Menu

Press Release

Chemical Financial Corporation Announces First Quarter Operating Results

Company Release - 4/19/2004 7:53 AM ET

MIDLAND, Mich., April 19 /PRNewswire-FirstCall/ -- Aloysius J. Oliver, Chairman of Chemical Financial Corporation (Nasdaq: CHFC), today announced first quarter net income of $14.1 million, or $.59 per diluted share, up $.1 million as compared with net income of $14.0 million, or $.59 per diluted share, for the first quarter of 2003. This represents an increase of .7% in net income for the first quarter 2004. The returns on average assets and average equity during the first quarter of 2004 were 1.46% and 12.3%, respectively, as compared with 1.59% and 13.1%, respectively, for the first quarter of 2003.

Net interest income increased $1.7 million, or 4.8%, to $36.8 million in the first quarter of 2004, as compared to the first quarter of 2003. The increase was attributable to the acquisition of Caledonia Financial Corporation ("Caledonia") on December 1, 2003. The Corporation's earnings were also positively affected by an increase in noninterest income of $.6 million, or 7%. This increase was primarily due to increases in investment securities gains of $.8 million, service charge income of $.7 million and trust services revenue of $.2 million. These noninterest income increases were partially offset by a decrease in mortgage banking revenue of $.8 million. Total operating expenses increased $2.1 million, or 9.3%, in the first quarter of 2004, as compared to the first quarter of 2003. The additional operating expenses attributable to the acquisition of Caledonia, of approximately $1.1 million, represented slightly over one-half of the increase.

Total assets of the Corporation at March 31, 2004 were $3.91 billion, up 8.2% over the $3.61 billion in total assets reported at March 31, 2003. Total deposits at March 31, 2004 were $3.02 billion, up 3.9% over total deposits of $2.90 billion at March 31, 2003. Total loans increased $417 million, or 19.6%, during the twelve months ended March 31, 2004 to $2.55 billion. The acquisition of Caledonia added $211 million in assets, $184 million in loans and $171 million in deposits on December 1, 2003. In addition, the Corporation borrowed $150 million from the Federal Home Loan Bank in the first quarter of 2004 and invested the proceeds in five and seven-year balloon type mortgage-backed securities.

The Corporation's provision for loan losses for the quarter ended March 31, 2004 was $746,000, as compared to net loan charge-offs of $431,000. As of March 31, 2004, the allowance for loan losses was $33.5 million and represented 1.31% of total loans. Non-performing loans were $11.9 million, or .47% of total loans, at the current quarter-end.

Shareholders' equity at March 31, 2004 was $470 million, or $19.63 per share, and represented 12% of total assets and a tangible equity to asset ratio of 10.3% as of March 31, 2004.

Chemical Financial Corporation is the fourth largest bank holding company headquartered in Michigan. The Company's four subsidiary banks operate 133 banking offices and 2 loan production offices spread over 33 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.


    Chemical Financial Corporation
 Announces First Quarter Operating Results

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


                                            March 31,  December 31,  March 31,
    (In thousands)                            2004         2003         2003
    Assets:
    Cash and demand deposits due from
     banks                                 $106,610     $131,184     $114,023
    Federal funds sold                       75,400       25,900       32,400
    Interest-bearing deposits with
     unaffiliated banks                      27,854        5,107       18,674
    Investment securities taxable           965,744      876,806    1,171,406
    Investment securities nontaxable         44,955       45,056       51,672
        Total Investment Securities       1,010,699      921,862    1,223,078
    Commercial loans                        444,229      405,929      325,673
    Real estate construction loans          148,592      138,280      106,384
    Real estate commercial loans            640,292      628,815      506,243
    Real estate residential loans           773,195      767,199      691,626
    Consumer loans                          542,811      541,052      501,767
        Total Loans                       2,549,119    2,481,275    2,131,693
    Less: Allowance for loan losses          33,494       33,179       30,693
        Net Loans                         2,515,625    2,448,096    2,101,000
    Premises and equipment                   48,669       49,616       41,841
    Intangible assets                        76,141       76,846       40,060
    Other assets                             49,574       50,277       42,423
        Total Assets                     $3,910,572   $3,708,888   $3,613,499
    Liabilities and Shareholders' Equity:
    Noninterest-bearing deposits           $502,147     $532,752     $448,585
    Interest-bearing deposits             2,515,476    2,434,484    2,455,517
        Total Deposits                    3,017,623    2,967,236    2,904,102
    FHLB borrowings                         292,210      155,373      153,591
    Other borrowings - short term            92,002       91,524       83,348
    Interest payable and
     other liabilities                       38,940       36,706       35,418
        Total Liabilities                 3,440,775    3,250,839    3,176,459
    Shareholders' Equity:
      Common stock, $1 par value             23,931       23,801       23,690
      Surplus                               333,065      328,774      325,096
      Retained earnings                     102,530       94,746       70,812
      Accumulated other comprehensive
       income                                10,271       10,728       17,442
        Total Shareholders' Equity          469,797      458,049      437,040
        Total Liabilities and
         Shareholders' Equity            $3,910,572   $3,708,888   $3,613,499



