MIDLAND, Mich., Jan. 25, 2017 (GLOBE NEWSWIRE) -- Chemical Financial Corporation ("Corporation" or "Chemical") (NASDAQ:CHFC) today announced 2016 fourth quarter net income of $47.2 million, or $0.66 per diluted share, compared to 2016 third quarter net income of $11.5 million, or $0.23 per diluted share, and 2015 fourth quarter net income of $25.5 million, or $0.66 per diluted share. For the year ended December 31, 2016, net income was $108.0 million, or $2.17 per diluted share, compared to net income for the year ended December 31, 2015 of $86.8 million, or $2.39 per diluted share.  The increase in net income in the fourth quarter, compared to both the third quarter of 2016 and the fourth quarter of 2015, was driven significantly by the reduction in merger and transaction-related expenses ("transaction expenses") from the completion of the Corporation's merger with Talmer Bancorp, Inc. ("Talmer") and the inclusion of Talmer operations for the full quarter compared to one month's inclusion of operations in the third quarter of 2016 and no inclusion during the fourth quarter of 2015.

Excluding transaction expenses, net gain on the sale of branches and the change in fair value in loan servicing rights ("significant items"), net income for the fourth quarter of 2016 was $49.9 million, or $0.70 per diluted share, compared to $37.5 million, or $0.75 per diluted share, and $26.9 million, or $0.70 per diluted share in the third quarter of 2016 and the fourth quarter of 2015, respectively.⁽¹⁾  Net income for the full year 2016, excluding significant items was $140.5 million, or $2.81 per diluted share, compared to $92.3 million, or $2.54 per diluted share for the full year 2015.⁽¹⁾

During the fourth quarter of 2016, transaction expenses of $18.0 million were partially offset by $7.4 million of net gain on the sale of branches and a $6.4 million gain due to the change in fair value in loan servicing rights.  The third quarter of 2016 included the impact of $37.5 million of transaction expenses and a $1.3 million detriment to earnings due to the change in fair value in loan servicing rights, while the fourth quarter of 2015 included $2.1 million of transaction expenses.

"Our fourth quarter financial results reflect both a solid finish to a milestone year and a strong base from which Chemical Financial Corporation will move forward.  During the quarter, we completed the integration of Talmer Bank and Chemical Bank, our fourth successful integration over the past two years.  Continued stable economic conditions in our core markets facilitated significant organic loan growth during the quarter, and we believe we have an attractive pipeline as we look forward to 2017," noted David B. Ramaker, Chief Executive Officer and President of the Corporation.  “Since year-end 2014, we have more than doubled our asset base and expanded our delivery network beyond Michigan into northeast Ohio and northern Indiana.  We have paired a targeted acquisition strategy with attractive organic growth across the Chemical franchise to achieve these results, never losing sight of our primary goal of meeting the financial service needs of the communities we serve and delivering strong results for our shareholders.”

The Corporation's return on average assets was 1.09% during the fourth quarter of 2016, compared to 0.37% in the third quarter of 2016 and 1.11% in the fourth quarter of 2015.  The Corporation's return on average shareholders' equity was 7.4% in the fourth quarter of 2016, compared to 2.9% in the third quarter of 2016 and 10.2% in the fourth quarter of 2015.  Excluding significant items, the Corporation's return on average assets was 1.16% during the fourth quarter of 2016, compared to 1.22% in the third quarter of 2016 and 1.17% in the fourth quarter of 2015 and the Corporation's return on average shareholders' equity was 7.8% in the fourth quarter of 2016, compared to 9.6% in the third quarter of 2016 and 10.7% in the fourth quarter of 2015.⁽²⁾

Net interest income was $132.4 million in the fourth quarter of 2016, $35.6 million, or 36.8%, higher than the third quarter of 2016 and $57.0 million, or 75.5%, higher than the fourth quarter of 2015.  The increase in net interest income in the fourth quarter of 2016 over the third quarter of 2016 was primarily attributable to loans acquired in the merger with Talmer, although also partially attributable to organic loan growth.  The increase in net interest income in the fourth quarter of 2016 over the fourth quarter of 2015 was attributable to the positive impact of 2016 organic loan growth and the impact of the merger with Talmer.  The Corporation experienced net organic loan growth of $275.0 million during the fourth quarter of 2016 and $837.2 million during the year ended December 31, 2016.  The merger with Talmer added $4.88 billion of loans on August 31, 2016.

The net interest margin was 3.48% in the fourth quarter of 2016, compared to 3.49% in the third quarter of 2016 and 3.55% in the fourth quarter of 2015.  The net interest margin (on a tax-equivalent basis) was 3.56% in the fourth quarter of 2016, compared to 3.58% in the third quarter of 2016 and 3.64% in the fourth quarter of 2015.⁽³⁾  The decrease in the net interest margin (on a tax-equivalent basis) in the fourth quarter of 2016, compared to the third quarter of 2016, was due primarily to an increase in FHLB borrowing costs, while the decrease in the fourth quarter of 2016, compared to the fourth quarter of 2015, was largely due to an increase in cost of funds significantly due to debt obtained related to transactions. The average yield on the loan portfolio was 4.18% in the fourth quarter of 2016, compared to 4.12% in the third quarter of 2016 and 4.16% in the fourth quarter of 2015.  Interest accretion from purchase accounting discounts on acquired loans contributed 14 basis points to the Corporation's net interest margin (on a tax-equivalent basis) in the fourth quarter of 2016, compared to 11 basis points in the third quarter of 2016 and four basis points in the fourth quarter of 2015.  Interest accretion on acquired loans comprised 16 basis points of the yield on the Corporation's loan portfolio in the fourth quarter of 2016, compared to 13 basis points in the third quarter of 2016 and five basis points in the fourth quarter of 2015.  The Corporation's average cost of funds was 0.33% in the fourth quarter of 2016, compared to 0.25% in both the third quarter of 2016 and the fourth quarter of 2015.

Net interest income was $381.1 million for the year ended December 31, 2016, $107.1 million, or 39.1%, higher than 2015, with the increase attributable to a combination of organic loan growth and the impact of the merger with Talmer.  The average balance of loans outstanding during the year ended December 31, 2016 were up $2.71 billion compared to the prior year, with the increase driven by the $4.88 billion of loans added on August 31, 2016 from the merger with Talmer and the $837.2 million of organic loan growth during 2016.  The net interest margin was 3.51% in 2016 and 3.49% in 2015.  The net interest margin (on a tax equivalent basis) was 3.60% in 2016 and 3.58% in 2015.⁽³⁾

The provision for loan losses was $6.3 million in the fourth quarter of 2016, compared to $4.1 million in the third quarter of 2016 and $2.0 million in the fourth quarter of 2015.  The increase in the provision for loan losses in the fourth quarter of 2016, compared to both the third quarter of 2016 and the fourth quarter of 2015, was primarily due to organic growth in the loan portfolio.  The provision for loan losses was $14.9 million for the year ended December 31, 2016, compared to $6.5 million in 2015, with the increase primarily due to organic growth in the loan portfolio.

