Exhibit 99.1
For further information:
David T. Provost, CEO
Dennis L. Klaeser, CFO
989-839-5350
Chemical Financial Corporation Reports 2017 Second Quarter Operating Results
MIDLAND, MI, July 25, 2017 -- Chemical Financial Corporation ("Corporation" or "Chemical") (NASDAQ:CHFC) today announced 2017 second quarter net income of $52.0 million, or $0.73 per diluted share, compared to 2017 first quarter net income of $47.6 million, or $0.67 per diluted share and 2016 second quarter net income of $25.8 million, or $0.67 per diluted share. Excluding transaction expenses and the change in fair value in loan servicing rights ("significant items"), net income in the second quarter of 2017 was $53.5 million, or $0.75 per diluted share, compared to $50.7 million, or $0.71 per diluted share, in the first quarter of 2017 and $27.8 million, or $0.72 per diluted share, in the second quarter of 2016.(1)
During the second quarter of 2017, significant items included transaction expenses of $0.5 million and a $1.8 million detriment to earnings due to the change in fair value in loan servicing rights, compared to transaction expenses of $4.2 million and a $0.5 million detriment to earnings due to the change in fair value in loan servicing rights in the first quarter of 2017. Transaction expenses for the second quarter of 2016 were $3.1 million.
"We are encouraged by the underlying trends this quarter including improved operating expense trends, fee income and quality loan growth," noted David T. Provost, Chief Executive Officer of Chemical Financial Corporation and Thomas C. Shafer, Vice Chairman of the Corporation and Chief Executive Officer of Chemical Bank. "Going forward, we will seek to further improve our fundamentals by carefully assessing how we allocate capital and focusing on strategies to enhance revenue growth while continuing to improve our operating efficiency."
The Corporation's return on average assets was 1.14% during the second quarter of 2017, compared to 1.09% during the first quarter of 2017 and 1.10% in the second quarter of 2016. The Corporation's return on average shareholders' equity was 8.0% in the second quarter of 2017, compared to 7.4% during the first quarter of 2017 and 10.0% in the second quarter of 2016. Excluding significant items, the Corporation's return on average assets was 1.17% during the second quarter of 2017, compared to 1.16% during the first quarter of 2017 and 1.19% in the second quarter of 2016 and the Corporation's return on average shareholders' equity was 8.2% in the second quarter of 2017, compared to 7.8% during the first quarter of 2017 and 10.7% in the second quarter of 2016. The Corporation's return on average tangible shareholders' equity was 14.3% in the second quarter of 2017, compared to 13.3% during the first quarter of 2017 and 14.3% in the second quarter of 2016. Excluding significant items, the Corporation's return on average tangible equity was 14.7% in the second quarter of 2017, compared to 14.2% during the first quarter of 2017 and 15.4% in the second quarter of 2016. (2)
Net interest income was $137.9 million in the second quarter of 2017, $7.9 million, or 6.0%, higher than the first quarter of 2017 and $60.5 million, or 78.0%, higher than the second quarter of 2016. The higher net interest income in the second quarter of 2017 compared to the first quarter of 2017 was driven by the positive impact of organic loan growth, an increase in the investment securities portfolio, an increase in interest accretion from purchase accounting discounts on acquired loans, and one additional day in the quarter. These benefits to net interest income were partially offset by the interest expense impact of increases in short-term borrowings and deposits. The increase in net interest income in the second quarter of 2017 over the second quarter of 2016 was primarily attributable to loans acquired in the merger with Talmer Bancorp, Inc. ("Talmer") and organic loan growth. The Corporation experienced net organic loan growth of $394.0 million during the second quarter of 2017 and $1.14 billion during the twelve months ended June 30, 2017. The merger with Talmer added $4.88 billion of loans on August 31, 2016.
The net interest margin was 3.41% in both the second quarter of 2017 and the first quarter of 2017, compared to 3.60% in the second quarter of 2016. The net interest margin (on a tax-equivalent basis) was 3.48% in the second quarter of 2017, compared to 3.49% in the first quarter of 2017 and 3.70% in the second quarter of 2016.(3) The net interest margin (on a tax-equivalent basis) in the second quarter of 2017, compared to the first quarter of 2017, was compressed due to an increase in the investment securities portfolio funded by an increase in short-term borrowings. This compression was offset by an increase of 11 basis points in yield on total loans in the second quarter of 2017 to
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4.22%, compared to the first quarter of 2017, primarily due to an increase of interest accretion from purchase accounting discounts on acquired loans and an increase in the average coupon rates on loans.
The provision for loan losses was $6.2 million in the second quarter of 2017, compared to $4.1 million in the first quarter of 2017 and $3.0 million in the second quarter of 2016. The increase in the provision for loan losses in the second quarter of 2017, compared to both the first quarter of 2017 and the second quarter of 2016, was primarily the result of an increase in organic growth in the loan portfolio. Originated loan growth was $699.9 million in the second quarter of 2017, compared to $501.4 million in the first quarter of 2017. The growth in the originated loan portfolio was partially offset by run-off in the acquired loan portfolio of $305.9 million in the second quarter of 2017, compared to $218.8 million in the first quarter of 2017. It is important to note that the acquired loan portfolio was adjusted to the fair value of loans at each respective acquisition date and, as of June 30, 2017, no allowance has been recorded for this population of loans. Therefore, the run-off of acquired loans does not result in the reduction of allowance.
Net loan charge-offs were $1.2 million, or 0.04% of average loans, in the second quarter of 2017, compared to $3.5 million, or 0.11% of average loans, in the first quarter of 2017 and $1.8 million, or 0.10% of average loans, in the second quarter of 2016. Net loan charge-offs in the first quarter of 2017 included $1.5 million of losses from one commercial loan relationship.
The Corporation's nonperforming loans totaled $50.9 million at June 30, 2017, compared to $47.8 million at March 31, 2017 and $44.0 million at June 30, 2016. Nonperforming loans comprised 0.37% of total loans at June 30, 2017, compared to 0.36% at March 31, 2017 and 0.58% at June 30, 2016. The decrease in the percentage of nonperforming loans to total loans at June 30, 2017, compared to June 30, 2016, was primarily due to $4.88 billion of total loans added as a result of the merger with Talmer, as none of these loans are classified as nonperforming after the merger date since they are recorded in loan pools at their estimated net realizable value in accordance with generally accepted accounting principles.
At June 30, 2017, the allowance for loan losses of the originated loan portfolio was $83.8 million, or 0.97% of originated loans, compared to $78.8 million, or 0.99% of originated loans, at March 31, 2017 and $71.5 million, or 1.12% of originated loans, at June 30, 2016. The reduction in allowance for loan losses as a percentage of originated loans primarily reflects overall credit improvement. The allowance for loan losses of the originated loan portfolio as a percentage of nonperforming loans was 164.7% at both June 30, 2017 and March 31, 2017, compared to 162.5% at June 30, 2016.
Noninterest income was $41.6 million in the second quarter of 2017, compared to $38.0 million in the first quarter of 2017 and $20.9 million in the second quarter of 2016. Noninterest income in the second quarter of 2017 increased compared to the first quarter of 2017, primarily due to a $1.1 million increase in wealth management revenue. Net gain on sale of loans and other mortgage banking revenue also increased $0.7 million and included a $1.8 million detriment to earnings due to a change in fair value in loan servicing rights in the second quarter of 2017, compared to a $0.5 million detriment in the first quarter of 2017. Noninterest income in the second quarter of 2017 was higher than the second quarter of 2016 due primarily to incremental revenue resulting from the merger with Talmer.
Operating expenses were $98.2 million in the second quarter of 2017, compared to $104.2 million in the first quarter of 2017 and $59.1 million in the second quarter of 2016. Operating expenses included transaction expenses of $0.5 million in the second quarter of 2017, $4.2 million in the first quarter of 2017 and $3.1 million in the second quarter of 2016. Excluding these transaction expenses, operating expenses were $97.8 million in the second quarter of 2017, compared to $100.0 million in the first quarter of 2017 and $56.0 million in the second quarter of 2016.(4) The decrease in operating expenses, excluding transaction expenses, in the second quarter of 2017, compared to the first quarter of 2017 was primarily due to a decrease of $7.6 million in salaries, wages and employee benefits expenses, aided by a decrease in payroll taxes mostly attributable to stock option exercises during the first quarter of 2017 and an increase in the deferral of loan origination costs due to increased loan production and revised loan origination costs based on an updated loan origination cost study. The increase in operating expenses, excluding transaction expenses, in the second quarter of 2017, compared to the second quarter of 2016, was primarily attributable to incremental expenses resulting from the merger with Talmer.
