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Intangible Assets
12 Months Ended
Dec. 31, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Intangible Assets

 

Note 7 – Intangible Assets

On February 1, 2016 (the “Effective Date”), VNB Wealth purchased the book of business, including interest in the client relationships, (“Purchased Relationships”), from an officer (the “Seller”) of VNB Wealth pursuant to an employment and asset purchase agreement (the “Purchase Agreement”). Prior to becoming an employee of the Company and until the Effective Date of the sale, the Seller provided services to these Purchased Relationships as a sole proprietor. As of January 15, 2016, the fair value of the assets under management associated with the Purchased Relationships totaled $31.5 million. Under the terms of the Purchase Agreement, the Company will receive all future revenue for investment management, advisory, brokerage, insurance, consulting, trust and related services performed for the Purchased Relationships.

The purchase price of $1.2 million was payable over a five year period with the last payment being made in January 2020. During the first quarter of 2016, the Company recognized goodwill and other intangible assets arising from this purchase. As required under ASC Topic 805, “Business Combinations,” using the acquisition method of accounting, below is a summary of the net asset values, as determined by an independent third party, based on the fair value measurements and the purchase price.

The intangible assets identified below will be amortized using a straight line method over the estimated useful life, and the amortized cost will be shown as noninterest expense. In accordance with ASC 350, “Intangibles-Goodwill and Other,” the Company will review the carrying value of indefinite lived goodwill at least annually or more frequently if certain impairment indicators exist.

 

(dollars in thousands)

 

Fair Value

 

 

% of Total

Intangible Assets

 

 

Estimated

Economic Useful

Life

Identified Intangible Assets

 

 

 

 

 

 

 

 

 

 

Non-Compete Agreement

 

$

103

 

 

 

9.0

%

 

3 years

Customer Relationships Intangible

 

 

670

 

 

 

58.5

%

 

10 years

Total Identified Intangible Assets

 

$

773

 

 

 

67.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

372

 

 

 

32.5

%

 

Indefinite

Total Intangible Assets

 

$

1,145

 

 

 

100.0

%

 

 

 

Through the twelve months ended December 31, 2020, the Company recognized $90,000 in amortization expense from these identified intangible assets with a finite life. The net carrying value of $341,000 will be recognized as amortization expense in future reporting periods through 2026. The following shows the gross and net balance of these intangible assets as of December 31, 2020.  

 

(in thousands)

 

Gross Carrying

Value

 

 

Accumulated

Amortization

 

 

Net Carrying

Value

 

Identified Intangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

Non-Compete Agreement

 

$

103

 

 

$

103

 

 

$

 

Customer Relationships Intangible

 

 

670

 

 

 

329

 

 

$

341

 

Total Identified Intangible Assets

 

$

773

 

 

$

432

 

 

$

341

 

 

As of December 31, 2020, the Company carried no contingent liability, as all five payments due to the Seller, as delineated in the Purchase Agreement, were paid, with the last annual payment paid from this liability in January 2020.