Net loan charge-offs were $1.8 million, or 0.06% of average loans, in the fourth quarter of 2016, compared to $1.8 million, or 0.08% of average loans, in the third quarter of 2016 and $4.3 million, or 0.24% of average loans, in the fourth quarter of 2015. The decrease in net loan charge-offs in the fourth quarter of 2016, compared to the fourth quarter of 2015, was partially attributable to a $1.6 million net loan charge-off from one commercial loan relationship occurring in the fourth quarter of 2015.  Net loan charge-offs totaled $9.9 million, or 0.11% of average loans, during the year ended December 31, 2016, compared to $8.9 million, or 0.13% of average loans, in 2015.

The Corporation's nonperforming loans totaled $44.3 million at December 31, 2016, compared to $41.3 million at September 30, 2016 and $62.2 million at December 31, 2015.  Nonperforming loans comprised 0.34% of total loans at December 31, 2016, compared to 0.32% at September 30, 2016 and 0.86% at December 31, 2015. The reduction in nonperforming loans as a percentage of total loans at December 31, 2016, compared to December 31, 2015, was due to the combined impact of overall improvements in credit quality within the Corporation's loan portfolios and the addition of $4.88 billion of loans acquired in the Talmer merger that are all classified as performing as these acquired loans are recorded in pools at their net realizable value.

At December 31, 2016, the allowance for loan losses of the originated loan portfolio was $78.3 million, or 1.05% of originated loans, compared to $73.8 million, or 1.09% of originated loans, at September 30, 2016 and $73.3 million, or 1.26% of originated loans, at December 31, 2015.   The decrease in the allowance coverage as a percentage of originated loans at December 31, 2016, compared to December 31, 2015, was primarily due to an overall improvement in credit quality and a decline in net credit charge-offs.  The allowance for loan losses of the originated loan portfolio as a percentage of nonperforming loans was 176.5% at December 31, 2016, compared to 178.6% at September 30, 2016 and 117.8% at December 31, 2015.

Noninterest income was $54.3 million in the fourth quarter of 2016, compared to $27.8 million in the third quarter of 2016 and $20.1 million in the fourth quarter of 2015.  Noninterest income in the fourth quarter of 2016 was higher than the third quarter of 2016 and the fourth quarter of 2015 primarily due to incremental revenue resulting from the merger with Talmer, in addition to a net gain on the sales of the Chicago, Illinois and Las Vegas, Nevada branches totaling $7.4 million and a $6.4 million benefit to earnings due to a change in fair value in loan servicing rights included within "mortgage banking revenue".

Noninterest income was $122.4 million for the year ended December 31, 2016, compared to $80.2 million in 2015.  The increase was primarily due to incremental revenue resulting from the merger with Talmer in August 2016 and the acquisitions of Lake Michigan Financial Corporation in May 2015 and Monarch Community Bancorp in April 2015.

Operating expenses were $114.3 million in the fourth quarter of 2016, compared to $106.1 million in the third quarter of 2016 and $57.8 million in the fourth quarter of 2015.  Operating expenses included transaction expenses of $18.0 million in the fourth quarter of 2016, $37.5 million in the third quarter of 2016 and $2.1 million in the fourth quarter of 2015.  Excluding transaction expenses, operating expenses were $96.3 million in the fourth quarter of 2016, $27.6 million, or 40.2%, higher than the third quarter of 2016 and $40.5 million, or 72.7%, higher than the fourth quarter of 2015. The increase in operating expenses, excluding transaction expenses, in the fourth quarter of 2016, compared to both the third quarter of 2016 and the fourth quarter of 2015, was due to the incremental expenses resulting from the merger with Talmer.

Operating expenses were $338.4 million for the year ended December 31, 2016, compared to $223.9 million in 2015.  Operating expenses included transaction expenses of $61.1 million in 2016 and $7.8 million in 2015. Excluding these transaction expenses, operating expenses were $277.3 million in 2016, an increase of $61.2 million, or 28.3%, over 2015, with the increase due primarily to incremental operating costs associated with the merger with Talmer.

The efficiency ratio is a measure of operating expenses as a percentage of net interest income and noninterest income.  The Corporation's efficiency ratio was 61.2% in the fourth quarter of 2016, 85.2% in the third quarter of 2016 and 60.5% in the fourth quarter of 2015. The Corporation's efficiency ratio was 67.2% for the year ended December 31, 2016 and 63.2% for 2015.  The Corporation's adjusted efficiency ratio, which excludes transaction expenses, changes in fair value of the legacy Talmer loan servicing portfolio, amortization of intangibles and net gains on sales of branches, closed branch locations and investment securities, was 53.7% in the fourth quarter of 2016, 52.6% in the third quarter of 2016 and 55.8% in the fourth quarter of 2015.  The Corporation's adjusted efficiency ratio was 54.4% for the year ended December 31, 2016 and 58.7% for 2015.⁽⁴⁾

Total assets were $17.36 billion at December 31, 2016, compared to $17.38 billion at September 30, 2016 and $9.18 billion at December 31, 2015.  The increase in total assets during the twelve months ended December 31, 2016 was primarily attributable to the merger with Talmer.  As of the merger date, Talmer added total assets of $7.71 billion, including total loans of $4.88 billion and goodwill of $846.7 million. 

Total loans were $12.99 billion at December 31, 2016, up $275.0 million, or 2.2%, from total loans of $12.72 billion at September 30, 2016 and up $5.72 billion, or 78.7%, from total loans of $7.27 billion at December 31, 2015.  As of the merger date, the Corporation added $4.88 billion of loans as part of the merger with Talmer.  Loan growth of $275.0 million during the fourth quarter of 2016 resulted from the impact of $702.5 million growth in the originated loan portfolio, partially offset by a $427.5 million decrease in the acquired loan portfolios.  Loan growth, excluding the impact of the Talmer acquisition, of $837.2 million during the year ended December 31, 2016 resulted from the impact of $1.65 billion growth in the originated loan portfolio, partially offset by an $813.2 million decrease in the acquired loan portfolios.

Total deposits were $12.87 billion at December 31, 2016, compared to $13.27 billion at September 30, 2016 and $7.46 billion at December 31, 2015. As of the merger date, the Corporation added $5.29 billion of deposits as part of the merger with Talmer, including $403.2 million of brokered deposits.  During the fourth quarter of 2016, the Corporation reduced the balance of brokered deposits by $248.5 million.  The Corporation experienced net run-off in customer deposits of $402.4 million during the fourth quarter of 2016; however, the Corporation also experienced net organic growth in customer deposits of $317.3 million for the year ended December 31, 2016.

Securities sold under agreements to repurchase with customers were $343.0 million at December 31, 2016, compared to $326.8 million at September 30, 2016 and $297.2 million at December 31, 2015.  Short-term borrowings were $825.0 million at December 31, 2016, compared to $400.0 million at September 30, 2016 and $100.0 million at December 31, 2015 and consisted of short-term FHLB advances utilized by the Corporation to fund short-term liquidity needs.  Long-term borrowings were $597.8 million at December 31, 2016, compared to $676.6 million at September 30, 2016 and $242.4 million at December 31, 2015.  The increase in borrowings during the twelve months ended December 31, 2016 was primarily attributable to the merger with Talmer and the Corporation borrowing $125.0 million under a three-year credit facility to partially fund the cash portion of the merger consideration.

The Corporation's shareholders' equity to total assets ratio was 14.9% at December 31, 2016, compared to 14.7% at September 30, 2016 and 11.1% at December 31, 2015.  The Corporation's tangible shareholders' equity to assets ratio and total risk-based capital ratio were 8.8% and 11.5% (estimated), respectively, at December 31, 2016, compared to 8.7% and 11.1%, respectively, at September 30, 2016 and 8.1% and 11.8%, respectively, at December 31, 2015.⁽⁵⁾  The Corporation's book value was $36.57 per share at December 31, 2016, compared to $36.37 per share at September 30, 2016 and $26.62 per share at December 31, 2015.  The Corporation's tangible book value was $20.20 per share at December 31, 2016, compared to $19.99 per share at September 30, 2016 and $18.78 per share at December 31, 2015.⁽⁶⁾

(1) Net income, excluding significant items, and diluted earnings per share, excluding significant items, are non-GAAP financial measures. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation to the most directly comparable GAAP financial measures.

(2) Return on average assets, excluding significant items, and return on average shareholders’ equity, excluding significant items, are non-GAAP financial measures. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation to the most directly comparable GAAP financial measures.

(3) Net interest margin, on a tax equivalent basis, is a non-GAAP financial measure. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Average Balances, Fully Tax Equivalent (FTE) Interest and Effective Yields and Rates” for a reconciliation of net interest income used to compute net interest margin on a tax equivalent basis to the most directly comparable GAAP financial measure.

(4) Adjusted efficiency ratio is a non-GAAP financial measure. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation to the most directly comparable GAAP financial measure.

(5) Tangible equity to tangible assets ratio is a non-GAAP financial measure. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation to the most directly comparable GAAP financial measure.

(6) Tangible book value per share is a non-GAAP financial measure. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation to the most directly comparable GAAP financial measure.

Conference Call Details

Chemical Financial Corporation will host a conference call to discuss its fourth quarter and full year 2016 operating results on Thursday, January 26, 2017 at 10:00 am ET.  Anyone interested may access the conference call on a live basis by dialing toll-free at 1-888-797-3007 and entering 879991 for the conference ID.  The call will also be broadcast live over the Internet hosted at Chemical Financial Corporation's website at www.chemicalbank.com under the "Investor Info" section.  A copy of the slide-show presentation and an audio replay of the call will remain available on Chemical Financial Corporation's website for at least 14 days.

About Chemical Financial Corporation

Chemical Financial Corporation is the largest banking company headquartered and operating branch offices in Michigan. The Corporation operates through its subsidiary bank, Chemical Bank, with 249 banking offices located in Michigan, northeast Ohio and northern Indiana. At December 31, 2016, the Corporation had total assets of $17.36 billion. Chemical Financial Corporation's common stock trades on The NASDAQ Stock Market under the symbol CHFC and is one of the issuers comprising The NASDAQ Global Select Market and the S&P MidCap 400 Index. More information about the Corporation is available by visiting the "Investor Info" section of its website at www.chemicalbank.com.

Non-GAAP Financial Measures

This press release contains references to financial measures which are not defined in generally accepted accounting principles ("GAAP"). Such non-GAAP financial measures include the Corporation's tangible equity to tangible assets ratio, tangible book value per share, presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis, and information presented excluding significant items, including net income, diluted earnings per share, return on average assets, return on average shareholders' equity, operating expenses and the efficiency ratio. These non-GAAP financial measures have been included as the Corporation believes they are helpful for investors to analyze and evaluate the Corporation's financial condition. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measure may be found in the financial tables included with this press release.

Forward-Looking Statements

This press release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and the Corporation. Words and phrases such as "anticipates," "believes," "continue," "estimates," "expects," "forecasts," "future," "intends," "is likely," "judgment," "look ahead," "look forward," "on schedule," "opinion," "opportunity," "plans," "predicts," "probable," "projects," "should," "strategic," "trend," "will," and variations of such words and phrases or similar expressions are intended to identify such forward-looking statements. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to future levels of loan charge-offs, future levels of provisions for loan losses, real estate valuation, future levels of nonperforming assets, the rate of asset dispositions, future capital levels, future dividends, future growth and funding sources, future liquidity levels, future profitability levels, future deposit insurance premiums, future asset levels, the effects on earnings of future changes in interest rates, the future level of other revenue sources, future economic trends and conditions, future initiatives to expand the Corporation’s market share, expected performance and cash flows from acquired loans, future effects of new or changed accounting standards, future opportunities for acquisitions, opportunities to increase top line revenues, the Corporation’s ability to grow its core franchise, future cost savings and the Corporation’s ability to maintain adequate liquidity and capital based on the requirements adopted by the Basel Committee on Banking Supervision and U.S. regulators. All statements referencing future time periods are forward-looking.

Management's determination of the provision and allowance for loan losses; the carrying value of acquired loans, goodwill and mortgage servicing rights; the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment); and management's assumptions concerning pension and other postretirement benefit plans involve judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated. All of the information concerning interest rate sensitivity is forward-looking. The future effect of changes in the financial and credit markets and the national and regional economies on the banking industry, generally, and on the Corporation, specifically, are also inherently uncertain. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Risk factors include, but are not limited to, the risk factors described in Item 1A of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation
(In thousands, except per share data)
		December 31, 2016				September 30, 2016				December 31, 2015
Assets
Cash and cash equivalents:
Cash and cash due from banks		$	272,048			$	286,351			$	194,136
Interest-bearing deposits with the Federal Reserve Bank and other banks and federal funds sold		202,354				270,216				44,653
Total cash and cash equivalents		474,402				556,567				238,789
Investment securities:
Available-for-sale		1,234,964				1,303,381				553,731
Held-to-maturity		623,427				563,721				509,971
Total investment securities		1,858,391				1,867,102				1,063,702
Loans held-for-sale		81,830				276,061				10,327
Loans:
Total loans		12,990,779				12,715,789				7,271,147
Allowance for loan losses		(78,268		)		(73,775		)		(73,328		)
Net loans		12,912,511				12,642,014				7,197,819
Premises and equipment		145,012				144,165				106,317
Loan servicing rights		58,315				51,393				11,122
Goodwill		1,133,534				1,137,166				287,393
Other intangible assets		40,211				35,700				26,982
Interest receivable and other assets		650,973				673,469				246,346
Total Assets		$	17,355,179			$	17,383,637			$	9,188,797
Liabilities
Deposits:
Noninterest-bearing		$	3,341,520			$	3,264,934			$	1,934,583
Interest-bearing		9,531,602				10,007,928				5,522,184
Total deposits		12,873,122				13,272,862				7,456,767
Interest payable and other liabilities		134,637				143,708				76,466
Securities sold under agreements to repurchase with customers		343,047				326,789				297,199
Short-term borrowings		825,000				400,000				100,000
Long-term borrowings		597,847				676,612				242,391
Total liabilities		14,773,653				14,819,971				8,172,823
Shareholders' Equity
Preferred stock, no par value per share		—				—				—
Common stock, $1 par value per share		70,599				70,497				38,168
Additional paid-in capital		2,210,762				2,207,345				725,280
Retained earnings		340,201				310,966				281,558
Accumulated other comprehensive loss		(40,036		)		(25,142		)		(29,032		)
Total shareholders' equity		2,581,526				2,563,666				1,015,974
Total Liabilities and Shareholders' Equity		$	17,355,179			$	17,383,637			$	9,188,797

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation
(In thousands, except per share data)
	Three Months Ended												Twelve Months Ended
	December 31, 2016				September 30, 2016(1)				December 31, 2015				December 31, 2016				December 31, 2015
Interest Income
Interest and fees on loans	$	134,463			$	97,103			$	75,253			$	383,545			$	271,772
Interest on investment securities:
Taxable	4,687				2,575				2,044				10,989				8,786
Tax-exempt	3,940				3,072				2,583				12,317				9,073
Dividends on nonmarketable equity securities	582				358				633				1,973				1,648
Interest on deposits with the Federal Reserve Bank and other banks and federal funds sold	744				454				116				1,555				510
Total interest income	144,416				103,562				80,629				410,379				291,789
Interest Expense
Interest on deposits	8,866				5,836				4,120				23,021				15,406
Interest on short-term borrowings	875				459				110				1,660				453
Interest on long-term borrowings	2,228				458				923				4,617				1,922
Total interest expense	11,969				6,753				5,153				29,298				17,781
Net Interest Income	132,447				96,809				75,476				381,081				274,008
Provision for loan losses	6,272				4,103				2,000				14,875				6,500
Net interest income after provision for loan losses	126,175				92,706				73,476				366,206				267,508
Noninterest Income
Service charges and fees on deposit accounts	8,414				7,665				6,398				28,136				25,481
Wealth management revenue	6,034				5,584				5,151				22,601				20,552
Other charges and fees for customer services	9,981				7,410				6,189				30,246				25,513
Mortgage banking revenue	14,420				4,439				1,606				21,859				6,133
Gain on sale of branches	7,391				—				—				7,391				—
Gain on sale of investment securities	76				16				18				129				630
Other	7,948				2,656				690				11,988				1,907
Total noninterest income	54,264				27,770				20,052				122,350				80,216
Operating Expenses
Salaries, wages and employee benefits	57,631				40,565				32,971				165,213				127,920
Occupancy	7,644				5,462				4,620				23,525				18,213
Equipment and software	8,709				6,420				5,102				24,408				18,569
Merger and acquisition-related transaction expenses (transaction expenses)	18,016				37,470				2,085				61,134				7,804
Other	22,302				16,227				13,046				64,138				51,388
Total operating expenses	114,302				106,144				57,824				338,418				223,894
Income before income taxes	66,137				14,332				35,704				150,138				123,830
Income tax expense	18,969				2,848				10,200				42,106				37,000
Net Income	$	47,168			$	11,484			$	25,504			$	108,032			$	86,830
Earnings Per Common Share:
Weighted average common shares outstanding-basic	70,171				49,107				38,150				49,091				36,081
Weighted average common shares outstanding-diluted	71,304				49,631				38,498				49,603				36,353
Basic earnings per common share	$	0.67			$	0.23			$	0.67			$	2.21			$	2.41
Diluted earnings per common share	$	0.66			$	0.23			$	0.66			$	2.17			$	2.39
Cash Dividends Declared Per Common Share	$	0.27			$	0.27			$	0.26			$	1.06			$	1.00
Key Ratios (annualized where applicable):
Return on average assets	1.09		%		0.37		%		1.11		%		0.90		%		1.02		%
Return on average shareholders' equity	7.4		%		2.9		%		10.2		%		7.0		%		9.4		%
Net interest margin (tax-equivalent basis) (non-GAAP)	3.56		%		3.58		%		3.64		%		3.60		%		3.58		%
Efficiency ratio - GAAP	61.2		%		85.2		%		60.5		%		67.2		%		63.2		%
Efficiency ratio - adjusted (non-GAAP)	53.7		%		52.6		%		55.8		%		54.4		%		58.7		%
(1) Third quarter 2016 information is revised to reflect the impact of the early adoption of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." The early adoption resulted in $752 thousand of excess tax benefits recognized within "Income tax expense" during the three months ended September 30, 2016 rather than previously recognized directly into equity within "Additional paid-in-capital."

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation
(Dollars in thousands, except per share data)
	4th Quarter 2016				3rd Quarter 2016(1)				2nd Quarter 2016(1)				1st Quarter 2016(1)				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015				1st Quarter 2015
Summary of Operations
Interest income	$	144,416			$	103,562			$	82,937			$	79,464			$	80,629			$	78,851			$	69,679			$	62,630
Interest expense	11,969				6,753				5,442				5,134				5,153				5,234				3,944				3,450
Net interest income	132,447				96,809				77,495				74,330				75,476				73,617				65,735				59,180
Provision for loan losses	6,272				4,103				3,000				1,500				2,000				1,500				1,500				1,500
Net interest income after provision for loan losses	126,175				92,706				74,495				72,830				73,476				72,117				64,235				57,680
Noninterest income	54,264				27,770				20,897				19,419				20,052				20,215				20,674				19,275
Operating expenses, excluding transaction expenses (non-GAAP)	96,286				68,674				56,031				56,293				55,739				57,365				53,328				49,658
Transaction expenses	18,016				37,470				3,054				2,594				2,085				900				3,457				1,362
Income before income taxes	66,137				14,332				36,307				33,362				35,704				34,067				28,124				25,935
Income tax expense	18,969				2,848				10,532				9,757				10,200				9,600				9,100				8,100
Net income	$	47,168			$	11,484			$	25,775			$	23,605			$	25,504			$	24,467			$	19,024			$	17,835
Significant items, net of tax	2,777				25,992				1,985				1,686				1,355				585				2,659				885
Net income, excluding significant items	$	49,945			$	37,476			$	27,760			$	25,291			$	26,859			$	25,052			$	21,683			$	18,720
Per Common Share Data
Net income:
Basic	$	0.67			$	0.23			$	0.67			$	0.61			$	0.67			$	0.64			$	0.54			$	0.54
Diluted	0.66				0.23				0.67				0.60				0.66				0.64				0.54				0.54
Diluted, excluding significant items (non-GAAP)	0.70				0.75				0.72				0.65				0.70				0.65				0.61				0.57
Cash dividends declared	0.27				0.27				0.26				0.26				0.26				0.26				0.24				0.24
Book value - period-end	36.57				36.37				27.45				26.99				26.62				26.18				25.74				24.68
Tangible book value - period-end	20.20				19.99				19.68				19.20				18.78				18.32				17.89				18.95
Market value - period-end	54.17				44.13				37.29				35.69				34.27				32.35				33.06				31.36
Net interest margin (taxable equivalent basis) (non-GAAP)	3.56		%		3.58		%		3.70		%		3.60		%		3.64		%		3.55		%		3.59		%		3.55		%
Efficiency ratio - adjusted (non-GAAP)	53.7		%		53.2		%		54.6		%		57.6		%		55.8		%		58.6		%		59.4		%		61.5		%
Return on average assets	1.09		%		0.37		%		1.10		%		1.02		%		1.11		%		1.05		%		0.94		%		0.98		%
Return on average shareholders' equity	7.4		%		2.9		%		10.0		%		9.3		%		10.2		%		9.8		%		8.6		%		9.0		%
Average shareholders' equity as a percent of average assets	14.9		%		12.7		%		11.1		%		11.0		%		10.9		%		10.7		%		10.9		%		10.8		%
Capital ratios (period end):
Tangible shareholders' equity as a percent of tangible assets	8.8		%		8.7		%		8.2		%		8.2		%		8.1		%		7.8		%		7.8		%		8.5		%
Total risk-based capital ratio (2)	11.5		%		11.1		%		11.4		%		11.5		%		11.8		%		11.6		%		11.6		%		13.0		%
(1) The third quarter, second quarter and first quarter of 2016 information is revised to reflect the impact of the early adoption of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting."  The early adoption resulted in $752 thousand, $68 thousand and $343 thousand of excess tax benefits recognized within "Income tax expense" during the three months ended September 30, June 30 and March 31, 2016, respectively, rather than previously recognized directly into equity within "Additional paid-in-capital."
(2) Estimated at December 31, 2016.

