Chemical Financial Corporation Reports Fourth Quarter And Full Year 2013 Results

MIDLAND, Mich., Jan. 27, 2014 (GLOBE NEWSWIRE) -- Chemical Financial Corporation (Nasdaq:CHFC) today announced 2013 fourth quarter net income of $14.4 million, or $0.48 per diluted share, up 14.3% on a diluted per share basis over 2012 fourth quarter net income of $11.7 million, or $0.42 per diluted share. For the twelve months ended December 31, 2013, net income was $56.8 million, or $2.00 per diluted share, an increase of 8.1% on a diluted per share basis compared to net income for the twelve months ended December 31, 2012 of $51.0 million, or $1.85 per diluted share.

"Fourth quarter 2013 earnings per share increased 14% over fourth quarter 2012 results, capping a strong year of earnings for Chemical Financial Corporation shareholders. Robust organic balance sheet growth, improving credit quality metrics and a focus on controlling costs led to consistent earnings improvement over the course of the year. While we remain confident in our prospects going forward, it is important to remember that future earnings improvement will be driven increasingly by overall balance sheet and fee income growth coupled with vigilant cost discipline, as opposed to credit quality improvements and cost cutting," said David B. Ramaker, Chairman, Chief Executive Officer and President.

"As our economy improves, we expect to see continued organic growth in 2014. By making Chemical Bank the community-oriented, Michigan-centric, financial institution of choice in the markets we serve---and seeking to partner with like-minded institutions in the state as Michigan's banking industry consolidates---we believe we are well positioned to achieve additional competitive and acquisitive market share gains as we move forward," Ramaker added.

Net income of $14.4 million in the fourth quarter of 2013 was $0.6 million, or 4.1%, lower than the third quarter of 2013, with higher net interest income and a lower provision for loan losses offset by slightly lower noninterest income and higher operating expenses in the fourth quarter of 2013. Net income in the fourth quarter of 2013 was $2.7 million, or 23%, higher than the fourth quarter of 2012, primarily attributable to a combination of higher net interest income and a lower provision for loan losses. Net income of $56.8 million in 2013 was $5.8 million, or 11.4%, higher than 2012, with higher net interest income and noninterest income and a lower provision for loan losses partially offset by higher operating expenses.

The Corporation's return on average assets was 0.93% during the fourth quarter of 2013, compared to 1.00% in the third quarter of 2013 and 0.83% in the fourth quarter of 2012. The Corporation's return on average shareholders' equity was 8.4% in the fourth quarter of 2013, compared to 9.6% in the third quarter of 2013 and 7.7% in the fourth quarter of 2012.

The net interest margin (on a tax-equivalent basis) was 3.63% in the fourth quarter of 2013, compared to 3.58% in the third quarter of 2013 and 3.74% in the fourth quarter of 2012. The slight increase in the net interest margin in the fourth quarter of 2013, compared to the third quarter of 2013, was largely attributable to growth in the loan portfolio. The decrease in the net interest margin in the fourth quarter of 2013, compared to the fourth quarter of 2012, was primarily attributable to the repricing of loans during the twelve months ended December 31, 2013, which was partially offset by growth in loans and the favorable repricing of deposits.

Net interest income was $51.3 million in the fourth quarter of 2013, $2.0 million, or 4.1%, higher than the third quarter of 2013 and $3.3 million, or 6.9%, higher than the fourth quarter of 2012. The increases in net interest income in the fourth quarter of 2013 over both the third quarter of 2013 and the fourth quarter of 2012 were largely attributable to loan growth. Total loans grew $125 million, or 2.8%, in the fourth quarter of 2013 and $480 million, or 11.5%, over the twelve months ended December 31, 2013.

Net interest income was $196.6 million in 2013, $9.1 million, or 4.9%, higher than 2012, with the increase primarily attributable to loan growth in 2013 and the favorable impact of interest-bearing deposits repricing lower during 2013. These increases were partially offset by the unfavorable impact of interest-earning assets repricing during the year. The net interest margin (on a tax equivalent basis) was 3.59% in 2013, compared to 3.76% in 2012.

The provision for loan losses was $2.0 million in the fourth quarter of 2013, compared to $3.0 million in the third quarter of 2013 and $5.0 million in the fourth quarter of 2012. The decrease in the provision for loan losses in the fourth quarter of 2013 compared to both the third quarter of 2013 and the fourth quarter of 2012 was due to continued improvement in the overall credit quality of the loan portfolio. The provision for loan losses was $11.0 million in 2013, compared to $18.5 million in 2012.

