Note 8 - Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 8 – GOODWILL AND INTANGIBLE ASSETS

Goodwill

During the third quarter, we performed a goodwill impairment analysis. Under new accounting standards for goodwill impairment testing, a company is allowed to forgo a full goodwill impairment study and assess relevant events and circumstances from the time of the prior testing. As such, we reviewed the following factors:

1)      General economic conditions in our banking area have continued to improve from July 2012 through the time of the review.

2)      Overall financial performance of the bank improved over the review period.

a.	Increase in market capitalization of the stock;
b.	Increase in net income;
c.	Increase in earnings per share;
d.	Decrease in nonperforming loans; and
e.	Decrease in charged off loans.

In addition to the factors mentioned above, the agreed upon sales price with Mercantile Bank resulted in a fair value mark for the Bank that was in excess of the current tangible book value by more than the current book value of goodwill.

Based on the analysis, management concluded that the implied fair value of goodwill exceeded the carrying value; therefore, no goodwill impairment charge was required at this time. Whole bank sale transactions at a premium to tangible book value in the market place play an important role in the determination of fair value of the company. Changes in the pricing of future whole bank sales could negatively affect future valuation and result in goodwill impairment at a future date.

There was no change in the carrying amount of goodwill during the year.

(In Thousands of Dollars)
	2013		2012
Balance at January 1	$	35,513	$	35,513
Goodwill from acquisitions/(divestitures)		0		0
Balance at December 31	$	35,513	$	35,513

Acquired Intangible Assets

Acquired intangible assets at year end were as follows:                

(In Thousands of Dollars)	2013			2012			2011
Core deposit intangibles resulting from bank and branch acquisitions:
Gross Amount	$	7,930		$	7,930		$	7,930
Accumulated Amortization		(7,334	)		(6,965	)		(6,482	)
Net Carrying Value	$	596		$	965		$	1,448

Aggregate amortization expense was $369,000, $483,000, and $698,000 for 2013, 2012, and 2011, respectively. Our estimated amortization expense for each of the next five years is:

(In Thousands of Dollars)

Year	Amount
2014	$	278
2015		185
2016		99
2017		34
2018		0