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)(1)
Chemical Financial Corporation
(Dollars in thousands)
	Three Months Ended
	December 31, 2016											September 30, 2016											December 31, 2015
	Average Balance				Interest (FTE)				Effective Yield/Rate(1)			Average Balance				Interest (FTE)				Effective Yield/Rate(1)			Average Balance				Interest (FTE)				Effective Yield/Rate(1)
Assets
Interest-earning assets:
Loans(1)(2)	$	12,895,557			$	135,301			4.18	%		$	9,470,650			$	97,880			4.12	%		$	7,241,339			$	75,905			4.16	%
Taxable investment securities	1,065,453				4,687				1.76			687,259				2,575				1.50			609,406				2,044				1.34
Tax-exempt investment securities(1)	807,093				6,047				3.00			592,747				4,721				3.19			481,968				3,973				3.30
Other interest-earning assets	80,202				582				2.89			57,756				358				2.47			36,799				633				6.82
Interest-bearing deposits with the FRB and other banks and federal funds sold	307,802				744				0.96			249,731				454				0.72			87,952				116				0.52
Total interest-earning assets	15,156,107				147,361				3.87			11,058,143				105,988				3.82			8,457,464				82,671				3.89
Less: allowance for loan losses	(74,822		)									(72,242		)									(75,225		)
Other assets:
Cash and cash due from banks	245,613											194,171											157,939
Premises and equipment	144,652											116,944											110,141
Interest receivable and other assets	1,793,118											953,714											524,905
Total assets	$	17,264,668										$	12,250,730										$	9,175,224
Liabilities and shareholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	2,680,241			$	1,266			0.19	%		$	2,327,762			$	961			0.16	%		$	1,816,694			$	414			0.09	%
Savings deposits	3,490,972				1,263				0.14			2,512,620				749				0.12			2,024,543				393				0.08
Time deposits	3,209,695				6,337				0.79			2,186,781				4,126				0.75			1,671,913				3,313				0.79
Short-term borrowings	949,292				875				0.38			593,903				459				3.10			405,713				110				0.11
Long-term borrowings	600,066				2,228				1.41			494,810				458				0.37			243,170				923				1.51
Total interest-bearing liabilities	10,930,266				11,969				0.44			8,115,876				6,753				0.33			6,162,033				5,153				0.33
Noninterest-bearing deposits	3,622,365				—				—			2,456,469				—				—			1,936,328				—				—
Total deposits and borrowed funds	14,552,631				11,969				0.33			10,572,345				6,753				0.25			8,098,361				5,153				0.25
Interest payable and other liabilities	147,094											118,717											76,516
Shareholders' equity	2,564,943											1,559,668											1,000,347
Total liabilities and shareholders' equity	$	17,264,668										$	12,250,730										$	9,175,224
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities)									3.43	%										3.49	%										3.56	%
Net Interest Income (FTE)					$	135,392										$	99,235										$	77,518
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)									3.56	%										3.58	%										3.64	%
Reconciliation to Reported Net Interest Income
Net interest income, fully taxable equivalent (non-GAAP)					$	135,392										$	99,235										$	77,518
Adjustments for taxable equivalent interest(1):
Loans					(838		)									(777		)									(652		)
Tax-exempt investment securities					(2,107		)									(1,649		)									(1,390		)
Total taxable equivalent interest adjustments					(2,945		)									(2,426		)									(2,042		)
Net interest income (GAAP)					$	132,447										$	96.809										$	75,476
Net interest margin (GAAP)					3.48		%									3.49		%									3.55		%
(1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.  The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry.
(2) Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)(1)
Chemical Financial Corporation
(Dollars in thousands)
		Twelve Months Ended December 31, 2016											Twelve Months Ended December 31, 2015
		Average Balance				Interest (FTE)				Effective Yield/Rate(1)			Average Balance				Interest (FTE)				Effective Yield/Rate(1)
Assets
Interest-earning assets:
Loans(1)(2)		$	9,304,573			$	386,575			4.15	%		$	6,594,507			$	274,341			4.16	%
Taxable investment securities		706,567				10,989				1.56			683,612				8,786				1.29
Tax-exempt investment securities(1)		595,677				18,929				3.18			415,092				13,956				3.36
Other interest-earning assets		55,341				1,973				3.57			34,188				1,648				4.82
Interest-bearing deposits with the FRB and other banks and federal funds sold		194,637				1,555				0.80			123,735				510				0.41
Total interest-earning assets		10,856,795				420,021				3.87			7,851,134				299,241				3.81
Less: allowance for loan losses		(73,136		)									(75,378		)
Other assets:
Cash and cash due from banks		186,706											155,109
Premises and equipment		118,080											105,904
Interest receivable and other assets		948,710											444,459
Total assets		$	12,037,155										$	8,481,228
Liabilities and shareholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits		$	2,143,064			$	3,277			0.15	%		$	1,661,592			$	1,465			0.09	%
Savings deposits		2,534,038				2,877				0.11			1,947,659				1,512				0.08
Time deposits		2,154,118				16,867				0.78			1,557,425				12,429				0.80
Short-term borrowings		571,510				1,660				0.29			420,529				453				0.11
Other borrowings		418,636				4,617				1.10			117,000				1,922				1.64
Total interest-bearing liabilities		7,821,366				29,298				0.37			5,704,205				17,781				0.31
Noninterest-bearing deposits		2,566,342				—				—			1,791,991				—				—
Total deposits and borrowed funds		10,387,708				29,298				0.28			7,496,196				17,781				0.24
Interest payable and other liabilities		102,726											65,704
Shareholders' equity		1,546,721											919,328
Total liabilities and shareholders' equity		$	12,037,155										$	8,481,228
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities)										3.50	%										3.50	%
Net Interest Income (FTE)						$	390,723										$	281,460
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)										3.60	%										3.58	%
Reconciliation to Reported Net Interest Income
Net interest income, fully taxable equivalent (non-GAAP)						$	390,723										$	281,460
Adjustments for taxable equivalent interest(1):
Loans						(3,030		)									(2,569		)
Tax-exempt investment securities						(6,612		)									(4,883		)
Total taxable equivalent interest adjustments						(9,642		)									(7,452		)
Net interest income (GAAP)						$	381,081										$	274,008
Net interest margin (GAAP)						3.51		%									3.49		%
(1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.  The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry.
(2) Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Noninterest Income and Operating Expenses Information (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
	4th Quarter 2016				3rd Quarter 2016				2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015				1st Quarter 2015
Noninterest income
Service charges and fees on deposit accounts	$	8,414			$	7,665			$	6,337			$	5,720			$	6,398			$	6,722			$	6,445			$	5,916
Wealth management revenue	6,034				5,584				5,782				5,201				5,151				4,725				5,605				5,071
Electronic banking fees	8,196				5,533				4,786				4,918				4,712				5,059				4,775				4,572
Mortgage banking revenue	14,420				4,439				1,595				1,405				1,606				1,436				1,688				1,403
Other fees for customer services	1,785				1,877				1,677				1,474				1,839				1,759				1,741				1,418
Gain on sale of investment securities	76				16				18				19				18				5				28				579
Gain on sale of branch offices	7,391				—				—				—				—				—				—				—
Other	7,948				2,656				702				682				328				509				392				316
Total noninterest income	$	54,264			$	27,770			$	20,897			$	19,419			$	20,052			$	20,215			$	20,674			$	19,275
	4th Quarter 2016				3rd Quarter 2016				2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015				1st Quarter 2015
Operating expenses
Salaries and wages	$	47,936			$	33,841			$	26,887			$	26,743			$	27,341			$	27,872			$	25,535			$	23,741
Employee benefits	9,695				6,724				6,240				7,147				5,630				6,113				6,176				5,512
Occupancy	7,644				5,462				5,514				4,905				4,620				4,781				4,386				4,426
Equipment and software	8,709				6,420				4,875				4,404				5,102				4,589				4,480				4,398
Outside processing and service fees	7,290				5,365				4,833				3,711				3,576				4,146				3,926				3,558
FDIC insurance premiums	2,813				1,849				1,338				1,407				1,482				1,441				1,337				1,225
Professional fees	2,304				1,472				1,020				1,036				1,112				1,235				1,258				1,237
Intangible asset amortization	1,843				1,292				1,195				1,194				1,341				1,270				987				791
Credit-related expenses	(1,029		)		(371		)		(1,331		)		30				600				90				(192		)		133
Transaction expenses	18,016				37,470				3,054				2,594				2,085				900				3,457				1,362
Other	9,081				6,620				5,460				5,716				4,935				5,828				5,435				4,637
Total operating expenses	$	114,302			$	106,144			$	59,085			$	58,887			$	57,824			$	58,265			$	56,785			$	51,020

