Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure

Goodwill and Other Intangible Assets

Goodwill is not amortized. Goodwill, as well as intangible assets, are subject to impairment tests on at least an annual basis, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of Alterra below its carrying amount (including goodwill). At December 31, 2015 and 2014, the Corporation had goodwill of $10.7 million.

The Corporation conducted its most recent annual impairment testing in July 2015, utilizing a qualitative assessment. Management evaluated several factors to perform the qualitative assessment, including but not limited to: macroeconomic conditions, industry and market considerations, cost factors, overall financial performance of Alterra (both current and projected), other Alterra-specific events, and changes in the Corporation’s common stock price. Based on these assessments, management concluded that the 2015 annual qualitative impairment assessment indicated that it is more likely than not that the estimated fair value exceeded the carrying value (including goodwill) for Alterra. Therefore, a step one quantitative analysis was not required. There were no events since the July 2015 impairment testing that have changed the Corporation's impairment assessment conclusion. There were no impairment charges recorded in 2015 and 2014, and no goodwill recorded in 2013.

The Corporation has intangible assets that are amortized consisting of loan servicing rights and core deposit intangibles.

Loan servicing rights are recognized separately when they are acquired through sales of SBA loans. When SBA loans are sold, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Loan servicing assets are subsequently measured using the amortization method, which requires servicing rights to be amortized into interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

The estimated fair value of the Corporation’s loan servicing asset was $1.6 million and $943,000 as of December 31, 2015 and 2014, respectively. This servicing asset represents the servicing rights retained upon sale of the guaranteed portion of certain SBA loans. The Corporation periodically reviews this portfolio for impairment and engages a third-party valuation firm to assess the fair value of the overall servicing rights portfolio.

For the year ended December 31, 2015 and 2014, loan servicing asset amortization totaled $197,000 and $24,000, respectively. The Corporation had no loan servicing asset outstanding in 2013.

Changes in the gross carrying amount, accumulated amortization and net book value of core deposit intangibles were as follows:



	Year Ended December 31,
	2015			2014			2013
	(In Thousands)
Core deposit intangibles:
Gross carrying amount	$	347		$	347		$	—
Less: accumulated amortization	(83		)	(12		)	—
Net book value	$	264		$	335		$	—
Amortization during the period	$	(71	)	$	(12	)	$	—

Estimated amortization expense of core deposit intangibles for fiscal years 2016 through 2020 are as follows:



	Core deposit intangibles
	(In Thousands)
Estimate for the year ended December 31,
2016	$	62
2017	54
2018	47
2019	40
2020	35
Thereafter	26
	$	264

- 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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