EXHIBIT 99.1
PRESS RELEASE |
| |
NASDAQ: | CHFC | |
FOR RELEASE: | IMMEDIATE | |
DATE: | APRIL 18, 2005 | |
|
| |
CONTACT: | DAVID B. RAMAKER | LORI A. GWIZDALA |
CHEMICAL FINANCIAL CORPORATION ANNOUNCES 2005
FIRST QUARTER OPERATING RESULTS
Midland, MI-The Board of Directors of Chemical Financial Corporation today announced 2005 first quarter net income of $13.50 million or $0.53 per diluted share, as compared to net income of $14.12 million or $0.56 per diluted share in the first quarter of 2004.
First Quarter Operating Results
Net income and earnings per share in the first quarter of 2005 decreased 4.4% and 5.4%, respectively, from the first quarter of 2004. The decreases in net income and earnings per share were attributable to lower net interest income and a slightly higher effective federal income tax rate. These two items were partially offset by slightly higher noninterest income and a slight decrease in operating expenses.
Net interest income of $35.95 million in the first quarter of 2005 was down $0.88 million, or 2.4% from the first quarter of 2004. The decrease in net interest income was attributable to both a decrease in average interest-earning assets and a reduction in the net interest margin.
Average interest-earnings assets were $3.59 billion in the first quarter of 2005, down $48 million, or 1.3% from the first quarter of 2004, although approximately the same as in the fourth quarter of 2004. The decrease in average interest-earning assets between the first quarter of 2005 and the first quarter of 2004 was primarily the result of a decline in deposits. Average loans were $2.58 billion in the first quarter of 2005, up $58.3 million, or 2.3% from average loans in the first quarter of 2004, although down $22.8 million, or 0.9% from average loans in the fourth quarter of 2004.
The net interest margin was 4.11% in the first quarter of 2005, compared to 4.12% in the first quarter of 2004 and 4.18% in the fourth quarter of 2004. The decrease in net interest margin in the first quarter of 2005, compared to the first quarter of 2004, was attributable to the Corporation's increase in its average cost of interest-bearing liabilities exceeding the increase in its average yield on interest-earning assets. The average cost of interest-bearing liabilities was 1.77% in the first quarter of 2005, an increase of 32 basis points over the first quarter of 2004. The increase in the average cost of interest-bearing liabilities was primarily a result of the increase in the average cost of deposits, which has been driven by the overall rise in short-term market interest rates and increased competition for deposits. The Corporation's average yield on interest-earning assets was 5.47% in the first quarter of 2005, an increase of 20 basis points over the first quart er of 2004. The increase in the average yield on interest-earning assets was
primarily driven by the increase in the interest yield on variable rate commercial loans tied to the prime rate.
The Corporation's provision for loan losses in the first quarter of 2005 was $0.73 million, compared to net loan charge-offs of $0.73 million during the same period. The provision for loan losses in the first quarter of 2004 was $0.75 million compared to net loan charge-offs during the period of $0.43 million.
Total noninterest income was $10.18 million in the first quarter of 2005, up $0.22 million or 2.2% over the first quarter of 2004. The Corporation experienced slight increases in a number of noninterest income categories, including trust and investment management services revenue, service charges on deposit accounts, ATM and debit card revenue, and investment securities gains. These increases were mostly offset by a continued reduction in mortgage banking revenue and related title insurance agency commissions. Investment securities gains of $1.09 million in the first quarter of 2005 included $0.85 million attributable to the sale of one common stock equity security owned by the parent company. Investment securities gains of $0.98 million in the first quarter of 2004 included $0.61 million of investment securities gains attributable to the sale of common stock equity securities owned by the parent company. The parent company did not hold any remaining common stock equity securities as of March 31, 2005.
Operating expenses were $24.98 million in the first quarter of 2005, down approximately $0.18 million, or 0.7% from the first quarter of 2004.
Balance Sheet and Capital Position
Total assets of the Corporation at March 31, 2005 were $3.80 billion, up $32.8 million or 0.9% over the $3.76 billion in total assets reported at December 31, 2004. Total deposits at March 31, 2005 were $2.93 billion, up $64.5 million, or 2.3% from total deposits of $2.86 billion at December 31, 2004.
Total loans were $2.577 billion at March 31, 2005, down $8.8 million, or 0.3% from total loans of $2.586 billion at December 31, 2004. The Corporation achieved an $11.6 million or 2.5% increase in commercial loans and a $2.1 million or 1.7% increase in real estate construction loans during the three months ended March 31, 2005. These increases were offset by slight decreases in the remaining three loan categories, with the largest decrease occurring in consumer loans. Consumer loans declined $16.3 million, or 3.0% during the first quarter of 2005.
