UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): October 5, 2018
HarborOne Bancorp, Inc.
(Exact Name of Registrant as Specified in its Charter)
Massachusetts |
|
001-37778 |
|
81-1607465 |
(State or other jurisdiction |
|
(Commission |
|
(IRS Employer |
of incorporation) |
|
File Number) |
|
Identification Number |
770 Oak Street, Brockton, Massachusetts 02301
(Address of principal executive offices)
(508) 895-1000
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.01 Completion of Acquisition or Disposition of Assets.
On October 5, 2018, HarborOne Bancorp, Inc. (the Company) filed a Current Report on Form 8-K (the Original Report) to report that on October 5, 2018, the Company completed its previously announced acquisition of Coastway Bancorp, Inc. (Coastway), with HarborOne as the surviving corporation (the Merger). Additionally, Coastway Community Bank, a wholly owned subsidiary of Coastway, merged with and into HarborOne Bank, a wholly owned subsidiary of HarborOne, with HarborOne Bank continuing as the surviving bank
This amendment to the Original Report is being filed to provide the financial statements and pro forma financial information required by Item 9.01(a) and 9.01(b), respectively, of Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
The audited consolidated financial statements of Coastway as of December 31, 2017 and 2016, and for each of the two years in the period ended December 31, 2017, as well as the accompanying notes thereto and the related Report of Independent Registered Public Accounting Firm, are filed as Exhibit 99.1 and incorporated herein by reference.
The unaudited consolidated financial statements of Coastway as of and for the three and six months ended June 30, 2018, as well as the accompanying notes thereto, are filed as Exhibit 99.2 and incorporated herein by reference.
The unaudited consolidated financial statements of Coastway as of and for the three and six months ended June 30, 2017, as well as the accompanying notes thereto, are filed as Exhibit 99.3 and incorporated herein by reference.
(b) Pro Forma Financial Information
The following unaudited pro forma combined condensed consolidated financial information giving effect to the Merger is furnished under this Item 9.01(b) as Exhibit 99.4 attached hereto, and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to liability of such section, not shall be deemed incorporated by reference in any filing of Community Bank System under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing:
· Unaudited pro forma combined condensed balance sheet as of June 30, 2018, giving effect to the Merger as if it occurred on June 30, 2018;
· Unaudited pro forma combined condensed consolidated statement of income for the six months ended June 30, 2018, giving effect to the Merger as if it occurred on January 1, 2017; and
· Unaudited pro forma combined condensed consolidated statement of income for the year ended December 31, 2017, giving effect to the Merger as if it occurred on January 1, 2017.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Number |
|
Description |
23.1 |
|
99.1 |
|
|
|
|
|
99.2 |
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|
|
|
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99.3 |
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|
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|
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99.4 |
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* Filed herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized.
|
HARBORONE BANCORP, INC. | |
|
|
|
|
By: |
/s/ Joseph F. Casey |
|
Name: |
Joseph F. Casey |
|
Title: |
President and Chief Operating Officer |
|
|
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Date: November 7, 2018 |
|
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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Current Report on Form 8-K/A of HarborOne Bancorp, Inc. of our report dated March 12, 2018 on the consolidated financial statements appearing on Form 10-K of Coastway Bancorp, Inc. for the year ended December 31, 2017.
|
/s/ Crowe LLP |
|
Crowe LLP |
|
|
Livingston, New Jersey |
|
|
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November 7, 2018 |
|
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
On October 5, 2018, HarborOne Bancorp, Inc. (HarborOne) acquired Coastway Bancorp, Inc. (Coastway). The following unaudited pro forma combined condensed consolidated financial information combines the historical consolidated financial position and results of operations of HarborOne and its subsidiaries and Coastway and its subsidiaries, as an acquisition by HarborOne of Coastway using the acquisition method of accounting and giving effect to the related pro forma adjustments described in the accompanying notes. Under the acquisition method of accounting, the assets and liabilities of Coastway were recorded by HarborOne at their respective fair values as of the date the merger was completed. The unaudited pro forma combined financial information should be read in conjunction with HarborOnes Quarterly Report on Form 10-Q for the period ended June 30, 2018, and Annual Report on Form 10-K for the year ended December 31, 2017, and Coastways Quarterly Report on Form 10-Q for the period ended June 30, 2018, and Annual Report on Form 10-K for the year ended December 31, 2017.
