Menu

Press Release

Chemical Financial Corporation Announces Second Quarter Operating Results

Company Release - 7/22/2003 8:00 AM ET

MIDLAND, Mich., July 22 /PRNewswire-FirstCall/ -- Aloysius J. Oliver, Chairman of Chemical Financial Corporation (Nasdaq: CHFC), today announced second quarter net income of $13.67 million or $.58 per diluted share, up $.13 million as compared with net income of $13.54 million, or $.57 per diluted share for the second quarter of 2002. This represents an increase of 1.8% in earnings per share and a 1.0% increase in net income for the second quarter 2003. The returns on average assets and average equity during the second quarter of 2003 were 1.54% and 12.4%, respectively, as compared with 1.54% and 13.7%, respectively, for the second quarter of 2002.

Net interest income decreased $1.67 million, or 4.5%, to $35.03 million in the second quarter of 2003, as compared to the second quarter 2002. The decrease, in part, was due to the low interest rate environment and the decrease in the yield on our earning assets which is outpacing the decrease in our cost of funds. The Corporation's earnings were positively affected by an increase in noninterest income of $2.09 million, or 26.2%. This increase was primarily due to higher service charge income of $1.23 million. Operating expenses increased by $.18 million, or .8%.

For the six months ended June 30, 2003, the Corporation earned net income of $27.68 million or $1.17 per share, as compared to net income of $27.25 million, or $1.15 per share for the first six months of 2002. This represents a 1.7% increase in earnings per share.

Total assets of the Corporation at June 30, 2003 were $3.59 billion, up 3.2% over the $3.48 billion in total assets reported at June 30, 2002. Total deposits at June 30, 2003 were $2.88 billion, up 3.6% over total deposits of $2.78 billion at June 30, 2002. Total loans increased 7.2% during the latest twelve months, from $2.09 billion at June 30, 2002, to $2.24 billion in outstanding loans at June 30, 2003.

The Corporation's provision for loan losses for the quarter ended June 30, 2003 was $1.27 million as compared to net loan losses of $1.48 million. As of June 30, 2003, the allowance for loan losses was $30.48 million and represented 1.36% of total loans. Non-performing loans were $10.21 million, or .46% of total loans at the current quarter-end.

Shareholders' equity at June 30, 2003 was $443 million, or $18.73 per share, and represented 12.4% of total assets and a tangible equity to asset ratio of 11.4% as of June 30, 2003.

Chemical Financial Corporation is the fourth largest bank holding company headquartered in Michigan. The Company's three subsidiary banks operate 129 "Chemical Bank" offices and 2 loan production offices spread over 32 counties in the lower peninsula of Michigan.

Chemical Financial Corporation common stock trades on The NASDAQ Stock Market under the symbol CHFC and is one of the issues comprising the NASDAQ Financial 100 index.

Forward Looking Statements

This press release contains forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "intends," "should," "will," variations of such words and similar expressions are intended to identify forward-looking statements. These statements reflect management's current beliefs as to the expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions 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. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interests rates and banking regulations; the impact of competition from traditional or new sources; and the possibility that anticipated cost savings and revenue enhancements from mergers and acquisitions and bank consolidations may not be fully realized at all or within the expected time frames. These and other factors that may emerge could cause decisions and actual results to differ materially from current expectations. Chemical undertakes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.

    Consolidated Statements of Financial Position (Unaudited)
    Chemical Financial Corporation
 and Subsidiaries


                                             June 30,  December 31,  June 30,
    (In thousands)                             2003        2002        2002
    Assets:
    Cash and demand deposits due from
     banks                                   $122,712    $148,112    $135,309
    Federal funds sold                         41,200      69,900      49,600
    Interest-bearing deposits with
     unaffiliated banks                         6,096      53,135      25,992

    Investment securities taxable           1,040,945   1,076,292   1,034,830
    Investment securities nontaxable           47,877      51,690      54,759
        Total Investment Securities         1,088,822   1,127,982   1,089,589

    Commercial loans                          329,929     327,438     324,116
    Real estate construction loans            106,747     108,589     112,331
    Real estate commercial loans              527,400     481,084     468,261
    Real estate residential loans             753,014     648,286     649,720
    Consumer loans                            519,727     509,789     531,197
        Total Loans                         2,236,817   2,075,186   2,085,625
    Less: Allowance for loan losses            30,482      30,672      31,011
        Net Loans                           2,206,335   2,044,514   2,054,614

