Note 11 - Goodwill and Other Intangibles

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE 11. GOODWILL AND OTHER INTANGIBLES

Goodwill and Other Intangibles, net consisted of the following at September 30, 2020 and December 31, 2019.

	September 30,			December 31,
(Amounts in thousands)	2020			2019
Goodwill and Other Intangibles:
Goodwill	$	11,671		$	11,671
Core deposit intangibles		6,125			6,125
Domain name		32			32
Accumulated amortization		(1,922	)		(1,348	)
Goodwill and other intangibles, net	$	15,906		$	16,480

Goodwill

Goodwill is a common byproduct of a business combination, and is calculated as the amount of consideration paid in excess of the fair value of the net assets acquired in a transaction. Goodwill is considered to have an indefinite life and is therefore not amortized. It is reviewed annually for impairment, or more frequently if required by circumstances known as triggering events. At September 30, 2020, goodwill totaled $11.7 million.

Events during 2020 have caused management to consider reviewing goodwill for impairment more frequently than on an annual basis. These events include deterioration in general economic conditions, decreased overall financial performance of the Company and a sustained decrease in the Company’s stock price.

The Company’s share price has traded below tangible book value for the entire second and third quarters of 2020 without interruption, a period we deemed to be sustained. We considered the sustained depressed price of our stock to be a triggering event that required us to evaluate if goodwill had been impaired on an interim basis.

After performing our qualitative assessment at September 30, 2020, we believe that it is more-likely-than-not that the fair value of our Bank (our only reporting unit) was more than the carrying amount and that a quantitative impairment test was unnecessary.

Core Deposit Intangibles

Acquired core deposits provide 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 intangibles were recorded at fair value which was derived using the income approach and represent 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 an estimated eight-year life, and is evaluated annually for impairment.

The following table sets forth, as of September 30, 2020, the total estimated future amortization of intangible assets:

(Amounts in thousands)	Amount
Amortization:
2020	$	191
2021		766
2022		766
2023		766
2024		581
2025 and thereafter		1,133
Total	$	4,203