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Chemical Financial Corporation Reports Fourth Quarter and Year End 2011 Results

Company Release - 1/26/2012 7:30 AM ET

MIDLAND, Mich., Jan. 26, 2012 (GLOBE NEWSWIRE) -- Chemical Financial Corporation (Nasdaq:CHFC) today announced 2011 fourth quarter net income of $11.2 million, or $0.41 per diluted share, compared to 2011 third quarter net income of $11.6 million, or $0.42 per diluted share, and 2010 fourth quarter net income of $7.5 million, or $0.27 per diluted share. Net income was $43.1 million, or $1.57 per diluted share, for the twelve months ended December 31, 2011, an increase of 78 percent on a per diluted share basis, compared to $23.1 million, or $0.88 per diluted share, for the twelve months ended December 31, 2010.

"This is the second straight year that our earnings performance has trended higher, primarily due to a higher level of net interest income and a lower loan loss provision. Our 2011 net income of $43.1 million marked a return to near pre-U.S. recession levels, and a rapid recovery from our low of $10.0 million in 2009. Our strong balance sheet and disciplined lending philosophy not only allowed us to profitably weather the economic storm, but also to capitalize on growth opportunities and take a leadership position in Michigan's banking industry during this period of turmoil," said David B. Ramaker, Chairman, Chief Executive Officer and President of the Corporation. "We have made significant progress in improving credit quality during the year, with nonperforming assets down nearly 25 percent from their December 31, 2010 peak. While pleased with the positive trends seen in our nonperforming assets, we continue to focus on strategies to further improve credit quality."

"To drive organic earnings improvements in the slow-growth economy we continue to face, we will need to prudently grow our loan portfolio, further improve credit quality, and control operating costs," added Ramaker. "At the same time, we will look to further capitalize on anticipated consolidation opportunities in Michigan's banking industry."

The Corporation's pretax income was approximately the same in each of the last three quarters of 2011, with the modest difference in net income between the quarters attributable to a slightly different effective tax rate in each of those quarters. Operating expenses were $2.4 million higher in the fourth quarter of 2011, as compared to the third quarter of 2011, which was offset by increases in net interest income of $0.8 million and noninterest income of $0.3 million and a decrease in the provision for loan losses of $1.3 million. The increase in net income in the fourth quarter of 2011 over the fourth quarter of 2010 was primarily attributable to a $5.2 million decrease in the provision for loan losses.

The Corporation's return on average assets during the fourth quarter of 2011 was 0.83 percent, down slightly from 0.87 percent in the third quarter of 2011 and up from 0.57 percent in the fourth quarter of 2010. The return on average equity was 7.7 percent in the fourth quarter of 2011, down slightly from 8.0 percent in the third quarter of 2011 and up from 5.3 percent in the fourth quarter of 2010.

Net interest income was $47.1 million in the fourth quarter of 2011, up $0.8 million, or 1.8 percent, from the third quarter of 2011 and up $1.1 million, or 2.5 percent, from the fourth quarter of 2010. The increase in net interest income of $0.8 million in the fourth quarter of 2011, as compared to the third quarter of 2011, was primarily attributable to a decrease in the cost of interest-bearing liabilities due primarily to the repricing of maturing certificates of deposit. The net interest margin (on a tax-equivalent basis) in the fourth quarter of 2011 was 3.84 percent, up from 3.80 percent in the third quarter of 2011 and 3.79 percent in the fourth quarter of 2010. The increases in the net interest margin in the fourth quarter of 2011 were primarily attributable to the continued reduction in the average cost of deposits.

The provision for loan losses was $5.1 million in the fourth quarter of 2011, down from $6.4 million in the third quarter of 2011 and $10.3 million in the fourth quarter of 2010. Net loan charge-offs were $5.5 million in the fourth quarter of 2011, down from $7.4 million in the third quarter of 2011 and $10.3 million in the fourth quarter of 2010. For the twelve months ended December 31, 2011, the provision for loan losses was $26.0 million, compared to net loan charge-offs of $27.2 million. In comparison, the provision for loan losses and net loan charge-offs during the twelve months ended December 31, 2010 were $45.6 million and $36.9 million, respectively.

