Note 10 - Intangible Assets

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE

10

– INTANGIBLE ASSETS

In

March

of

2016,

as part of our branch acquisition, we recorded a core deposit intangible of

$1.8

million and goodwill of

$665

thousand. The acquired core deposit base provides value as a source of below market rate funds and the realization of interest cost savings is a fundamental rationale for assuming these deposit liabilities. The cost savings is defined as the difference between the cost of funds on our new deposits (i.e., interest and net maintenance costs) and the cost of an equal amount of funds from an alternative source having a similar term as the new deposit base. Our core deposit intangible was recorded at fair value which was derived by using the income approach and represents the present value of the cost savings over the projected term of our new deposit base.

The core deposit intangible is being amortized on a straight-line basis over the estimated useful life of the deposits, which is

eight

years, with no expected residual value. For tax purposes, the core deposit intangible will be amortized over

15

years.

As of

December

31,

2016,

we have recorded the following amounts related to the core deposit intangible.

(Amounts in thousands)	December 31,
Intangibles	2016
Gross carrying amount	$	1,772
Accumulated amortization		(185	)
Core deposit intangible, net	$	1,587

The following table sets forth, as of

December

31,

2016,

the total estimated future amortization of intangible assets:

(Amounts in thousands)
For the year ended December 31,	Amount
2017	$	221
2018		221
2019		221
2020		221
2021		221
2022 and thereafter		482
Total	$	1,587

Goodwill is calculated as the amount of cash paid in excess of the fair value of the net assets acquired in the transaction. Goodwill is not amortized, but is annually reviewed for impairment. For tax purposes, the goodwill will be amortized over

15

years. See Note

26

Branch Acquisition

in the

Notes to

Consolidated Financial Statements

in this document for further detail on the branch acquisition.