XML 28 R18.htm IDEA: XBRL DOCUMENT

Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2024

Note 8 Goodwill and Intangible Assets

Goodwill and other intangible assets

In connection with our acquisitions, the Company’s goodwill was $306.0 million as of June 30, 2024. 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 or six months ended June 30, 2024 or the year ended December 31, 2023.

The gross carrying amount of other intangible assets and the associated accumulated amortization at June 30, 2024 and December 31, 2023, are presented as follows:


	June 30, 2024						December 31, 2023
	Gross				Net		Gross				Net
	carrying		Accumulated		carrying		carrying		Accumulated		carrying
	amount		amortization		amount		amount		amortization		amount
Core deposit intangible	$	91,566	$	(52,757)	$	38,809	$	91,566	$	(50,095)	$	41,471
Customer relationship intangible		17,000		(2,960)		14,040		17,000		(1,867)		15,133
Internally developed technology		2,300		(460)		1,840		2,300		(230)		2,070
Total	$	110,866	$	(56,177)	$	54,689	$	110,866	$	(52,192)	$	58,674

The Company is amortizing intangibles from acquisitions over a weighted average period of 9.8 years from the date of the respective acquisitions. The core deposit and customer relationship intangibles are being amortized over a weighted average period of 10 years, and the internally developed technology intangible is being amortized over a weighted average period of five years. The Company recognized other intangible assets amortization expense of $2.0 million and $4.0 million during the three and six months ended June 30, 2024, respectively. During the three and six months ended June 30, 2023, the Company recognized other intangible assets amortization expense of $2.0 million and $3.4 million, respectively.

The following table shows the estimated future amortization expense during the next five years for other intangible assets as of June 30, 2024:


Years ending December 31,		Amount
For the six months ending December 31, 2024	$	3,924
For the year ending December 31, 2025		7,786
For the year ending December 31, 2026		7,664
For the year ending December 31, 2027		7,542
For the year ending December 31, 2028		6,142

Servicing Rights

Mortgage servicing rights

Mortgage servicing rights (“MSRs”) represent rights to service loans originated by the Company and sold to government-sponsored enterprises including FHLMC, FNMA, GNMA and FHLB and are included in other assets in the consolidated statements of financial condition. Mortgage loans serviced for others were $0.5 billion and $1.0 billion at June 30, 2024 and 2023, respectively.

Below are the changes in the MSRs for the periods presented:


	For the six months ended June 30,
	2024		2023
Beginning balance	$	4,911	$	9,162
Originations		204		808
Recovery		61		66
Amortization		(257)		(479)
Ending balance		4,919		9,557
Fair value of mortgage servicing rights	$	7,539	$	14,004

During the third quarter of 2023, the Company sold rights to service loans totaling $486.7 million in unpaid principal balances from our mortgage servicing rights portfolio. As a result of the sale, the book value of our mortgage servicing rights intangible decreased $4.7 million.

The fair value of MSRs 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 10.0% to 10.5% and the constant prepayment speed ranged from 6.1% to 11.3% for the June 30, 2024 valuation. The discount rate ranged from 10.0% to 10.5%, and the constant prepayment speed ranged from 5.7% to 13.5% for the June 30, 2023 valuation. Included in mortgage banking income in the consolidated statements of operations was servicing income of $0.4 million and $0.8 million for the three and six months ended June 30, 2024, respectively, and $0.6 million and $1.4 million for the three and six months ended June 30, 2023, respectively.

MSRs are evaluated and impairment is recognized to the extent fair value is less than the carrying amount. The Company evaluates impairment by stratifying MSRs based on the predominant risk characteristics of the underlying loans, including loan type and loan term. The Company is amortizing the MSRs in proportion to and over the period of the estimated net servicing income of the underlying loans.

The following table shows the estimated future amortization expense during the next five years for the MSRs as of June 30, 2024:


Years ending December 31,		Amount
For the six months ending December 31, 2024	$	274
For the year ending December 31, 2025		517
For the year ending December 31, 2026		459
For the year ending December 31, 2027		408
For the year ending December 31, 2028		363

SBA servicing asset

The SBA servicing asset represents the value associated with servicing small business real estate loans that have been sold to outside investors with servicing retained. The SBA servicing asset is evaluated and impairment is recognized to the extent fair value is less than the carrying amount. The Company evaluates impairment by stratifying the SBA servicing asset based on the predominant risk characteristics of the underlying loans, including loan type and loan term. The Company is amortizing the SBA servicing asset in proportion to and over the period of the estimated net servicing income of the underlying loans. The Company serviced $124.8 million and $108.8 million of SBA loans that have been sold into the secondary market, as of June 30, 2024 and December 31, 2023, respectively. For the three and six months ended June 30, 2024, the Company recognized SBA servicing asset fee income totaling $0.1 million and $0.2 million. During the three and six months ended June 30, 2023, the Company recognized SBA servicing asset fee income totaling $0.2 million and $0.6 million, respectively.

Below are the changes in the SBA servicing asset for the periods presented:


	For the six months ended June 30,
	2024		2023
Beginning balance	$	2,440	$	2,666
Originations		623		162
Disposals		(247)		(245)
Recovery		104		153
Amortization		(172)		(69)
Ending balance		2,748		2,667
Fair value of SBA servicing asset	$	2,748	$	2,667

The Company uses assumptions and estimates in determining the fair value of SBA loan servicing rights. These assumptions include prepayment speeds, discount rates, and other assumptions. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. For the six months ended June 30, 2024 and 2023, the key assumptions used to determine the fair value of the Company’s SBA loan servicing rights included weighted average lifetime constant prepayment rates equal to 15.5% and 13.3%, respectively, and weighted average discount rates equal to 9.5% and 11.0%, respectively.

The following table shows the estimated future amortization expense during the next five years for the SBA servicing asset as of June 30, 2024:


Years ending December 31,		Amount
For the six months ending December 31, 2024	$	248
For the year ending December 31, 2025		300
For the year ending December 31, 2026		264
For the year ending December 31, 2027		233
For the year ending December 31, 2028		205