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8-K - CHEMICAL FINANCIAL FORM 8-K - CHEMICAL FINANCIAL CORPchem8k_041612.htm

EXHIBIT 99.1

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


Chemical Financial Corporation Reports First Quarter 2012 Results

MIDLAND, MI, April 16, 2012 -- -- Chemical Financial Corporation (NASDAQ:CHFC) today announced 2012 first quarter net income of $12.4 million, or $0.45 per diluted share, compared to 2011 fourth quarter net income of $11.2 million, or $0.41 per diluted share, and 2011 first quarter net income of $9.2 million, or $0.33 per diluted share.

"We continued to create momentum entering the new year and our earnings performance continued its upward trend. Our 2012 first quarter earnings of $0.45 per share were 36 percent higher than 2011 first quarter earnings per share and marked the highest level of quarterly earnings per share Chemical Financial has reported since the fourth quarter of 2006. In addition to a lower loan loss provision and higher net interest income, this quarter's earnings, as compared to the first quarter of 2011, were aided by an after-tax nonrecurring gain of $0.9 million from the sale of our merchant processing business to First Data, which bolstered noninterest income," said David B. Ramaker, Chairman, Chief Executive Officer and President of the Corporation.

"We are benefiting from continued stability in the Michigan economy, and have seen pockets of increasing economic strength. At the same time, we remain cognizant of the challenges at hand, and diligent in our efforts to proactively address asset quality issues," added Ramaker. "We feel that we are uniquely positioned to continue our pattern of long-term growth and profitability, both organically and via acquisition opportunities that we believe will arise as our state's banking industry consolidates," said Ramaker.

The increase in net income in the first quarter of 2012 over the fourth quarter of 2011 was attributable to a $1.1 million increase in noninterest income and a $1.5 million decrease in operating expenses that was partially offset by a decrease in net interest income of $0.9 million. The increase in net income in the first quarter of 2012 over the first quarter of 2011 was attributable to a $1.0 million increase in net interest income, a $2.5 million decrease in the provision for loan losses and a $1.9 million increase in noninterest income that was partially offset by a $0.9 million increase in operating expenses.

The Corporation's return on average assets during the first quarter of 2012 was 0.92 percent, up from 0.83 percent in the fourth quarter of 2011 and 0.70 percent in the first quarter of 2011. The Corporation's return on average equity was 8.7 percent in the first quarter of 2012, up from 7.7 percent in the fourth quarter of 2011 and 6.6 percent in the first quarter of 2011.


1


Net interest income was $46.2 million in the first quarter of 2012, down $0.9 million, or 1.9 percent, from the fourth quarter of 2011 and up $1.0 million, or 2.2 percent, from the first quarter of 2011.

The decrease in net interest income in the first quarter of 2012, as compared to the fourth quarter of 2011, was primarily attributable to the timing of certain sources of interest income. The positive impact of average loans being $52 million higher in the first quarter of 2012, as compared to the fourth quarter of 2011, was offset by the net impact of interest-earning assets and interest-bearing liabilities repricing during the quarter.

The increase in net interest income in the first quarter of 2012 over the first quarter of 2011 was primarily attributable to an increase in average loans of $152 million, or 4.1 percent, between these two quarters that was partially offset by the net impact of interest-earning assets and interest-bearing liabilities repricing during the twelve months ended March 31, 2012.

The net interest margin (on a tax-equivalent basis) in the first quarter of 2012 was 3.76 percent, compared to 3.84 percent in the fourth quarter of 2011 and 3.78 percent in the first quarter of 2011.

The provision for loan losses was $5.0 million in the first quarter of 2012, compared to $5.1 million in the fourth quarter of 2011 and $7.5 million in the first quarter of 2011. Net loan charge-offs were $5.5 million in both the first quarter of 2012 and fourth quarter of 2011, compared to $7.4 million in the first quarter of 2011.