The Corporation's nonperforming loans, consisting of nonaccrual loans, accruing loans past due 90 days or more as to principal or interest payments and nonperforming troubled debt restructurings, totaled $82.0 million at December 31, 2013, compared to $75.8 million at September 30, 2013 and $90.9 million at December 31, 2012. Nonperforming loans comprised 1.76% of total loans at December 31, 2013, compared to 1.68% at September 30, 2013 and 2.18% at December 31, 2012. The increase in nonperforming loans during the fourth quarter of 2013 was largely attributable to the downgrade to nonaccrual status of $6.4 million of commercial and commercial real estate loans to an agricultural grower and processor. At December 31, 2013, the borrower was experiencing some financial difficulty; however, these loans were believed to be adequately secured by income-producing farm land and other assets. Accordingly, the Corporation did not require a specific impairment reserve on these loans at that date. The reduction in nonperforming loans during the twelve months ended December 31, 2013 was attributable to a combination of improving economic conditions and loan charge-offs.

Net loan charge-offs were $4.5 million, or 0.39% of average loans, in the fourth quarter of 2013, compared to $3.7 million, or 0.33% of average loans, in the third quarter of 2013 and $5.2 million, or 0.51% of average loans, in the fourth quarter of 2012. Net loan charge-offs totaled $16.4 million, or 0.38% of average loans, in 2013, compared to $22.3 million, or 0.57% of average loans, in 2012.

At December 31, 2013, the allowance for loan losses of the originated loan portfolio was $78.6 million, or 1.81% of originated loans, compared to $81.0 million, or 1.92% of originated loans, at September 30, 2013 and $84.0 million, or 2.22% of originated loans, at December 31, 2012. The allowance for loan losses of the originated loan portfolio as a percentage of nonperforming loans was 96% at December 31, 2013, compared to 107% at September 30, 2013 and 92% at December 31, 2012.

Noninterest income was $13.6 million in the fourth quarter of 2013, compared to $14.6 million in the third quarter of 2013 and $14.7 million in the fourth quarter of 2012. The decrease in noninterest income in the fourth quarter of 2013, compared to both the third quarter of 2013 and the fourth quarter of 2012, was largely attributable to lower mortgage banking revenue. Mortgage banking revenue was $0.6 million in the fourth quarter of 2013, compared to $1.0 million in the third quarter of 2013 and $2.5 million in the fourth quarter of 2012. The decreases in mortgage banking revenue in the fourth quarter of 2013, compared to both the third quarter of 2013 and the fourth quarter of 2012, were primarily attributable to declines in the volume of loans sold in the secondary market. The Corporation sold $36 million of residential mortgage loans in the secondary market in the fourth quarter of 2013, compared to $45 million in the third quarter of 2013 and $76 million in the fourth quarter of 2012.

Noninterest income was $60.4 million in 2013, compared to $54.7 million in 2012. Noninterest income in 2013 was $5.7 million, or 10.5%, higher than 2012, with the increase attributable to increases in all major categories of noninterest income, except for mortgage banking revenue, that was partially driven by growth in the volume of services provided and additional fees and revenue earned as a result of the acquisition of 21 branch banking offices in December 2012 (branch acquisition transaction). Wealth management revenue was $14.0 million in 2013, compared to $11.8 million in 2012, with the increase due partially to an increase in equity market performance that led to increased assets under management. Mortgage banking revenue was $5.3 million in 2013, compared to $6.6 million in 2012, with the decrease due primarily to declines in the volume of loans sold in the secondary market. The Corporation sold $211 million of residential mortgage loans in the secondary market in 2013, compared to $305 million in 2012.

Operating expenses were $42.4 million in the fourth quarter of 2013, compared to $39.5 million in the third quarter of 2013 and $42.0 million in the fourth quarter of 2012. The increase in operating expenses of $2.9 million, or 7.2%, in the fourth quarter of 2013, compared to the third quarter of 2013, was primarily attributable to an $0.8 million increase in donations expense, a $0.6 million increase in credit-related expenses, and a $0.5 million increase in group health care costs. The increase in donations expense was attributable to year-end commitments by the Corporation to the Chemical Bank Foundation to further assist in building the Foundation's endowment fund. The increase in credit-related expenses was primarily attributable to lower gains on the sales of other real estate properties in the fourth quarter of 2013, compared to the third quarter of 2013. While operating expenses in the fourth quarter of 2013 were similar to those in the fourth quarter of 2012, incremental operating costs associated with the branch acquisition transaction, merit and market-driven compensation increases provided to the Corporation's employees effective at the beginning of 2013, and higher performance-based compensation expenses were partially offset by lower credit-related expenses. Operating expenses in the fourth quarter of 2012 also included $1.8 million attributable to the branch acquisition transaction.

