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Intangible Assets

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Note 6 – Intangible Assets

Intangible assets are included in the Consolidated Balance Sheets as a separate line item, net of accumulated amortization and consist of the following items:

	Gross										Net
	Intangible				Accumulated			FHA			Intangible
(dollars in thousands)	Assets		Additions		Amortization			MSR Sales			Assets
December 31, 2018
Goodwill (1)	$	104,168	$	—	$	—		$	—		$	104,168
Core deposit (2)		7,070		—		(6,312	)		—			758
Excess servicing (3)		1,465		838		(1,053	)		(672	)		578
Non-compete agreements (4)		345		0		(83	)		—			262
	$	113,048	$	838	$	(7,448	)	$	(672	)	$	105,766
December 31, 2017
Goodwill (1)	$	104,168	$	—	$	—		$	—		$	104,168
Core deposit (2)		7,070		—		(5,355	)		—			1,715
Excess servicing (3)		472		993		(481	)		—			984
Non-compete agreements (4)		—		345		—			—			345
	$	111,710	$	1,338	$	(5,836	)	$	—		$	107,212

The aggregate amortization expense was $1.6 million, $1.5 million, and $1.7 million for the years ended December 31, 2018, 2017, and 2016, respectively.

(1)

The Company recorded an initial amount of unidentified intangible (goodwill) incident to the acquisition of Fidelity of approximately $360 thousand. Based on allowable adjustments through August 31, 2009, the unidentified intangible (goodwill) amounted to approximately $2.2 million. The Company recorded an initial amount of unidentified intangible (goodwill) incident to the acquisition of Virginia Heritage of approximately $102 million.

(2)

In connection with the Fidelity and Virginia Heritage acquisitions, the Company made an allocation of the purchase price to core deposit intangibles which were $2.3 million and $4.6 million, respectively, based off of an independent evaluation and is included in intangible assets, net of accumulated amortization on the Consolidated Balance Sheets. The initial amount recorded for the Fidelity acquisition was $2.3 million. The amount of the core deposit intangible relating to the Fidelity acquisition was fully amortized at December 31, 2018, as a component of other noninterest expense. The initial amount recorded for the Virginia Heritage acquisition was $4.6 million. The amount of the core deposit intangible relating to the Virginia Heritage acquisition at December 31, 2018 was $758 thousand, which is being amortized over its remaining economic life through 2020 as a component of other noninterest expense.

(3)

The Company recognizes a servicing asset for the computed value of servicing fees on the sale of multifamily FHA loans and the sale of the guaranteed portion of SBA loans. Assumptions related to loan terms and amortization is made to arrive at the initial recorded values, which are included in other assets. During 2018, the Company sold a portion of its FHA mortgage servicing rights totaling $672 thousand for a net loss of $71 thousand.

(4)

The Company entered into a non-compete agreement for three years with its former Vice Chairman of the Bank. The amount of the non-compete intangible was $262 thousand as of December 31, 2018, which is being amortized over its remaining term through 2020 as a component of professional fees.

The future estimated annual amortization expense is presented below:

Years ending December 31:
(dollars in thousands)	Amount
2019		1,051
2020		155
2021		71
2022		71
2023		71
Thereafter		179
Total annual amortization	$	1,598