Noninterest income was $12.6 million in the first quarter of 2012, up from $11.5 million in the fourth quarter of 2011 and $10.8 million in the first quarter of 2011. The higher level of noninterest income in the first quarter of 2012 was primarily attributable to the sale of the Corporation's merchant card servicing business to First Data in the first quarter of 2012 that resulted in a nonrecurring gain on the sale of $1.3 million. The transaction will provide additional merchant services to customers and will also provide the Corporation with future revenue sharing opportunities.

Operating expenses were $36.3 million in the first quarter of 2012, down from $37.8 million in the fourth quarter of 2011 and up from $35.4 million in the first quarter of 2011. The decrease in operating expenses of $1.5 million in the first quarter of 2012, as compared to the fourth quarter of 2011, was largely attributable to a reduction in credit-related operating expenses. During the fourth quarter of 2011, the Corporation recognized net expense of $1.9 million applicable to writedowns of other real estate (ORE) and net realized gains/losses on ORE sales, compared to a net gain of $0.3 million in the first quarter of 2012. The increase in operating expenses of $0.9 million in the first quarter of 2012, as compared to the first quarter of 2011, was primarily attributable to higher compensation costs that were partially offset by lower loan collection costs, consulting expenses and FDIC premiums. The Corporation's efficiency ratio was 60.4 percent in the first quarter of 2012, compared to 63.1 percent in the fourth quarter of 2011 and 61.8 percent in the first quarter of 2011.


2


Total assets were $5.45 billion at March 31, 2012, up from $5.34 billion at both December 31, 2011 and March 31, 2011. The increase in total assets during the first quarter of 2012 was largely attributable to an increase in interest-bearing balances held at the Federal Reserve Bank (FRB) resulting from an increase in customer deposits. The Corporation continues to maintain significant amounts of funds generated from deposit growth at the FRB, and thus maintains a high level of available liquidity, with $348 million in balances held at the FRB at March 31, 2012, compared to $256 million at December 31, 2011 and $520 million at March 31, 2011.

Total loans were $3.84 billion at March 31, 2012, compared to $3.83 billion at December 31, 2011 and $3.68 billion at March 31, 2011. The increase in total loans of $161 million, or 4.4 percent, during the twelve months ended March 31, 2012 was attributable to a combination of improving economic conditions and higher loan demand, as well as the Corporation increasing its market share. During the twelve months ended March 31, 2012, commercial loans increased $83 million, or 10.1 percent, real estate commercial loans increased $21 million, or 1.9 percent, real estate residential loans increased $52 million, or 6.5 percent, and consumer installment and home equity loans increased $43 million, or 5.1 percent, while real estate construction loans decreased $38 million, or 27 percent. Loan demand eased in the first quarter of 2012 with an increase in total loans of $12 million, or an annualized growth rate of 1.2 percent. The average yield on the loan portfolio was 5.10 percent in the first quarter of 2012, compared to 5.25 percent in the fourth quarter of 2011 and 5.48 percent in the first quarter of 2011.

Investment securities were $867 million at March 31, 2012, compared to $851 million at December 31, 2011 and $750 million at March 31, 2011.

Total deposits were $4.46 billion at March 31, 2012, compared to $4.37 billion at December 31, 2011 and $4.38 billion at March 31, 2011. The Corporation experienced an increase of $95 million, or 2.2 percent, in total deposits during the first quarter of 2012, primarily attributable to increases in consumer demand deposit and savings accounts. Federal Home Loan Bank (FHLB) advances totaled $42.1 million at March 31, 2012, compared to $43.1 million at December 31, 2011 and $72.9 million at March 31, 2011. Brokered deposits totaled $94 million at March 31, 2012, compared to $95 million at December 31, 2011 and $151 million at March 31, 2011. The repricing of matured customer certificates of deposit and various interest-bearing deposit accounts resulted in the Corporation's average cost of funds declining to 0.67 percent in the first quarter of 2012 from 0.73 percent in the fourth quarter of 2011 and 0.87 percent in the first quarter of 2011.

