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Chemical Financial Corporation Reports Fourth Quarter and Full Year 2015 Results

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MIDLAND, Mich., Jan. 25, 2016 (GLOBE NEWSWIRE) -- Chemical Financial Corporation ("Corporation" or "Chemical") (NASDAQ: CHFC) today announced 2015 fourth quarter net income of $25.5 million, or $0.66 per diluted share, compared to 2014 fourth quarter net income of $15.3 million, or $0.46 per diluted share, and 2015 third quarter net income of $24.5 million, or $0.64 per diluted share. For the twelve months ended December 31, 2015, net income was $86.8 million, or $2.39 per diluted share, compared to net income for the twelve months ended December 31, 2014 of $62.1 million, or $1.97 per diluted share.

Excluding nonrecurring acquisition-related expenses, net income in the fourth quarter of 2015 was $26.9 million, or $0.70 per diluted share, compared to $18.4 million, or $0.56 per diluted share, in the fourth quarter of 2014 and $25.1 million, or $0.65 per diluted share, in the third quarter of 2015. Excluding nonrecurring acquisition-related expenses, net income in 2015 was $92.3 million, or $2.54 per diluted share, compared to $66.7 million, or $2.11 per diluted share, in 2014.

"2015 was a year of significant accomplishments for Chemical Financial Corporation, with strong acquisitive and organic growth leading to double digit percentage gains in earnings per share, excluding nonrecurring acquisition-related expenses. In the fourth quarter of 2015, we completed the integration into Chemical Bank of The Bank of Holland and The Bank of Northern Michigan, which were acquired in the Lake Michigan Financial Corporation transaction, the third major acquisition we've closed and integrated in the past fifteen months. In doing so, we have brought a number of new commercial and retail customers into the Chemical Bank fold, while ensuring that we continued to meet the needs of our existing customers and communities," noted David B. Ramaker, Chairman, Chief Executive Officer and President of the Corporation.

"I'm extremely proud of the work done by Chemical's 2,100 employees as we have extended our community-focused approach to banking across Michigan, while successfully executing our core banking strategies. Looking ahead to the future, we see opportunities to extend our franchise even further. As we continue our recent pattern of growth to the $10-billion asset level and beyond, we are mindful of the increased regulatory burden we will face, and of the need to forge through, as opposed to merely cross over, that threshold," added Ramaker.

The double digit percentage increases in earnings per share, excluding nonrecurring acquisition-related expenses, for the three- and twelve-month periods ended December 31, 2015, compared to the same periods for the prior year, were primarily driven by higher net interest income due to organic loan growth over the last twelve months of $476 million, or 8%, and incremental earnings from the acquisitions of Northwestern Bancorp, Inc. ("Northwestern"), Monarch Community Bancorp, Inc. ("Monarch") and Lake Michigan Financial Corporation ("Lake Michigan") that closed on October 31, 2014, April 1, 2015 and May 31, 2015, respectively. The increase in earnings per share in the fourth quarter of 2015, compared to the third quarter of 2015, was attributable to higher net interest income and lower operating expenses.

The Corporation's return on average assets, excluding nonrecurring acquisition-related expenses, was 1.16% during the fourth quarter of 2015, compared to 1.04% in the fourth quarter of 2014 and 1.08% in the third quarter of 2015. The Corporation's return on average shareholders' equity, excluding nonrecurring acquisition-related expenses, was  10.7% in the fourth quarter of 2015, compared to 9.1% in the fourth quarter of 2014 and 10.1% in the third quarter of 2015.

Net interest income was $75.5 million in the fourth quarter of 2015, $17.2 million, or 30%, higher than the fourth quarter of 2014 and $1.9 million, or 2.5%, higher than the third quarter of 2015. The increase in net interest income in the fourth quarter of 2015 over the fourth quarter of 2014 was largely attributable to the positive impact of 2015 organic loan growth and the impact of the three aforementioned acquisitions. The increase in net interest income in the fourth quarter of 2015 over the third quarter of 2015 was largely attributable to additional interest income resulting from third and fourth quarter 2015 organic loan growth.

The net interest margin (on a tax-equivalent basis) was 3.64% in the fourth quarter of 2015, compared to 3.62% in the fourth quarter of 2014 and 3.55% in the third quarter of 2015. The increase in the net interest margin in the fourth quarter of 2015, compared to the third quarter of 2015, was primarily attributable to an increase in the average yield on the Corporation's investment securities portfolio and receipt in the fourth quarter of 2015 of a semi-annual dividend of $0.4 million on the Corporation's Federal Reserve Bank stock. The average yield on the loan portfolio was 4.16% in the fourth quarter of 2015, compared to 4.22% in the fourth quarter of 2014 and 4.15% in the third quarter of 2015. The average yield of the investment securities portfolio was 2.21% in the fourth quarter of 2015, compared to 2.02% in the fourth quarter of 2014 and 2.08% in the third quarter of 2015. The Corporation's average cost of funds was 0.25% in both the fourth quarter of 2015 and the third quarter of 2015, compared to 0.23% in the fourth quarter of 2014.

