Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2023

Goodwill And Intangible Assets Disclosure [Abstract]

Note 5 -- 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 First Mid Wealth Management Company and First Mid Insurance. The following table presents gross carrying value and accumulated amortization by major intangible asset class as of March 31, 2023 and December 31, 2022 (in thousands):


	March 31, 2023				December 31, 2022
	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Goodwill not subject to amortization (effective 1/1/02)	$	144,172	$	3,760	$	144,172	$	3,760
Intangibles from branch acquisition		3,015		3,015		3,015		3,015
Core deposit intangibles		45,355		29,481		45,355		28,432
Other intangibles		20,782		9,007		20,782		8,551
	$	213,324	$	45,263	$	213,324	$	43,758

During the first quarter of 2022, goodwill of $28.6 million was provisionally recorded for the acquisition and merger of Delta Bancshares Company. This goodwill was subsequently adjusted to $28.2 million to reflect proper tax treatment of the Delta assets and liabilities. All this goodwill was assigned to the banking unit of the Company.

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


Unallocated purchase price				$	29,791
Less purchase accounting adjustments:
Fair value of securities	$	(2,836	)
Fair value of loans, net		(3,399	)
Fair value of premises and equipment		3,508
Fair value of time deposits		(1,759	)
Fair value of FHLB advances		(75	)
Core deposit intangible		5,920
Other assets		(570	)
Other liabilities		444
					1,233
				$	28,558

The Company has mortgage servicing rights acquired in previous acquisitions. The following table summarizes the activity pertaining to mortgage servicing rights included in intangible assets as of March 31, 2023, March 31, 2022 and December 31, 2022 (in thousands):


	March 31, 2023			March 31, 2022			December 31, 2022
Beginning balance	$	331		$	420		$	420
Adjustment to valuation reserve		—			106			108
Mortgage servicing rights amortized		(17	)		(101	)		(200	)
Interest only strip		(2	)		7			3
Ending balance	$	312		$	432		$	331

Total amortization expense for three months ended March 31, 2023 and 2022 was as follows (in thousands):


	Three months ended March 31,
	2023		2022
Core deposit intangibles	$	1,049	$	989
Customer list intangibles		456		432
Mortgage servicing rights		17		101
	$	1,522	$	1,522

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 01/01/23 - 03/31/23	$	1,522
Estimated amortization expense:
For period 04/01/23 - 12/31/23		5,862
For year ended 12/31/24		5,371
For year ended 12/31/25		4,736
For year ended 12/31/26		3,835
For year ended 12/31/27		3,254

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, 2022 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.