ConnectOne Bancorp, Inc. Goodwill & Intangibles Disclosure
Note 7 – Goodwill and Other Intangible Assets
The Company performs an annual impairment test as required by ASC 350. For 2025, management utilized the "step zero" qualitative assessment. This assessment evaluates whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
Based upon management’s review through December 31, 2025, the Company concluded that no impairment exists, the "step zero" test was passed, and no further quantitative testing was required.
Goodwill
The following table summarizes the changes in the carrying amount of goodwill for the years ended December 31, 2025 and 2024, including adjustments related to the measurement period of prior acquisitions:
| 2025 | 2024 | |||||||
| (dollars in thousands) | ||||||||
| Balance, January 1 | $ | 208,372 | $ | 208,372 | ||||
| Acquired goodwill | 7,239 | - | ||||||
| Measurement period adjustments | 4,624 | - | ||||||
| Impairment | - | - | ||||||
| Balance, December 31 | $ | 220,235 | $ | 208,372 | ||||
The adjustment was primarily driven by a finalization of deferred tax assets, including a $5.0 million increase from true-ups based on tax filings (decrease to goodwill), a $1.3 million increase from the application of the finalized 30.9% blended statutory tax rate (decrease to goodwill) and a $10.9 million valuation allowance related to Section 382 limitations-including recognized built-in losses and net operating losses resulting from the completion of a formal limitation study and updated New York apportionment rates (increase to goodwill).
Acquired Intangible Assets
The following table summarizes the gross carrying amount, accumulated amortization, and net carrying amount of the Company’s core deposit intangibles as of the dates set forth below:
| Gross | Net | |||||||||||
| Carrying | Accumulated | Carrying | ||||||||||
| Amount | Amortization | Amount | ||||||||||
| (dollars in thousands) | ||||||||||||
| Core deposit intangibles | ||||||||||||
| December 31, 2025 | $ | 76,413 | $ | (16,490 | ) | $ | 59,923 | |||||
| Core deposit intangibles | ||||||||||||
| December 31, 2024 | $ | 13,207 | $ | (8,568 | ) | $ | 4,639 | |||||
One core deposit intangible of $5.3 million in gross carrying value from a previous merger was fully amortized as of December 31, 2024 and is no longer reflected in the financial statements.
Aggregate amortization expense was approximately $7.9 million, $1.2 million and $1.4 million for 2025, 2024 and 2023, respectively. Estimated amortization expense for each of the next five years (dollars in thousands):
| 2026 | $ | 11,382 | ||
| 2027 | 9,491 | |||
| 2028 | 8,171 | |||
| 2029 | 6,829 | |||
| 2030 | 5,565 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 6, 2018 | |
| 2016 | Mar 10, 2017 | |
| 2015 | Mar 4, 2016 | |
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.