Net interest income was $274.0 million in 2015, $61.5 million, or 29%, higher than 2014, with the increase primarily attributable to a combination of organic loan growth and the impact of the three aforementioned acquisitions that occurred in 2014 and 2015. The average balance of loans outstanding during 2015 was up $1.61 billion over 2014, with the increase driven by $1.11 billion of loans acquired in the Lake Michigan and Monarch acquisitions and $476 million of organic loan growth during 2015. The net interest margin (on a tax equivalent basis) was 3.58% in 2015 and 3.59% in 2014.

The provision for loan losses was $2.0 million in the fourth quarter of 2015, compared to $1.5 million in the fourth quarter of 2014 and the third quarter of 2015. The increase in the provision for loan losses in the fourth quarter of 2015, compared to both the fourth quarter of 2014 and the third quarter of 2015, was primarily due to growth in the loan portfolio. The provision for loan losses was $6.5 million in 2015, compared to $6.1 million in 2014. The Corporation's provision for loan losses remained relatively consistent during 2015, compared to 2014, despite significant organic growth in its loan portfolio, due primarily to an overall modest reduction in net loan charge-offs and strong credit quality.

Net loan charge-offs were $4.3 million, or 0.24% of average loans, in the fourth quarter of 2015, compared to $2.8 million, or 0.21% of average loans, in the fourth quarter of 2014 and $0.8 million, or 0.05% of average loans, in the third quarter of 2015. The increase in net loan charge-offs in the fourth quarter of 2015, compared to the fourth quarter of 2014 and the third quarter of 2015, was partially attributable to a $1.6 million net loan charge-off from one commercial loan relationship. Net loan charge-offs totaled $8.9 million, or 0.13% of average loans, in 2015, compared to $9.5 million, or 0.19% of average loans, in 2014.

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 $83.9 million at December 31, 2015, compared to $81.2 million at September 30, 2015 and $71.2 million at December 31, 2014. Nonperforming loans comprised 1.15% of total loans at December 31, 2015, compared to 1.13% at September 30, 2015 and 1.25% at December 31, 2014. The reduction in nonperforming loans as a percentage of total loans at December 31, 2015, compared to December 31, 2014, was partially due to the addition of $1.11 billion of loans acquired in the Lake Michigan and Monarch transactions, with no corresponding increase in nonperforming loans as these acquired loans are not classified as nonperforming loans after the acquisition date since they are recorded in pools at their net realizable value.

At December 31, 2015, the allowance for loan losses of the originated loan portfolio was $73.3 million, or 1.26% of originated loans, compared to $75.6 million, or 1.33% of originated loans, at September 30, 2015 and $75.2 million, or 1.51% of originated loans, at December 31, 2014. The allowance for loan losses of the originated loan portfolio as a percentage of nonperforming loans was 87% at December 31, 2015, compared to 93% at September 30, 2015 and 106% at December 31, 2014.

Noninterest income was $20.1 million in the fourth quarter of 2015, compared to $18.2 million in the fourth quarter of 2014 and $20.2 million in the third quarter of 2015. Noninterest income in the fourth quarter of 2015 was higher than the fourth quarter of 2014 due primarily to higher wealth management revenue and an increase in customer service fees resulting from the three aforementioned acquisitions. Noninterest income in the fourth quarter of 2015 was slightly lower than the third quarter of 2015, with higher wealth management revenue being offset by lower overdraft and electronic banking fees. The increase in wealth management revenue in the fourth quarter of 2015, compared to both the fourth quarter of 2014 and third quarter of 2015, was primarily due to an increase in fees resulting from new assets under management.

Noninterest income was $80.2 million in 2015, compared to $63.1 million in 2014, with the increase largely attributable to increases in all major categories of noninterest income that was largely driven by the three aforementioned acquisitions. Wealth management revenue was $20.6 million in 2015, compared to $16.0 million in 2014, with the increase primarily due to increased assets under management resulting from the Northwestern acquisition, which added approximately $1.0 billion of assets under management to the Corporation's Wealth Management department as of the acquisition date.

Operating expenses were $57.8 million in the fourth quarter of 2015, compared to $52.6 million in the fourth quarter of 2014 and $58.3 million in the third quarter of 2015. Operating expenses included nonrecurring acquisition-related expenses of $2.1 million in the fourth quarter of 2015, $4.1 million in the fourth quarter of 2014 and $0.9 million in the third quarter of 2015. Excluding these nonrecurring acquisition-related expenses, operating expenses were $55.7 million in the fourth quarter of 2015, $7.3 million, or 15%, higher than the fourth quarter of 2014 and $1.6 million, or 2.8%, lower than the third quarter of 2015. The increase in operating expenses in the fourth quarter of 2015, compared to the fourth quarter of 2014, was primarily attributable to incremental operating costs associated with the three aforementioned acquisitions. The decrease in operating expenses in the fourth quarter of 2015, compared to the  third quarter of 2015, was largely attributable to reductions in expenses for incentive compensation, employee benefits, outside services and advertising, which were partially offset by higher equipment expenses and lower gains from the sale of other real estate properties.