At March 31, 2012, the Corporation's tangible equity to assets ratio and total risk-based capital ratio were 8.7 percent and 13.7 percent, respectively, compared to 8.7 percent and 13.3 percent, respectively, at December 31, 2011 and 8.5 percent and 13.0 percent, respectively, at March 31, 2011. At March 31, 2012, the Corporation's book value was $21.10 per share, compared to $20.82 per share at December 31, 2011 and $20.54 per share at March 31, 2011.

The credit quality of the Corporation's loan portfolio showed further improvement during the first quarter of 2012. At March 31, 2012, the Corporation's nonperforming loans, consisting of nonaccrual loans, accruing loans past due 90 days or more and nonperforming troubled debt restructurings, totaled $98.5 million, compared to $106.3 million at December 31, 2011 and

3


$145.9 million at March 31, 2011, representing declines of 7.3 percent and 32.4 percent, respectively. At March 31, 2012, the Corporation's $473 million acquired loan portfolio was overall performing better than expected, despite the establishment of a $2.2 million allowance for loan losses on these loans that was primarily attributable to one of the fourteen loan pools experiencing a decline in expected cash flows, with $0.6 million of this allowance established in the first quarter of 2012.

Other real estate and repossessed assets totaled $25.9 million at March 31, 2012, compared to $25.5 million at December 31, 2011 and $26.4 million at March 31, 2011.

At March 31, 2012, the allowance for loan losses of the originated portfolio was $85.6 million, or 2.54 percent of originated loans, compared to 2.60 percent at December 31, 2011 and 2.85 percent at March 31, 2011. The allowance for loan losses of the originated portfolio as a percentage of nonperforming loans was 87 percent at March 31, 2012, compared to 82 percent at December 31, 2011 and 61 percent at March 31, 2011. At March 31, 2012, nonperforming loans as a percentage of total loans were 2.56 percent, down from 2.77 percent at December 31, 2011 and 3.96 percent at March 31, 2011.

Chemical Financial Corporation is the second-largest bank holding company headquartered and operating branch offices in Michigan. The Corporation operates through a single subsidiary bank, Chemical Bank, with 142 banking offices spread over 32 counties in the lower peninsula of Michigan. At March 31, 2012, the Corporation had total assets of $5.5 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.











4


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 Chemical Financial Corporation. Words such as "anticipated," "believe," "capitalize," "continue," "feel," "focus," "further," "improving," "intends," "look," "opportunities," "progress," "strategies," "trends," "will," "yet" and variations of such words and 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 the credit quality of the loan portfolio, future levels of nonperforming loans, future economic trends and conditions, anticipated consolidation opportunities in Michigan's banking industry, future income levels, and our ability to grow our loan portfolio, improve credit quality and control operating costs. 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, mortgage servicing rights and other real estate owned and 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) involve judgments that are inherently forward-looking. 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 or that other real estate owned can be sold for its carrying value or at all. The future effect of changes in the financial and credit markets and the national and regional economy 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, 2011. 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.








5


Chemical Financial Corporation Announces First Quarter Operating Results

Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation


(In thousands, except per share data)

March 31
2012

 

December 31
2011

 

March 31
2011

 

Assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

   Cash and cash due from banks

$

120,435

 

$

121,294

 

$

116,445

 

   Interest-bearing deposits with unaffiliated banks and others

 

353,243

 

 

260,646

 

 

525,174

 

      Total cash and cash equivalents

 

473,678

 

 

381,940

 

 

641,619

 

Investment securities:

 

 

 

 

 

 

 

 

 

   Available-for-sale

 

676,007

 

 

667,276

 

 

585,992

 

   Held-to-maturity

 

191,297

 

 

183,339

 

 

163,890

 

      Total Investment Securities

 

867,304

 

 

850,615

 

 

749,882

 

Loans held-for-sale

 

25,080

 

 

18,818

 

 

4,033

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

   Commercial

 

903,935

 

 

895,150

 

 

821,115

 

   Real estate commercial

 

1,095,793

 

 

1,071,999

 

 

1,074,842

 

   Real estate construction and land development

 

101,157

 

 

118,176

 

 

139,439

 

   Real estate residential

 

861,301

 

