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Chemical Financial Corporation Reports 2015 Second Quarter Operating Results

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MIDLAND, Mich., July 21, 2015 (GLOBE NEWSWIRE) -- Chemical Financial Corporation (the "Corporation") (NASDAQ: CHFC) today announced 2015 second quarter net income of $19.0 million, or $0.54 per diluted share, compared to 2014 second quarter net income of $16.2 million, or $0.54 per diluted share, and 2015 first quarter net income of $17.8 million, or $0.54 per diluted share. Net income was $36.9 million, or $1.08 per diluted share, for the six months ended June 30, 2015, compared to $30.0 million, or $1.00 per diluted share, for the six months ended June 30, 2014.

"Strong second quarter organic loan growth and the combined impact of our three recent acquisitions drove a healthy improvement in core earnings performance over 2014's second quarter, although the impact on reported net income was partially offset by nonrecurring transaction-related expenses. The organic loan growth was broad based across loan categories and geographical regions of our expanding franchise, and we believe it bodes well for further portfolio expansion as the year progresses," noted David B. Ramaker, Chairman, Chief Executive Officer and President of Chemical Financial Corporation. "Our capital ratios remain solid, and credit quality continues to improve, with our ratio of nonperforming loans to total loans at June 30, 2015 falling to 1.01%, the lowest since year-end 2006."

"With the closing of the two transactions during the quarter, coupled with the Northwestern transaction last fall, we are very excited and proud to welcome all employees and customers to Chemical Bank. We look forward with great enthusiasm to continuing to grow our market share in these important regions. We also will continue to selectively pursue acquisitive growth opportunities, but remain primarily focused on capitalizing on increasing loan and deposit demand as the Michigan communities, businesses and consumers we serve benefit from improving economic conditions," added Ramaker.

Excluding nonrecurring transaction-related expenses, net income in the second quarter of 2015 was $21.7 million, or $0.61 per diluted share, compared to $16.7 million, or $0.55 per diluted share, in the second quarter of 2014 and $18.7 million, or $0.57 per diluted share, in the first quarter of 2015. On a year-to-date basis, excluding nonrecurring transaction-related expenses, net income was $40.4 million, or $1.18 per diluted share, in 2015, compared to $30.7 million, or $1.02 per diluted share, during the first six months of 2014. The double digit percentage increases in earnings per share, excluding nonrecurring transaction-related expenses, for the three and six month periods ended June 30, 2015, compared to the same periods for the prior year, were primarily driven by organic loan growth over the last twelve months which resulted in higher net interest income, and incremental earnings from the all cash Northwestern Bancorp, Inc. ("Northwestern") transaction that closed in the fourth quarter of 2014. The increase in earnings per share in the second quarter of 2015, compared to the first quarter of 2015, was primarily attributable to increases in net interest income and noninterest income from the legacy operations of Chemical Bank.

As previously reported, the Corporation completed its acquisitions of Lake Michigan Financial Corporation ("Lake Michigan"), parent company of The Bank of Holland and The Bank of Northern Michigan, on May 31, 2015 and Monarch Community Bancorp, Inc. ("Monarch"), parent company of Monarch Community Bank, on April 1, 2015. Accordingly, the results of Lake Michigan's and Monarch's operations are included in the Corporation's operations since the respective acquisition dates. The Bank of Holland and The Bank of Northern Michigan will be operated as separate subsidiaries of the Corporation until their planned consolidation with and into Chemical Bank in the fourth quarter of 2015. Monarch Community Bank was consolidated with and into Chemical Bank during the second quarter of 2015. The acquisition of Lake Michigan resulted in increases in the Corporation's total assets of $1.24 billion, total loans of $986 million, total deposits of $925 million, and goodwill of $101 million. The acquisition of Monarch resulted in increases in the Corporation's total assets of $183 million, total loans of $122 million, total deposits of $144 million, and goodwill of $5 million.

Nonrecurring transaction-related expenses attributable to the Lake Michigan and Monarch acquisitions were $3.5 million and $4.8 million for the three and six months ended June 30, 2015, respectively, while nonrecurring transaction-related expenses attributable to the October 31, 2014 acquisition of Northwestern were $0.6 million and $1.0 million for the three and six months ended June 30, 2014. The Corporation expects to incur approximately $3.0 million of additional nonrecurring transaction-related expenses in the second half of 2015.

Net income, excluding nonrecurring transaction-related expenses, in the second quarter of 2015 was higher than the second quarter of 2014 due to a combination of higher net interest income and higher noninterest income, which were partially offset by higher operating expenses. The increases in each of these components of net income were due, in part, to the Lake Michigan, Monarch and Northwestern transactions. Net income, excluding nonrecurring transaction-related expenses, in the second quarter of 2015 was higher than the first quarter of 2015 due also, in part, to incremental net income resulting from the Lake Michigan and Monarch transactions.

