Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

The Corporation has core deposit and customer-related intangibles and mortgage servicing rights, which are not deemed to have an indefinite life and therefore will continue to be amortized over their useful life using the present value of projected cash flows. The Corporation also has goodwill which is deemed to be an indefinite intangible asset and is not amortized.

Changes in the carrying amount of the Corporation's goodwill by business segment for the six months ended June 30, 2015 were as follows:



(Dollars in thousands)	Banking		Wealth Management		Insurance		Consolidated
Balance at December 31, 2014	$	35,058	$	15,434	$	17,225	$	67,717
Addition to goodwill from acquisitions	43,377		—		1,424		44,801
Balance at June 30, 2015	$	78,435	$	15,434	$	18,649	$	112,518

The following table reflects the components of intangible assets at the dates indicated:



	At June 30, 2015						At December 31, 2014
(Dollars in thousands)	Gross Carrying Amount		Accumulated Amortization and Fair Value Adjustments		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization and Fair Value Adjustments		Net Carrying Amount
Amortized intangible assets:
Core deposit intangibles	$	1,520	$	138	$	1,382	$	—	$	—	$	—
Customer related intangibles	14,227		7,758		6,469		13,397		6,726		6,671
Mortgage servicing rights	11,440		5,744		5,696		10,559		5,050		5,509
Total amortized intangible assets	$	27,187	$	13,640	$	13,547	$	23,956	$	11,776	$	12,180

The estimated aggregate amortization expense for core deposit and customer related intangibles for the remainder of 2015 and the succeeding fiscal years is as follows:



Year	(Dollars in thousands)	Amount
Remainder of 2015		$	1,108
2016		1,872
2017		1,544
2018		1,170
2019		846
Thereafter		1,311

The Corporation has originated mortgage servicing rights which are included in other intangible assets on the consolidated balance sheets. Mortgage servicing rights are amortized in proportion to, and over the period of, estimated net servicing income on a basis similar to the interest method and an accelerated amortization method for loan payoffs. Mortgage servicing rights are subject to impairment testing on a quarterly basis. The aggregate fair value of these rights was $7.8 million and $6.9 million at June 30, 2015 and December 31, 2014, respectively. The fair value of mortgage servicing rights was determined using a discount rate of 10.0% at June 30, 2015, and December 31, 2014.

Changes in the mortgage servicing rights balance are summarized as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2015			2014			2015			2014
Beginning of period	$	5,523		$	5,406		$	5,509		$	5,519
Servicing rights capitalized	499			236			881			359
Amortization of servicing rights	(326		)	(264		)	(694		)	(507		)
Changes in valuation allowance	—			—			—			7
End of period	$	5,696		$	5,378		$	5,696		$	5,378
Mortgage loans serviced for others	$	832,318		$	761,413		$	832,318		$	761,413

Activity in the valuation allowance for mortgage servicing rights was as follows:



	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in thousands)	2015		2014			2015		2014
Valuation allowance, beginning of period	$	—	$	(243	)	$	—	$	(250	)
Additions	—		—			—		—
Reductions	—		—			—		7
Direct write-downs	—		—			—		—
Valuation allowance, end of period	$	—	$	(243	)	$	—	$	(243	)

The estimated amortization expense of mortgage servicing rights for the remainder of 2015 and the succeeding fiscal years is as follows:



Year	(Dollars in thousands)	Amount
Remainder of 2015		$	430
2016		804
2017		695
2018		597
2019		511
Thereafter		2,659

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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