Acquisition (Tables)

12 Months Ended

Dec. 31, 2016

Summary of Cash Consideration Paid, and Fair Values of Assets Acquired and Liabilities Assumed

The results of First Eastern’s operations are included in the Company’s consolidated statement of operations from the date of acquisition. First Eastern’s assets and liabilities were recorded at their fair value as of the date of acquisition based on management’s estimates using currently available information. Prior to the end of the one year measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required, such adjustments will be included in the purchase price allocation in the reporting period in which the adjustment amounts are determined. Cash consideration paid, and fair values of First Eastern’s assets acquired and liabilities assumed, along with the resulting bargain purchase gain, are summarized in the following table (in thousands):

				Fair Value
	As Acquired			Adjustments				As Recorded
	(In thousands)
Cash and cash equivalents	$	2,951		$	—			$	2,951
Loans held for sale		26,209			450		(a)		26,659
Loans		30,824			482		(b)		31,306
Mortgage servicing rights		4,396			1,820		(c)		6,216
Premises and equipment		1,566			1,534		(d)		3,100
Core deposit intangible		—			118		(e)		118
Goodwill		789			(789	)	(f)		—
Other assets		2,046			(55	)	(g)		1,991
Deposits		(41,737	)		(53	)	(h)		(41,790	)
Federal Home Loan Bank advances		(13,128	)		(60	)	(h)		(13,188	)
Other liabilities		(1,917	)		(88	)	(i)		(2,005	)
Total identifiable net assets	$	11,999		$	3,359				15,358

Cash consideration paid to seller									14,082

Bargain purchase gain								$	1,276

Explanation of the fair value adjustments is as follows:

(a)

The adjustment represents the write-up of the book value of loans held for sale to their estimated fair value based on current selling prices, including the value of their servicing rights.

(b)

The adjustment represents the write-up of the book value of loans, to their estimated fair value based on current interest rates and expected cash flows, which includes an estimate of expected loan losses inherent in the portfolio. The balance of impaired loans was not significant.

(c)

The adjustment represents the write-up of the book value of mortgage servicing rights associated with $789.3 million of serviced loans to their estimated fair value based on an independent appraisal. The fair value was determined based on the discounted present value of estimated future net servicing income using market-based assumptions including prepayment speeds, costs of servicing, risk characteristics and interest rates.

(d)

The adjustment represents the write-up of the Boston retail branch based on an independent appraisal.

(e)

This amount represents the estimated fair value of core deposit relationships (equal to 1.1% of core deposits) based on an independent appraisal.

(f)

The adjustment eliminates existing goodwill.

(g)

The adjustment eliminates deferred origination costs for loans-in-process.

(h)

The adjustments represent the write-up of the book value of term certificate accounts and FHLB advances based on interest rates currently offered on instruments having similar remaining maturities.

(i)

The adjustment represents the fair value of forward loan sale commitments written on a best efforts basis.

Summary of Unaudited Pro Forma Financial Information

Unaudited pro forma financial information for the years ended December 31, 2016 and 2015 is as follows (in thousands):

	2016		2015
Net Interest Income	$	13,463	$	13,287
Non-interest Income		20,539		15,080
Net Income		1,658		243