CHFC 2018 Annual Report

• Changes in securities analysts' estimates of financial performance or recommendations • New litigation or contingencies or changes in existing litigation or contingencies • New technology used, or services offered, by competitors • Breaches in information security systems of Chemical and/or its customers and competitors • Changes in accounting policies or procedures required by standard setting or other regulatory agencies • New developments in the financial services industry • News reports relating to trends, concerns and other issues in the financial services industry • Perceptions in the marketplace regarding the financial services industry, the Corporation and/or its competitors • Rumors or erroneous information • Geopolitical conditions such as acts or threats of terrorism or military conflicts We may issue debt and equity securities that are senior to our common stock as to distributions and in liquidation, which could negatively affect the value of our common stock. Our authorized capital stock includes 135 million shares of common stock and two million shares of preferred stock, which can be issued without further shareholder approval. As of December 31, 2018, we had 71,460,119 shares of common stock outstanding and had 1,301,285 shares reserved for issuance underlying options and restricted stock awards under our existing equity plans. As of December 31, 2018, we had no shares of preferred stock outstanding. In connection with our planned merger with TCF, which was announced on January 28, 2019, based on the number of shares of Chemical common stock and TCF common stock outstanding as of December 31, 2018, and based on the number of shares of Chemical common stock expected to be issued in the merger, the former stockholders of TCF, as a group, will receive shares in the merger constituting approximately 54% of the outstanding shares of Chemical common stock immediately after the merger. As a result, current shareholders of Chemical, as a group, will own approximately 46% of the outstanding shares of Chemical common stock immediately after the merger. In connection with the merger, we will also issue shares of our preferred stock, to be designated Series C 5.70% Series C Non- Cumulative Perpetual Preferred Stock, with equivalent rights, preferences, privileges, as those of the TCF Series C 5.70% Series C Non-Cumulative Perpetual Preferred Stock, for which they are exchanged. The merger, which is expected to close the late third or early fourth quarter of 2019, is subject to, among other things, required regulatory approvals and the affirmative vote of both our shareholders and TCF’s stockholders to approve or adopt the merger agreement, as applicable, and in the case of Chemical, to approve an amendment to our articles of incorporation to increase the number of authorized shares of Chemical common stock and to change our name to TCF Financial Corporation, effective only upon completion of the merger. In addition, in the future, we may increase our capital resources by entering into debt or debt-like financing or issuing debt or equity securities, which could include issuances of senior notes, subordinated notes, preferred stock or common stock. In the event of our liquidation, our lenders and holders of our debt securities and preferred stockwould receive a distribution of our available assets before distributions to the holders of our common stock. Our decision to incur debt and issue securities in future offerings may depend on market conditions and other factors beyond our control. We cannot predict or estimate the amount, timing or nature of our future offerings and debt financings, if any. Future offerings could reduce the value of shares of our common stock and dilute a shareholder's interest in Chemical. Chemical relies on dividends from Chemical Bank for most of its revenue. Chemical is a separate and distinct legal entity from Chemical Bank. It receives substantially all of its revenue from dividends from Chemical Bank. These dividends are the principal source of funds to pay cash dividends on Chemical's common stock. Various federal and/or state laws and regulations limit the amount of dividends that Chemical Bank may pay to Chemical. In the event Chemical Bank is unable to pay dividends to Chemical, Chemical may not be able to pay cash dividends on its common stock. The earnings of Chemical Bank have been the principal source of funds to pay cash dividends to shareholders. Over the long-term, cash dividends to shareholders are dependent upon earnings, as well as capital requirements, regulatory restraints and other factors affecting Chemical Bank. See the section captioned "Supervision and Regulation" in Item 1. Business and Note 21 - Regulatory Capital and Reserve Requirements in the notes to our Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data, which are located elsewhere in this Annual Report. Shares of our common stock are not insured deposits. Shares of our common stock are not bank deposits and are not insured or guaranteed by the FDICor any other governmental agency, and are subject to investment risk, including the possible loss of principal. 31 Item 1B. Unresolved Staff Comments. None.