Operating expenses were $164.9 million in 2013, compared to $151.9 million in 2012. Operating expenses included nonrecurring costs in 2012 of $2.9 million attributable to the branch acquisition transaction. Excluding these nonrecurring expenses, operating expenses in 2013 were $15.9 million, or 11%, higher than 2012, due largely to incremental operating costs associated with the branch acquisition transaction, in addition to employee compensation costs resulting from merit increases, market-based salary adjustments, higher performance-based compensation and higher group health care costs, all of which were partially offset by lower credit-related expenses.

The Corporation's efficiency ratio was 63.7% in the fourth quarter of 2013, 61.0% in the third quarter of 2013 and 63.0% in the fourth quarter of 2012. The Corporation's efficiency ratio was 63.1% for 2013 and 60.8% for 2012.

Total assets were $6.18 billion at December 31, 2013, compared to $6.26 billion at September 30, 2013 and $5.92 billion at December 31, 2012. The increase in total assets during the twelve months ended December 31, 2013 was primarily attributable to an increase in deposits that was used to partially fund loan growth. The Corporation continues to keep its excess liquidity at the Federal Reserve Bank (FRB), with $180 million in balances held at the FRB at December 31, 2013, compared to $357 million at September 30, 2013 and $514 million at December 31, 2012.

Total loans were $4.65 billion at December 31, 2013, up from $4.52 billion at September 30, 2013 and $4.17 billion at December 31, 2012. During the three and twelve months ended December 31, 2013, total loans increased $125 million, or 2.8%, and $480 million, or 11.5%, respectively. The increases in loans during the three and twelve months ended December 31, 2013 occurred across all loan categories and were largely attributable to a combination of improving economic conditions and increased market share. The increase in loans of $480 million during 2013 was attributable to increases in commercial loans of $174 million, or 17.3%, commercial real estate loans of $71 million, or 6.1%, real estate construction and land development loans of $10 million, or 9.6%, residential real estate loans of $76 million, or 8.7%, and consumer installment and home equity loans of $149 million, or 14.6%. The average yield on the loan portfolio was 4.42% in the fourth quarter of 2013, compared to 4.44% in the third quarter of 2013 and 4.79% in the fourth quarter of 2012.

Investment securities were $958.5 million at December 31, 2013, compared to $987.7 million at September 30, 2013 and $816.8 million at December 31, 2012. The average yield of the investment securities portfolio was 2.07% in the fourth quarter of 2013, compared to 2.05% in the third quarter of 2013 and 2.21% in the fourth quarter of 2012.

Total deposits were $5.12 billion at December 31, 2013, compared to $5.19 billion at September 30, 2013 and $4.92 billion at December 31, 2012. The Corporation experienced an increase in total deposits of $201 million, or 4.1%, during the twelve months ended December 31, 2013, with the increase attributable to organic deposit growth of $255 million during the twelve months ended December 31, 2013, which was partially offset by the payoff of maturing brokered deposits acquired in the acquisition of O.A.K. Financial Corporation in 2010. The repricing of matured customer certificates of deposit and the decrease in interest rates on various interest-bearing deposit accounts to reflect lower market interest rates resulted in the Corporation's average cost of funds declining to 0.30% in the fourth quarter of 2013 from 0.32% in the third quarter of 2013 and 0.41% in the fourth quarter of 2012.

At December 31, 2013, the Corporation's tangible equity to assets ratio and total risk-based capital ratio were 9.4% and 14.0%, respectively, compared to 8.9% and 14.2%, respectively, at September 30, 2013 and 8.1% and 13.2%, respectively, at December 31, 2012. At December 31, 2013, the Corporation's book value was $23.38 per share, compared to $22.61 per share at September 30, 2013 and $21.69 per share at December 31, 2012. At December 31, 2013, the Corporation's tangible book value was $19.17 per share, compared to $18.36 per share at September 30, 2013 and $17.03 per share at December 31, 2012.