    Premises and equipment                     40,795      42,767      43,092
    Intangible assets                          39,472      40,489      42,548
    Other assets                               42,397      41,994      36,240
        Total Assets                       $3,587,829  $3,568,893  $3,476,984

    Liabilities and Shareholders' Equity:
    Noninterest-bearing deposits             $530,010    $475,933    $458,604
    Interest-bearing deposits               2,347,416   2,371,339   2,319,251
        Total Deposits                      2,877,426   2,847,272   2,777,855
    FHLB borrowings                           148,573     157,393     167,528
    Other borrowings - short term              88,949     104,212      97,836
    Interest payable and other liabilities     29,741      29,677      26,609
        Total Liabilities                   3,144,689   3,138,554   3,069,828

    Shareholders' Equity:
      Common stock, $1 par value               23,665      23,684      22,552
      Surplus                                 324,213     325,149     290,887
      Retained earnings                        78,558      62,721      81,218
      Accumulated other comprehensive
       income                                  16,704      18,785      12,499
        Total Shareholders' Equity            443,140     430,339     407,156
        Total Liabilities and
         Shareholders' Equity              $3,587,829  $3,568,893  $3,476,984


    Consolidated Statements of Income (Unaudited)
    Chemical Financial Corporation
 and Subsidiaries

                                             Quarter Ended    Six Months Ended
                                                June 30,          June 30,
    (In thousands, except per share data)    2003     2002     2003     2002
    Interest Income:
    Interest and fees on loans             $36,155  $39,001  $72,569  $79,545
    Interest on investment securities:
      Taxable                                9,778   12,965   20,458   24,959
      Nontaxable                               639      750    1,316    1,532
        Total Interest on Investment
         Securities                         10,417   13,715   21,774   26,491
    Interest on federal funds sold             107      381      443    1,073
    Interest on deposits with unaffiliated
     banks                                      18      185      157      448
        Total Interest Income               46,697   53,282   94,943  107,557

    Interest Expense:
    Interest on deposits                     9,453   14,112   20,293   29,654
    Interest on FHLB borrowings              2,077    2,238    4,190    4,448
    Interest on other borrowings - short
     term                                      138      235      307      501
        Total Interest Expense              11,668   16,585   24,790   34,603
        Net Interest Income                 35,029   36,697   70,153   72,954
    Provision for loan losses                1,272    1,352    1,567    2,005
        Net Interest Income after
              Provision for Loan Losses     33,757   35,345   68,586   70,949

    Noninterest Income:
    Service charges on deposit accounts      4,227    3,001    8,090    5,615
    Other charges and fees for customer
     services                                1,869    1,739    3,812    3,559
    Mortgage banking revenue                 1,861    1,622    3,408    4,178
    Trust services revenue                   1,791    1,615    3,518    3,296
    Investment securities gains (losses)       308      (40)     492      (84)
    Other                                       30       57       80       83
        Total Noninterest Income            10,086    7,994   19,400   16,647

    Operating Expenses:
    Salaries and employee benefits          13,594   13,434   27,283   27,248
    Occupancy                                1,937    1,895    3,901    3,774
    Equipment                                2,079    1,929    4,128    4,127
    Other                                    5,572    5,747   10,896   11,551
        Total Operating Expenses            23,182   23,005   46,208   46,700
    Income Before Income Taxes              20,661   20,334   41,778   40,896
        Federal income taxes                 6,991    6,799   14,094   13,651
    Net Income                             $13,670  $13,535  $27,684  $27,245

    Net income per share:
      Basic                                  $0.58    $0.57    $1.17    $1.15
      Diluted                                 0.58     0.57     1.17     1.15

    Cash dividends per share                  0.25     0.23     0.50     0.46

    Average shares outstanding:
      Basic                                 23,684   23,681   23,690   23,668
      Diluted                               23,735   23,757   23,738   23,738


    Financial Summary (Unaudited)
    Chemical Financial Corporation
 and Subsidiaries
    (Dollars in thousands)

