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Goodwill, Other Intangible Assets, and Acquisition Related Accounting
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12 Months Ended | |
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Dec. 31, 2014
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| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Goodwill and Intangible Assets Disclosure [Text Block] |
Note 7 Goodwill, Other Intangible Assets, and Acquisition Related Accounting
The Bancorp established a goodwill balance of approximately $2.0 million with the acquisition of First Federal in April of 2014. In addition to goodwill, a core deposit intangible of $93 thousand was established and is being amortized over 7.9 years on a straight line basis. Approximately $3 thousand of amortization was taken during the period ended March 31, 2015. It is estimated that $9 thousand of additional amortization will occur during 2015 and the remaining amount will be equally amortized through to the first quarter of 2022.
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. During the first quarter of 2015, initial estimates of fair values related to a pool of loans with a single borrower were determined to be lower than originally estimated. This change, net of related estimated adjustments, led to the addition of $377 thousand to goodwill and $423 thousand to purchase credit impaired loan balances during the period ended March 31, 2015. Goodwill totaled $2.0 million at March 31, 2015 and $1.6 million at December 31, 2014.
As part of the fair value of loans receivable, a net fair value discount was established for residential real estate, including home equity lines of credit, of $1.1 million that is being accreted over 55 months on a straight line basis. Approximately $70 thousand of accretion was taken into income for the three months ended March 31, 2015. It is estimated that $150 thousand of accrection will occur during the remainder of 2015. It is estimated that $200 thousand of accretion will occur annually through 2017, and accretion of $167 thousand will occur during 2018.
As part of the fair value of certificates of deposit, a fair value premium was established of $276 thousand that is being amortized over 17 months on a straight line basis. Approximately $50 thousand of amortization was taken as expense during the three months ended March 31, 2015. It is estimated that $76 thousand of amortization will occur during the remainder of 2015.
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