Operating expenses were $223.9 million in 2015, compared to $179.9 million in 2014. Operating expenses included nonrecurring acquisition-related expenses of $7.8 million in 2015 and $6.4 million in 2014. Excluding these nonrecurring acquisition-related expenses, operating expenses were $216.1 million in 2015, an increase of $42.6 million, or 25%, over 2014, with the increase due primarily to incremental operating costs associated with the three aforementioned acquisitions.

The Corporation's efficiency ratio was 57.1% in the fourth quarter of 2015, 62.2% in the fourth quarter of 2014 and 59.9% in the third quarter of 2015. The Corporation's efficiency ratio was 59.8% for 2015 and 61.6% for 2014.

Total assets were $9.19 billion at December 31, 2015, compared to $9.26 billion at September 30, 2015 and $7.32 billion at December 31, 2014. The increase in total assets during the twelve months ended December 31, 2015 was primarily attributable to the Lake Michigan and Monarch acquisitions, and also due to an organic increase in customer deposits, that was used to partially fund loan growth. Interest-bearing balances with the Federal Reserve Bank (FRB) totaled $15 million at December 31, 2015, compared to $109 million at September 30, 2015 and $8 million at December 31, 2014. Investment securities were $1.06 billion at December 31, 2015, compared to $1.14 billion at September 30, 2015 and $1.07 billion at December 31, 2014.

Total loans were $7.27 billion at December 31, 2015, up $56 million, from total loans of $7.22 billion at September 30, 2015 and up $1.58 billion, or 28%, from total loans of $5.69 billion at December 31, 2014. The increase in loans during the twelve months ended December 31, 2015 was attributable to $1.11 billion of loans acquired in the Lake Michigan and Monarch acquisitions and $476 million of organic loan growth.

Total deposits were $7.46 billion at December 31, 2015, compared to $7.62 billion at September 30, 2015 and $6.08 billion at December 31, 2014. The decrease in total deposits during the fourth quarter of 2015 was attributable to a decline in seasonal municipal deposit accounts. The increase in total deposits during the twelve months ended December 31, 2015 was attributable to the Corporation acquiring $1.07 billion in deposits, including $278 million of brokered deposits, in the acquisitions of Lake Michigan and Monarch and organic growth in customer deposits of $382 million, or 6.3%. The Corporation does not intend to renew the brokered deposits, which totaled $208 million at December 31, 2015, as they mature.

Short-term borrowings were $397 million at December 31, 2015, compared to $330 million at September 30, 2015 and $389 million at December 31, 2014. The increase in short-term borrowings during the fourth quarter of 2015 was due to the Corporation borrowing $100 million of short-term Federal Home Loan Bank (FHLB) advances, which were partially used to fund loan growth during the quarter. Other borrowings were $242 million at December 31, 2015 and $248 million at September 30, 2015. The Corporation had no other borrowings at December 31, 2014. The increase in other borrowings during the twelve months ended December 31, 2015 was primarily attributable to the acquisition of Lake Michigan and the Corporation borrowing $100 million of long-term FHLB advances during the third quarter of 2015 in anticipation of increases in market interest rates.

At December 31, 2015, the Corporation's tangible equity to assets ratio and total risk-based capital ratio were 8.1% and 11.8%, respectively, compared to 7.8% and 11.5%, respectively, at September 30, 2015 and 8.4% and 12.4%, respectively, at December 31, 2014. The decrease in the Corporation's capital ratios at December 31, 2015, compared to December 31, 2014, was attributable to the Lake Michigan and Monarch acquisitions. At December 31, 2015, the Corporation's book value was $26.62 per share, compared to $26.18 per share at September 30, 2015 and $24.32 per share at December 31, 2014. At December 31, 2015, the Corporation's tangible book value was $18.78 per share, compared to $18.32 per share at September 30, 2015 and $18.57 per share at December 31, 2014.

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 basis (FTE), information presented excluding nonrecurring acquisition-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. A reconciliation of non-GAAP financial measures may be found in the financial tables included with this press release.