Noninterest income was $11.5 million in the fourth quarter of 2011, up slightly from $11.2 million in the third quarter of 2011 and $10.9 million in the fourth quarter of 2010.

Operating expenses were $37.8 million in the fourth quarter of 2011, up from $35.4 million in the third quarter of 2011 and $36.7 million in the fourth quarter of 2010. The increase in operating expenses of $2.4 million in the fourth quarter of 2011, as compared to the third quarter of 2011, was primarily related to an increase in writedowns to estimated net realizable value of ORE properties that had been held for one year or more. During the fourth quarter of 2011, the Corporation recognized net expense of $1.9 million applicable to ORE writedowns and net realized gains/losses on ORE sales, compared to $0.3 million in the third quarter of 2011. The Corporation also recognized $0.3 million of expense during the fourth quarter of 2011 related to the reduction in the carrying value of a building facility that is no longer being used and is held for sale. The Corporation's efficiency ratio was 63.1 percent in the fourth quarter of 2011, compared to 60.2 percent in the third quarter of 2011 and 63.3 percent in the fourth quarter of 2010.

Total assets were $5.34 billion at December 31, 2011, down from $5.44 billion at September 30, 2011 and up from $5.25 billion at December 31, 2010. The decrease in assets during the fourth quarter of 2011 was largely attributable to a decrease in interest-bearing balances held at the Federal Reserve Bank (FRB) resulting from a seasonal decline in deposits of municipal customers. The Corporation continues to maintain significant amounts of funds generated from deposit growth over the last two years at the FRB, and thus maintains a high level of available liquidity, with $256 million in balances held at the FRB at December 31, 2011, compared to $479 million at September 30, 2011 and $440 million at December 31, 2010.

Total loans were $3.83 billion at December 31, 2011, compared to $3.76 billion at September 30, 2011 and $3.68 billion at December 31, 2010. The increase in total loans of $150 million, or 4.1 percent, during the twelve months ended December 31, 2011 was driven primarily by increases in commercial loans and real estate residential loans. Approximately one-half of the 2011 increase in total loans occurred during the fourth quarter of the year, with commercial loans up $36 million, or 16.8 percent on an annualized basis, and real estate residential loans up $22 million, or 10.3 percent on an annualized basis. The growth in loans during the fourth quarter of 2011 was attributable to a combination of improving economic conditions and higher loan demand, as well as the Corporation increasing its market share. Commercial loans increased $76 million, or 9.3 percent, and real estate residential loans increased $64 million, or 8.0 percent, during the twelve months ended December 31, 2011. The growth in real estate residential loans during the twelve months ended December 31, 2011 was partially attributable to the Corporation originating $44 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 Corporation's general practice. Investment securities were $851 million at December 31, 2011, compared to $797 million at September 30, 2011 and $744 million at December 31, 2010.

Total deposits were $4.37 billion at December 31, 2011, compared to $4.48 billion at September 30, 2011 and $4.33 billion at December 31, 2010. The Corporation experienced a decrease of $114 million, or 2.5 percent, in total deposits during the fourth quarter of 2011, primarily attributable to a seasonal decline in deposits of municipal customers. The Corporation 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 Corporation intends to continue to pay off these wholesale funding sources as they mature. FHLB advances totaled $43.1 million at December 31, 2011, down from $46.0 million at September 30, 2011 and $74.1 million at December 31, 2010. Brokered deposits totaled $95 million at December 31, 2011, down from $98 million at September 30, 2011 and $163 million at December 31, 2010. The reduction in FHLB advances and brokered deposits and the repricing of matured customer certificates of deposit resulted in the Corporation's average cost of funds declining to 0.73 percent in the fourth quarter of 2011 from 0.80 percent in the third quarter of 2011.

