Goodwill and Intangibles
|12 Months Ended|
Dec. 31, 2020
|Goodwill And Intangible Assets Disclosure [Abstract]|
|Goodwill and Intangibles||
NOTE 8. GOODWILL AND INTANGIBLES
Goodwill and other intangible assets, which consist of core deposit intangibles, are summarized as follows:
Amortization expense for core deposit intangibles for the years ended December 31, 2020, 2019 and 2018 totalled $3.7 million, $3.6 million and $917 thousand, respectively.
The estimated amount of amortization expense for core deposit intangible assets to be recognized over the next five fiscal years is as follows:
Due to triggering events associated with the COVID-19 pandemic, the Company evaluated Goodwill for impairment quarterly during 2020 in addition to completing the annual Goodwill impairment test as of December 31, 2020. The result of each quarterly assessment and the annual impairment test was that the fair value of the one
reporting unit, the Bank, exceeded the carrying value and no impairment charge was deemed necessary. The Company utilized discounted cash flow and market valuation approaches in each assessment and in the annual impairment test.
The discounted cash flow approach utilizes the Company’s five year forecasted income statement which was updated for expected losses related to the pandemic, lower loan growth, and an extended period of low interest rates. The resulting cash flows for each year was discounted using a rate determined through a build-up approach which includes, a risk free rate, an equity risk premium, size premium, and company specific premium.
The market approach utilizes observed merger activity during the year and calculates deal multiples of last twelve months net income, book value, and tangible book value. An additional market approach was utilized for the annual impairment test which utilized the same multiples calculated based upon market capitalization applied to a group of representative peers.
The entire disclosure for goodwill and intangible assets.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef