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Goodwill and Other Intangible Assets | 3 Months Ended
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Mar. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill Goodwill is not amortized but is instead subject to impairment tests on at least an annual basis, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Corporation conducted its most recent annual impairment testing in May 2021, utilizing a qualitative assessment. Factors that management considered in this assessment included macroeconomic conditions, industry and market considerations, overall financial performance of the Corporation and each reporting unit (both current and projected), changes in management strategy, and changes in the composition or carrying amount of net assets. In addition, management considered the changes in both the Corporation's common stock price and in the overall bank common stock index (based on the S&P 400 Regional Bank Sub-Industry Index), as well as the Corporation's earnings per common share trend over the past year. Based on these assessments, management concluded that it is more likely than not that the estimated fair value exceeded the carrying value (including goodwill) for each reporting unit. Therefore a step one quantitative analysis was not required. There have been no events since the May 2021 impairment test that have changed the Corporation's impairment assessment conclusion. There were no impairment charges recorded in 2021 or the first three months of 2022. The Corporation had goodwill of $1.1 billion at both March 31, 2022 and December 31, 2021. Other Intangible Assets The Corporation has other intangible assets and CDIs that are amortized. For CDIs and other intangibles, changes in the gross carrying amount, accumulated amortization, and net book value were as follows:
($ in Thousands) | Three months ended Mar 31, 2022 | Year Ended Dec 31, 2021
Core deposit intangibles |  |
Gross carrying amount at the beginning of period | $ | 88,109 |  | $ | 88,109 |
Accumulated amortization | (32,219) |  | (30,016) |
Net book value | $ | 55,890 |  | $ | 58,093 |
Amortization during the period | $ | 2,203 |  | $ | 8,811 |
Other intangibles |  |
Gross carrying amount at the beginning of period | $ | — |  | $ | 2,000 |
Reductions due to sale | — |  | (1,317) |
Accumulated amortization | — |  | (683) |
Net book value | $ | — |  | $ | — |
Amortization during the period | $ | — |  | $ | 33 |
Mortgage Servicing Rights The Corporation sells residential mortgage loans in the secondary market and typically retains the right to service the loans sold. MSRs are accounted for under the fair value measurement method, with any change in fair value being recognized through earnings in mortgage banking, net on the consolidated statements of income. On January 1, 2022, the Corporation made the irrevocable election to account for its MSRs asset under the fair value measurement methodology. Under this methodology, changes in the fair value are recognized in earnings as they occur, through mortgage banking, net on the consolidated statements of income. MSRs are not traded in active markets. As a result, a cash flow model is used to determine fair value. Key assumptions and estimates, projected prepayment speeds, assumed servicing costs, ancillary income, costs to service delinquent loans, costs of foreclosure, and discount rates with option-adjusted spreads, are used in measuring the fair value of the MSRs asset. These assumptions are considered significant unobservable inputs. See Note 12 for a discussion of the recourse provisions on sold residential mortgage loans. See Note 13 which further discusses fair value measurement relative to the MSRs asset. A summary of changes in the balance of the MSRs asset under the fair value measurement method for the quarter ended March 31, 2022 is as follows:
($ in Thousands) | Three months ended Mar 31, 2022 |
Mortgage servicing rights |  |
Mortgage servicing rights at beginning of period | $ | 54,862 |  |
Cumulative effect of accounting methodology change | 2,296 |  |
Balance at beginning of period, adjusted | $ | 57,158 |  |
Additions | 3,042 |  |
Paydowns | (2,637) |  |
Valuation: |  |
Change in fair value model assumptions | 2,345 |  |
Changes in fair value of asset | 7,106 |  |
Mortgage servicing rights at end of period | $ | 67,015 |  |
Portfolio of residential mortgage loans serviced for others (“servicing portfolio”) | $ | 6,972,242 |  |
Mortgage servicing rights to servicing portfolio | 0.96 | % |
Prior to January 1, 2022, the Corporation accounted for its MSRs under the amortization methodology. Under this methodology the Corporation evaluated its MSRs asset for impairment at minimum on a quarterly basis. Impairment was assessed based on fair value at each reporting date using estimated prepayment speeds of the underlying mortgage loans serviced and stratifications based on the risk characteristics of the underlying loans (predominantly loan type and note interest rate). As mortgage interest rates fell, prepayment speeds were usually faster and the value of the MSRs asset generally decreased, requiring additional valuation reserve. Conversely, as mortgage interest rates rose, prepayment speeds were usually slower and the value of the MSRs asset generally increased, requiring less valuation reserve. A valuation allowance was established, through a charge to earnings, to the extent the amortized cost of the MSRs exceeded the estimated fair value by stratification. An other-than-temporary impairment (i.e., recoverability was considered remote when considering interest rates and loan pay off activity) was recognized as a write-down of the MSRs asset and the related valuation allowance (to the extent a valuation allowance was available) and then against earnings. A direct write-down permanently reduced the carrying value of the MSRs asset and valuation allowance, precluding subsequent recoveries. A summary of changes in the balance of the MSRs asset and the MSRs valuation allowance under the amortization method for the year ended December 31, 2021 is as follows:
($ in Thousands) |  | Year Ended Dec 31, 2021
Mortgage servicing rights |  |
Mortgage servicing rights at beginning of period |  | $ | 59,967 |
Additions |  | 16,151 |
Amortization |  | (19,436) |
Mortgage servicing rights at end of period |  | $ | 56,682 |
Valuation allowance at beginning of period |  | $ | (18,006) |
(Additions) recoveries, net |  | 16,186 |
Valuation allowance at end of period |  | $ | (1,820) |
Mortgage servicing rights, net |  | $ | 54,862 |
Fair value of mortgage servicing rights |  | $ | 57,259 |
Portfolio of residential mortgage loans serviced for others (“servicing portfolio”) |  | $ | 6,994,834 |
Mortgage servicing rights, net to servicing portfolio |  | 0.78 | %
Mortgage servicing rights expense(a) |  | $ | 3,250 |
(a) Includes the amortization of mortgage servicing rights and additions / recoveries to the valuation allowance of mortgage servicing rights, and is a component of mortgage banking, net on the consolidated statements of income. The projections of amortization expense for CDIs and decay for MSRs are based on existing asset balances, the current interest rate environment, and prepayment speeds as of March 31, 2022. The actual expense the Corporation recognizes in any given period may be significantly different depending upon acquisition or sale activities, changes in interest rates, prepayment speeds, market conditions, regulatory requirements, and events or circumstances that indicate the carrying amount of an asset may not be recoverable. The following table shows the estimated future amortization expense for amortizing intangible assets:
($ in Thousands) | Core Deposit Intangibles |  | Mortgage Servicing Rights
Nine months ended December 31, 2022 | $ | 6,608 |  |  | $ | 8,956 |
2023 | 8,811 |  |  | 11,320 |
2024 | 8,811 |  |  | 9,663 |
2025 | 8,811 |  |  | 8,227 |
2026 | 8,811 |  |  | 6,874 |
2027 | 8,811 |  |  | 5,913 |
Beyond 2027 | 5,227 |  |  | 16,062 |
Total Estimated Amortization Expense | $ | 55,890 |  |  | $ | 67,015 |

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- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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