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Goodwill and Other Intangibles and Mortgage Servicing Rights
 9 Months Ended
Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangibles and Mortgage Servicing Rights Goodwill and Other Intangibles and Mortgage Servicing Rights
Management periodically reviews the carrying value of its intangible assets to determine if any impairment has occurred, in which case an impairment charge would be recorded as an expense in the period of impairment, or whether changes in circumstances have occurred that would require a revision to the remaining useful life which would impact expense prospectively. In making such determination, management evaluates whether there are any adverse qualitative factors indicating that an impairment may exist, as well as the performance, on an undiscounted basis, of the underlying operations or assets which give rise to the intangible. Management continues to consider the ongoing impacts of the COVID-19 pandemic and related economic uncertainty on the valuation of our franchise, stability of deposits, and of the wealth client base, underlying our goodwill, core deposit intangible, and customer list intangibles, and determined no impairments were indicated. A summary of goodwill and other intangibles was as follows.
Nine Months EndedYear Ended
(in thousands)September 30, 2021December 31, 2020
Goodwill$255,431 $163,151 
Core deposit intangibles11,539 8,837 
Customer list intangibles2,984 3,365 
    Other intangibles14,523 12,202 
Goodwill and other intangibles, net$269,954 $175,353 
Goodwill: A summary of goodwill was as follows. During 2021, goodwill increased due to the Mackinac acquisition, while during 2020, goodwill increased due to the Advantage acquisition. See Note 2 for additional information on the Company’s acquisitions.
Nine Months EndedYear Ended
(in thousands)September 30, 2021December 31, 2020
Goodwill:
Goodwill at beginning of year$163,151 $151,198 
Acquisition92,280 11,953 
Goodwill at end of period$255,431 $163,151 
Other intangible assets: Other intangible assets, consisting of core deposit intangibles and customer list intangibles, are amortized over their estimated finite lives. A summary of other intangible assets was as follows. During 2021, core deposit intangibles increased due to the Mackinac acquisition, while during 2020, core deposit intangibles increased due to the Advantage acquisition. See Note 2 for additional information on the Company’s acquisitions.
Nine Months EndedYear Ended
(in thousands)September 30, 2021December 31, 2020
Core deposit intangibles:
Gross carrying amount$36,436 $31,715 
Accumulated amortization(24,897)(22,878)
Net book value$11,539 $8,837 
Additions during the period$4,721 $1,000 
Amortization during the period$2,019 $3,060 
Customer list intangibles:
Gross carrying amount$5,523 $5,523 
Accumulated amortization(2,539)(2,158)
Net book value$2,984 $3,365 
Amortization during the period$381 $507 
Mortgage servicing rights: Mortgage servicing rights are amortized in proportion to and over the period of estimated net servicing income, and assessed for impairment at each reporting date, with the amortization recorded in mortgage income, net, in the consolidated statements of income. Mortgage servicing rights are carried at the lower of the initial capitalized amount, net
of accumulated amortization, or estimated fair value, and are included in other assets in the consolidated balance sheets. A summary of the changes in the mortgage servicing rights asset was as follows.
Nine Months EndedYear Ended
(in thousands)September 30, 2021December 31, 2020
Mortgage servicing rights ("MSR") asset:
MSR asset at beginning of year$10,230 $5,919 
Capitalized MSR3,191 5,256 
MSR asset acquired1,322 529 
Amortization during the period(1,580)(1,474)
MSR asset at end of period$13,163 $10,230 
Valuation allowance at beginning of year$(1,000)$— 
Additions(500)(1,000)
Reversals300 — 
Valuation allowance at end of period$(1,200)$(1,000)
MSR asset, net$11,963 $9,230 
Fair value of MSR asset at end of period$14,482 $9,276 
Residential mortgage loans serviced for others$1,532,585 $1,250,206 
Net book value of MSR asset to loans serviced for others0.78 %0.74 %
The Company periodically evaluates its mortgage servicing rights asset for impairment. At each reporting date, impairment is assessed based on estimated fair value using estimated prepayment speeds of the underlying mortgage loans serviced and stratification based on the risk characteristics of the underlying loans (predominantly loan type and note interest rate). See Note 9 for additional information on the fair value of the MSR asset.
The following table shows the estimated future amortization expense for amortizing intangible assets and the MSR asset. The projections are based on existing asset balances, the current interest rate environment and prepayment speeds as of September 30, 2021. The actual amortization expense the Company recognizes in any given period may be significantly different depending upon acquisition or sale activities, changes in interest rates, prepayment speeds, market conditions, regulatory requirements and events or circumstances that indicate the carrying amount of an asset may not be recoverable.
(in thousands)Core deposit
intangibles		Customer list
intangibles		MSR asset
Year ending December 31,
2021 (remaining three months)
$859 $126 $486 
20223,059 507 2,421 
20232,412 483 2,363 
20241,815 449 2,250 
20251,248 449 1,361 
2026777 249 1,118 
Thereafter1,369 721 3,164 
Total$11,539 $2,984 $13,163