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The effective tax rate was 30.7% in the second quarter of 2017, compared to 20.5% in the first quarter of 2017 and 29.0% in the second quarter of 2016. The tax rate for the first quarter of 2017 benefited from stock option exercises that occurred in the first quarter of 2017.
The efficiency ratio is a measure of operating expenses as a percentage of net interest income and noninterest income. The Corporation's efficiency ratio was 54.7% in the second quarter of 2017, compared to 62.0% in the first quarter of 2017 and 60.1% in the second quarter of 2016. The Corporation's adjusted efficiency ratio, which excludes significant items, amortization of intangibles and net gains on sales of branches, closed branch locations and investment securities, was 52.2% in the second quarter of 2017, compared to 57.4% in the first quarter of 2017 and 54.6% in the second quarter of 2016.(5)
Total assets were $18.78 billion at June 30, 2017, compared to $17.64 billion at March 31, 2017 and $9.51 billion at June 30, 2016. The increase in total assets during the three months ended June 30, 2017 was primarily attributable to an increase in investment securities available-for-sale and loan growth that was funded by an increase in short-term FHLB advances. During the quarter, the investment securities portfolio grew by $490.0 million to $2.41 billion at June 30, 2017. The increase in total assets during the twelve months ended June 30, 2017 was primarily attributable to the merger with Talmer, organic loan growth and an increase in investment securities available-for-sale.
Total loans were $13.67 billion at June 30, 2017, an increase of $394.0 million, or 3.0%, from total loans of $13.27 billion at March 31, 2017 and an increase of $6.02 billion, or 78.7%, from total loans of $7.65 billion at June 30, 2016. The Corporation experienced organic loan growth of $394.0 million during the second quarter of 2017 and $1.14 billion during the twelve months ended June 30, 2017. The Corporation added $4.88 billion of loans as part of the merger with Talmer on August 31, 2016.
Total deposits were $13.20 billion at June 30, 2017, compared to $13.13 billion at March 31, 2017 and $7.46 billion at June 30, 2016. The Corporation experienced organic growth in customer deposits of $72.0 million during the second quarter of 2017. The Corporation added $5.29 billion of deposits as part of the merger with Talmer that was completed on August 31, 2016, including $403.2 million of brokered deposits. The Corporation reduced the balance of brokered deposits by $351.2 million during the period of September 30, 2016 to June 30, 2017.
Securities sold under agreements to repurchase with customers were $310.0 million at June 30, 2017, compared to $398.9 million at March 31, 2017 and $256.2 million at June 30, 2016. Short-term borrowings were $2.05 billion at June 30, 2017, compared to $900.0 million at March 31, 2017 and $300.0 million at June 30, 2016 and consisted of short-term FHLB advances utilized by the Corporation to fund short-term liquidity needs. The increase in short-term FHLB advances in the second quarter 2017 was primarily utilized to fund an increase in the investment securities portfolio and loan growth. Long-term borrowings were $435.9 million at June 30, 2017, compared to $490.9 million at March 31, 2017 and $371.6 million at June 30, 2016.
The Corporation's shareholders' equity to total assets ratio was 14.1% at June 30, 2017, compared to 14.7% at March 31, 2017 and 11.0% at June 30, 2016. The Corporation's tangible equity to tangible assets ratio and total risk-based capital ratio were 8.4% and 11.1% (estimated), respectively, at June 30, 2017 compared to 8.8% and 11.4%, respectively, at March 31, 2017 and 8.2% and 11.4%, respectively, at June 30, 2016. (6) The Corporation's book value was $37.11 per share at June 30, 2017, compared to $36.56 per share at March 31, 2017 and $27.45 per share at June 30, 2016. The Corporation's tangible book value was $20.89 per share at June 30, 2017, compared to $20.32 per share at March 31, 2017 and $19.68 per share at June 30, 2016.(7)
(1) Net income, excluding significant items, and diluted earnings per share, excluding significant items, are non-GAAP financial measures. Please refer to the section entitled "Non-GAAP Financial Measures" in this press release and to the financial tables entitled "Reconciliation of Non-GAAP Financial Measures" for a reconciliation to the most directly comparable GAAP financial measures.
(2) Return on average assets, excluding significant items, return on average shareholders’ equity, excluding significant items, return on average tangible shareholders' equity, and return on average tangible shareholders' equity, excluding significant items are non-GAAP financial measures. Please refer to the section entitled "Non-GAAP Financial Measures" in this press release and to the financial tables entitled "Reconciliation of Non-GAAP Financial Measures" for a reconciliation to the most directly comparable GAAP financial measures.
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(3) Net interest margin, on a tax equivalent basis, is a non-GAAP financial measure. Please refer to the section entitled "Non-GAAP Financial Measures" in this press release and to the financial tables entitled "Average Balances, Fully Tax Equivalent (FTE) Interest and Effective Yields and Rates" for a reconciliation of net interest income used to compute net interest margin on a tax equivalent basis to the most directly comparable GAAP financial measure.
(4) Operating expenses excluding transaction expenses is a non-GAAP financial measure.
(5) Adjusted efficiency ratio is a non-GAAP financial measure. Please refer to the section entitled "Non-GAAP Financial Measures" in this press release and to the financial tables entitled "Reconciliation of Non-GAAP Financial Measures" for a reconciliation to the most directly comparable GAAP financial measure.
(6) Tangible equity to tangible assets ratio is a non-GAAP financial measure. Please refer to the section entitled "Non-GAAP Financial Measures" in this press release and to the financial tables entitled "Reconciliation of Non-GAAP Financial Measures" for a reconciliation to the most directly comparable GAAP financial measure.
(7) Tangible book value per share is a non-GAAP financial measure. Please refer to the section entitled "Non-GAAP Financial Measures" in this press release and to the financial tables entitled "Reconciliation of Non-GAAP Financial Measures" for a reconciliation to the most directly comparable GAAP financial measure.
Conference Call Details
Chemical Financial Corporation will host a conference call to discuss its second quarter 2017 operating results on Wednesday, July 26, 2017, at 10:30 a.m. ET. Anyone interested may access the conference call on a live basis by dialing toll-free at 1-888-490-2760 and entering 481059 for the conference ID. The call will also be broadcast live over the Internet hosted at Chemical Financial Corporation's website at www.chemicalbank.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.
About Chemical Financial Corporation
Chemical Financial Corporation is the largest banking company headquartered and operating branch offices in Michigan. The Corporation operates through its subsidiary bank, Chemical Bank, with 249 banking offices located primarily in Michigan, northeast Ohio and northern Indiana. At June 30, 2017, the Corporation had total assets of $18.78 billion. Chemical Financial Corporation's common stock trades on The NASDAQ Stock Market under the symbol CHFC and is one of the issuers comprising The NASDAQ Global Select Market and the S&P MidCap 400 Index. More information about the Corporation is available by visiting the investor relations section of its website at www.chemicalbank.com.
Non-GAAP Financial Measures
This press release contains references to financial measures which are not defined in generally accepted accounting principles ("GAAP"). Such non-GAAP financial measures include the Corporation's tangible equity to tangible assets ratio, tangible book value per share, presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis, and information presented excluding transaction expenses or significant items, including net income, diluted earnings per share, return on average assets, return on average shareholders' equity, operating expenses and the efficiency ratio. These non-GAAP financial measures have been included as the Corporation believes they are helpful for investors to analyze and evaluate the Corporation's financial condition. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measure may be found in the financial tables included with this press release.
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 the Corporation. Words and phrases such as "anticipates," "believes," "continue," "estimates," "expects," "forecasts," "future," "intends," "is likely," "judgment," "look ahead," "look forward," "on schedule," "opinion," "opportunity," "plans," "potential," "predicts," "probable," "projects," "should," "strategic," "trend," "will," and variations of such words and phrases or 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
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materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to future improvement of core operating efficiency, 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 dividends, future growth and funding sources, future liquidity levels, future profitability levels, future deposit insurance premiums, future asset 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, opportunities to increase top line revenues, the Corporation’s ability to grow its core franchise, future cost savings and the Corporation’s ability to maintain adequate liquidity and capital based on the requirements adopted by the Basel Committee on Banking Supervision and U.S. regulators. 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. All of the information concerning interest rate sensitivity is forward-looking. 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 Chemical's Annual Report on Form 10-K for the year ended December 31, 2016. 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.