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Composition of Loans and Deposits and Additional Information on Intangible Assets (Unaudited)
Chemical Financial Corporation
(Dollars in Thousands)
	Dec 31, 2016				Sept 30, 2016				Organic Growth - Three Months Ended Dec 31, 2016				Talmer Merger Aug 31, 2016				June 30, 2016				March 31, 2016				Dec 31, 2015				Organic Growth - Twelve Months Ended Dec 31, 2016
Composition of Loans
Commercial loan portfolio:
Commercial	$	3,444,376			$	3,435,283			0.3		%		$	1,453,628			$	1,953,301			$	1,922,259			$	1,905,879			4.5	%
Commercial real estate	3,746,064				3,497,670				7.1				1,359,451				2,157,733				2,143,051				2,112,162				13.0
Real estate construction	403,772				500,494				(19.3		)		166,364				285,848				242,899				232,076				2.3
Subtotal - commercial loans	7,594,212				7,433,447				2.2				2,979,443				4,396,882				4,308,209				4,250,117				8.6
Consumer loan portfolio:
Residential mortgage	3,086,474				3,046,959				1.3				1,531,641				1,494,192				1,461,120				1,429,636				8.8
Consumer installment	1,433,884				1,335,707				7.4				158,835				1,048,622				897,078				877,457				45.3
Home equity	876,209				899,676				(2.6		)		212,483				707,573				700,478				713,937				(7.0	)
Subtotal - consumer loans	5,396,567				5,282,342				2.2				1,902,959				3,250,387				3,058,676				3,021,030				15.6
Total loans	$	12,990,779			$	12,715,789			2.2		%		$	4,882,402			$	7,647,269			$	7,366,885			$	7,271,147			11.5	%
	Dec 31, 2016				Sept 30, 2016				Organic Growth - Three Months Ended Dec 31, 2016				Talmer Merger Aug 31, 2016				June 30, 2016				March 31, 2016				Dec 31, 2015				Organic Growth - Twelve Months Ended Dec 31, 2016
Composition of Deposits
Noninterest-bearing demand	$	3,341,520			$	3,264,934			2.3	%			$	1,236,902			$	2,007,629			$	1,951,193			$	1,934,583			8.8	%
Savings	1,662,115				1,650,276				0.7				549,428				1,107,558				1,080,940				1,026,269				8.4
Interest-bearing demand	2,825,801				3,316,635				(14.8	)			894,748				1,819,865				2,005,053				1,870,197				3.3
Money market accounts	2,033,319				1,692,656				20.1				699,739				969,566				1,006,271				978,306				36.3
Brokered deposits	226,429				474,902				(52.3	)			403,210				173,092				186,143				207,785				(185.1	)
Other time deposits	2,783,938				2,873,459				(3.1	)			1,510,591				1,386,936				1,420,516				1,439,627				(11.6	)
Total deposits	$	12,873,122			$	13,272,862			(3.0	)%			$	5,294,618			$	7,464,646			$	7,650,116			$	7,456,767			1.6	%

	December 31, 2016				Sept 30, 2016				June 30, 2016				March 31, 2016				Dec 31, 2015				Sept 30, 2015				June 30, 2015				March 31, 2015
Additional Data - Intangibles
Goodwill	$	1,133,534			$	1,137,166			$	286,867			$	286,867			$	287,393			$	286,454			$	285,512			$	180,128
Loan servicing rights	58,315				51,393				9,677				10,478				11,122				11,540				12,307				11,583
Core deposit intangibles (CDI)	40,211				35,618				24,429				25,542				26,654				27,890				28,353				20,072
Noncompete agreements	—				82				164				246				328				434				541				—

