NOTE 5 – Goodwill and Other Acquisition-Related Intangible Assets
Goodwill
Changes in the carrying amount of People’s United Financial’s goodwill are summarized as follows for the years ended December 31, 2013, 2012 and 2011:
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(in millions) |
Commercial Banking |
Retail and Business Banking |
Wealth Management |
Total | ||||||||||||
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Balance at December 31, 2010 |
$ | 1,037.1 | $ | 636.5 | $ | 49.8 | $ | 1,723.4 | ||||||||
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Acquisition of Danvers |
183.6 | 45.9 | — | 229.5 | ||||||||||||
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Adjustments |
0.2 | (1.7 | ) | — | (1.5 | ) | ||||||||||
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Balance at December 31, 2011 |
1,220.9 | 680.7 | 49.8 | 1,951.4 | ||||||||||||
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Acquisition of branches |
— | 0.7 | — | 0.7 | ||||||||||||
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Adjustments |
1.9 | 0.5 | — | 2.4 | ||||||||||||
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Balance at December 31, 2012 |
1,222.8 | 681.9 | 49.8 | 1,954.5 | ||||||||||||
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Balance at December 31, 2013 |
$ | 1,222.8 | $ | 681.9 | $ | 49.8 | $ | 1,954.5 | ||||||||
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Recent acquisitions have been undertaken with the objective of expanding the Company’s business, both geographically and through product offerings, as well as realizing synergies and economies of scale by combining with the acquired entities. For these reasons, a market-based premium was generally paid for the acquired entities which, in turn, resulted in the recognition of goodwill, representing the excess of the respective purchase prices over the estimated fair value of the net assets acquired.
All of People’s United Financial’s tax deductible goodwill was created in transactions in which the Company purchased the assets of the target (as opposed to purchasing the issued and outstanding stock of the target). At December 31, 2013 and 2012, tax deductible goodwill totaled $14.5 million and $14.8 million, respectively, and related, almost entirely, to the Butler Bank acquisition completed in 2010.
Other Acquisition-Related Intangible Assets
The following is a summary of People’s United Financial’s other acquisition-related intangible assets:
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As of December 31 (in millions) |
Gross Amount |
Accumulated Amortization |
Carrying Amount |
Gross Amount |
Accumulated Amortization |
Carrying Amount |
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Trade name intangible |
$ | 122.7 | $ | 26.7 | $ | 96.0 | $ | 122.7 | $ | 18.5 | $ | 104.2 | ||||||||||||
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Core deposit intangible |
143.8 | 93.9 | 49.9 | 143.8 | 79.2 | 64.6 | ||||||||||||||||||
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Trust relationships |
42.7 | 17.1 | 25.6 | 42.7 | 14.2 | 28.5 | ||||||||||||||||||
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Insurance relationships |
31.5 | 30.2 | 1.3 | 31.5 | 29.8 | 1.7 | ||||||||||||||||||
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Total other acquisition-related intangible assets |
$ | 340.7 | $ | 167.9 | $ | 172.8 | $ | 340.7 | $ | 141.7 | $ | 199.0 | ||||||||||||
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Other acquisition-related intangible assets have an original weighted-average amortization period of 14 years. Amortization expense of other acquisition-related intangible assets totaled $26.2 million, $26.8 million and $25.8 million for the years ended December 31, 2013, 2012 and 2011, respectively. Scheduled amortization expense attributable to other acquisition-related intangible assets for each of the next five years is as follows: $24.8 million in 2014; $23.8 million in 2015; $22.7 million in 2016; $21.6 million in 2017 and $10.2 million in 2018. There were no impairment losses relating to goodwill or other acquisition-related intangible assets recorded during the years ended December 31, 2013, 2012 and 2011.
Recent Acquisitions
On June 22, 2012, People’s United Bank acquired 57 branches from RBS Citizens, N.A. and assumed approximately $324 million in deposits associated with these branches. The assets acquired, which included cash, premises and equipment, and other assets totaling $15.8 million, and liabilities assumed, which included deposits and other liabilities totaling $324.6 million, were recorded by People’s United Financial at their estimated fair values as of the acquisition date.
After the close of business on June 30, 2011, People’s United Financial acquired Danvers Bancorp, Inc. (“Danvers”). The transaction was effective July 1, 2011. Total consideration paid in the Danvers acquisition of approximately $462 million consisted of approximately $214 million in cash and 18.5 million shares of People’s United Financial common stock with a fair value of approximately $248 million. Cash consideration was paid at the rate of $23.00 per share of Danvers common stock and stock consideration was paid at the rate of 1.624 shares of People’s United Financial common stock per share of Danvers common stock. The fair value of the assets acquired and liabilities assumed in the Danvers acquisition totaled $2.8 billion and $2.4 billion, respectively. People’s United Financial’s results of operations include the results of Danvers beginning with the effective date. Merger-related expenses recorded in 2011 totaling $42.9 million related to the Danvers acquisition and acquisitions completed during 2010.