At December 31, 2011, the Corporation's tangible equity to assets ratio and total risk-based capital ratio were 8.7 percent and 13.1 percent, respectively, compared to 8.6 percent and 13.1 percent, respectively, at September 30, 2011. At December 31, 2011, the Corporation's book value was $20.82 per share, compared to $21.02 per share at September 30, 2011 and $20.41 per share at December 31, 2010.

The credit quality of the Corporation's loan portfolio showed continued improvement during the fourth quarter of 2011. At December 31, 2011, the Corporation's $3.34 billion portfolio 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 $82.2 million, compared to $94.1 million at September 30, 2011 and $110.4 million at December 31, 2010, representing declines of 12.7 percent and 25.5 percent, respectively. The Corporation'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 $24.1 million at December 31, 2011, down from $26.3 million at September 30, 2011 and $37.4 million at December 31, 2010. At December 31, 2011, the Corporation's $493 million portfolio of acquired loans, representing loans acquired in the OAK acquisition, were overall performing slightly better than expected, despite the establishment of a $1.6 million allowance for loan losses on acquired loans during 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 $25.5 million at December 31, 2011, compared to $28.7 million at September 30, 2011 and $27.5 million at December 31, 2010. The net decrease in the fourth quarter of 2011 was primarily attributable to writedowns of ORE properties that had been held for one year or more, as previously discussed.

At December 31, 2011, the allowance for loan losses of the originated portfolio was $86.7 million, or 2.60 percent of originated loans, compared to 2.68 percent at September 30, 2011 and 2.86 percent at December 31, 2010. The allowance for loan losses of the originated portfolio as a percentage of nonperforming loans was 82 percent at December 31, 2011, compared to 73 percent at September 30, 2011 and 61 percent at December 31, 2010. At December 31, 2011, nonperforming loans as a percentage of total loans were 2.77 percent, down from 3.20 percent at September 30, 2011 and 4.01 percent at December 31, 2010.

Chemical Financial Corporation is the second-largest bank holding company headquartered and operating branch offices in Michigan. The Corporation operates through a single subsidiary bank, Chemical Bank, with 142 banking offices spread over 32 counties in the lower peninsula of Michigan. At December 31, 2011, the Corporation had total assets of $5.3 billion. Chemical Financial Corporation's common stock trades on The NASDAQ Stock Market under the symbol CHFC and is one of the issues comprising the NASDAQ Global Select Market. More information about the Corporation is available by visiting the investor relations section of its website at www.chemicalbankmi.com.

Forward-Looking Statements

This 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 "capitalize," "continue," "focus," "improving," "intends," "opportunities," "will," "strategies," "trends," "anticipated," "further," "progress," "yet," "look" 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, anticipated consolidation opportunities in Michigan's banking industry, future income levels, and our ability to grow our loan portfolio, improve credit quality and control operating costs. 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 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, 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 Fourth Quarter Operating Results
     
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation 
     
     
(In thousands, except per share data) December 31 2011 December 31 2010
Assets:    
Cash and cash equivalents:    
Cash and cash due from banks  $ 121,294  $ 91,403
Interest-bearing deposits with unaffiliated banks and others  260,646  444,762
Total cash and cash equivalents  381,940  536,165
Investment securities:    
Available-for-sale  667,276  578,610
Held-to-maturity  183,339  165,400
Total Investment Securities  850,615  744,010
Loans held-for-sale  18,818  20,479
     
Loans:    
Commercial   895,150  818,997
Real estate commercial   1,071,999  1,076,971
Real estate construction and land development   118,176  142,620
Real estate residential   861,716  798,046
Consumer installment and home equity  884,244  845,028
Total Loans  3,831,285  3,681,662
Allowance for loan losses  (88,333)  (89,530)
Net Loans  3,742,952  3,592,132
     
Premises and equipment  65,997  65,961
Goodwill  113,414  113,414
Other intangible assets  11,472  13,521
Interest receivable and other assets  154,245  160,527
Total Assets  $ 5,339,453  $ 5,246,209
     
