Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2024

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Note 11 Goodwill and Intangible Assets

Goodwill and other intangible assets

In connection with our acquisitions, the Company’s goodwill was $306.0 million as of December 31, 2024 and 2023. Goodwill is measured as the excess of the fair value of consideration paid over the fair value of net assets acquired. No goodwill impairment was recorded during the years ended December 31, 2024 or December 31, 2023.

The gross carrying amount of other intangible assets and the associated accumulated amortization at December 31, 2024 and December 31, 2023, are presented as follows:

	December 31, 2024						December 31, 2023
	Gross				Net		Gross				Net
	carrying		Accumulated		carrying		carrying		Accumulated		carrying
	amount		amortization		amount		amount		amortization		amount
Core deposit intangible	$	91,566	$	(55,417)	$	36,149	$	91,566	$	(50,095)	$	41,471
Customer relationship intangible		17,000		(4,024)		12,976		17,000		(1,867)		15,133
Acquired technology intangible		2,300		(690)		1,610		2,300		(230)		2,070
Total	$	110,866	$	(60,131)	$	50,735	$	110,866	$	(52,192)	$	58,674

The Company is amortizing intangibles from acquisitions over a weighted average period of 9.8 years from the date of the respective acquisitions. The core deposit and customer relationship intangibles are being amortized over a weighted average period of 10 years, and the acquired technology intangible is being amortized over a weighted average period of five years. The Company recognized other intangible assets amortization expense of $7.9 million, $7.4 million and $2.3 million during the years ended December 31, 2024, 2023 and 2022, respectively.

The following table shows the estimated future amortization expense during the next five years for other intangible assets as of December 31, 2024:

Years ending December 31,		Amount
2025	$	7,786
2026		7,664
2027		7,542
2028		6,142
2029		5,790

Servicing Rights

Mortgage servicing rights

MSRs represent rights to service loans originated by the Company and sold to government-sponsored enterprises including FHLMC, FNMA, GNMA and FHLB and are included in other assets in the consolidated statements of financial condition. Mortgage loans serviced for others were $0.5 billion at December 31, 2024 and 2023.

Below are the changes in the MSRs for the years presented:

	For the years ending December 31,
	2024		2023
Beginning balance	$	4,911	$	9,162
Originations		404		1,183
Sales		—		(4,664)
Recovery		61		5
Amortization		(541)		(775)
Ending balance		4,835		4,911
Fair value of mortgage servicing rights	$	7,451	$	7,124

During the year ended December 31, 2023, the Company sold rights to service loans totaling $486.7 million in unpaid principal balances from our mortgage servicing rights portfolio. As a result of the sale, the book value of our mortgage servicing right intangible decreased $4.7 million and generated a gain of $1.1 million included in mortgage banking income in the consolidated statements of operations.

The fair value of MSRs was determined based upon a discounted cash flow analysis. The cash flow analysis included assumptions for discount rates and prepayment speeds. The discount rate ranged from 10.0% to 10.5%, and the constant prepayment speed ranged from 6.0% to 10.3% for the December 31, 2024 valuation. For the December 31, 2023 valuation, the discount rate ranged from 10.0% to 10.5%, and the constant prepayment speed ranged from 6.5% to 15.8%. Included in mortgage banking income in the consolidated statements of operations was servicing income of $1.5 million and $2.4 million for the years ended December 31, 2024 and 2023, respectively.

MSRs are evaluated and impairment is recognized to the extent fair value is less than the carrying amount. The Company evaluates impairment by stratifying MSRs based on the predominant risk characteristics of the underlying loans, including loan type and loan term. The Company is amortizing the MSRs in proportion to and over the period of the estimated net servicing income of the underlying loans.

The following table shows the estimated future amortization expense during the next five years for the MSRs as of December 31, 2024:

Years ending December 31,		Amount
2025	$	537
2026		477
2027		424
2028		377
2029		335

SBA servicing asset

The SBA servicing asset represents the value associated with servicing small business real estate loans that have been sold to outside investors with servicing retained. The SBA servicing asset is evaluated and impairment is recognized to the extent fair value is less than the carrying amount. The Company evaluates impairment by stratifying the SBA servicing asset based on the predominant risk characteristics of the underlying loans, including loan type and loan term. The Company is amortizing the SBA servicing asset in proportion to and over the period of the estimated net servicing income of the underlying loans. The Company serviced $132.0 million and $108.8 million of SBA loans that have been sold into the secondary market, as of December 31, 2024 and 2023, respectively. The Company recognized SBA servicing asset fee income of $0.3 million and $0.9 million during the years ended December 31, 2024 and 2023, respectively.

Below are the changes in the SBA servicing asset for the years presented:

	For the year ended December 31,
	2024		2023
Beginning balance	$	2,440	$	2,666
Originations		1,150		358
Disposals		(569)		(353)
Recovery (impairment)		124		(75)
Amortization		(283)		(156)
Ending balance		2,862		2,440
Fair value of mortgage servicing rights	$	2,862	$	2,440

The Company uses assumptions and estimates in determining the fair value of the SBA servicing asset. These assumptions include prepayment speeds, discount rates, and other assumptions. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. For the years ended December 31, 2024 and 2023, the key assumptions used to determine the fair value of the Company’s SBA servicing asset included a weighted average lifetime constant prepayment rate equal to 15.7% and 14.7%, respectively, and a weighted average discount rate equal to 10.4% and 12.3%, respectively.