 

861,716

 

 

809,085

 

   Consumer installment and home equity

 

880,912

 

 

884,244

 

 

838,035

 

      Total Loans

 

3,843,098

 

 

3,831,285

 

 

3,682,516

 

   Allowance for loan losses

 

(87,785

)

 

(88,333

)

 

(89,674

)

      Net Loans

 

3,755,313

 

 

3,742,952

 

 

3,592,842

 

 

 

 

 

 

 

 

 

 

 

Premises and equipment

 

66,661

 

 

65,997

 

 

65,135

 

Goodwill

 

113,414

 

 

113,414

 

 

113,414

 

Other intangible assets

 

10,939

 

 

11,472

 

 

13,060

 

Interest receivable and other assets

 

139,130

 

 

154,245

 

 

155,110

 

      Total Assets

$

5,451,519

 

$

5,339,453

 

$

5,335,095

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

   Noninterest-bearing

$

914,523

 

$

875,791

 

$

766,876

 

   Interest-bearing

 

3,546,861

 

 

3,491,066

 

 

3,615,395

 

      Total Deposits

 

4,461,384

 

 

4,366,857

 

 

4,382,271

 

Interest payable and other liabilities

 

32,809

 

 

54,024

 

 

30,038

 

Short-term borrowings

 

335,082

 

 

303,786

 

 

286,193

 

Federal Home Loan Bank advances

 

42,120

 

 

43,057

 

 

72,854

 

      Total Liabilities

 

4,871,395

 

 

4,767,724

 

 

4,771,356

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

 

 

 

   Preferred stock, no par value per share

 

-

 

 

-

 

 

-

 

   Common stock, $1 par value per share

 

27,491

 

 

27,457

 

 

27,451

 

   Additional paid-in capital

 

431,549

 

 

431,277

 

 

429,990

 

   Retained earnings

 

145,195

 

 

138,324

 

 

120,935

 

   Accumulated other comprehensive loss

 

(24,111

)

 

(25,329

)

 

(14,637

)

      Total Shareholders' Equity

 

580,124

 

 

571,729

 

 

563,739

 

      Total Liabilities and Shareholders' Equity

$

5,451,519

 

$

5,339,453

 

$

5,335,095

 



6


Chemical Financial Corporation Announces First Quarter Operating Results

Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation

 

Three Months Ended
March 31

(In thousands, except per share data)

2012

 

2011

Interest Income:

 

 

 

 

 

Interest and fees on loans

$

48,256

 

$

49,440

Interest on investment securities:

 

 

 

 

 

   Taxable

 

2,565

 

 

2,324

   Tax-exempt

 

1,485

 

 

1,479

Dividends on nonmarketable equity securities

 

130

 

 

123

Interest on deposits with unaffiliated banks and others

 

228

 

 

309

      Total Interest Income

 

52,664

 

 

53,675

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

Interest on deposits

 

6,102

 

 

7,878

Interest on short-term borrowings

 

104

 

 

150

Interest on Federal Home Loan Bank advances

 

263

 

 

442

      Total Interest Expense

 

6,469

 

 

8,470

      Net Interest Income

 

46,195

 

 

45,205

Provision for loan losses

 

5,000

 

 

7,500

      Net Interest Income after Provision for Loan Losses

 

41,195

 

 

37,705

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

Service charges on deposit accounts

 

4,505

 

 

4,096

Wealth management revenue

 

2,921

 

 

2,766

Other charges and fees for customer services

 

2,689

 

 

2,658

Mortgage banking revenue

 

1,185

 

 

1,064

Gain on sale of merchant card services

 

1,280

 

 

-

Other

 

69

 

 

188

      Total Noninterest Income

 

12,649

 

 

10,772

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

Salaries, wages and employee benefits

 

20,569

 

 

18,325

Occupancy

 

3,154

 

 

3,338

Equipment and software

 

3,118

 

 

2,722

Other

 

9,454

 

 

11,004

      Total Operating Expenses

 

36,295

 

 

35,389

Income Before Income Taxes

 

