Note 6 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note 6 – Goodwill and Other Intangible Assets

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.

Due to recent declines in bank stock prices and events impacting the banking industry, the Company performed a quantitative impairment analysis as of December 31, 2023. The annual quantitative assessment of goodwill for the reporting unit was performed utilizing a discounted cash flow analysis ("income approach") and estimates of selected market information ("market approaches"). The income approach measures the fair value of an interest in a business by discounting expected future cash flows to present value. The market approaches take into consideration fair values of comparable companies operating in similar lines of business that are potentially subject to similar economic and environmental factors and could be considered reasonable investment alternatives. The result of the income approach was weighted 50% and the results of the market approaches comprised the remaining 50% in determining the fair value of the reporting unit. The results of the annual quantitative impairment analysis indicated that the fair value exceeded the carrying value of the reporting unit.

Based upon management’s review through December 31, 2023, 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.

Goodwill

The change in goodwill during the year is as follows:

	2023		2022
	(dollars in thousands)
Balance, January 1	$	208,372	$	208,372
Acquired goodwill		-		-
Impairment		-		-
Balance, December 31	$	208,372	$	208,372

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					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
	(dollars in thousands)
Core deposit intangibles
December 31, 2023	$	18,515	$	(12,641	)	$	5,874
Core deposit intangibles
December 31, 2022	$	18,515	$	(11,203	)	$	7,312

Aggregate amortization expense was approximately $1.4 million, $1.7 million and $2.0 million for 2023, 2022 and 2021, respectively. Estimated amortization expense for each of the next five years (dollars in thousands):

2024	$	1,235
2025		1,116
2026		1,050
2027		989
2028		930