Goodwill And Other Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

On October 1, 2016, we completed the acquisition of HCB and acquired intangible assets of $1.6 million and recorded $4.8 million of preliminary goodwill. See Note 3 Acquisitions for additional information.

Goodwill and certain other intangible assets with indefinite useful lives are not amortized into net income over an estimated life, but rather are tested at least annually for impairment. Intangible assets determined to have definite useful lives are amortized over their estimated useful lives and also are subject to impairment testing.

We first determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, we determine it is not more likely that the fair value of a reporting unit is less than its carrying amount, then performing the impairment test is unnecessary. However, if we conclude otherwise, then we perform an impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. Fair value is determined based on at least one of three various market valuation methodologies. If the fair value equals or exceeds the book value, no write-down of recorded goodwill is necessary. If the fair value is less than the book value, a charge may be required to write down the goodwill to the proper carrying value based upon additional analysis.Such additional analysis compares the implied fair value of the reporting unit goodwill with the carrying amount of the goodwill for the reporting unit. The implied fair value of goodwill is determined in the same manner as goodwill that is recognized in a business combination.

During 2016, we completed our annual impairment test for our reporting units and determined that no impairment charges were necessary as follows:

Community Banking – During third quarter 2016, we performed the Step 0 assessment of our goodwill of our community banking reporting unit and determined that it was not more likely than not that the fair value was less than its carrying value. In performing the qualitative Step 0 assessments, we considered certain events and circumstances such as macroeconomic conditions, industry and market considerations, overall financial performance and cost factors when evaluating whether it is more likely than not that the fair value is less than its carrying amount. No indicators of impairment were noted as of September 30, 2016.

Insurance Services – During third quarter 2016, we performed the Step 0 assessment of our goodwill of our insurance services reporting unit. We considered certain events and circumstances specific to the reporting unit, such as macroeconomic conditions, industry and market considerations, overall financial performance and cost factors when evaluating whether it is more likely than not that the fair value of our insurance services reporting unit is less than its carrying value and deemed it necessary to perform the further 2-step impairment test. We performed an internal valuation utilizing the income approach to determine the fair value of our insurance services reporting unit. This methodology consisted of discounting the expected future cash flows of this unit based upon a forecast of its operations considering long-term key business drivers such as anticipated commission revenue growth. The long term growth rate used in determining the terminal value was estimated at 2.5% and a discount rate of 10.0% was applied to the insurance services unit’s estimated future cash flows. We did not fail this Step 1 test as of September 30, 2016, therefore Step 2 testing was not necessary.

In addition, at December 31, 2016 and December 31, 2015, we had $2.66 million and $1.30 million in unamortized identifiable assets comprised of $1.56 million core deposit intangible and $1.10 million customer intangible at December 31, 2016 and $1.30 million customer intangible at December 31, 2015.



	Goodwill Activity
Dollars in thousands	Community Banking		Insurance Services		Total
Balance, January 1, 2016	$	1,488	$	4,710	$	6,198
Acquired goodwill, net	4,791		—		4,791
Balance, December 31, 2016	$	6,279	$	4,710	$	10,989



	Other Intangible Assets
	December 31, 2016						December 31, 2015
Dollars in thousands	Community Banking		Insurance Services		Total		Community Banking		Insurances Services		Total
Unidentifiable intangible assets
Gross carrying amount	$	—	$	—	$	—	$	2,268	$	—	$	2,268
Less: accumulated amortization	—		—		—		2,268		—		2,268
Net carrying amount	$	—	$	—	$	—	$	—	$	—	$	—

Identifiable intangible assets
Gross carrying amount	$	1,610	$	3,000	$	4,610	$	—	$	3,000	$	3,000
Less: accumulated amortization	47		1,900		1,947		—		1,700		1,700
Net carrying amount	$	1,563	$	1,100	$	2,663	$	—	$	1,300	$	1,300

Amortization relative to our identifiable intangible assets is as follows:



	Core Deposit		Customer
Dollars in thousands	Intangible		Intangible
Actual:
2014	$	—	$	250
2015	—		200
2016	47		200
Expected:
2017	186		200
2018	175		200
2019	163		200
2020	151		200
2021	139		200

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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