Note 6 - Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note  6. Goodwill and Other Intangible Assets

On

May 10, 2018

the Company completed its acquisition of Prime Bank, a Connecticut bank headquartered in Orange, CT. The closing of the transaction added a new Patriot branch located in the Town of Orange, New Haven County, Connecticut.

The assets acquired and liabilities assumed from Prime Bank were recorded at their fair value as of the closing date of the acquisition. Goodwill of

$2.1

million was recorded at the time of the acquisition, and was adjusted to

$1.7

million as of

December 31, 2018,

primarily due to updating of fair value of the core deposit intangible and adjustment of cash and contingent consideration. The goodwill was further adjusted to

$1.1

million as a result of reducing the estimated amount to be paid pursuant to certain problem loans pending resolution by

$621,000

as of

May 10, 2019.

There were

no

income statement effects resulting from the recorded measurement period adjustments for the

three

and

nine

months ended

September 30, 2020.

The goodwill is all deductible for income taxes over

15

years.

Information on goodwill for the

three

and

nine

months ended

September 30, 2020

and

2019

is as follows:

(In thousands)	Three Month Ended September 30,				Nine Month Ended September 30,
	2020		2019		2020		2019
Balance, beginning of period	$	1,107	$	1,107	$	1,107	$	1,728
Mesurement period adjustments		-		-		-		(621	)
Balance, end of period	$	1,107	$	1,107	$	1,107	$	1,107

Goodwill is evaluated for impairment annually, in the

fourth

quarter of the year, or whenever we identify certain triggering events or circumstances that would more likely than

not

reduce the fair value of a reporting unit below its carrying amount. Events or circumstances that might indicate an interim evaluation is warranted include, among other things, unexpected adverse business conditions, macro and reporting unit specific economic factors, supply costs, unanticipated competitive activities, and acts by governments and courts.

The Company identified the COVID-

19

pandemic and related reported losses as a triggering event in the

first

quarter of

2020.

Due to this triggering event, the Company performed a qualitative assessment of the goodwill, and concluded it was more likely than

not

that the fair value of the reporting unit exceeded its carrying value, and goodwill was

not

impaired. The Company did

not

perform an interim goodwill test in the

third

quarter of

2020

as

no

events occurred which would trigger an impairment assessment. The Company will perform a quantitative assessment as of

October 31, 2020,

the Company's annual goodwill impairment measurement date.