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Chemical Financial Corporation Reports Third Quarter 2011 Results

Company Release - 10/25/2011 8:00 AM ET

MIDLAND, Mich., Oct. 25, 2011 (GLOBE NEWSWIRE) -- Chemical Financial Corporation (Nasdaq:CHFC) today announced 2011 third quarter net income of $11.6 million, or $0.42 per diluted share, up from 2011 second quarter net income of $11.0 million, or $0.40 per diluted share, and up from 2010 third quarter net income of $8.9 million, or $0.32 per diluted share. Net income was $31.8 million, or $1.16 per diluted share, for the nine months ended September 30, 2011, an increase of 93 percent on a per diluted share basis, compared to $15.6 million, or $0.60 per diluted share, for the nine months ended September 30, 2010.

"Our earnings performance has trended higher over the past two years as we continue to benefit from both a higher level of net interest income and a lower loan loss provision. We have made significant progress in credit quality during the year, with nonperforming assets down over $26 million to $149.1 million at September 30, 2011 from their peak of $175.2 million at December 31, 2010. We are pleased with the positive direction of our nonperforming assets and we will continue to focus on tactics to further improve credit quality," said David B. Ramaker, Chairman, Chief Executive Officer and President of the Company. 

"With the exception of a few sectors, we continue to experience sluggish loan demand, which is not surprising given the significant economic uncertainty. Many of our core Michigan small and middle-market business customers lack the short-term confidence to expand or borrow in this environment. As a result, our loan growth this year has been a direct result of initiatives designed to expand market share. In these economic times, we believe we can continue to achieve higher organic growth by focusing on the strategies which have proven successful. Additionally, we are well positioned to benefit from our initiatives related to expected consolidation opportunities in Michigan's banking industry," added Ramaker.

Net income in the third quarter of 2011 was up from the second quarter of 2011, with an increase in net interest income of $1.0 million, a reduction in the provision for loan losses of $0.6 million and a reduction in federal income tax expense of $0.7 million partially offset by an increase in operating expenses of $2.0 million. The increase in net income in the third quarter of 2011 over the third quarter of 2010 was primarily attributable to a decrease in the provision for loan losses of $2.2 million and a decrease in operating expenses of $0.8 million.

The Company's return on average assets during the third quarter of 2011 was 0.87 percent, up from 0.84 percent in the second quarter of 2011 and 0.67 percent in the third quarter of 2010. The return on average equity was 8.0 percent in the third quarter of 2011, up from 7.8 percent in the second quarter of 2011 and 6.3 percent in the third quarter of 2010.

Net interest income was $46.3 million in the third quarter of 2011, up $1.0 million, or 2.2 percent, from the second quarter of 2011 and up $0.4 million, or 0.8 percent, from the third quarter of 2010. The increase in net interest income of $1.0 million in the third quarter of 2011, as compared to the second quarter of 2011, was primarily attributable to a decrease in the cost of interest-bearing liabilities due to the continued declines in market interest rates, loan growth and one additional day during the third quarter, which were partially offset by a decline in the average yield on loans due to the lower interest rate environment. The net interest margin (on a tax-equivalent basis) in the third quarter of 2011 was 3.80 percent, up from 3.78 percent in the second quarter of 2011 and unchanged from 3.80 percent in the third quarter of 2010.

The provision for loan losses was $6.4 million in the third quarter of 2011, down from $7.0 million in the second quarter of 2011 and $8.6 million in the third quarter of 2010. Net loan charge-offs were $7.4 million in the third quarter of 2011, slightly higher than the $6.9 million in the second quarter of 2011, but lower than the $8.6 million in the third quarter of 2010. The provision for loan losses in the third quarter of 2011 was lower than net loan charge-offs for the first time in nineteen quarters due to improvement in the credit quality of the loan portfolio. During the third quarter of 2011, the Company's efforts to resolve and reduce the level of its nonaccrual loans reduced the specific allocation of the allowance for loan losses on nonaccrual loans (valuation allowance) by $2.2 million and was primarily achieved through loan charge-offs on nonaccrual loans. The valuation allowance was $8.7 million at September 30, 2011, compared to $10.9 million at June 30, 2011 and $17.8 million at September 30, 2010. For the nine months ended September 30, 2011, the provision for loan losses was $20.9 million compared to net loan charge-offs of $21.7 million. In comparison, the provision for loan losses and net loan charge-offs during the nine months ended September 30, 2010 were $35.3 million and $26.6 million, respectively.