Chemical Financial Corporation is the second largest banking company headquartered and operating branch offices in Michigan. The Corporation operates through its subsidiary bank, Chemical Bank, with 185 banking offices spread over 47 counties in Michigan. At December 31, 2015, the Corporation had total assets of $9.2 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," "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, 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 Fourth Quarter and Full Year 2015 Operating Results
 
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation
       
  December 31, September 30, December 31,
  2015 2015 2014
  (In thousands, except per share data)
Assets      
Cash and cash equivalents:      
Cash and cash due from banks $194,136  $157,512  $144,892 
Interest-bearing deposits with the Federal Reserve Bank and other banks 44,653  134,025  38,128 
Total cash and cash equivalents 238,789  291,537  183,020 
Investment securities:      
Available-for-sale 553,731  635,641  748,864 
Held-to-maturity 509,971  501,083  316,413 
Total investment securities 1,063,702  1,136,724  1,065,277 
Loans held-for-sale 10,327  12,319  9,128 
Loans:      
Commercial 1,905,879  1,829,870  1,354,881 
Commercial real estate 2,112,162  2,227,364  1,557,648 
Real estate construction and land development 232,076  145,581  171,495 
Residential mortgage 1,429,636  1,394,427  1,110,390 
Consumer installment and home equity 1,591,394  1,618,953  1,493,816 
Total loans 7,271,147  7,216,195  5,688,230 
Allowance for loan losses (73,328) (75,626) (75,683)
Net loans 7,197,819  7,140,569  5,612,547 
Premises and equipment 106,317  110,670  97,496 
Goodwill 287,393  286,454  180,128 
Other intangible assets 38,104  39,864  33,080 
Interest receivable and other assets 246,346  246,417  141,467 
Total Assets $9,188,797  $9,264,554  $7,322,143 
Liabilities      
Deposits:      
Noninterest-bearing $1,934,583  $1,875,636  $1,591,661 
Interest-bearing 5,522,184  5,739,575  4,487,310 
Total deposits 7,456,767  7,615,211  6,078,971 
Interest payable and other liabilities 76,466  72,568  56,572 
Short-term borrowings 397,199  330,016  389,467 
Other borrowings 242,391  248,396   
Total liabilities 8,172,823  8,266,191  6,525,010 
Shareholders' Equity      
Preferred stock, no par value per share      
Common stock, $1 par value per share 38,168  38,131  32,774 
Additional paid-in capital 725,280  723,427  565,166 
Retained earnings 281,558  265,991  231,646 
Accumulated other comprehensive loss (29,032) (29,186) (32,453)
Total shareholders' equity 1,015,974  998,363  797,133 
Total Liabilities and Shareholders' Equity $9,188,797  $9,264,554  $7,322,143 


Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results  
 
Consolidated Statements of Income (Unaudited) 
Chemical Financial Corporation 
     
  Three Months Ended Twelve Months Ended
  December 31, December 31,
  2015 2014 2015 2014
  (In thousands, except per share data)
Interest Income        
Interest and fees on loans $75,253  $57,140  $271,772  $209,429 
Interest on investment securities:        
Taxable 2,044  2,322  8,786  9,147 
Tax-exempt 2,583  1,841  9,073  7,054 
Dividends on nonmarketable equity securities 633  415  1,648  1,224 
Interest on deposits with the Federal Reserve Bank and other banks 116  89  510  407 
Total interest income 80,629  61,807  291,789  227,261 
Interest Expense        
Interest on deposits 4,120  3,414  15,406  14,254 
Interest on short-term borrowings 110  107  453  414 
Interest on other borrowings 923  42  1,922  42 
Total interest expense 5,153  3,563  17,781  14,710 
Net Interest Income 75,476  58,244  274,008  212,551 
Provision for loan losses 2,000  1,500  6,500  6,100 
Net interest income after provision for loan losses 73,476  56,744  267,508  206,451 
Noninterest Income        
Service charges and fees on deposit accounts 6,398  6,386  25,481  22,414 
Wealth management revenue 5,151  4,696  20,552  16,015 
Other charges and fees for customer services 6,189  5,366  25,513  18,928 
Mortgage banking revenue 1,606  1,590  6,133  5,041 
Gain on sale of investment securities 18    630   
Other 690  189  1,907  697 
Total noninterest income 20,052  18,227  80,216  63,095 
Operating Expenses        
Salaries, wages and employee benefits 32,971  28,628  127,920  102,557 
Occupancy 4,620  4,201  18,213  15,842 
Equipment and software 5,102  4,272  18,569  14,737 
Acquisition-related expenses 2,085  4,139  7,804  6,388 
Other 13,046  11,376  51,388  40,401 
Total operating expenses 57,824  52,616  223,894  179,925 
Income before income taxes 35,704  22,355  123,830  89,621 
Federal income tax expense 10,200  7,050  37,000  27,500 
Net Income $25,504  $15,305  $86,830  $62,121 
Earnings Per Common Share:        
Weighted average common shares outstanding for basic earnings per share 38,150  32,767  36,081  31,367 
Weighted average common shares outstanding for diluted earnings per share, including common stock equivalents 38,498  33,033  36,353  31,588 
Basic earnings per common share $0.67  $0.47  $2.41  $1.98 
Diluted earnings per common share $0.66  $0.46  $2.39  $1.97 
Cash Dividends Declared Per Common Share $0.26  $0.24  $1.00  $0.94 
Key Ratios (annualized where applicable):        
Return on average assets 1.10% 0.87% 1.02% 0.96%
Return on average shareholders' equity 10.1% 7.5% 9.4% 8.2%
Net interest margin 3.64% 3.62% 3.58% 3.59%
Efficiency ratio 57.1% 62.2% 59.8% 61.6%


Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results  
 
Financial Summary (Unaudited) 
Chemical Financial Corporation 
(Dollars in Thousands)
  
  4th   3rd   2nd   1st   4th   3rd   2nd   1st  
  Quarter   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  
   2015   2015   2015   2015   2014   2014   2014   2014 
Average Balances                        
Total assets $9,175,224   $9,203,856  $8,117,138  $7,401,258  $7,007,879  $6,412,460  $6,253,574  $6,210,569 
Total interest-earning assets  8,457,464   8,467,939   7,534,733   6,920,734   6,558,147   6,046,991   5,907,549   5,860,429 
Total loans  7,227,680   7,125,896   6,262,072   5,696,961   5,418,743   4,962,948   4,824,299   4,692,430 
Total deposits  7,449,478   7,452,556   6,709,428   6,204,095   5,808,187   5,249,317   5,151,581   5,142,276 
Total interest-bearing liabilities  6,162,033   6,233,944   5,442,676   4,959,123   4,632,769   4,237,626   4,250,158   4,276,677 
Total shareholders' equity  1,000,347   987,727   884,863   801,438   804,328   794,711   714,355   701,878 
Key Ratios (annualized where applicable)                                
Net interest margin (taxable equiv basis)  3.64%  3.55%  3.59%  3.55%  3.62%  3.59%  3.59%  3.53%
Efficiency ratio  57.1%  59.9%  60.5%  62.4%  62.2%  59.2%  60.9%  64.5%
Return on average assets  1.10%  1.05%  0.94%  0.98%  0.87%  1.04%  1.04%  0.90%
Return on average shareholders' equity  10.1%  9.8%  8.6%    9.0%  7.5%  8.4%  9.1%  8.0%
Average shareholders' equity as a percent of average assets  10.9%  10.7%  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  8.1%  7.8%  7.8%  8.4%  8.4%  10.5%  11.0%  9.3%
Total risk-based capital ratio  11.8%  11.5%  11.7%  13.0%  12.4%  15.0%  15.3%  13.8%
                                 
  4th   3rd   2nd   1st   4th   3rd   2nd   1st  
  Quarter   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter   Quarter  
  2015  2015  2015  2015  2014  2014  2014  2014 
Credit Quality Statistics                        
Originated
Loans
 $   5,807,934   $  5,667,159  $  5,351,011  $  5,048,662  $  4,990,067  $  4,777,614  $  4,624,409  $  4,464,465 
Acquired Loans  1,463,213   1,549,036   1,683,732   654,212   698,163   263,306   274,395   288,824 
Nonperforming Assets:                                
Nonperforming loans (NPLs)  83,880   81,217   70,906   72,741   71,184   70,742   73,735   76,544 
Other real estate / repossessed assets (ORE)  9,935   11,207   14,197   14,744   14,205   10,354   10,392   10,056 
Total nonperforming assets  93,815   92,424   85,103   87,485   85,389   81,096   84,127   86,600 
Performing troubled debt restructurings  47,810   44,803   45,808   45,981   45,664   44,588   44,133   41,823 
Allowance for loan losses - originated as a percent of:                                
Total originated loans  1.26%  1.33%  1.40%  1.49%  1.51%  1.60%  1.67%  1.75%
Nonperforming loans  87%  93%  106%  103%  106%  108%  105%  102%
NPLs as a percent of total loans  1.15%  1.13%  1.01%  1.28%  1.25%  1.40%  1.51%  1.61%
Nonperforming assets as a percent of:                                
Total loans plus ORE  1.29%  1.28%  1.21%  1.53%  1.50%  1.61%  1.71%  1.82%
Total assets  1.02%  1.00%  0.94%  1.16%  1.17%  1.23%  1.35%  1.37%
Net loan charge-offs (year-to-date)  8,855   4,557   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%  0.10%  0.13%  0.14%  0.19%  0.18%  0.18%  0.19%
                                 
  Dec 31,   Sept 30,   June 30,   Mar 31,   Dec 31,   Sept 30,   June 30,   Mar 31,  
   2015   2015   2015   2015   2014   2014   2014   2014 
Additional Data - Intangibles                        
Goodwill $   287,393   $  286,454  $  285,512  $  180,128  $  180,128  $  120,164  $  120,164  $  120,164 
Core deposit intangibles (CDI)  26,654   27,890   28,353   20,072   20,863   8,665   9,110   9,556 
Mortgage servicing rights (MSR)  11,122   11,540   12,307   11,583   12,217   3,293   3,344   3,316 
Noncompete agreements  328   434   541           
Amortization of CDI and noncompete agreements (quarter only)  1,341   1,270   987   791   693   445   446   445 

 

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
 
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)*
Chemical Financial Corporation
     
