CHFC 2018 Annual Report

Chemical Financial Corporation Consolidated Statements of Changes in Shareholders’ Equity (Dollars in thousands) Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders' Equity Balances at December 31, 2015 $ 38,168 $ 725,280 $ 281,558 $ (29,032) $ 1,015,974 Comprehensive income 108,032 (11,004) 97,028 Cash dividends declared and paid of $1.06 per share (49,389) (49,389) Issuance of common stock and common stock equivalents in business combinations 32,074 1,472,737 1,504,811 Net shares issued under share-based compensation plans 351 (701) (350) Share-based compensation expense 6 13,446 13,452 Balances at December 31, 2016 $ 70,599 $ 2,210,762 $ 340,201 $ (40,036) $ 2,581,526 Cumulative effect adjustment of change in accounting policy, net of tax impact (1) 3,659 3,659 Comprehensive income 149,523 19,056 168,579 Cash dividends declared and paid of $1.10 per share (78,498) (78,498) Net shares issued under share-based compensation plans 608 (24,471) (23,863) Share-based compensation expense — 17,346 17,346 Reclassification of certain income tax effects (2) 4,518 (4,518) — Balances at December 31, 2017 $ 71,207 $ 2,203,637 $ 419,403 $ (25,498) $ 2,668,749 Cumulative effect adjustment of change in accounting policy, net of tax impact (1) 1,680 (341) 1,339 Comprehensive income 284,020 (35,271) 248,749 Cash dividends declared and paid of $1.24 per share (88,954) (88,954) Net shares issued under share-based compensation plans 253 (2,454) (2,201) Share-based compensation expense — 8,578 8,578 Balances at December 31, 2018 $ 71,460 $ 2,209,761 $ 616,149 $ (61,110) $ 2,836,260 (1) Refer to Note 1, Summary of Significant Accounting Policies, Note 4, Investment Securities, Note 7, Other Real Estate Owned and Repossessed Assets and Note 9, Loan Servicing Rights, for further details on the changes in accounting policy. (2) The reclassification from accumulated other comprehensive income (loss) to retained earnings was due to the early adoption of ASU 2018-02, refer to Note 1 for further details on the adoption. See accompanying notes to Consolidated Financial Statements. 86