The unaudited pro forma combined condensed financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had the companies actually been combined at the beginning of each period presented, nor the impact of possible business model changes. The unaudited pro forma combined condensed consolidated financial information also does not consider any potential effects of changes in market conditions on revenues, expense efficiencies, asset dispositions, and share repurchases, among other factors. In addition, as explained in more detail in the accompanying notes, the preliminary allocation of the pro forma purchase price reflected in the unaudited pro forma combined condensed consolidated financial information is subject to adjustment and could materially vary from the actual purchase price allocation as additional information becomes available. Accrued income taxes and deferred taxes were recorded on a provisional basis and could vary from the actual recorded balance once finalized.
The Coastway merger was announced on March 14, 2018, and was completed on October 5, 2018. The Coastway merger provided that Coastways shareholders would receive $28.25 per share of Coastway common stock.
The unaudited pro forma combined condensed consolidated balance sheet gives effect to the merger as if the transaction had occurred on June 30, 2018. The unaudited pro forma combined condensed consolidated income statements for the six months ended June 30, 2018, and the year ended December 31, 2017, give effect to the merger as if the transaction had become effective on January 1, 2017.
HarborOne Bancorp, Inc. Unaudited Combined Condensed Consolidated Balance Sheet as of June 30, 2018
(in thousands)
|
|
|
|
|
|
|
|
|
|
HarborOne |
| ||||
|
|
HarborOne |
|
Coastway |
|
|
|
|
|
Bancorp, Inc. Pro |
| ||||
|
|
Bancorp, Inc |
|
Bancorp, Inc. |
|
Pro Forma |
|
|
|
Forma |
| ||||
|
|
As Reported |
|
As Reported |
|
Adjustments |
|
Ref |
|
Combined |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
|
$ |
132,496 |
|
$ |
50,084 |
|
$ |
(125,565 |
) |
A |
|
$ |
57,015 |
|
Securities available for sale |
|
185,702 |
|
|
|
|
|
|
|
185,702 |
| ||||
Securities held-to-maturity |
|
48,251 |
|
|
|
|
|
|
|
48,251 |
| ||||
Federal Home Loan Bank stock, at cost |
|
15,310 |
|
11,368 |
|
|
|
|
|
26,678 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Loans held for sale |
|
71,017 |
|
16,238 |
|
|
|
|
|
87,255 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Loans |
|
2,300,695 |
|
712,113 |
|
(23,644 |
) |
B |
|
2,989,164 |
| ||||
Allowance for loan losses |
|
(19,244 |
) |
(3,358 |
) |
3,358 |
|
B |
|
(19,244 |
) | ||||
Net loans |
|
2,281,451 |
|
708,755 |
|
(20,286 |
) |
|
|
2,969,920 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Goodwill |
|
13,717 |
|
|
|
58,361 |
|
C |
|
72,078 |
| ||||
Other intangible, net |
|
|
|
|
|
8,823 |
|
D |
|
8,823 |
| ||||
Other assets |
|
131,770 |
|
48,459 |
|
3,423 |
|
E, G |
|
183,652 |
| ||||
Total assets |
|
$ |
2,879,714 |
|
$ |
834,904 |
|
$ |
(75,244 |
) |
|
|
$ |
3,639,374 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
|
$ |
2,202,502 |
|
$ |
501,944 |
|
$ |
(1,814 |
) |
F |
|
$ |
2,702,632 |
|
Short-term borrowings |
|
70,000 |
|
250,950 |
|
|
|
|
|
320,950 |
| ||||
Long-term debt |
|
217,438 |
|
|
|
|
|
|
|
217,438 |
| ||||
Other liabilities |
|
41,198 |
|
8,580 |
|
|
|
|
|
49,778 |
| ||||
Total liabilities |
|
2,531,138 |
|
761,474 |
|
(1,814 |
) |
|
|
3,290,798 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Stockholders equity |
|
|
|
|
|
|
|
|
|
|
| ||||
Total stockholders equity |
|
348,576 |
|
73,430 |
|
(73,430 |
) |
H |
|
348,576 |
| ||||
Total liabilities and stockholders equity |
|
$ |
2,879,714 |
|
$ |
834,904 |
|
$ |
(75,244 |
) |
|
|
$ |
3,639,374 |
|
See accompanying notes to unaudited pro forma combined condensed consolidated financial statements.
