NOTE 2: Merger On April 18, 2018, Cincinnati Federal and Kentucky Federal Savings and Loan Association ("Kentucky Federal") signed an Agreement and Plan of Merger, pursuant to which Kentucky Federal merged with and into Cincinnati Federal effective October 12, 2018. On the effective date of the merger, the Company issued from its authorized but unissued shares of common stock, 63,382 shares of common stock to CF Mutual Holding Company. The number of shares issued was in consideration of Kentucky Federal's appraised value. At closing, Kentucky Federal Director, Philip Wehrman, was added to the Boards of Directors of CF Mutual Holding Company, Cincinnati Bancorp and Cincinnati Federal. The merger with Kentucky Federal was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration paid were recorded at their estimated fair values as of the merger date. The following table summarizes the fair value recorded as of October 12, 2018: Amount Fair Value Fair Value Recorded Adjustments Recorded Consideration Paid: Fair value of total consideration transferred (common shares issued) $ 1,240,001 $  $ 1,240,001 Identifiable Assets Acquired: Cash and cash equivalents 2,224,645  2,224,645 Interest-bearing time deposits 3,580,000  3,580,000 Investment securities 5,280,000 (280,107) 4,999,893 Federal Home Loan Bank Stock 1,543,300  1,543,300 Net loans receivable 16,159,521 164,074 16,323,595 Premises &amp; Equipment, net 194,202 772,700 966,902 Core deposit and other intangibles - 221,193 221,193 Other real estate owned 132,590 (33,000) 99,590 Other assets 895,044 (35,718) 859,326 Total identifiable assets acquired 30,009,302 809,142 30,818,444 Liabilities Assumed: Deposits 26,475,279 3,739 26,479,018 Federal Home Loan Bank advances 343,242  343,242 Deferred taxes 41,947 176,636 218,583 Other Liabilities 345,260  345,260 Total liabilities assumed 27,205,728 180,375 27,386,103 Total identified net assets acquired 2,803,574 628,767 3,432,341 Gain on merger $ 1,563,573 $ 628,767 $ 2,192,340 As permitted by ASC No. 805-10-25, Business Combinations, the above estimates may be adjusted up to one year after closing date of the acquisition to reflect any new information obtained about facts and circumstances existing at the acquisition date. Any changes in the estimated fair values will be recognized in the period the adjustment is identified. 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 October 12, 2018 based on management's best estimate using the information available at acquisition date. The application of purchase accounting resulted in a bargain purchase gain of approximately $2.2 million. The primary reason for the bargain purchase gain is the mutual ownership structure of Kentucky Federal. The number of institutions that could merge with Kentucky Federal was limited and the mutual holding company structure of Cincinnati Bancorp allowed the merger to occur. The fair values of loans acquired from Kentucky Federal were estimated using cash flow projections based on remaining maturity and repricing terms. Cash flows were adjusted by estimated future credit losses and the rate of prepayments. Projected monthly cash flows were discounted to present value using a risk-adjusted market rate for similar loans. There was no carryover of Kentucky Federal's allowance for loan losses associated with the loans that were acquired, as the loans were initially recorded at fair value on October 12, 2018. The Company acquired various loans in the acquisition for which none had evidence of deterioration of credit quality since origination. The fair value of assets includes loans with a fair value of $16,323,595. The gross principal and contractual interest due under the contracts is $16,419,786, of which $251,369 is expected to be uncollectible. The core deposit intangible asset recognized of $221,193 is being amortized over its estimated life of approximately 10 years using the straight-line method and is included in other assets in the condensed consolidated balance sheets. Direct acquisition and integration costs were expensed as incurred and totaled approximately $18,000 for the nine months ended September 30, 2019 and $231,000 for the nine months ended September 30, 2018. These items were recorded as merger-related expenses on the consolidated statements of income.