  Three Months Ended December 31, 2015 Three Months Ended December 31, 2014
    Tax     Tax  
  Average Equivalent Effective Average Equivalent Effective
  Balance Interest Yield/Rate Balance Interest Yield/Rate
Assets (Dollars in thousands)
Interest-earning assets:            
Loans** $7,241,339  $75,905  4.16% $5,426,664  $57,680  4.22%
Taxable investment securities 609,406  2,044  1.34  712,516  2,322  1.30 
Tax-exempt investment securities 481,968  3,973  3.30  306,446  2,832  3.70 
Other interest-earning assets 36,799  633  6.82  27,139  415  6.07 
Interest-bearing deposits with the Federal Reserve Bank and other banks 87,952  116  0.52  85,382  89  0.41 
Total interest-earning assets 8,457,464  82,671  3.89  6,558,147  63,338  3.84 
Less: allowance for loan losses (75,225)        (77,053)       
Other assets:                  
Cash and cash due from banks 157,939         134,309        
Premises and equipment 110,141         93,111        
Interest receivable and other assets 524,905         299,365        
Total assets $9,175,224         $7,007,879        
Liabilities and shareholders' equity                  
Interest-bearing liabilities:                  
Interest-bearing demand deposits $1,816,694  $414  0.09% $1,368,314  $329  0.10%
Savings deposits 2,024,543  393  0.08  1,613,338  367  0.09 
Time deposits 1,671,913  3,313  0.79  1,306,712  2,718  0.83 
Short-term borrowings 405,713  110  0.11  337,681  107  0.13 
Other borrowings 243,170  923  1.51  6,724  42  2.48 
Total interest-bearing liabilities 6,162,033  5,153  0.33  4,632,769  3,563  0.31 
Noninterest-bearing deposits 1,936,328      1,519,823     
Total deposits and borrowed funds 8,098,361  5,153  0.25  6,152,592  3,563  0.23 
Interest payable and other liabilities 76,516         50,959      
Shareholders' equity 1,000,347         804,328      
Total liabilities and shareholders' equity $9,175,224         $7,007,879      
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities)     3.56%     3.53%
Net Interest Income (FTE)   $77,518      $59,775    
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)     3.64%     3.62%
               
* 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 Fourth Quarter and Full Year 2015 Operating Results
 
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)*    
Chemical Financial Corporation    
     
  Twelve Months Ended December 31, 2015 Twelve Months Ended December 31, 2014
    Tax     Tax  
  Average Equivalent Effective Average Equivalent Effective
  Balance Interest Yield/Rate Balance Interest Yield/Rate
Assets (Dollars in thousands)
Interest-earning assets:            
Loans** $6,594,507  $274,341  4.16% $4,982,986  $211,608  4.25%
Taxable investment securities 683,612  8,786  1.29  667,978  9,147  1.37 
Tax-exempt investment securities 415,092  13,956  3.36  279,709  10,850  3.88 
Other interest-earning assets 34,188  1,648  4.82  25,967  1,224  4.71 
Interest-bearing deposits with the Federal Reserve Bank and other banks 123,735  510  0.41  138,424  407  0.29 
Total interest-earning assets 7,851,134  299,241  3.81  6,095,064  233,236  3.83 
Less: allowance for loan losses (75,378)        (78,126)       
Other assets:                  
Cash and cash due from banks 155,109         126,142        
Premises and equipment 105,904         79,278        
Interest receivable and other assets 444,459         250,786        
Total assets $8,481,228         $6,473,144        
Liabilities and shareholders' equity                  
Interest-bearing liabilities:                  
Interest-bearing demand deposits $1,661,592  $1,465  0.09% $1,234,347  $1,197  0.10%
Savings deposits 1,947,659  1,512  0.08  1,472,092  1,325  0.09 
Time deposits 1,557,425  12,429  0.80  1,307,058  11,732  0.90 
Short-term borrowings 420,529  453  0.11  334,785  414  0.12 
Other borrowings 117,000  1,922  1.64  1,695  42  2.48 
Total interest-bearing liabilities 5,704,205  17,781  0.31  4,349,977  14,710  0.34 
Noninterest-bearing deposits 1,791,991      1,325,925     
Total deposits and borrowed funds 7,496,196  17,781  0.24  5,675,902  14,710  0.26 
Interest payable and other liabilities 65,704       43,031        
Shareholders' equity 919,328       754,211        
Total liabilities and shareholders' equity $8,481,228       $6,473,144        
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities)     3.50%     3.49%
Net Interest Income (FTE)   $281,460       $218,526    
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)     3.58%     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 Fourth Quarter and Full Year 2015 Operating Results
 