HarborOne Bancorp, Inc.and Subsidiaries Unaudited Combined Condensed Consolidated Income Statement
for the Six Months Ended June 30, 2018
(in thousands, except per share data)
|
|
HarborOne |
|
Coastway |
|
Pro Forma |
|
|
|
HarborOne |
| ||||
|
|
As Reported |
|
As Reported |
|
Adjustments |
|
Ref |
|
Combined |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest Income: |
|
|
|
|
|
|
|
|
|
|
| ||||
Interest and fees on loans |
|
$ |
47,302 |
|
$ |
14,114 |
|
$ |
493 |
|
I |
|
$ |
61,909 |
|
Interest and dividends on investments |
|
3,063 |
|
|
|
|
|
|
|
3,063 |
| ||||
Other interest and dividend income |
|
571 |
|
550 |
|
|
|
|
|
1,121 |
| ||||
Total Interest Income |
|
50,936 |
|
14,664 |
|
493 |
|
|
|
66,093 |
| ||||
Interest Expenese |
|
9,917 |
|
3,557 |
|
181 |
|
J |
|
13,655 |
| ||||
Net interest income |
|
41,019 |
|
11,107 |
|
312 |
|
|
|
52,438 |
| ||||
Provision for loan losses |
|
1,694 |
|
569 |
|
|
|
|
|
2,263 |
| ||||
Net interest income after provision for loan losses |
|
39,325 |
|
10,538 |
|
312 |
|
|
|
50,175 |
| ||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage banking income |
|
15,742 |
|
1,635 |
|
|
|
|
|
17,377 |
| ||||
Deposit account fees |
|
6,191 |
|
1,847 |
|
|
|
|
|
8,038 |
| ||||
Income of retirment account annuities |
|
232 |
|
|
|
|
|
|
|
232 |
| ||||
Bank-owned life insurance income |
|
482 |
|
61 |
|
|
|
|
|
543 |
| ||||
Other income |
|
1,259 |
|
27 |
|
|
|
|
|
1,286 |
| ||||
Total noninterest income |
|
23,906 |
|
3,570 |
|
|
|
|
|
27,476 |
| ||||
Noninterest expenses: |
|
|
|
|
|
|
|
|
|
|
| ||||
Compensation and benefits |
|
33,697 |
|
5,799 |
|
|
|
|
|
39,496 |
| ||||
Occupany and equipment |
|
6,236 |
|
1,575 |
|
|
|
|
|
7,811 |
| ||||
Data Processing |
|
3,122 |
|
968 |
|
|
|
|
|
4,090 |
| ||||
Loan expenses |
|
2,652 |
|
|
|
|
|
|
|
2,652 |
| ||||
Marketing |
|
2,083 |
|
142 |
|
|
|
|
|
2,225 |
| ||||
Deposit expenses |
|
657 |
|
|
|
|
|
|
|
657 |
| ||||
Amortization of intangible assets |
|
|
|
|
|
441 |
|
K |
|
441 |
| ||||
Other expenses |
|
7,670 |
|
2,860 |
|
(1,663 |
) |
L |
|
8,867 |
| ||||
Total noninterest expenses |
|
56,117 |
|
11,344 |
|
(1,222 |
) |
|
|
66,239 |
| ||||
Income before taxes |
|
7,114 |
|
2,764 |
|
1,534 |
|
|
|
11,412 |
| ||||
Income taxes |
|
1,759 |
|
910 |
|
383 |
|
M |
|
3,052 |
| ||||
Net income |
|
$ |
5,355 |
|
$ |
1,854 |
|
$ |
1,151 |
|
|
|
$ |
8,360 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
|
31,574,411 |
|
4,026,715 |
|
(4,026,715 |
) |
|
|
31,574,411 |
| ||||
Diluted |
|
31,574,411 |
|
4,087,301 |
|
(4,087,301 |
) |
|
|
31,574,411 |
| ||||
Basic earnings per share |
|
$ |
0.17 |
|
$ |
0.46 |
|
|
|
|
|
$ |
0.26 |
| |
Diluted earnings per share |
|
$ |
0.17 |
|
$ |
0.45 |
|
|
|
|
|
$ |
0.26 |
|
See accompanying notes to unaudited pro forma combined condensed consolidated financial statements.
