Note 2: Acquisitions On February 28, 2018, the Company completed the 100% acquisition of Universal Bancorp (Universal). Universal and BloomBank, a wholly-owned subsidiary of Universal, merged with and into the Company and the Bank, respectively. BloomBank was headquartered in Bloomfield, Indiana and had 13 retail financial center offices serving counties in central and southern Indiana. Under terms of the merger agreement, shareholders of Universal received fixed consideration of 15.6 shares of MutualFirst common stock and $250.00 in cash for each share of Universal common stock. The Company issued approximately 1.2 million shares of common stock, which was valued at approximately $42.3 million. Based upon the February 28, 2018 closing price of $35.70 per share of MutualFirst common stock, the transaction had an implied valuation of approximately $61.3 million. The Company incurred approximately $605,000 in pretax expenses related to the acquisition in the first three months of 2018. These expenses were classified in the non-interest expense section of the income statement, primarily in professional fees and other expenses. As a result of the acquisition, the Company was able to increase both its deposit and loan base and expects to reduce costs through economies of scale. Goodwill resulted from this transaction due to the expected synergies and economies of scale. Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on valuations of the fair value of tangible and intangible assets acquired, liabilities assumed and related deferred tax impacts, which were based on assumptions that were subject to change as management evaluated, the purchase price for the Universal acquisition is detailed in the following table. If, prior to the end of the one-year measurement period for finalizing the purchase price allocation, information becomes available which would indicate adjustments were required to the purchase price allocation, such adjustments will be recorded in the reporting period in which the adjustment amounts were determined. No measurement period adjustments were recorded in the first quarter of 2019. Measurement period adjustments recorded in 2018 were calculated as if the accounting had been completed as of the acquisition date. Assets Liabilities Cash and cash equivalents $ 11,326 Deposits Interest-bearing time deposits 8,747 Non-interest bearing $ 81,061 Investment securities, available for sale 87,817 NOW accounts 66,372 Savings and money market 85,690 Loans Certificated of deposits 82,107 Commercial 203,489 Total deposits 315,230 Residential mortgage 36,410 Consumer 12,532 Borrowings 25,463 Total loans 252,431 Interest payable 81 Subordinated debt 4,000 Premises and equipment, net 4,799 Other liabilities 462 Federal Home Loan Bank stock 1,637 Total liabilities assumed $ 345,236 Deferred tax asset, net 2,848 Cash value of life insurance 7,556 Goodwill 20,511 Core deposit intangible 4,545 Interest receivable 1,259 Other real estate owned and repossessed assets 1,009 Other assets 2,073 Total assets purchased $ 406,558 Common shares issued $ 42,323 Cash paid 18,999 Total purchase price $ 61,322 Of the total purchase price, $4.5 million was allocated to a core deposit intangible that is being amortized over its estimated life of 15 years. Of the remaining purchase price, $20.5 million was allocated to goodwill, which is not deductible for tax purposes. Loans acquired had a fair value of $252.4 million. The contractual principal at the acquisition date was $257.0 million. The $4.6 million will be accreted into income for the performing loans or utilized for charging off non-performing loans. Pro Forma Financial Information The results of operations of Universal Bancorp have been included in the Companys consolidated financial statements since the acquisition date. The following schedule includes pro forma results for the three months ended March 31, 2018, as if the Universal acquisition occurred as of the beginning of the reporting period presented. Three Months Ended March 31, 2018 Summary of Operations Net interest income $ 15,875 Provision for loan losses (450) Net interest income after provision $ 15,425 Non-interest income 4,713 Non-interest expense (18,795) Income before income taxes $ 1,343 Income tax benefit (expense) 208 Net income to common shareholders $ 1,551 Basic earnings per share $ 0.18 Diluted earnings per share $ 0.18 The pro-forma information for March 31, 2018 includes operating revenue from Universal of $1.4 million since the date of acquisition. Earnings of Universal since the acquisition date, net of tax and non-recurring expenses related to the acquisition were $1.2 million as of March 31, 2018. The pro forma information is presented for information purposes only and is not indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of that time, nor is it intended to be a projection of future results.