FS Bancorp, Inc. Goodwill & Intangibles Disclosure

NOTE 20 – GOODWILL AND OTHER INTANGIBLE ASSETS

 

Goodwill and certain other intangibles generally arise from business combinations accounted for under the acquisition method of accounting. Goodwill totaled $3.6 million at both  December 31, 2025, and December 31, 2024, and represents the excess of the total acquisition price paid over the fair value of the assets acquired, net of the fair values of liabilities assumed in the Branch Purchase on February 24, 2023 (“Branch Acquisition”), and the purchase of four retail bank branches from Bank of America on January 22, 2016. Goodwill is not amortized but is evaluated for impairment on an annual basis at December 31 of each year or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The Company elected to perform a qualitative assessment to determine whether it was more likely than not that the fair value of the reporting unit exceeded its carrying value, including goodwill. In performing this assessment, management considered qualitative factors including macroeconomic conditions, industry and market trends, financial performance, and changes in the Company’s stock price and market capitalization. Based on this assessment, management concluded that it was more likely than not that the fair value of the reporting unit exceeded its carrying value, and therefore no impairment of goodwill was indicated.

 

Core deposit intangible (“CDI”) is evaluated for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, with any changes in estimated useful life accounted for prospectively over the revised remaining life. As of December 31, 2025, management believes that there have been no events or changes in the circumstances that would indicate a potential impairment of CDI.

 

The following table summarizes the changes in the Company’s other intangible assets comprised solely of CDI for the years indicated:

 

		Other Intangible Assets
						Accumulated
		Gross CDI				Amortization				Net CDI
Balance, December 31, 2023		$	24,928			$	(7,585	)		$	17,343
Amortization			—				(3,633	)			(3,633	)
Balance, December 31, 2024			24,928				(11,218	)			13,710
Amortization			—				(3,192	)			(3,192	)
Balance, December 31, 2025		$	24,928			$	(14,410	)		$	10,518

 

The CDI represents the fair value assigned to the intangible core deposit base acquired in business combinations. The CDI from the Branch Acquisition is being amortized on an accelerated basis over 10 years, while the CDI from the Anchor Bank acquisition (completed in November 2018) is being amortized on a straight-line basis over 10 years.  Amortization expense was $3.2 million, $3.6 million and $3.5 million for the years ended  December 31, 2025, 2024 and 2023, respectively.

 

Amortization expense for CDI is expected to be as follows for the years ended December 31:         

 

2026		$	2,845
2027			2,500
2028			2,110
2029			1,283
2030			937
Thereafter			843
Total		$	10,518