Nonperforming Assets (Unaudited)
Chemical Financial Corporation
                 
  Dec 31, Sept 30, June 30, Mar 31, Dec 31, Sept 30, June 30, Mar 31,
  2015 2015 2015 2015 2014 2014 2014 2014
  (In thousands)
Nonperforming Loans:                
Nonaccrual loans:                
Commercial $28,554  $26,463  $17,260  $18,904  $16,418  $18,213  $18,773  $18,251 
Commercial real estate 25,163  24,969  25,287  24,766  24,966  23,858  25,361  27,568 
Real estate construction 247  247  247  663  162  162  160  160 
Land development 274  297  255  290  225  1,467  2,184  2,267 
Residential mortgage 5,557  6,248  6,004  6,514  6,706  6,693  6,325  6,589 
Consumer installment 451  536  393  433  500  527  536  806 
Home equity 1,979  1,876  1,769  1,870  1,667  2,116  2,296  2,046 
Total nonaccrual loans 62,225  60,636  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 364  122  711  52  170  16  15  43 
Commercial real estate 254  216  56  148    87  69  730 
Real estate construction                
Land development                
Residential mortgage 402  572  424  172  557  380  376   
Consumer installment                
Home equity 1,267  558  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 2,287  1,468  1,779  801  2,073  2,262  1,535  1,395 
Nonperforming troubled debt restructurings:                
Commercial loan portfolio 16,297  15,559  14,547  15,810  15,271  11,797  11,049  11,218 
Consumer loan portfolio 3,071  3,554  3,365  2,690  3,196  3,647  5,516  6,244 
Total nonperforming troubled debt restructurings 19,368  19,113  17,912  18,500  18,467  15,444  16,565  17,462 
Total nonperforming loans 83,880  81,217  70,906  72,741  71,184  70,742  73,735  76,544 
Other real estate and repossessed assets 9,935  11,207  14,197  14,744  14,205  10,354  10,392  10,056 
Total nonperforming assets $93,815  $92,424  $85,103  $87,485  $85,389  $81,096  $84,127  $86,600 


Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
 
Summary of Loan Loss Experience (Unaudited)
Chemical Financial Corporation
         
  Twelve   Twelve  
  Months   Months  
  Ended    Ended  
  Dec 31, 
 Three Months Ended Dec 31,
 Three Months Ended
  2015 Dec 31, 2015 Sept 30, 2015 June 30, 2015 Mar 31, 2015 2014 Dec 31, 2014 Sept 30, 2014 June 30, 2014 Mar 31, 2014
  (In thousands)
Allowance for loan losses - originated loan portfolio              
Allowance for loan losses - beginning of period $75,183  $75,626  $74,941  $75,256  $75,183  $78,572  $76,506  $77,293  $77,973  $78,572 
Provision for loan losses 7,000  2,000  1,500  1,500  2,000  6,100  1,500  1,500  1,500  1,600 
Net loan charge-offs:                    
Commercial (2,581) (2,207) 86  (36) (424) (2,269) (932) (535) (569) (233)
Commercial real estate (1,475) (624) 145  (581) (415) (2,056) (620) (412) (783) (241)
Real estate construction (129)     (49) (80) (113)   (13)   (100)
Land development (12)   (1)   (11) 648  363  16  127  142 
Residential mortgage (1,912) (545) (214) (661) (492) (1,626) (277) (304) (341) (704)
Consumer installment (2,791) (770) (782) (590) (649) (2,915) (813) (689) (612) (801)
Home equity 45  (152) (49) 102  144  (1,158) (544) (350) (2) (262)
Net loan charge-offs (8,855) (4,298) (815) (1,815) (1,927) (9,489) (2,823) (2,287) (2,180) (2,199)
Allowance for loan losses - end of period 73,328  73,328  75,626  74,941  75,256  75,183  75,183  76,506  77,293  77,973 
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 $73,328  $73,328  $75,626  $74,941  $75,256  $75,683  $75,683  $77,006  $77,793  $78,473 
Net loan charge-offs as a percent of average loans (quarterly amounts annualized)  0.13%  0.24%  0.05%  0.12%  0.14%  0.19%  0.21%  0.18%  0.18%  0.19%


Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
 
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation
 
  4th 3rd  2nd  1st 4th  3rd 2nd  1st 
  Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
  2015 2015 2015 2015 2014 2014 2014 2014
  (Dollars in thousands, except per share data)
Summary of Operations                
Interest income $80,629  $78,851  $69,679  $62,630  $61,807  $56,629  $55,180  $53,645 
Interest expense 5,153  5,234  3,944  3,450  3,563  3,561  3,720  3,866 
Net interest income 75,476  73,617  65,735  59,180  58,244  53,068  51,460  49,779 
Provision for loan losses 2,000  1,500  1,500  1,500  1,500  1,500  1,500  1,600 
Net interest income after provision for loan losses 73,476  72,117  64,235  57,680  56,744  51,568  49,960  48,179 
Noninterest income 20,052  20,215  20,674  19,275  18,227  15,351  15,801  13,716 
Operating expenses 55,739  57,365  53,328  49,658  48,477  41,423  41,778  41,859 
Acquisition-related expenses 2,085  900  3,457  1,362  4,139  1,279  647  323 
Income before income taxes 35,704  34,067  28,124  25,935  22,355  24,217  23,336  19,713 
Federal income tax expense 10,200  9,600  9,100  8,100  7,050  7,450  7,100  5,900 
Net income $25,504  $24,467  $19,024  $17,835  $15,305  $16,767  $16,236  $13,813 
Net interest margin 3.64% 3.55% 3.59% 3.55% 3.62% 3.59% 3.59% 3.53%
                 
