Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Note 8 Goodwill and Intangible Assets

Goodwill and core deposit intangible

In connection with all of our acquisitions, the Company recorded goodwill of $115.0 million and core deposit intangible assets of $48.8 million. The goodwill is measured as the excess of the fair value of consideration paid over the fair value of net assets acquired. No goodwill impairment was recorded during the three months ended March 31, 2019 or the year ended December 31, 2018.

The gross carrying amount of the core deposit intangibles and the associated accumulated amortization at March 31, 2019 and December 31, 2018, are presented as follows:

March 31, 2019

December 31, 2018

Gross

Net

Gross

Net

carrying

Accumulated

carrying

carrying

Accumulated

carrying

amount

amortization

amount

amount

amortization

amount

Core deposit intangible

$

48,834

$

39,215

$

9,619

$

48,834

$

38,920

$

9,914

The Company is amortizing the core deposit intangibles from acquisitions on a straight line basis over 7-10 years from the date of the respective acquisitions, which represents the expected useful life of the assets. The Company recognized core deposit intangible amortization expense of $0.3 million and $0.7 million during the three months ended March 31, 2019 and 2018, respectively.

The following table shows the estimated future amortization expense for the core deposit intangibles as of March 31, 2019:

Years ending December 31,		Amount
For the nine months ending December 31, 2019	$	887
For the year ending December 31, 2020		1,183
For the year ending December 31, 2021		1,183
For the year ending December 31, 2022		1,127
For the year ending December 31, 2023		1,048

Mortgage servicing rights

Mortgage servicing rights represent rights to service loans originated by the Company and sold to government sponsored enterprises including FHLMC, FNMA, GNMA and FHLB. Mortgage loans serviced for others were $376.0 million and $441.0 million at March 31, 2019 and 2018, respectively.

Below are the changes in the mortgage servicing rights for the periods presented:

	For the three months ended March 31,
	2019		2018
Beginning balance	$	3,556	$	—
Acquired through acquisition		—		4,301
Originations		13		—
Impairment		(54)		—
Amortization		(153)		(171)
Ending balance	$	3,362	$	4,130
Fair value of mortgage servicing rights		3,564		4,712

The fair value of mortgage servicing rights was determined based upon a discounted cash flow analysis. The cash flow analysis included assumptions for discount rates and prepayment speeds. Discount rates ranged from 9.5% to 10.5% and the constant prepayment speed ranged from 13.4% to 19.8% for the March 31, 2019 valuation. Included in mortgage banking income in the consolidated statements of operations were service fees of $0.3 million and $0.3 million for the three months ended March 31, 2019 and 2018, respectively.

Mortgage servicing rights are evaluated, and impairment is recognized to the extent fair value is less than the carrying amount. The Company evaluates impairment by type (FHLMC, FNMA, GNMA and FHLB) and interest rate. The Company is amortizing the mortgage servicing rights in proportion to and over the period of the estimated net servicing income of the underlying loans. The Company recognized mortgage servicing rights amortization expense of $0.2 million and $0.2 million for the three months ended March 31, 2019 and 2018, respectively.

The following table shows the estimated future amortization expense for the mortgage servicing rights as of March 31, 2019:

Years ending December 31,		Amount
For the nine months ending December 31, 2019	$	449
For the year ending December 31, 2020		519
For the year ending December 31, 2021		427
For the year ending December 31, 2022		351
For the year ending December 31, 2023		288