Liabilities:    
Deposits:    
Noninterest-bearing   $ 875,791  $ 753,553
Interest-bearing   3,491,066  3,578,212
Total Deposits  4,366,857  4,331,765
Interest payable and other liabilities  54,024  37,533
Short-term borrowings  303,786  242,703
Federal Home Loan Bank advances   43,057  74,130
Total Liabilities  4,767,724  4,686,131
     
Shareholders' Equity:    
Preferred stock, no par value per share  --  --
Common stock, $1 par value per share  27,457  27,440
Additional paid-in capital  431,277  429,511
Retained earnings  138,324  117,238
Accumulated other comprehensive loss  (25,329)  (14,111)
Total Shareholders' Equity  571,729  560,078
Total Liabilities and Shareholders' Equity  $ 5,339,453  $ 5,246,209
 
Chemical Financial Corporation Announces Fourth Quarter Operating Results
         
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation 
         
  Three Months Ended
December 31
Twelve Months Ended
December 31
(In thousands, except per share data) 2011 2010 2011 2010
Interest Income:        
Interest and fees on loans  $ 49,515  $ 50,766  $ 197,897  $ 192,247
Interest on investment securities:        
Taxable  2,539  2,557  9,423  11,363
Tax-exempt  1,475  1,405  5,860  4,999
Dividends on nonmarketable equity securities  360  308  965  766
Interest on deposits with unaffiliated banks and others  241  312  1,097  1,055
Total Interest Income  54,130  55,348  215,242  210,430
         
Interest Expense:        
Interest on deposits  6,665  8,679  29,293  35,895
Interest on short-term borrowings  106  161  524  650
Interest on Federal Home Loan Bank advances   274  560  1,572  2,765
Total Interest Expense  7,045  9,400  31,389  39,310
Net Interest Income   47,085  45,948  183,853  171,120
Provision for loan losses  5,100  10,300  26,000  45,600
Net Interest Income after Provision for Loan Losses  41,985  35,648  157,853  125,520
         
Noninterest Income:        
Service charges on deposit accounts  4,948  4,400  18,452  18,562
Wealth management revenue  2,674  2,690  11,104  10,106
Other charges and fees for customer services  2,534  2,703  10,501  9,599
Mortgage banking revenue  1,145  1,088  3,881  3,925
Investment securities loss  --  (82)  --  --
Other   200  114  462  280
Total Noninterest Income  11,501  10,913  44,400  42,472
         
Operating Expenses:        
Salaries, wages and employee benefits  18,871  18,766  74,493  68,416
Occupancy   3,444  3,017  12,974  11,491
Equipment and software  2,941  3,336  11,935  13,446
Other  12,551  11,628  42,601  43,449
Total Operating Expenses  37,807  36,747  142,003  136,802
Income Before Income Taxes  15,679  9,814  60,250  31,190
Federal Income Tax Expense   4,475  2,275  17,200  8,100
Net Income   $ 11,204  $ 7,539  $ 43,050  $ 23,090
         
Net income per common share:        
Basic  $ 0.41  $ 0.27  $ 1.57  $ 0.88
Diluted  0.41  0.27  1.57  0.88
         
Cash dividends declared per common share  0.20  0.20  0.80  0.80
         
Average common shares outstanding:        
Basic  27,457  27,440  27,455  26,276
Diluted  27,541  27,476  27,506  26,305
 
Chemical Financial Corporation Announces Fourth Quarter Operating Results
                 
Financial Summary (Unaudited)
Chemical Financial Corporation 
          Three Months Ended December 31 Twelve Months Ended December 31
(Dollars in thousands)         2011 2010 2011 2010
Average Balances                 
Total assets          $ 5,341,079  $ 5,270,529  $ 5,304,098  $ 4,913,310
Total interest-earning assets          5,008,813  4,947,539  4,971,704  4,618,012
Total loans          3,772,140  3,659,385  3,730,795  3,438,550
Total deposits          4,378,066  4,336,523  4,349,873  4,017,230
Total interest-bearing liabilities          3,847,003  3,932,149  3,874,811  3,685,186
Total shareholders' equity          578,105  561,388  569,521  530,819
                 