HarborOne Bancorp, Inc. and Subsidiaries Unaudited Combined Condensed Consolidated Income Statement
for the Year Ended December 31, 2017
(in thousands, except per share data)
|
|
HarborOne |
|
Coastway |
|
Pro Forma |
|
|
|
HarborOne |
| ||||
|
|
As Reported |
|
As Reported |
|
Adjustments |
|
Ref |
|
Combined |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest Income: |
|
|
|
|
|
|
|
|
|
|
| ||||
Interest and fees on loans |
|
$ |
83,853 |
|
$ |
23,510 |
|
$ |
986 |
|
I |
|
$ |
108,349 |
|
Interest and dividends on investments |
|
5,271 |
|
|
|
|
|
|
|
5,271 |
| ||||
Other interest and dividend income |
|
1,160 |
|
679 |
|
|
|
|
|
1,839 |
| ||||
Total Interest Income |
|
90,284 |
|
24,189 |
|
986 |
|
|
|
115,459 |
| ||||
Interest Expenese |
|
15,936 |
|
4,474 |
|
363 |
|
J |
|
20,773 |
| ||||
Net interest income |
|
74,348 |
|
19,715 |
|
624 |
|
|
|
94,687 |
| ||||
Provision for loan losses |
|
2,416 |
|
435 |
|
|
|
|
|
2,851 |
| ||||
Net interest income after provision for loan losses |
|
71,932 |
|
19,280 |
|
624 |
|
|
|
91,836 |
| ||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage banking income |
|
37,195 |
|
3,671 |
|
|
|
|
|
40,866 |
| ||||
Deposit account fees |
|
12,311 |
|
3,479 |
|
|
|
|
|
15,790 |
| ||||
Income of retirment account annuities |
|
455 |
|
|
|
|
|
|
|
455 |
| ||||
Bank-owned life insurance income |
|
1,024 |
|
133 |
|
|
|
|
|
1,157 |
| ||||
Other income |
|
3,549 |
|
255 |
|
|
|
|
|
3,804 |
| ||||
Total noninterest income |
|
54,534 |
|
7,538 |
|
|
|
|
|
62,072 |
| ||||
Noninterest expenses: |
|
|
|
|
|
|
|
|
|
|
| ||||
Compensation and benefits |
|
66,223 |
|
12,326 |
|
|
|
|
|
78,549 |
| ||||
Occupany and equipment |
|
11,706 |
|
3,211 |
|
|
|
|
|
14,917 |
| ||||
Data Processing |
|
6,157 |
|
1,921 |
|
|
|
|
|
8,078 |
| ||||
Loan expenses |
|
6,881 |
|
|
|
|
|
|
|
6,881 |
| ||||
Marketing |
|
3,595 |
|
312 |
|
|
|
|
|
3,907 |
| ||||
Deposit expenses |
|
1,349 |
|
903 |
|
|
|
|
|
2,252 |
| ||||
Amortization of intangible assets |
|
|
|
|
|
882 |
|
K |
|
882 |
| ||||
Other expenses |
|
13,503 |
|
3,074 |
|
|
|
|
|
16,577 |
| ||||
Total noninterest expenses |
|
109,414 |
|
21,747 |
|
882 |
|
|
|
132,043 |
| ||||
Income before taxes |
|
17,052 |
|
5,071 |
|
(259 |
) |
|
|
21,864 |
| ||||
Income taxes |
|
6,673 |
|
2,479 |
|
(65 |
) |
M |
|
9,087 |
| ||||
Net income |
|
$ |
10,379 |
|
$ |
2,592 |
|
$ |
(194 |
) |
|
|
$ |
12,777 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
|
31,228,318 |
|
4,013,000 |
|
(4,013,000 |
) |
|
|
31,228,318 |
| ||||
Diluted |
|
31,228,317 |
|
4,039,000 |
|
(4,039,000 |
) |
|
|
31,228,317 |
| ||||
Basic earnings per share |
|
$ |
0.33 |
|
0.65 |
|
|
|
|
|
0.41 |
| |||
Diluted earnings per share |
|
$ |
0.33 |
|
0.64 |
|
|
|
|
|
0.41 |