The Corporation's return on average assets was 0.94% during the second quarter of 2015, compared to 1.04% in the second quarter of 2014 and 0.98% in the first quarter of 2015. The Corporation's return on average shareholders' equity was 8.6% in the second quarter of 2015, compared to 9.1% in the second quarter of 2014 and 9.0% in the first quarter of 2015. Nonrecurring transaction-related expenses in the second quarter of 2015 reduced the Corporation's return on average assets by 13 basis points and return on average shareholders' equity by 121 basis points.

Net interest income was $65.7 million in the second quarter of 2015, $14.3 million, or 28%, higher than the second quarter of 2014 and $6.6 million, or 11%, higher than the first quarter of 2015. The increase in net interest income in the second quarter of 2015 over the second quarter of 2014 was largely attributable to the positive impact of organic loan growth and the impact of loans acquired in the Lake Michigan, Monarch and Northwestern transactions. The increase in net interest income in the second quarter of 2015 over the first quarter of 2015 was primarily attributable to the incremental benefit of the Lake Michigan and Monarch transactions, although the Corporation's net interest income also benefited from one additional day in the second quarter of 2015 and additional net interest income resulting from second quarter 2015 organic loan growth that was partially funded through Federal Home Loan Bank (FHLB) short-term borrowings.

The net interest margin (on a tax-equivalent basis) was 3.59% in the second quarter of 2015, compared to 3.59% in the second quarter of 2014 and 3.55% in the first quarter of 2015. The increase in the net interest margin in the second quarter of 2015, compared to the first quarter of 2015, was partially attributable to the reduction in the Corporation's seasonal municipal deposits that were maintained at the Federal Reserve Bank (FRB) at approximately the same interest yield as the interest rate paid on the deposits, and also due to loan growth. The positive impact on the net interest margin attributable to organic loan growth during the twelve months ended June 30, 2015 was partially offset by a reduction in the average yield on the loan portfolio. The average yield on the loan portfolio was 4.17% in the second quarter of 2015, compared to 4.26% in the second quarter of 2014 and 4.16% in the first quarter of 2015. The average yield of the investment securities portfolio was 2.03% in the second quarter of 2015, compared to 2.13% in the second quarter of 2014 and 1.96% in the first quarter of 2015. Modest changes in the mix of customer deposits and the repricing of matured customer certificates of deposit was offset by the higher cost of $278 million of brokered deposits and other wholesale borrowings acquired in the Lake Michigan transaction. The Corporation's average cost of funds was 0.22% in the second quarter of 2015, compared to 0.27% in the second quarter of 2014 and 0.21% in the first quarter of 2015.

The provision for loan losses was $1.5 million in the second quarter of 2015, unchanged from both the second quarter of 2014 and the first quarter of 2015. The Corporation's quarterly provision for loan losses remained relatively consistent throughout 2014 and the first half of 2015, despite significant organic growth in its loan portfolio, due primarily to a reduction in net loan charge-offs and strong credit quality.

Net loan charge-offs were $1.8 million, or 0.12% of average loans, in the second quarter of 2015, compared to $2.2 million, or 0.18% of average loans, in the second quarter of 2014 and $1.9 million, or 0.14% of average loans, in the first quarter of 2015. The modest reduction in net loan charge-offs in the second quarter of 2015, compared to the second quarter of 2014, was due to the continued improvement in the overall credit quality of the loan portfolio and characteristics of an improving economy in the State of Michigan.

The Corporation's nonperforming loans, consisting of nonaccrual loans, accruing loans past due 90 days or more as to principal or interest payments and nonperforming troubled debt restructurings, totaled $70.9 million at June 30, 2015, compared to $72.7 million at March 31, 2015 and $73.7 million at June 30, 2014. Nonperforming loans comprised 1.01% of total loans at June 30, 2015, compared to 1.28% at March 31, 2015 and 1.51% at June 30, 2014. The decrease in the percentage of nonperforming loans to total loans at June 30, 2015, compared to June 30, 2014, was partially due to $1.58 billion of total loans acquired in the Lake Michigan, Monarch and Northwestern transactions, as these loans are not classified as nonperforming after the acquisition date since they are recorded in loan pools at their net realizable value.

At June 30, 2015, the allowance for loan losses of the originated loan portfolio was $74.9 million, or 1.40% of originated loans, compared to $75.3 million, or 1.49% of originated loans, at March 31, 2015 and $77.3 million, or 1.67% of originated loans, at June 30, 2014. The allowance for loan losses of the originated loan portfolio as a percentage of nonperforming loans was 106% at June 30, 2015, compared to 103% at March 31, 2015 and 105% at June 30, 2014.

