Note 10 - Goodwill and Other Intangible Asset

12 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Text Block]

Note

10:

Goodwill and Other Intangible Assets

The Company’s intangible assets (goodwill and core deposit intangible) at

March 31, 2017

consists of assets recorded in

December 2009

associated with the acquisition of a branch office in Pasadena, Maryland and the acquisition of Fairmount in

September 2015

and the acquisition of Fraternity in

May 2016.

The goodwill is deductible for tax purposes. We evaluate goodwill and other intangible assets for impairment on an annual basis. The core deposit intangible asset is being amortized straight-line over a life of

eight

years.

The following table presents the changes in net book value of intangible assets for the years ended

March 31, 2017

and

2016:

				Core deposit
	Goodwill			intangible

Balance April 1, 2015	$	2,664,432		$	138,333
Additions (1)		4,103,379			542,540
Amortization		-			(62,573	)
Balance March 31, 2016		6,767,811			618,300
Additions (2)		1,877,243			242,020
Post acquisition adjustments		(81,524	)		-
Amortization		-			(121,022	)

Balance March 31, 2017	$	8,563,530		$	739,298

(

) - Additions to intangible assets are related to the merger with Fairmount Bancorp, Inc.

(

) - Additions to intangible assets are related to the acquisition of Fraternity Community Bancorp, Inc.

The post acquisition adjustment to goodwill shown in the table above was recorded in the

first

quarter of fiscal

2017.

The adjustment represents a

$451,000

write-down of several owner-occupied residential investor loans to

one

borrower that were acquired in the Fairmount acquisition and recording of an increase to the deferred tax asset related to a

$533,000

net operating loss (NOL) from Fairmount’s final tax return. With regards to the investor loans, information we were

not

aware of at the time of the acquisition became available during the quarter ended

June 30, 2016.

Had we known this information at the time of the acquisition, we would have deemed these loans as impaired and valued them accordingly.

March 31, 2017,

future expected annual amortization associated with the core deposit intangible is as follows:

Year ending March 31,	Amount

2018		126,070
2019		126,070
2020		123,737
2021		98,070
2022		98,070
2023		98,070
2024		64,169
2025		5,042
	$	739,298

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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