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Chemical Financial Corporation Announces 2017 Second Quarter Operating Results
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation
(In thousands, except per share data)
| June 30, 2017 | March 31, 2017 | December 31, 2016 | June 30, 2016 | ||||||||||||
| Assets | |||||||||||||||
| Cash and cash equivalents: | |||||||||||||||
| Cash and cash due from banks | $ | 230,219 | $ | 191,940 | $ | 237,758 | $ | 179,310 | |||||||
| Interest-bearing deposits with the Federal Reserve Bank and other banks and federal funds sold | 389,022 | 249,840 | 236,644 | 53,650 | |||||||||||
| Total cash and cash equivalents | 619,241 | 441,780 | 474,402 | 232,960 | |||||||||||
| Investment securities: | |||||||||||||||
| Available-for-sale | 1,767,478 | 1,275,846 | 1,234,964 | 458,552 | |||||||||||
| Held-to-maturity | 645,605 | 647,192 | 623,427 | 552,828 | |||||||||||
| Total investment securities | 2,413,083 | 1,923,038 | 1,858,391 | 1,011,380 | |||||||||||
| Loans held-for-sale | 65,371 | 39,123 | 81,830 | 13,990 | |||||||||||
| Loans: | |||||||||||||||
| Total loans | 13,667,372 | 13,273,392 | 12,990,779 | 7,647,269 | |||||||||||
| Allowance for loan losses | (83,797 | ) | (78,774 | ) | (78,268 | ) | (71,506 | ) | |||||||
| Net loans | 13,583,575 | 13,194,618 | 12,912,511 | 7,575,763 | |||||||||||
| Premises and equipment | 146,460 | 142,763 | 145,012 | 102,709 | |||||||||||
| Loan servicing rights | 64,522 | 64,604 | 58,315 | 9,677 | |||||||||||
| Goodwill | 1,133,534 | 1,133,534 | 1,133,534 | 286,867 | |||||||||||
| Other intangible assets | 37,322 | 38,848 | 40,211 | 24,593 | |||||||||||
| Interest receivable and other assets | 718,297 | 658,665 | 650,973 | 256,233 | |||||||||||
| Total Assets | $ | 18,781,405 | $ | 17,636,973 | $ | 17,355,179 | $ | 9,514,172 | |||||||
| Liabilities | |||||||||||||||
| Deposits: | |||||||||||||||
| Noninterest-bearing | $ | 3,626,592 | $ | 3,399,287 | $ | 3,341,520 | $ | 2,007,629 | |||||||
| Interest-bearing | 9,577,775 | 9,733,060 | 9,531,602 | 5,457,017 | |||||||||||
| Total deposits | 13,204,367 | 13,132,347 | 12,873,122 | 7,464,646 | |||||||||||
| Interest payable and other liabilities | 141,702 | 114,789 | 134,637 | 71,417 | |||||||||||
| Securities sold under agreements to repurchase with customers | 310,042 | 398,910 | 343,047 | 256,213 | |||||||||||
| Short-term borrowings | 2,050,000 | 900,000 | 825,000 | 300,000 | |||||||||||
| Long-term borrowings | 435,852 | 490,876 | 597,847 | 371,597 | |||||||||||
| Total liabilities | 16,141,963 | 15,036,922 | 14,773,653 | 8,463,873 | |||||||||||
| Shareholders' Equity | |||||||||||||||
| Preferred stock, no par value per share | — | — | — | — | |||||||||||
| Common stock, $1 par value per share | 71,131 | 71,118 | 70,599 | 38,267 | |||||||||||
| Additional paid-in capital | 2,197,501 | 2,194,705 | 2,210,762 | 726,734 | |||||||||||
| Retained earnings | 404,939 | 372,193 | 340,201 | 310,996 | |||||||||||
| Accumulated other comprehensive loss | (34,129 | ) | (37,965 | ) | (40,036 | ) | (25,698 | ) | |||||||
| Total shareholders' equity | 2,639,442 | 2,600,051 | 2,581,526 | 1,050,299 | |||||||||||
| Total Liabilities and Shareholders' Equity | $ | 18,781,405 | $ | 17,636,973 | $ | 17,355,179 | $ | 9,514,172 | |||||||
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Chemical Financial Corporation Announces 2017 Second Quarter Operating Results
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation
(In thousands, except per share data)
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 30, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||
| Interest Income | |||||||||||||||||||
| Interest and fees on loans | $ | 141,314 | $ | 132,485 | $ | 77,578 | $ | 273,799 | $ | 151,979 | |||||||||
| Interest on investment securities: | |||||||||||||||||||
| Taxable | 7,125 | 4,756 | 1,798 | 11,881 | 3,727 | ||||||||||||||
| Tax-exempt | 4,426 | 4,235 | 2,640 | 8,661 | 5,305 | ||||||||||||||
| Dividends on nonmarketable equity securities | 1,246 | 621 | 777 | 1,867 | 1,033 | ||||||||||||||
| Interest on deposits with the Federal Reserve Bank and other banks and federal funds sold | 1,022 | 799 | 144 | 1,821 | 357 | ||||||||||||||
| Total interest income | 155,133 | 142,896 | 82,937 | 298,029 | 162,401 | ||||||||||||||
| Interest Expense | |||||||||||||||||||
| Interest on deposits | 10,582 | 8,916 | 4,260 | 19,498 | 8,319 | ||||||||||||||
| Interest on short-term borrowings | 4,659 | 1,658 | 226 | 6,317 | 326 | ||||||||||||||
| Interest on long-term borrowings | 1,944 | 2,225 | 956 | 4,169 | 1,931 | ||||||||||||||
| Total interest expense | 17,185 | 12,799 | 5,442 | 29,984 | 10,576 | ||||||||||||||
| Net Interest Income | 137,948 | 130,097 | 77,495 | 268,045 | 151,825 | ||||||||||||||
| Provision for loan losses | 6,229 | 4,050 | 3,000 | 10,279 | 4,500 | ||||||||||||||
| Net interest income after provision for loan losses | 131,719 | 126,047 | 74,495 | 257,766 | 147,325 | ||||||||||||||
| Noninterest Income | |||||||||||||||||||
| Service charges and fees on deposit accounts | 8,777 | 8,004 | 6,337 | 16,781 | 12,057 | ||||||||||||||
| Wealth management revenue | 6,958 | 5,827 | 5,782 | 12,785 | 10,983 | ||||||||||||||
| Other charges and fees for customer services | 9,734 | 8,891 | 6,463 | 18,625 | 12,855 | ||||||||||||||
| Net gain on sale of loans and other mortgage banking revenue | 9,879 | 9,160 | 1,595 | 19,039 | 3,000 | ||||||||||||||
| Gain on sale of investment securities | 77 | 90 | 18 | 167 | 37 | ||||||||||||||
| Other | 6,143 | 6,038 | 702 | 12,181 | 1,384 | ||||||||||||||
| Total noninterest income | 41,568 | 38,010 | 20,897 | 79,578 | 40,316 | ||||||||||||||
| Operating Expenses | |||||||||||||||||||
| Salaries, wages and employee benefits | 52,601 | 60,248 | 33,127 | 112,849 | 67,017 | ||||||||||||||
| Occupancy | 8,745 | 7,392 | 5,514 | 16,137 | 10,419 | ||||||||||||||
| Equipment and software | 8,149 | 8,517 | 4,875 | 16,666 | 9,279 | ||||||||||||||
| Merger and acquisition-related transaction expenses (transaction expenses) | 465 | 4,167 | 3,054 | 4,632 | 5,648 | ||||||||||||||
| Other | 28,277 | 23,872 | 12,515 | 52,149 | 25,609 | ||||||||||||||
| Total operating expenses | 98,237 | 104,196 | 59,085 | 202,433 | 117,972 | ||||||||||||||
| Income before income taxes | 75,050 | 59,861 | 36,307 | 134,911 | 69,669 | ||||||||||||||
| Income tax expense | 23,036 | 12,257 | 10,532 | 35,293 | 20,289 | ||||||||||||||
| Net Income | $ | 52,014 | $ | 47,604 | $ | 25,775 | $ | 99,618 | $ | 49,380 | |||||||||
