CHFC 2017 Annual Report

Information regarding loans accounted for under ASC 310-30 at the merger date is as follows: (Dollars in thousands) Accounted for under ASC 310-30: Contractual cash flows $ 5,968,488 Contractual cash flows not expected to be collected (nonaccretable difference) 223,959 Expected cash flows 5,744,529 Interest component of expected cash flows (accretable yield) 862,127 Fair value at acquisition $ 4,882,402 Acquisition of Lake Michigan Financial Corporation On May 31, 2015, the Corporation acquired all of the outstanding stock of Lake Michigan Financial Corporation (Lake Michigan) for total consideration of $187.4 million, which included stock consideration of $132.9 million and cash consideration of $54.5 million. As a result of the acquisition, the Corporation issued approximately 4.3 million shares of its common stock, based on an exchange ratio of 1.326 shares of its common stock, and paid $16.64 in cash, for each share of Lake Michigan common stock outstanding. LakeMichigan, a bank holding companywhich ownedThe Bank of Holland andThe Bank of NorthernMichigan, provided traditional banking services and products with five banking offices in Holland, Grand Haven, Grand Rapids, Petoskey and Traverse City, Michigan. The Bank of Holland and the Bank of Northern Michigan were consolidated with and into Chemical Bank on November 13, 2015. At the acquisition date, Lake Michigan added total assets of $1.24 billion, including total loans of $985.5 million, and total deposits of $924.7 million to the Consolidated Statement of Financial Position. The Corporation recorded $101.1 million of goodwill, which was primarily attributable to the synergies and economies of scale expected from combining the operations of the Corporation and Lake Michigan. In addition, the Corporation recorded $8.6 million of core deposit and other intangible assets in conjunction with the acquisition. The results of the merged Lake Michigan operations are presented in the Consolidated Financial Statements from the date of acquisition. Acquisition-related expenses associated with the Lake Michigan transaction totaled $5.5 million during 2015. The summary computation of the purchase price, including adjustments to reflect Lake Michigan's assets acquired and liabilities assumed at fair value and the allocation of the purchase price to the net assets of Lake Michigan, is presented below. in thousands) ( Stock $ 132,916 Cash 54,478 Total consideration 187,394 Net assets acquired: Lake Michigan shareholders' equity $ 89,280 Adjustments to reflect fair value of net assets acquired: Loans (22,600) Allowance for loan losses 15,888 Premises and equipment (5,031) Core deposit intangibles 8,003 Deferred tax assets, net 4,096 Deposits and borrowings, net (3,182) Other assets and other liabilities (121) Fair value of adjusted net assets acquired 86,333 Goodwill recognized as a result of the Lake Michigan transaction $ 101,061 Chemical Financial Corporation Notes to Consolidated Financial Statements December 31, 2017 97