On February 28, 2021, the Company completed its acquisition of Gibraltar Bank. Pursuant to the terms of the Merger Agreement, Gibraltar Bank merged with and into Bogota Savings Bank, with the Bogota Savings Bank as the surviving entity. Under the terms of the merger agreement, depositors of Gibraltar Bank became depositors of the Bank and have the same rights and privileges in Bogota Financial MHC as if their accounts had been established at the Bank on the date established at Gibraltar Bank. The Company issued 1,267,916 shares of its common stock to Bogota MHC.

The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their fair values as of February 28, 2021 based on management’s best estimate using the information available as of the merger date. The application of the acquisition method of accounting resulted in the recognition of bargain purchase gain of $1.9 million and a core deposit intangible of $400,000.

Merger-related expenses of $318,000 for 2021 and $146,000 for 2020 are recorded in the Consolidated Statements of Income and are expensed as incurred. The following table sets forth assets acquired and liabilities assumed in the acquisition of the Gibraltar Bank, at their estimated fair values as of the closing date of the transaction:

	As recorded by Gibraltar Bank			Fair value adjustments				As recorded at acquisition
Consideration paid								$	11,500,000
Assets Acquired
Cash and cash equivalents	$	19,393,090		$	—			$	19,393,090
Securities held to maturity		7,250,000			(208,051	)	(a)		7,041,949
Federal Home Loan Bank stock and other restricted stock		603,500			—				603,500
Loans receivable		77,683,903			(920,497	)	(b)		76,763,406
Allowance for loan loss		(640,232	)		640,232		(c )		—
Accrued interest receivable		302,927			—				302,927
Premises and equipment, net		348,714			1,079,647		(d)		1,428,361
Core deposit intangible		—			400,000		(e )		400,000
Deferred taxes		913,303			(184,973	)	(f)		728,330
Other assets		362,636			(278,355	)	(g)		84,281
Total assets acquired	$	106,217,841		$	528,003			$	106,745,844

Liabilities assumed
Deposits	$	81,558,612		$	386,865		(h)	$	81,945,477
Borrowings		10,000,000			273,721		(i)		10,273,721
Advance payments by borrowers for taxes and insurance		646,661			—				646,661
Accrued expenses and other liabilities		446,588			—				446,588
Total liabilities assumed	$	92,651,861		$	660,586			$	93,312,447
Net assets acquired								$	13,433,397
Bargain purchase gain recorded at merger									1,933,397

Explanation of certain fair value related adjustments:

(a)

Represents the fair value adjustments on investment securities.

(b)

Represents the fair value adjustments on the net book value of loans, which includes an interest rate mark and

credit mark adjustment and the reversal of deferred fees/costs and premiums.

(c)

Represents the elimination of Gibraltar Bank allowance for loan losses.

(d)

Represents the fair value adjustments to reflect the fair value of land and buildings and premises and equipment,

which will be amortized on a straight-line basis over the estimated useful lives of the individual assets.

(e)

Represents the intangible assets recorded to reflect the fair value of core deposits.

The core deposit asset was recorded as an identifiable intangible asset and will be amortized on an

accelerated basis over the estimated average life of the deposit base.

(f)

Represents an adjustment to net deferred tax assets resulting from the fair value adjustments related to the acquired assets,

liabilities assumed and identifiable intangible assets recorded.

(g)

Represents an adjustment to other assets acquired.

(h)

Represents fair value adjustments on time deposits, which will be treated as a reduction of interest expense

over the remaining term of the time deposits.


(i)	Represents FHLB borrowing calculation to prepay borrowings, which will be treated as a reduction of interest expense

The fair value of loans acquired from Gibraltar Bank was estimated using cash flow projections based on the remaining maturity and repricing terms. Cash flows were adjusted by estimating future credit losses and the rate of prepayments. Projected monthly cash flows were then discounted to present value using a risk-adjusted market rate for similar loans. There was no carryover of Gibraltar’s Bank allowance for loan losses associated with the loans that were acquired. The core deposit intangible asset recognized is being amortized over its estimated useful life of approximately 10 years utilizing the sum-of-the-years digits method. The acquisition was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Accordingly, the Company recognizes amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair value. Due to the complexity in valuing the assets acquired and liabilities assumed, and the significant amount of data inputs required, the valuation of the assets and liabilities acquired is not yet final. Fair value estimates are based on the information available and are subject to change for up to one year after the closing date of the acquisition as additional information relative to the closing date fair values becomes available.

The fair value of purchased financial assets with credit impairment was $6.1 million on the date of acquisition. The gross contractual amounts receivable relating to the purchased financial assets with the credit impairment was $6.7 million.

The fair value of retail demand and interest bearing deposit accounts was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. The fair value of time deposits was estimated by discounting the contractual future cash flows using market rates offered for time deposits of similar remaining maturities. The fair value of borrowings was based on the FHLB calculation to prepay borrowings with associated penalties.