Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 7. Goodwill and Intangible Assets

Goodwill and Intangible Assets:

In accordance with FASB ASC 350, Goodwill and Other, regarding testing goodwill for impairment provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company performs its annual goodwill impairment test as of December 31 of each year. For 2021, the results of the qualitative assessment provided no indication of potential impairment. For 2020, considering the economic conditions resulting from the COVID-19 pandemic, the Company performed a Step 1 goodwill impairment test (which compares the fair value of a reporting unit with its carrying amount, including goodwill), the results indicated that there was no impairment. Management will continue to evaluate the economic conditions at future reporting periods for applicable changes.

On September 30, 2021, the Company entered into a Purchase and Assumption Agreement and completed the sale of a portfolio of loans and certain assets associated (the “Sale”) with its branch office located in Richmond, Virginia to Strasburg, Virginia-based First Bank.  In accordance with GAAP, the Company allocated a proportionate share of its goodwill balance to the Sale on a relative fair value basis.  Based on a relative fair value analysis performed through the date of the sale, goodwill adjustment in the amount of $2.5 million related to the Sale was recorded during the third quarter of 2021.

The Company’s other intangible assets consist of core deposit intangibles, insurance agency customer relationships and insurance agency tradename.  They are initially recognized based on a valuation performed as of the consummation date. The core deposit intangible is amortized over the average remaining life of the acquired customer deposits, the insurance agency customer relationships are amortized over ten years and the insurance agency tradename is amortized over five years.

The carrying amount of goodwill and other intangible assets as of the dates indicated is summarized below (in thousands):

	December 31,		December 31,
	2021		2020
Goodwill:
Balance, beginning of period	$	74,135	$	65,614
Acquisition of PFG		323		8,521
Acquisition of Fountain		2,400		—
Acquisition of SCB		17,171		—
Adjustment, due to Sale		(2,464)		—
Balance, end of the period	$	91,565	$	74,135

	Core Deposit		Customer Relationships		Tradename
Amortized other intangible assets:	Intangibles		Intangibles		Intangibles		Total
December 31, 2021:
Beginning balance January 1, 2021, gross	$	15,920	$	1,064	$	63	$	17,047
Acquisition of Fountain		-		2,658		-		2,658
Acquisition of SCB		1,550		-		-		1,550
Balance, December 31, 2021, other intangible assets, gross		17,470		3,722		63		21,255
Less: accumulated amortization		(6,212)		(733)		(23)		(6,968)
Balance, December 31, 2021, other intangible assets, net	$	11,258	$	2,989	$	40	$	14,287
December 31, 2020:
Beginning balance January 1, 2020, gross	$	14,550	$	-	$	-	$	14,550
Acquisition of PFG		1,370		1,064		63		2,497
Balance, December 31, 2020, other intangible assets, gross		15,920		1,064		63		17,047
Less: accumulated amortization		(4,540)		(161)		(10)		(4,711)
Balance, December 31, 2020, other intangible assets, net	$	11,380	$	903	$	53	$	12,336

The aggregate amortization expense for other intangibles assets for the years ended December 31, 2021 and 2020, was $2.3 million and $1.7 million, respectively.

The estimated aggregate amortization expense for future periods for other intangible assets is as follows (in thousands):

2022	$	2,521
2023		2,356
2024		2,203
2025		2,041
2026		1,888
Thereafter		3,278
Total	$	14,287