Note 5 - Goodwill

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

(5) Goodwill

As of September 30, 2022, goodwill totaled $203 million, $67 million of which was added through the CB acquisition. As permitted under GAAP, management has up to 12 months following the date of acquisition to finalize the fair values of the acquired assets and assumed liabilities related to the CB acquisition. During this measurement period, Bancorp may record subsequent adjustments to goodwill for provisional amounts recorded at the acquisition date.

The composition of goodwill is presented by respective acquisition below:

	September 30,		December 31,
(in thousands)	2022		2021
Commonwealth Bancshares (2022)	$	66,694	$	—
Kentucky Bancshares (2021)		123,317		123,317
King Southern Bancorp (2019)		11,831		11,831
Austin State Bank (1996)		682		682
Total	$	202,524	$	135,830

Note: The acquisition of The Bank Oldham County in 2013 resulted in a bargain purchase gain.

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 September 30, 2022, Bancorp elected to perform a qualitative assessment to determine if it was more-likely-than-not that the fair value of the reporting units exceeded their carrying value, including goodwill. The qualitative assessment indicated that it was not more-likely-than-not that the carrying value of the reporting units exceeded their fair value.

Changes in the carrying value of goodwill follows:

		Three months ended				Nine months ended
		September 30,				September 30,
(in thousands)	2022		2021			2022		2021
Balance at beginning of period	$	202,524	$	136,529		$	135,830	$	12,513
Goodwill recorded from acquisitions		—		—			66,694		124,016
Provisional period adjustments		—		(699	)		—		(699	)
Impairment		—		—			—		—
Balance at end of period	$	202,524	$	135,830		$	202,524	$	135,830

As of September 30, 2022, goodwill totaling $203 million was recorded on Bancorp’s consolidated balance sheets, of which $175 million is attributed to the commercial banking segment and $28 million is attributed to WM&T. The portion of total goodwill attributed to WM&T relates entirely to the CB acquisition, which generated $67 million in total goodwill during the nine months ended September 30, 2022.