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Goodwill and Other Intangibles and Mortgage Servicing Rights
 9 Months Ended
Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangibles and Mortgage Servicing Rights Goodwill and Other Intangibles and Mortgage Servicing Rights
Management periodically reviews the carrying value of its intangible assets to determine if any impairment has occurred, in which case an impairment charge would be recorded as an expense in the period of impairment, or whether changes in circumstances have occurred that would require a revision to the remaining useful life which would impact expense prospectively. In making such determination, management evaluates whether there are any adverse qualitative factors indicating that an impairment may exist, as well as the performance, on an undiscounted basis, of the underlying operations or assets which give rise to the intangible. In the first nine months of 2020, management considered the potential impacts of the COVID-19 pandemic on the valuation of our franchise value, stability of deposits, and of the wealth client base, underlying our goodwill, core deposit intangible, and customer list intangibles, and determined no impairments were indicated. However, the impacts of the COVID-19 pandemic, which began in March 2020, continue to evolve. The Company’s assessment in 2019 resulted in an $0.8 million full impairment charge on non-bank goodwill related to a change in business strategy. A summary of goodwill and other intangibles was as follows.
Nine Months EndedYear Ended
(in thousands)September 30, 2020December 31, 2019
Goodwill$163,151 $151,198 
Core deposit intangibles9,570 10,897 
Customer list intangibles3,492 3,872 
    Other intangibles13,062 14,769 
Goodwill and other intangibles, net$176,213 $165,967 
Goodwill: A summary of goodwill was as follows. During 2020, goodwill increased due to the Advantage acquisition and during 2019, goodwill increased due to the Choice acquisition. See Note 2 for additional information on the Company's acquisitions.
Nine Months EndedYear Ended
(in thousands)September 30, 2020December 31, 2019
Goodwill:
Goodwill at beginning of year$151,198 $107,366 
Acquisition11,953 44,594 
Impairment— (762)
Goodwill at end of period$163,151 $151,198 
Other intangible assets: Other intangible assets, consisting of core deposit intangibles and customer list intangibles, are amortized over their estimated finite lives. During 2020, core deposit intangibles increased due to the Advantage acquisition and during 2019, core deposit intangibles increased due to the Choice acquisition. See Note 2 for additional information on the Company's acquisitions.
Nine Months EndedYear Ended
(in thousands)September 30, 2020December 31, 2019
Core deposit intangibles:
Gross carrying amount$31,715 $30,715 
Accumulated amortization(22,145)(19,818)
Net book value$9,570 $10,897 
Additions during the period$1,000 $1,700 
Amortization during the period$2,327 $3,365 
Customer list intangibles:
Gross carrying amount$5,523 $5,523 
Accumulated amortization(2,031)(1,651)
Net book value$3,492 $3,872 
Additions during the period$— $— 
Amortization during the period$380 $507 
Mortgage servicing rights: Mortgage servicing rights are amortized in proportion to and over the period of estimated net servicing income, and assessed for impairment at each reporting date, with the amortization recorded in mortgage income, net, in the consolidated statements of income. Mortgage servicing rights are carried at the lower of the initial capitalized amount, net
of accumulated amortization, or estimated fair value, and are included in other assets in the consolidated balance sheets. A summary of the changes in the mortgage servicing rights asset was as follows.
Nine Months EndedYear Ended
(in thousands)September 30, 2020December 31, 2019
Mortgage servicing rights ("MSR") asset:
MSR asset at beginning of year$5,919 $3,749 
Capitalized MSR4,038 2,876 
MSR asset acquired529 160 
Amortization during the period(1,001)(866)
MSR asset at end of period$9,485 $5,919 
Valuation allowance at beginning of year$— $— 
Additions(800)— 
Valuation allowance at end of period$(800)$— 
MSR asset, net$8,685 $5,919 
Fair value of MSR asset at end of period$10,332 $8,420 
Residential mortgage loans serviced for others$1,204,856 $847,756 
Net book value of MSR asset to loans serviced for others0.72 %0.70 %
The Company periodically evaluates its mortgage servicing rights asset for impairment. At each reporting date, impairment is assessed based on estimated fair value 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). A valuation allowance of $0.8 million was recorded for the nine months ended September 30, 2020, while no valuation allowance was recorded for the year ended December 31, 2019. See Note 9 for additional information on the fair value of the MSR asset.
The following table shows the estimated future amortization expense for amortizing intangible assets and the MSR asset. The projections are based on existing asset balances, the current interest rate environment and prepayment speeds as of September 30, 2020. The actual amortization expense the Company 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.
(in thousands)Core deposit
intangibles		Customer list
intangibles		MSR asset
Year ending December 31,
2020 (remaining three months)
$733 $127 $434 
20212,643 507 1,568 
20222,150 507 1,535 
20231,633 483 1,419 
20241,130 449 1,202 
2025670 449 784 
Thereafter611 970 2,543 
Total$9,570 $3,492 $9,485