Noninterest income was $11.2 million in the third quarter of 2011, up slightly from $10.9 million in the second quarter of 2011 and $11.1 million in the third quarter of 2010. The increase in noninterest income in the third quarter of 2011, as compared to the second quarter of 2011, was due primarily to higher mortgage banking revenue that was partially offset by a decline in wealth management revenue. Mortgage banking revenue was $0.7 million higher in the third quarter of 2011, as compared to the second quarter of 2011, while wealth management revenue was $0.4 million lower.

Operating expenses were $35.4 million in the third quarter of 2011, up from $33.4 million in the second quarter of 2011 and down from $36.2 million in the third quarter of 2010. The increase in operating expenses of $2.0 million in the third quarter of 2011, as compared to the second quarter of 2011, was primarily attributable to higher state tax expense, salaries, wages and employee benefits expense and credit-related expenses. State tax expense was $0.9 million higher due to the reversal of state tax expense in the second quarter of 2011 as a result of the elimination of a valuation reserve during that quarter. Salaries, wages and employee benefits were $1.2 million higher due to increases in both salaries and group health expenses. Credit-related operating expenses of $2.2 million in the third quarter of 2011 were $0.8 million higher than the second quarter of 2011 due primarily to property taxes on other real estate properties that are largely incurred in the third quarter of the year. The Company's efficiency ratio was 60.2 percent in the third quarter of 2011, compared to 58.2 percent in the second quarter of 2011 and 62.3 percent in the third quarter of 2010.

Total assets were $5.44 billion at September 30, 2011, up from $5.20 billion at June 30, 2011 and up slightly from $5.40 billion at September 30, 2010. The increase in assets during the third quarter of 2011 was largely attributable to an increase in interest-bearing balances held at the Federal Reserve Bank (FRB) resulting from higher funds derived from seasonal deposits of municipal customers. The Company continues to maintain significant amounts of funds generated from deposit growth over the last two years at the FRB, further enhancing the Company's liquidity position, with $479 million in balances held at the FRB at September 30, 2011, compared to $265 million at June 30, 2011.

Total loans were $3.76 billion at September 30, 2011, compared to $3.75 billion at June 30, 2011 and $3.64 billion at September 30, 2010. The increase in loans of $120 million, or 3.3 percent, during the twelve months ended September 30, 2011 was driven primarily by increases in real estate residential loans and commercial loans. Real estate residential loans increased $93 million, or 12.4 percent, and commercial loans increased $64 million, or 8.1 percent, during the twelve months ended September 30, 2011. The growth in real estate residential loans during the twelve months ended September 30, 2011 was primarily attributable to the Company originating $73 million of conforming real estate residential loans with amortization periods of fifteen years that it kept in the loan portfolio, rather than selling these loans in the secondary market as has historically been the Company's general practice, due to an overall low level of loan demand and increased competition for new loans. Total loans increased $12.4 million, or 0.3 percent, in the third quarter of 2011 and $78.8 million, or 2.1 percent, during the nine months ended September 30, 2011. Investment securities were $797 million at September 30, 2011, compared to $802 million at June 30, 2011 and $766 million at September 30, 2010.

Total deposits were $4.48 billion at September 30, 2011, compared to $4.25 billion at June 30, 2011 and $4.47 billion at September 30, 2010. The Company experienced an increase of $230 million, or 5.4 percent, in total deposits during the third quarter of 2011, with the increase attributable to a seasonal increase in deposits of municipal customers. The Company used a portion of its liquidity to pay off maturing Federal Home Loan Bank (FHLB) advances and brokered deposits that were acquired in the 2010 acquisition of O.A.K. Financial Corporation (OAK) and the Company intends to continue to pay off these wholesale funding sources as they mature. FHLB advances totaled $46.0 million at September 30, 2011, down from $71.9 million at June 30, 2011 and $85.4 million at September 30, 2010. Brokered deposits totaled $98 million at September 30, 2011, down from $110 million at June 30, 2011 and $182 million at September 30, 2010.

At September 30, 2011, the Company's tangible equity to assets ratio and total risk-based capital ratio were 8.6 percent and 13.1 percent, respectively, compared to 8.9 percent and 13.0 percent, respectively, at June 30, 2011. At September 30, 2011, the Company's book value was $21.02 per share, compared to $20.78 per share at June 30, 2011.

The credit quality of the Company's loan portfolio showed improvement during the third quarter of 2011. At September 30, 2011, the Company's $3.27 billion of originated loans, representing all loans other than those acquired in the OAK acquisition, had nonaccrual loans and loans past due 90 days or more totaling $94.1 million, compared to $109.1 million at June 30, 2011 and $119.4 million at September 30, 2010, representing declines of 13.7 percent and 21.1 percent, respectively. The Company's nonperforming loans also include commercial, real estate commercial and real estate residential loans that have been modified and a concession granted due to financial difficulties being experienced by customers (nonperforming troubled debt restructurings) of $26.3 million at September 30, 2011, down from $26.8 million at June 30, 2011 and $28.5 million at September 30, 2010. At September 30, 2011, the Company's $495 million of acquired loans, representing loans acquired in the OAK acquisition, were overall performing slightly better than expected, despite the establishment of a $1.3 million allowance for loan losses on acquired loans during the third quarter of 2011 that was primarily attributable to one of the loan pools experiencing a decline in expected cash flows.

Other real estate and repossessed assets totaled $28.7 million at September 30, 2011, compared to $24.6 million at June 30, 2011 and $22.7 million at September 30, 2010. The net increase in the third quarter of 2011 was primarily attributable to the addition of eight foreclosed properties totaling $4.5 million during the quarter.

At September 30, 2011, the allowance for loan losses of the originated portfolio was $87.4 million, or 2.68 percent of originated loans, compared to 2.78 percent at June 30, 2011 and 2.94 percent at September 30, 2010. The allowance for loan losses of the originated portfolio as a percentage of nonperforming loans was 73 percent at September 30, 2011, compared to 66 percent at June 30, 2011 and 61 percent at September 30, 2010. At September 30, 2011, nonperforming loans as a percentage of total loans were 3.20 percent, down from 3.63 percent at June 30, 2011 and 4.06 percent at September 30, 2010.

Chemical Financial Corporation is the second-largest bank holding company headquartered and operating branch offices in Michigan. The Company operates through a single subsidiary bank, Chemical Bank, with 142 banking offices spread over 32 counties in the lower peninsula of Michigan. At September 30, 2011, the Company had total assets of $5.4 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 Company 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 Chemical Financial Corporation. Words such as "continue," "focus," "improving," "see," "would," "expectations," "opportunities," "will," "intend," "strategies," "trend" and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to the credit quality of the loan portfolio, future levels of nonperforming loans, future economic trends and conditions, future strategies to expand market share and initiatives related to expected consolidation opportunities in Michigan's banking industry. All statements referencing future time periods are forward-looking. Management's determination of the provision and allowance for loan losses, the carrying value of acquired loans, goodwill, mortgage servicing rights and other real estate owned and the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment) involve judgments that are inherently forward-looking. Management's assumptions concerning pension and other postretirement benefit plans involve judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated or that other real estate owned can be sold for its carrying value or at all. The future effect of changes in the financial and credit markets and the national and regional economy on the banking industry, generally, and on the Company, 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 Company 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 Company's Annual Report on Form 10-K for the year ended December 31, 2010. 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 Third Quarter Operating Results
       