Chemical Financial Corporation will host a conference call to discuss its fourth quarter and full year 2013 results on Monday, January 27, 2014 at 11 a.m. eastern standard time. Anyone interested may access the conference call on a live basis by dialing toll-free at 1-888-378-0324 and entering 8885780 for the conference ID. The call will also be broadcast live over the Internet hosted at Chemical Financial Corporation's website at www.chemicalbankmi.com under the "Investor Info" section. A copy of the slide-show presentation and an audio replay of the call will remain available on Chemical Financial Corporation's website for at least 14 days.

Chemical Financial Corporation is the second largest banking company headquartered and operating branch offices in Michigan. The Corporation operates through a single subsidiary bank, Chemical Bank, with 156 banking offices spread over 38 counties in the lower peninsula of Michigan. At December 31, 2013, the Corporation had total assets of $6.2 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 (Corporation). Words or phrases such as "anticipates," "believes," "confident," "continue," "estimates," "expects," "focus," "forecasts," "future," "going-forward," "improving," "intends," "is likely," "judgment," "look," "opinion," "opportunities," "plans," "predicts," "projects," "prospects," "seeking," "should," "trend," "will," 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 future earnings improvement, future levels of loan charge-offs, future levels of provisions for loan losses, real estate valuation, future levels of nonperforming assets, the rate of asset dispositions, future capital levels, future changes in regulatory requirements, future dividends, future growth and funding sources, future liquidity levels, future profitability levels, the effects on earnings of future changes in interest rates, the future level of other revenue sources, future economic trends and conditions, future initiatives to expand the Corporation's market share, expected performance and cash flows from acquired loans, future effects of new or changed accounting standards, future opportunities for acquisitions, and future cost savings. 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 and mortgage servicing rights; 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); and 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. The future effect of changes in the financial and credit markets and the national and regional economies 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, 2012. 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 and Full Year 2013 Operating Results
 
Consolidated Statements of Financial Position (Unaudited)      
Chemical Financial Corporation      
       
  December 31, 2013 September 30, 2013 December 31, 2012
  (In thousands, except per share data)
Assets      
Cash and cash equivalents:      
Cash and cash due from banks  $ 130,811  $ 135,839  $ 142,467
Interest-bearing deposits with the Federal Reserve Bank 179,977 357,271 513,668
Total cash and cash equivalents 310,788 493,110 656,135
Investment securities:      
Available-for-sale 684,570 705,146 586,809
Held-to-maturity 273,905 282,579 229,977
Total investment securities 958,475 987,725 816,786
Loans held-for-sale 5,219 7,907 17,665
       
Loans:      
Commercial 1,176,307 1,128,122 1,002,722
Commercial real estate 1,232,658 1,215,631 1,161,861
Real estate construction and land development 109,861 102,034 100,237
Residential mortgage 960,423 942,777 883,835
Consumer installment and home equity 1,168,372 1,134,107 1,019,080
Total loans 4,647,621 4,522,671 4,167,735
Allowance for loan losses (79,072) (81,532) (84,491)
Net loans 4,568,549 4,441,139 4,083,244
       
Premises and equipment 75,308 73,690 75,458
Goodwill 120,164 120,164 120,164
Other intangible assets 13,424 13,865 15,388
Interest receivable and other assets 132,781 120,636 132,412
Total Assets  $ 6,184,708  $ 6,258,236  $ 5,917,252
       
Liabilities      
Deposits:      
Noninterest-bearing  $ 1,227,768  $ 1,162,599  $ 1,085,857
Interest-bearing 3,894,617 4,028,706 3,835,586
Total deposits 5,122,385 5,191,305 4,921,443
Interest payable and other liabilities 38,395 36,019 54,716
Short-term borrowings 327,428 357,595 310,463
Federal Home Loan Bank (FHLB) advances 34,289
Total liabilities 5,488,208 5,584,919 5,320,911
       
Shareholders' Equity      
Preferred stock, no par value per share
Common stock, $1 par value per share 29,790 29,778 27,499
Additional paid-in capital 488,177 487,176 433,195
Retained earnings 199,053 191,538 166,766
Accumulated other comprehensive loss (20,520) (35,175) (31,119)
Total shareholders' equity 696,500 673,317 596,341
Total Liabilities and Shareholders' Equity  $ 6,184,708  $ 6,258,236  $ 5,917,252
 
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2013 Operating Results
 
Consolidated Statements of Income (Unaudited)        
Chemical Financial Corporation        
         