Noninterest income was $20.7 million in the second quarter of 2015, compared to $15.8 million in the second quarter of 2014 and $19.3 million in the first quarter of 2015. Noninterest income in the second quarter of 2015 was higher than the second quarter of 2014, with all major categories of noninterest income higher and largely attributable to incremental revenue due to the Lake Michigan, Monarch and Northwestern transactions. Excluding $0.6 million of gains from the sale of investment securities in the first quarter of 2015, noninterest income in the second quarter of 2015 was $2.0 million higher than the first quarter of 2015, with the increase largely attributable to higher wealth management revenue, overdraft fee income and foreign ATM fee income from the legacy operations of Chemical Bank, as well as partially due to incremental revenue attributable to the Lake Michigan and Monarch transactions.

Operating expenses were $56.8 million in the second quarter of 2015, compared to $42.4 million in the second quarter of 2014 and $51.0 million in the first quarter of 2015. Operating expenses included nonrecurring transaction-related expenses of $3.5 million in the second quarter of 2015, $0.6 million in the second quarter of 2014 and $1.4 million in the first quarter of 2015. Excluding these nonrecurring transaction-related expenses, operating expenses were $53.3 million in the second quarter of 2015, $11.6 million, or 28%, higher than the second quarter of 2014 and $3.7 million, or 7.4%, higher than the first quarter of 2015. The increase in operating expenses in the second quarter of 2015, compared to the second quarter of 2014, was primarily attributable to incremental operating costs associated with the Lake Michigan, Monarch and Northwestern transactions, while the increase in the second quarter of 2015, compared to the first quarter of 2015, was attributable to incremental operating costs associated with the Lake Michigan and Monarch transactions.

The Corporation's efficiency ratio was 60.5% in the second quarter of 2015, 62.4% in the first quarter of 2015 and 60.9% in the second quarter of 2014.

Total assets were $9.02 billion at June 30, 2015, compared to $7.55 billion at March 31, 2015 and $6.23 billion at June 30, 2014. The increase in total assets during the three months ended June 30, 2015 was primarily attributable to the Lake Michigan and Monarch transactions. The increase in total assets during the twelve months ended June 30, 2015 was largely attributable to the Lake Michigan, Monarch and Northwestern transactions, in addition to an organic increase in deposits of $337 million that was used to partially fund loan growth. Interest-bearing balances at the FRB totaled $16 million at June 30, 2015, compared to $239 million at March 31, 2015 and $1.3 million at June 30, 2014. The decline in interest-bearing balances during the second quarter of 2015 was largely attributable to a decline in seasonable municipal deposit accounts. Investment securities were $1.16 billion at June 30, 2015, compared to $1.06 billion at March 31, 2015 and $924 million at June 30, 2014. The increase in investment securities during the twelve months ended June 30, 2015 was due to investment securities acquired in the Lake Michigan and Northwestern transactions.

Total loans were $7.03 billion at June 30, 2015, up $1.33 billion, or 23%, from total loans of $5.70 billion at March 31, 2015 and up $2.14 billion, or 44%, from total loans of $4.90 billion at June 30, 2014. The increase in loans during the three months ended June 30, 2015 was attributable to $1.11 billion of loans acquired in the Lake Michigan and Monarch transactions and $224 million of organic loan growth. The increase in loans during the twelve months ended June 30, 2015 was attributable to $1.58 billion of loans acquired in the three acquisitions and $553 million of organic loan growth.

Total deposits were $7.29 billion at June 30, 2015, compared to $6.32 billion at March 31, 2015 and $5.09 billion at June 30, 2014. Short-term borrowings were $532 million at June 30, 2015, compared to $372 million at March 31, 2015 and $305 million at June 30, 2014. Other borrowings were $148 million at June 30, 2015. The Corporation had no other borrowings at March 31, 2015 and June 30, 2014. The increase in total deposits and other borrowings during the twelve months ended June 30, 2015 was largely attributable to the acquisitions of Lake Michigan, Monarch and Northwestern. The Corporation acquired $1.86 billion in deposits and $163 million in combined borrowings as of the respective acquisition dates for these transactions.

At June 30, 2015, the Corporation's tangible equity to assets ratio and total risk-based capital ratio were 7.8% and 11.6%, respectively, compared to 8.4% and 13.0%, respectively, at March 31, 2015 and 11.0% and 15.3%, respectively, at June 30, 2014. The decreases in the Corporation's capital ratios at June 30, 2015, compared to March 31, 2015 and June 30, 2014, were attributable to the three acquisitions. At June 30, 2015, the Corporation's book value was $25.74 per share, compared to $24.68 per share at March 31, 2015 and $24.22 per share at June 30, 2014. At June 30, 2015, the Corporation's tangible book value was $17.87 per share, compared to $18.95 per share at March 31, 2015 and $20.42 per share at June 30, 2014. The decrease in the Corporation's tangible book value per share during the second quarter of 2015 was due to the Lake Michigan transaction, which reduced the Corporation's tangible book value by $1.58 per share.