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation 
       
(In thousands, except per share data) September 30
2011
December 31
2010
September 30
2010
Assets:      
Cash and cash equivalents:      
Cash and cash due from banks  $ 126,712  $ 91,403  $ 118,441
Interest-bearing deposits with unaffiliated banks and others  484,572  444,762  600,909
Total cash and cash equivalents  611,284  536,165  719,350
Investment securities:      
Trading securities at fair value  --  --  1,471
Available-for-sale  610,493  578,610  608,823
Held-to-maturity  186,432  165,400  155,475
Total Investment Securities  796,925  744,010  765,769
Other securities  25,572  27,133  26,189
Loans held-for-sale  15,212  20,479  19,547
       
Loans:      
Commercial   858,969  818,997  794,739
Real estate commercial   1,056,092  1,076,971  1,077,760
Real estate construction and land development   119,829  142,620  167,738
Real estate residential   840,044  798,046  747,135
Consumer installment and home equity  885,492  845,028  853,499
Total Loans  3,760,426  3,681,662  3,640,871
Allowance for loan losses  (88,713)  (89,530)  (89,521)
Net Loans  3,671,713  3,592,132  3,551,350
       
Premises and equipment  64,998  65,961  66,212
Goodwill  113,414  113,414  110,266
Other intangible assets  11,849  13,521  14,532
Interest receivable and other assets  128,637  133,394  127,093
Total Assets  $ 5,439,604  $ 5,246,209  $ 5,400,308
       
Liabilities:      
Deposits:      
Noninterest-bearing   $ 891,363  $ 753,553  $ 696,710
Interest-bearing   3,589,223  3,578,212  3,770,692
Total Deposits  4,480,586  4,331,765  4,467,402
Interest payable and other liabilities  33,700  37,533  31,744
Short-term borrowings  302,298  242,703  254,799
Federal Home Loan Bank advances   45,991  74,130  85,390
Total Liabilities  4,862,575  4,686,131  4,839,335
       
Shareholders' Equity:      
Preferred stock, no par value per share  --  --  --
Common stock, $1 par value per share  27,457  27,440  27,440
Additional paid-in capital  430,462  429,511  429,459
Retained earnings  132,611  117,238  115,187
Accumulated other comprehensive loss  (13,501)  (14,111)  (11,113)
Total Shareholders' Equity  577,029  560,078  560,973
Total Liabilities and Shareholders' Equity  $ 5,439,604  $ 5,246,209  $ 5,400,308
 
 
Chemical Financial Corporation Announces Third Quarter Operating Results
         
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation 
         
  Three Months Ended
September 30
Nine Months Ended
September 30
(In thousands, except per share data) 2011 2010 2011 2010
Interest Income:        
Interest and fees on loans  $ 49,770  $ 51,485  $ 148,382  $ 141,481
Interest on investment securities:        
Taxable  2,335  2,718  6,884  8,806
Tax-exempt  1,513  1,391  4,385  3,594
Dividends on other securities  114  81  605  458
Interest on deposits with unaffiliated banks and others  266  323  856  743
Total Interest Income  53,998  55,998  161,112  155,082
         
Interest Expense:        
Interest on deposits  7,199  9,314  22,628  27,216
Interest on short-term borrowings  117  168  418  489
Interest on Federal Home Loan Bank advances   413  623  1,298  2,205
Total Interest Expense  7,729  10,105  24,344  29,910
Net Interest Income   46,269  45,893  136,768  125,172
Provision for loan losses  6,400  8,600  20,900  35,300
Net Interest Income after Provision for Loan Losses  39,869  37,293  115,868  89,872
         
Noninterest Income:        
Service charges on deposit accounts  4,780  4,680  13,504  14,162
Wealth management revenue  2,638  2,521  8,430  7,416
Other charges and fees for customer services  2,581  2,555  7,967  6,896
Mortgage banking revenue  1,173  1,204  2,736  2,837
Investment securities gains   --  82  --  82
Other   53  77  262  166
Total Noninterest Income  11,225  11,119  32,899  31,559
         
Operating Expenses:        
Salaries, wages and employee benefits  19,229  18,015  55,622  49,650
Occupancy   3,093  2,903  9,530  8,474
Equipment and software  3,162  3,698  8,994  10,110
Other  9,910  11,600  30,050  31,821
Total Operating Expenses  35,394  36,216  104,196  100,055
Income Before Income Taxes  15,700  12,196  44,571  21,376
Federal Income Tax Expense   4,075  3,325  12,725  5,825
Net Income   $ 11,625  $ 8,871  $ 31,846  $ 15,551
         
Net income per common share:        
Basic  $ 0.42  $ 0.32  $ 1.16  $ 0.60
Diluted  0.42  0.32  1.16  0.60
         
Cash dividends declared per common share  0.20  0.20  0.60  0.60
         
Average common shares outstanding:        
Basic  27,457  27,438  27,454  25,883
Diluted  27,504  27,471  27,494  25,911
 
 
Chemical Financial Corporation Announces Third Quarter Operating Results
               
Financial Summary (Unaudited)
Chemical Financial Corporation 
        Three Months Ended
September 30
Nine Months Ended
September 30
(Dollars in thousands) 2011 2010 2011 2010
Average Balances               
Total assets        $ 5,323,962  $ 5,264,545  $ 5,291,731  $ 4,799,067
Total interest-earning assets        4,985,380  4,925,102  4,959,199  4,506,962
Total loans        3,769,745  3,664,925  3,716,862  3,364,129
Total deposits        4,358,658  4,326,096  4,340,372  3,909,630
Total interest-bearing liabilities        3,853,443  3,946,563  3,884,182  3,601,960
Total shareholders' equity        573,580  557,927  566,628  520,517
               
           
        Three Months Ended
September 30
Nine Months Ended
September 30
  2011 2010 2011 2010
Key Ratios (annualized where applicable)              
Net interest margin (taxable equivalent basis)       3.80% 3.80% 3.79% 3.80%
Efficiency ratio        60.2% 62.3% 60.0% 62.6%
Return on average assets       0.87% 0.67% 0.80% 0.43%
Return on average shareholders' equity       8.0% 6.3% 7.5% 4.0%
Average shareholders' equity as a
percent of average assets
      10.8% 10.6% 10.7% 10.8%
Tangible shareholders' equity as a
percent of total assets
          8.6% 8.4%
Total risk-based capital ratio           13.1% 13.7%
               
  Sept 30
2011
June 30 
2011
March 31
2011
Dec 31 
2010
Sept 30
2010
June 30 
2010
March 31
2010
Credit Quality Statistics              
Originated Loans  $ 3,265,054  $ 3,225,179  $ 3,143,489  $ 3,129,399  $ 3,045,872  $ 3,034,515  $ 2,988,315
Acquired Loans  495,372  522,831  539,027  552,263  594,999  613,446  --
Nonperforming Loans:              
Nonaccrual loans  91,112  105,350  106,296  102,962  112,832  107,981  100,882
Accruing loans contractually past due 90 days or more
as to interest or principal payments
 3,015 3,744 2,196 7,408 6,526 8,301 7,204
Troubled debt restructurings - commercial and real estate commercial  16,457 15,443 15,201 15,057 9,834  7,791  6,243
Troubled debt restructurings - real estate residential   9,811 11,392 22,166 22,302  18,712  18,856  15,799
Total nonperforming loans   120,395  135,929  145,859  147,729  147,904  142,929  130,128
Other real estate and repossessed assets (ORE)  28,679 24,607 26,355 27,510 22,704 21,724 18,813
Total nonperforming assets  149,074  160,536  172,214  175,239  170,608  164,653  148,941
               
Performing troubled debt restructurings  15,543  12,889  --  --  --  --  --
               
Allowance for loan losses-originated  87,413  89,733  89,674  89,530  89,521  89,502  84,155
Allowance for loan losses-acquired  1,300  --  --  --  --  --  --
               