Per Common Share Data                
Net income:                
Basic $0.67  $0.64  $0.54  $0.54  $0.47  $0.51  $0.54  $0.46 
Diluted 0.66  0.64  0.54  0.54  0.46  0.51  0.54  0.46 
Diluted, excluding acquisition-related expenses 0.70  0.65  0.61  0.57  0.56  0.53  0.55  0.47 
Cash dividends declared 0.26  0.26  0.24  0.24  0.24  0.24  0.23  0.23 
Book value - period-end 26.62  26.18  25.74  24.68  24.32  24.47  24.22  23.63 
Tangible book value - period-end 18.78  18.32  17.89  18.95  18.57  20.68  20.42  19.44 
Market value - period-end 34.27  32.35  33.06  31.36  30.64  26.89  28.08  32.45 


Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
 
Non-GAAP Financial Measures (Unaudited)
Chemical Financial Corporation
                     
  Twelve         Twelve        
  Months         Months        
  Ended 4th 3rd 2nd  1st Ended 4th 3rd 2nd 1st
  Dec 31, Quarter Quarter Quarter Quarter Dec 31, Quarter Quarter Quarter Quarter
  2015 2015 2015 2015 2015 2014 2014 2014 2014 2014
  (Dollars in thousands, except per share data)
Non-GAAP Operating Results                
Net Income                    
Net income, as reported $86,830  $25,504  $24,467  $19,024  $17,835  $62,121  $15,305  $16,767  $16,236  $13,813 
Acquisition-related expenses, net of tax 5,484  1,355  585  2,659  885  4,555  3,094  831  420  210 
Net income, excluding acquisition-related expenses $92,314  $26,859  $25,052  $21,683  $18,720  $66,676  $18,399  $17,598  $16,656  $14,023 
                     
Diluted Earnings Per Share                    
Diluted earnings per share, as reported $2.39  $0.66  $0.64  $0.54  $0.54  $1.97  $0.46  $0.51  $0.54  $0.46 
Effect of acquisition-related expenses, net of tax 0.15  0.04  0.01  0.07  0.03  0.14  0.10  0.02  0.01  0.01 
Diluted earnings per share, excluding acquisition-related expenses $2.54  $0.70  $0.65  $0.61  $0.57  $2.11  $0.56  $0.53  $0.55  $0.47 
                     
Return on Average Assets                    
Return on average assets, as reported 1.02% 1.10% 1.05% 0.94% 0.98% 0.96% 0.87% 1.04% 1.04% 0.90%
Effect of acquisition-related expenses, net of tax 0.07  0.06  0.03  0.13  0.05  0.07  0.17  0.05  0.03  0.02 
Return on average assets, excluding acquisition-related expenses 1.09% 1.16% 1.08% 1.07% 1.03% 1.03% 1.04% 1.09% 1.07% 0.92%
                     
Return on Average Shareholders' Equity                  
Return on average shareholders' equity, as reported 9.4% 10.1% 9.8% 8.6% 9.0% 8.2% 7.5% 8.4% 9.1% 8.0%
Effect of acquisition-related expenses, net of tax 0.6  0.6  0.3  1.2  0.5  0.6  1.6  0.4  0.3  0.1 
Return on average shareholders' equity, excluding acquisition-related expenses 10.0% 10.7% 10.1% 9.8% 9.5% 8.8% 9.1% 8.8% 9.4% 8.1%


  Dec 31, Sept 30, June 30, Mar 31, Dec 31, Sept 30, June 30, Mar 31,
  2015 2015 2015 2015 2014 2014  2014 2014
  (Amounts in thousands, except per share data)
Tangible Book Value                
Shareholders' equity, as reported $1,015,974  $998,363  $980,791  $810,501  $797,133  $801,606  $793,498  $705,595 
Goodwill, CDI and noncompete agreements, net of tax (299,123) (299,681) (299,109) (187,991) (188,505) (124,149) (124,594) (125,040)
Tangible shareholders' equity $716,851  $698,682  $681,682  $622,510  $608,628  $677,457  $668,904  $580,555 
Common shares outstanding 38,168  38,131  38,110  32,847  32,774  32,763  32,760  29,866 
Book value per share (shareholders' equity, as reported, divided by common shares outstanding) $26.62  $26.18  $25.74  $24.68  $24.32  $24.47  $24.22  $23.63 
Tangible book value per share (tangible shareholders' equity divided by common shares outstanding) $18.78  $18.32  $17.89  $18.95  $18.57  $20.68  $20.42  $19.44 

 

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

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