Business Combination

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Business Combination

2.  Business Combination

On December 30, 2015, the Corporation announced the signing of a definitive merger agreement to acquire Lake National Bank (LNB) of Mentor, Ohio for $22.50 per share in cash, or approximately $24.75 million in the aggregate. LNB served the northeastern Ohio market with two branches located in Mentor, Ohio. On July 15, 2016, the transaction closed and the Corporation began including LNB’s results of operations in its consolidated results. The two LNB offices now operate as part of the ERIEBANK division of CNB Bank.

As disclosed in the accompanying consolidated statements of income, the Corporation incurred merger costs of $486 thousand and $308 thousand for the twelve months ended December 31, 2016 and 2015, respectively. All merger costs have been expensed as incurred.

The following table summarizes the consideration paid for LNB and the amounts of the assets acquired and liabilities assumed that were recognized at the acquisition date:

Consideration paid:
Cash	$	24,750
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		21,884
Securities available for sale		450
Loans		122,206
FHLB and other equity interests		637
Premises and equipment		3,242
Bank owned life insurance		2,152
Mortgage servicing rights		367
Core deposit intangible		1,583
Accrued interest receivable and other assets		3,110
Total assets acquired		155,631
Demand deposits		81,472
Time deposits		58,311
Accrued interest payable and other liabilities		2,634
Total liabilities assumed		142,417
Total identifiable net assets		13,214
Goodwill	$	11,536

Valuation of some assets acquired or created including, but not limited to, goodwill are preliminary and could be subject to change.

Included in accrued interest receivable and other assets is a deferred tax asset of $58 which represents the tax effect of temporary differences between the tax basis and fair values assigned to the assets and liabilities.

Acquired loans were recorded at fair value with no carryover of the related allowance for loan losses. Determining the fair value of loans involved estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. The Corporation acquired $126,134 of gross loans and recognized a net combined yield and credit mark of $3,928.

Goodwill of $11,536 arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the Corporation and Lake National Bank. None of the goodwill is expected to be deductible for income tax purposes.