Allowance for loan losses-originated as a percent of:              
Total originated loans 2.68% 2.78% 2.85% 2.86% 2.94% 2.95% 2.82%
Nonperforming loans 73% 66% 61% 61% 61% 63% 65%
Nonperforming loans as a percent of total loans 3.20% 3.63% 3.96% 4.01% 4.06% 3.92% 4.35%
Nonperforming assets as a percent of:              
Total loans plus ORE 3.93% 4.26% 4.64% 4.72% 4.66% 4.49% 4.95%
Total assets 2.74% 3.08% 3.23% 3.34% 3.16% 3.22% 3.47%
Net loan charge-offs as a percent of
average loans (year-to-date, annualized)
0.78% 0.77% 0.80% 1.07% 1.06% 1.12% 1.43%
               
  Sept 30
2011
June 30 
2011
March 31
2011
Dec 31 
2010
Sept 30
2010
June 30 
2010
March 31
2010
Additional Data - Intangibles              
Goodwill  $ 113,414  $ 113,414  $ 113,414  $ 113,414  $ 110,266  $ 109,149  $ 69,908
Core deposit intangibles  8,261  8,643  9,024  9,406  10,352  10,791  2,183
Mortgage servicing rights (MSR)  3,561  3,577  3,832  3,782  3,718  3,641  3,059
Other intangible assets  27  107  204  333  462  591  --
Amortization of core deposit intangibles (quarter only)  382  381  382  436  439  337  148
 
 
Chemical Financial Corporation Announces Third Quarter Operating Results
               
Nonperforming Assets (Unaudited)
Chemical Financial Corporation 
               
(Dollars in thousands) Sept 30
2011
June 30
2011
March 31
2011
Dec 31
2010
Sept 30
2010
June 30
2010
March 31
2010
Nonperforming Loans:              
Nonaccrual loans:              
Commercial  $ 10,804  $ 14,386  $ 15,672  $ 16,668  $ 19,440  $ 21,643  $ 18,382
Real estate commercial  48,854  57,324 59,931  60,558  59,353 57,085 51,865
Real estate construction and land development  7,877  8,933 9,414  8,967  16,085 13,397 15,870
Real estate residential  17,544  17,809 15,505  12,083  13,485 12,499 10,913
Consumer installment and home equity  6,033  6,898 5,774  4,686  4,469 3,357 3,852
Total nonaccrual loans  91,112  105,350 106,296  102,962  112,832 107,981 100,882
Accruing loans contractually past due 90 days or more as to
interest or principal payments:
           
Commercial  282  629 455  530  909 2,108 2,576
Real estate commercial  415  143 459  1,350  2,265 2,030 1,483
Real estate construction and land development  --  --  --  1,220  -- 436 988
Real estate residential  974  1,729 191  3,253  2,316 2,842 1,636
Consumer installment and home equity  1,344  1,243 1,091  1,055  1,036 885 521
Total accruing loans contractually past due 90 days or more 
as to interest or principal payments
 3,015  3,744 2,196  7,408  6,526 8,301 7,204
Loans modified under troubled debt restructurings:              
Commercial and real estate commercial  16,457  15,443 15,201  15,057  9,834 7,791 6,243
Real estate residential loans  9,811  11,392 22,166  22,302  18,712 18,856 15,799
Total loans modified under troubled debt restructurings  26,268  26,835 37,367  37,359  28,546 26,647 22,042
Total nonperforming loans  120,395  135,929 145,859  147,729  147,904 142,929 130,128
Other real estate and repossessed assets  28,679  24,607 26,355  27,510  22,704 21,724 18,813
Total nonperforming assets  $ 149,074  $ 160,536  $ 172,214  $ 175,239  $ 170,608  $ 164,653  $ 148,941
 
