|
|
 | | | |
- close
- close
- close
- close
MBHI » Topics » If the Company is required to write down goodwill or other intangible assets or if it is required to mark-to-market certain of its assets or reduce its deferred tax assets by a valuation allowance, its financial condition and results of operations would bThese excerpts taken from the MBHI 10-K filed Mar 11, 2009. If the
Company is required to write down goodwill or other intangible
assets or if it is required to mark-to-market certain of its
assets or reduce its deferred tax assets by a valuation
allowance, its financial condition and results of operations
would be negatively affected.
When the Company acquires a business, a portion of the purchase
price of the acquisition may be allocated to goodwill and
identifiable intangible assets. The amount of the purchase price
which is allocated to goodwill is determined by the excess of
the purchase price over the fair value of the net tangible and
identifiable intangible assets acquired. At December 31,
2008, the Company’s goodwill and identifiable intangible
assets were approximately $93.5 million. Under generally
accepted accounting principles, if the Company determines that
the carrying value of its goodwill or intangible assets is
impaired, the Company is required to write down the value of
these assets. The Company conducts an annual review to determine
whether goodwill and identifiable intangible assets are impaired.
The Company’s goodwill and intangible assets are reviewed
annually for impairment as of September 30th of each
year. This review in 2008 was conducted with the assistance of a
third party valuation specialist. In conducting the review, the
market value of the Company’s common stock, estimated
control premiums, projected cash flow and various pricing
analyses are all taken into consideration to determine if the
fair value of the assets and liabilities in its business exceed
their carrying amounts.
On September 30, 2008, the Company recorded a non-cash
goodwill impairment charge of $80.0 million. This goodwill
impairment charge was not tax deductible, did not impact its
tangible equity or regulatory capital ratios, and did not
adversely affect its overall liquidity position. It is
classified as a noninterest expense item.
Under SFAS No. 142, goodwill must be tested for
impairment annually and, under certain circumstances, at
intervening interim dates. A goodwill impairment test also could
be triggered between annual testing dates if an event occurs or
circumstances change that would more likely than not reduce the
fair value below the carrying amount. Examples of those events
or circumstances would include the following:
The Company does not believe that any new events or changes in
circumstance have occurred since September 30, 2008 (the
date of our most recent annual test and resulting impairment
recognition) that would require an interim impairment analysis
to be conducted as of December 31, 2008. Management will
continue to assess any shortfall in the Company’s market
capitalization relative to its total book value and tangible
book value, which management currently attributes to both
industry-wide and Company-specific factors, and to evaluate
whether any additional adjustments are required in the carrying
value of goodwill. If the Company’s common stock
Table of Contents
continues to trade at a price below book value, the Company may
be required in a future period to recognize an impairment of
all, or some portion, of its remaining goodwill.
The Company cannot assure that it will not be required to take
additional goodwill impairment charges in the future. Any
impairment charge would have a negative effect on its
stockholders’ equity and financial results.
If an impairment charge is significant enough to result in
negative net income for the period, it could affect the ability
of the Bank to upstream dividends to the Company, which could
have a material adverse effect on the Company’s liquidity
and its ability to pay dividends to stockholders.
If the Company decides to sell a loan or a portfolio of loans it
is required to classify those loans as held for sale, which
requires it to carry such loans at the lower of cost or market.
If it decides to sell loans at a time when the fair market value
of those loans is less than their carrying value, the adjustment
will result in a loss. The Company may from time to time decide
to sell particular loans or groups of loans, for example to
resolve classified loans, and the required adjustment could
negatively affect its financial condition or results of
operations.
The Company is required, under generally accepted accounting
principles, to assess the need for a valuation allowance on its
deferred tax assets. If, based on the weight of available
evidence, it is more likely than not that some portion or all of
the deferred tax assets will not be realized, the Company would
be required to reduce its deferred tax assets by a valuation
allowance and increase income tax expense. At December 31,
2008, the Company’s net deferred tax asset was
$56.5 million.
