CHFC 2017 Annual Report

Chemical Financial Corporation Consolidated Statements of Income Year Ended December 31, (Dollars in thousands, except per share data) 2017 2016 2015 Interest income Interest and fees on loans $ 573,128 $ 383,545 $ 271,772 Interest on investment securities: Taxable 31,496 10,989 8,786 Tax-exempt 18,343 12,317 9,073 Dividends on nonmarketable equity securities 4,924 1,973 1,648 Interest on deposits with the Federal Reserve Bank, other banks and Federal funds sold 4,244 1,555 510 Total interest income 632,135 410,379 291,789 Interest expense Interest on deposits 46,727 23,021 15,406 Interest on short-term borrowings 20,321 1,660 453 Interest on long-term borrowings 7,509 4,617 1,922 Total interest expense 74,557 29,298 17,781 Net interest income 557,578 381,081 274,008 Provision for loan losses 23,300 14,875 6,500 Net interest income after provision for loan losses 534,278 366,206 267,508 Noninterest income Service charges and fees on deposit accounts 35,001 28,136 25,481 Wealth management revenue 25,512 22,601 20,552 Other charges and fees for customer services 32,771 30,246 25,513 Net gain on sale of loans and other mortgage banking revenue 32,205 21,859 6,133 Net (loss) gain on sale of investment securities (7,388) 129 630 Net gain on sale of branch offices — 7,391 — Other 25,918 11,988 1,907 Total noninterest income 144,019 122,350 80,216 Operating expenses Salaries, wages and employee benefits 213,828 165,213 127,920 Occupancy 30,554 23,525 18,213 Equipment and software 32,248 24,408 18,569 Outside processing and service fees 35,142 21,199 15,207 Merger expenses 8,522 61,134 7,804 Restructuring expenses 19,880 — — Other 81,820 42,939 36,181 Total operating expenses 421,994 338,418 223,894 Income before income taxes 256,303 150,138 123,830 Income tax expense 106,780 42,106 37,000 Net income $ 149,523 $ 108,032 $ 86,830 Earnings per common share: Basic $ 2.11 $ 2.21 $ 2.41 Diluted 2.08 2.17 2.39 Cash dividends declared per common share 1.10 1.06 1.00 See accompanying notes to Consolidated Financial Statements. 80