As of March 31, 2005, the allowance for loan losses was $34.17 million or 1.33% of total loans, while nonperforming loans were $10.74 million or 0.42% of total loans. Nonperforming loans were up $0.7 million or 6.8% from December 31, 2004. Nonperforming assets as a percentage of loans plus repossessed assets were 0.67% as of March 31, 2005, compared to 0.65% as of December 31, 2004. Net loan losses as a percentage of average total loans were 0.11% on an annualized basis in the first quarter of 2005, the same percentage as during the twelve months ended December 31, 2004.
Shareholders' equity at March 31, 2005 was $487 million or $19.32 per share and represented 12.8% of total assets. The Corporation's total risk-based capital and tangible equity to asset ratios were 17.7% and 11.1%, respectively, as of March 31, 2005.
Chemical Financial Corporation is the fourth largest bank holding company headquartered in Michigan. The Company's three subsidiary banks operate "Chemical Bank" branch offices throughout the lower peninsula of Michigan.
Chemical Financial Corporation common stock trades on The Nasdaq Stock Market under the symbol CHFC and is one of the issues comprising the Nasdaq Financial 100 index.
Forward Looking Statements This press release contains forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "intends," "should," "will," variations of such words and similar expressions are intended to identify forward-looking statements. These statements reflect management's current beliefs as to the expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates and banking laws and regulations; the impact of competition from traditional or new sources; and the possibility that anticipated cost savings and revenue enhanceme nts from mergers and acquisitions and bank consolidations may not be fully realized at all or within the expected time frames. These and other factors that may emerge could cause decisions and actual results to differ materially from current expectations. Chemical undertakes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release. |
# # #
Chemical Financial Corporation Announces First Quarter Operating Results |
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation and Subsidiaries
| March 31, |
| December 31, |
| March 31, | |||
Assets: |
|
|
|
|
|
|
|
|
Cash and demand deposits due from banks | $ | 94,135 |
| $ | 106,565 |
| $ | 106,610 |
Federal funds sold |
| 51,500 |
|
| 34,500 |
|
| 75,400 |
Interest-bearing deposits with unaffiliated banks |
| 37,151 |
|
| 5,869 |
|
| 27,854 |
|
|
|
|
|
|
|
|
|
Investment securities - available for sale |
| 740,738 |
|
| 716,757 |
|
| 840,957 |
Investment securities - held to maturity |
| 159,467 |
|
| 176,517 |
|
| 169,742 |
Total Investment Securities |
| 900,205 |
|
| 893,274 |
|
| 1,010,699 |
|
|
|
|
|
|
|
|
|
Commercial loans |
| 480,553 |
|
| 468,970 |
|
| 444,229 |
Real estate construction loans |
| 122,951 |
|
| 120,900 |
|
| 148,592 |
Real estate commercial loans |
| 696,018 |
|
| 697,779 |
|
| 640,292 |
Real estate residential loans |
| 756,468 |
|
| 760,834 |
|
| 773,195 |
Consumer loans |
| 520,800 |
|
| 537,102 |
|
| 542,811 |
Total Loans |
| 2,576,790 |
|
| 2,585,585 |
|
| 2,549,119 |
Less: Allowance for loan losses |
| 34,171 |
|
| 34,166 |
|
| 33,494 |
Net Loans |
| 2,542,619 |
|
| 2,551,419 |
|
| 2,515,625 |
|
|
|
|
|
|
|
|
|
Premises and equipment |
| 46,671 |
|
| 47,577 |
|
| 48,669 |
Intangible assets |
| 73,728 |
|
| 74,421 |
|
| 76,141 |
Other assets |
| 50,881 |
|
| 50,500 |
|
| 49,574 |
Total Assets | $ | 3,796,890 |
| $ | 3,764,125 |
| $ | 3,910,572 |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity: |
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
| 525,272 |
|
| $555,287 |
|
| $502,147 |
Interest-bearing deposits |
| 2,402,675 |
|
| 2,308,186 |
|
| 2,515,476 |