  Three Months Ended Twelve Months Ended
  December 31, December 31,
  2013 2012 2013 2012
  (In thousands, except per share data)
Interest Income        
Interest and fees on loans  $ 50,639  $ 48,721  $ 195,590  $ 193,193
Interest on investment securities:        
Taxable 2,497 2,280 10,234 9,890
Tax-exempt 1,656 1,524 6,394 5,931
Dividends on nonmarketable equity securities 404 403 1,105 1,041
Interest on deposits with the Federal Reserve Bank 127 198 738 703
Total interest income 55,323 53,126 214,061 210,758
         
Interest Expense        
Interest on deposits 3,893 4,783 16,883 21,782
Interest on short-term borrowings 125 109 484 426
Interest on FHLB advances 240 47 1,005
Total interest expense 4,018 5,132 17,414 23,213
         
Net Interest Income 51,305 47,994 196,647 187,545
Provision for loan losses 2,000 5,000 11,000 18,500
Net interest income after provision for loan losses 49,305 42,994 185,647 169,045
         
Noninterest Income        
Service charges and fees on deposit accounts 5,519 5,035 21,939 19,581
Wealth management revenue 3,296 2,928 13,989 11,763
Other charges and fees for customer services 3,925 3,743 17,151 14,227
Mortgage banking revenue 637 2,538 5,336 6,597
Gain on sale of investment securities 29 34 1,133 34
Gain on sale of merchant card services 1,280
Other 172 418 861 1,202
Total noninterest income 13,578 14,696 60,409 54,684
         
Operating Expenses        
Salaries, wages and employee benefits 24,357 22,537 96,419 84,383
Occupancy 3,485 3,149 13,934 12,413
Equipment and software 3,483 3,461 13,734 13,112
Other 11,080 12,881 40,861 42,013
Total operating expenses 42,405 42,028 164,948 151,921
Income before income taxes 20,478 15,662 81,108 71,808
Federal income tax expense 6,100 4,000 24,300 20,800
Net Income  $ 14,378  $ 11,662  $ 56,808  $ 51,008
         
Earnings Per Common Share:        
Weighted average common shares outstanding for basic earnings per share 29,786 27,498 28,183 27,492
Weighted average common shares outstanding for diluted earnings per share, including common stock equivalents 30,032 27,630 28,352 27,583
Basic earnings per common share  $ 0.48  $ 0.42  $ 2.02  $ 1.86
Diluted earnings per common share  $ 0.48  $ 0.42  $ 2.00  $ 1.85
Cash Dividends Declared Per Common Share  $ 0.23  $ 0.21  $ 0.87  $ 0.82
         
Key Ratios (annualized where applicable):        
Return on average assets 0.93% 0.83% 0.95% 0.94%
Return on average shareholders' equity 8.4% 7.7% 9.1% 8.7%
Net interest margin 3.63% 3.74% 3.59% 3.76%
Efficiency ratio 63.7% 63.0% 63.1% 60.8%
 
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2013 Operating Results
 
Financial Summary (Unaudited)                
Chemical Financial Corporation                
(Dollars in Thousands)                
                 
  Three Months Ended
  Dec 31, 2013 Sept 30, 2013 June 30, 2013 March 31, 2013 Dec 31, 2012 Sept 30, 2012 June 30, 2012 March 31, 2012
Average Balances                
Total assets  $ 6,117,217  $ 5,966,988  $ 5,859,822  $ 5,924,820  $ 5,576,422  $ 5,433,491  $ 5,360,598  $ 5,396,420
Total interest-earning assets 5,782,141 5,621,542 5,530,262 5,579,789 5,251,531 5,105,101 5,044,629 5,061,882
Total loans 4,588,448 4,424,332 4,249,708 4,152,570 4,077,918 3,987,928 3,901,321 3,824,604
Total deposits 5,065,671 4,960,270 4,878,214 4,950,956 4,590,370 4,464,582 4,383,628 4,416,273
Total interest-bearing liabilities 4,211,647 4,167,915 4,126,751 4,221,638 3,926,582 3,823,954 3,817,753 3,903,986
Total shareholders' equity 678,487 620,911 606,607 599,406 600,794 591,683 582,873 574,261
Key Ratios (annualized where applicable)                
Net interest margin (taxable equivalent basis) 3.63% 3.58% 3.60% 3.54% 3.74% 3.76% 3.80% 3.76%
Efficiency ratio 63.7% 61.0% 63.3% 64.4% 63.0% 59.3% 58.7% 62.1%
Return on average assets 0.93% 1.00% 0.97% 0.91% 0.83% 0.96% 1.04% 0.92%
Return on average shareholders' equity 8.4% 9.6% 9.4% 9.0% 7.7% 8.8% 9.6% 8.7%
Average shareholders' equity as a percent of average assets 11.1% 10.4% 10.4% 10.1% 10.8% 10.9% 10.9% 10.6%
Capital ratios (period end):                
Tangible shareholders' equity as a percent of total assets 9.4% 8.9% 8.5% 8.1% 8.1% 8.8% 9.0% 8.7%
Total risk-based capital ratio 14.0% 14.2% 13.1% 13.3% 13.2% 13.6% 13.6% 13.7%
   