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 assets ratio, presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis, and information presented excluding nonrecurring transaction-related expenses, including net income, diluted earnings per share, return on average assets, return on average shareholders' equity and operating expenses. 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.

Chemical Financial Corporation will host a conference call to discuss its second quarter 2015 operating results on Wednesday, July 22, 2015 at 10:00 a.m. EDT. Anyone interested may access the conference call on a live basis by dialing toll-free at 1-888-600-4862 and entering 7353331 for the conference ID. The call will also be broadcast live over the Internet hosted at Chemical Financial Corporation's website at www.chemicalbankmi.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.

Chemical Financial Corporation is the second largest banking company headquartered and operating branch offices in Michigan. The Corporation operates through its subsidiary banks, Chemical Bank, The Bank of Holland and The Bank of Northern Michigan, with 187 banking offices spread over 47 counties in Michigan. At June 30, 2015, the Corporation had total assets of $9.0 billion. Chemical Financial Corporation's common stock trades on The NASDAQ Stock Market under the symbol CHFC and is one of the issues comprising The NASDAQ Global Select Market. More information about the Corporation is available by visiting the investor relations section of its website at www.chemicalbankmi.com.

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," "intends," "is likely," "judgment," "look forward," "opinion," "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. 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.

This press release may also contain forward-looking statements regarding the Corporation's outlook or expectations with respect to its recently completed acquisition of Lake Michigan, the expected costs to be incurred in connection with the acquisition, Lake Michigan's future performance and consequences of its integration into the Corporation and the impact of the transaction on the Corporation's future performance.

Risk factors relating to this transaction and the integration of Lake Michigan into the Corporation after closing include, without limitation:

  • The transaction may be more expensive to complete and the anticipated benefits, including anticipated cost savings and strategic gains, may be significantly harder or take longer to achieve than expected or may not be achieved in their entirety as a result of unexpected factors or events.


  • The integration of Lake Michigan's business and operations into the Corporation, which will include conversion of operating systems and procedures, may take longer than anticipated or be more costly than anticipated or have unanticipated adverse results relating to Lake Michigan's or the Corporation's existing businesses.

  • The Corporation's ability to achieve anticipated results from the transaction is dependent on the state of the economic and financial markets going forward. Specifically, the Corporation may incur more credit losses from Lake Michigan's loan portfolio than expected and deposit attrition may be greater than expected.

In addition, 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, 2014. 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 2015 Second Quarter Operating Results
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation        
  June 30,
 2015
 March 31,
 2015
 December 31,
 2014
 June 30,
 2014
  (In thousands, except per share data)
Assets        
Cash and cash equivalents:        
Cash and cash due from banks $167,054  $121,796  $144,892  $139,023 
Interest-bearing deposits with the Federal Reserve Bank and other banks 47,980  272,142  38,128  1,271 
Total cash and cash equivalents 215,034  393,938  183,020  140,294 
Investment securities:        
Available-for-sale 685,706  680,644  748,864  615,975 
Held-to-maturity 469,837  381,450  316,413  308,130 
Total investment securities 1,155,543  1,062,094  1,065,277  924,105 
Loans held-for-sale 7,798  9,675  9,128  6,329 
Loans:        
Commercial 1,754,873  1,356,169  1,354,881  1,212,383 
Commercial real estate 2,243,513  1,616,923  1,557,648  1,298,365 
Real estate construction and land development 112,312  108,839  171,495  112,124 
Residential mortgage 1,310,167  1,117,445  1,110,390  970,397 
Consumer installment and home equity 1,613,878  1,503,498  1,493,816  1,305,535 
Total loans 7,034,743  5,702,874  5,688,230  4,898,804 
Allowance for loan losses (74,941) (75,256) (75,683) (77,793)
Net loans 6,959,802  5,627,618  5,612,547  4,821,011 
Premises and equipment 111,968  96,486  97,496  74,291 
Goodwill 285,512  180,128  180,128  120,164 
Other intangible assets 41,201  31,655  33,080  12,454 
Interest receivable and other assets 243,867  150,041  141,467  133,327 
Total Assets $9,020,725  $7,551,635  $7,322,143  $6,231,975 
Liabilities        
Deposits:        
Noninterest-bearing $1,860,863  $1,614,319  $1,591,661  $1,283,439 
Interest-bearing 5,432,116  4,706,034  4,487,310  3,809,474 
Total deposits 7,292,979  6,320,353  6,078,971  5,092,913 
Interest payable and other liabilities 66,174  48,545  56,572  40,142 
Short-term borrowings 532,291  372,236  389,467  305,422 
Other borrowings 148,490       
Total liabilities 8,039,934  6,741,134  6,525,010  5,438,477 
Shareholders' Equity        
Preferred stock, no par value per share        
Common stock, $1 par value per share 38,110  32,847  32,774  32,760 
Additional paid-in capital 722,329  565,851  565,166  563,393 
Retained earnings 251,456  241,582  231,646  215,333 
Accumulated other comprehensive loss (31,104) (29,779) (32,453) (17,988)
Total shareholders' equity 980,791  810,501  797,133  793,498 
Total Liabilities and Shareholders' Equity $9,020,725  $7,551,635  $7,322,143  $6,231,975 