                                   Quarter Ended          Six Months Ended
                                      June 30,                June 30,
                                  2003        2002        2003        2002
    Average Balances
    Total assets               $3,563,035  $3,520,071  $3,568,663  $3,532,803
    Total interest-earning
     assets                     3,368,826   3,287,811   3,383,787   3,308,226
    Total loans                 2,173,962   2,073,797   2,137,557   2,104,677
    Total deposits              2,856,439   2,803,846   2,859,093   2,823,488
    Total shareholders' equity    441,358     397,080     437,694     395,310


                                      Quarter Ended          Six Months Ended
                                         June 30,                June 30,
                                     2003        2002        2003        2002
    Key Ratios (annualized
     where applicable)
    Net interest margin             4.22%       4.54%       4.24%       4.51%
    Efficiency ratio                50.9%       50.9%       51.1%       51.5%
    Return on average assets        1.54%       1.54%       1.56%       1.56%
    Return on average
     shareholders' equity           12.4%       13.7%       12.8%       13.9%
    Average shareholders'
     equity as a percent of
       average assets               12.4%       11.3%       12.3%       11.2%
    Tangible shareholders'
     equity as a percent of
       total assets                                         11.4%       10.6%
    Total risk-based capital
     ratio                                                  18.7%       18.3%


                                                                  June 30,
                                                             2003        2002
    Credit Quality Statistics
    Nonaccrual loans                                       $5,139      $8,534
    Loans 90 or more days past
     due and still accruing
      interest                                              5,066       3,815
    Total nonperforming loans                              10,205      12,349
    Repossessed assets
     acquired (RAA)                                         5,659       1,021
    Total nonperforming assets                             15,864      13,370
    Net loan charge-offs                                    1,757       1,988

    Allowance for loan losses
     as a percent of total loans                            1.36%       1.49%
    Allowance for loan losses
     as a percent of nonperforming
      loans                                                  299%        251%
    Nonperforming loans as a
      percent of total loans                                0.46%       0.59%
    Nonperforming assets as a
      percent of total loans
       plus RAA                                             0.71%       0.64%
    Net loan charge-offs as a
      percent of average loans                              0.17%       0.19%


                                                                June 30,
                                                            2003        2002
    Additional Data
    Goodwill                                              $27,940     $27,940
    Core deposit intangibles                                8,992      10,835
    Mortgage servicing rights                               2,402       3,601
    Amortization of
     intangibles                                            1,989       1,497


    Selected Quarterly Information (Unaudited)
    Chemical Financial Corporation
 and Subsidiaries
    (Dollars in thousands)

                               2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
                                 2003     2003     2002     2002     2002
    Summary of Operations
    Interest income             $46,697  $48,246  $51,036  $52,475  $53,282
    Interest expense             11,668   13,122   14,673   16,076   16,585
    Net interest income          35,029   35,124   36,363   36,399   36,697
    Provision for loan losses     1,272      295    1,013      747    1,352
    Net interest income after
     provision for loan losses   33,757   34,829   35,350   35,652   35,345
    Noninterest income           10,086    9,314    9,275    8,588    7,994
    Noninterest expense          23,182   23,026   23,692   23,134   23,005
    Income taxes                  6,991    7,103    7,251    7,088    6,799
    Net income                   13,670   14,014   13,682   14,018   13,535

    Per Common Share Data
    Net income:
         Basic                    $0.58    $0.59    $0.58    $0.59    $0.57
         Diluted                   0.58     0.59     0.57     0.59     0.57
    Cash dividends                 0.25     0.25     0.23     0.23     0.23
    Book value                    18.73    18.45    18.31    17.78    17.19
SOURCE  Chemical Financial Corporation

    -0-                             07/22/2003
    /CONTACT:  David B. Ramaker, President & CEO, +1-989-839-5269, or Lori A.
Gwizdala, Executive Vice President & Chief Financial Officer, +1-989-839-5358,
both of Chemical Financial Corporation
/
    /Company News On-Call: http://www.prnewswire.com/gh/cnoc/comp/157448.html/
    /Web site:  http://chemicalbankmi.com /
    (CHFC)

CO:  Chemical Financial Corporation

ST:  Michigan
IN:  FIN
SU:  ERN


KN-AM 
-- DETU004 --
2513 07/22/2003 08:00 EDT http://www.prnewswire.com