| Earnings Per Common Share: | |||||||||||||||||||
| Weighted average common shares outstanding-basic | 70,819 | 70,628 | 38,258 | 70,725 | 38,228 | ||||||||||||||
| Weighted average common shares outstanding-diluted | 71,443 | 71,415 | 38,600 | 71,429 | 38,560 | ||||||||||||||
| Basic earnings per share | $ | 0.73 | $ | 0.67 | $ | 0.67 | $ | 1.41 | $ | 1.29 | |||||||||
| Diluted earnings per share | 0.73 | 0.67 | 0.67 | 1.39 | 1.28 | ||||||||||||||
| Cash Dividends Declared Per Common Share | 0.27 | 0.27 | 0.26 | 0.54 | 0.52 | ||||||||||||||
| Key Ratios (annualized where applicable): | |||||||||||||||||||
| Return on average assets | 1.14 | % | 1.09 | % | 1.10 | % | 1.11 | % | 1.06 | % | |||||||||
| Return on average shareholders' equity | 8.0 | % | 7.4 | % | 10.0 | % | 7.7 | % | 9.6 | % | |||||||||
| Net interest margin (tax-equivalent basis) (non-GAAP) | 3.48 | % | 3.49 | % | 3.70 | % | 3.49 | % | 3.65 | % | |||||||||
| Efficiency ratio - GAAP | 54.7 | % | 62.0 | % | 60.1 | % | 58.2 | % | 61.4 | % | |||||||||
| Efficiency ratio - adjusted (non-GAAP) | 52.2 | % | 57.4 | % | 54.6 | % | 54.7 | % | 56.1 | % | |||||||||
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Chemical Financial Corporation Announces 2017 Second Quarter Operating Results
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation
(Dollars in thousands, except per share data)
| 2nd Quarter 2017 | 1st Quarter 2017 | 4th Quarter 2016 | 3rd Quarter 2016 | 2nd Quarter 2016 | 1st Quarter 2016 | ||||||||||||||||||
| Summary of Operations | |||||||||||||||||||||||
| Interest income | $ | 155,133 | $ | 142,896 | $ | 144,416 | $ | 103,562 | $ | 82,937 | $ | 79,464 | |||||||||||
| Interest expense | 17,185 | 12,799 | 11,969 | 6,753 | 5,442 | 5,134 | |||||||||||||||||
| Net interest income | 137,948 | 130,097 | 132,447 | 96,809 | 77,495 | 74,330 | |||||||||||||||||
| Provision for loan losses | 6,229 | 4,050 | 6,272 | 4,103 | 3,000 | 1,500 | |||||||||||||||||
| Net interest income after provision for loan losses | 131,719 | 126,047 | 126,175 | 92,706 | 74,495 | 72,830 | |||||||||||||||||
| Noninterest income | 41,568 | 38,010 | 54,264 | 27,770 | 20,897 | 19,419 | |||||||||||||||||
| Operating expenses, excluding transaction expenses (non-GAAP) | 97,772 | 100,029 | 96,286 | 68,674 | 56,031 | 56,293 | |||||||||||||||||
| Transaction expenses | 465 | 4,167 | 18,016 | 37,470 | 3,054 | 2,594 | |||||||||||||||||
| Income before income taxes | 75,050 | 59,861 | 66,137 | 14,332 | 36,307 | 33,362 | |||||||||||||||||
| Income tax expense | 23,036 | 12,257 | 18,969 | 2,848 | 10,532 | 9,757 | |||||||||||||||||
| Net income | $ | 52,014 | $ | 47,604 | $ | 47,168 | $ | 11,484 | $ | 25,775 | $ | 23,605 | |||||||||||
| Significant items, net of tax | 1,474 | 3,046 | 2,781 | 25,921 | 1,985 | 1,686 | |||||||||||||||||
| Net income, excluding significant items | $ | 53,488 | $ | 50,650 | $ | 49,949 | $ | 37,405 | $ | 27,760 | $ | 25,291 | |||||||||||
| Per Common Share Data | |||||||||||||||||||||||
| Net income: | |||||||||||||||||||||||
| Basic | $ | 0.73 | $ | 0.67 | $ | 0.67 | $ | 0.23 | $ | 0.67 | $ | 0.61 | |||||||||||
| Diluted | 0.73 | 0.67 | 0.66 | 0.23 | 0.67 | 0.60 | |||||||||||||||||
| Diluted, excluding significant items (non-GAAP) | 0.75 | 0.71 | 0.70 | 0.75 | 0.72 | 0.65 | |||||||||||||||||
| Cash dividends declared | 0.27 | 0.27 | 0.27 | 0.27 | 0.26 | 0.26 | |||||||||||||||||
| Book value - period-end | 37.11 | 36.56 | 36.57 | 36.37 | 27.45 | 26.99 | |||||||||||||||||
| Tangible book value - period-end | 20.89 | 20.32 | 20.20 | 19.99 | 19.68 | 19.20 | |||||||||||||||||
| Market value - period-end | 48.41 | 51.15 | 54.17 | 44.13 | 37.29 | 35.69 | |||||||||||||||||
| Key Ratios (annualized where applicable) | |||||||||||||||||||||||
| Net interest margin (taxable equivalent basis) (non-GAAP) | 3.48 | % | 3.49 | % | 3.56 | % | 3.58 | % | 3.70 | % | 3.60 | % | |||||||||||
| Efficiency ratio - adjusted (non-GAAP) | 52.2 | % | 57.4 | % | 53.7 | % | 52.7 | % | 54.6 | % | 57.6 | % | |||||||||||
| Return on average assets | 1.14 | % | 1.09 | % | 1.09 | % | 0.37 | % | 1.10 | % | 1.02 | % | |||||||||||
| Return on average shareholders' equity | 8.0 | % | 7.4 | % | 7.4 | % | 2.9 | % | 10.0 | % | 9.3 | % | |||||||||||
| Average shareholders' equity as a percent of average assets | 14.3 | % | 14.8 | % | 14.9 | % | 12.7 | % | 11.1 | % | 11.0 | % | |||||||||||
| Capital ratios (period end): | |||||||||||||||||||||||
| Tangible shareholders' equity as a percent of tangible assets | 8.4 | % | 8.8 | % | 8.8 | % | 8.7 | % | 8.2 | % | 8.2 | % | |||||||||||
Total risk-based capital ratio (1) | 11.1 | % | 11.4 | % | 11.5 | % | 11.1 | % | 11.4 | % | 11.5 | % | |||||||||||
(1) Estimated at June 30, 2017.
8
Chemical Financial Corporation Announces 2017 Second Quarter Operating Results
Average Balances, Fully Tax Equivalent (FTE) Interest and Effective Yields and Rates(1) (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
| Three Months Ended | ||||||||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||||||||||||||||||||||||||
Average Balance | Interest (FTE) | Effective Yield/Rate (1) | Average Balance | Interest (FTE) | Effective Yield/Rate (1) | Average Balance | Interest (FTE) | Effective Yield/Rate (1) | ||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||
Loans (1)(2) | $ | 13,513,927 | $ | 142,128 | 4.22 | % | $ | 13,155,846 | $ | 133,293 | 4.11 | % | $ | 7,511,192 | $ | 78,295 | 4.19 | % | ||||||||||||||
| Taxable investment securities | 1,364,358 | 7,125 | 2.09 | 1,005,489 | 4,756 | 1.89 | 515,303 | 1,798 | 1.40 | |||||||||||||||||||||||
Tax-exempt investment securities(1) | 882,445 | 6,781 | 3.07 | 861,508 | 6,495 | 3.02 | 484,271 | 4,061 | 3.35 | |||||||||||||||||||||||
| Other interest-earning assets | 166,244 | 1,246 | 3.01 | 103,334 | 621 | 2.44 | 43,615 | 777 | 7.16 | |||||||||||||||||||||||
| Interest-bearing deposits with the FRB and other banks and federal funds sold | 302,022 | 1,022 | 1.36 | 269,288 | 799 | 1.20 | 82,246 | 144 | 0.70 | |||||||||||||||||||||||
| Total interest-earning assets | 16,228,996 | 158,302 | 3.91 | 15,395,465 | 145,964 | 3.83 | 8,636,627 | 85,075 | 3.96 | |||||||||||||||||||||||
| Less: allowance for loan losses | (80,690 | ) | (78,616 | ) | (71,790 | ) | ||||||||||||||||||||||||||
| Other assets: | ||||||||||||||||||||||||||||||||
| Cash and cash due from banks | 222,954 | 229,203 | 148,034 | |||||||||||||||||||||||||||||
| Premises and equipment | 145,320 | 146,044 | 104,488 | |||||||||||||||||||||||||||||
