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Chemical Financial Corporation Reports Fourth Quarter and Full Year 2015 Results

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

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

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

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

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

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

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

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

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

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

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

The Corporation's nonperforming loans, consisting of nonaccrual loans, accruing loans past due 90 days or more as to principal or interest payments and nonperforming troubled debt restructurings, totaled $83.9 million at December 31, 2015, compared to $81.2 million at September 30, 2015 and $71.2 million at December 31, 2014. Nonperforming loans comprised 1.15% of total loans at December 31, 2015, compared to 1.13% at September 30, 2015 and 1.25% at December 31, 2014. The reduction in nonperforming loans as a percentage of total loans at December 31, 2015, compared to December 31, 2014, was partially due to the addition of $1.11 billion of loans acquired in the Lake Michigan and Monarch transactions, with no corresponding increase in nonperforming loans as these acquired loans are not classified as nonperforming loans after the acquisition date since they are recorded in pools at their net realizable value.

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

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

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

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

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

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

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

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

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

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

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

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

Chemical Financial Corporation is the second largest banking company headquartered and operating branch offices in Michigan. The Corporation operates through its subsidiary bank, Chemical Bank, with 185 banking offices spread over 47 counties in Michigan. At December 31, 2015, the Corporation had total assets of $9.2 billion. Chemical Financial Corporation's common stock trades on The NASDAQ Stock Market under the symbol CHFC and is one of the issues comprising The NASDAQ Global Select Market. More information about the Corporation is available by visiting the investor relations section of its website at www.chemicalbankmi.com.

Forward-Looking Statements

This press release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and the Corporation. Words and phrases such as "anticipates," "believes," "continue," "estimates," "expects," "forecasts," "future," "intends," "is likely," "judgment," "look ahead," "look forward," "on schedule," "opinion," "opportunity," "plans," "predicts," "probable," "projects," "should," "strategic," "trend," "will," and variations of such words and phrases or similar expressions are intended to identify such forward-looking statements. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to future levels of loan charge-offs, future levels of provisions for loan losses, real estate valuation, future levels of nonperforming assets, the rate of asset dispositions, future capital levels, future dividends, future growth and funding sources, future liquidity levels, future profitability levels, future deposit insurance premiums, future asset levels, the effects on earnings of future changes in interest rates, the future level of other revenue sources, future economic trends and conditions, future initiatives to expand the Corporation’s market share, expected performance and cash flows from acquired loans, future effects of new or changed accounting standards, future opportunities for acquisitions, opportunities to increase top line revenues, the Corporation’s ability to grow its core franchise, future cost savings and the Corporation’s ability to maintain adequate liquidity and capital based on the requirements adopted by the Basel Committee on Banking Supervision and U.S. regulators. All statements referencing future time periods are forward-looking.