 
Chemical Financial Corporation Announces Third Quarter Operating Results
               
Summary of Loan Loss Experience (Unaudited)
Chemical Financial Corporation 
               
  Three Months Ended
(Dollars in thousands) Sept 30
2011
June 30
2011
March 31
2011
Dec 31
2010
Sept 30
2010
June 30
2010
March 31
2010
Allowance for loan losses at beginning of period  $ 89,733  $ 89,674  $ 89,530  $ 89,521  $ 89,502  $ 84,155  $ 80,841
Provision for loan losses  6,400 7,000  7,500  10,300  8,600 12,700 14,000
Loans charged off:              
Commercial  (1,234) (1,972)  (1,976)  (2,797)  (2,830)  (1,438)  (1,365)
Real estate commercial  (3,969) (3,168)  (3,875)  (3,828)  (2,586)  (2,108)  (2,289)
Real estate construction and land development  (236) (136)  (63)  (1,111)  (146)  (638)  (644)
Real estate residential  (1,884) (1,198)  (944)  (1,349)  (1,767)  (1,752)  (3,173)
Consumer installment and home equity  (1,516) (1,832)  (1,784)  (1,961)  (1,916)  (2,361)  (4,427)
Total loan charge-offs  (8,839) (8,306)  (8,642)  (11,046)  (9,245)  (8,297)  (11,898)
Recoveries of loans previously charged off:              
Commercial  614 710  215  165  212  171  373
Real estate commercial  285 212  87  189  38  29  170
Real estate construction and land development  -- 5  --  --  19  1  --
Real estate residential  207 106  456  74  109  175  185
Consumer installment and home equity  313 332  528  327  286  568  484
Total loan recoveries  1,419 1,365  1,286  755  664  944  1,212
Net loan charge-offs  (7,420) (6,941)  (7,356)  (10,291)  (8,581)  (7,353)  (10,686)
Allowance for loan losses at end of period  $ 88,713  $ 89,733  $ 89,674  $ 89,530  $ 89,521  $ 89,502  $ 84,155
               
               
Provision for loan losses (year-to-date)  $ 20,900  $ 14,500  $ 7,500  $ 45,600  $ 35,300  $ 26,700  $ 14,000
Net loan charge-offs (year-to-date)  21,717  14,297 7,356 36,911 26,620 18,039 10,686
 
 
Chemical Financial Corporation Announces Third Quarter Operating Results
               
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation 
               
(Dollars in thousands, except per share data) 3rd Qtr.
2011
2nd Qtr.
2011
1st Qtr.
2011
4th Qtr.
2010
3rd Qtr.
2010
2nd Qtr.
2010
1st Qtr.
2010
Summary of Operations              
Interest income  $ 53,998  $ 53,439  $ 53,675  $ 55,348  $ 55,998  $ 52,962  $ 46,122
Interest expense  7,729 8,145 8,470  9,400  10,105  10,071  9,734
Net interest income  46,269 45,294 45,205  45,948  45,893 42,891 36,388
Provision for loan losses  6,400 7,000 7,500  10,300  8,600  12,700  14,000
Net interest income after provision
for loan losses
 39,869 38,294 37,705  35,648  37,293  30,191  22,388
Noninterest income  11,225 10,902 10,772  10,913  11,119  11,000  9,440
Operating expenses   35,394 33,413 35,389  36,747  36,216  34,650  29,189
Income before income taxes  15,700 15,783 13,088  9,814  12,196  6,541  2,639
Federal income tax expense  4,075 4,750 3,900  2,275  3,325  2,150  350
Net income   $ 11,625  $ 11,033  $ 9,188  $ 7,539  $ 8,871  $ 4,391  $ 2,289
               
Net interest margin 3.80% 3.78% 3.78% 3.79% 3.80% 3.88% 3.72%
 
Per Common Share Data              
Net income:              
 Basic  $ 0.42  $ 0.40  $ 0.33  $ 0.27  $ 0.32  $ 0.17  $ 0.10
 Diluted  0.42 0.40  0.33  0.27  0.32  0.17  0.10
Cash dividends declared  0.20 0.20  0.20  0.20  0.20  0.20  0.20
Book value - period-end  21.02 20.78  20.54  20.41  20.44  20.27  19.76
Market value - period-end  15.31 18.76  19.93  22.15  20.64  21.78  23.62
CONTACT: David B. Ramaker, CEO
         Lori A. Gwizdala, CFO
         989-839-5350
Source: Chemical Financial Corporation