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 business lines acquired. The following table presents gross carrying amount and accumulated amortization by major intangible asset class as of December 31, 2019 and 2018 (in thousands):



	2019				2018
	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Goodwill not subject to amortization	$	108,752	$	3,760	$	109,037	$	3,760
Intangibles from branch acquisition	3,015		3,015		3,015		3,015
Core deposit intangibles	32,355		17,746		32,355		14,017
Customer list intangibles	16,129		3,917		16,029		2,648
	$	160,251	$	28,438	$	160,436	$	23,440

Goodwill of $26.5 million was recorded for the acquisition and merger of First Bank during the second quarter of 2018. 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 Bank and the amount of goodwill recorded (in thousands):



Unallocated purchase price			$	26,946
Less purchase accounting adjustments:
Fair value of securities	320
Fair value of loans	3,463
Fair value of OREO	12
Fair value of mortgage servicing rights	(1,097	)
Fair value of premises and equipment	689
Fair value of time deposits	1,301
Fair value of FHLB advances	(328	)
Fair value of subordinated debentures	(1,451	)
Core deposit intangible	(5,224	)
Other assets and other liabilities	1,860
			(455		)
Resulting goodwill from acquisition			$	26,491

Goodwill of $18.4 million was recorded for the acquisition and merger of Soy Capital during the fourth quarter of 2018. 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 the acquisition of Soy Capital and the amount of goodwill recorded (in thousands):



Unallocated purchase price			$	21,694
Less purchase accounting adjustments:
Fair value of securities	41
Fair value of loans	3,377
Fair value of OREO	345
Fair value of premises and equipment	(953	)
Fair value of time deposits	(343	)
Fair value of FHLB advances	(29	)
Core deposit intangible	(7,269	)
Customer list intangibles	(12,298	)
Other assets and other liabilities	13,786
			$	(3,343	)
Resulting goodwill from acquisition			$	18,351

As part of the acquisition of First Bank acquisition, the Company acquired mortgage servicing rights valued at $1,558,000. There were no mortgage service rights added during 2019. The unpaid principal balances of mortgage loans serviced for others were $186.2 million and $207.7 million at December 31, 2019 and 2018, respectively. The following table summarizes the activity pertaining to the mortgage servicing rights included in intangible assets as of December 31, 2019 and 2018 (in thousands):



	December 31, 2019			December 31, 2018
Beginning Balance	2,101			844
Acquired Balance	—			1,558
Mortgage Servicing rights capitalized	—			7
Valuation reserve	(380		)	—
Mortgage Servicing rights amortized	(411		)	(308		)
I/O strip	134			—
Ending Balance	$	1,444		$	2,101

Total amortization expense for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands):



	2019		2018		2017
Core deposit intangibles	3,729		2,544		1,829
Customer list intangibles	1,269		363		183
Mortgage Servicing Rights	850		308		141
	$	5,848	$	3,215	$	2,153

Estimated amortization expense for each of the five succeeding years is shown in the table below (in thousands):



For year ended 12/31/20	$	4,917
For year ended 12/31/21	4,253
For year ended 12/31/22	3,829
For year ended 12/31/23	3,516
For year ended 12/31/24	2,977

In accordance with the provisions of SFAS 142,”Goodwill and Other Intangible Assets,” codified in ASC 350, the Company performed testing of goodwill for impairment as of September 30, 2019 and 2018, and determined, as of each of these dates, that goodwill was not impaired. Management also concluded that the remaining amounts and amortization periods were appropriate for all intangible assets The weighted average amortization period for core deposit, customer lists and total intangibles was 3.58, 5.27 and 4.33, respectively, at December 31, 2019.