CHFC 2017 Annual Report

PART I. 4 Item 1. Business. Overview Chemical Financial Corporation (the "Corporation"), headquartered inMidland, Michigan, is a financial holding company registered under the Bank Holding Company Act of 1956, as amended, that was incorporated in the State of Michigan in August 1973. Our common stock is listed on the NASDAQ under the symbol "CHFC." On June 30, 1974, the Corporation acquired Chemical Bank and Trust Company pursuant to a reorganization in which the former shareholders of Chemical Bank and Trust Company became shareholders of the Corporation. Chemical Bank and Trust Company's name was changed to Chemical Bank on December 31, 2005. In this Annual Report, unless the context indicates otherwise, all references to "we," "us," and "our" refer to Chemical Financial Corporation and Chemical Bank. Since our acquisition of Chemical Bank and Trust Company, we have acquired 25 community banks and 36 other branch bank offices through December 31, 2017. Our most recent transactions include our merger with Talmer Bancorp, Inc. ("Talmer") during the third quarter of 2016 and the acquisitions of Lake Michigan Financial Corporation ("Lake Michigan") and Monarch Community Bancorp, Inc. ("Monarch") during the second quarter of 2015, and the acquisition of Northwestern Bancorp, Inc. ("Northwestern") during the fourth quarter of 2014. These transactions are discussed in more detail under the subheading "Mergers, Acquisitions and Branch Closings" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this Annual Report. Our business is concentrated in a single industry segment, commercial banking, which is conducted through our single commercial bank subsidiary, Chemical Bank. We offer a full range of traditional banking and fiduciary products and services to residents and business customers in our geographical market areas. These products and services include business and personal checking accounts, savings and individual retirement accounts, time deposit instruments, electronically accessed banking products, residential and commercial real estate financing, commercial lending, consumer financing, debit cards, safe deposit box services, money transfer services, automated teller machines, access to insurance and investment products, corporate and personal wealth management services, mortgage banking and other banking services. Chemical Bank operated through an internal organizational structure of seven regional banking units, organized by geography, as of December 31, 2017. In addition, we own, directly or indirectly, various non-bank operating and non-operating subsidiaries. At December 31, 2017, we had consolidated total assets of $19.28 billion, total loans of $14.16 billion, total deposits of $13.64 billion and shareholders' equity of $2.67 billion. Formore information about our financial condition and results of operations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Consolidated Financial Statements and related notes included in this Annual Report. Our Market Area Our principal market concentrations are in Michigan, Northeast Ohio and Northern Indiana where Chemical Bank's branches are located and the areas surrounding these communities. As of December 31, 2017, we served these markets through 212 banking offices. In addition to the banking offices, Chemical Bank operated seven loan production offices and over 245 automated teller machines, both on- and off-bank premises, as of December 31, 2017. Lending Activities We offer a range of lending services including both commercial and consumer loans. Our commercial loan portfolio is comprised of commercial, commercial real estate loans and real estate construction and land development loans. Our consumer loan portfolio is comprised of residential mortgage, consumer installment and home equity loans. Our customers are generally commercial businesses, professional services and retail consumers within our market areas. At December 31, 2017, total loans, net of allowance for loan losses, were $14.06 billion, representing 72.9% of our total assets.