GOODWILL AND OTHER INTANGIBLE ASSETS
The following table presents a roll forward of the Company's goodwill activity:
| | | | | | | | |
| | Year Ended December 31, 2025 |
| (Dollars in Thousands) | |
| Beginning Balance | | $ | — | |
| Goodwill acquired in Branch Purchase | | 1,193 | |
| Ending Balance | | $ | 1,193 | |
The Company believes that customer relationships associated with deposits acquired in business combinations represent identifiable intangible assets. Accordingly, in connection with acquisitions, the Company recorded a core deposit intangible, which represents the value of the acquired entity’s relationships with its deposit customers.
The fair value of the core deposit intangible was estimated using a DCF methodology that considered the type of deposit, estimated deposit retention, the cost of maintaining the deposit base, and an alternate cost of funds.
The following tables present the details of the Company's core deposit intangible:
| | | | | | | | |
| | Year Ended December 31, 2025 |
| (Dollars in Thousands) | |
| Gross Carrying Amount | | $ | 1,101 | |
| Accumulated Amortization | | (161) | |
| Ending Balance | | $ | 940 | |
| | |
| Beginning Balance | | $ | — | |
| Core Deposit Intangible in Branch Purchase | | 1,101 | |
| Amortization Expense | | (161) | |
| Ending Balance | | $ | 940 | |
The core deposit intangible is being amortized over 10 years on an accelerated basis. The estimated amortization expense for core deposit intangible assets for each of the next five years and thereafter is as follows:
| | | | | | | | |
| (Dollars in Thousands) | | |
| 2026 | | $ | 232 | |
| 2027 | | 180 | |
| 2028 | | 139 | |
| 2029 | | 107 | |
| 2030 | | 83 | |
| Thereafter | | 199 | |
| | $ | 940 | |
The Company will complete an annual assessment of the carrying value of goodwill during 2026 to determine whether or not its carrying value is impaired.
Refer to Note 2, Business Combinations in the Notes to Consolidated Financial Statements in Item 8. of the Annual Report on Form 10-K for additional information on the Branch Acquisition.
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.