 

 

Chemical Financial Corporation Announces 2015 Second Quarter Operating Results
Consolidated Statements of Income (Unaudited)    
Chemical Financial Corporation    
  Three Months Ended Six Months Ended
  June 30, June 30,
  2015 2014 2015 2014
  (In thousands, except per share data)
Interest Income        
Interest and fees on loans $64,613  $50,751  $122,710  $99,946 
Interest on investment securities:        
Taxable 2,202  2,248  4,509  4,631 
Tax-exempt 2,185  1,671  4,091  3,375 
Dividends on nonmarketable equity securities 551  411  749  649 
Interest on deposits with the Federal Reserve Bank and other banks 128  99  250  224 
Total interest income 69,679  55,180  132,309  108,825 
Interest Expense        
Interest on deposits 3,630  3,626  6,982  7,371 
Interest on short-term borrowings 101  94  199  215 
Interest on other borrowings 213    213   
Total interest expense 3,944  3,720  7,394  7,586 
Net Interest Income 65,735  51,460  124,915  101,239 
Provision for loan losses 1,500  1,500  3,000  3,100 
Net interest income after provision for loan losses 64,235  49,960  121,915  98,139 
Noninterest Income        
Service charges and fees on deposit accounts 6,445  5,486  12,361  10,416 
Wealth management revenue 5,605  3,958  10,676  7,589 
Other charges and fees for customer services 6,516  4,682  12,506  8,876 
Mortgage banking revenue 1,688  1,491  3,091  2,285 
Gain on sale of investment securities 28    607   
Other 392  184  708  351 
Total noninterest income 20,674  15,801  39,949  29,517 
Operating Expenses        
Salaries, wages and employee benefits 31,711  24,860  60,964  49,044 
Occupancy 4,386  3,638  8,812  8,012 
Equipment and software 4,480  3,413  8,878  6,874 
Acquisition-related transaction expenses 3,457  647  4,819  970 
Other 12,751  9,867  24,332  19,707 
Total operating expenses 56,785  42,425  107,805  84,607 
Income before income taxes 28,124  23,336  54,059  43,049 
Federal income tax expense 9,100  7,100  17,200  13,000 
Net Income $19,024  $16,236  $36,859  $30,049 
Earnings Per Common Share:        
Weighted average common shares outstanding for basic earnings per share 35,162  30,068  33,992  29,947 
Weighted average common shares outstanding for diluted earnings per share, including common stock equivalents 35,397  30,279  34,227  30,159 
Basic earnings per share $0.54  $0.54  $1.08  $1.00 
Diluted earnings per share 0.54  0.54  1.08  1.00 
         
Cash Dividends Declared Per Common Share 0.24  0.23  0.48  0.46 
         
Key Ratios (annualized where applicable):        
Return on average assets 0.94% 1.04% 0.96% 0.97%
Return on average shareholders' equity 8.6% 9.1% 8.8% 8.6%
Net interest margin 3.59% 3.59% 3.57% 3.56%
Efficiency ratio 60.5% 60.9% 61.4% 62.6%



Chemical Financial Corporation Announces 2015 Second Quarter Operating Results
Financial Summary (Unaudited)            
Chemical Financial Corporation            
(Dollars in Thousands)            
  2nd
Quarter
2015
 1st
Quarter
2015
 4th
Quarter
2014
 3rd
Quarter
2014
 2nd
Quarter
2014
 1st
Quarter
2014
Average Balances            
Total assets $8,117,138  $7,401,258  $7,007,879  $6,412,460  $6,253,574  $6,210,569 
Total interest-earning assets 7,534,733  6,920,734  6,558,147  6,046,991  5,907,549  5,860,429 
Total loans 6,262,072  5,696,961  5,418,743  4,962,948  4,824,299  4,692,430 
Total deposits 6,709,428  6,204,095  5,808,187  5,249,317  5,151,581  5,142,276 
Total interest-bearing liabilities 5,442,676  4,959,123  4,632,769  4,237,626  4,250,158  4,276,677 
Total shareholders' equity 884,863  801,438  804,328  794,711  714,355  701,878 
Key Ratios (annualized where applicable)            
Net interest margin (taxable equivalent basis) 3.59% 3.55% 3.62% 3.59% 3.59% 3.53%
Efficiency ratio 60.5% 62.4% 62.2% 59.2% 60.9% 64.5%
Return on average assets 0.94% 0.98% 0.87% 1.04% 1.04% 0.90%
Return on average shareholders' equity 8.6% 9.0% 7.5% 8.4% 9.1% 8.0%
Average shareholders' equity as a percent of average assets 10.9% 10.8% 11.5% 12.4% 11.4% 11.3%
Capital ratios (period end):            
Tangible shareholders' equity as a percent of total assets 7.8% 8.4% 8.4% 10.5% 11.0% 9.3%
Total risk-based capital ratio 11.6% 13.0% 12.4% 15.0% 15.3% 13.8%
                   