17,549

 

 

13,088

      Federal Income Tax Expense

 

5,175

 

 

3,900

Net Income

$

12,374

 

$

9,188

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

   Basic

$

0.45

 

$

0.33

   Diluted

 

0.45

 

 

0.33

 

 

 

 

 

 

Cash dividends declared per common share

 

0.20

 

 

0.20

 

 

 

 

 

 

Average common shares outstanding:

 

 

 

 

 

   Basic

 

27,478

 

 

27,451

   Diluted

 

27,539

 

 

27,482



7


Chemical Financial Corporation Announces First Quarter Operating Results

Financial Summary (Unaudited)
Chemical Financial Corporation

 

Three Months Ended


(Dollars in thousands)

March 31
2012

 

Dec 31
2011

 

Sept 30
2011

 

June 30
2011

 

March 31
2011

Average Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

5,396,420

 

$

5,341,079

 

$

5,323,962

 

$

5,255,244

 

$

5,302,558

Total interest-earning assets

 

5,061,882

 

 

5,008,813

 

 

4,985,380

 

 

4,928,590

 

 

4,963,384

Total loans

 

3,824,604

 

 

3,772,140

 

 

3,769,745

 

 

3,707,468

 

 

3,672,301

Total deposits

 

4,416,273

 

 

4,378,066

 

 

4,358,658

 

 

4,299,728

 

 

4,362,774

Total interest-bearing liabilities

 

3,903,986

 

 

3,847,003

 

 

3,853,443

 

 

3,857,678

 

 

3,942,406

Total shareholders' equity

 

574,261

 

 

578,105

 

 

573,580

 

 

565,500

 

 

560,661

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Ratios (annualized where applicable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (taxable equivalent basis)

 

3.76%

 

 

3.84%

 

 

3.80%

 

 

3.78%

 

 

3.78%

Efficiency ratio

 

60.4%

 

 

63.1%

 

 

60.2%

 

 

58.2%

 

 

61.8%

Return on average assets

 

0.92%

 

 

0.83%

 

 

0.87%

 

 

0.84%

 

 

0.70%

Return on average shareholders' equity

 

8.7%

 

 

7.7%

 

 

8.0%

 

 

7.8%

 

 

6.6%

Average shareholders' equity as a

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   percent of average assets

 

10.6%

 

 

10.8%

 

 

10.8%

 

 

10.8%

 

 

10.6%

Capital ratios (period end):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Tangible shareholders' equity as a

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      percent of total assets

 

8.7%

 

 

8.7%

 

 

8.6%

 

 

8.9%

 

 

8.5%

   Total risk-based capital ratio

 

13.7%

 

 

13.3%

 

 

13.1%

 

 

13.0%

 

 

13.0%


 

March 31
2012

 

Dec 31
2011

 

Sept 30
2011

 

June 30
2011

 

March 31
2011

Credit Quality Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated Loans

$

3,370,279

 

$

3,338,502

 

$

3,265,054

 

$

3,225,179

 

$

3,143,489

Acquired Loans

 

472,819

 

 

492,783

 

 

495,372

 

 

522,831

 

 

539,027

Nonperforming Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Nonaccrual loans

 

79,153

 

 

78,394

 

 

91,112

 

 

105,350

 

 

106,296

   Accruing loans past due 90 days or more

 

2,646

 

 

3,817

 

 

3,015

 

 

3,744

 

 

2,196

   Troubled debt restructurings

 

16,749

 

 

24,058

 

 

26,268

 

 

26,835

 

 

37,367

   Total nonperforming loans

 

98,548

 

 

106,269

 

 

120,395

 

 

135,929

 

 

145,859

Other real estate and repossessed assets
  (ORE)

 


25,944

 

 


25,484

 

 


28,679

 

 


24,607

 

 


26,355

Total nonperforming assets

 

124,492

 

 

131,753

 

 

149,074

 

 

160,536

 

 

172,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing troubled debt restructurings

 

27,177

 

 

20,394

 

 

15,543

 

 

