A goodwill impairment test is required under ASC 350, Intangibles – Goodwill and Other, and the FASB issued ASU No. 2011-08, “Testing Goodwill for Impairment,” allowing an initial qualitative assessment of goodwill commonly known as step zero impairment testing. In general, the step zero test allows an entity to first assess qualitative factors to determine whether it is more likely than not (i.e., more than 50%) that the fair value of a reporting unit is less than its carrying value. If a step zero impairment test results in the conclusion that it is more likely than not that the fair value of the reporting unit exceeds its carrying value, then no further testing is required.

In accordance with ASC 350, the Company performs goodwill impairment test at least annually, or more frequently if triggering event occurs. In the second quarter of 2020, the impact of COVID-19, prompted the Company to quantitively evaluate goodwill for impairment. The Company engaged an independent third-party to evaluate the fair value of the Company compared to its carrying value. To estimate the fair value of the Company, the third-party relied on a weighted discounted cash flow method, guideline public company method, and transaction method. The results concluded that the fair value of the Company exceeded its current carrying value and goodwill impairment did not exist as of June 30, 2020.

Based upon management’s review through December 31, 2020, the Company’s goodwill was not impaired. Management concludes that the ASC 350 goodwill step zero test has been passed, and no further testing is required.

	2020		2019
	(dollars in thousands)
Balance, January 1	$	162,574	$	145,909
Acquired goodwill		45,798		16,665
Impairment		-		-
Balance, December 31	$	208,372	$	162,574

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Table of Contents

CONNECTONE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 – Goodwill and Other Intangible Assets – (continued)

Acquired Intangible Assets

The table below provides information regarding the carrying amounts and accumulated amortization of total amortized intangible assets as of the dates set forth below.

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(dollars in thousands)
As of December 31, 2020

Core deposit intangibles	$	18,515	$	(7,538)	$	10,977

As of December 31, 2019

Core deposit intangibles	$	10,439	$	(4,979)	$	5,460

Aggregate amortization expense was approximately $2.6 million, $1.4 million and $0.6 million for 2020, 2019 and 2018, respectively. Estimated amortization expense for each of the next five years (dollars in thousands):

2021	$	1,981
2022		1,485
2023		1,438
2024		1,235
2025		1,116