Note 4 - Goodwill and Core Deposit Intangibles

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

(4) Goodwill and Core Deposit Intangibles

Goodwill represents $11.8 million related to the 2019 KSB acquisition and $682,000 related to the 1996 purchase of a bank in southern Indiana. The acquisition of TBOC in 2013 generated a bargain purchase gain. Effective March 31, 2020, management finalized the fair values of the acquired assets and assumed liabilities related to the 2019 KSB acquisition ahead of the 12 months as allowed by GAAP.

GAAP requires that goodwill and intangible assets with indefinite useful lives not be amortized, but instead be tested for impairment at least annually. Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value. Bancorp’s annual goodwill impairment test is conducted as of September 30 of each year or more often as situations dictate.

At December 31, 2020, Bancorp elected to perform a qualitative assessment to determine if it was more-likely-than-not that the fair value of the Commercial Banking reporting unit exceeded its carrying value, including goodwill. The qualitative assessment indicated that it was not more-likely-than-not that the carrying value of the reporting unit exceeded its fair value.

Changes in the carrying value of goodwill follows:

	Three months ended
	March 31,
(in thousands)	2021		2020
Balance at beginning of period	$	12,513	$	12,513
Goodwill acquired		—		—
Recast adjustments		—		—
Impairment		—		—
Balance at end of period	$	12,513	$	12,513

Bancorp recorded CDI assets of $1.5 million and $2.5 million in association with the acquisition of KSB in 2019 and TBOC in 2013, respectively.

Changes in the net carrying amount of CDIs follows:

	Three months ended
	March 31,
(in thousands)	2021			2020
Balance at beginning of period	$	1,962		$	2,285
Core deposit intangible acquired		—			—
Amortization		(77	)		(82	)
Balance at end of period	$	1,885		$	2,203