12,889

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses-originated as a
  percent of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Total originated loans

 

2.54%

 

 

2.60%

 

 

2.68%

 

 

2.78%

 

 

2.85%

   Nonperforming loans

 

87%

 

 

82%

 

 

73%

 

 

66%

 

 

61%

Nonperforming loans as a percent of total
  loans

 


2.56%

 

 


2.77%

 

 


3.20%

 

 


3.63%

 

 


3.96%

Nonperforming assets as a percent of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Total loans plus ORE

 

3.22%

 

 

3.42%

 

 

3.93%

 

 

4.26%

 

 

4.64%

   Total assets

 

2.28%

 

 

2.47%

 

 

2.74%

 

 

3.08%

 

 

3.23%

Net loan charge-offs as a percent of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  average loans (year-to-date, annualized)

 

0.58%

 

 

0.73%

 

 

0.78%

 

 

0.77%

 

 

0.80%


 

March 31
2012

 

Dec 31
2011

 

Sept 30
2011

 

June 30
2011

 

March 31
2011

Additional Data - Intangibles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

$

113,414

 

$

113,414

 

$

113,414

 

$

113,414

 

$

113,414

Core deposit intangibles

 

7,512

 

 

7,879

 

 

8,261

 

 

8,643

 

 

9,024

Mortgage servicing rights (MSR)

 

3,427

 

 

3,593

 

 

3,561

 

 

3,577

 

 

3,832

Other intangible assets

 

-

 

 

-

 

 

27

 

 

107

 

 

204

Amortization of core deposit intangibles
  (quarter only)

 


367

 

 


382

 

 


382

 

 


381

 

 


382



8


Chemical Financial Corporation Announces First Quarter Operating Results

Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)*

 

Three Months Ended March 31, 2012

 



(Dollars in thousands)


Average
Balance

 

Tax
Equivalent
Interest

 


Effective
Yield/Rate

 

Assets

 

 

 

 

 

 

 

 

 

Interest-Earning Assets:

 

 

 

 

 

 

 

 

 

   Loans**

$

3,842,168

 

$

48,737

 

 

5.10

%

   Taxable investment securities

 

663,689

 

 

2,565

 

 

1.55

 

   Tax-exempt investment securities

 

182,543

 

 

2,261

 

 

4.95

 

   Other interest-earning assets

 

25,572

 

 

130

 

 

2.05

 

   Interest-bearing deposits with

 

 

 

 

 

 

 

 

 

      unaffiliated banks and others

 

347,910

 

 

228

 

 

0.26

 

Total interest-earning assets

 

5,061,882

 

 

53,921

 

 

4.28

 

Less: Allowance for loan losses

 

88,595

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

 

 

 

   Cash and cash due from banks

 

112,357

 

 

 

 

 

 

 

   Premises and equipment

 

66,261

 

 

 

 

 

 

 

   Interest receivable and other assets

 

244,515

 

 

 

 

 

 

 

Total Assets

$

5,396,420

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

Interest-bearing Liabilities:

 

 

 

 

 

 

 

 

 

   Interest-bearing demand deposits

$

880,665

 

$

272

 

 

0.12

%

   Savings deposits

 

1,162,328

 

 

394

 

 

0.14

 

   Time deposits

 

1,497,913

 

 

5,436

 

 

1.46

 

   Short-term borrowings

 

320,476

 

 

104

 

 

0.13

 

   FHLB advances

 

42,604

 

 

263

 

 

2.48

 

Total interest-bearing liabilities

 

3,903,986

 

 

6,469

 

 

0.67

 

Noninterest-bearing deposits

 

875,367

 

 

 

 

 

 

 

Total deposits and borrowed funds

 

4,779,353

 

 

 

 

 

 

 

Interest payable and other liabilities

 

42,806

 

 

 

 

 

 

 

Shareholders' equity

 

574,261

 

 

 

 

 

 

 

Total Liabilities and Shareholders' Equity

$

5,396,420

 

 

 

 

 

 

 

Net Interest Spread (Average yield earned minus average rate paid)

 

 

 

 

 

 

 

3.61

%

Net Interest Income (FTE)

 

 

 

$

47,452

 

 

 

 

Net Interest Margin (Net Interest Income (FTE) divided by

 

 

 

 

 

 

 

 

 

   total average interest-earning assets)

 

 

 

 

 

 

 

3.76

%


*

Taxable equivalent 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.



