Note 7 - Goodwill and Intangibles

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 7 - GOODWILL AND INTANGIBLES

Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any non-controlling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill resulting from whole bank and branch acquisitions are tested for impairment at least annually. Goodwill amounted to $71.5 million at both September 30, 2023 and  December 31, 2022, and is the only intangible asset with an indefinite life on the Company's balance sheet. 

The bank failures in the first half of 2023 caused a significant decline in bank stock prices, including the Company’s stock price. After evaluating the prolonged decrease in the Company's market value, management performed a quantitative goodwill impairment analysis as of September 30, 2023. Management estimated the fair value of the Company using both the guideline public company method, market approach, and the discounted cash flow method, income approach. Based on this quantitative analysis, the fair value of the Company exceeds its carrying amount with a passing amount of 9.6%. Management has concluded that goodwill was not impaired at September 30, 2023.

Other intangible assets consist of core deposit intangible ("CDI") assets arising from whole bank and branch acquisitions. CDI assets are amortized on an accelerated method over their estimated useful life of 8 to 10 years. The unamortized balance at September 30, 2023 and December 31, 2022 was $3.0 million and $3.7 million, respectively. CDI amortization expense was $236,000 and $277,000 for the three months ended September 30, 2023 and 2022, respectively, and $708,000 and $833,000 for the nine months ended September 30, 2023 and 2022, respectively.

Estimated CDI amortization expense for future years is as follows:

(dollars in thousands)
As of September 30, 2023:
Remainder of 2023	$	215
2024		784
2025		672
2026		501
2027		417
Thereafter		421
Total	$	3,010