GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2022

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 16 - GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and certain other intangibles generally arise from business combinations accounted for under the acquisition method of accounting.  Goodwill totaled $2.3 million at June 30, 2022 and December 31, 2021, and represents the excess of the total acquisition price paid over the fair value of the assets acquired, net of the fair values of liabilities assumed as a result of the purchase of four retail bank branches (“Branch Purchase”) from Bank of America on January 22, 2016.  Goodwill is not amortized but is evaluated for impairment on an annual basis at December 31 of each year or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The Company performed an impairment analysis at December 31, 2021, and determined that no impairment of goodwill existed. However, if adverse economic conditions or the decrease in the Company’s stock price and market capitalization as a result of the COVID-19 pandemic were to be deemed sustained rather than temporary, it may significantly affect the fair value of our goodwill.  Accordingly, no assurances can be given that the Company will not record an impairment loss on goodwill in the future.

Core deposit intangible (“CDI”) is evaluated for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, with any changes in estimated useful life accounted for prospectively over the revised remaining life.  As of June 30, 2022, management believes that there have been no events or changes in the circumstances that would indicate a potential impairment of CDI.

The following table summarizes the changes in the Company’s other intangible assets comprised solely of CDI for the year ended December 31, 2021, and the six months ended June 30, 2022.

	Other Intangible Assets
			Accumulated
	Gross CDI		Amortization		Net CDI
Balance, December 31, 2020	$	7,490	$	(2,739)	$	4,751
Amortization		—		(691)		(691)
Balance, December 31, 2021		7,490		(3,430)		4,060
Amortization		—		(345)		(345)
Balance, June 30, 2022	$	7,490	$	(3,775)	$	3,715

The CDI represents the fair value of the intangible core deposit base acquired in business combinations. The CDI will be amortized on a straight-line basis over 10 years for the CDI related to the Anchor Bank acquisition in November 2018 (“Anchor Acquisition”)m and on an accelerated basis over approximately nine years for the CDI related to the Branch Purchase. Total amortization expense was $172,000 and $ 345,000 for the three and six months ended June 30, 2022, respectively, and $177,000 and $354,000 for the same periods, respectively, in 2021.

Amortization expense for CDI is expected to be as follows at June 30, 2022:

Remainder of 2022	$	346
2023		691
2024		621
2025		525
2026		525
Thereafter		1,007
Total	$	3,715