|
See accompanying notes to unaudited pro forma combined condensed consolidated financial statements.
Note 1Basis of Presentation
The unaudited pro forma combined condensed consolidated financial information and notes have been prepared to illustrate the effects of the merger transaction involving HarborOne and Coastway using the acquisition method of accounting with HarborOne treated as the acquirer. The unaudited pro forma combined condensed consolidated financial information is presented for illustrative purposes only and does not necessarily indicate the financial results of the combined companies had the companies actually been combined at the beginning of each period presented, nor does it necessarily indicate the results of operations in future periods or the future financial position of the combined entity. Under the acquisition method of accounting, the assets and liabilities of Coastway, as of the effective date of the merger, were recorded by HarborOne at their respective fair values and the excess of the merger consideration over the fair value of the net assets was allocated to goodwill and other intangible assets.
The Coastway merger was announced on March 14, 2018, and was completed on October 5, 2018. The Coastway merger provided that Coastways shareholders would receive $28.25 per share of Coastway common stock.
The pro forma allocation of purchase price reflected in the unaudited pro forma combined condensed consolidated financial information is subject to adjustment and may vary from the actual purchase price allocation that was recorded at the time the merger transaction was completed. Adjustments may include, but not be limited to, changes in (i) Coastways balance sheet through the effective date of the merger; (ii) total merger related expenses if consummation and/or implementation costs vary from currently estimated amounts; and (iv) the underlying values of assets and liabilities if market conditions differ from current assumptions.
The accounting policies of HarborOne and Coastway are in the process of being reviewed in detail. Upon completion of such review, conforming adjustments or financial statement reclassification may be determined.
Note 2Preliminary Purchase Price Allocation
The pro forma adjustments include the accounting entries to record the merger transaction under the acquisition method of accounting for business combinations. The excess of the purchase price over the fair value of net assets acquired was allocated to goodwill and other intangible assets. Fair value adjustments included in the pro forma financial statements are based upon available information and certain assumptions considered reasonable, and may be revised as additional information becomes available.