  2nd
Quarter
2015
 1st
Quarter
2015
 4th
Quarter
2014
 3rd
Quarter
2014
 2nd
Quarter
2014
 1st
Quarter
2014
Credit Quality Statistics            
Originated loans $5,351,011  $5,048,662  $4,990,067  $4,777,614  $4,624,409  $4,464,465 
Acquired loans 1,683,732  654,212  698,163  263,306  274,395  288,824 
Nonperforming assets:            
Nonperforming loans (NPLs) 70,906  72,741  71,184  70,742  73,735  76,544 
Other real estate/repossessed assets (ORE) 14,197  14,744  14,205  10,354  10,392  10,056 
Total nonperforming assets 85,103  87,485  85,389  81,096  84,127  86,600 
Performing troubled debt restructurings 45,808  45,981  45,664  44,588  44,133  41,823 
Allowance for loan losses - originated as a percent of:            
Total originated loans 1.40% 1.49% 1.51% 1.60% 1.67% 1.75%
Nonperforming loans 106% 103% 106% 108% 105% 102%
NPLs as a percent of total loans 1.01% 1.28% 1.25% 1.40% 1.51% 1.61%
Nonperforming assets as a percent of:            
Total loans plus ORE 1.21% 1.53% 1.50% 1.61% 1.71% 1.82%
Total assets 0.94% 1.16% 1.17% 1.23% 1.35% 1.37%
Net loan charge-offs (year-to-date) $3,742  $1,927  $9,489  $6,666  $4,379  $2,199 
Net loan charge-offs as a percent of average loans (year-to-date, annualized) 0.13% 0.14% 0.19% 0.18% 0.18% 0.19%
                   
  June 30,
2015
 March 31,
2015
 Dec 31,
2014
 Sept 30,
2014
 June 30,
2014
 March 31,
2014
Additional Data - Intangibles            
Goodwill $285,512  $180,128  $180,128  $120,164  $120,164  $120,164 
Core deposit intangibles (CDI) 28,353  20,072  20,863  8,665  9,110  9,556 
Mortgage servicing rights (MSR) 12,307  11,583  12,217  3,293  3,344  3,316 
Noncompete agreements 541           
Amortization of CDI and noncompete agreements (during quarter ended) 987  791  693  445  446  445 



Chemical Financial Corporation Announces 2015 Second Quarter Operating Results
Average Balances, Fully Tax Equivalent (FTE) Interest and Effective Yields and Rates* (Unaudited)    
Chemical Financial Corporation    
  Three Months Ended June 30, 2015 Three Months Ended June 30, 2014
  Average
Balance
 Interest (FTE) Effective
Yield/
Rate*
 Average
Balance
 Interest (FTE) Effective
Yield/
Rate*
Assets (Dollars in thousands)
Interest-earning assets:            
Loans** $6,272,814  $65,227  4.17% $4,830,341  $51,284  4.26%
Taxable investment securities 698,521  2,202  1.26  651,685  2,248  1.38 
Tax-exempt investment securities 396,295  3,361  3.39  253,468  2,576  4.07 
Other interest-earning assets 34,269  551  6.45  25,572  411  6.45 
Interest-bearing deposits with the Federal Reserve Bank and other banks 132,834  128  0.39  146,483  99  0.27 
Total interest-earning assets 7,534,733  71,469  3.80  5,907,549  56,618  3.84 
Less: allowance for loan losses 75,079      78,626     
Other assets:            
Cash and cash due from banks 148,950      116,390     
Premises and equipment 103,907      74,353     
Interest receivable and other assets 404,627      233,908     
Total assets $8,117,138      $6,253,574     
Liabilities and Shareholders' Equity            
Interest-bearing liabilities:            
Interest-bearing demand deposits $1,539,348  $291  0.08% $1,149,063  $273  0.10%
Savings deposits 1,951,477  360  0.07  1,416,961  315  0.09 
Time deposits 1,490,753  2,979  0.80  1,336,551  3,038  0.91 
Short-term borrowings 398,197  101  0.10  347,583  94  0.11 
Other borrowings 62,901  213  1.36       
Total interest-bearing liabilities 5,442,676  3,944  0.29  4,250,158  3,720  0.35 
Noninterest-bearing deposits 1,727,850      1,249,006     
Total deposits and borrowed funds 7,170,526  3,944  0.22  5,499,164  3,720  0.27 
Interest payable and other liabilities 61,749      40,055     
Shareholders' equity 884,863      714,355     
Total liabilities and shareholders' equity $8,117,138      $6,253,574     
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities)     3.51%     3.49%
Net Interest Income (FTE)   $67,525      $52,898   
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)     3.59%     3.59%


*Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.
**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 2015 Second Quarter Operating Results
Average Balances, Fully Tax Equivalent (FTE) Interest and Effective Yields and Rates* (Unaudited)            
Chemical Financial Corporation            
  Six Months Ended June 30, 2015 Six Months Ended June 30, 2014
  Average
Balance
 Interest (FTE) Effective
Yield/
Rate*
 Average
Balance
 Interest (FTE) Effective
Yield/
Rate*
Assets (Dollars in thousands)
Interest-earning assets:            
Loans** $5,990,999  $123,887  4.16% $4,763,748  $101,028  4.27%
Taxable investment securities 716,606  4,509  1.26  671,662  4,631  1.38 
Tax-exempt investment securities 364,264  6,293  3.46  255,310  5,191  4.07 
Other interest-earning assets 31,867  749  4.74  25,572  649  5.12 
Interest-bearing deposits with the Federal Reserve Bank and other banks 125,694  250  0.40  167,827  224  0.27 
Total interest-earning assets 7,229,430  135,688  3.78  5,884,119  111,723  3.82 
Less: allowance for loan losses 75,477      78,972     
Other assets:            
Cash and cash due from banks 143,658      118,269     
Premises and equipment 100,525      74,557     
Interest receivable and other assets 363,040      234,217     
Total assets $7,761,176      $6,232,190     
Liabilities and Shareholders' Equity            
Interest-bearing liabilities:            
Interest-bearing demand deposits $1,523,240  $615  0.08% $1,180,623  $560  0.10%
Savings deposits 1,864,891  730  0.08  1,416,045  630  0.09 
Time deposits 1,412,162  5,637  0.80  1,328,878  6,181  0.94 
Short-term borrowings 370,317  199  0.11  337,798  215  0.13 
Other borrowings 31,624  213  1.36       
Total interest-bearing liabilities 5,202,234  7,394  0.29  4,263,344  7,586  0.36 
Noninterest-bearing deposits 1,657,864      1,221,408     
Total deposits and borrowed funds 6,860,098  7,394  0.22  5,484,752  7,586  0.28 
Interest payable and other liabilities 57,697      39,287     
Shareholders' equity 843,381      708,151     
Total liabilities and shareholders' equity $7,761,176      $6,232,190     
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities)     3.49%     3.46%
Net Interest Income (FTE)   $128,294      $104,137   
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)     3.57%     3.56%


*Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.
**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 2015 Second Quarter Operating Results
Nonperforming Assets (Unaudited)            
Chemical Financial Corporation            
  June 30,
2015
 March 31,
2015
 Dec 31,
2014
 Sept 30,
2014
 June 30,
2014
 March 31,
2014
 (In thousands)
Nonperforming Loans:            
Nonaccrual loans:            
Commercial $17,260  $18,904  $16,418  $18,213  $18,773  $18,251 
Commercial real estate 25,287  24,766  24,966  23,858  25,361  27,568 
Real estate construction 247  663  162  162  160  160 
Land development 255  290  225  1,467  2,184  2,267 
Residential mortgage 6,004  6,514  6,706  6,693  6,325  6,589 
Consumer installment 393  433  500  527  536  806 
Home equity 1,769  1,870  1,667  2,116  2,296  2,046 
Total nonaccrual loans 51,215  53,440  50,644  53,036  55,635  57,687 
Accruing loans contractually past due 90 days or more as to interest or principal payments:            
Commercial 711  52  170  16  15  43 
Commercial real estate 56  148    87  69  730 
Real estate construction            
Land development            
Residential mortgage 424  172  557  380  376   
Consumer installment            
Home equity 588  429  1,346  1,779  1,075  622 
Total accruing loans contractually past due 90 days or more as to interest or principal payments 1,779  801  2,073  2,262  1,535  1,395 
Nonperforming troubled debt restructurings:            
Commercial loan portfolio 14,547  15,810  15,271  11,797  11,049  11,218 
Consumer loan portfolio 3,365  2,690  3,196  3,647  5,516  6,244 
Total nonperforming troubled debt restructurings 17,912  18,500  18,467  15,444  16,565  17,462 
Total nonperforming loans 70,906  72,741  71,184  70,742  73,735  76,544 
Other real estate and repossessed assets 14,197  14,744  14,205  10,354  10,392  10,056 
Total nonperforming assets $85,103  $87,485  $85,389  $81,096  $84,127  $86,600 



