NEW INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY Notes to the Consolidated Financial Statements
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES( Continued)
m. Other Real Estate Real estate properties acquired through, or in lieu of, loan foreclosure are held for sale, and are initially recorded at the fair value less estimated selling cost at the date of foreclosure, establishing a new cost basis. Any write-downs are charged to the allowance for credit loss. Costs of significant property improvements are capitalized, whereas costs relating to holding the property are expensed. The portion of interest costs relating to development of real estate is capitalized. Valuations are periodically performed by management, and any subsequent write-downs are recorded as a charge to operations, if necessary, to reduce the carrying value of a property to the lower of the cost basis or fair value less cost to sell.
n. Goodwill and Other Intangible Assets Goodwill arises from business combinations and is determined as the excess of the fair value of the consideration transferred over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that an impairment test should be performed. Intangible assets with finite useful lives are amortized over their estimated useful lives to their estimated residual values. Amortized intangibles must be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset( group) might not be recoverable. An impairment loss related to intangible assets with finite useful lives is recognized if the carrying amount of the intangible asset is not recoverable and its carrying amount exceeds its fair value. After the impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Goodwill is the only intangible asset with an indefinite life on the balance sheet.
Other intangible assets consist of core deposit intangible assets arising from bank acquisitions and are amortized on the straight line basis over 10 years.
o. Revenue Recognition New Independent Title and Insurance Company, LLC recognizes premiums from the sale of title insurance on an as-earned basis.
In the ordinary course of business, the Company recognizes income from various revenue generating activities. Certain revenues are generated from contracts with customers where such revenues are recognized when, or as, services or products are transferred to customers for amounts to which the Company expects to be entitled. A description of the Company ' s revenue streams from contracts with customers are as follows:
Service Charges on Deposit Accounts: The Company earns fees from its deposit customers for transaction-based account maintenance and overdraft fees. Transaction-based fees, which include services such as stop payment charges and statement rendering, are recognized at the time the transaction is executed( the point in time the Company fills the customer ' s request). Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs.
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