| Interest receivable and other assets | 1,748,119 | 1,781,923 | 515,039 | |||||||||||||||||||||||||||||
| Total assets | $ | 18,264,699 | $ | 17,474,019 | $ | 9,332,398 | ||||||||||||||||||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 2,682,652 | $ | 1,289 | 0.19 | % | $ | 2,898,061 | $ | 1,018 | 0.14 | % | $ | 1,892,512 | $ | 582 | 0.12 | % | ||||||||||||||
| Savings deposits | 3,881,260 | 3,047 | 0.31 | 3,842,594 | 1,721 | 0.18 | 2,073,412 | 476 | 0.09 | |||||||||||||||||||||||
| Time deposits | 2,958,436 | 6,246 | 0.85 | 2,953,069 | 6,177 | 0.85 | 1,582,467 | 3,202 | 0.81 | |||||||||||||||||||||||
| Short-term borrowings | 2,027,505 | 4,659 | 0.92 | 1,225,888 | 1,658 | 0.55 | 418,232 | 226 | 0.22 | |||||||||||||||||||||||
| Long-term borrowings | 474,086 | 1,944 | 1.65 | 539,032 | 2,225 | 1.67 | 281,327 | 956 | 1.37 | |||||||||||||||||||||||
| Total interest-bearing liabilities | 12,023,939 | 17,185 | 0.57 | 11,458,644 | 12,799 | 0.45 | 6,247,950 | 5,442 | 0.35 | |||||||||||||||||||||||
| Noninterest-bearing deposits | 3,499,686 | — | — | 3,305,201 | — | — | 1,979,423 | — | — | |||||||||||||||||||||||
| Total deposits and borrowed funds | 15,523,625 | 17,185 | 0.44 | 14,763,845 | 12,799 | 0.35 | 8,227,373 | 5,442 | 0.27 | |||||||||||||||||||||||
| Interest payable and other liabilities | 134,557 | 125,673 | 72,011 | |||||||||||||||||||||||||||||
| Shareholders' equity | 2,606,517 | 2,584,501 | 1,033,014 | |||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 18,264,699 | $ | 17,474,019 | $ | 9,332,398 | ||||||||||||||||||||||||||
| Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities) | 3.34 | % | 3.38 | % | 3.61 | % | ||||||||||||||||||||||||||
| Net Interest Income (FTE) | $ | 141,117 | $ | 133,165 | $ | 79,633 | ||||||||||||||||||||||||||
| Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets) | 3.48 | % | 3.49 | % | 3.70 | % | ||||||||||||||||||||||||||
| Reconciliation to Reported Net Interest Income | ||||||||||||||||||||||||||||||||
| Net interest income, fully taxable equivalent (non-GAAP) | $ | 141,117 | $ | 133,165 | $ | 79,633 | ||||||||||||||||||||||||||
Adjustments for taxable equivalent interest (1): | ||||||||||||||||||||||||||||||||
| Loans | (814 | ) | (808 | ) | (717 | ) | ||||||||||||||||||||||||||
| Tax-exempt investment securities | (2,355 | ) | (2,260 | ) | (1,421 | ) | ||||||||||||||||||||||||||
| Total taxable equivalent interest adjustments | (3,169 | ) | (3,068 | ) | (2,138 | ) | ||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 137,948 | $ | 130,097 | $ | 77,495 | ||||||||||||||||||||||||||
| Net interest margin (GAAP) | 3.41% | 3.41 | % | 3.60 | % | |||||||||||||||||||||||||||
(1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry.
(2) 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.
9
Chemical Financial Corporation Announces 2017 Second Quarter Operating Results
Average Balances, Fully Tax Equivalent (FTE) Interest and Effective Yields and Rates (1) (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
| Six Months Ended | ||||||||||||||||||||||
| June 30, 2017 | June 30, 2016 | |||||||||||||||||||||
Average Balance | Interest (FTE) | Effective Yield/Rate (1) | Average Balance | Interest (FTE) | Effective Yield/Rate (1) | |||||||||||||||||
| Assets | ||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||
Loans (1)(2) | $ | 13,335,876 | $ | 275,421 | 4.16 | % | $ | 7,405,332 | $ | 153,394 | 4.16 | % | ||||||||||
| Taxable investment securities | 1,185,915 | 11,881 | 2.00 | 534,914 | 3,727 | 1.39 | ||||||||||||||||
Tax-exempt investment securities (1) | 872,034 | 13,276 | 3.04 | 490,287 | 8,161 | 3.33 | ||||||||||||||||
| Other interest-earning assets | 134,962 | 1,867 | 2.79 | 41,554 | 1,033 | 5.00 | ||||||||||||||||
| Interest-bearing deposits with the FRB and other banks and federal funds sold | 285,746 | 1,821 | 1.28 | 109,582 | 357 | 0.66 | ||||||||||||||||
| Total interest-earning assets | 15,814,533 | 304,266 | 3.87 | 8,581,669 | 166,672 | 3.90 | ||||||||||||||||
| Less: allowance for loan losses | (79,658 | ) | (72,669 | ) | ||||||||||||||||||
| Other assets: | ||||||||||||||||||||||
| Cash and cash due from banks | 226,061 | 153,156 | ||||||||||||||||||||
| Premises and equipment | 145,680 | 105,223 | ||||||||||||||||||||
| Interest receivable and other assets | 1,764,925 | 519,337 | ||||||||||||||||||||
| Total assets | $ | 17,871,541 | $ | 9,286,716 | ||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 2,789,762 | $ | 2,307 | 0.17 | % | $ | 1,923,068 | $ | 1,050 | 0.11 | % | ||||||||||
| Savings deposits | 3,862,033 | 4,768 | 0.25 | 2,061,141 | 865 | 0.08 | ||||||||||||||||
| Time deposits | 2,955,768 | 12,423 | 0.85 | 1,604,020 | 6,404 | 0.80 | ||||||||||||||||
| Short-term borrowings | 1,628,911 | 6,317 | 0.78 | 383,966 | 326 | 0.17 | ||||||||||||||||
| Long-term borrowings | 506,379 | 4,169 | 1.66 | 273,675 | 1,931 | 1.42 | ||||||||||||||||
| Total interest-bearing liabilities | 11,742,853 | 29,984 | 0.51 | 6,245,870 | 10,576 | 0.34 | ||||||||||||||||
| Noninterest-bearing deposits | 3,402,981 | — | — | 1,943,159 | — | — | ||||||||||||||||
| Total deposits and borrowed funds | 15,145,834 | 29,984 | 0.40 | 8,189,029 | 10,576 | 0.26 | ||||||||||||||||
| Interest payable and other liabilities | 130,140 | 72,216 | ||||||||||||||||||||
| Shareholders' equity | 2,595,567 | 1,025,471 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 17,871,541 | $ | 9,286,716 | ||||||||||||||||||
| Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities) | 3.36 | % | 3.56 | % | ||||||||||||||||||
| Net Interest Income (FTE) | $ | 274,282 | $ | 156,096 | ||||||||||||||||||
| Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets) | 3.49 | % | 3.65 | % | ||||||||||||||||||
| Reconciliation to Reported Net Interest Income | ||||||||||||||||||||||
| Net interest income, fully taxable equivalent (non-GAAP) | $ | 274,282 | $ | 156,096 | ||||||||||||||||||
Adjustments for taxable equivalent interest (1): | ||||||||||||||||||||||
| Loans | (1,622 | ) | (1,415 | ) | ||||||||||||||||||
| Tax-exempt investment securities | (4,615 | ) | (2,856 | ) | ||||||||||||||||||
| Total taxable equivalent interest adjustments | (6,237 | ) | (4,271 | ) | ||||||||||||||||||
| Net interest income (GAAP) | $ | 268,045 | $ | 151,825 | ||||||||||||||||||
| Net interest margin (GAAP) | 3.41 | % | 3.55 | % | ||||||||||||||||||
(1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry.
(2) 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.
