EXHIBIT 99.1
PRESS RELEASE
NASDAQ: | CHFC |
FOR RELEASE: | IMMEDIATE |
DATE: | July 25, 2005 |
| |
CONTACT: | David B. Ramaker
President & Chief Executive Officer
Chemical Financial Corporation
989/839-5269 |
| |
| Lori A. Gwizdala
Executive Vice President & Chief Financial Officer
Chemical Financial Corporation
989/839-5358 |
CHEMICAL FINANCIAL CORPORATION
ANNOUNCES
SECOND QUARTER 2005 OPERATING RESULTS
Midland, Michigan - Chemical Financial Corporation's Board of Directors today announced 2005 second quarter net income of $13.22 million, or $0.53 per diluted share, down $0.65 million, or $0.02 per diluted share, as compared with net income of $13.87 million, or $0.55 per diluted share, in the second quarter of 2004.
Net income was $26.72 million or $1.06 per share in the first six months of 2005, compared to net income of $27.99 million, or $1.11 per share in the first six months of 2004. This represented a decrease of 4.5% in both net income and earnings per share for the first six months of 2005, compared to the prior year. The returns on average assets and average equity during the first six months of 2005 were 1.42% and 11.0%, respectively, as compared to 1.45% and 12.1%, respectively, for the first six months of 2004.
Second Quarter Operating Results
Net income and earnings per share in the second quarter of 2005 decreased 4.7% and 3.6%, respectively, from the second quarter of 2004. The decreases in net income and earnings per share were attributable to lower net interest income, a modest increase in the provision for
1
loan losses and slightly lower noninterest income. These decreases were partially offset by a slight decrease in operating expenses.
Net interest income of $35.70 million in the second quarter of 2005 was $0.71 million, or 2.0%, lower than the second quarter of 2004. The decrease in net interest income was attributable to a decrease in average interest-earning assets that was partially offset by a modest increase in the net interest margin.
Average interest-earning assets were $3.53 billion in the second quarter of 2005, down $106 million, or 2.9% from the second quarter of 2004. The decrease in average interest-earning assets between the second quarter of 2005 and the second quarter of 2004 was primarily the result of a decline in deposits, including brokered deposits. Average loans were $2.60 billion in the second quarter of 2005, up $45 million, or 1.8% from average loans in the second quarter of 2004.
The net interest margin was 4.10% in the second quarter of 2005, compared to 4.07% in the second quarter of 2004. The modest increase in net interest margin was primarily attributable to a positive change in the mix of interest-earning assets and liabilities in the second quarter of 2005, as compared to the prior year quarter. In the second quarter of 2005, the average yield on interest-earning assets was 5.62%, compared to the average cost of interest-bearing liabilities of 1.98%. The average yield on interest-earning assets increased 42 basis points in the second quarter of 2005, as compared to the prior year quarter, while the average cost of interest-bearing liabilities increased 54 basis points during the same period. 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 and home equity lines of credit tied to prime. The increase in the average cost of interest-bearin g liabilities continued to result from rising deposit interest rates, which have been driven by the overall rise in short-term market interest rates and increased competition for deposits.
The provision for loan losses in the second quarter of 2005 was $0.73 million, the same as in the first quarter of 2005, although slightly higher than the $0.66 million recorded in the second quarter of 2004. Net loan charge-offs were $1.079 million in the second quarter of 2005,
2
compared to $0.725 million in the first quarter of 2005 and $0.60 million in the second quarter of 2004.
Total noninterest income was $9.75 million in the second quarter of 2005, down $0.25 million or 2.5% from the second 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, and ATM and debit card revenue, although these increases were more than offset by a decrease in investment securities gains and a continued reduction in mortgage banking revenue. Mortgage banking revenue of $0.48 million in the second quarter of 2005 was approximately the same as the first quarter of 2005, although down $0.60 million, or 55%, from the second quarter of 2004.
Operating expenses were $24.76 million in the second quarter of 2005, down $0.16 million, or 0.6%, from the second quarter of 2004, and down $0.22 million, or 0.9%, from the first quarter of 2005.
The returns on average assets and average equity during the second quarter of 2005 were 1.41% and 10.8%, respectively, as compared to 1.44% and 11.9%, respectively, for the second quarter of 2004.
Balance Sheet and Capital Position
Total assets of the Corporation at June 30, 2005 were $3.722 billion, down $42 million or 1.1% from the $3.764 billion in total assets reported at December 31, 2004. Total deposits at June 30, 2005 were $2.824 billion, down $39 million, or 1.4% from the total deposits of $2.863 billion at December 31, 2004.