9


Chemical Financial Corporation Announces First Quarter Operating Results

Nonperforming Assets (Unaudited)
Chemical Financial Corporation


(Dollars in thousands)

March 31
2012

 

Dec 31
2011

 

Sept 30
2011

 

June 30
2011

 

March 31
2011

Nonperforming Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Nonaccrual loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Commercial

$

11,443

 

$

10,726

 

$

10,804

 

$

14,386

 

$

15,672

    Real estate commercial

 

46,870

 

 

44,438

 

 

48,854

 

 

57,324

 

 

59,931

    Real estate construction and land development

 

3,809

 

 

6,190

 

 

7,877

 

 

8,933

 

 

9,414

    Real estate residential

 

12,687

 

 

12,573

 

 

17,544

 

 

17,809

 

 

15,505

    Consumer installment and home equity

 

4,344

 

 

4,467

 

 

6,033

 

 

6,898

 

 

5,774

    Total nonaccrual loans

 

79,153

 

 

78,394

 

 

91,112

 

 

105,350

 

 

106,296

Accruing loans contractually past due 90 days or
    more as to interest or principal payments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Commercial

 

1,005

 

 

1,381

 

 

282

 

 

629

 

 

455

    Real estate commercial

 

75

 

 

374

 

 

415

 

 

143

 

 

459

    Real estate construction and land development

 

-

 

 

287

 

 

-

 

 

-

 

 

-

    Real estate residential

 

333

 

 

752

 

 

974

 

 

1,729

 

 

191

    Consumer installment and home equity

 

1,233

 

 

1,023

 

 

1,344

 

 

1,243

 

 

1,091

    Total accruing loans contractually past due 90
      days or more as to interest or principal
      payments

 



2,646

 

 



3,817

 

 



3,015

 

 



3,744

 

 



2,196

Nonperforming troubled debt restructurings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Commercial loan portfolio

 

11,258

 

 

14,675

 

 

16,457

 

 

15,443

 

 

15,201

    Consumer loan portfolio

 

5,491

 

 

9,383

 

 

9,811

 

 

11,392

 

 

22,166

    Total nonperforming troubled debt
      restructurings

 


16,749

 

 


24,058

 

 


26,268

 

 


26,835

 

 


37,367

Total nonperforming loans

 

98,548

 

 

106,269

 

 

120,395

 

 

135,929

 

 

145,859

Other real estate and repossessed assets

 

25,944

 

 

25,484

 

 

28,679

 

 

24,607

 

 

26,355

Total nonperforming assets

$

124,492

 

$

131,753

 

$

149,074

 

$

160,536

 

$

172,214



10


Chemical Financial Corporation Announces First Quarter Operating Results

Summary of Loan Loss Experience (Unaudited)
Chemical Financial Corporation

 

Three Months Ended

 


(Dollars in thousands)

March 31
2012

 

Dec 31
2011

 

Sept 30
2011

 

June 30
2011

 

March 31
2011

 

Allowance for loan losses at beginning of period

$

88,333

 

$

88,713

 

$

89,733

 

$

89,674

 

$

89,530

 

Provision for loan losses

 

5,000

 

 

5,100

 

 

6,400

 

 

7,000

 

 

7,500

 

Loans charged off:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Commercial

 

(1,079

)

 

(1,768

)

 

(1,234

)

 

(1,972

)

 

(1,976

)

   Real estate commercial

 

(2,268

)

 

(2,120

)

 

(3,969

)

 

(3,168

)

 

(3,875

)

   Real estate construction and land development

 

(32

)

 

(54

)

 

(236

)

 

(136

)

 

(63

)

   Real estate residential

 

(1,717

)

 

(945

)

 

