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Note 8 - Intangibles and Acquisition Related Accounting

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Text Block]

Note 8 – Intangibles and Acquisition Related Accounting

(Dollars in thousands)	2023		2022
Goodwill balance January 1,	$	22,395	$	11,109
Goodwill acquired - Royal Financial		-		11,286
Goodwill balance September 30,	$	22,395	$	22,395

Goodwill is tested annually for impairment. Goodwill arising from business combinations represents the value attributable to unidentifiable intangible assets in the business acquired. The Bancorp’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of the Bancorp to provide quality, cost effective banking services in a competitive marketplace. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value. There has not been any impairment of goodwill identified or recorded.

In addition to goodwill, a core deposit intangible was established with the acquisition of RYFL and from previous acquisitions. The Bancorp had core deposit intangible balances of $3.6 million and $4.8 million as of September 30, 2023, and December 31, 2022, respectively. The table below summarizes the annual amortization:

The amortization recorded for the three months ended September 30, is as follows:

(dollars in thousands)	Total
2022	$	400
2023	$	380

The amortization recorded for the nine months ended September 30, is as follows:

(dollars in thousands)	Total
2022	$	1,157
2023	$	1,158

Amortization to be recorded in future periods, is as follows:

(dollars in thousands)	Total
Remainder of 2023		364
2024		1,411
2025		688
2026		360
2027		294
Thereafter		519
Total	$	3,636

For the RYFL acquisition, as part of the fair value of certificates of deposit, a fair value premium was established of $1.0 million. Approximately $49 thousand and $134 thousand of amortization was taken as income during the three months ended September 30, 2023, and 2022, respectively. Approximately $176 thousand and $438 thousand of amortization was taken as income during the nine months ended September 30, 2023, and 2022, respectively. It is estimated amortization to be recorded in future periods is as follows: $40 thousand for the remainder of 2023, $124 thousand in 2024, $72 thousand in 2025, and $55 thousand thereafter.