CHFC 2017 Annual Report

Allocation of Purchase Price The following schedule summarizes the acquisition date fair values of assets acquired and liabilities assumed from Lake Michigan: (Dollars in thousands) Assets Cash and cash equivalents $ 39,301 Investment securities 66,699 Loans 985,542 Premises and equipment 10,975 Deferred tax asset, net 16,715 Goodwill 101,061 Core deposit intangible asset 8,003 Bank-owned life insurance 23,844 Other assets 37,695 Assets acquired, at fair value 1,289,835 Liabilities Deposits 924,697 Short-term borrowings 30,000 Other borrowings 124,857 Other liabilities 22,887 Total liabilities acquired, at fair value 1,102,441 Total purchase price $ 187,394 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 $ 1,198,388 Contractual cash flows not expected to be collected (nonaccretable difference) 22,600 Expected cash flows 1,175,788 Interest component of expected cash flows (accretable yield) 190,246 Fair value at acquisition $ 985,542 Acquisition of Monarch Community Bancorp, Inc. OnApril 1, 2015, the Corporation acquired all of the outstanding stock of Monarch Community Bancorp, Inc. (Monarch) in an all-stock transaction valued at $27.2 million. As a result of the acquisition, the Corporation issued 860,575 shares of its common stock based on an exchange ratio of 0.0982 shares of its common stock for each share of Monarch common stock outstanding. Monarch, a bank holding company, ownedMonarch Community Bank, which operated five full service branch offices in Coldwater, Marshall, Hillsdale and Union City, Michigan. Monarch Community Bank was consolidated with and into Chemical Bank on May 8, 2015. At the acquisition date, Monarch added total assets of $182.8 million, including total loans of $121.8 million, and total deposits of $144.3 million to the Consolidated Statement of Financial Position. In connection with the acquisition of Monarch, the Corporation recorded $5.3 million of goodwill, which was primarily attributable to the synergies and economies of scale expected from combining the operations of the Corporation and Monarch. In addition, the Corporation recorded $1.9 million of core deposit intangible assets in conjunction with the acquisition. Chemical Financial Corporation Notes to Consolidated Financial Statements December 31, 2017 98