Note 20 - Subsequent Event

 

On July 22, 2014, the Corporation entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Madison Bancorp, Inc., a Maryland corporation (“Madison”), and CVLY Corp., a Pennsylvania corporation and wholly-owned subsidiary of the Corporation (“Acquisition Subsidiary).  Pursuant to the Merger Agreement, Madison agreed to cause its wholly-owned subsidiary, Madison Square Federal Savings Bank (“MSFSB”), to merge with and into the Corporation’s wholly-owned subsidiary PeoplesBank, with PeoplesBank being the surviving bank in the Bank Merger.

 

The acquisition of Madison and MSFSB was completed on January 16, 2015, as reported on a Form 8-K filed on the same date.  Pursuant to the Merger Agreement, each share of Madison common stock was converted into the right to receive $22.90 in cash, without interest, and each outstanding option to purchase Madison common stock was converted into the right to receive cash based on a formula set forth in the Merger Agreement. The transaction was valued at approximately $14.4 million. At December 31, 2014, and sixteen days prior to the acquisition transaction, MSFSB reported total assets of $135 million, total loans of $77 million, and total deposits of $115 million on a Call Report filed with federal banking regulators.  Given that the initial purchase accounting for the acquisition, in accordance with generally accepted accounting principles for this business combination, is not yet completed, the Corporation is not yet able to disclose the preliminary fair value of the Madison assets acquired and liabilities assumed.