CHFC 2018 Annual Report

Chemical Financial Corporation Consolidated Statements of Income Year Ended December 31, (Dollars in thousands, except per share data) 2018 2017 2016 Interest income Interest and fees on loans $ 675,875 $ 573,128 $ 383,545 Interest on investment securities: Taxable 62,231 31,496 10,989 Tax-exempt 24,286 18,343 12,317 Dividends on nonmarketable equity securities 7,877 4,924 1,973 Interest on deposits with the Federal Reserve Bank, other banks and Federal funds sold 5,727 4,244 1,555 Total interest income 775,996 632,135 410,379 Interest expense Interest on deposits 96,980 46,727 23,021 Interest on collateralized customer deposits 2,607 1,269 303 Interest on short-term borrowings 37,510 19,052 1,357 Interest on long-term borrowings 6,566 7,509 4,617 Total interest expense 143,663 74,557 29,298 Net interest income 632,333 557,578 381,081 Provision for loan losses 30,750 23,300 14,875 Net interest income after provision for loan losses 601,583 534,278 366,206 Noninterest income Service charges and fees on deposit accounts 37,097 38,367 30,724 Wealth management revenue 25,996 25,512 22,601 Other charges and fees for customer services 21,437 29,405 27,658 Net gain on sale of loans and other mortgage banking revenue 35,193 32,205 21,859 Net gain (loss) on sale of investment securities 224 (7,388) 129 Net gain on sale of branch offices — — 7,391 Other 28,589 25,918 11,988 Total noninterest income 148,536 144,019 122,350 Operating expenses Salaries, wages and employee benefits 225,427 215,562 165,862 Occupancy 31,670 30,554 23,525 Equipment and software 31,761 32,248 24,408 Outside processing and service fees 45,387 35,142 21,199 Merger expenses — 8,522 61,134 Restructuring expenses — 19,880 — Other 89,953 80,086 42,290 Total operating expenses 424,198 421,994 338,418 Income before income taxes 325,921 256,303 150,138 Income tax expense 41,901 106,780 42,106 Net income $ 284,020 $ 149,523 $ 108,032 Earnings per common share: Basic $ 3.98 $ 2.11 $ 2.21 Diluted 3.94 2.08 2.17 See accompanying notes to Consolidated Financial Statements. 84