If the Company is required to write down goodwill or other intangible assets or if it is required to mark-to-market certain of its assets or reduce its deferred tax assets by a valuation allowance, its financial condition and results of operations would be negatively affected. When the Company acquires a business, a portion of the purchase price of the acquisition may be allocated to goodwill and identifiable intangible assets. The amount of the purchase price which is allocated to goodwill is determined by the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. At December 31, 2008, the Company’s goodwill and identifiable intangible assets were approximately $93.5 million. Under generally accepted accounting principles, if the Company determines that the carrying value of its goodwill or intangible assets is impaired, the Company is required to write down the value of these assets. The Company conducts an annual review to determine whether goodwill and identifiable intangible assets are impaired. The Company’s goodwill and intangible assets are reviewed annually for impairment as of September 30th of each year. This review in 2008 was conducted with the assistance of a third party valuation specialist. In conducting the review, the market value of the Company’s common stock, estimated control premiums, projected cash flow and various pricing analyses are all taken into consideration to determine if the fair value of the assets and liabilities in its business exceed their carrying amounts. On September 30, 2008, the Company recorded a non-cash goodwill impairment charge of $80.0 million. This goodwill impairment charge was not tax deductible, did not impact its tangible equity or regulatory capital ratios, and did not adversely affect its overall liquidity position. It is classified as a noninterest expense item. Under SFAS No. 142, goodwill must be tested for impairment annually and, under certain circumstances, at intervening interim dates. A goodwill impairment test also could be triggered between annual testing dates if an event occurs or circumstances change that would more likely than not reduce the fair value below the carrying amount. Examples of those events or circumstances would include the following:
The Company does not believe that any new events or changes in circumstance have occurred since September 30, 2008 (the date of our most recent annual test and resulting impairment recognition) that would require an interim impairment analysis to be conducted as of December 31, 2008. Management will continue to assess any shortfall in the Company’s market capitalization relative to its total book value and tangible book value, which management currently attributes to both industry-wide and Company-specific factors, and to evaluate whether any additional adjustments are required in the carrying value of goodwill. If the Company’s common stock
Table of Contentscontinues to trade at a price below book value, the Company may be required in a future period to recognize an impairment of all, or some portion, of its remaining goodwill. The Company cannot assure that it will not be required to take additional goodwill impairment charges in the future. Any impairment charge would have a negative effect on its stockholders’ equity and financial results. If an impairment charge is significant enough to result in negative net income for the period, it could affect the ability of the Bank to upstream dividends to the Company, which could have a material adverse effect on the Company’s liquidity and its ability to pay dividends to stockholders. If the Company decides to sell a loan or a portfolio of loans it is required to classify those loans as held for sale, which requires it to carry such loans at the lower of cost or market. If it decides to sell loans at a time when the fair market value of those loans is less than their carrying value, the adjustment will result in a loss. The Company may from time to time decide to sell particular loans or groups of loans, for example to resolve classified loans, and the required adjustment could negatively affect its financial condition or results of operations. The Company is required, under generally accepted accounting principles, to assess the need for a valuation allowance on its deferred tax assets. If, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized, the Company would be required to reduce its deferred tax assets by a valuation allowance and increase income tax expense. At December 31, 2008, the Company’s net deferred tax asset was $56.5 million. If the Company is required to write down goodwill or other intangible assets or if it is required to mark-to-market certain of its assets or reduce its deferred tax assets by a valuation allowance, its financial condition and results of operations would be negatively affected. When the Company acquires a business, a portion of the purchase price of the acquisition may be allocated to goodwill and identifiable intangible assets. The amount of the purchase price which is allocated to goodwill is determined by the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. At December 31, 2008, the Company’s goodwill and identifiable intangible assets were approximately $93.5 million. Under generally accepted accounting principles, if the Company determines that the carrying value of its goodwill or intangible assets is impaired, the Company is required to write down the value of these assets. The Company conducts an annual review to determine whether goodwill and identifiable intangible assets are impaired. The Company’s goodwill and intangible assets are reviewed annually for impairment as of September 30th of each year. This review in 2008 was conducted with the assistance of a third party valuation specialist. In conducting the review, the market value of the Company’s common stock, estimated control premiums, projected cash flow and various pricing analyses are all taken into consideration to determine if the fair value of the assets and liabilities in its business exceed their carrying amounts. On September 30, 2008, the Company recorded a non-cash goodwill impairment charge of $80.0 million. This goodwill impairment charge was not tax deductible, did not impact its tangible equity or regulatory capital ratios, and did not adversely affect its overall liquidity position. It is classified as a noninterest expense item. Under SFAS No. 142, goodwill must be tested for impairment annually and, under certain circumstances, at intervening interim dates. A goodwill impairment test also could be triggered between annual testing dates if an event occurs or circumstances change that would more likely than not reduce the fair value below the carrying amount. Examples of those events or circumstances would include the following:
The Company does not believe that any new events or changes in circumstance have occurred since September 30, 2008 (the date of our most recent annual test and resulting impairment recognition) that would require an interim impairment analysis to be conducted as of December 31, 2008. Management will continue to assess any shortfall in the Company’s market capitalization relative to its total book value and tangible book value, which management currently attributes to both industry-wide and Company-specific factors, and to evaluate whether any additional adjustments are required in the carrying value of goodwill. If the Company’s common stock
Table of Contentscontinues to trade at a price below book value, the Company may be required in a future period to recognize an impairment of all, or some portion, of its remaining goodwill. The Company cannot assure that it will not be required to take additional goodwill impairment charges in the future. Any impairment charge would have a negative effect on its stockholders’ equity and financial results. If an impairment charge is significant enough to result in negative net income for the period, it could affect the ability of the Bank to upstream dividends to the Company, which could have a material adverse effect on the Company’s liquidity and its ability to pay dividends to stockholders. If the Company decides to sell a loan or a portfolio of loans it is required to classify those loans as held for sale, which requires it to carry such loans at the lower of cost or market. If it decides to sell loans at a time when the fair market value of those loans is less than their carrying value, the adjustment will result in a loss. The Company may from time to time decide to sell particular loans or groups of loans, for example to resolve classified loans, and the required adjustment could negatively affect its financial condition or results of operations. The Company is required, under generally accepted accounting principles, to assess the need for a valuation allowance on its deferred tax assets. If, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized, the Company would be required to reduce its deferred tax assets by a valuation allowance and increase income tax expense. At December 31, 2008, the Company’s net deferred tax asset was $56.5 million. | EXCERPTS ON THIS PAGE:
|
| |||||||