  Dec 31, 2013 Sept 30, 2013 June 30, 2013 March 31, 2013 Dec 31, 2012 Sept 30, 2012 June 30, 2012 March 31, 2012
Credit Quality Statistics                
Originated Loans  $ 4,352,924  $ 4,213,728  $ 3,990,633  $ 3,810,989  $ 3,775,140  $ 3,606,547  $ 3,515,110  $ 3,370,279
Acquired Loans 294,697 308,943 345,238 374,272 392,595 412,612 447,232 472,819
Nonperforming Assets:                
Nonperforming loans 81,984 75,818 79,342 86,417 90,854 90,877 92,811 98,548
Other real estate / repossessed assets (ORE) 9,776 12,033 13,659 18,194 18,469 19,467 23,509 25,944
Total nonperforming assets 91,760 87,851 93,001 104,611 109,323 110,344 116,320 124,492
Performing troubled debt restructurings 39,571 34,071 32,657 30,723 31,369 30,406 26,383 27,177
Allowance for loan losses - originated as a percent of:                
Total originated loans 1.81% 1.92% 2.05% 2.16% 2.22% 2.33% 2.40% 2.54%
Nonperforming loans 96% 107% 103% 95% 92% 93% 91% 87%
Nonperforming loans as a percent of total loans 1.76% 1.68% 1.83% 2.06% 2.18% 2.26% 2.34% 2.56%
Nonperforming assets as a percent of:                
Total loans plus ORE 1.97% 1.94% 2.14% 2.49% 2.61% 2.73% 2.92% 3.22%
Total assets 1.48% 1.40% 1.60% 1.75% 1.85% 1.98% 2.17% 2.28%
Net loan charge-offs (year-to-date):                
Originated $ 16,419 $ 11,959 $ 8,307 $ 4,657 $ 20,142 $ 14,939 $ 10,622 $ 5,548
Acquired 2,200 2,200
Total loan charge-offs (year-to-date)   16,419   11,959   8,307   4,657   22,342   17,139   10,622   5,548
Net loan charge-offs as a percent of average loans (year-to-date, annualized) 0.38% 0.37% 0.40% 0.45% 0.57% 0.59% 0.55% 0.58%
   
  Dec 31, 2013 Sept 30, 2013 June 30, 2013 March 31, 2013 Dec 31, 2012 Sept 30, 2012 June 30, 2012 March 31, 2012
Additional Data - Intangibles                
Goodwill  $ 120,164  $ 120,164  $ 120,164  $ 120,164  $ 120,164  $ 113,414  $ 113,414  $ 113,414
Core deposit intangibles (CDI) 10,001 10,466 10,933 11,417 11,910 6,777 7,144 7,512
Mortgage servicing rights (MSR) 3,423 3,399 3,421 3,485 3,478 3,466 3,463 3,427
Amortization of CDI (quarter only) 465 467 484 493 467 367 368 367
 
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2013 Operating Results
 
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)*
Chemical Financial Corporation
             
