NOTE 7. GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill represents the excess if purchase consideration over the fair value of identifiable net assets acquired in a business combination. Goodwill and other intangible assets with indefinite useful lives are not amortized but are assessed for impairment at least annually.
In performing our annual goodwill impairment testing in the fourth quarter of 2025 we considered relevant events and circumstances that may affect the fair value or carrying amount of our reporting unit. The events and circumstances we considered included macroeconomic conditions, industry conditions, and our financial performance. Based on our qualitative assessment, we concluded that there were no conditions, changes in operations, or results that indicated a triggering event had occurred in the fourth quarter of 2025. Thus, a quantitative assessment was not required, and we determined that it was more likely than not that the fair value of the reporting unit was greater than its carrying value and there was no evidence of impairment.
During the year ended December 31, 2024, the Company recorded adjustments related to the Merger resulting in an increase to goodwill of $15.9 million, within the one-year measurement period subsequent to the acquisition date of November 30, 2023. These adjustments largely related to the estimated fair value of acquired loans. During the year ended December 31, 2023, the Company recorded goodwill impairment of $1.4 billion due to the decline in the economic conditions in the banking industry.
The following table presents the changes in the carrying amount of goodwill for the years indicated:
| | | | | |
| | Goodwill |
| | (In thousands) |
| |
| |
| |
| Balance, December 31, 2023 | $ | 198,627 | |
| Purchase accounting adjustments - Merger with PacWest Bancorp | 15,894 | |
| Balance, December 31, 2024 | $ | 214,521 | |
| |
| Balance, December 31, 2025 | $ | 214,521 | |
Our other intangible assets with definite lives are CDI and CRI. CDI and CRI are amortized on an accelerated basis over their respective estimated useful lives and reviewed for impairment at least quarterly. The amortization expense represents the estimated decline in the value of the underlying deposits or customer relationships acquired.
The following table presents the carrying amounts of CDI and CRI and the related accumulated amortization for the years indicated:
| | | | | | | | | | | | | |
| | Year Ended December 31, |
| 2025 | | 2024 | | |
| | (In thousands) |
| Gross Amount of CDI and CRI: | | | | | |
| Balance, beginning of year | $ | 178,764 | | | $ | 236,264 | | | |
| | | | | |
| Fully amortized portion | — | | | (57,500) | | | |
| Balance, end of year | 178,764 | | | 178,764 | | | |
| Accumulated Amortization: | | | | | |
| Balance, beginning of year | (45,820) | | | (70,787) | | | |
| Amortization expense | (27,657) | | | (32,533) | | | |
| Fully amortized portion | — | | | 57,500 | | | |
| Balance, end of year | (73,477) | | | (45,820) | | | |
| Net CDI and CRI, end of year | $ | 105,287 | | | $ | 132,944 | | | |
There was no impairment of CDI and CRI for the years ended December 31, 2025 and 2024.
The following table presents the estimated aggregate future amortization expense for our current CDI and CRI as of the date indicated:
| | | | | |
| December 31, 2025 |
| (In thousands) |
| Year Ending December 31, | |
| 2026 | $ | 24,412 | |
| 2027 | 21,166 | |
| 2028 | 17,920 | |
| 2029 | 14,675 | |
| 2030 | 11,430 | |
| Thereafter | 15,684 | |
| Net CDI and CRI | $ | 105,287 | |