          Three Months Ended December 31 Twelve Months Ended December 31
          2011 2010 2011 2010
Key Ratios (annualized where applicable)                
Net interest margin (taxable equivalent basis)         3.84% 3.79% 3.80% 3.80%
Efficiency ratio          63.1% 63.3% 60.8% 62.8%
Return on average assets         0.83% 0.57% 0.81% 0.47%
Return on average shareholders' equity         7.7% 5.3% 7.6% 4.3%
Average shareholders' equity as a  percent of average assets         10.8% 10.7% 10.7% 10.8%
Tangible shareholders' equity as a percent of total assets             8.7% 8.6%
Total risk-based capital ratio             13.1% 12.9%
                 
  Dec 31 2011 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  $ 3,338,502  $ 3,265,054  $ 3,225,179  $ 3,143,489  $ 3,129,399  $ 3,045,872  $ 3,034,515  $ 2,988,315
Acquired Loans  492,783  495,372  522,831  539,027  552,263  594,999  613,446  --
Nonperforming Loans:                
 Nonaccrual loans  78,394  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  3,817  3,015 3,744 2,196 7,408 6,526 8,301 7,204
Troubled debt restructurings - commercial and real estate commercial  14,675  16,457 15,443 15,201 15,057 9,834  7,791  6,243
 Troubled debt restructurings - real estate residential   9,383  9,811 11,392 22,166 22,302  18,712  18,856  15,799
 Total nonperforming loans   106,269  120,395  135,929  145,859  147,729  147,904  142,929  130,128
Other real estate and repossessed assets (ORE)  25,484  28,679 24,607 26,355 27,510 22,704 21,724 18,813
Total nonperforming assets  131,753  149,074  160,536  172,214  175,239  170,608  164,653  148,941
                 
Performing troubled debt restructurings  20,394  15,543  12,889  --  --  --  --  --
                 
Allowance for loan losses-originated  86,733  87,413  89,733  89,674  89,530  89,521  89,502  84,155
Allowance for loan losses-acquired  1,600  1,300  --  --  --  --  --  --
                 
Allowance for loan losses-originated as a percent of:                
Total originated loans 2.60% 2.68% 2.78% 2.85% 2.86% 2.94% 2.95% 2.82%
Nonperforming loans 82% 73% 66% 61% 61% 61% 63% 65%
Nonperforming loans as a percent of total loans 2.77% 3.20% 3.63% 3.96% 4.01% 4.06% 3.92% 4.35%
Nonperforming assets as a percent of:                
Total loans plus ORE 3.42% 3.93% 4.26% 4.64% 4.72% 4.66% 4.49% 4.95%
Total assets 2.47% 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) 0.73% 0.78% 0.77% 0.80% 1.07% 1.06% 1.12% 1.43%
                 
  Dec 31  2011 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  $ 113,414  $ 110,266  $ 109,149  $ 69,908
Core deposit intangibles  7,879  8,261  8,643  9,024  9,406  10,352  10,791  2,183
Mortgage servicing rights (MSR)  3,593  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  382  381  382  436  439  337  148
 
Chemical Financial Corporation Announces Fourth Quarter Operating Results
             
Average Balances, Tax Equivalent Interest and Effective Yields and Rates*
             
  Three Months Ended December 31, 2011 Twelve Months Ended December 31, 2011
(Dollars in thousands)
Average
Balance
Tax
Equivalent
Interest

