten years utilizing an accelerated method. Other intangible assets resulting from the Qualpay acquisition, which primarily include client relationships, partner relationships, and developed technology, are being amortized on a straight-line basis over their estimated useful lives ranging from five to eight years. Aggregate other intangible assets amortization expense is included in other operating expense on the consolidated statements of income, and for the three and nine months ended September 30, 2023 was $3.0 million and $7.3 million, respectively. Aggregate other intangible assets amortization expense for the three and nine months ended September 30, 2022 was $2.1 million and $6.4 million, respectively.
(in thousands) | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Value
September 30, 2023 |  |  |  |  |
CDI | $ | 57,400 |  |  | $ | (40,180) |  |  | $ | 17,220 |
Client Relationships | 22,100 |  |  | (7,421) |  |  | 14,679 |
Partner Relationships | 4,700 |  |  | (313) |  |  | 4,387 |
Developed Technology | 11,091 |  |  | (739) |  |  | 10,352 |
Other | 3,900 |  |  | (1,442) |  |  | 2,458 |
Total other intangible assets | $ | 99,191 |  |  | $ | (50,095) |  |  | $ | 49,096 |
December 31, 2022 |  |  |  |  |
CDI | $ | 57,400 |  |  | $ | (35,484) |  |  | $ | 21,916 |
Client Relationships | 10,800 |  |  | (6,136) |  |  | 4,664 |
Other | 1,700 |  |  | (1,156) |  |  | 544 |
Total other intangible assets | $ | 69,900 |  |  | $ | (42,776) |  |  | $ | 27,124 |

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