Total Deposits |
| 2,927,947 |
|
| 2,863,473 |
|
| 3,017,623 |
Other borrowings - short term |
| 94,445 |
|
| 101,834 |
|
| 92,002 |
Interest payable and other liabilities |
| 33,828 |
|
| 28,986 |
|
| 38,940 |
FHLB borrowings |
| 253,979 |
|
| 284,996 |
|
| 292,210 |
Total Liabilities |
| 3,310,199 |
|
| 3,279,289 |
|
| 3,440,775 |
|
|
|
|
|
|
|
|
|
Shareholders' Equity: |
|
|
|
|
|
|
|
|
Common stock, $1 par value |
| 25,185 |
|
| 25,169 |
|
| 23,931 |
Surplus |
| 379,149 |
|
| 378,694 |
|
| 333,065 |
Retained earnings |
| 87,096 |
|
| 80,266 |
|
| 102,530 |
Accumulated other comprehensive income/(loss) |
| (4,739 | ) |
| 707 |
|
| 10,271 |
Total Shareholders' Equity |
| 486,691 |
|
| 484,836 |
|
| 469,797 |
Total Liabilities and Shareholders' Equity | $ | 3,796,890 |
| $ | 3,764,125 |
| $ | 3,910,572 |
Chemical Financial Corporation Announces First Quarter Operating Results |
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation and Subsidiaries
| Three Months Ended | ||||
(In thousands, except per share data) | 2005 |
| 2004 | ||
Interest Income: |
|
|
|
|
|
Interest and fees on loans | $ | 38,811 |
| $ | 37,478 |
Interest on investment securities: |
|
|
|
|
|
Taxable |
| 7,781 |
|
| 8,876 |
Nontaxable |
| 490 |
|
| 565 |
Total Interest on Investment Securities |
| 8,271 |
|
| 9,441 |
Interest on federal funds sold |
| 653 |
|
| 201 |
Interest on deposits with unaffiliated banks |
| 225 |
|
| 65 |
Total Interest Income |
| 47,960 |
|
| 47,185 |
|
|
|
|
|
|
Interest Expense: |
|
|
|
|
|
Interest on deposits |
| 9,193 |
|
| 7,691 |
Interest on other borrowings - short term |
| 348 |
|
| 96 |
Interest on FHLB borrowings |
| 2,472 |
|
| 2,576 |
Total Interest Expense |
| 12,013 |
|
| 10,363 |
Net Interest Income |
| 35,947 |
|
| 36,822 |
Provision for loan losses |
| 730 |
|
| 746 |
Net Interest Income after |
|
|
|
|
|
Provision for Loan Losses |
| 35,217 |
|
| 36,076 |
|
|
|
|
|
|
Noninterest Income: |
|
|
|
|
|
Service charges on deposit accounts |
| 4,716 |
|
| 4,554 |
Trust and investment management services revenue |
| 2,017 |
|
| 1,909 |
Other charges and fees for customer services |
| 1,688 |
|
| 1,548 |
Mortgage banking revenue |
| 489 |
|
| 780 |
Investment securities gains |
| 1,089 |
|
| 983 |
Other |
| 181 |
|
| 188 |
Total Noninterest Income |
| 10,180 |
|
| 9,962 |
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
Salaries and employee benefits |
| 14,580 |
|
| 14,801 |
Occupancy and equipment |
| 4,756 |
|
| 4,844 |
Other |
| 5,647 |
|
| 5,515 |
Total Operating Expenses |
| 24,983 |
|
| 25,160 |
Income Before Income Taxes |
| 20,414 |
|
| 20,878 |
Federal income taxes |
| 6,910 |
|
| 6,759 |
Net Income | $ | 13,504 |
| $ | 14,119 |
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
Basic | $ | 0.54 |
| $ | 0.56 |
Diluted |
| 0.53 |
|
| 0.56 |
|
|
|
|
|
|
Cash dividends per share | $ | 0.265 |
| $ | 0.252 |
|
|
|
|
|
|
Average shares outstanding: |
|
|
|
|
|
Basic |
| 25,183 |
|
| 25,086 |
Diluted |
| 25,247 |
|
| 25,185 |
Chemical Financial Corporation Announces First Quarter Operating Results |
Financial Summary (Unaudited)
Chemical Financial Corporation and Subsidiaries
(Dollars in thousands)
| Three Months Ended | ||||
| 2005 |
| 2004 | ||
Average Balances |
|
|
|
|
|
Total assets | $ | 3,822,046 |
| $ | 3,888,849 |
Total interest-earning assets |
| 3,585,659 |
|
| 3,633,736 |
Total loans |
| 2,575,331 |
|
| 2,517,080 |
Total deposits |
| 2,929,347 |
|
| 3,020,391 |
Total shareholders' equity |
| 487,557 |
|
| 463,268 |
| Three Months Ended | ||||
| 2005 |
| 2004 | ||
Key Ratios (annualized where applicable) |
|
|
|
|
|
Net interest margin |
| 4.11% |
|
| 4.12% |
Efficiency ratio |
| 54.7% |
|
| 53.3% |
Return on average assets |
| 1.43% |
|
| 1.46% |
Return on average shareholders' equity |
| 11.2% |
|
| 12.3% |
