Chemical Financial Corporation Reports 2014 First Quarter Operating Results

MIDLAND, Mich., April 21, 2014 (GLOBE NEWSWIRE) -- Chemical Financial Corporation (Nasdaq:CHFC) today announced 2014 first quarter net income of $13.8 million, or $0.46 per diluted share, compared to 2013first quarter net income of $13.2 million, or $0.48 per diluted share, and 2013 fourth quarter net income of $14.4 million, or $0.48 per diluted share. The decline in per share earnings from the prior year's first quarter was primarily attributable to the higher number of outstanding shares in this year's first quarter due to Chemical Financial Corporation's ("Corporation") September 2013 follow-on common equity offering.

"Chemical Financial Corporation enjoyed another solid quarter of earnings as increasing net interest income and a lower loan loss provision more than offset lower noninterest income. The decline in noninterest income was largely attributable to lower mortgage banking revenue, lower gains on securities sales, and lower customer-related service fees, as an exceptionally cold and snowy winter across Michigan impacted consumer behavior during the quarter. Despite the unusual weather, we sustained our recent pattern of organic loan growth, with total loans up 2.3% during the quarter and 13.6% over the past year," noted David B. Ramaker, Chairman, Chief Executive Officer and President of Chemical Financial Corporation.

"Importantly, during the quarter, we continued to advance our strategic growth initiative with the March 2014 announcement of our partnership with Northwestern Bancorp, Inc., the holding company for Northwestern Bank. We view Northwestern, with its 25 locations across 11 northwestern Michigan counties and $758 million in deposits, as the premier northwestern Michigan community banking franchise, and believe the combination of these two community-driven, Michigan-focused institutions will provide a compelling choice for the state's residents and businesses. We remain confident in our ability to achieve additional competitive and acquisitive market share gains as we move forward," added Ramaker.

Net income in the first quarter of 2014 was $0.6 million, or 4.4%, higher than the first quarter of 2013, with the increase attributable to a combination of higher net interest income and a lower provision for loan losses, both of which were partially offset by lower noninterest income and slightly higher operating expenses. Net income of $13.8 million in the first quarter of 2014 was $0.6 million, or 3.9%, lower than the fourth quarter of 2013, with the decrease primarily attributable to lower net interest income.

The Corporation's return on average assets was 0.90% during the first quarter of 2014, compared to 0.91% in the first quarter of 2013 and 0.93% in the fourth quarter of 2013. The Corporation's return on average shareholders' equity was 8.0% in the first quarter of 2014, compared to 9.0% in the first quarter of 2013 and 8.4% in the fourth quarter of 2013. The decrease in return on average shareholders' equity in the first quarter of 2014, compared to the first quarter of 2013, was primarily attributable to an increase in shareholders' equity resulting from the Corporation's September 2013 follow-on common equity offering.

Net interest income was $49.8 million in the first quarter of 2014, $2.1 million higher than the first quarter of 2013, although $1.5 million lower than the fourth quarter of 2013. The increase in net interest income in the first quarter of 2014 over the first quarter of 2013 was largely attributable to the positive impact of loan growth of $568 million, or 13.6%, during the twelve months ended March 31, 2014. The decrease in net interest income in the first quarter of 2014 from the fourth quarter of 2013 was largely attributable to two fewer days in the first quarter of 2014.

The net interest margin (on a tax-equivalent basis) was 3.53% in the first quarter of 2014, compared to 3.54% in the first quarter of 2013 and 3.63% in the fourth quarter of 2013. The slight decrease in the net interest margin in the first quarter of 2014, compared to the first quarter of 2013, was primarily attributable to the significant positive impact attributable to growth in loans during the twelve months ended March 31, 2014, that was largely offset by loans repricing downward. The average yield on the loan portfolio was 4.28% in the first quarter of 2014, compared to 4.69% in the first quarter of 2013 and 4.42% in the fourth quarter of 2013. The average yield of the investment securities portfolio was 2.11% in the first quarter of 2014, compared to 2.19% in the first quarter of 2013 and 2.07% in the fourth quarter of 2013. Modest changes in the mix of customer deposits and the repricing of matured customer certificates of deposit resulted in the Corporation's average cost of funds declining to 0.29% in the first quarter of 2014 from 0.36% in the first quarter of 2013 and 0.30% in the fourth quarter of 2013.

