Note 9 - Intangible Assets

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE

9.

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

is being amortized over

15

years.

As of

December 31, 2017,

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

(Amounts in thousands)	December 31,
Intangibles	2017
Gross carrying amount	$	1,772
Accumulated amortization		(407	)
Core deposit intangible, net	$	1,365

The following table sets forth, as of

December 31, 2017,

the total estimated future amortization of intangible assets:

(Amounts in thousands)
For the year ended December 31,	Amount
2018	$	221
2019		221
2020		221
2021		221
2022		221
2023 and thereafter		260
Total	$	1,365

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.

No

impairment of goodwill was deemed necessary based on the

2017

annual review for impairment. For tax purposes, the goodwill

is being amortized over

15

years. See Note

25

Branch Acquisition in these Notes to Consolidated Financial Statements in this document for further detail on the branch acquisition.