TONE » Topics » Goodwill and Intangible Assets.

This excerpt taken from the TONE 10-K filed Mar 13, 2009.
Goodwill and Intangible Assets.  We recorded goodwill as a result of our 2004 acquisition of United Nebraska Financial Co. (“UNFC”).  We tested this goodwill for impairment annually during the third quarter of each year, or between annual assessment dates whenever events or significant changes in circumstances indicated that the carrying value may be impaired.  We performed a goodwill impairment test as of March 31, 2008 due to adverse changes in the business climate.  As a result of a decline in the market value of our common stock to levels below our book value, we determined that the entire amount of our goodwill was impaired, and we recorded a $42.1 million goodwill impairment charge to write-off our goodwill at March 31, 2008.

The value of core deposit intangible assets acquired in connection with the UNFC and Marine Bank transactions, which is subject to amortization, is included in the Consolidated Statements of Financial Condition as other intangible assets.  Determining the amount of identifiable intangible assets and their average lives involves multiple assumptions and estimates and is typically determined by performing a discounted cash flow analysis, which involves a combination of any or all of the following assumptions:  customer attrition, account runoff, alternative funding costs, deposit servicing costs and discount rates.  Core deposit intangible assets are amortized using an accelerated method of amortization which is recorded in the Consolidated Statements of Operations as other operating expense.

We review our core deposit intangible assets for impairment whenever events or changes in circumstances indicate that we may not recover our investment in the underlying assets or liabilities which gave rise to these intangible assets.  For the years ended December 31, 2008 and 2007, no events or circumstances triggered an impairment charge against our core deposit intangible assets.

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