Effective
Yield/Rate

Average
Balance
Tax Equivalent
Interest

Effective
Yield/Rate
Assets            
Interest-Earning Assets:            
 Loans**  $ 3,789,507  $ 50,012 5.25%  $ 3,741,850  $ 199,982 5.34%
 Taxable investment securities 648,858 2,539 1.57 607,921 9,423 1.55
 Tax-exempt investment securities 176,690 2,276 5.15 171,971 8,907 5.18
 Other interest-earning assets 25,572 360 5.58 26,252 965 3.68
 Interest-bearing deposits with unaffiliated banks and others 368,186 241 0.26 423,710 1,097 0.26
Total interest-earning assets 5,008,813 55,428 4.40 4,971,704 220,374 4.43
Less: Allowance for loan losses 91,021     91,720    
Other Assets:            
 Cash and cash due from banks 111,647     113,919    
 Premises and equipment 65,440     65,344    
 Interest receivable and other assets 246,200     244,851    
Total Assets  $ 5,341,079      $ 5,304,098    
             
Liabilities and shareholders' equity            
Interest-bearing Liabilities:            
 Interest-bearing demand deposits  $ 825,123  $ 273 0.13%  $ 820,996  $ 1,366 0.17%
 Savings deposits 1,142,369 447 0.16 1,141,977 2,342 0.21
 Time deposits 1,530,483 5,945 1.54 1,560,405 25,585 1.64
 Short-term borrowings 304,750 106 0.14 287,176 524 0.18
 FHLB advances 44,278 274 2.46 64,257 1,572 2.45
Total interest-bearing liabilities 3,847,003 7,045 0.73 3,874,811 31,389 0.81
Noninterest-bearing deposits 880,091     826,495    
Total deposits and borrowed funds 4,727,094     4,701,306    
Interest payable and other liabilities 35,880     33,271    
Shareholders' equity 578,105     569,521    
Total Liabilities and Shareholders' Equity  $ 5,341,079      $ 5,304,098    
Net Interest Spread (Average yield earned minus average rate paid)   3.67%     3.62%
Net Interest Income (FTE)    $ 48,383      $ 188,985  
Net Interest Margin (Net Interest Income (FTE) divided by  total average interest-earning assets)     3.84%     3.80%
             
* Taxable equivalent 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 Operating Results
                 
Nonperforming Assets (Unaudited)
Chemical Financial Corporation 
                 
(Dollars in thousands) Dec 31 2011 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  $ 10,726  $ 10,804  $ 14,386  $ 15,672  $ 16,668  $ 19,440  $ 21,643  $ 18,382
Real estate commercial  43,381  48,854  57,324 59,931  60,558  59,353 57,085 51,865
Real estate construction and land development  7,247  7,877  8,933 9,414  8,967  16,085 13,397 15,870
Real estate residential  12,573  17,544  17,809 15,505  12,083  13,485 12,499 10,913
Consumer installment and home equity  4,467  6,033  6,898 5,774  4,686  4,469 3,357 3,852
Total nonaccrual loans  78,394  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  1,381  282  629 455  530  909 2,108 2,576
Real estate commercial  374  415  143 459  1,350  2,265 2,030 1,483
Real estate construction and land development  287  --  --  --  1,220  -- 436 988
Real estate residential  752  974  1,729 191  3,253  2,316 2,842 1,636
Consumer installment and home equity  1,023  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  3,817  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  14,675  16,457  15,443 15,201  15,057  9,834 7,791 6,243
Real estate residential loans  9,383  9,811  11,392 22,166  22,302  18,712 18,856 15,799
Total loans modified under troubled debt restructurings  24,058  26,268  26,835 37,367  37,359  28,546 26,647 22,042
Total nonperforming loans  106,269  120,395  135,929 145,859  147,729  147,904 142,929 130,128
Other real estate and repossessed assets  25,484  28,679  24,607 26,355  27,510  22,704 21,724 18,813
Total nonperforming assets  $ 131,753  $ 149,074  $ 160,536  $ 172,214  $ 175,239  $ 170,608  $ 164,653  $ 148,941
 
