Note 10 - Intangible Assets

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

(

1

0

)

Intangible Assets

The Company's intangible assets consist of mortgage servicing rights, core deposit intangibles, and goodwill. A summary of mortgage servicing activity is as follows:

(Dollars in thousands)	Nine Months ended September 30, 2020			Twelve Months ended December 31, 2019			Nine Months ended September 30, 2019
Balance, beginning of period	$	2,172			1,855			1,855
Originations		1,710			1,097			674
Amortization		(1,002	)		(780	)		(535	)
Balance, end of period	$	2,880			2,172			1,994
Fair value of mortgage servicing rights	$	2,956			3,390			2,922

All of the loans sold where the Company continues to service the loans are serviced for FNMA under the mortgage-backed security program or the individual loan sale program. The following is a summary of the risk characteristics of the loans being serviced for FNMA at

September 30, 2020.

			Weighted			Weighted
	Loan		Average			Average
	Principal		Interest			Remaining		Number
(Dollars in thousands)	Balance		Rate			Term (months)		of Loans
Original term 30 year fixed rate	$	380,018		3.74	%		311		2,593
Original term 15 year fixed rate		117,870		3.03			140		1,064

The gross carrying amount of intangible assets and the associated accumulated amortization at

September 30, 2020

and

December 31, 2019

is presented in the following table. Amortization expense for amortizing intangible assets was

$1.1

million and

$0.6

million for the

nine

month periods ended

September 30, 2020

and

2019,

respectively.

	September 30, 2020
	Gross
(Dollars in thousands)	Carrying Amount		Accumulated Amortization			Unamortized Amount
Mortgage servicing rights	$	6,018		(3,138	)		2,880
Core deposit intangible		574		(492	)		82
Goodwill		802		0			802
Total	$	7,394		(3,630	)		3,764

	December 31, 2019
	Gross
(Dollars in thousands)	Carrying Amount		Accumulated Amortization			Unamortized Amount
Mortgage servicing rights	$	4,968		(2,796	)		2,172
Core deposit intangible		574		(418	)		156
Goodwill		802		0			802
Total	$	6,344		(3,214	)		3,130

The following table indicates the estimated future amortization expense for amortizing intangible assets:

(Dollars in thousands)	Mortgage Servicing Rights		Core Deposit Intangible		Total Amortizing Intangible Assets
Year ended December 31,
2020	$	156		25		181
2021		596		47		643
2022		550		10		560
2023		495		0		495
2024		437		0		437
Thereafter		646		0		646
Total	$	2,880		82		2,962

Projections of amortization are based on existing asset balances and the existing interest rate environment as of

September 30, 2020.

The Company's actual experience

may

be different depending upon changes in mortgage interest rates and other market conditions.

No

amortization expense relating to goodwill is recorded as GAAP does

not

allow goodwill to be amortized but requires that it be tested for impairment at least annually, or sooner, if there are indications that impairment

may

exist. The Company's stock was trading at a price below its book value at

September 30, 2020

and therefore, goodwill was analyzed for impairment. Based on the analysis, the Company determined that goodwill was

not

permanently impaired and

no

write down was required at

September 30, 2020.