10
Chemical Financial Corporation Announces 2017 Second Quarter Operating Results
Chemical Financial Corporation
(Dollars in thousands)
| 2nd Quarter 2017 | 1st Quarter 2017 | 4th Quarter 2016 | 3rd Quarter 2016 | 2nd Quarter 2016 | 1st Quarter 2016 | ||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||
| Service charges and fees on deposit accounts | $ | 8,777 | $ | 8,004 | $ | 8,414 | $ | 7,665 | $ | 6,337 | $ | 5,720 | |||||||||||
| Wealth management revenue | 6,958 | 5,827 | 6,034 | 5,584 | 5,782 | 5,201 | |||||||||||||||||
| Electronic banking fees | 7,482 | 6,817 | 8,196 | 5,533 | 4,786 | 4,918 | |||||||||||||||||
| Net gain on sale of loans and other mortgage banking revenue | 9,879 | 9,160 | 14,420 | 4,439 | 1,595 | 1,405 | |||||||||||||||||
| Other fees for customer services | 2,252 | 2,074 | 1,785 | 1,877 | 1,677 | 1,474 | |||||||||||||||||
| Gain on sale of investment securities | 77 | 90 | 76 | 16 | 18 | 19 | |||||||||||||||||
| Gain on sale of branch offices | — | — | 7,391 | — | — | — | |||||||||||||||||
| Other | 6,143 | 6,038 | 7,948 | 2,656 | 702 | 682 | |||||||||||||||||
| Total noninterest income | $ | 41,568 | $ | 38,010 | $ | 54,264 | $ | 27,770 | $ | 20,897 | $ | 19,419 | |||||||||||
| 2nd Quarter 2017 | 1st Quarter 2017 | 4th Quarter 2016 | 3rd Quarter 2016 | 2nd Quarter 2016 | 1st Quarter 2016 | ||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Salaries and wages | $ | 44,959 | $ | 48,526 | $ | 47,936 | $ | 33,841 | $ | 26,887 | $ | 26,743 | |||||||||||
| Employee benefits | 7,642 | 11,722 | 9,695 | 6,724 | 6,240 | 7,147 | |||||||||||||||||
| Occupancy | 8,745 | 7,392 | 7,644 | 5,462 | 5,514 | 4,905 | |||||||||||||||||
| Equipment and software | 8,149 | 8,517 | 8,709 | 6,420 | 4,875 | 4,404 | |||||||||||||||||
| Outside processing and service fees | 8,924 | 7,511 | 7,290 | 5,365 | 4,833 | 3,711 | |||||||||||||||||
| FDIC insurance premiums | 2,460 | 1,406 | 2,813 | 1,849 | 1,338 | 1,407 | |||||||||||||||||
| Professional fees | 2,567 | 1,968 | 2,304 | 1,472 | 1,020 | 1,036 | |||||||||||||||||
| Intangible asset amortization | 1,525 | 1,513 | 1,843 | 1,292 | 1,195 | 1,194 | |||||||||||||||||
| Credit-related expenses | 1,895 | 1,200 | (1,029 | ) | (371 | ) | (1,331 | ) | 30 | ||||||||||||||
| Transaction expenses | 465 | 4,167 | 18,016 | 37,470 | 3,054 | 2,594 | |||||||||||||||||
| Other | 10,906 | 10,274 | 9,081 | 6,620 | 5,460 | 5,716 | |||||||||||||||||
| Total operating expenses | $ | 98,237 | $ | 104,196 | $ | 114,302 | $ | 106,144 | $ | 59,085 | $ | 58,887 | |||||||||||
11
Chemical Financial Corporation Announces 2017 Second Quarter Operating Results
Composition of Loans and Deposits and Additional Information on Intangible Assets (Unaudited)
Chemical Financial Corporation
(Dollars in Thousands)
| Organic Growth - | Organic Growth - | ||||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | Three Months Ended June 30, 2017 | Dec 31, 2016 | Sep 30, 2016 | Talmer Merger Aug 31, 2016 | June 30, 2016 | Twelve Months Ended June 30, 2017 | ||||||||||||||||||||||
| Composition of Loans | |||||||||||||||||||||||||||||
| Commercial loan portfolio: | |||||||||||||||||||||||||||||
| Commercial | $ | 3,360,161 | $ | 3,253,608 | 3.3 | % | $ | 3,217,300 | $ | 3,199,576 | $ | 1,223,179 | $ | 1,953,301 | 9.4 | % | |||||||||||||
| Commercial real estate | 4,324,323 | 4,097,771 | 5.5 | 3,973,140 | 3,733,377 | 1,589,900 | 2,157,733 | 26.7 | |||||||||||||||||||||
| Real estate construction | 446,678 | 453,811 | (1.6 | ) | 403,772 | 500,494 | 166,364 | 285,848 | (1.9 | ) | |||||||||||||||||||
| Subtotal - commercial loans | 8,131,162 | 7,805,190 | 4.2 | 7,594,212 | 7,433,447 | 2,979,443 | 4,396,882 | 17.2 | |||||||||||||||||||||
| Consumer loan portfolio: | |||||||||||||||||||||||||||||
| Residential mortgage | 3,125,397 | 3,133,465 | (0.3 | ) | 3,086,474 | 3,046,959 | 1,531,641 | 1,494,192 | 6.7 | ||||||||||||||||||||
| Consumer installment | 1,553,967 | 1,481,057 | 4.9 | 1,433,884 | 1,335,707 | 158,835 | 1,048,622 | 33.0 | |||||||||||||||||||||
| Home equity | 856,846 | 853,680 | 0.4 | 876,209 | 899,676 | 212,483 | 707,573 | (8.9 | ) | ||||||||||||||||||||
| Subtotal - consumer loans | 5,536,210 | 5,468,202 | 1.2 | 5,396,567 | 5,282,342 | 1,902,959 | 3,250,387 | 11.8 | |||||||||||||||||||||
| Total loans | $ | 13,667,372 | $ | 13,273,392 | 3.0 | % | $ | 12,990,779 | $ | 12,715,789 | $ | 4,882,402 | $ | 7,647,269 | 14.9 | % | |||||||||||||
| Organic Growth - | Organic Growth - | ||||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | Three Months Ended June 30, 2017 | Dec 31, 2016 | Sep 30, 2016 | Talmer Merger Aug 31, 2016 | June 30, 2016 | Twelve Months Ended June 30, 2017 | ||||||||||||||||||||||
| Composition of Deposits | |||||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 3,626,592 | $ | 3,399,287 | 6.7 | % | $ | 3,341,520 | $ | 3,264,934 | $ | 1,236,902 | $ | 2,007,629 | 19.0 | % | |||||||||||||
| Savings | 1,749,199 | 1,752,040 | (0.2 | ) | 1,662,115 | 1,650,276 | 549,428 | 1,107,558 | 8.3 | ||||||||||||||||||||
| Interest-bearing demand | 2,606,032 | 2,900,546 | (10.2 | ) | 2,825,801 | 3,316,635 | 894,748 | 1,819,865 | (6.0 | ) | |||||||||||||||||||
| Money market accounts | 2,235,412 | 2,161,645 | 3.4 | 2,033,319 | 1,692,656 | 699,739 | 969,566 | 58.4 | |||||||||||||||||||||
| Brokered deposits | 123,728 | 156,367 | (20.9 | ) | 226,429 | 474,902 | 403,210 | 173,092 | (261.5 | ) | |||||||||||||||||||
| Other time deposits | 2,863,404 | 2,762,462 | 3.7 | 2,783,938 | 2,873,459 | 1,510,591 | 1,386,936 | (2.5 | ) | ||||||||||||||||||||
| Total deposits | $ | 13,204,367 | $ | 13,132,347 | 0.5 | % | $ | 12,873,122 | $ | 13,272,862 | $ | 5,294,618 | $ | 7,464,646 | 6.0 | % | |||||||||||||
| June 30, 2017 | March 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | June 30, 2016 | ||||||||||||||||
| Additional Data - Intangibles | ||||||||||||||||||||
| Goodwill | $ | 1,133,534 | $ | 1,133,534 | $ | 1,133,534 | $ | 1,137,166 | $ | 286,867 | ||||||||||
| Loan servicing rights | 64,522 | 64,604 | 58,315 | 51,393 | 9,677 | |||||||||||||||
| Core deposit intangibles (CDI) | 37,235 | 38,723 | 40,211 | 35,618 | 24,429 | |||||||||||||||
| Noncompete agreements | 87 | 125 | — | 82 | 164 | |||||||||||||||
12
Chemical Financial Corporation Announces 2017 Second Quarter Operating Results
Nonperforming Assets (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
| June 30, 2017 | March 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | June 30, 2016 | March 31, 2016 | |||||||||||||||||||
| Nonperforming Assets | ||||||||||||||||||||||||
Nonperforming Loans (1): | ||||||||||||||||||||||||
| Nonaccrual loans: | ||||||||||||||||||||||||
| Commercial | $ | 18,773 | $ | 16,717 | $ | 13,178 | $ | 13,742 | $ | 14,577 | $ | 19,264 | ||||||||||||
| Commercial real estate | 19,723 | 20,828 | 19,877 | 19,914 | 21,325 | 25,859 | ||||||||||||||||||
| Real estate construction | 56 | 79 | 80 | 80 | 496 | 546 | ||||||||||||||||||
| Residential mortgage | 7,714 | 6,749 | 6,969 | 5,119 | 5,343 | 5,062 | ||||||||||||||||||
| Consumer installment | 757 | 755 | 879 | 378 | 285 | 360 | ||||||||||||||||||
| Home equity | 3,871 | 2,713 | 3,351 | 2,064 | 1,971 | 2,328 | ||||||||||||||||||
Total nonaccrual loans(1) | 50,894 | 47,841 | 44,334 | 41,297 | 43,997 | 53,419 | ||||||||||||||||||
| Other real estate and repossessed assets | 14,582 | 16,395 | 17,187 | 20,730 | 8,440 | 9,248 | ||||||||||||||||||
| Total nonperforming assets | $ | 65,476 | $ | 64,236 | $ | 61,521 | $ | 62,027 | $ | 52,437 | $ | 62,667 | ||||||||||||
| Accruing loans contractually past due 90 days or more as to interest or principal payments, excluding acquired loans accounted for under ASC 310-30: | ||||||||||||||||||||||||
| Commercial | 58 | 1,823 | 11 | 221 | 3 | 370 | ||||||||||||||||||
| Commercial real estate | 262 | 700 | 277 | 739 | 3 | — | ||||||||||||||||||
| Real estate construction | — | — | — | 1,439 | — | — | ||||||||||||||||||
| Residential mortgage | — | — | — | 375 | 407 | 423 | ||||||||||||||||||
| Home equity | 2,026 | 1,169 | 995 | 628 | 1,071 | 679 | ||||||||||||||||||
| Total accruing loans contractually past due 90 days or more as to interest or principal payments | $ | 2,346 | 3,692 | $ | 1,283 | $ | 3,402 | $ | 1,484 | $ | 1,472 | |||||||||||||
(1) Acquired loans, accounted for under Accounting Standards Codification 310-30, that are not performing in accordance with contractual terms are not reported as nonperforming loans because these loans are recorded in pools at their net realizable value based on the principal and interest the Corporation expects to collect on these loans.
