Note 8 – Intangibles and Acquisition Related Accounting

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:

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.