The provision for loan losses was $1.6 million in the first quarter of 2014, compared to $3.0 million in the first quarter of 2013 and $2.0 million in the fourth quarter of 2013. The decreases in the provision for loan losses in the first quarter of 2014, compared to both the first quarter of 2013 and the fourth quarter of 2013 were attributable to continued improvement in the overall credit quality of the loan portfolio.

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 $76.5 million at March 31, 2014, compared to $82.0 million at December 31, 2013 and $86.4 million at March 31, 2013. Nonperforming loans comprised 1.61% of total loans at March 31, 2014, compared to 1.76% at December 31, 2013 and 2.06% at March 31, 2013. The reduction in nonperforming loans during the three and twelve months ended March 31, 2014 was attributable to a combination of improving economic conditions and loan charge-offs.

Net loan charge-offs were $2.2 million, or 0.19% of average loans, in the first quarter of 2014, compared to $4.7 million, or 0.45% of average loans, in the first quarter of 2013 and $4.5 million, or 0.39% of average loans, in the fourth quarter of 2013.

At March 31, 2014, the allowance for loan losses of the originated loan portfolio was $78.0 million, or 1.75% of originated loans, compared to $78.6 million, or 1.81% of originated loans, at December 31, 2013 and $82.3 million, or 2.16% of originated loans, at March 31, 2013. The allowance for loan losses of the originated loan portfolio as a percentage of nonperforming loans was 102% at March 31, 2014, compared to 96% at December 31, 2013 and 95% at March 31, 2013.

Noninterest income was $13.7 million in the first quarter of 2014, compared to $16.2 million in the first quarter of 2013 and $13.6 million in the fourth quarter of 2013. Noninterest income in the first quarter of 2013 included nonrecurring income of $0.8 million of investment securities gains. Excluding this nonrecurring income, noninterest income in the first quarter of 2014 was $1.7 million lower than the first quarter of 2013, with the decrease largely attributable to lower mortgage banking revenue and related title insurance revenue, in addition to lower service charges and fees on deposit accounts. Mortgage banking revenue of $0.8 million in the first quarter of 2014 was $1.2 million, or 61%, lower than the first quarter of 2013. The decrease in mortgage banking revenue in the first quarter of 2014, compared to the first quarter of 2013, was primarily attributable to a decline in the volume of loans sold in the secondary market and related gains, due to the rising interest rate environment. The Corporation sold $21 million of residential mortgage loans in the secondary market in the first quarter of 2014, compared to $69 million in the first quarter of 2013. Service charges and fees on deposit accounts were $0.3 million lower in the first quarter of 2014, compared to the first quarter of 2013. Noninterest income in the first quarter of 2014 was $0.1 million higher than the fourth quarter of 2013, with the increase primarily attributable to increases of $0.3 million and $0.4 million in wealth management revenue and electronic banking revenue, respectively, which were partially offset by a $0.6 million decline in service charges and fees on deposit accounts.

Operating expenses of $42.2 million in the first quarter of 2014 were $0.2 million higher than the first quarter of 2013. Operating expenses in the first quarter of 2014 included $0.3 million of nonrecurring transaction-related costs attributable to the pending acquisition of Northwestern Bancorp, Inc., while operating expenses in the first quarter of 2013 included $0.8 million of nonrecurring fees associated with the Corporation's prepayment of its outstanding Federal Home Loan Bank (FHLB) advances. Excluding nonrecurring costs and fees, operating expenses in the first quarter of 2014 were $0.7 million higher than the first quarter of 2013, with the increase attributable to an $0.8 million increase in employee compensation expense and a $0.7 million increase in occupancy expenses, which were partially offset by a $0.6 million decrease in credit-related expenses. The increase in employee compensation expense was partially due to merit increases that took effect at the beginning of 2014. The decrease in credit-related expenses was due to a combination of lower other real estate (ORE) properties held, and therefore lower ORE operating costs, and lower loan collection costs.

