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OTHER INTANGIBLE ASSETS
6 Months Ended
Jun. 30, 2015
OTHER INTANGIBLE ASSETS  
OTHER INTANGIBLE ASSETS

8.   OTHER INTANGIBLE ASSETS

 

Other intangible assets include a core deposit premium and mortgage servicing rights. The following table presents changes in other intangible assets for the six months ended June 30, 2015:

 

 

 

Core

 

Mortgage

 

 

 

 

 

Deposit

 

Servicing

 

 

 

 

 

Premium

 

Rights

 

Total

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

10,029

 

$

19,668

 

$

29,697

 

Additions

 

 

1,245

 

1,245

 

Amortization

 

(1,337

)

(2,327

)

(3,664

)

Balance, end of period

 

$

8,692

 

$

18,586

 

$

27,278

 

 

Income generated as the result of new mortgage servicing rights is reported as gains on sales of loans and totaled $0.6 million and $1.2 million for the three and six months ended June 30, 2015, respectively, compared to $0.5 million and $0.9 million for the comparable prior year periods. Amortization of mortgage servicing rights was $0.9 million and $2.3 million for the three and six months ended June 30, 2015, respectively, compared to $0.6 million and $1.2 million for the comparable prior year periods.

 

 

The following table presents the fair market value and key assumptions used in determining the fair market value of our mortgage servicing rights:

 

 

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

Fair market value, beginning of period

 

$

19,975

 

$

21,399

 

Fair market value, end of period

 

19,202

 

20,341

 

Weighted average discount rate

 

9.5

%

8.0

%

Weighted average prepayment speed assumption

 

13.8

 

15.1

 

 

The gross carrying value and accumulated amortization related to our intangible assets are presented below:

 

 

 

June 30, 2015

 

December 31, 2014

 

 

 

Gross

 

 

 

Net

 

Gross

 

 

 

Net

 

 

 

Carrying

 

Accumulated

 

Carrying

 

Carrying

 

Accumulated

 

Carrying

 

 

 

Value

 

Amortization

 

Value

 

Value

 

Amortization

 

Value

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core deposit premium

 

$

44,642

 

$

(35,950

)

$

8,692

 

$

44,642

 

$

(34,613

)

$

10,029

 

Mortgage servicing rights

 

56,194

 

(37,608

)

18,586

 

56,687

 

(37,019

)

19,668

 

 

 

$

100,836

 

$

(73,558

)

$

27,278

 

$

101,329

 

$

(71,632

)

$

29,697

 

 

Based on the core deposit premium and mortgage servicing rights held as of June 30, 2015, estimated amortization expense for the remainder of fiscal year 2015, the next five succeeding fiscal years and all years thereafter are as follows:

 

 

 

Estimated Amortization Expense

 

 

 

Core

 

Mortgage

 

 

 

 

 

Deposit

 

Servicing

 

 

 

 

 

Premium

 

Rights

 

Total

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

2015 (remainder)

 

$

1,337

 

$

1,482

 

$

2,819

 

2016

 

2,674

 

2,322

 

4,996

 

2017

 

2,674

 

1,646

 

4,320

 

2018

 

2,007

 

1,157

 

3,164

 

2019

 

 

778

 

778

 

2020

 

 

434

 

434

 

Thereafter

 

 

10,767

 

10,767

 

 

 

$

8,692

 

$

18,586

 

$

27,278

 

 

We perform an impairment assessment of our other intangible assets whenever events or changes in circumstance indicate that the carrying value of those assets may not be recoverable. Our impairment assessments involve, among other valuation methods, the estimation of future cash flows and other methods of determining fair value. Estimating future cash flows and determining fair values is subject to judgment and often involves the use of significant estimates and assumptions. The variability of the factors we use to perform our impairment tests depend on a number of conditions, including the uncertainty about future events and cash flows. All such factors are interdependent and, therefore, do not change in isolation. Accordingly, our accounting estimates may materially change from period to period due to changing market factors.