GOODWILL AND CORE DEPOSIT INTANGIBLES
The following table summarizes the carrying value of goodwill for the years ended December 31, 2013, 2012 and 2011.
|
| | | | | | | | | |
(in millions) | | | |
December 31 | 2013 | 2012 | 2011 |
Business Bank | $ | 380 |
| $ | 380 |
| $ | 380 |
|
Retail Bank | 194 |
| 194 |
| 194 |
|
Wealth Management | 61 |
| 61 |
| 61 |
|
Total | $ | 635 |
| $ | 635 |
| $ | 635 |
|
The Corporation performs its annual evaluation of goodwill impairment in the third quarter of each year and on an interim basis if events or changes in circumstances between annual tests indicate goodwill might be impaired.
In 2013, the annual test of goodwill impairment was performed as of the beginning of the third quarter 2013. There have been no events since the annual test performed in the third quarter 2013 that would indicate that it was more likely than not that goodwill had become impaired.
In January 2012, the Federal Reserve announced their expectation for the Federal Funds target rate to remain at currently low levels through late 2014. Given the potential for a continued low interest rate environment, the Corporation determined that an interim goodwill impairment test should be performed in the first quarter 2012. In addition, the annual test of goodwill impairment was performed as of the beginning of the third quarter 2012. In September 2012, the Federal Reserve updated their expectation that the Federal Funds target rate will remain at the current low rate level through mid-2015. This announcement by the Federal Reserve did not significantly impact the results of the annual goodwill impairment test.
At the conclusion of the first step of the annual and interim goodwill impairment tests performed in 2013 and 2012 the estimated fair values of all reporting units exceeded their carrying amounts, including goodwill, indicating that goodwill was not impaired.
As a result of the acquisition of Sterling, the Corporation recorded a core deposit intangible of $34 million. The core deposit intangible is being amortized on an accelerated basis over 10 years. A summary of the core deposit intangible carrying value and related accumulated amortization follows:
|
| | | | | | | |
(in millions) | | | |
December 31 | 2013 | | 2012 |
Gross carrying amount | $ | 34 |
| | $ | 34 |
|
Accumulated amortization | (18 | ) | | (14 | ) |
Net carrying amount | $ | 16 |
| | $ | 20 |
|
The Corporation recorded amortization expense related to the core deposit intangible of $4 million and $9 million for the years ended December 31, 2013 and 2012, respectively. At December 31, 2013, estimated future amortization expense was as follows:
|
| | | |
(in millions) | |
Years Ending December 31 | |
2014 | $ | 3 |
|
2015 | 3 |
|
2016 | 2 |
|
2017 | 2 |
|
2018 | 2 |
|
Thereafter | 4 |
|
Total | $ | 16 |
|