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

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


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


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


Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Financial Summary (Unaudited)
Chemical Financial Corporation
(Dollars in Thousands)
4th 3rd 2nd 1st 4th 3rd 2nd 1st
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
2015 2015 2015 2015 2014 2014 2014 2014
Average Balances
Total assets $9,175,224 $9,203,856 $8,117,138 $7,401,258 $7,007,879 $6,412,460 $6,253,574 $6,210,569
Total interest-earning assets 8,457,464 8,467,939 7,534,733 6,920,734 6,558,147 6,046,991 5,907,549 5,860,429
Total loans 7,227,680 7,125,896 6,262,072 5,696,961 5,418,743 4,962,948 4,824,299 4,692,430
Total deposits 7,449,478 7,452,556 6,709,428 6,204,095 5,808,187 5,249,317 5,151,581 5,142,276
Total interest-bearing liabilities 6,162,033 6,233,944 5,442,676 4,959,123 4,632,769 4,237,626 4,250,158 4,276,677
Total shareholders' equity 1,000,347 987,727 884,863 801,438 804,328 794,711 714,355 701,878
Key Ratios (annualized where applicable)
Net interest margin (taxable equiv basis) 3.64% 3.55% 3.59% 3.55% 3.62% 3.59% 3.59% 3.53%
Efficiency ratio 57.1% 59.9% 60.5% 62.4% 62.2% 59.2% 60.9% 64.5%
Return on average assets 1.10% 1.05% 0.94% 0.98% 0.87% 1.04% 1.04% 0.90%
Return on average shareholders' equity 10.1% 9.8% 8.6% 9.0% 7.5% 8.4% 9.1% 8.0%
Average shareholders' equity as a percent of average assets 10.9% 10.7% 10.9% 10.8% 11.5% 12.4% 11.4% 11.3%
Capital ratios (period end):
Tangible shareholders' equity as a percent of total assets 8.1% 7.8% 7.8% 8.4% 8.4% 10.5% 11.0% 9.3%
Total risk-based capital ratio 11.8% 11.5% 11.7% 13.0% 12.4% 15.0% 15.3% 13.8%
4th 3rd 2nd 1st 4th 3rd 2nd 1st
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
2015 2015 2015 2015 2014 2014 2014 2014
Credit Quality Statistics
Originated
Loans
$ 5,807,934 $ 5,667,159 $ 5,351,011 $ 5,048,662 $ 4,990,067 $ 4,777,614 $ 4,624,409 $ 4,464,465
Acquired Loans 1,463,213 1,549,036 1,683,732 654,212 698,163 263,306 274,395 288,824
Nonperforming Assets:
Nonperforming loans (NPLs) 83,880 81,217 70,906 72,741 71,184 70,742 73,735 76,544
Other real estate / repossessed assets (ORE) 9,935 11,207 14,197 14,744 14,205 10,354 10,392 10,056
Total nonperforming assets 93,815 92,424 85,103 87,485 85,389 81,096 84,127 86,600
Performing troubled debt restructurings 47,810 44,803 45,808 45,981 45,664 44,588 44,133 41,823
Allowance for loan losses - originated as a percent of:
Total originated loans 1.26% 1.33% 1.40% 1.49% 1.51% 1.60% 1.67% 1.75%
Nonperforming loans 87% 93% 106% 103% 106% 108% 105% 102%
NPLs as a percent of total loans 1.15% 1.13% 1.01% 1.28% 1.25% 1.40% 1.51% 1.61%
Nonperforming assets as a percent of:
Total loans plus ORE 1.29% 1.28% 1.21% 1.53% 1.50% 1.61% 1.71% 1.82%
Total assets 1.02% 1.00% 0.94% 1.16% 1.17% 1.23% 1.35% 1.37%
Net loan charge-offs (year-to-date) 8,855 4,557 3,742 1,927 9,489 6,666 4,379 2,199
Net loan charge-offs as a percent of average loans (year-to-date, annualized) 0.13% 0.10% 0.13% 0.14% 0.19% 0.18% 0.18% 0.19%
Dec 31, Sept 30, June 30, Mar 31, Dec 31, Sept 30, June 30, Mar 31,
2015 2015 2015 2015 2014 2014 2014 2014
Additional Data - Intangibles
Goodwill $ 287,393 $ 286,454 $ 285,512 $ 180,128 $ 180,128 $ 120,164 $ 120,164 $ 120,164
Core deposit intangibles (CDI) 26,654 27,890 28,353 20,072 20,863 8,665 9,110 9,556
Mortgage servicing rights (MSR) 11,122 11,540 12,307 11,583 12,217 3,293 3,344 3,316
Noncompete agreements 328 434 541
Amortization of CDI and noncompete agreements (quarter only) 1,341 1,270 987 791 693 445 446 445

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)*
Chemical Financial Corporation
Three Months Ended December 31, 2015 Three Months Ended December 31, 2014
Tax Tax
Average Equivalent Effective Average Equivalent Effective
Balance Interest Yield/Rate Balance Interest Yield/Rate
Assets (Dollars in thousands)
Interest-earning assets:
Loans** $7,241,339 $75,905 4.16% $5,426,664 $57,680 4.22%
Taxable investment securities 609,406 2,044 1.34 712,516 2,322 1.30
Tax-exempt investment securities 481,968 3,973 3.30 306,446 2,832 3.70
Other interest-earning assets 36,799 633 6.82 27,139 415 6.07
Interest-bearing deposits with the Federal Reserve Bank and other banks 87,952 116 0.52 85,382 89 0.41
Total interest-earning assets 8,457,464 82,671 3.89 6,558,147 63,338 3.84
Less: allowance for loan losses (75,225) (77,053)
Other assets:
Cash and cash due from banks 157,939 134,309
Premises and equipment 110,141 93,111
Interest receivable and other assets 524,905 299,365
Total assets $9,175,224 $7,007,879
Liabilities and shareholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits $1,816,694 $414 0.09% $1,368,314 $329 0.10%
Savings deposits 2,024,543 393 0.08 1,613,338 367 0.09
Time deposits 1,671,913 3,313 0.79 1,306,712 2,718 0.83
Short-term borrowings 405,713 110 0.11 337,681 107 0.13
Other borrowings 243,170 923 1.51 6,724 42 2.48
Total interest-bearing liabilities 6,162,033 5,153 0.33 4,632,769 3,563 0.31
Noninterest-bearing deposits 1,936,328 1,519,823
Total deposits and borrowed funds 8,098,361 5,153 0.25 6,152,592 3,563 0.23
Interest payable and other liabilities 76,516 50,959
Shareholders' equity 1,000,347 804,328
Total liabilities and shareholders' equity $9,175,224 $7,007,879
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities) 3.56% 3.53%
Net Interest Income (FTE) $77,518 $59,775
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets) 3.64% 3.62%
* Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.
** Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.


Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)*
Chemical Financial Corporation
Twelve Months Ended December 31, 2015 Twelve Months Ended December 31, 2014
Tax Tax
Average Equivalent Effective Average Equivalent Effective
Balance Interest Yield/Rate Balance Interest Yield/Rate
Assets (Dollars in thousands)
Interest-earning assets:
Loans** $6,594,507 $274,341 4.16% $4,982,986 $211,608 4.25%
Taxable investment securities 683,612 8,786 1.29 667,978 9,147 1.37
Tax-exempt investment securities 415,092 13,956 3.36 279,709 10,850 3.88
Other interest-earning assets 34,188 1,648 4.82 25,967 1,224 4.71
Interest-bearing deposits with the Federal Reserve Bank and other banks 123,735 510 0.41 138,424 407 0.29
Total interest-earning assets 7,851,134 299,241 3.81 6,095,064 233,236 3.83
Less: allowance for loan losses (75,378) (78,126)
Other assets:
Cash and cash due from banks 155,109 126,142
Premises and equipment 105,904 79,278
Interest receivable and other assets 444,459 250,786
Total assets $8,481,228 $6,473,144
Liabilities and shareholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits $1,661,592 $1,465 0.09% $1,234,347 $1,197 0.10%
Savings deposits 1,947,659 1,512 0.08 1,472,092 1,325 0.09
Time deposits 1,557,425 12,429 0.80 1,307,058 11,732 0.90
Short-term borrowings 420,529 453 0.11 334,785 414 0.12
Other borrowings 117,000 1,922 1.64 1,695 42 2.48
Total interest-bearing liabilities 5,704,205 17,781 0.31 4,349,977 14,710 0.34
Noninterest-bearing deposits 1,791,991 1,325,925
Total deposits and borrowed funds 7,496,196 17,781 0.24 5,675,902 14,710 0.26
Interest payable and other liabilities 65,704 43,031
Shareholders' equity 919,328 754,211
Total liabilities and shareholders' equity $8,481,228 $6,473,144
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities) 3.50% 3.49%
Net Interest Income (FTE) $281,460 $218,526
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets) 3.58% 3.59%
* Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.
** Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.


Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Nonperforming Assets (Unaudited)
Chemical Financial Corporation
Dec 31, Sept 30, June 30, Mar 31, Dec 31, Sept 30, June 30, Mar 31,
2015 2015 2015 2015 2014 2014 2014 2014
(In thousands)
Nonperforming Loans:
Nonaccrual loans:
Commercial $28,554 $26,463 $17,260 $18,904 $16,418 $18,213 $18,773 $18,251
Commercial real estate 25,163 24,969 25,287 24,766 24,966 23,858 25,361 27,568
Real estate construction 247 247 247 663 162 162 160 160
Land development 274 297 255 290 225 1,467 2,184 2,267
Residential mortgage 5,557 6,248 6,004 6,514 6,706 6,693 6,325 6,589
Consumer installment 451 536 393 433 500 527 536 806
Home equity 1,979 1,876 1,769 1,870 1,667 2,116 2,296 2,046
Total nonaccrual loans 62,225 60,636 51,215 53,440 50,644 53,036 55,635 57,687
Accruing loans contractually past due 90 days or more as to interest or principal payments:
Commercial 364 122 711 52 170 16 15 43
Commercial real estate 254 216 56 148 87 69 730
Real estate construction
Land development
Residential mortgage 402 572 424 172 557 380 376
Consumer installment
Home equity 1,267 558 588 429 1,346 1,779 1,075 622
Total accruing loans contractually past due 90 days or more as to interest or principal payments 2,287 1,468 1,779 801 2,073 2,262 1,535 1,395
Nonperforming troubled debt restructurings:
Commercial loan portfolio 16,297 15,559 14,547 15,810 15,271 11,797 11,049 11,218
Consumer loan portfolio 3,071 3,554 3,365 2,690 3,196 3,647 5,516 6,244
Total nonperforming troubled debt restructurings 19,368 19,113 17,912 18,500 18,467 15,444 16,565 17,462
Total nonperforming loans 83,880 81,217 70,906 72,741 71,184 70,742 73,735 76,544
Other real estate and repossessed assets 9,935 11,207 14,197 14,744 14,205 10,354 10,392 10,056
Total nonperforming assets $93,815 $92,424 $85,103 $87,485 $85,389 $81,096 $84,127 $86,600


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


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


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


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


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

Source:Chemical Financial Corporation