Goodwill and Intangible Assets (Notes)

3 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

Goodwill and Intangible Assets

The Company has goodwill from business combinations, intangible assets from branch acquisitions, identifiable intangible assets assigned to core deposit relationships and customer lists of the Insurance agency. The following table presents gross carrying value and accumulated amortization by major intangible asset class as of March 31, 2017 and December 31, 2016 (in thousands):



	March 31, 2017				December 31, 2016
	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Goodwill not subject to amortization (effective 1/1/02)	$	61,551	$	3,760	$	61,551	$	3,760
Intangibles from branch acquisition	3,015		3,015		3,015		3,015
Core deposit intangibles	19,862		10,115		19,862		9,644
Other intangibles	3,731		2,148		3,731		2,102
	$	88,159	$	19,038	$	88,159	$	18,521

During the third quarter of 2016, goodwill of $16.8 million was recorded for the acquisition of First Clover Leaf. The goodwill consists largely of the synergies and economies of scale expected from combining the operations of First Clover Leaf Bank with First Mid Bank. All of the goodwill was assigned to the banking segment of the Company. The Company expects this goodwill will not be deductible for tax purposes.

The following table provides a reconciliation of the purchase price paid for First Clover Leaf and the amount of goodwill recorded (in thousands):



Purchase price (in excess of net book value)			$	8,741
Less purchase accounting adjustments:
Fair value of securities	737
Fair value of loans, net	3,475
Fair value of OREO	754
Fair value of premises and equipment	(1,963	)
Fair value of time deposits	1,994
Fair value of FHLB advances	113
Fair value of subordinated debentures	(731	)
Core deposit intangible	(4,660	)
Other assets	8,325
			8,044
Resulting goodwill from acquisition			$	16,785

As part of the acquisition of First Clover Leaf Bank, the Company acquired mortgage servicing rights valued at $1,069,000. The following table summarizes the activity pertaining to mortgage servicing rights included in intangible assets as of March 31, 2017 and December 31, 2016 (in thousands):



	March 31, 2017			December 31, 2016
Beginning Balance	$	985		$	—
Mortgage Servicing rights acquired during period	—			1,069
Mortgage Servicing rights capitalized	—			14
Mortgage Servicing rights amortized	(30		)	(98		)
Ending Balance	$	955		$	985

Total amortization expense for the three months ended March 31, 2017 and 2016 was as follows (in thousands):



	Three months ended March 31,
	2016		2016
Core deposit intangibles	$	471	$	409
Other Intangibles	46		46
Mortgage Service Rights	30		—
	$	547	$	455

Aggregate amortization expense for the current year and estimated amortization expense for each of the five succeeding years is shown in the table below (in thousands):



Aggregate amortization expense:
For period 01/01/17-03/31/17	$	547
Estimated amortization expense:
For period 04/01/17-12/31/17	1,585
For year ended 12/31/18	1,934
For year ended 12/31/19	1,758
For year ended 12/31/20	1,556
For year ended 12/31/21	1,284
For year ended 12/31/22	1,175

In accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” codified within ASC 350, the Company performed testing of goodwill for impairment as of September 30, 2016 and determined that, as of that date, goodwill was not impaired. Management also concluded that the remaining amounts and amortization periods were appropriate for all intangible assets.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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