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Nonperforming Assets (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
		Dec 31, 2016				Sept 30, 2016				June 30, 2016				Mar 31, 2016				Dec 31, 2015				Sept 30, 2015				June 30, 2015				Mar 31, 2015
Nonperforming Assets
Nonperforming Loans(1):
Nonaccrual loans:
Commercial		$	13,178			$	13,742			$	14,577			$	19,264			$	28,554			$	26,463			$	17,260			$	18,904
Commercial real estate		19,877				19,914				21,325				25,859				25,163				24,969				25,287				24,766
Real estate construction		80				80				496				546				521				544				502				953
Residential mortgage		6,969				5,119				5,343				5,062				5,557				6,248				6,004				6,514
Consumer installment		879				378				285				360				451				536				393				433
Home equity		3,351				2,064				1,971				2,328				1,979				1,876				1,769				1,870
Total nonaccrual loans(1)		44,334				41,297				43,997				53,419				62,225				60,636				51,215				53,440
Other real estate and repossessed assets		17,187				20,730				8,440				9,248				9,935				11,207				14,197				14,744
Total nonperforming assets		$	61,521			$	62,027			$	52,437			$	62,667			$	72,160			$	71,843			$	65,412			$	68,184
Accruing loans contractually past due 90 days or more as to interest or principal payments, excluding acquired loans accounted for under ASC 310-30:
Commercial		11				221				3				370				364				122				711				52
Commercial real estate		277				739				3				—				254				216				56				148
Real estate construction		—				1,439				—				—				—				—				—				—
Residential mortgage		—				375				407				423				402				572				424				172
Consumer installment		—				—				—				—				—				—				—				—
Home equity		995				628				1,071				679				1,267				558				588				429
Total accruing loans contractually past due 90 days or more as to interest or principal payments		$	1,283			$	3,402			$	1,484			$	1,472			$	2,287			$	1,468			$	1,779			$	801
(1) Acquired loans, accounted for under Accounting Standards Codification 310-30, that are not performing in accordance with contractual terms are not reported as nonperforming loans because these loans are recorded in pools at their net realizable value based on the principal and interest the Corporation expects to collect on these loans.

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Summary of Loan Loss Experience (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
	Three Months Ended																				Three Months Ended																				Twelve months ended
	Dec 31, 2016					Sept 30, 2016					June 30, 2016					Mar 31, 2016					Dec 31, 2015					Sept 30, 2015					June 30, 2015					Mar 31, 2015					Dec 31, 2016					Dec 31, 2015
Allowance for loan losses - originated portfolio
Allowance for loan losses - beginning of period	$	73,775				$	71,506				$	70,318				$	73,328				$	75,626				$	74,941				$	75,256				$	75,183				$	73,328				$	75,183
Provision for loan losses	6,272					4,103					3,000					1,500					2,000					1,500					1,500					2,000					14,875					7,000
Net loan charge-offs:
Commercial	(336		)			(150		)			(1,153		)			(3,115		)			(2,207		)			86					(36		)			(424		)			(4,754		)			(2,581		)
Commercial real estate	(280		)			(154		)			(187		)			(440		)			(624		)			145					(581		)			(415		)			(1,061		)			(1,475		)
Real estate construction	36					(31		)			—					(11		)			—					(1		)			(49		)			(91		)			(6		)			(141		)
Residential mortgage	(236		)			(304		)			8					(172		)			(545		)			(214		)			(661		)			(492		)			(704		)			(1,912		)
Consumer installment	(823		)			(1,137		)			(486		)			(602		)			(770		)			(782		)			(590		)			(649		)			(3,048		)			(2,791		)
Home equity	(140		)			(58		)			6					(170		)			(152		)			(49		)			102					144					(362		)			45
Net loan charge-offs	(1,779		)			(1,834		)			(1,812		)			(4,510		)			(4,298		)			(815		)			(1,815		)			(1,927		)			(9,935		)			(8,855		)
Allowance for loan losses - end of period	$	78,268				$	73,775				$	71,506				$	70,318				$	73,328				$	75,626				$	74,941				$	75,256				$	78,268				$	73,328
Allowance for loan losses - acquired loan portfolio
Allowance for loan losses - beginning of period	—					—					—					—					—					—					—					500					—					500
Provision for loan losses	—					—					—					—					—					—					—					(500		)			—					(500		)
Allowance for loan losses - end of period	—					—					—					—					—					—					—					—					—					—
Total allowance for loan losses	$	78,268				$	73,775				$	71,506				$	70,318				$	73,328				$	75,626				$	74,941				$	75,256				$	78,268				$	73,328
Net loan charge-offs as a percent of average loans (quarterly amounts annualized)	0.06			%		0.08			%		0.10			%		0.25			%		0.24			%		0.05			%		0.12			%		0.14			%		0.11			%		0.13			%

	December 31, 2016					Sept 30, 2016					June 30, 2016					March 31, 2016					December 31, 2015					Sept 30, 2015					June 30, 2015					March 31, 2015
Originated loans	$	7,458,401				$	6,755,931				$	6,378,934				$	6,001,714				$	5,807,934				$	5,667,159				$	5,351,010				$	5,048,662
Acquired loans	5,532,378					5,959,858					1,268,335					1,365,171					1,463,213					1,549,036					1,683,733					654,212
Total loans	$	12,990,779				$	12,715,789				$	7,647,269				$	7,366,885				$	7,271,147				$	7,216,195				$	7,034,743				$	5,702,874
Allowance for loan losses as a percent of:
Total originated loans	1.05			%		1.09			%		1.12			%		1.17			%		1.26			%		1.33			%		1.40			%		1.49			%
Nonperforming loans	176.5			%		178.6			%		162.5			%		131.6			%		117.8			%		124.7			%		146.3			%		140.8			%
Credit mark as a percent of unpaid principal balance on acquired loans	3.1			%		3.0			%		4.1			%		4.5			%		4.4			%		4.2			%		3.9			%		5.7			%

