Note 7: Goodwill and Intangibles

Goodwill at December 31, 2019 decreased by approximately $1.6 million, compared with December 31, 2018, primarily as a result of purchase accounting adjustments to the FMNBP and NattyMac, LLC acquisitions. Included in those adjustments was a $1.6 million transfer of goodwill, related to the NattyMac, LLC acquisition, to intangible assets. Goodwill represents the amount by which the cost of an acquisition exceeded the fair value of net assets acquired. Goodwill is tested for impairment as of year‑end, or more frequently if events and circumstances exist that indicate a goodwill impairment test should be performed. Based upon management’s assessment and evaluation of goodwill at year‑end, the likelihood that an impairment of the current carrying amount of goodwill has occurred is considered remote.


	2019									2018								2017
	Multifamily		Banking		Warehouse		Total		Multifamily		Banking		Warehouse		Total		Multifamily		Banking		Warehouse		Total
	(In thousands)								(In thousands)								(In thousands)
Balance, beginning of period	$	3,791	$	8,686	$	5,000	$	17,477	$	3,379	$	523	$	—	$	3,902	$	—	$	523	$	—	$	523
Goodwill acquired during the period		—		—		—		—		—		8,163		5,000		13,163		3,379		—		—		3,379
Post-acquisition adjustments		—		(333)		(1,299)		(1,632)		412		—		—		412		—		—		—		—
Impairment losses		—		—		—		—		—		—		—		—		—		—		—		—
Balance, end of period	$	3,791	$	8,353	$	3,701	$	15,845	$	3,791	$	8,686	$	5,000	$	17,477	$	3,379	$	523	$	—	$	3,902

In conjunction with the acquisition of the assets of NattyMac, LLC on December 31, 2018, the Company recorded goodwill of $3.7 million in the Warehouse segment, after reflecting a $1.6 million transfer to intangible assets and a $271,000 purchase accounting adjustment related to contingent consideration that increased goodwill during 2019. Intangible assets of $1.6 million, related to customer lists, were recorded and are being amortized over 21 months using the straight-line method. Amortization of these intangible assets was $673,000 for the year ended December 31, 2019.

In conjunction with the acquisition of FMNBP on October 1, 2018, the Company recorded goodwill of $6.9 million in the Banking segment as of December 31, 2019, after reflecting a $333,000 purchase accounting adjustment, primarily related to the valuation of securities, that decreased goodwill during 2019. The Company also recorded intangible assets for core deposits, as summarized below. The core deposit intangibles are being amortized over 10 years using the accelerated sum of the years digits method. Amortization for these intangible assets was $339,000 and $85,000 for the years ended December 31, 2019 and December 31, 2018, respectively.

In conjunction with the acquisition of FMBI on January 2, 2018, the Company recorded goodwill of $988,000 in the Banking segment as of December 31, 2019. The Company also recorded intangible assets for core deposits, as summarized below. The core deposit intangibles are being amortized over 10 years using the accelerated sum of the years digits method. Amortization for these intangible assets was $82,000 and $84,000 for the years ended December 31, 2019 and December 31, 2018, respectively.

In conjunction with the acquisition of MCS on August 15, 2017, the Company recorded goodwill of $3.8 million in the Multi-family segment, after reflecting a purchase accounting adjustment of $412,000, related to contingent consideration for loans closed after the acquisition date, that increased goodwill during the year ended December 31, 2018. The Company also recorded intangible assets for licenses and trade names as summarized below. The licenses are being amortized over 84 months and trade names are being amortized over 120 months, both using the straight-line method. Amortization of these intangible assets was $218,000 for the year ended December 31, 2019, $218,000 for the year ended December 31, 2018, and $82,000 for the year ended December 31, 2017.


	2019						2018						2017
	Gross						Gross						Gross
	Carrying		Accumulated				Carrying		Accumulated				Carrying		Accumulated
	Amount		Amortization		Total		Amount		Amortization		Total		Amount		Amortization		Total
	(In thousands)						(In thousands)						(In thousands)
Licenses	$	1,370	$	(465)	$	905	$	1,370	$	(269)	$	1,101	$	1,370	$	(74)	$	1,296
Trade names		224		(53)		171		224		(31)		193		224		(8)		216
Customer list		1,570		(673)		897		—		—		—		—		—		—
Core deposit intangible		2,417		(591)		1,826		2,417		(169)		2,248		—		—		—
Total intangible Assets	$	5,581	$	(1,782)	$	3,799	$	4,011	$	(469)	$	3,542	$	1,594	$	(82)	$	1,512

Estimated amortization expense for future years is as follows (in thousands):


Year ending December 31,
2020	$	1,516
2021		577
2022		521
2023		462
2024		335
Thereafter		388
Total	$	3,799