Acquisition

In October 2016, we entered into an agreement and plan of merger to acquire DCB Financial Corp and its banking subsidiary, The Delaware County Bank and Trust Company, with approximately $550 million in total assets, $477 million in total deposits, $388 million in total loans and nine full-service banking offices in the Columbus MSA. This merger is expected to be completed in the second quarter of 2017.

On December 2, 2016, the Company completed the acquisition of thirteen branches from FirstMerit Bank, NA receiving $476.6 million in cash. This acquisition further expands the Company's market into northern Ohio and included the purchase of $105.6 million in loans and $619.7 million in deposits.

On October 1, 2015, the Company completed the acquisition of Columbus, Ohio based First Community Bank for $14.75 million cash. Upon closing of the transaction, First Community Bank merged into First Commonwealth Bank. First Community Bank operated four branch locations which after the merger operate under the First Commonwealth name. The acquisition expanded the Company’s market into the central Ohio area.

The table below summarizes the net assets acquired (at fair value) and consideration transferred in connection with the FirstMerit Bank, NA, acquisition (dollars in thousands):



Consideration Received
Cash received	$	(476,555	)
Total consideration received				$	(476,555	)

Fair Value of Assets Acquired
Cash and cash equivalents	2,914
Loans	102,097
Premises and other equipment	4,562
Core deposit intangible	11,330
Other assets	294
Total assets acquired	121,197

Fair Value of Liabilities Assumed
Deposits	619,729
Other Liabilities	70
Total liabilities assumed	619,799

Total Fair Value of Identifiable Net Assets				(498,602		)

Goodwill				$	22,047

The goodwill of $22.0 million arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company with the branches acquired from FirstMerit Bank, NA. The goodwill for this transaction is expected to be deducted over a 15 year period for income tax purposes.

We acquired $105.6 million in total loans and recognized a net combined yield and credit market adjustment of $3.5 million.

Costs related to the acquisition totaled $3.2 million. These amounts were expensed as incurred and are recorded as a merger and acquisition related expense in the Consolidated Statements of Income.

The table below summarizes the net assets acquired (at fair value) and consideration transferred in connection with the First Community acquisition (dollars in thousands):



Consideration Paid
Cash Paid to shareholders	$	14,750
Total consideration paid			$	14,750

Fair Value of Assets Acquired
Cash and cash equivalents	11,217
Investment Securities	25,980
FHLB Stock	832
Loans	61,173
Premises and other equipment	1,801
Core deposit intangible	172
Other real estate	816
Other assets	1,115
Total assets acquired	103,106

Fair Value of Liabilities Assumed
Deposits	90,311
Other Liabilities	1,115
Total liabilities assumed	91,426

Total Fair Value of Identifiable Net Assets			11,680

Goodwill			$	3,070

We acquired $62.5 million in gross loans and recognized a net combined yield and credit market adjustment of $1.3 million.

Costs related to the acquisition totaled $0.9 million. These amounts were expensed as incurred and are recorded as a merger and acquisition related expense in the Consolidated Statements of Income.

The Company determined that both of these acquisitions constitute a business combination as defined in FASB ASC Topic 805, “Business Combinations.” Accordingly, as of the date of the acquisition, the Company recorded the assets acquired and liabilities assumed at fair value. The Company determined fair values in accordance with the guidance provided in FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” Acquired loans were recorded at fair value with no carryover of the related allowance for loan losses. Fair value is established by discounting the expected future cash flows with a market discount rate for like maturities and risk instruments. At the date of acquisition, none of the loans were accounted for under the guidance of ASC Topic 310-30, “Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality.”