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Reconciliation of Non-GAAP Financial Measures (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
																																															Twelve months ended
	4th Quarter 2016				3rd Quarter 2016(2)						2nd Quarter 2016(2)						1st Quarter 2016(2)						4th Quarter 2015						3rd Quarter 2015						2nd Quarter 2015						1st Quarter 2015						Dec 31, 2016						Dec 31, 2015
Non-GAAP Operating Results
Net Income
Net income, as reported	$	47,168			$	11,484					$	25,775					$	23,605					$	25,504					$	24,467					$	19,024					$	17,835					$	108,032					$	86,830
Transaction expenses	18,016					37,470						3,054						2,594						2,085						900						3,457						1,362						61,134						7,804
Gain on sales of branch offices	(7,391		)			—						—						—						—						—						—						—						(7,391			)			—
Loan servicing rights change in fair valuation	(6,352		)			1,344						—						—						—						—						—						—						(5,008			)			—
Significant items	4,273					38,814						3,054						2,594						2,085						900						3,457						1,362						48,735						7,804
Income tax benefit (1)	(1,496		)			(12,822			)			(1,069			)			(908			)			(730			)			(315			)			(798			)			(477			)			(16,295			)			(2,320			)
Significant items, net of tax	2,777					25,992						1,985						1,686						1,355						585						2,659						885						32,440						5,484
Net income, excluding significant items	$	49,945			$	37,476					$	27,760					$	25,291					$	26,859					$	25,052					$	21,683					$	18,720					$	140,472					$	92,314
Diluted Earnings Per Share
Diluted earnings per share, as reported	$	0.66			$	0.23					$		0.67				$		0.60				$		0.66				$		0.64				$		0.54				$		0.54				$		2.17				$		2.39
Effect of significant items, net of tax	0.04					0.52						0.05						0.05						0.04						0.01						0.07						0.03						0.64						0.15
Diluted earnings per share, excluding significant items	$	0.70			$	0.75					$		0.72				$		0.65				$		0.70				$		0.65				$		0.61				$		0.57				$	2.81					$		2.54
Return on Average Assets
Return on average assets, as reported	1.09		%			0.37			%			1.10			%			1.02			%			1.11			%			1.05			%			0.94			%			0.98			%			0.90			%			1.02			%
Effect of significant items, net of tax	0.07					0.85						0.09						0.07						0.06						0.03						0.13						0.05						0.27						0.07
Return on average assets, excluding significant items	1.16		%			1.22			%			1.19			%			1.09			%			1.17			%			1.08			%			1.07			%			1.03			%			1.17			%			1.09			%
Return on Average Shareholders' Equity
Return on average shareholders' equity, as reported	7.4		%			2.9			%			10.0			%			9.3			%			10.2			%			9.8			%			8.6			%			9.0			%			7.0			%			9.4			%
Effect of significant items, net of tax	0.4					6.7						0.7						0.6						0.5						0.3						1.2						0.5						2.1						0.6
Return on average shareholders' equity, excluding significant items	7.8		%			9.6			%			10.7			%			9.9			%			10.7			%			10.1			%			9.8			%			9.5			%			9.1			%			10.0			%
(1) Assumes transaction expenses and other significant items are deductible at an income tax rate of 35%, except for the impact of estimated nondeductible expenses incurred in periods when the Corporation completes merger and acquisition transactions.
(2) The third quarter, second quarter and first quarter of 2016 information is revised to reflect the impact of the early adoption of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting."  The early adoption resulted in $752 thousand, $68 thousand and $343 thousand of excess tax benefits recognized within "Income tax expense" during the three months ended September 30, June 30 and March 31, 2016, respectively, rather than previously recognized directly into equity within "Additional paid-in-capital."

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Reconciliation of Non-GAAP Financial Measures (Unaudited)
Chemical Financial Corporation
(Dollars in thousands, except per share data)
																																	Twelve months ended
	4th Quarter 2016				3rd Quarter 2016				2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015				1st Quarter 2015				Dec 31, 2016				Dec 31, 2015
Efficiency Ratio
Net interest income	$	132,447			$	96,809			$	77,495			$	74,330			$	75,476			$	73,617			$	65,735			$	59,180			$	381,081			$	274,008
Noninterest income	54,264				27,770				20,897				19,419				20,052				20,215				20,674				19,275				122,350				80,216
Total revenue - GAAP	186,711				124,579				98,392				93,749				95,528				93,832				86,409				78,455				503,431				354,224
Net interest income FTE adjustment	2,945				2,426				2,138				2,133				2,042				2,031				1,790				1,589				9,642				7,452
Loan servicing rights change in fair valuation	(6,352		)		1,344				—				—				—				—				—				—				(5,008		)		—
Gains on sale of branches	(7,391		)		—				—				—				—				—				—				—				(7,391		)		—
Gains from sale of investment securities and closed branch locations	(76		)		(301		)		(123		)		(169		)		(42		)		(111		)		(47		)		(579		)		(669		)		(779		)
Total revenue - Non-GAAP	$	175,837			$	128,048			$	100,407			$	95,713			$	97,528			$	95,752			$	88,152			$	79,465			$	500,005			$	360,897
Operating expenses - GAAP	$	114,302			$	106,144			$	59,085			$	58,887			$	57,824			$	58,265			$	56,785			$	51,020			$	338,418			$	223,894
Transaction expenses	(18,016		)		(37,470		)		(3,054		)		(2,594		)		(2,085		)		(900		)		(3,457		)		(1,362		)		(61,134		)		(7,804		)
Amortization of intangibles	(1,843		)		(1,292		)		(1,195		)		(1,194		)		(1,341		)		(1,270		)		(987		)		(791		)		(5,524		)		(4,389		)
Operating expenses - Non-GAAP	$	94,443			$	67,382			$	54,836			$	55,099			$	54,398			$	56,095			$	52,341			$	48,867			$	271,760			$	211,701
Efficiency ratio - GAAP	61.2		%		85.2		%		60.1		%		62.8		%		60.5		%		62.1		%		65.7		%		65.0		%		67.2		%		63.2		%
Efficiency ratio - adjusted	53.7		%		52.6		%		54.6		%		57.6		%		55.8		%		58.6		%		59.4		%		61.5		%		54.4		%		58.7		%

	December 31, 2016				September 30, 2016				June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
Tangible Book Value
Shareholders' equity, as reported	$	2,581,526			$	2,563,666			$	1,050,299			$	1,032,291			$	1,015,974			$	998,363			$	980,791			$	810,501
Goodwill, CDI and noncompete agreements, net of tax	(1,155,617		)		(1,154,121		)		(297,044		)		(297,821		)		(299,123		)		(299,681		)		(299,109		)		(187,991		)
Tangible shareholders' equity	$	1,425,909			$	1,409,545			$	753,255			$	734,470			$	716,851			$	698,682			$	681,682			$	622,510
Common shares outstanding	70,599				70,497				38,267				38,248				38,168				38,131				38,110				32,847
Book value per share (shareholders' equity, as reported, divided by common shares outstanding)	$	36.57			$	36.37			$	27.45			$	26.99			$	26.62			$	26.18			$	25.74			$	24.68
Tangible book value per share (tangible shareholders' equity divided by common shares outstanding)	$	20.20			$	19.99			$	19.68			$	19.20			$	18.78			$	18.32			$	17.89			$	18.95
Tangible Shareholders' Equity to Tangible Assets
Total assets, as reported	$	17,355,179			$	17,383,637			$	9,514,172			$	9,303,632			$	9,188,797			$	9,264,554			$	9,020,725			$	7,551,635
Goodwill, CDI and noncompete agreements, net of tax	(1,155,617		)		(1,154,121		)		(297,044		)		(297,821		)		(299,123		)		(299,681		)		(299,109		)		(187,991		)
Tangible assets	$	16,199,562			$	16,229,516			$	9,217,128			$	9,005,811			$	8,889,674			$	8,964,873			$	8,721,616			$	7,363,644
Shareholders' equity to total assets	14.9		%		14.7		%		11.0		%		11.1		%		11.1		%		10.8		%		10.9		%		10.7		%
Tangible shareholders' equity to tangible assets	8.8		%		8.7		%		8.2		%		8.2		%		8.1		%		7.8		%		7.8		%		8.5		%

For further information:
David B. Ramaker, CEO
Dennis L. Klaeser, CFO
989-839-5350

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