Goodwill and Intangibles

6 Months Ended

Dec. 31, 2020

Goodwill and Intangibles

Goodwill and Intangibles

Note 8 – Goodwill and Intangibles

The goodwill and intangible assets arising from acquisitions is accounted for in accordance with the accounting guidance in FASB ASC Topic 350 for Intangibles — Goodwill and Other. William Penn Bancorp recorded goodwill of $4.9 million and core deposit intangibles of $1.4 million in connection with the acquisition of Audubon Savings Bank in July 2018. William Penn Bancorp also recorded core deposit intangibles totaling $65 thousand and $197 thousand in connection with the acquisitions of Fidelity and Washington, respectively, in May 2020. As of December 31, 2020 and June 30, 2020, the other intangibles consisted of $1.1 million and $1.2 million, respectively, of core deposit intangibles, which are amortized over an estimated useful life of ten years.

William Penn Bancorp performs its annual impairment evaluation on June 30 or more frequently if events and circumstances indicate that the fair value of the banking unit is less than its carrying value. During the year ended June 30, 2020, management included considerations of the current economic environment caused by COVID-19 in its qualitative assessment of goodwill impairment and

determined that a quantitative assessment of goodwill was warranted. Management engaged a third-party valuation specialist to perform a quantitative assessment of goodwill impairment and it was determined that it is not more likely than not that the carrying value of goodwill is impaired. No goodwill impairment existed at June 30, 2020. During the six months ended December 31, 2020, management considered the current economic environment caused by the COVID-19 pandemic in its evaluation, and determined based on the totality of its qualitative assessment that it is not more likely than not that the carrying value of goodwill is impaired. No goodwill impairment exists during the six months ended December 31, 2020.

Goodwill and other intangibles are summarized as follows for the periods presented:

			Core Deposit
(Dollars in thousands)	Goodwill		Intangibles
Balance, July 1, 2019	$	4,858	$	1,172
Adjustments:
Additions		—		—
Amortization		—		(59)
Balance, September 30, 2019	$	4,858	$	1,113
Adjustments:
Additions		—		—
Amortization		—		(59)
Balance, December 31, 2019	$	4,858	$	1,054
			Core Deposit
(Dollars in thousands)	Goodwill		Intangibles
Balance, June 30, 2020	$	4,858	$	1,192
Adjustments:
Additions		—		—
Amortization		—		(64)
Balance, September 30, 2020	$	4,858	$	1,128
Adjustments:
Additions		—		—
Amortization		—		(64)
Balance, December 31, 2020	$	4,858	$	1,064

Aggregate amortization expense was $64 thousand and $128 thousand for the three and six months ended December 31, 2020, respectively. Aggregate amortization expense was $59 thousand and $118 thousand for the three and six months ended December 31, 2019, respectively.