Effective January 31, 2020, the Company merged with UCFC and its subsidiaries, pursuant to the Merger Agreement. Pursuant to the Merger Agreement, UCFC was merged with and into First Defiance. Immediately following the Merger, Home Savings was merged with and into First Federal Bank of the Midwest, with First Federal surviving the Merger. In addition, UCFC’s wholly-owned insurance subsidiaries, HSB Insurance, LLC and United American Financial Services, Inc., each merged with the Company’s wholly-owned insurance subsidiary, First Insurance Group of the Midwest, Inc., with First Insurance Group of the Midwest, Inc. surviving the Merger. UCFC’s consolidated assets and equity (unaudited) as of January 31, 2020 totaled $2.8 billion and $324.5 million, respectively. The Company accounted for the transaction under the acquisition method of accounting, which means that the acquired assets and liabilities were recorded at fair value at the date of acquisition. The fair value estimates included in these financial statements are based on preliminary valuations.

In accordance with ASC 805, the Company expensed approximately $11.5 million of direct acquisition costs during the three months ended March 31, 2020, of which $4.7 million was to settle employment and benefit agreements and for personnel expenses related to operating the new UCFC locations. The Company recorded $217.5 million of goodwill and $33.0 million of intangible assets in the first quarter of 2020. Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and is attributable to synergies expected to be derived from the combination of the two entities. The Merger was consistent with the Company’s strategy to enhance and expand its presence in northern Ohio. The Merger offers the Company the opportunity to increase profitability by introducing existing products and services to the acquired customer base as well as add new customers in the expanded market area. The intangible assets are related to core deposits, which are being amortized over 10 years on an accelerated basis, and customer relationships, which are being amortized over 10 years on a straight-line basis. For tax purposes, goodwill is non-deductible but will be evaluated annually for impairment. The following table summarizes the fair value of the total consideration transferred as part of the Merger as well as the fair value of identifiable assets and liabilities assumed as of the effective date of the transaction.

	January 31, 2020
	(In Thousands)

Cash Consideration	$	132
Equity - Dollar Value of Issued Shares		526,875
Fair Value of Total Consideration Transferred		527,007

Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:
Cash and Cash Equivalents		52,580
Securities available for sale		262,753
Net loans, including loans held for sale and allowance		2,340,701
FHLB Stock		12,753
Office Properties and Equipment		21,216
Intangible Assets		33,014
Bank Owned Life Insurance		65,934
Mortgage Servicing Rights		9,747
Accrued Interest Receivable and Other Assets		34,452
Deposits - Non-Interest Bearing		(430,921	)
Deposits - Interest Bearing		(1,651,669	)
Advances from FHLB		(381,000	)
Deferred tax liability		(2,262	)
Accrued Interest Payable and Other Liabilities		(57,742	)
Total Identifiable Net Assets		309,556

Goodwill	$	217,451

As a result of the Merger and in accordance with the Merger Agreement, each share of UCFC common stock issued and outstanding immediately prior to the effective time was converted into 0.3715 share of First Defiance common stock. No fractional shares of First Defiance common stock were issued in the Merger, and UCFC’s shareholders became entitled to receive cash in lieu of fractional shares. The Company issued 17,927,017 First Defiance common shares and paid approximately $0.1 million to UCFC shareholders as a result of the Merger. The fair value of First Defiance common shares issued as part of the consideration paid for the UCFC common shares was determined based on the closing price of the Company’s common shares on the effective date of the Merger.

The following table presents unaudited pro forma information as if the acquisition had occurred on January 1, 2019, after giving effect to certain adjustments. The unaudited pro forma information for the three months ended March 31, 2020 and March 31, 2019 includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, interest expense on deposits and borrowings acquired, and the related income tax effects. The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed date.

	Pro Forma Three Months Ended March 31,
	2020			2019
	(In Thousands)
Net interest income	$	53,380		$	52,460
Provision for credit losses		(17,831	)		(273	)
Non-interest income		17,281			16,796
Non-interest expense		(41,141	)		(43,946	)
Income (loss) before income taxes		11,689			25,037
Income tax benefit (expense)		(2,734	)		(4,498	)
Net income (loss)	$	8,955		$	20,539
Diluted earnings per share	$	0.24		$	0.54

The above pro forma financial information related to 2020 excludes non-recurring merger costs that totaled $11.5 million on a pre-tax basis. The above pro forma financial information excludes the $25.9 million pre-tax provision expense recognized for the three months ended March 31, 2020 under CECL for acquired non-PCD loans as CECL was not effective as of the assumed transaction date of January 1, 2019.