13
Chemical Financial Corporation Announces 2017 Second Quarter Operating Results
Summary of Allowance and Loan Loss Experience (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
| 2nd Quarter 2017 | 1st Quarter 2017 | 4th Quarter 2016 | 3rd Quarter 2016 | 2nd Quarter 2016 | 1st Quarter 2016 | Six Months Ended | |||||||||||||||||||||||||
| June 30, 2017 | June 30, 2016 | ||||||||||||||||||||||||||||||
| Allowance for loan losses - originated loan portfolio | |||||||||||||||||||||||||||||||
| Allowance for loan losses - beginning of period | $ | 78,774 | $ | 78,268 | $ | 73,775 | $ | 71,506 | $ | 70,318 | $ | 73,328 | $ | 78,268 | $ | 73,328 | |||||||||||||||
| Provision for loan losses | 6,229 | 4,050 | 6,272 | 4,103 | 3,000 | 1,500 | 10,279 | 4,500 | |||||||||||||||||||||||
| Net loan (charge-offs) recoveries: | |||||||||||||||||||||||||||||||
| Commercial | (239 | ) | (1,999 | ) | (336 | ) | (150 | ) | (1,153 | ) | (3,115 | ) | (2,238 | ) | (4,268 | ) | |||||||||||||||
| Commercial real estate | (205 | ) | 730 | (280 | ) | (154 | ) | (187 | ) | (440 | ) | 525 | (627 | ) | |||||||||||||||||
| Real estate construction | — | (9 | ) | 36 | (31 | ) | — | (11 | ) | (9 | ) | (11 | ) | ||||||||||||||||||
| Residential mortgage | 19 | (567 | ) | (236 | ) | (304 | ) | 8 | (172 | ) | (548 | ) | (164 | ) | |||||||||||||||||
| Consumer installment | (747 | ) | (1,310 | ) | (823 | ) | (1,137 | ) | (486 | ) | (602 | ) | (2,057 | ) | (1,088 | ) | |||||||||||||||
| Home equity | (34 | ) | (389 | ) | (140 | ) | (58 | ) | 6 | (170 | ) | (423 | ) | (164 | ) | ||||||||||||||||
| Net loan charge-offs | (1,206 | ) | (3,544 | ) | (1,779 | ) | (1,834 | ) | (1,812 | ) | (4,510 | ) | (4,750 | ) | (6,322 | ) | |||||||||||||||
| Allowance for loan losses - end of period | 83,797 | 78,774 | 78,268 | 73,775 | 71,506 | 70,318 | 83,797 | 71,506 | |||||||||||||||||||||||
| Allowance for loan losses - acquired loan portfolio | |||||||||||||||||||||||||||||||
| Allowance for loan losses - beginning of period | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
| Provision for loan losses | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
| Allowance for loan losses - end of period | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
| Total allowance for loan losses | $ | 83,797 | $ | 78,774 | $ | 78,268 | $ | 73,775 | $ | 71,506 | $ | 70,318 | $ | 83,797 | $ | 71,506 | |||||||||||||||
| Net loan charge-offs as a percent of average loans (annualized) | 0.04 | % | 0.11 | % | 0.06 | % | 0.08 | % | 0.10 | % | 0.25 | % | 0.07 | % | 0.17 | % | |||||||||||||||
| June 30, 2017 | March 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | June 30, 2016 | |||||||||||||||
| Originated loans | $ | 8,659,622 | $ | 7,959,769 | $ | 7,458,401 | $ | 6,755,931 | $ | 6,378,934 | |||||||||
| Acquired loans | 5,007,750 | 5,313,623 | 5,532,378 | 5,959,858 | 1,268,335 | ||||||||||||||
| Total loans | $ | 13,667,372 | $ | 13,273,392 | $ | 12,990,779 | $ | 12,715,789 | $ | 7,647,269 | |||||||||
| Allowance for loan losses as a percent of: | |||||||||||||||||||
| Total originated loans | 0.97% | 0.99% | 1.05% | 1.09% | 1.12% | ||||||||||||||
| Nonperforming loans | 164.7% | 164.7% | 176.5% | 178.6% | 162.5% | ||||||||||||||
| Credit mark as a percent of unpaid principal balance on acquired loans | 1.3% | 2.8% | 3.1% | 3.0% | 4.1% | ||||||||||||||
14
Chemical Financial Corporation Announces 2017 Second Quarter Operating Results
Reconciliation of Non-GAAP Financial Measures (Unaudited)
Chemical Financial Corporation
(Amounts in thousands)
| 2nd Quarter 2017 | 1st Quarter 2017 | 4th Quarter 2016 | 3rd Quarter 2016 | 2nd Quarter 2016 | 1st Quarter 2016 | Six Months Ended | |||||||||||||||||||||||||
| June 30, 2017 | June 30, 2016 | ||||||||||||||||||||||||||||||
| Non-GAAP Operating Results | |||||||||||||||||||||||||||||||
| Net Income | |||||||||||||||||||||||||||||||
| Net income, as reported | $ | 52,014 | $ | 47,604 | $ | 47,168 | $ | 11,484 | $ | 25,775 | $ | 23,605 | $ | 99,618 | $ | 49,380 | |||||||||||||||
| Transaction expenses | 465 | 4,167 | 18,016 | 37,470 | 3,054 | 2,594 | 4,632 | 5,648 | |||||||||||||||||||||||
| Gain on sales of branch offices | — | — | (7,391 | ) | — | — | — | — | — | ||||||||||||||||||||||
| Loan servicing rights change in fair valuation | 1,802 | 519 | (6,348 | ) | 1,236 | — | — | 2,321 | — | ||||||||||||||||||||||
| Significant items | 2,267 | 4,686 | 4,277 | 38,706 | 3,054 | 2,594 | 6,953 | 5,648 | |||||||||||||||||||||||
Income tax benefit (1) | (793 | ) | (1,640 | ) | (1,496 | ) | (12,785 | ) | (1,069 | ) | (908 | ) | (2,433 | ) | (1,977 | ) | |||||||||||||||
| Significant items, net of tax | 1,474 | 3,046 | 2,781 | 25,921 | 1,985 | 1,686 | 4,520 | 3,671 | |||||||||||||||||||||||
| Net income, excluding significant items | $ | 53,488 | $ | 50,650 | $ | 49,949 | $ | 37,405 | $ | 27,760 | $ | 25,291 | $ | 104,138 | $ | 53,051 | |||||||||||||||
| Diluted Earnings Per Share | |||||||||||||||||||||||||||||||
| Diluted earnings per share, as reported | $ | 0.73 | $ | 0.67 | $ | 0.66 | $ | 0.23 | $ | 0.67 | $ | 0.60 | $ | 1.39 | $ | 1.28 | |||||||||||||||
| Effect of significant items, net of tax | 0.02 | 0.04 | 0.04 | 0.52 | 0.05 | 0.05 | 0.06 | 0.10 | |||||||||||||||||||||||
| Diluted earnings per share, excluding significant items | $ | 0.75 | $ | 0.71 | $ | 0.70 | $ | 0.75 | $ | 0.72 | $ | 0.65 | $ | 1.45 | $ | 1.38 | |||||||||||||||
| Return on Average Assets | |||||||||||||||||||||||||||||||
| Return on average assets, as reported | 1.14 | % | 1.09% | 1.09 | % | 0.37 | % | 1.10 | % | 1.02 | % | 1.11 | % | 1.06 | % | ||||||||||||||||
| Effect of significant items, net of tax | 0.03 | 0.07 | 0.07 | 0.85 | 0.09 | 0.07 | 0.06 | 0.08 | |||||||||||||||||||||||
| Return on average assets, excluding significant items | 1.17 | % | 1.16% | 1.16 | % | 1.22 | % | 1.19 | % | 1.09 | % | 1.17 | % | 1.14 | % | ||||||||||||||||
| Return on Average Shareholders' Equity | |||||||||||||||||||||||||||||||
