Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 8 - GOODWILL AND INTANGIBLE ASSETS

The carrying amount of goodwill has increased $48,844 since December 31, 2021 as a result of the Comunibanc Corp. and VFG acquisitions, as discussed in Note 2. The balance of goodwill was $125,695 at December 31, 2022 and $76,851 at December 31, 2021.

Management performs an evaluation of goodwill for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Management performed an evaluation of the Company’s goodwill during the fourth quarter of 2022. Based on this test, management concluded that the Company’s goodwill was not impaired at December 31, 2022.

Acquired intangible assets were as follows as of year-end.


	2022						2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Core deposit intangible assets(1):
Core deposit intangibles		12,953		4,883		8,070		8,527		3,588		4,939
Total core deposit intangible assets	$	12,953	$	4,883	$	8,070	$	8,527	$	3,588	$	4,939

(1)

Excludes fully amortized core deposit intangible assets

Aggregate core deposit intangible amortization expense was $1,296, $890 and $913 for 2022, 2021 and 2020, respectively.

Activity for mortgage servicing rights (MSRs) and the related valuation allowance follows:


	2022		2021
Mortgage Servicing Rights:
Beginning of year	$	2,642	$	2,246
Additions		397		764
Disposals		—		—
Amortized to expense		350		572
Other Charges		—		—
Change in valuation allowance		—		(204	)
End of year	$	2,689	$	2,642

Valuation allowance:
Beginning of year	$	—	$	204
Additions expensed		—		261
Reductions credited to operations		—		(465	)
Direct write-offs		—		—
End of year	$	—	$	—

The unpaid principal balance of mortgage loans serviced for third parties was $456,149 at December 31, 2022, compared to $405,786 at December 31, 2021 and $353,473 at December 31, 2020.

Aggregate mortgage servicing rights (MSRs) amortization was $350, $572 and $524 for 2022, 2021 and 2020, respectively.

Mortgage loan contractual servicing fees were $1,063, $947 and $634 for 2022, 2021 and 2020, respectively. Mortgage loan contractual servicing fees are included in Other income on the Consolidated Statements of Operations.

NOTE 8 - GOODWILL AND INTANGIBLE ASSETS (Continued)

The fair value of servicing rights was $2,689 and $2,642 at year-end 2022 and 2021, respectively. Fair value at year-end 2022 was determined using a discount rate of 12.0%, prepayment speeds ranging from 5.0% to 20.0%, depending on the stratification of the specific right, and a weighted average default rate of 0.14%. Fair value at year-end 2021 was determined using a discount rate of 12.0%, prepayment speeds ranging from 8.0% to 35.0%, depending on the stratification of the specific right, and a default rate of 0.41%.

Estimated amortization expense for each of the next five years and thereafter is as follows:


	MSRs		Core deposit intangibles		Total
2023	$	140	$	1,581	$	1,721
2024		140		1,489		1,629
2025		140		1,311		1,451
2026		139		1,193		1,332
2027		137		1,071		1,208
Thereafter		1,993		1,425		3,418
	$	2,689	$	8,070	$	10,759