CHFC 2018 Annual Report

Contract Balances A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity's obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Corporation's noninterest income streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is most often received immediately or shortly after the Corporation satisfies its performance obligation and revenue is recognized. The Corporation does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of December 31, 2018 and December 31, 2017, the Corporation did not have a material amount of contract balances. Chemical Financial Corporation Notes to Consolidated Financial Statements December 31, 2018 146 Note 17: Income Taxes The current and deferred components of the provision for income taxes were as follows: Years Ended December 31, (Dollars in thousands) 2018 2017 2016 Current income tax expense (benefit) Federal $ (653) $ 14,665 $ 19,144 State 321 20 (423) Total current income tax expense (332) 14,685 18,721 Deferred income tax expense Federal 41,687 92,636 23,649 State 229 548 442 Total deferred income tax expense 41,916 93,184 24,091 Change in valuation allowance 317 (1,089) (706) Income tax provision $ 41,901 $ 106,780 $ 42,106