Note 7 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note 7 – Goodwill and Other Intangible Assets

The Company records as goodwill the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Impairment testing is performed annually, as well as when an event triggering impairment may have occurred. In testing goodwill for impairment, the Company must first decide if circumstances lead to a determination that it is not more likely than not that the fair value of a reporting unit is less than its carrying value. If, after assessing, it concludes that it is not more likely than not that the fair value of a reporting unit is greater than its carrying value, then no further testing is required and the goodwill is not impaired. In the wake of the COVID-19 pandemic, the Company determined a triggering event had occurred and evaluated goodwill each of the four quarters of 2020 and no indicators of impairment were noted. The Company performed its annual analysis for the years ended December 31, 2022 and 2021, respectively, and no indications of impairment were noted.

Core deposit intangibles resulting from the MidCarolina Financial Corporation ("MidCarolina") acquisition in July 2011 were $6.6 million and became fully amortized at June 30, 2020. Core deposit intangibles resulting from the MainStreet Bankshares, Inc. acquisition in January 2015 were $1.8 million and are being amortized on an accelerated basis over 120 months. Core deposit intangibles resulting from the acquisition of HomeTown Bankshares Corporation ("Hometown") in April 2019 were $8.2 million and are being amortized on an accelerated basis over 120 months.

The changes in the carrying amount of goodwill and intangibles for the twelve months ended December 31, 2022, are as follows (dollars in thousands):

	Goodwill		Intangibles
Balance at December 31, 2021	$	85,048	$	4,627
Amortization		—		(1,260	)
Balance at December 31, 2022	$	85,048	$	3,367

Goodwill and intangible assets at December 31, 2022 and 2021 were as follows (dollars in thousands):

	Gross Carrying		Accumulated			Net Carrying
	Value		Amortization			Value
December 31, 2022
Core deposit intangibles	$	19,708	$	(16,341	)	$	3,367
Goodwill		85,048		—			85,048
December 31, 2021
Core deposit intangibles	$	19,708	$	(15,081	)	$	4,627
Goodwill		85,048		—			85,048

Amortization expense of core deposit intangibles for the years ended December 31, 2022, 2021, and 2020 was $1.3 million, $1.5 million, and $1.6 million, respectively. As of December 31, 2022, the estimated future amortization expense of core deposit intangibles is as follows (dollars in thousands):

Year	Amount
2023	$	1,069
2024		800
2025		617
2026		454
2027		427
Total	$	3,367