Chemical Financial Corporation Announces 2015 Second Quarter Operating Results
Summary of Loan Loss Experience (Unaudited)              
Chemical Financial Corporation              
  2nd
Quarter
2015
 1st
Quarter
2015
 4th Quarter 2014 3rd
Quarter
2014
 2nd
Quarter
2014
 1st
Quarter
2014
 Six Months Ended
        June 30,
2015
 June 30,
2014
 (In thousands)
Allowance for loan losses - originated loan portfolio          
Allowance for loan losses - beginning of period $75,256  $75,183  $76,506  $77,293  $77,973  $78,572  $75,183  $78,572 
Provision for loan losses 1,500  2,000  1,500  1,500  1,500  1,600  3,500  3,100 
Net loan (charge-offs) recoveries:                
Commercial (36) (424) (932) (535) (569) (233) (460) (802)
Commercial real estate (581) (415) (620) (412) (783) (241) (996) (1,024)
Real estate construction (49) (80)   (13)   (100) (129) (100)
Land development   (11) 363  16  127  142  (11) 269 
Residential mortgage (661) (492) (277) (304) (341) (704) (1,153) (1,045)
Consumer installment (590) (649) (813) (689) (612) (801) (1,239) (1,413)
Home equity 102  144  (544) (350) (2) (262) 246  (264)
Net loan charge-offs (1,815) (1,927) (2,823) (2,287) (2,180) (2,199) (3,742) (4,379)
Allowance for loan losses - end of period 74,941  75,256  75,183  76,506  77,293  77,973  74,941  77,293 
Allowance for loan losses - acquired loan portfolio          
Allowance for loan losses - beginning of period   500  500  500  500  500  500  500 
Provision for loan losses   (500)         (500)  
Allowance for loan losses - end of period     500  500  500  500    500 
Total allowance for loan losses $74,941  $75,256  $75,683  $77,006  $77,793  $78,473  $74,941  $77,793 
Net loan charge-offs as a percent of average loans  0.12%  0.14%  0.21%  0.18%  0.18%  0.19%  0.13%  0.18%



Chemical Financial Corporation Announces 2015 Second Quarter Operating Results
Selected Quarterly Information (Unaudited)            
Chemical Financial Corporation            
  2nd
Quarter
2015
 1st
Quarter
2015
 4th
Quarter
2014
 3rd
Quarter
2014
 2nd
Quarter
2014
 1st
Quarter
2014
 (Dollars in thousands, except per share data)
Summary of Operations            
Interest income $69,679  $62,630  $61,807  $56,629  $55,180  $53,645 
Interest expense 3,944  3,450  3,563  3,561  3,720  3,866 
Net interest income 65,735  59,180  58,244  53,068  51,460  49,779 
Provision for loan losses 1,500  1,500  1,500  1,500  1,500  1,600 
Net interest income after provision for loan losses 64,235  57,680  56,744  51,568  49,960  48,179 
Noninterest income 20,674  19,275  18,227  15,351  15,801  13,716 
Operating expenses 53,328  49,658  48,477  41,423  41,778  41,859 
Acquisition-related transaction expenses 3,457  1,362  4,139  1,279  647  323 
Income before income taxes 28,124  25,935  22,355  24,217  23,336  19,713 
Federal income tax expense 9,100  8,100  7,050  7,450  7,100  5,900 
Net income $19,024  $17,835  $15,305  $16,767  $16,236  $13,813 
Net interest margin 3.59% 3.55% 3.62% 3.59% 3.59% 3.53%
             
Per Common Share Data            
Net income:            
Basic $0.54  $0.54  $0.47  $0.51  $0.54  $0.46 
Diluted 0.54  0.54  0.46  0.51  0.54  0.46 
Diluted, excluding acquisition-related transaction expenses 0.61  0.57  0.56  0.53  0.55  0.47 
Cash dividends declared 0.24  0.24  0.24  0.24  0.23  0.23 
Book value - period-end 25.74  24.68  24.32  24.47  24.22  23.63 
Tangible book value - period-end 17.87  18.95  18.57  20.68  20.42  19.44 
Market value - period-end 33.06  31.36  30.64  26.89  28.08  32.45 

 

For further information: David B. Ramaker, CEO Lori A. Gwizdala, CFO 989-839-5350

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