Total loans were $2.654 billion at June 30, 2005, up $68 million, or 2.6% from total loans of $2.586 billion at December 31, 2004. The Corporation achieved a $39.6 million or 3.4% increase in commercial and commercial real estate loans, an $8.2 million or 6.8% increase in real estate construction loans, a $5.6 million or 0.7% increase in real estate residential loans and a $15.0 million or 2.8% increase in consumer loans during the six months ended June 30, 2005.
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As of June 30, 2005, the allowance for loan losses was $33.82 million or 1.27% of total loans, while nonperforming loans were $16.1 million or 0.61% of total loans. Net loan losses as a percentage of average total loans were 0.14% on an annualized basis during the six months ended June 30, 2005; slightly higher than the percentage for the twelve months ended December 31, 2004 of 0.11%. Nonperforming assets of $21.9 million at June 30, 2005, were up $5.06 million or 30% from December 31, 2004. The increase in nonperforming assets was largely attributable to two commercial real estate loans totaling $3.7 million. The Corporation does not expect any loss on these credits based on the collateral evaluation of these loans as of June 30, 2005. Nonperforming assets as a percentage of total assets were 0.59% as of June 30, 2005 compared to 0.45% as of December 31, 2004.
Shareholders' equity at June 30, 2005 was $495 million or $19.68 per share and represented 13.3% of total assets. The Corporation's total risk-based capital and tangible equity to asset ratios were 17.7% and 11.6%, respectively, as of June 30, 2005.
Chemical Financial Corporation is the fourth largest bank holding company headquartered in Michigan. The Company's three subsidiary banks operate banking offices spread over 32 counties in the lower peninsula of Michigan.
Chemical Financial Corporation common stock trades on The Nasdaq Stock Market under the symbol CHFC and is one of the issues comprising the Nasdaq Financial 100 index.
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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. |
# # #
5
Chemical Financial Corporation Announces Second Quarter Operating Results
|
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation and Subsidiaries
(In thousands)
| June 30,
2005
|
| December 31,
2004
|
| June 30,
2004
|
Assets: | | | | | | | | |
Cash and demand deposits due from banks | $ | 105,261 | | $ | 106,565 | | $ | 114,743 |
Federal funds sold | | 5,000 | | | 34,500 | | | 60,700 |
Interest-bearing deposits with unaffiliated banks | | 5,804 | | | 5,869 | | | 9,931 |
| | | | | | | | |
Investment securities - available for sale | | 679,646 | | | 716,757 | | | 768,228 |
Investment securities - held to maturity |
| 139,934
| |
| 176,517
| |
| 156,362
|
Total Investment Securities | | 819,580 | | | 893,274 | | | 924,590 |
| | | | | | | | |
Commercial loans | | 491,919 | | | 468,970 | | | 466,666 |
Real estate construction loans | | 129,144 | | | 120,900 | | | 132,956 |
Real estate commercial loans | | 714,393 | | | 697,779 | | | 655,053 |
Real estate residential loans | | 766,447 | | | 760,834 | | | 781,062 |
Consumer loans |
| 552,100
| |
| 537,102
| |
| 553,237
|
Total Loans | | 2,654,003 | | | 2,585,585 | | | 2,588,974 |
Less: Allowance for loan losses |
| 33,822
| |
| 34,166
| |
| 33,552
|
Net Loans | | 2,620,181 | | | 2,551,419 | | | 2,555,422 |
| | | | | | | | |
Premises and equipment | | 46,165 | | | 47,577 | | | 48,077 |
Intangible assets | | 73,031 | | | 74,421 | | | 75,683 |
Other assets |
| 47,078
| |
| 50,500
| |
| 52,593
|
Total Assets | $
| 3,722,100
| | $
| 3,764,125
| | $
| 3,841,739
|
| | | | | | | | |
Liabilities and Shareholders' Equity: | | | | | | | | |
Noninterest-bearing deposits | $ | 531,667 | | $ | 555,287 | | $ | 551,087 |
