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Goodwill and Intangible Assets
12 Months Ended
Sep. 30, 2011
Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 8. Goodwill and Intangible Assets


     The Consolidated Balance Sheets at September 30, 2010 included goodwill totaling $28.3 million, which was comprised of $630 thousand related to continuing operations and $27.6 million related to insurance operations which was reclassified to assets of discontinued operations. On June 1, 2011 and September 30, 2011, the sale of First Southeast and Kimbrell, respectively, were completed and the assets and liabilities related to these companies, including goodwill, were removed from First Financial’s Consolidated Balance Sheets.


     As of May 31, 2011, First Financial performed its annual goodwill impairment test. The Step 1 analysis indicated that the carrying amount exceeded estimated fair value for Atlantic Acceptance (“Atlantic”), a subsidiary of First Federal and for Kimbrell; therefore, Step 2 testing was required. As a result of the Step 2 analysis, First Financial determined that the goodwill associated with both entities was impaired due to updated discounted cash flow projections, and a change in business strategy. During fiscal year 2011, First Financial recorded a non-cash, non-tax-deductible goodwill impairment charge of $630 thousand for Atlantic, which is included in the operating results for continuing operations, and $1.9 million for Kimbrell, which is included in the operating results from discontinued operations.


     The following table summarizes the carrying amount of customer list intangibles.


               

 

 

 

 

 

 

 

 

 

 

As of September 30,

 

 

 

   

   (in thousands)

 

2011

 

2010

 

           

   Customer list

 

$

3,211

 

$

1,180

 

   Transfer of goodwill associated with Amercian Pensions

 

 

---

 

 

2,031

 

   Less: accumulated amortization

 

 

(720

)

 

(395

)

 

 

           

   Total

 

$

2,491

 

$

2,816

 

 

 

           

 

 

 

 

 

 

 

 

               

     During the year ended September 30, 2010, $1.3 million of goodwill was transferred to intangible assets to adjust the value of customer lists related to the July 2009 acquisition of American Pensions. The transfer resulted in the establishment of a deferred tax liability of $777 thousand with a total of $2.0 million recorded as an increase to intangible assets.


     The weighted average amortization period for intangible assets is approximately eight years as of September 30, 2011. Expected amortization expense related to intangibles for future years is shown in the table below:


         

 

 

 

 

 

(in thousands)

 

Intangible
Amortization
Expense

 

       

Fiscal Year

 

 

 

 

2012

 

$

341

 

2013

 

 

319

 

2014

 

 

319

 

2015

 

 

319

 

2016

 

 

319

 

Thereafter

 

 

874

 

 

 

     

Total

 

$

2,491