    Chemical Financial Corporation
 Announces First Quarter Operating Results

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

                                                        Three Months Ended
                                                            March 31,
    (In thousands, except per share data)            2004              2003
    Interest Income:
    Interest and fees on loans                     $37,478           $36,414
    Interest on investment securities:
       Taxable                                       8,876            10,680
       Nontaxable                                      565               677
          Total Interest on Securities               9,441            11,357
    Interest on federal funds sold                     201               336
    Interest on deposits with
     unaffiliated banks                                 77               139
          Total Interest Income                     47,197            48,246

    Interest Expense:
    Interest on deposits                             7,703            10,840
    Interest on FHLB borrowings                      2,576             2,113
    Interest on other borrowings - short term           96               169
          Total Interest Expense                    10,375            13,122
          Net Interest Income                       36,822            35,124
    Provision for loan losses                          746               295
          Net Interest Income after
                Provision for Loan Losses           36,076            34,829

    Noninterest Income:
    Service charges on deposit accounts              4,554             3,891
    Trust services revenue                           1,909             1,727
    Other charges and fees for customer services     1,548             1,915
    Mortgage banking revenue                           780             1,547
    Investment securities gains                        983               184
    Other                                              188                50
          Total Noninterest Income                   9,962             9,314

    Operating Expenses:
    Salaries and employee benefits                  14,801            13,689
    Occupancy and equipment                          4,844             4,013
    Other                                            5,515             5,324
          Total Operating Expenses                  25,160            23,026
    Income Before Income Taxes                      20,878            21,117
          Federal income taxes                       6,759             7,103
    Net Income                                     $14,119           $14,014

    Net income per share:
       Basic                                         $0.59             $0.59
       Diluted                                        0.59              0.59

    Cash dividends per share                         0.265              0.25

    Average shares outstanding:
       Basic                                        23,892            23,696
       Diluted                                      23,986            23,740



    Chemical Financial Corporation
 Announces First Quarter Operating Results

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

                                                       Three Months Ended
                                                            March 31,
                                                      2004               2003
    Average Balances
    Total assets                                $3,888,849         $3,574,354
    Total interest-earning assets                3,633,736          3,398,914
    Total loans                                  2,517,080          2,100,747
    Total deposits                               3,020,391          2,861,776
    Total shareholders' equity                     463,268            433,989

                                                       Three Months Ended
                                                            March 31,
                                                      2004               2003
    Key Ratios (annualized where
     applicable)
    Net interest margin                               4.12%              4.25%
    Efficiency ratio                                  53.3%              51.3%
    Return on average assets                          1.46%              1.59%
    Return on average shareholders' equity            12.3%              13.1%
    Average shareholders' equity as a
       percent of average assets                      11.9%              12.1%
    Tangible shareholders' equity as a
       percent of total assets                        10.3%              11.1%
    Total risk-based capital ratio                    16.5%              18.7%

                                                            March 31,
                                                      2004               2003
    Credit Quality Statistics
    Nonaccrual loans                                $5,317             $5,730
    Loans 90 or more days past due
       and still accruing                            6,559              5,442
    Total nonperforming loans                       11,876             11,172
    Repossessed assets acquired (RAA)                6,294              4,590
    Total nonperforming assets                      18,170             15,762
    Net loan charge-offs                               431                274

    Allowance for loan losses as a
       percent of total loans                         1.31%              1.44%
    Allowance for loan losses as a
       percent of nonperforming loans                  282%               275%
    Nonperforming loans as a
       percent of total loans                         0.47%              0.52%
    Nonperforming assets as a
       percent of total loans plus RAA                0.71%              0.74%
    Net loan charge-offs as a
       percent of average loans                       0.07%              0.05%

                                                            March 31,
                                                      2004               2003
    Additional Data
    Goodwill                                       $63,295            $27,940
    Core deposit intangibles                         9,611              9,592
    Mortgage servicing rights                        3,235              2,528
    Amortization of intangibles                        751                808



    Chemical Financial Corporation
 Announces First Quarter Operating Results

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

                                  1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
                                    2004     2003     2003     2003     2003
    Summary of Operations
    Interest income               $47,197  $44,857  $45,237  $46,697  $48,246
    Interest expense               10,375   10,002   10,473   11,668   13,122
    Net interest income            36,822   34,855   34,764   35,029   35,124
    Provision for loan losses         746      727      540    1,272      295
    Net interest income after
     provision for loan losses     36,076   34,128   34,224   33,757   34,829
    Noninterest income              9,962    9,420   10,274   10,086    9,314
    Noninterest expense            25,160   23,014   22,701   23,182   23,026
    Income taxes                    6,759    6,971    7,328    6,991    7,103
    Net income                     14,119   13,563   14,469   13,670   14,014

    Per Common Share Data
    Net income:
         Basic                      $0.59    $0.57    $0.61    $0.58    $0.59
         Diluted                     0.59     0.57     0.61     0.58     0.59
    Cash dividends                  0.265     0.25     0.25     0.25     0.25
    Book value                      19.63    19.25    18.94    18.73    18.45

SOURCE  Chemical Financial Corporation

    -0-                             04/19/2004
    /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/comp/157448.html/
    /Web site:  http://chemicalbankmi.com /
    (CHFC)

CO:  Chemical Financial Corporation

ST:  Michigan
IN:  FIN
SU:  ERN

TM-ML 
-- DEM014 --
4655 04/19/2004 07:53 EDT http://www.prnewswire.com