Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

NOTE 8—GOODWILL AND INTANGIBLE ASSETS

Goodwill associated with the Company’s purchase of Bowers in June 2016, NBOH in June 2015, Tri-State in October 2015, NAI in July of 2013 and Trust in 2009 totaled $37.2 million at December 31, 2016 and $35.1 million at December 31, 2015. The Bowers, NBOH, Tri-State and NAI acquisitions are more fully described in Note 2. Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value, which is determined through a two-step impairment test. Step 1 includes the determination of the carrying value of the reporting units, including the existing goodwill and intangible assets, and estimating the fair value of the reporting units. After our annual impairment analysis as of September 30, 2016, the Company determined the fair value of all goodwill exceeded its carrying amount. After the annual impairment testing as of September 30, 2014, the fair value of NAI was less than its carrying value. When the carrying amount of a reporting unit exceeds its fair value, a second step to the impairment test is required. The analysis indicated that the Step 2 analysis was necessary for the NAI reporting unit. Step 2 of the goodwill impairment test is performed to measure the impairment loss. Step 2 requires that the implied fair value of the reporting unit’s goodwill be compared to the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess. After performing Step 2 it was determined that the implied value of goodwill was less than the carrying costs, resulting in an impairment charge of $763 thousand for the year ended December 31, 2014. During the initial valuation of NAI, the future income projections were not fully attained. The fair value of the reporting unit was determined based on a discounted cash flow model. Additionally, the $763 thousand impairment was offset with an equal reduction of the future payment liability associated with the purchase. The two adjustments offset resulting in a zero impact to the Company’s consolidated statements of income for year ended December 31, 2014.

Other Intangibles

Core deposit intangible assets associated with the Company’s purchases of NBOH and Tri-State totaled $5.6 million.

Other intangible assets were as follows at year end:

	2016					2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Other intangible:
Customer relationship intangibles	$	7,210	$	(4,253	)	$	5,970	$	(3,585	)
Non-compete contracts		430		(357	)		370		(325	)
Trade Name		520		(113	)		190		(65	)
Core deposit intangible		5,582		(1,029	)		5,582		(316	)
Total	$	13,742	$	(5,752	)	$	12,112	$	(4,291	)

Aggregate amortization expense was $1.5 million, $983 thousand, and $767 thousand for 2016, 2015, and 2014, respectively.

Estimated amortization expense for each of the next five years:

2017	$	1,459
2018		1,334
2019		1,222
2020		1,119
2021		1,058
Thereafter		1,798
TOTAL	$	7,990

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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