Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2024

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

9. Goodwill and Other Intangible Assets

At December 31, 2024, the carrying amount of goodwill of $267.4 million was comprised of $39.6 million recorded in connection with the acquisition of The Bank of River Oaks (“BORO”) in an all-cash transaction (“BORO Acquisition”) and $227.8 million recorded in connection with the acquisition of PCC pursuant to a plan of merger whereby PCC merged with and into a wholly owned subsidiary (the “PlainsCapital Merger”). The banking, mortgage origination and broker-dealer business segments have been assigned goodwill of $247.4 million, $13.1 million and $7.0 million, respectively.

Other intangible assets were $6.6 million and $8.5 million at December 31, 2024 and 2023, respectively.

The Company performed required annual impairment tests of its goodwill and other intangible assets having an indefinite useful life as of October 1st for each of its reportable business segments. At October 1, 2024, the Company determined that the estimated fair value of goodwill for each of its business segments and other intangible assets exceeded their carrying values. The Company estimated the fair values of goodwill for its business segments based on both a market and income approach using historical, normalized actual and forecasted results, taking into consideration the amount by which fair value exceeded book value and sensitivities performed. Based on this evaluation, at December 31, 2024, the Company concluded that the goodwill and other identifiable intangible assets were fully realizable.

The Company’s evaluation includes multiple assumptions, including estimated discounted cash flows and other estimates that may change over time. If future discounted cash flows become less than those projected by the Company, future non-cash impairment charges may become necessary that could have a materially adverse impact on the Company’s results of operations and financial condition. Such a charge would have no impact on tangible capital or regulatory capital. As quoted market prices in active stock markets are relevant evidence of fair value, a significant decline in the Company’s common stock trading price may indicate an impairment of goodwill.

To the extent future operating performance of the Company’s reporting segments remain challenged and below forecasted projections during 2025, significant assumptions such as expected future cash flows or the risk-adjusted discount rate used to estimate fair value are adversely impacted, or upon the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause the Company to perform impairment tests on its goodwill and other intangible assets, an impairment charge may be recorded for that period.

While certain valuation assumptions and judgments may change to account for operating performance of the reporting segments and overall economic conditions, the Company does not anticipate significant changes in methodology used to determine the fair value of its goodwill, intangible assets and other long-lived assets. The Company will continue to monitor developments regarding future operating performance of its business segments, overall economic conditions, market capitalization, and any other triggering events or circumstances that may indicate an impairment in the future.

The carrying value of intangible assets subject to amortization was as follows (in thousands).

	Estimated			Gross				Net
	Useful Life			Intangible		Accumulated		Intangible
December 31, 2024	(Years)			Assets		Amortization		Assets
Core deposits	4	-	12	$	48,930	$	(48,930)	$	—
Trademarks and trade names		20			16,500		(10,562)		5,938
Customer contracts and relationships	12	-	14		15,300		(14,605)		695
				$	80,730	$	(74,097)	$	6,633

	Estimated			Gross				Net
	Useful Life			Intangible		Accumulated		Intangible
December 31, 2023	(Years)			Assets		Amortization		Assets
Core deposits	4	-	12	$	48,930	$	(48,297)	$	633
Trademarks and trade names		20			16,500		(9,813)		6,687
Customer contracts and relationships	12	-	14		15,300		(14,163)		1,137
				$	80,730	$	(72,273)	$	8,457

Amortization expense related to intangible assets during 2024, 2023 and 2022 was $1.8 million, $2.9 million and $4.0 million, respectively. The estimated aggregate future amortization expense for intangible assets at December 31, 2024 is as follows (in thousands).

2025	$	1,028
2026		959
2027		889
2028		820
2029		750
Thereafter		2,187
	$	6,633