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Press Release

Chemical Financial Corporation Announces First Quarter Operating Results

Company Release - 4/21/2003 12:00 AM ET
MIDLAND, Mich., April 21 /PRNewswire-FirstCall/

Aloysius J. Oliver, Chairman of Chemical Financial Corporation (Nasdaq: CHFC), today announced first quarter net income of $14.0 million or $.59 per diluted share, up $.3 million as compared with net income of $13.7 million, or $.58 per diluted share for the first quarter of 2002. This represents an increase of 1.7% in earnings per share and a 2.2% increase in net income for the first quarter 2003. The returns on average assets and average equity during the first quarter of 2003 were 1.59% and 13.1%, respectively, as compared with 1.57% and 14.1%, respectively, for the first quarter of 2002.

Net interest income decreased $1.1 million, or 3.0%, to $35.1 million in the first quarter of 2003, as compared to the first 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 $.6 million, or 7.4%. This increase was primarily due to higher service charge income of $1.3 million. A reduction in operating expenses of $.7 million, or 2.8%, also had a positive effect on earnings.

Total assets of the Corporation at March 31, 2003 were $3.61 billion, up 2.6% over the $3.52 billion in total assets reported at March 31, 2002. Total deposits at March 31, 2003 were $2.90 billion, up 2.8% over total deposits of $2.82 billion at March 31, 2002. Total loans increased 2.2% during the latest twelve months, from $2.09 billion at March 31, 2002, to $2.13 billion in outstanding loans at March 31, 2003.

The Corporation's provision for loan losses for the quarter ended March 31, 2003 was $295 thousand as compared to net loan losses of $274 thousand. As of March 31, 2003, the allowance for loan losses was $30.7 million and represented 1.44% of total loans. Non-performing loans were $11.2 million, or .52% of total loans at the current quarter-end.

Shareholders' equity at March 31, 2003 was $437 million, or $18.45 per share, and represented 12.1% of total assets and a tangible equity to asset ratio of 11.1% as of March 31, 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 interest 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 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 clarifyforward-looking statements to reflect events or conditions after the date of this release.