NOTE 9 - GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 9 - GOODWILL AND INTANGIBLE ASSETS

NOTE 9 - GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying values of goodwill and intangible assets were as follows:

Years ended December 31, (in thousands)		2020			2019			2018
Goodwill (1)
Balance, beginning of period	$	13,815		$	13,815		$	13,815
Additions		-			-			-
Impairment		-			-			-
Balance, end of period	$	13,815		$	13,815		$	13,815
Core deposit intangibles
Cost, beginning of period	$	5,881		$	5,881		$	5,881
Additions		-			-			-
Cost, end of period		5,881			5,881			5,881
Amortization, beginning of period		(4,886	)		(4,498	)		(4,044	)
Amortization		(321	)		(388	)		(454	)
Amortization, end of period		(5,207	)		(4,886	)		(4,498	)
Core deposit intangibles, net	$	674		$	995		$	1,383

(1) Not subject to amortization.

Management evaluates goodwill and identifiable intangible assets for impairment at least annually using valuation techniques that involve observations and adjustments as to comparable transactions, estimates for discount rates, projected future cash flows and time period calculations, all of which are susceptible to change based on changes in economic conditions and other factors. The COVID-19 pandemic triggered significant volatility in the global financial markets. Throughout 2020, Salisbury’s stock price primarily traded below its book value. On December 31, 2020, Salisbury’s closing stock price was $37.27 per share compared with its book value of $43.88 per share. Salisbury’s stock price has declined approximately 18% from December 31, 2019 consistent with financial stocks, as measured by the S&P United States BMI Banks Index, which declined approximately 16% over the same period. As a result of the stock market volatility and the negative impact from COVID-19 on the national and regional economy, in addition to the required annual assessment, the Bank periodically assessed during the year ended December 31, 2020 whether it was more likely than not that the carrying value of goodwill was impaired.

During fiscal year 2020, management evaluated several qualitative factors including macroeconomic conditions, the Bank’s financial performance and the short-term volatility in Salisbury’s share price and concluded that it was not more likely than not that goodwill was impaired. Salisbury performed its annual quantitative impairment analysis as of November 30, 2020 instead of December 31, 2020. Management changed the date of the assessment to ensure that there was adequate time to review the results of the analysis and record an impairment charge, if necessary, prior to finalizing the financial statements for fiscal year 2020. There were no material changes in the Bank’s operating environment or financial results during the month of December 2020 that would have affected the outcome of the impairment analysis. As a result of the analysis, management concluded that goodwill and other intangible assets were not impaired as of November 30, 2020. No impairment charges were recognized in 2019 or 2018.

The core deposit intangibles were recorded as identifiable intangible assets and are being amortized over ten years using the sum-of-the-years’ digits method. Estimated annual amortization expense of core deposit intangibles is as follows:

December 31,		CDI amortization (in thousands)
	2021		255
	2022		192
	2023		128
	2024		61
	2025		25
	2026 and thereafter		13
	Total	$	674