The pro forma purchase price for the Coastway merger is as follows:
(in thousands, except per share data)
Pro forma purchase price
Cash consideration |
|
|
| |
Shares outstanding |
|
4,386,351 |
| |
Cash consideration per share |
|
$ |
28.25 |
|
|
|
$ |
123,914 |
|
Cash consideration for stock options |
|
1,651 |
| |
Total proforma purchase price |
|
$ |
125,565 |
|
|
|
|
| |
Preliminary pro forma goodwill |
|
|
| |
|
|
|
| |
Total pro forma purchase price |
|
$ |
125,565 |
|
Net assets at fair value |
|
|
| |
Fair value of assets acquired: |
|
|
| |
Cash and cash equivalents |
|
50,084 |
| |
Investments held to maturity |
|
11,368 |
| |
Loans held for sale |
|
16,238 |
| |
Loans, net |
|
688,469 |
| |
Other assets |
|
51,882 |
| |
Core deposit intangibles |
|
8,823 |
| |
Total assets acquired |
|
826,864 |
| |
Fair value of liabilities assumed: |
|
|
| |
Deposits |
|
500,130 |
| |
Short-term borrowings |
|
250,950 |
| |
Other liabilites |
|
8,580 |
| |
Total liabilities assumed |
|
759,660 |
| |
Net assets acquired |
|
67,204 |
| |
Preliminary pro forma goodwill |
|
$ |
58,361 |
|
Note 3Pro Forma Adjustments
The following pro forma adjustments have been reflected in the unaudited pro forma combined condensed consolidated financial information. All taxable adjustments were calculated using a 25.0% tax rate to arrive at deferred tax asset or liability adjustments. All adjustments are based on current assumptions and valuations, which are subject to change.
A. Adjustments to cash to reflect the cash of $125.6 million used to purchase Coastway.
B. Adjustments to loans to reflect the estimated fair value adjustments to acquired loans of $20.3 million, net, including $6.8 million of estimated credit loss,
an estimated adjustment of $11.5 million related to the difference in loan portfolio interest rates and current market interest rates, an estimated write off of deferred origination costs of $5.4 million for purchased loans, and net of the reversal of Coastway allowance for loan losses of $3.4 million.
C. Adjustments to record estimated goodwill of $58.4 million associated with the Coastway transaction.
D. Adjustments to record an estimated $8.8 million in core deposit intangibles.
E. Adjustment to reflect the net fair value decrease of premises and equipment of $ 0.8 million based on independent third party appraisals of all significant premises and equipment owned by Coastway.
F. Adjustment to Coastway time deposits of $1.8 million to reflect a current market rate of interest.
G. Adjustment to other assets to record a deferred tax asset of $6.8 million associated with the fair value adjustment to acquired loans for expected net credit deterioration and interest rates associated with the Coastway transaction and to record deferred tax liability of $2.2 million associated with the core deposit intangible asset adjustment and a deferred tax liability of $454,000 associated with the time deposit fair value adjustment.
H. Adjustment to eliminate Coastway shareholders equity.
I. Net adjustments to interest and fees on loans of $493,000 for the six months ended June 30, 2018 and $886,000 for the year ended December 31, 2017 to record amortization of premiums and accretion of discounts on acquired loans of Coastway using a weighted average maturity of approximately 18.5 years.
J. Net adjustments to interest expense of $181,000 for the six months ended June 30, 2018and $363,000 for the year ended December 31, 2017 to record amortization of the fair value adjustment on acquired time deposits.
K. Net adjustments to amortization of intangible assets of $441,000 for the six months ended June 30, 2018 and $882,000 for the year ended December 31, 2017 to record amortization of core deposit intangible on acquired deposits from Coastway using the straight line method over an estimated 10 year life.
L. Adjustment to eliminate acquisition expenses recorded on Coastway and HarborOne associated with the transaction with HarborOne of $1.7 million for the six months ended June 30, 2018. There were no acquisition expenses recorded for the year ended December 31, 2017.
M. Adjustment to income tax expense to record income tax effect of pro forma adjustments at the estimated statutory tax rate of 25.0%.
Note 4Estimated Cost Savings and Merger Integration Costs
HarborOne expects to realize approximately $6.0 million, or approximately 28% of Coastway noninterest expense base, in annual pre-tax cost savings following the merger. Estimated cost savings is expected to be fully realized by the end of fiscal year 2019 and is excluded from this pro forma analysis.
Merger and integration-related costs are not included in the pro forma combined statements of income since they will be recorded in the combined results of income as they are incurred prior to, or after completion of, the merger and are non-recurring in nature of what the historical results of the combined company would have been had the
companies been actually combined during the periods presented. Merger and integration-related costs are estimated to be $9.3 million pre-tax for the Coastway transaction.