Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Note 7 -- 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, 2023 and 2022 (in thousands):


	2023				2022
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
	Value		Amortization		Value		Amortization
Goodwill	$	200,221	$	3,760	$	144,172	$	3,760
Intangibles from branch acquisition		3,015		3,015		3,015		3,015
Core deposit intangibles		79,945		34,966		45,355		28,432
Customer list intangibles		26,552		10,620		20,782		8,551
	$	309,733	$	52,361	$	213,324	$	43,758

Goodwill of $50.1 million was recorded for the acquisition and merger of Blackhawk Bankcorp, Inc. during the third quarter of 2023. All this goodwill was assigned to the banking unit of the Company. The goodwill will not be deductible for tax purposes.

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


Unallocated purchase price				$	26,955
Less purchase accounting adjustments:
Fair value of securities	$	(25,521	)
Fair value of loans, net		(43,477	)
Fair value of premises and equipment		(3,856	)
Fair value of time deposits		2,311
Fair value of subordinated and jr subordinated debentures		3,707
Increase in core deposit intangible		33,731
Increase in mortgage servicing rights		3,344
Other assets		6,619
					(23,142	)
Resulting goodwill from acquisition				$	50,097

Goodwill of $28.6 million was recorded for the acquisition and merger of Delta Bancshares Company during the first quarter of 2022. All this goodwill was assigned to the banking unit of the Company.

During the quarter ended June 30, 2023, goodwill of $6 million was recorded for the acquisition of the stock of Purdum, Gray, Ingledue, Beck, Inc., in connection with its insurance business. First Mid Insurance was assigned all this goodwill.

The following provides a reconciliation of the purchase price paid for Purdum, Gray, Ingledue, Beck, Inc. and the amount of goodwill recorded (in thousands):


Unallocated purchase price				$	10,145
Less purchase accounting adjustments:
Insurance Company intangible	$	5,770
Other liabilities		(1,576	)
					4,194
Resulting goodwill from acquisition				$	5,951

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
Resulting goodwill from acquisition				$	28,558

The unpaid principal balance of mortgage loans serviced for others was $641.2 million and $73.6 million at December 31, 2023 and 2022, respectively. The following table summarizes the activity pertaining to the mortgage servicing rights included in intangible assets as of December 31, 2023 and 2022 (in thousands):


	December 31, 2023			December 31, 2022
Beginning balance	$	331		$	420
Mortgage servicing rights acquired		7,070			—
Valuation recovery		(8	)		108
Mortgage servicing rights amortized		(524	)		(200	)
I/O strip		(10	)		3
Ending balance	$	6,859		$	331

Total amortization expense for the years ended December 31, 2023, 2022, and 2021 was as follows (in thousands):


	2023		2022		2021
Core deposit intangibles	$	6,534	$	4,347	$	3,176
Customer list intangibles		2,069		1,743		1,586
Mortgage servicing rights		524		200		629
	$	9,127	$	6,290	$	5,391

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


For year ended 12/31/24	$	13,478
For year ended 12/31/25		12,158
For year ended 12/31/26		10,570
For year ended 12/31/27		9,351
For year ended 12/31/28		8,183

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 during the year, 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 3.51, 4.56 and 3.78 years respectively, at December 31, 2023.