  Three Months Ended December 31, 2013 Twelve Months Ended December 31, 2013
    Tax     Tax  
  Average Equivalent Effective Average Equivalent Effective
  Balance Interest Yield/Rate Balance Interest Yield/Rate
Assets (Dollars in thousands)
Interest-earning assets:            
Loans**  $ 4,595,248  $ 51,167 4.42%  $ 4,366,209  $ 197,563 4.52%
Taxable investment securities 725,658 2,497 1.38 721,932 10,234 1.42
Tax-exempt investment securities 247,256 2,542 4.11 233,965 9,776 4.18
Other interest-earning assets 25,572 404 6.27 25,572 1,105 4.32
Interest-bearing deposits with the Federal Reserve Bank 188,407 127 0.27 281,291 738 0.26
Total interest-earning assets 5,782,141 56,737 3.90 5,628,969 219,416 3.90
Less: allowance for loan losses (81,558)     (83,264)    
Other assets:            
Cash and cash due from banks 122,589     121,488    
Premises and equipment 74,258     74,134    
Interest receivable and other assets 219,787     223,265    
Total assets  $ 6,117,217      $ 5,964,592    
Liabilities and shareholders' equity            
Interest-bearing liabilities:            
Interest-bearing demand deposits  $ 1,145,924  $ 266 0.09%  $ 1,093,975  $ 1,011 0.09%
Savings deposits 1,382,324 309 0.09 1,357,317 1,210 0.09
Time deposits 1,347,393 3,318 0.98 1,391,045 14,662 1.05
Short-term borrowings 336,006 125 0.15 337,649 484 0.14
FHLB advances 1,935 47 2.43
Total interest-bearing liabilities 4,211,647 4,018 0.38 4,181,921 17,414 0.42
Noninterest-bearing deposits 1,190,030 1,121,745
Total deposits and borrowed funds 5,401,677 4,018 0.30 5,303,666 17,414 0.33
Interest payable and other liabilities 37,053     34,371    
Shareholders' equity 678,487     626,555    
Total liabilities and shareholders' equity  $ 6,117,217      $ 5,964,592    
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities)     3.52%     3.48%
Net Interest Income (FTE)    $ 52,719      $ 202,002  
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)     3.63%     3.59%
             
* Fully taxable equivalent (FTE) 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 and Full Year 2013 Operating Results
 
Nonperforming Assets (Unaudited)                
Chemical Financial Corporation                
   
  Dec 31, 2013 Sept 30, 2013 June 30, 2013 March 31, 2013 Dec 31, 2012 Sept 30, 2012 June 30, 2012 March 31, 2012
  (In thousands)
Nonperforming Loans:                
Nonaccrual loans:                
Commercial  $ 18,374  $ 11,809  $ 11,052  $ 12,186  $ 14,601  $ 15,217  $ 12,673  $ 11,443
Commercial real estate 28,598 28,623 28,498 35,849 37,660 41,311 41,691 46,870
Real estate construction 371 183 183 168 1,217 933 408 61
Land development 2,309 2,954 3,434 4,105 4,184 5,731 3,077 3,748
Residential mortgage 8,921 8,029 9,241 10,407 10,164 11,307 12,613 12,687
Consumer installment 676 665 552 699 739 876 1,182 1,278
Home equity 2,648 3,023 3,064 2,837 2,733 2,949 2,812 3,066
Total nonaccrual loans 61,897 55,286 56,024 66,251 71,298 78,324 74,456 79,153
Accruing loans contractually past due 90 days or more as to interest or principal payments:                
Commercial 536 281 1 4 273 300 1,005
Commercial real estate 190 78 177 87 247 269 75
Real estate construction
Land development
Residential mortgage 537 692 164 196 1,503 431 840 333
Consumer installment
Home equity 734 686 689 874 769 1,147 1,157 1,233
Total accruing loans contractually past due 90 days or more as to interest or principal payments 1,997 1,659 932 1,251 2,359 2,098 2,566 2,646
Nonperforming troubled debt restructurings:                
Commercial loan portfolio 13,414 15,744 19,140 14,587 13,876 6,553 11,691 11,258
Consumer loan portfolio 4,676 3,129 3,246 4,328 3,321 3,902 4,098 5,491
Total nonperforming troubled debt restructurings 18,090 18,873 22,386 18,915 17,197 10,455 15,789 16,749
Total nonperforming loans 81,984 75,818 79,342 86,417 90,854 90,877 92,811 98,548
Other real estate and repossessed assets 9,776 12,033 13,659 18,194 18,469 19,467 23,509 25,944
Total nonperforming assets  $ 91,760  $ 87,851  $ 93,001  $ 104,611  $ 109,323  $ 110,344  $ 116,320  $ 124,492
 
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2013 Operating Results
 
Summary of Loan Loss Experience (Unaudited)              
Chemical Financial Corporation                
                     
