21.BUSINESS COMBINATION AND PENDING ACQUISITION

On March 17, 2017, the Company completed the acquisition of the West Scranton branch of Wayne Bank, the wholly owned banking subsidiary of Norwood Financial Corp., pursuant to the terms of the Branch Purchase and Deposit Assumption Agreement dated September 29, 2016. The Company purchased all of the deposit liabilities associated with the branch, certain loans, and the branch real estate, and immediately closed the branch and consolidated the acquired deposits and loans into its nearby West Scranton branch office. The Company expects this transaction to expand its customer base in West Scranton.

The transaction has been accounted for using the acquisition method of accounting. The acquired assets and assumed liabilities were recorded at book value which also represented estimated fair value at the date of acquisition. Management made significant estimates and exercised significant judgement in estimating fair value, but the fair value adjustments were deemed immaterial to the financial statements.

The Company recognized $41 thousand of acquisition-related costs during 2017. These costs were expensed as incurred and are presented in non-interest expenses on the consolidated statements of income. Costs incurred in 2017 consist principally of legal fees and other professional fees.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition:



(dollars in thousands)	March 17, 2017

Cash and cash equivalents	$	11,817
Loans		1,574
Bank premises and equipment		264
Goodwill		209
Accrued interest receivable and other assets		4
Total assets acquired	$	13,868

Deposits	$	13,809
Accrued interest payable and other liabilities		59
Total liabilities assumed	$	13,868

The Company acquired $1.6 million in residential and consumer loans. None of the loans that were acquired had evidence of credit quality deterioration.

The Company recorded goodwill associated with the acquisition of the West Scranton branch of Wayne bank totaling $0.2 million. Goodwill is not amortized, but is periodically evaluated for impairment. The Company did not recognize any impairment during 2019 or 2018. For income tax purposes, goodwill will be deducted over a 15 year period.

Pending Acquisition

In December 2019, the Company announced an agreement and plan of reorganization to acquire MNB Corporation (“MNB”) in a transaction valued on December 6, 2019 at $78.5 million. Under the terms of the agreement, MNB shareholders will receive as consideration 1.039 shares of Fidelity common stock for each share of MNB common stock that they own as of the closing date. MNB is the holding company of Merchants Bank of Bangor (“Merchants Bank”) which operates 9 retail community banking offices in Northeastern and Eastern Pennsylvania. Subject to the terms and conditions of the agreement, MNB will merge with and into the Company and Merchants Bank will merger with and into the Bank. The merger which is subject to shareholder approval of the Company, MNB shareholder approval, regulatory approvals and other customary closing conditions, is currently expected to close in the second quarter of 2020. In 2019, the Corporation incurred merger-related expenses totaling $440 thousand related to the planned acquisition of MNB Corporation. Non-recurring costs to facilitate the anticipated merger and integrate systems in 2020 are currently estimated to be $2.4 million.