NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) NOTE 7 GOODWILL NOTE 8 CORE DEPOSIT INTANGIBLES During 2002, the Corporation changed its method of accounting and financial reporting for goodwill and other intangible assets by adopting the provisions of SFAS No. 142. Had the new method been applied retroactively, the previously reported 2001 net income would have increased by $1,070,000. No impairment loss was recorded in 2003 and 2002. The changes in the carrying amount of goodwill are as follows: The carrying basis and accumulated amortization of recognized core deposit intangibles at December 31 were: Amortization expense for the years ended December 31, 2003, 2002 and 2001, was $3,704,000, $2,571,000 and $612,000, respectively. Estimated amortization expense for each of the following five years is: 40 2004 ................................ $3,348 2005 ................................ 3,064 2006 ................................ 3,013 2007 ................................ 3,013 2008 ................................ 3,013 2003 2002 ============================================================================= Gross carrying amount ........................... $ 31,073 $ 22,902 Accumulated amortization ........................ (7,029) (3,325) --------- -------- Core deposit intangibles ..................... $ 24,044 $ 19,577 ========= ======== 2003 2002 ============================================================================= Balance, January 1 .............................. $ 87,640 $ 26,081 Goodwill acquired ............................... 30,291 60,122 Adjustments to previously acquired goodwill ............................. 748 1,437 --------- -------- Balance, December 31 ............................ $ 118,679 $ 87,640 ========= ========