    Three Months Ended   Three Months Ended
  Twelve Months Ended Dec 31, 2013 Dec 31, 2013 Sept 30, 2013 June 30, 2013 March 31, 2013 Twelve Months Ended Dec 31, 2012 Dec 31, 2012 Sept 30, 2012 June 30, 2012 March 31, 2012
  (In thousands)
Allowance for loan losses - originated loan portfolio
Allowance for loan losses - beginning of period $ 83,991 $ 81,032 $ 81,684 $ 82,334 $ 83,991 $ 86,733 $ 84,194 $ 84,511 $ 85,585 $ 86,733
Provision for loan losses 11,000 2,000 3,000 3,000 3,000 17,400 5,000 4,000 4,000 4,400
Net loan charge-offs:                    
Commercial (2,321) (448) (615) (59) (1,199) (3,483) (1,345) (416) (834) (888)
Commercial real estate (6,277) (1,233) (1,248) (1,786) (2,010) (5,684) (330) (1,627) (1,880) (1,847)
Real estate construction (37) (37) (70) (70)
Land development (753) (207) (400) (50) (96) (1,294) (1,168) (51) (45) (30)
Residential mortgage (2,532) (527) (409) (1,023) (573) (4,876) (1,120) (1,120) (941) (1,695)
Consumer installment (2,643) (836) (786) (574) (447) (3,209) (917) (691) (872) (729)
Home equity (1,856) (1,172) (194) (158) (332) (1,526) (253) (412) (502) (359)
Net loan charge-offs (16,419) (4,460) (3,652) (3,650) (4,657) (20,142) (5,203) (4,317) (5,074) (5,548)
Allowance for loan losses - end of period 78,572 78,572 81,032 81,684 82,334 83,991 83,991 84,194 84,511 85,585
 
Allowance for loan losses - acquired loan portfolio
Allowance for loan losses - beginning of period 500 500 500 500 500 1,600 500 2,200 2,200 1,600
Provision for loan losses 1,100 500 600
Net loan charge-offs - (commercial) (2,200) (2,200)
Allowance for loan losses - end of period 500 500 500 500 500 500 500 500 2,200 2,200
Total allowance for loan losses $ 79,072 $ 79,072 $ 81,532 $ 82,184 $ 82,834 $ 84,491 $ 84,491 $ 84,694 $ 86,711 $ 87,785
Net loan charge-offs as a percent of average loans (quarterly amounts annualized) 0.38% 0.39% 0.33% 0.34% 0.45% 0.57% 0.51% 0.65% 0.52% 0.58%
 
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2013 Operating Results
 
Selected Quarterly Information (Unaudited)                
Chemical Financial Corporation                
                 
  4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
  2013 2013 2013 2013 2012 2012 2012 2012
  (Dollars in thousands, except per share data)
Summary of Operations                
Interest income  $ 55,323  $ 53,578  $ 52,781  $ 52,379  $ 53,126  $ 52,501  $ 52,467  $ 52,664
Interest expense 4,018 4,284 4,385 4,727 5,132 5,591 6,021 6,469
Net interest income 51,305 49,294 48,396 47,652 47,994 46,910 46,446 46,195
Provision for loan losses 2,000 3,000 3,000 3,000 5,000 4,500 4,000 5,000
Net interest income after provision for loan losses 49,305 46,294 45,396 44,652 42,994 42,410 42,446 41,195
Noninterest income 13,578 14,644 15,948 16,239 14,696 12,719 13,944 13,325
Operating expenses 42,405 39,545 41,041 41,957 42,028 36,723 36,199 36,971
Income before income taxes 20,478 21,393 20,303 18,934 15,662 18,406 20,191 17,549
Federal income tax expense 6,100 6,400 6,100 5,700 4,000 5,300 6,325 5,175
Net income  $ 14,378 $ 14,993 $ 14,203 $ 13,234 $ 11,662 $ 13,106 $ 13,866 $ 12,374
Net interest margin 3.63% 3.58% 3.60% 3.54% 3.74% 3.76% 3.80% 3.76%
 
Per Common Share Data                
Net income:                
Basic  $ 0.48  $ 0.54  $ 0.52  $ 0.48  $ 0.42  $ 0.48  $ 0.50  $ 0.45
Diluted 0.48 0.53 0.51 0.48 0.42 0.48 0.50 0.45
Cash dividends declared 0.23 0.22 0.21 0.21 0.21 0.21 0.20 0.20
Book value - period-end 23.38 22.61 22.14 21.97 21.69 21.75 21.42 21.10
Tangible book value - period-end 19.17 18.36 17.53 17.34 17.03 17.52 17.17 16.84
Market value - period-end 31.67 27.92 25.99 26.38 23.76 24.20 21.50 23.44
CONTACT: For further information:         David B. Ramaker, CEO         Lori A. Gwizdala, CFO         989-839-5350

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