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Note 3 - Acquisitions | 12 Months Ended
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Dec. 31, 2023
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | NOTE 3 – ACQUISITIONS Completion of Acquisition of Certain Assets and Liabilities of the Honolulu, Hawaii Branch Office of Bank of the Orient On January 14, 2022, the Company completed the acquisition of the Hawaii Branch from BOTO. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of January 14, 2022. The total fair value of assets acquired approximated $8.5 million, which included $312,000 in cash and cash equivalents, $7.4 million in selected performing loans, $729,000 in core deposit intangible assets and $64,000 in other assets. The total fair value of liabilities assumed was $81.8 million, which included $81.7 million in deposits, $27,000 in certificate of deposit premium, and $90,000 in other liabilities. The Bank received $71.0 million in cash in connection with the acquisition, which represented consideration for the deposits assumed by the Bank, partially offset by the purchase price of the assets acquired and the premium paid. The Company acquired Hawaii Branch from BOTO to strategically establish a presence in the Hawaiian Islands area. Goodwill in the amount of $2.3 million and core deposit intangible of $729,000 was recognized in connection with this acquisition. Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and is attributable to synergies expected to be derived from the combination of the two entities. Goodwill is not deductible for income tax purposes. The following table represents the assets acquired and liabilities assumed from the Hawaii Branch as of January 14, 2022 and the fair value adjustments and amounts recorded by the Company under the acquisition method of accounting:
|  | BOTO |  |  | Fair Value |  |  | Fair |
(dollars in thousands) |  | Book Value |  |  | Adjustments |  |  | Value |
Assets acquired |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 312 |  |  | $ | — |  |  | $ | 312 |
Loans, gross |  |  | 7,352 |  |  |  | 38 |  |  |  | 7,390 |
Bank premises and equipment |  |  | 12 |  |  |  | — |  |  |  | 12 |
Core deposit intangible |  |  | — |  |  |  | 729 |  |  |  | 729 |
Other assets |  |  | 412 |  |  |  | (360 | ) |  |  | 52 |
Total assets acquired |  | $ | 8,088 |  |  | $ | 407 |  |  | $ | 8,495 |
Liabilities assumed |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 81,673 |  |  | $ | 27 |  |  | $ | 81,700 |
Escrow Payable |  |  | 2 |  |  |  | — |  |  |  | 2 |
Other liabilities |  |  | 460 |  |  |  | (372 | ) |  |  | 88 |
Total liabilities assumed |  |  | 82,135 |  |  |  | (345 | ) |  |  | 81,790 |
Excess of assets acquired over liabilities assumed |  |  | (74,047 | ) |  |  | 752 |  |  |  | (73,295 | )
|  | $ | 8,088 |  |  | $ | 407 |  |  |  |  |
Cash received |  |  |  |  |  |  |  |  |  |  | 71,040 |
Goodwill recognized |  |  |  |  |  |  |  |  |  | $ | 2,255 |
The Company accounted for this transaction under the acquisition method of accounting in accordance with ASC 805, Business Combinations, which requires purchased assets and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The loan portfolio of the Hawaii branch was recorded at fair value at the date of acquisition with the assistance of a third-party valuation. A valuation of the loan portfolio was performed as of the acquisition date to assess the fair value of the loan portfolio. The loan portfolio was segmented into two groups; loans with credit deterioration and loans without credit deterioration, and then split further by loan type. There were no loans acquired with credit deterioration. The fair value was calculated on an individual loan basis using a DCF analysis. The discount rate utilized was based on a weighted average cost of capital, considering the cost of equity and cost of debt. Also factored into the fair value estimates were loss rates, recovery period and prepayment rates based on industry standards. The Company also determined the fair value of the core deposit intangible, premises and equipment and deposits with the assistance of third-party valuations. The core deposit intangible on non-maturing deposits was determined by evaluating the underlying characteristics of the deposit relationships, including customer attrition, deposit interest rates, service charge income, overhead expense and costs of alternative funding. Since the fair value of intangible assets are calculated as if they were stand-alone assets, the presumption is that a hypothetical buyer of the intangible asset would be able to take advantage of potential tax benefits resulting from the asset purchase. The value of the benefit is the present value over the period of the tax benefit, using the discount rate applicable to the asset. In determining the fair value of certificates of deposit, a DCF analysis was used, which involved present valuing the contractual payments over the remaining life of the certificates of deposit at market-based interest rates. Third-party acquisition related expenses are recognized as incurred and continue until the acquired system is converted and operational functions become fully integrated.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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