Operating expenses of $42.2 million in the first quarter of 2014 were $0.2 million lower than the fourth quarter of 2013. The decrease was primarily attributable to decreases of $1.0 million in donations expense and $0.3 million in salaries and wages expense, which were partially offset by increases of $0.9 million in occupancy expenses, $0.3 million in credit-related expenses and $0.3 million of nonrecurring transaction-related costs. The decrease in donations expense was attributable to year-end 2013 commitments by the Corporation to the Chemical Bank Foundation.

The Corporation's efficiency ratio was 64.5% in the first quarter of 2014, 63.7% in the fourth quarter of 2013 and 64.4% in the first quarter of 2013.

Total assets were $6.34 billion at March 31, 2014, compared to $6.18 billion at December 31, 2013 and $5.99 billion at March 31, 2013. The increase in total assets during the twelve months ended March 31, 2014 was largely attributable to an increase in deposits that was used to partially fund loan growth. The increase in total assets from year-end 2013 was largely due to $100 million of temporary funds received from one customer of Chemical Bank ($50 million in interest-bearing deposits and $50 million in customer repurchase agreements). The Corporation intends to maintain this $100 million of funds at the Federal Reserve Bank (FRB). Investment securities have remained relatively stable and were $935.9 million at March 31, 2014, compared to $958.5 million at December 31, 2013 and $961.4 million at March 31, 2013.

Total loans were $4.75 billion at March 31, 2014, up from $4.65 billion at December 31, 2013 and $4.19 billion at March 31, 2013. During the three and twelve months ended March 31, 2014, total loans increased $105.7 million, or 2.3%, and $568.0 million, or 13.6%, respectively. The increases in loans during the three and twelve months ended March 31, 2014 generally occurred across all major loan categories and were largely attributable to a combination of improving economic conditions and increased market share. The increase in loans of $105.7 million during the first quarter of 2014 was primarily attributable to increases in commercial loans of $32.3 million, or 2.7%, commercial real estate loans of $46.5 million, or 3.8%, and consumer installment and home equity loans of $36.3 million, or 3.1%.

Total deposits were $5.23 billion at March 31, 2014, compared to $5.12 billion at December 31, 2013 and $5.01 billion at March 31, 2013. The increase in total deposits during the first quarter of 2014 was largely attributable to the $50 million in interest-bearing deposits from one customer, as previously discussed, and a seasonal increase in municipal customer deposits. Excluding this $50 million deposit, the Corporation experienced an increase in total deposits of $174 million, or 3.5%, during the twelve months ended March 31, 2014, with the increase attributable to organic deposit growth of $212 million that was partially offset by the payoff of maturing brokered deposits.

At March 31, 2014, the Corporation's tangible equity to assets ratio and total risk-based capital ratio were 9.3% and 13.8%, respectively, compared to 9.4% and 14.0%, respectively, at December 31, 2013 and 8.1% and 13.3%, respectively, at March 31, 2013. At March 31, 2014, the Corporation's book value was $23.63 per share, compared to $23.38 per share at December 31, 2013 and $21.97 per share at March 31, 2013. At March 31, 2014, the Corporation's tangible book value was $19.44 per share, compared to $19.17 per share at December 31, 2013 and $17.34 per share at March 31, 2013.

Chemical Financial Corporation will host a conference call to discuss its first quarter 2014 results on Monday, April 21, 2014 at 10:30 a.m. EDT. Anyone interested may access the conference call on a live basis by dialing toll-free at 1-800-500-0920 and entering 2399151 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 a single subsidiary bank, Chemical Bank, with 157 banking offices spread over 38 counties in the lower peninsula of Michigan. At March 31, 2014, the Corporation had total assets of $6.3 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 report 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 (Corporation). Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "judgment," "opinion," "plans," "predicts," "probable," "projects," "should," "trend," "will," 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 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, 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.

This report also contains forward-looking statements regarding the Corporation's outlook or expectations with respect to the planned acquisition of Northwestern Bancorp, Inc. (Northwestern), the expected costs to be incurred in connection with the acquisition, Northwestern'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 both the transaction and the integration of Northwestern into the Corporation after closing include, without limitation:

Completion of the transaction is dependent on, among other things, receipt of regulatory and Northwestern shareholder approvals, the timing of which cannot be predicted with precision at this point and which may not be received at all.

The impact of the completion of the transaction on the Corporation's financial statements will be affected by the timing of the transaction, including in particular the ability to complete the acquisition in the third quarter of 2014.

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 Northwestern's business and operations into the Corporation, which will include conversion of Northwestern's operating systems and procedures, may take longer than anticipated or be more costly than anticipated or have unanticipated adverse results relating to Northwestern'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 Northwestern's loan portfolio than expected and deposit attrition may be greater than expected.

Risk factors also 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, 2013. 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 2014 First Quarter Operating Results
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation
March 31, December 31, March 31,
2014 2013 2013
(In thousands, except per share data)
Assets
Cash and cash equivalents:
Cash and cash due from banks $ 122,288 $ 130,811 $ 101,501
Interest-bearing deposits with the Federal Reserve Bank 260,097 179,977 477,225
Total cash and cash equivalents 382,385 310,788 578,726
Investment securities:
Available-for-sale 657,818 684,570 703,622
Held-to-maturity 278,099 273,905 257,749
Total investment securities 935,917 958,475 961,371
Loans held-for-sale 3,814 5,219 14,850
Loans:
Commercial 1,208,641 1,176,307 1,038,115
Commercial real estate 1,279,167 1,232,658 1,162,383
Real estate construction and land development 98,845 109,861 98,007
Residential mortgage 962,009 960,423 872,454
Consumer installment and home equity 1,204,627 1,168,372 1,014,302
Total loans 4,753,289 4,647,621 4,185,261
Allowance for loan losses (78,473) (79,072) (82,834)
Net loans 4,674,816 4,568,549 4,102,427
Premises and equipment 74,779 75,308 73,501
Goodwill 120,164 120,164 120,164
Other intangible assets 12,872 13,424 14,902
Interest receivable and other assets 133,581 132,781 124,587
Total Assets $ 6,338,328 $ 6,184,708 $ 5,990,528
Liabilities
Deposits:
Noninterest-bearing $ 1,219,081 $ 1,227,768 $ 1,086,986
Interest-bearing 4,012,212 3,894,617 3,920,372
Total deposits 5,231,293 5,122,385 5,007,358
Interest payable and other liabilities 40,209 38,395 30,931
Short-term borrowings 361,231 327,428 347,484
Total liabilities 5,632,733 5,488,208 5,385,773
Shareholders' Equity
Preferred stock, no par value per share
Common stock, $1 par value per share 29,866 29,790 27,532
Additional paid-in capital 489,045 488,177 433,648
Retained earnings 205,985 199,053 174,209
Accumulated other comprehensive loss (19,301) (20,520) (30,634)
Total shareholders' equity 705,595 696,500 604,755
Total Liabilities and Shareholders' Equity $ 6,338,328 $ 6,184,708 $ 5,990,528
Chemical Financial Corporation Announces 2014 First Quarter Operating Results
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation
Three Months Ended
March 31,
2014 2013
(In thousands, except per share data)
Interest Income
Interest and fees on loans $ 49,195 $ 47,905
Interest on investment securities:
Taxable 2,383 2,438
Tax-exempt 1,704 1,564
Dividends on nonmarketable equity securities 238 151
Interest on deposits with the Federal Reserve Bank 125 321
Total interest income 53,645 52,379
Interest Expense
Interest on deposits 3,745 4,566
Interest on short-term borrowings 121 114
Interest on FHLB advances 47
Total interest expense 3,866 4,727
Net Interest Income 49,779 47,652
Provision for loan losses 1,600 3,000
Net interest income after provision for loan losses 48,179 44,652
Noninterest Income
Service charges and fees on deposit accounts 4,930 5,195
Wealth management revenue 3,631 3,445
Other charges and fees for customer services 4,194 4,651
Mortgage banking revenue 794 2,012
Gain on sale of investment securities 847
Other 167 89
Total noninterest income 13,716 16,239
Operating Expenses
Salaries, wages and employee benefits 24,184 23,369
Occupancy 4,374 3,663
Equipment and software 3,461 3,450
Other 10,163 11,475
Total operating expenses 42,182 41,957
Income before income taxes 19,713 18,934
Federal income tax expense 5,900 5,700
Net Income $ 13,813 $ 13,234
Earnings Per Common Share:
Weighted average common shares outstanding for basic earnings per share 29,825 27,519
Weighted average common shares outstanding for diluted earnings per share, including common stock equivalents 30,037 27,641
Basic earnings per share $ 0.46 $ 0.48
Diluted earnings per share 0.46 0.48
Cash Dividends Declared Per Common Share 0.23 0.21
Key Ratios (annualized where applicable):
Return on average assets 0.90% 0.91%
Return on average shareholders' equity 8.0% 9.0%
Net interest margin 3.53% 3.54%
Efficiency ratio 64.5% 64.4%
Chemical Financial Corporation Announces 2014 First Quarter Operating Results
Financial Summary (Unaudited)
Chemical Financial Corporation
(Dollars in Thousands)
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
2014 2013 2013 2013 2013
Average Balances
Total assets $ 6,210,569 $ 6,117,217 $ 5,966,988 $ 5,859,822 $ 5,924,820
Total interest-earning assets 5,860,429 5,782,141 5,621,542 5,530,262 5,579,789
Total loans 4,692,430 4,588,448 4,424,332 4,249,708 4,152,570
Total deposits 5,142,276 5,065,671 4,960,270 4,878,214 4,950,956
Total interest-bearing liabilities 4,276,677 4,211,647 4,167,915 4,126,751 4,221,638
Total shareholders' equity 701,878 678,487 620,911 606,607 599,406
Key Ratios (annualized where applicable)
Net interest margin (taxable equivalent basis) 3.53% 3.63% 3.58% 3.60% 3.54%
Efficiency ratio 64.5% 63.7% 61.0% 63.3% 64.4%
Return on average assets 0.90% 0.93% 1.00% 0.97% 0.91%
Return on average shareholders' equity 8.0% 8.4% 9.6% 9.4% 9.0%
Average shareholders' equity as a percent of average assets 11.3% 11.1% 10.4% 10.4% 10.1%
Capital ratios (period end):
Tangible shareholders' equity as a percent of total assets 9.3% 9.4% 8.9% 8.5% 8.1%
Total risk-based capital ratio 13.8% 14.0% 14.2% 13.1% 13.3%
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
2014 2013 2013 2013 2013
Credit Quality Statistics
Originated Loans $ 4,464,465 $ 4,352,924 $ 4,213,728 $ 3,990,633 $ 3,810,989
Acquired Loans 288,824 294,697 308,943 345,238 374,272
Nonperforming Assets:
Nonperforming loans 76,544 81,984 75,818 79,342 86,417
Other real estate / repossessed assets (ORE) 10,056 9,776 12,033 13,659 18,194
Total nonperforming assets 86,600 91,760 87,851 93,001 104,611
Performing troubled debt restructurings 41,823 39,571 34,071 32,657 30,723
Allowance for loan losses - originated as a percent of:
Total originated loans 1.75% 1.81% 1.92% 2.05% 2.16%
Nonperforming loans 102% 96% 107% 103% 95%
Nonperforming loans as a percent of total loans 1.61% 1.76% 1.68% 1.83% 2.06%
Nonperforming assets as a percent of:
Total loans plus ORE 1.82% 1.97% 1.94% 2.14% 2.49%
Total assets 1.37% 1.48% 1.40% 1.60% 1.75%
Net loan charge-offs (year-to-date):
Originated $ 2,199 $ 16,419 $ 11,959 $ 8,307 $ 4,657
Acquired
Total loan charge-offs (year-to-date) 2,199 16,419 11,959 8,307 4,657
Net loan charge-offs as a percent of average loans (year-to-date, annualized) 0.19% 0.38% 0.37% 0.40% 0.45%
March 31, March 31,
2014 Dec 31, 2013 Sept 30, 2013 June 30, 2013 2013
Additional Data - Intangibles
Goodwill $ 120,164 $ 120,164 $ 120,164 $ 120,164 $ 120,164
Core deposit intangibles (CDI) 9,556 10,001 10,466 10,933 11,417
Mortgage servicing rights (MSR) 3,316 3,423 3,399 3,421 3,485
Amortization of CDI (during quarter ended) 445 465 467 484 493
Chemical Financial Corporation Announces 2014 First Quarter Operating Results
Average Balances, Fully Tax Equivalent (FTE) Interest and Effective Yields and Rates (Unaudited)
Chemical Financial Corporation
Three Months Ended March 31, 2014 Three Months Ended March 31, 2013
Average Interest Effective Average Interest Effective
Balance (FTE) Yield/Rate* Balance (FTE) Yield/Rate*
Assets (Dollars in thousands)
Interest-earning assets:
Loans** $ 4,696,415 $ 49,744 4.28% $ 4,167,614 $ 48,361 4.69%
Taxable investment securities 691,861 2,383 1.38 666,809 2,438 1.46
Tax-exempt investment securities 257,173 2,615 4.07 215,727 2,388 4.43
Other interest-earning assets 25,572 238 3.77 25,572 151 2.39
Interest-bearing deposits with the Federal Reserve Bank 189,408 125 0.27 504,067 321 0.26
Total interest-earning assets 5,860,429 55,105 3.80 5,579,789 53,659 3.89
Less: allowance for loan losses 79,323 84,978
Other assets:
Cash and cash due from banks 120,168 117,620
Premises and equipment 74,762 74,608
Interest receivable and other assets 234,533 237,781
Total assets $ 6,210,569 $ 5,924,820
Liabilities and shareholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits $ 1,212,534 $ 287 0.10% $ 1,102,386 $ 252 0.09%
Savings deposits 1,415,119 316 0.09 1,337,415 296 0.09
Time deposits 1,321,119 3,142 0.96 1,451,681 4,018 1.12
Short-term borrowings 327,905 121 0.15 322,308 114 0.14
FHLB advances 7,848 47 2.43
Total interest-bearing liabilities 4,276,677 3,866 0.37 4,221,638 4,727 0.45
Noninterest-bearing deposits 1,193,504 1,059,474
Total deposits and borrowed funds 5,470,181 3,866 0.29 5,281,112 4,727 0.36
Interest payable and other liabilities 38,510 44,302
Shareholders' equity 701,878 599,406
Total liabilities and shareholders' equity $ 6,210,569 $ 5,924,820
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities) 3.43% 3.44%
Net Interest Income (FTE) $ 51,239 $ 48,932
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets) 3.53% 3.54%
* 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 2014 First Quarter Operating Results
Nonperforming Assets (Unaudited)
Chemical Financial Corporation
December 31, September 30,
March 31, 2014 2013 2013 June 30, 2013 March 31, 2013
(In thousands)
Nonperforming Loans:
Nonaccrual loans:
Commercial $ 18,251 $ 18,374 $ 11,809 $ 11,052 $ 12,186
Commercial real estate 27,568 28,598 28,623 28,498 35,849
Real estate construction 160 371 183 183 168
Land development 2,267 2,309 2,954 3,434 4,105
Residential mortgage 6,589 8,921 8,029 9,241 10,407
Consumer installment 806 676 665 552 699
Home equity 2,046 2,648 3,023 3,064 2,837
Total nonaccrual loans 57,687 61,897 55,286 56,024 66,251
Accruing loans contractually past due 90 days or more as to interest or principal payments:
Commercial 43 536 281 1 4
Commercial real estate 730 190 78 177
Real estate construction
Land development
Residential mortgage 537 692 164 196
Consumer installment
Home equity 622 734 686 689 874
Total accruing loans contractually past due 90 days or more as to interest or principal payments 1,395 1,997 1,659 932 1,251
Nonperforming troubled debt restructurings:
Commercial loan portfolio 11,218 13,414 15,744 19,140 14,587
Consumer loan portfolio 6,244 4,676 3,129 3,246 4,328
Total nonperforming troubled debt restructurings 17,462 18,090 18,873 22,386 18,915
Total nonperforming loans 76,544 81,984 75,818 79,342 86,417
Other real estate and repossessed assets 10,056 9,776 12,033 13,659 18,194
Total nonperforming assets $ 86,600 $ 91,760 $ 87,851 $ 93,001 $ 104,611
Chemical Financial Corporation Announces 2014 First Quarter Operating Results
Summary of Loan Loss Experience (Unaudited)
Chemical Financial Corporation
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
2014 2013 2013 2013 2013
(In thousands)
Allowance for loan losses - originated loan portfolio
Allowance for loan losses - beginning of period $ 78,572 $ 81,032 $ 81,684 $ 82,334 $ 83,991
Provision for loan losses 1,600 2,000 3,000 3,000 3,000
Net loan (charge-offs) recoveries:
Commercial (233) (448) (615) (59) (1,199)
Commercial real estate (241) (1,233) (1,248) (1,786) (2,010)
Real estate construction (100) (37)
Land development 142 (207) (400) (50) (96)
Residential mortgage (704) (527) (409) (1,023) (573)
Consumer installment (801) (836) (786) (574) (447)
Home equity (262) (1,172) (194) (158) (332)
Net loan charge-offs (2,199) (4,460) (3,652) (3,650) (4,657)
Allowance for loan losses - end of period 77,973 78,572 81,032 81,684 82,334
Allowance for loan losses - acquired loan portfolio
Allowance for loan losses - beginning of period 500 500 500 500 500
Provision for loan losses
Net loan charge-offs
Allowance for loan losses - end of period 500 500 500 500 500
Total allowance for loan losses $ 78,473 $ 79,072 $ 81,532 $ 82,184 $ 82,834
Net loan charge-offs as a percent of average loans (quarter only, annualized) 0.19% 0.39% 0.33% 0.34% 0.45%
Chemical Financial Corporation Announces 2014 First Quarter Operating Results
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
2014 2013 2013 2013 2013
(Dollars in thousands, except per share data)
Summary of Operations
Interest income $ 53,645 $ 55,323 $ 53,578 $ 52,781 $ 52,379
Interest expense 3,866 4,018 4,284 4,385 4,727
Net interest income 49,779 51,305 49,294 48,396 47,652
Provision for loan losses 1,600 2,000 3,000 3,000 3,000
Net interest income after provision for loan losses 48,179 49,305 46,294 45,396 44,652
Noninterest income 13,716 13,578 14,644 15,948 16,239
Operating expenses 42,182 42,405 39,545 41,041 41,957
Income before income taxes 19,713 20,478 21,393 20,303 18,934
Federal income tax expense 5,900 6,100 6,400 6,100 5,700
Net income $ 13,813 $ 14,378 $ 14,993 $ 14,203 $ 13,234
Net interest margin 3.53% 3.63% 3.58% 3.60% 3.54%
Per Common Share Data
Net income:
Basic $ 0.46 $ 0.48 $ 0.54 $ 0.52 $ 0.48
Diluted 0.46 0.48 0.53 0.51 0.48
Cash dividends declared 0.23 0.23 0.22 0.21 0.21
Book value - period-end 23.63 23.38 22.61 22.14 21.97
Tangible book value - period-end 19.44 19.17 18.36 17.53 17.34
Market value - period-end 32.45 31.67 27.92 25.99 26.38

CONTACT: For further information: David B. Ramaker, CEO Lori A. Gwizdala, CFO 989-839-5350Source:Chemical Financial Corporation