Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

The Corporation has core deposit and customer-related intangibles and 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, 2019 were as follows:



(Dollars in thousands)	Banking		Wealth Management		Insurance		Consolidated
Balance at December 31, 2018	$	138,476	$	15,434	$	18,649	$	172,559
Addition to goodwill from acquisitions	—		—		—		—
Balance at June 30, 2019	$	138,476	$	15,434	$	18,649	$	172,559

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



	At June 30, 2019						At December 31, 2018
(Dollars in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized intangible assets:
Covenants not to compete	$	—	$	—	$	—	$	710	$	710	$	—
Core deposit intangibles	6,788		3,609		3,179		6,788		3,143		3,645
Customer related intangibles	8,819		7,602		1,217		12,381		10,804		1,577
Servicing rights	17,960		11,361		6,599		17,314		10,546		6,768
Total amortized intangible assets	$	33,567	$	22,572	$	10,995	$	37,193	$	25,203	$	11,990

The estimated aggregate amortization expense for core deposit and customer-related intangibles for the remainder of 2019 and the succeeding fiscal years is as follows:



Year	(Dollars in thousands)	Amount
Remainder of 2019		$	739
2020		1,200
2021		923
2022		666
2023		409
Thereafter		459

The Corporation has originated mortgage servicing rights, which are included in other intangible assets on the consolidated balance sheet. 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 $8.8 million at June 30, 2019 and $11.5 million at December 31, 2018. The fair value of mortgage servicing rights was determined using a discount rate of 10.0% at June 30, 2019 and December 31, 2018. The Corporation also records servicing rights on small business administration (SBA) loans. The value of these servicing rights was $135 thousand and $42 thousand at June 30, 2019 and December 31, 2018, respectively.

Changes in the servicing rights balance are summarized as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2019			2018			2019			2018
Beginning of period	$	6,725		$	6,605		$	6,768		$	6,573
Servicing rights capitalized	321			350			587			687
Amortization of servicing rights	(426		)	(305		)	(735		)	(610		)
Changes in valuation allowance	(21		)	—			(21		)	—
End of period	$	6,599		$	6,650		$	6,599		$	6,650
Residential mortgage and SBA loans serviced for others	$	1,042,438		$	1,019,233		$	1,042,438		$	1,019,233

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)	2019			2018		2019			2018
Valuation allowance, beginning of period	$	—		$	—	$	—		$	—
Additions	(21		)	—		(21		)	—
Valuation allowance, end of period	$	(21	)	$	—	$	(21	)	$	—

The estimated amortization expense of servicing rights for the remainder of 2019 and the succeeding fiscal years is as follows:



Year	(Dollars in thousands)	Amount
Remainder of 2019		$	1,174
2020		993
2021		822
2022		678
2023		535
Thereafter		2,397