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Chemical Financial Corporation Reports 2015 Second Quarter Operating Results

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This press release contains references to financial measures which are not defined in generally accepted accounting principles ("GAAP"). Such non-GAAP financial measures include the Corporation's tangible equity to assets ratio, presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis, and information presented excluding nonrecurring transaction-related expenses, including net income, diluted earnings per share, return on average assets, return on average shareholders' equity and operating expenses. These non-GAAP financial measures have been included as the Corporation believes they are helpful for investors to analyze and evaluate the Corporation's financial condition.

Chemical Financial Corporation will host a conference call to discuss its second quarter 2015 operating results on Wednesday, July 22, 2015 at 10:00 a.m. EDT. Anyone interested may access the conference call on a live basis by dialing toll-free at 1-888-600-4862 and entering 7353331 for the conference ID. The call will also be broadcast live over the Internet hosted at Chemical Financial Corporation's website at www.chemicalbankmi.com under the "Investor Info" section. A copy of the slide-show presentation and an audio replay of the call will remain available on Chemical Financial Corporation's website for at least 14 days.

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

Forward-Looking Statements

This press release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and the Corporation. Words and phrases such as "anticipates," "believes," "continue," "estimates," "expects," "forecasts," "intends," "is likely," "judgment," "look forward," "opinion," "plans," "predicts," "probable," "projects," "should," "strategic," "trend," "will," and variations of such words and phrases or similar expressions are intended to identify such forward-looking statements. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. All statements referencing future time periods are forward-looking.

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

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

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

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


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

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

In addition, risk factors include, but are not limited to, the risk factors described in Item 1A of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

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

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



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



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


*Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.
**Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.



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


*Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.
**Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.



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



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



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

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

Source:Chemical Financial Corporation