XML 42 R26.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Goodwill and Intangible Assets | 12 Months Ended
--- | ---
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Goodwill was $236.3 million and $150.6 million at December 31, 2018 and 2017, respectively. BancShares annual impairment test, conducted as of July 31 st, or more frequently if events occur or circumstances change that may trigger a decline in the value of the reporting unit or otherwise indicate that a potential impairment exists, resulted in no indication of goodwill impairment. Subsequent to the annual impairment test, there were no events or changes in circumstances that would indicate goodwill should be tested for impairment during the interim period between annual tests. No goodwill impairment was recorded during 2018, 2017 or 2016. The following table presents the changes in the carrying amount of goodwill for the years ended December 31, 2018 and 2017:
(Dollars in thousands) | 2018 |  | 2017
Balance at January 1 | $ | 150,601 |  |  | $ | 150,601 |
Acquired in the HomeBancorp acquisition | 57,616 |  |  | — |
Acquired in the Capital Commerce acquisition | 10,680 |  |  | — |
Acquired in the Palmetto Heritage acquisition | 17,450 |  |  | — |
Balance at December 31 | $ | 236,347 |  |  | $ | 150,601 |
Other Intangible Assets Other intangible assets includes mortgage servicing rights on loans sold to third parties with servicing retained, core deposit intangibles that represent the estimated fair value of acquired core deposits and other customer relationships, and other servicing rights acquired. Mortgage Servicing Rights Our portfolio of residential mortgage loans serviced for third parties was $2.95 billion, $2.81 billion and $2.49 billion as of December 31, 2018, 2017 and 2016, respectively. These loans were originated by BancShares and sold to third parties on a non-recourse basis with servicing rights retained. These retained servicing rights are recorded as a servicing asset and reported in other intangible assets on the Consolidated Balance Sheets. The mortgage servicing rights are initially recorded at fair value and then carried at the lower of amortized cost or fair market value. The activity of the servicing asset for the years ended December 31, 2018, 2017 and 2016 is presented in the following table:
(Dollars in thousands) | 2018 |  | 2017 |  | 2016
Balance at January 1 | $ | 21,945 |  |  | $ | 20,415 |  |  | $ | 19,351 |
Servicing rights originated | 5,258 |  |  | 7,174 |  |  | 5,931 |
Amortization | (5,807 | ) |  | (5,648 | ) |  | (4,958 | )
Valuation allowance reversal | — |  |  | 4 |  |  | 91 |
Balance at December 31 | $ | 21,396 |  |  | $ | 21,945 |  |  | $ | 20,415 |
The amortization expense related to mortgage servicing rights is included as a reduction of mortgage income in the Consolidated Statements of Income.
Contractually specified mortgage servicing fees, late fees, and ancillary fees earned for the years ended December 31, 2018, 2017 and 2016, were $7.5 million, $7.1 million and $5.8 million, respectively, and reported in mortgage income in the Consolidated Statements of Income. Valuation of mortgage servicing rights is performed using a pooling methodology. Similar loans are pooled together and evaluated on a discounted earnings basis to determine the present value of future earnings. Key economic assumptions used to value mortgage servicing rights as of December 31, 2018 and 2017, were as follows:
| 2018 |  | 2017
Discount rate - conventional fixed loans | 9.69 | % |  | 9.41 | %
Discount rate - all loans excluding conventional fixed loans | 10.69 | % |  | 10.41 | %
Weighted average constant prepayment rate | 9.26 | % |  | 10.93 | %
Weighted average cost to service a loan | $ | 72.65 |  |  | $ | 64.03 |
The discount rate is based on the 10-year U.S. Treasury rate plus 700 basis points for conventional fixed loans and 800 basis points for all other loans. The 700 and 800 basis points are used as a risk premium when calculating the discount rate. The repayment rate is derived from the Public Securities Association Standard Prepayment model. The average cost to service a loan is based on the number of loans serviced and the total costs to service the loans. Core Deposit Intangibles Core deposit intangibles represent the estimated fair value of core deposits and other customer relationships that were acquired. They are being amortized on an accelerated basis over their estimated useful lives. The estimated useful remaining lives range from 1 year to less than 10 years. The following information relates to other intangible assets, all customer-related, which are being amortized over their estimated useful lives:
(Dollars in thousands) | 2018 |  | 2017
Balance at January 1 | $ | 51,151 |  |  | $ | 57,625 |
Acquired in the Harvest Community Bank acquisition | — |  |  | 850 |
Acquired in the Guaranty acquisition | — |  |  | 9,870 |
Acquired in the HomeBancorp acquisition | 9,860 |  |  | — |
Acquired in the Capital Commerce acquisition | 2,680 |  |  | — |
Acquired in the Palmetto Heritage acquisition | 1,706 |  |  | — |
Amortization | (17,165 | ) |  | (17,194 | )
Balance at December 31 | $ | 48,232 |  |  | $ | 51,151 |
The gross amount of other intangible assets and accumulated amortization as of December 31, 2018 and 2017, are:
(Dollars in thousands) | 2018 |  | 2017
Gross balance | $ | 143,007 |  |  | $ | 128,761 |
Accumulated amortization | (94,775 | ) |  | (77,610 | )
Carrying value | $ | 48,232 |  |  | $ | 51,151 |
Based on current estimated useful lives and carrying values, BancShares anticipates amortization expense for core deposit intangibles in subsequent periods will be:
(Dollars in thousands) |
2019 | $ | 14,964 |
2020 | 11,729 |
2021 | 8,706 |
2022 | 5,805 |
2023 and subsequent | 7,028 |
Other Servicing Rights Other servicing rights were acquired as part of a business combination and relate to the sale of the guaranteed portion of government guaranteed loans with servicing retained. The amount of the other servicing rights were $2.7 million and $0 at December 31, 2018, and 2017, respectively.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration