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Business Combination | 12 Months Ended
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Dec. 31, 2019
Business Combinations [Abstract] |
Business Combination | Note 21 – Business Combination ChoiceOne completed the merger of County Bank Corp (“County”) with and into ChoiceOne on October 1, 2019. County had 14 branch offices and one loan production office as of the date of the merger. Total assets of County as of October 1, 2019 were $673 million, including total loans of $424 million. Deposits garnered in the merger, the majority of which are core deposits, totaled $574 million. The results of operations as a result of the merger have been included in ChoiceOne’s results since the effective date of the merger. As consideration in the merger, ChoiceOne issued 3,603,872 shares of ChoiceOne common stock, which was net of 299 fractional shares not issued, with an approximate value of $108 million. ChoiceOne recorded a preliminary deposit based intangible of $6.4 million and goodwill of $39.1 million. While ChoiceOne believes the majority of the business combination and purchase accounting activity is complete, it is expected there will be minor adjustments in the normal course within the allotted GAAP adjustment period. Purchase accounting activity still being analyzed primarily includes certain tax implications. Acquisition costs related to the merger amounted to $2.1 million, of which $1.8 million was expensed and $297,000 was netted with stock issuance costs. The transaction created $39.1 million of goodwill, none of which is deductible for tax purposes. As the transaction happened on October 1, 2019, only earnings related to the period from October 1, 2019 through December 31, 2019 were included in ChoiceOne Financial Services income for the year ended December 31, 2019. These County earnings amounted to $2.3 million for the year ended December 31, 2019. The table below highlights the allocation of purchase price for the merger with County (dollars in thousands):
Purchase Price: |  |  |  |
Consideration |  | $ | 107,945 |
Net assets acquired: |  |  |  |
Cash and cash equivalents |  |  | 20,638 |
Equity securities at fair value |  |  | 474 |
Securities available for sale |  |  | 187,230 |
Federal Home Loan Bank and Federal Reserve Bank stock |  |  | 2,903 |
Loans to other financial institutions |  |  | 33,481 |
Originated loans |  |  | 390,354 |
Premises and equipment |  |  | 9,271 |
Other real estate owned |  |  | 1,364 |
Deposit based intangible |  |  | 6,359 |
Bank owned life insurance |  |  | 16,912 |
Other assets |  |  | 4,002 |
Total assets |  |  | 672,988 |
Non-interest bearing deposits |  |  | 124,113 |
Interest bearing deposits |  |  | 449,488 |
Total deposits |  |  | 573,601 |
Federal funds purchased |  |  | 3,800 |
Advances from Federal Home Loan Bank |  |  | 23,000 |
Other liabilities |  |  | 3,784 |
Total liabilities |  |  | 604,185 |
Net assets acquired |  |  | 68,803 |
Goodwill |  | $ | 39,142 |
The following table provides the unaudited pro forma information for the results of operations for the twelve months ended December 31, 2019, 2018 and 2017, as if the merger with County had occurred on January 1. Dollars are shown in thousands, except for per share data. These adjustments reflect the impact of certain purchase accounting fair value measurements, primarily on the loan and deposit portfolios of County. In addition, merger-related costs are excluded from the amounts below, for comparative purposes. Further operating cost savings are expected along with additional business synergies as a result of the merger which are not presented in the pro forma amounts. These unaudited pro forma results are presented for illustrative purposes only and are not intended to represent or be indicative of the actual results of operations of the combined banking organization that would have been achieved had the merger occurred at the beginning of the period, nor are they intended to represent or be indicative of the future results of the Company.
(Dollars in thousands, except per share data) |  |  |  |  |  |  |  |  |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Net interest income |  | $ | 44,440 |  |  | $ | 42,974 |  |  | $ | 40,178 |
Noninterest income |  |  | 13,289 |  |  |  | 12,151 |  |  |  | 13,364 |
Noninterest expense |  |  | 42,611 |  |  |  | 38,501 |  |  |  | 37,361 |
Net income |  |  | 13,487 |  |  |  | 14,251 |  |  |  | 11,513 |
Net income per diluted share |  |  | 1.86 |  |  |  | 1.97 |  |  |  | 1.63 |
In most instances, determining the fair value of the acquired assets and assumed liabilities required ChoiceOne to estimate the cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of those determinations is related to the valuation of acquired loans. For such loans, the excess cash flows expected at the effective time of the merger over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at the effective time of the merger and the cash flows expected to be collected at the effective time of the merger reflects the impact of estimated credit losses, interest rate changes, and other factors, such as prepayments. In accordance with the applicable accounting guidance for business combinations, there was no carry-over of the County’s previously established allowance for loan losses. The Merger with County was effective on October 1, 2019. The combined company will have the opportunity to deploy existing low-cost funding into strategic markets across Michigan. County appears to be a cultural fit with very similar values regarding community involvement and development that ChoiceOne has fostered over its history. County also has an attractive core deposit base expected to provide support for future expansion. On January 6, 2020, ChoiceOne entered into an Agreement and Plan of Merger with Community Shores Bank Corp (“Community Shores”), the holding company for Community Shores Bank. Completion of the acquisition is subject to receipt of shareholder approval from Community Shores shareholders, receipt of regulatory approval, and the satisfaction of other customary closing conditions. Management expects the merger to become effective in the second half of 2020. As of December 31, 2019, Community Shores had total assets of approximately $204 million, total loans of approximately $156 million, and total deposits of approximately $184 million.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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