Note 11 - New Accounting Pronouncements

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

Note

11:

New Accounting Pronouncements

In

June 2016,

the FASB issued ASU

2016

-

13,

Financial Instruments-Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments. Codification Improvements to Topic

326,

Financial Instruments – Credit Losses, have been released in

November 2018 (

2018

-

19

),

November 2019 (

2019

-

10

and

2019

-

11

) and a

January 2020

Update (

2020

-

02

) that provided additional guidance on this Topic. Among other things, the amendments in this ASU require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For SEC filers meeting certain criteria, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019.

For SEC filers that meet the criteria of a smaller reporting company (including this Company) and for non-SEC registrant public companies and other organizations, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2022.

Early adoption will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019.

The Company has formed a committee that is assessing our data and evaluating the impact of adopting ASU

2016

-

13.

The Company has also selected a

third

-party vendor to assist in generating loan level cash flows and disclosures. Based on the results from larger SEC filers and preliminary internal calculations there is likely a significant financial impact of adopting this standard. Estimated amounts and decisions pertaining to implementation of this standard will be evaluated over the next several quarters.

In

January 2017,

the FASB issued ASU

No.

2017

-

04,

Intangibles: Goodwill and Other: Simplifying the Test for Goodwill Impairment.  To simplify the subsequent measurement of goodwill, the amendments eliminate Step

2

from the goodwill impairment test.  The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount.  An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit.  In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. An entity still has the option to perform the quantitative assessment for a reporting unit to determine if the qualitative impairment test is necessary.  The amendments should be applied on a prospective basis.  The nature of and reason for the change in accounting principle should be disclosed upon transition.  This standard has been delayed and is now effective for fiscal years beginning after

December 15, 2022.

In

August 2017,

the FASB issued ASU

2017

-

12,

Derivatives and Hedging (Topic

815

): Targeted improvements to accounting for hedging activities. Additional guidance on this Topic was released in

October 2018 (

ASU

2018

-

16

),

November 2019 (

2019

-

10

) and

January 2020 (

2020

-

01

). The purpose of this updated guidance is to better align financial reporting for hedging activities with the economic objectives of those activities. The amendments in this update are effective for fiscal years beginning after

December 15, 2018,

with early adoption, including adoption in an interim period, permitted.  The standard requires the modified retrospective transition approach as of the date of adoption.  Implementation of this standard did

not

have a material impact on the Company’s consolidated financial statements.

In

August 2018,

the FASB issued ASU

2018

-

13,

Fair Value Measurement (Topic

820

): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU applies to all entities that are required, under existing GAAP, to make disclosures about recurring or nonrecurring fair value measurements. Disclosures removed by this ASU are the amount and reasons for transfers between Level

1

and Level

2,

the policy for timing of transfers between levels and the valuation process for Level

3

measurements. This ASU modifies disclosures relating to investments in certain entities that calculate net asset value. Additional disclosures require by the ASU include:

1

) change in unrealized gains and losses included in other comprehensive income for recurring Level

3

fair value measurements held at the end of the reporting period and

2

) range and weighted average of significant observable inputs used to develop Level

3

measurements. The prospective method of transition is required for the new disclosure requirements. The other amendments should be applied retrospectively. This ASU is effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years or

January 1, 2020

for the Company. The Company adopted this standard during the

first

quarter of

2020

with

no

significant impact on the financial statements.