GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill. Assets and liabilities acquired in a business combination are recorded at their estimated fair values as of the acquisition date. The excess of the purchase price of the acquisition over the fair value of net assets acquired is recorded as goodwill.

Changes in the carrying amount of goodwill for the three and nine months ended September 30, 2022 and September 30, 2021 were as follows:


	Three months ended				Nine months ended
	September 30,				September 30,
(Dollars in thousands)	2022		2021		2022		2021
Balance at beginning of period	$	999,959	$	937,771	$	1,000,749	$	937,771
Goodwill resulting from business combinations	(1,537)		0		(2,327)		0
Balance at end of period	$	998,422	$	937,771	$	998,422	$	937,771

In December 2021, First Financial recorded $63.0 million of goodwill resulting from the acquisition of Summit Funding Group, Inc. In the third quarter of 2022, First Financial recorded adjustments of $1.5 million to goodwill from the Summit merger. In the first nine months of 2022, First Financial recorded adjustments of $2.3 million to goodwill from the Summit merger. The fair value measurements of Summit's assets and liabilities are subject to refinement for up to one year after the closing date of the acquisition as additional information relative to closing date fair values become available, and the measurement period ends in December 2022. For further detail on various mergers or acquisitions, see Note 18 - Business Combinations.

Goodwill is evaluated for impairment on an annual basis as of October 1 of each year, or whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying value. First Financial performed its most recent annual impairment test as of October 1, 2021 and no impairment was indicated. As of September 30, 2022, no events or changes in circumstances indicated that the fair value of the reporting unit was below its carrying value.

Other intangible assets. Other intangible assets consist primarily of core deposit, customer list, mortgage servicing rights and other miscellaneous intangibles, such as purchase commissions, non-compete agreements and trade name intangibles.

Core deposit intangibles represent the estimated fair value of acquired customer deposit relationships on the date of acquisition and are amortized on an accelerated basis over their estimated useful lives. First Financial's core deposit intangibles have an estimated weighted average remaining life of 5.5 years.

First Financial recorded a customer list intangible asset in conjunction with the Summit acquisition to account for the obligation or advantage on the part of either the Company or the customer to continue the pre-existing relationship subsequent to the merger. The customer list intangible asset is being amortized on a straight-line basis over its estimated useful life of 12 years and was $28.3 million and $30.1 million at September 30, 2022 and December 31, 2021, respectively. Additionally, First Financial recorded a customer list intangible asset in conjunction with the Bannockburn acquisition which is being amortized on a straight-line basis over its estimated useful life of 11 years and was $28.4 million and $31.1 million at September 30, 2022 and December 31, 2021, respectively.

Amortization expense recognized on other intangible assets for the three months ended September 30, 2022 and September 30, 2021 was $2.8 million and $2.5 million, respectively. Amortization expense recognized on other intangible assets for the nine months ended September 30, 2022 and September 30, 2021 was $8.6 million and $7.4 million, respectively.

Mortgage servicing rights are servicing fees First Financial receives from selling fixed and adjustable-rate residential mortgage loans where it obtains servicing responsibilities. In those sales, the First Financial obtained servicing responsibilities and provided certain standard representations and warranties; however, the investors have no recourse to the Company’s other assets for failure of debtors to pay when due. First Financial receives servicing fees based on a percentage of the outstanding balance. Mortgage servicing rights are measured at fair value with changes in fair value reported in mortgage banking net revenue in the Consolidated Statements of Income.

The gross carrying amount and accumulated amortization of other intangible assets at September 30, 2022 and December 31, 2021 were as follows:


(Dollars in thousands)	September 30, 2022				December 31, 2021
	Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Amortized other intangible assets
Core deposit intangibles	$	41,750	$	(25,761)	$	45,256	$	(26,911)
Customer list	69,563		(12,933)		69,563		(8,362)
Other	14,079		(6,668)		14,589		(5,237)
Unamortized other intangible assets
Mortgage servicing rights	16,498		0		15,469		0
Total	$	141,890	$	(45,362)	$	144,877	$	(40,510)