Average shareholders' equity as a |
|
|
|
|
|
percent of average assets |
| 12.8% |
|
| 11.9% |
Tangible shareholders' equity as a |
|
|
|
|
|
percent of total assets |
| 11.1% |
|
| 10.3% |
Total risk-based capital ratio |
| 17.7% |
|
| 16.5% |
| March 31, |
| December 31, |
| September 30, |
| June 30, |
| March 31, | |||||
Credit Quality Statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans | $ | 7,823 |
| $ | 8,397 |
| $ | 5,787 |
| $ | 5,413 |
| $ | 5,317 |
Loans 90 or more days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing |
| 2,914 |
|
| 1,653 |
|
| 5,914 |
|
| 5,488 |
|
| 6,559 |
Total nonperforming loans |
| 10,737 |
|
| 10,050 |
|
| 11,701 |
|
| 10,901 |
|
| 11,876 |
Repossessed assets acquired (RAA) |
| 6,544 |
|
| 6,799 |
|
| 6,924 |
|
| 7,344 |
|
| 6,294 |
Total nonperforming assets |
| 17,281 |
|
| 16,849 |
|
| 18,625 |
|
| 18,245 |
|
| 18,170 |
Net loan charge-offs -- year-to-date |
| 725 |
|
| 2,832 |
|
| 1,658 |
|
| 1,034 |
|
| 431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses as a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
percent of total loans |
| 1.33% |
|
| 1.32% |
|
| 1.29% |
|
| 1.30% |
|
| 1.31% |
Allowance for loan losses as a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
percent of nonperforming loans |
| 318% |
|
| 340% |
|
| 288% |
|
| 308% |
|
| 282% |
Nonperforming loans as a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
percent of total loans |
| 0.42% |
|
| 0.39% |
|
| 0.45% |
|
| 0.42% |
|
| 0.47% |
Nonperforming assets as a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
percent of total loans plus RAA |
| 0.67% |
|
| 0.65% |
|
| 0.71% |
|
| 0.70% |
|
| 0.71% |
Net loan charge-offs as a percent of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average loans -- year-to-date (annualized) |
| 0.11% |
|
| 0.11% |
|
| 0.09% |
|
| 0.08% |
|
| 0.07% |
| March 31, |
| December 31, |
| September 30, |
| June 30, |
| March 31, | |||||
Additional Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill | $ | 63,293 |
| $ | 63,293 |
| $ | 63,293 |
| $ | 63,293 |
| $ | 63,293 |
Core deposits and other intangibles |
| 7,324 |
|
| 7,931 |
|
| 8,572 |
|
| 9,138 |
|
| 9,613 |
Mortgage servicing rights (MSR), |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of MSR impairment reserve |
| 3,111 |
|
| 3,197 |
|
| 3,441 |
|
| 3,252 |
|
| 3,235 |
MSR impairment reserve |
| - |
|
| - |
|
| - |
|
| 443 |
|
| 693 |
Amortization of intangibles |
| 800 |
|
| 948 |
|
| 931 |
|
| 1,079 |
|
| 851 |
Chemical Financial Corporation Announces First Quarter Operating Results |
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation and Subsidiaries
| 1st Qtr. |
| 4th Qtr. |
| 3rd Qtr. |
| 2nd Qtr. |
| 1st Qtr. |
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
Summary of Operations |
|
|
|
|
|
|
|
|
|
Interest income | $47,960 |
| $48,164 |
| $47,318 |
| $46,583 |
| $47,185 |
Interest expense | 12,013 |
| 10,914 |
| 10,165 |
| 10,174 |
| 10,363 |
Net interest income | 35,947 |
| 37,250 |
| 37,153 |
| 36,409 |
| 36,822 |
Provision for loan losses | 730 |
| 1,711 |
| 701 |
| 661 |
| 746 |
Net interest income after provision |
|
|
|
|
|
|
|
|
|
for loan losses | 35,217 |
| 35,539 |
| 36,452 |
| 35,748 |
| 36,076 |
Noninterest income | 10,180 |
| 9,739 |
| 9,623 |
| 10,005 |
| 9,962 |
Noninterest expense | 24,983 |
| 23,890 |
| 24,499 |
| 24,920 |
| 25,160 |
Income taxes | 6,910 |
| 6,987 |
| 7,280 |
| 6,967 |
| 6,759 |
Net income | 13,504 |
| 14,401 |
| 14,296 |
| 13,866 |
| 14,119 |
|
|
|
|
|
|
|
|
|
|
Per Common Share Data |
|
|
|
|
|
|
|
|
|
Net income: |
|
|
|
|
|
|
|
|
|
Basic | $0.54 |
| $0.57 |
| $0.58 |
| $0.55 |
| $0.56 |
Diluted | 0.53 |
| 0.57 |
| 0.57 |
| 0.55 |
| 0.56 |
Cash dividends | 0.265 |
| 0.252 |
| 0.252 |
| 0.252 |
| 0.252 |
Book value | 19.32 |
| 19.26 |
| 19.04 |
| 18.63 |
| 18.70 |