Chemical Financial Corporation Announces Fourth Quarter Operating Results
                 
Summary of Loan Loss Experience (Unaudited)
Chemical Financial Corporation 
                 
  Three Months Ended
(Dollars in thousands) Dec 31 2011 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  $ 88,713  $ 89,733  $ 89,674  $ 89,530  $ 89,521  $ 89,502  $ 84,155  $ 80,841
Provision for loan losses  5,100  6,400 7,000  7,500  10,300  8,600 12,700 14,000
Loans charged off:                
Commercial  (1,768)  (1,234) (1,972)  (1,976)  (2,797)  (2,830)  (1,438)  (1,365)
Real estate commercial  (2,120)  (3,969) (3,168)  (3,875)  (3,828)  (2,586)  (2,108)  (2,289)
Real estate construction and land development  (54)  (236) (136)  (63)  (1,111)  (146)  (638)  (644)
Real estate residential  (945)  (1,884) (1,198)  (944)  (1,349)  (1,767)  (1,752)  (3,173)
Consumer installment and home equity  (1,434)  (1,516) (1,832)  (1,784)  (1,961)  (1,916)  (2,361)  (4,427)
Total loan charge-offs  (6,321)  (8,839) (8,306)  (8,642)  (11,046)  (9,245)  (8,297)  (11,898)
Recoveries of loans previously charged off:                
Commercial  137  614 710  215  165  212  171  373
Real estate commercial  272  285 212  87  189  38  29  170
Real estate construction and land development  40  -- 5  --  --  19  1  --
Real estate residential  80  207 106  456  74  109  175  185
Consumer installment and home equity  312  313 332  528  327  286  568  484
Total loan recoveries  841  1,419 1,365  1,286  755  664  944  1,212
Net loan charge-offs  (5,480)  (7,420) (6,941)  (7,356)  (10,291)  (8,581)  (7,353)  (10,686)
Allowance for loan losses at end of period  $ 88,333  $ 88,713  $ 89,733  $ 89,674  $ 89,530  $ 89,521  $ 89,502  $ 84,155
                 
                 
Provision for loan losses (year-to-date)  $ 26,000  $ 20,900  $ 14,500  $ 7,500  $ 45,600  $ 35,300  $ 26,700  $ 14,000
Net loan charge-offs (year-to-date)  27,197  21,717  14,297 7,356 36,911 26,620 18,039 10,686
 
Chemical Financial Corporation Announces Fourth Quarter Operating Results
                 
Selected Quarterly Information (Unaudited)                
Chemical Financial Corporation                 
                 
(Dollars in thousands, except per share data) 4th Qtr. 2011 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  $ 54,130  $ 53,998  $ 53,439  $ 53,675  $ 55,348  $ 55,998  $ 52,962  $ 46,122
Interest expense  7,045  7,729 8,145 8,470  9,400  10,105  10,071  9,734
Net interest income  47,085  46,269 45,294 45,205  45,948  45,893 42,891 36,388
Provision for loan losses  5,100  6,400 7,000 7,500  10,300  8,600  12,700  14,000
Net interest income after provision for loan losses  41,985  39,869 38,294 37,705  35,648  37,293  30,191  22,388
Noninterest income  11,501  11,225 10,902 10,772  10,913  11,119  11,000  9,440
Operating expenses   37,807  35,394 33,413 35,389  36,747  36,216  34,650  29,189
Income before income taxes  15,679  15,700 15,783 13,088  9,814  12,196  6,541  2,639
Federal income tax expense  4,475  4,075 4,750 3,900  2,275  3,325  2,150  350
Net income   $ 11,204  $ 11,625  $ 11,033  $ 9,188  $ 7,539  $ 8,871  $ 4,391  $ 2,289
                 
Net interest margin 3.84% 3.80% 3.78% 3.78% 3.79% 3.80% 3.88% 3.72%
 
Per Common Share Data                
Net income:                
 Basic  $ 0.41  $ 0.42  $ 0.40  $ 0.33  $ 0.27  $ 0.32  $ 0.17  $ 0.10
 Diluted  0.41  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  0.20
Book value - period-end  20.82  21.02 20.78  20.54  20.41  20.44  20.27  19.76
Market value - period-end  21.32  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