Note 8 - Intangible Assets

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE 8 Intangible Assets

The Company’s intangible assets consist of core deposit intangibles, goodwill and mortgage servicing rights. A summary of mortgage servicing rights activity for 2021 and 2020 is as follows:

(Dollars in thousands)	2021			2020
Mortgage servicing rights, net:
Balance, beginning of year	$	3,043			2,172
Originations		1,405			2,189
Amortization		(1,168	)		(1,318	)
Balance, end of year	$	3,280			3,043
Fair value of mortgage servicing rights	$	4,813			3,378

All of the single family loans sold where the Company continues to service the loans are serviced for FNMA under the individual loan sale program. The following is a summary of the risk characteristics of the loans being serviced for FNMA at December 31, 2021:

(Dollars in thousands)	Loan Principal Balance		Weighted Average Interest Rate			Weighted Average Remaining Term (months)		Number of Loans
Original term:
15 year fixed rate	$	117,439		2.85	%		142		1,066
30 year fixed rate		424,109		3.42			313		2,663

The gross carrying amount of intangible assets and the associated accumulated amortization at December 31, 2021 and 2020 are presented in the following table. Amortization expense for intangible assets was $1.2 million and $1.4 million for the years ended December 31, 2021 and 2020, respectively.

	Gross					Unamortized
	Carrying		Accumulated			Intangible
(Dollars in thousands)	Amount		Amortization			Assets
December 31, 2021
Mortgage servicing rights	$	5,854		(2,574	)		3,280
Core deposit intangible		574		(564	)		10
Goodwill		802		0			802
Total	$	7,230		(3,138	)		4,092
December 31, 2020
Mortgage servicing rights	$	5,691		(2,648	)		3,043
Core deposit intangible		574		(517	)		57
Goodwill		802		0			802
Total	$	7,067		(3,165	)		3,902

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,
2022	$	695		10		705
2023		648		0		648
2024		613		0		613
2025		543		0		543
2026		441		0		441
Thereafter		340		0		340
	$	3,280		10		3,290

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 an impairment may exist. Goodwill was tested for impairment at December 31, 2021 and the Company determined that it was not permanently impaired and no write down was required.

Projections of amortization are based on asset balances and the interest rate environment that existed at December 31, 2021. The Company’s actual experience may be significantly different depending upon changes in mortgage interest rates and other market conditions.