| Return on average shareholders' equity, as reported | 8.0 | % | 7.4 | % | 7.4 | % | 2.9 | % | 10.0 | % | 9.3 | % | 7.7 | % | 9.6 | % | |||||||||||||||
| Effect of significant items, net of tax | 0.2 | 0.4 | 0.4 | 6.7 | 0.7 | 0.6 | 0.3 | 0.7 | |||||||||||||||||||||||
| Return on average shareholders' equity, excluding significant items | 8.2 | % | 7.8 | % | 7.8 | % | 9.6 | % | 10.7 | % | 9.9 | % | 8.0 | % | 10.3 | % | |||||||||||||||
| Return on Average Tangible Shareholders' Equity | |||||||||||||||||||||||||||||||
| Average shareholders' equity | $2,606,517 | $2,584,501 | $2,564,943 | $1,559,668 | $1,033,014 | $1,017,929 | $2,595,567 | $1,025,471 | |||||||||||||||||||||||
| Average goodwill, CDI and noncompete agreements, net of tax | 1,171,593 | 1,173,019 | 1,172,079 | 601,544 | 312,033 | 313,753 | 1,172,302 | 312,893 | |||||||||||||||||||||||
| Average tangible shareholders' equity | $1,434,924 | $1,411,482 | $1,392,864 | $958,124 | $720,981 | $704,176 | $1,423,265 | $712,578 | |||||||||||||||||||||||
| Return on average tangible shareholders' equity | 14.3 | % | 13.3% | 13.4 | % | 4.8 | % | 14.3 | % | 13.4 | % | 14.0 | % | 13.9 | % | ||||||||||||||||
| Effect of significant items, net of tax | 0.4 | 0.9 | 0.8 | 10.8 | 1.1 | 1.0 | 0.6 | 1.0 | |||||||||||||||||||||||
| Return on average tangible shareholders' equity, excluding significant items | 14.7 | % | 14.2 | % | 14.2 | % | 15.6 | % | 15.4 | % | 14.4 | % | 14.6 | % | 14.9 | % | |||||||||||||||
(1) Assumes transaction expenses and other significant items are deductible at an income tax rate of 35%, except for the impact of estimated nondeductible expenses incurred in periods when the Corporation completes merger and acquisition transactions.
15
Chemical Financial Corporation Announces 2017 Second Quarter Operating Results
Reconciliation of Non-GAAP Financial Measures (Unaudited)
Chemical Financial Corporation
(Amounts in thousands, except per share data)
| 2nd Quarter 2017 | 1st Quarter 2017 | 4th Quarter 2016 | 3rd Quarter 2016 | 2nd Quarter 2016 | 1st Quarter 2016 | Six Months Ended | |||||||||||||||||||||||||
| June 30, 2017 | June 30, 2016 | ||||||||||||||||||||||||||||||
| Efficiency Ratio | |||||||||||||||||||||||||||||||
| Net interest income | $ | 137,948 | $ | 130,097 | $ | 132,447 | $ | 96,809 | $ | 77,495 | $ | 74,330 | $ | 268,045 | $ | 151,825 | |||||||||||||||
| Noninterest income | 41,568 | 38,010 | 54,264 | 27,770 | 20,897 | 19,419 | 79,578 | 40,316 | |||||||||||||||||||||||
| Total revenue - GAAP | 179,516 | 168,107 | 186,711 | 124,579 | 98,392 | 93,749 | 347,623 | 192,141 | |||||||||||||||||||||||
| Net interest income FTE adjustment | 3,169 | 3,068 | 2,945 | 2,426 | 2,138 | 2,133 | 6,237 | 4,271 | |||||||||||||||||||||||
| Loan servicing rights change in fair value (gains)losses | 1,802 | 519 | (6,348 | ) | 1,236 | — | — | 2,321 | — | ||||||||||||||||||||||
| Gain on sales of branch offices | — | — | (7,391 | ) | — | — | — | — | — | ||||||||||||||||||||||
| Gains from sale of investment securities gains and closed branch locations | (77 | ) | (90 | ) | (76 | ) | (301 | ) | (123 | ) | (169 | ) | (167 | ) | (292 | ) | |||||||||||||||
| Total revenue - Non-GAAP | $ | 184,410 | $ | 171,604 | $ | 175,841 | $ | 127,940 | $ | 100,407 | $ | 95,713 | $ | 356,014 | $ | 196,120 | |||||||||||||||
| Operating expenses - GAAP | $ | 98,237 | $ | 104,196 | $ | 114,302 | $ | 106,144 | $ | 59,085 | $ | 58,887 | $ | 202,433 | $ | 117,972 | |||||||||||||||
| Transaction expenses | (465 | ) | (4,167 | ) | (18,016 | ) | (37,470 | ) | (3,054 | ) | (2,594 | ) | (4,632 | ) | (5,648 | ) | |||||||||||||||
| Amortization of intangibles | (1,525 | ) | (1,513 | ) | (1,843 | ) | (1,292 | ) | (1,195 | ) | (1,194 | ) | (3,038 | ) | (2,389 | ) | |||||||||||||||
| Operating expenses - Non-GAAP | $ | 96,247 | $ | 98,516 | $ | 94,443 | $ | 67,382 | $ | 54,836 | $ | 55,099 | $ | 194,763 | $ | 109,935 | |||||||||||||||
| Efficiency ratio - GAAP | 54.7 | % | 62.0 | % | 61.2 | % | 85.2 | % | 60.1 | % | 62.8 | % | 58.2 | % | 61.4 | % | |||||||||||||||
| Efficiency ratio - adjusted Non-GAAP | 52.2 | % | 57.4 | % | 53.7 | % | 52.7 | % | 54.6 | % | 57.6 | % | 54.7 | % | 56.1 | % | |||||||||||||||
| June 30, 2017 | March 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | June 30, 2016 | March 31, 2016 | ||||||||||||||||||
| Tangible Book Value | |||||||||||||||||||||||
| Shareholders' equity, as reported | $ | 2,639,442 | $ | 2,600,051 | $ | 2,581,526 | $ | 2,563,666 | $ | 1,050,299 | $ | 1,032,291 | |||||||||||
| Goodwill, CDI and noncompete agreements, net of tax | (1,153,595 | ) | (1,154,915 | ) | (1,155,617 | ) | (1,154,121 | ) | (297,044 | ) | (297,821 | ) | |||||||||||
| Tangible shareholders' equity | $ | 1,485,847 | $ | 1,445,136 | $ | 1,425,909 | $ | 1,409,545 | $ | 753,255 | $ | 734,470 | |||||||||||
| Common shares outstanding | 71,131 | 71,118 | 70,599 | 70,497 | 38,267 | 38,248 | |||||||||||||||||
| Book value per share (shareholders' equity, as reported, divided by common shares outstanding) | $ | 37.11 | $ | 36.56 | $ | 36.57 | $ | 36.37 | $ | 27.45 | $ | 26.99 | |||||||||||
| Tangible book value per share (tangible shareholders' equity divided by common shares outstanding) | $ | 20.89 | $ | 20.32 | $ | 20.20 | $ | 19.99 | $ | 19.68 | $ | 19.20 | |||||||||||
| Tangible Shareholders' Equity to Tangible Assets | |||||||||||||||||||||||
| Total assets, as reported | $ | 18,781,405 | $ | 17,636,973 | $ | 17,355,179 | $ | 17,383,637 | $ | 9,514,172 | $ | 9,303,632 | |||||||||||
| Goodwill, CDI and noncompete agreements, net of tax | (1,153,595 | ) | (1,154,915 | ) | (1,155,617 | ) | (1,154,121 | ) | (297,044 | ) | (297,821 | ) | |||||||||||
| Tangible assets | $ | 17,627,810 | $ | 16,482,058 | $ | 16,199,562 | $ | 16,229,516 | $ | 9,217,128 | $ | 9,005,811 | |||||||||||
| Shareholders' equity to total assets | 14.1 | % | 14.7 | % | 14.9 | % | 14.7 | % | 11.0 | % | 11.1 | % | |||||||||||
| Tangible shareholders' equity to tangible assets | 8.4 | % | 8.8 | % | 8.8 | % | 8.7 | % | 8.2 | % | 8.2 | % | |||||||||||
16