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Intangible Assets

12 Months Ended

Dec. 31, 2019

Note 7 – 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, 2019
Goodwill (1)	$	104,168	$	—	$	—	$	—	$	104,168
Core deposit (2)		7,070		—		(7,027)		—		43
Excess servicing (3)		1,465		1,013		(1,971)		—		507
Non-compete agreements (4)		345		—		(324)		—		21
	$	113,048	$	1,013	$	(9,322)	$	—	$	104,739
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		—		(83)		—		262
	$	113,048	$	838	$	(7,448)	$	(672)	$	105,766

The aggregate amortization expense was $1.2 million, $1.6 million, and $1.5 million for the years ended December 31, 2019, 2018, and 2017, 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 which 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, 2019 was $43 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.

(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 $21 thousand as of December 31, 2019, 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
2020		139
2021		55
2022		55
2023		55
2024		55
Thereafter		212
Total annual amortization	$	571