Note 12. Goodwill and Intangible Assets

The Company accounts for goodwill and other intangible assets in accordance with ASC 350. The Company records the excess of cost acquired entities over the fair value of identifiable tangible and intangible assets acquired, less liabilities assumed, as goodwill. The Company amortizes acquired intangible assets with definite useful economic lives over their useful economic lives. On a periodic basis, management assesses whether events or changes in circumstances indicate that the carrying amount of the intangible assets may be impaired. The Company does not amortize goodwill or any acquired intangible assets with an indefinite useful economic life, but reviews them for impairment on an annual basis, or when events or changes in circumstances indicate that the carrying amounts may be impaired. The Company has performed the required goodwill impairment test and has determined that goodwill was not impaired as of December 31, 2019.

Goodwill: The Company acquired goodwill in the purchase of Partners (see Note 13 – Virginia Partners Bank Transaction for further information). The following table provides changes in goodwill for the three months ended March 31, 2020 and the year ended December 31, 2019:


	March 31,		December 31,
Dollars in Thousands	2020		2019
Balance at the beginning of the period	$	9,391	$	5,237
Partners acquisition		—		4,154
Impairment		—		—
Balance at the end of the period	$	9,391	$	9,391

Core Deposit Intangible: The Company acquired core deposit intangibles in the acquisitions of Liberty and Partners. For the core deposit intangible related to Liberty, the Company utilizes the double declining balance method of amortization, in which the straight line amortization rate is doubled and applied to the remaining unamortized portion of the intangible asset. The amortization method changes to the straight line method of amortization when the straight line amortization amount exceeds the amount that would be calculated under the double declining balance method. This core deposit intangible is being amortized over seven years. For the core deposit intangible related to Partners, the Company utilizes the sum of months method and an estimated average life of 120 months. The following table provides changes in the core deposit intangible for the three months ended March 31, 2020, and the year ended December 31, 2019:


	March 31,		December 31,
Dollars in Thousands	2020		2019
Balance at the beginning of the period	$	3,373	$	1,069
Partners acquisition		—		2,650
Accumulated amortization		(183)		(346)
Balance at the end of the period	$	3,190	$	3,373

The following table provides the amortization expense for the core deposit intangible over the years indicated below:


	March 31,
Dollars in Thousands	2020
2020	$	530
2021		600
2022		520
2023		467
2024 and thereafter		1,073
	$	3,190

Net Deposits Purchased Premium and Discount: The Company paid a deposit premium in the acquisition of Liberty and received a deposit discount in the acquisition of Partners, which are included in the balances of time deposits on the balance sheets. The premium amount is amortized as a reduction in interest expense over the life of the acquired time deposits and the discount is accreted as an increase in interest expense over the life of the acquired time deposits. The premium and discount on deposits will both be amortized and accreted over approximately five years. The following table provides changes in the net deposit discount for the three months ended March 31, 2020 and the year ended December 31, 2019:


	March 31,		December 31,
Dollars in Thousands	2020		2019
Balance at the beginning of the period	$	(31)	$	27
Partners acquisition		—		(38)
Accumulated amortization, net		—		(20)
Balance at the end of the period	$	(31)	$	(31)

The following table provides the accretion for the net deposit discount over the years indicated below:


	March 31,
Dollars in Thousands	2020
2020	$	(8)
2021		(15)
2022		(6)
2023		(2)
2024 and thereafter		—
	$	(31)