(1,884

)

 

(1,198

)

 

(944

)

   Consumer installment and home equity

 

(1,451

)

 

(1,434

)

 

(1,516

)

 

(1,832

)

 

(1,784

)

   Total loan charge-offs

 

(6,547

)

 

(6,321

)

 

(8,839

)

 

(8,306

)

 

(8,642

)

Recoveries of loans previously charged off:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Commercial

 

191

 

 

137

 

 

614

 

 

710

 

 

215

 

   Real estate commercial

 

421

 

 

272

 

 

285

 

 

212

 

 

87

 

   Real estate construction and land development

 

2

 

 

40

 

 

-

 

 

5

 

 

-

 

   Real estate residential

 

22

 

 

80

 

 

207

 

 

106

 

 

456

 

   Consumer installment and home equity

 

363

 

 

312

 

 

313

 

 

332

 

 

528

 

   Total loan recoveries

 

999

 

 

841

 

 

1,419

 

 

1,365

 

 

1,286

 

Net loan charge-offs

 

(5,548

)

 

(5,480

)

 

(7,420

)

 

(6,941

)

 

(7,356

)

Allowance for loan losses at end of period

$

87,785

 

$

88,333

 

$

88,713

 

$

89,733

 

$

89,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses-originated

$

85,585

 

$

86,733

 

$

87,413

 

$

89,733

 

$

89,674

 

Allowance for loan losses-acquired

 

2,200

 

 

1,600

 

 

1,300

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan losses (year-to-date)

$

5,000

 

$

26,000

 

$

20,900

 

$

14,500

 

$

7,500

 

Net loan charge-offs (year-to-date)

 

5,548

 

 

27,197

 

 

21,717

 

 

14,297

 

 

7,356

 



11


Chemical Financial Corporation Announces First Quarter Operating Results

Selected Quarterly Information (Unaudited)
Chemical Financial Corporation


(Dollars in thousands, except per share data)

1st Qtr.
2012

 

4th Qtr.
2011

 

3rd Qtr.
2011

 

2nd Qtr.
2011

 

1st Qtr.
2011

Summary of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

52,664

 

$

54,130

 

$

53,998

 

$

53,439

 

$

53,675

Interest expense

 

6,469

 

 

7,045

 

 

7,729

 

 

8,145

 

 

8,470

Net interest income

 

46,195

 

 

47,085

 

 

46,269

 

 

45,294

 

 

45,205

Provision for loan losses

 

5,000

 

 

5,100

 

 

6,400

 

 

7,000

 

 

7,500

Net interest income after provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     for loan losses

 

41,195

 

 

41,985

 

 

39,869

 

 

38,294

 

 

37,705

Noninterest income

 

12,649

 

 

11,501

 

 

11,225

 

 

10,902

 

 

10,772

Operating expenses

 

36,295

 

 

37,807

 

 

35,394

 

 

33,413

 

 

35,389

Income before income taxes

 

17,549

 

 

15,679

 

 

15,700

 

 

15,783

 

 

13,088

Federal income tax expense

 

5,175

 

 

4,475

 

 

4,075

 

 

4,750

 

 

3,900

Net income

$

12,374

 

$

11,204

 

$

11,625

 

$

11,033

 

$

9,188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.76%

 

 

3.84%

 

 

3.80%

 

 

3.78%

 

 

3.78%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Common Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

$

0.45

 

$

0.41

 

$

0.42

 

$

0.40

 

$

0.33

     Diluted

 

0.45

 

 

0.41

 

 

0.42

 

 

0.40

 

 

0.33

Cash dividends declared

 

0.20

 

 

0.20

 

 

0.20

 

 

0.20

 

 

0.20

Book value - period-end

 

21.10

 

 

20.82

 

 

21.02

 

 

20.78

 

 

20.54

Tangible book value - period-end

 

16.84

 

 

16.54

 

 

16.71

 

 

16.46

 

 

16.19

Market value - period-end

 

23.44

 

 

21.32

 

 

15.31

 

 

18.76

 

 

19.93




12