Goodwill and Intangible Assets. Goodwill is not amortized; however, it is tested for impairment at each calendar  year end or more frequently when events or circumstances dictate. The impairment test compares the carrying value of  goodwill to an implied fair value of the goodwill, which is based on a review of the Company’s market capitalization  adjusted for appropriate control premiums as well as an analysis of valuation multiples of recent, comparable acquisitions. The Company considers the result from each of these valuation methods in determining the implied fair value of its  goodwill. A goodwill impairment would be recorded for the amount that the carrying value exceeds the implied fair value.  Intangible assets include core deposit intangibles and mortgage servicing rights. Core deposit intangible assets are  amortized over their estimated useful life of ten years on an accelerated basis. When facts and circumstances indicate  potential impairment, the Company will evaluate the recoverability of the intangible asset’s carrying value, using estimates  of undiscounted future cash flows over the remaining asset life. Any impairment loss is measured by the excess of carrying  value over fair value. Mortgage servicing assets are recognized as separate assets when rights are retained after the sale of  financial assets, primarily one-to-four family real estate loans and are recorded at the lower of amortized cost or estimated  fair value. Mortgage servicing rights are amortized into non-interest expense in proportion to, and over the period of, the  estimated future net servicing income of the underlying financial assets. Servicing assets are recorded at the lower of  amortized cost or estimated fair value and are evaluated for impairment based upon the fair value of the retained rights as  compared to amortized cost stratified by maturity and interest rate. Income Taxes.  The objective of accounting for income taxes is to recognize the amount of taxes payable or  refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been  recognized in an entity’s financial statements or tax returns. Judgment is required in assessing the future tax consequences  of events that have been recognized in financial statements or tax returns. Uncertain income tax positions will be  recognized only if it is more likely than not that they will be sustained upon examination by taxing authorities, based upon  its technical merits. Once that standard is met, the amount recorded will be the largest amount of benefit that has a greater  than 50 percent likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties  related to unrecognized tax benefits as a component of income tax expense in the consolidated statements of earnings. The  Company assesses deferred tax assets to determine if the items are more likely than not to be realized, and a valuation  allowance is established for any amounts that are not more likely than not to be realized. Changes in estimates regarding the  actual outcome of these future tax consequences, including the effects of taxing authority examinations, could materially  impact the financial position and results of operations. Use of Estimates. The preparation of the consolidated financial statements in conformity with U.S. generally  accepted accounting principles (“GAAP”) requires the Company to make estimates and assumptions that affect the reported  amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial  statements and the reported amounts of revenues and expenses during the reporting period. Estimates that are particularly  susceptible to significant change include the determination of the allowance for loan losses, valuation and impairment of  real estate owned, valuation and impairment of investment securities, income taxes and goodwill. Actual results could differ  from those estimates.  Comprehensive Income. The Company’s comprehensive income consists of unrealized holding gains and losses  on available-for-sale securities.  Foreclosed Assets. Assets acquired through, or in lieu of, foreclosure are to be sold and are initially recorded at  the date of foreclosure at fair value of the collateral less estimated selling costs through a gain or a charge to the allowance  for loan losses, establishing a new cost basis. Subsequent to foreclosure, the Company records a charge to earnings if the  carrying value of a property exceeds the fair value less estimated costs to sell. Revenue and expenses from operations and  subsequent declines in fair value are included in other non-interest expense in the consolidated statement of earnings.  Stock-Based Compensation.   The Company has a stock-based employee compensation plan, which is described  more fully in Note 11. The fair value of stock options awarded to employees is calculated through the use of an option  pricing model, which requires subjective assumptions, including future stock price volatility and expected term, which  greatly affect the estimated fair value. The Company uses the Black-Scholes option pricing model to estimate the grant date  fair value of its stock options, which is recognized as compensation expense over the option vesting period, on a straight- line basis, which is typically four or five years. The fair value of restricted common stock is equal to the Company’s stock  price on the grant date, which is recognized as compensation expense on a straight-line basis over the vesting period. 71 