Interest-bearing deposits |
| 2,292,512
| |
| 2,308,186
| |
| 2,408,162
|
Total Deposits | | 2,824,179 | | | 2,863,473 | | | 2,959,249 |
Other borrowings - short term | | 106,781 | | | 101,834 | | | 95,371 |
Interest payable and other liabilities | | 27,526 | | | 28,986 | | | 33,569 |
FHLB borrowings |
| 268,959
| |
| 284,996
| |
| 285,191
|
Total Liabilities | | 3,227,445 | | | 3,279,289 | | | 3,373,380 |
| | | | | | | | |
Shareholders' Equity: | | | | | | | | |
Common stock, $1 par value | | 25,138 | | | 25,169 | | | 23,944 |
Surplus | | 377,854 | | | 378,694 | | | 333,475 |
Retained earnings | | 93,650 | | | 80,266 | | | 110,054 |
Accumulated other comprehensive income/(loss) |
| (1,987
| )
|
| 707
| |
| 886
|
Total Shareholders' Equity
|
| 494,655
| |
| 484,836
| |
| 468,359
|
Total Liabilities and Shareholders' Equity | $
| 3,722,100
| | $
| 3,764,125
| | $
| 3,841,739
|
6
Chemical Financial Corporation Announces Second Quarter Operating Results
|
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation and Subsidiaries
| Quarter Ended
June 30, | | Six Months Ended
June 30, | |
(In thousands, except per share data)
| 2005
|
| 2004
|
| 2005
|
| 2004
| |
Interest Income: | | | | | | | | | | | | |
Interest and fees on loans | $ | 40,221 | | $ | 37,481 | | $ | 79,032 | | $ | 74,959 | |
Interest on investment securities: | | | | | | | | | | | | |
Taxable | | 7,728 | | | 8,276 | | | 15,509 | | | 17,152 | |
Nontaxable |
| 522
| |
| 526
| |
| 1,012
| |
| 1,091
| |
Total Interest on Investment Securities | | 8,250 | | | 8,802 | | | 16,521 | | | 18,243 | |
Interest on federal funds sold | | 251 | | | 202 | | | 904 | | | 403 | |
Interest on deposits with unaffiliated banks |
| 290
| |
| 98
| |
| 515
| |
| 163
| |
Total Interest Income | | 49,012 | | | 46,583 | | | 96,972 | | | 93,768 | |
| | | | | | | | | | | | |
Interest Expense: | | | | | | | | | | | | |
Interest on deposits | | 10,478 | | | 7,523 | | | 19,671 | | | 15,214 | |
Interest on other borrowings - short term | | 445 | | | 103 | | | 793 | | | 199 | |
Interest on FHLB borrowings |
| 2,391
| |
| 2,548
| |
| 4,863
| |
| 5,124
| |
Total Interest Expense |
| 13,314
| |
| 10,174
| |
| 25,327
| |
| 20,537
| |
Net Interest Income | | 35,698 | | | 36,409 | | | 71,645 | | | 73,231 | |
Provision for loan losses |
| 730
| |
| 661
| |
| 1,460
| |
| 1,407
| |
Net Interest Income after | | | | | | | | | | | | |
Provision for Loan Losses | | 34,968 | | | 35,748 | | | 70,185 | | | 71,824 | |
| | | | | | | | | | | | |
Noninterest Income: | | | | | | | | | | | | |
Service charges on deposit accounts | | 5,014 | | | 4,757 | | | 9,730 | | | 9,311 | |
Trust & investment management services revenue | | 2,055 | | | 1,871 | | | 4,072 | | | 3,780 | |
Other charges and fees for customer services | | 1,908 | | | 1,806 | | | 3,596 | | | 3,354 | |
Mortgage banking revenue | | 481 | | | 1,080 | | | 970 | | | 1,860 | |
Investment securities gains | | 82 | | | 267 | | | 1,171 | | | 1,250 | |
Other |
| 213
| |
| 224
| |
| 394
| |
| 412
| |
Total Noninterest Income | | 9,753 | | | 10,005 | | | 19,933 | | | 19,967 | |
| | | | | | | | | | | | |
Operating Expenses: | | | | | | | | | | | | |
Salaries and employee benefits | | 14,658 | | | 14,693 | | | 29,238 | | | 29,494 | |
Occupancy and equipment | | 4,517 | | | 4,440 | | | 9,273 | | | 9,284 | |
Other |
| 5,588
| |
| 5,787
| |
| 11,235
| |
| 11,302
| |
Total Operating Expenses |
| 24,763
| |
| 24,920
| |
| 49,746
| |
| 50,080
| |
Income Before Income Taxes | | 19,958 | | | 20,833 | | | 40,372 | | | 41,711 | |
Federal income taxes |
| 6,743
| |
| 6,967
| |
| 13,653
| |
| 13,726
| |
Net Income | $
| 13,215
| | $
| 13,866
| | $
| 26,719
| | $
| 27,985
| |
| | | | | | | | | | | | |
Net income per share: | | | | | | | | | | | | |
Basic | $ | 0.53 | | $ | 0.55 | | $ | 1.06 | | $ | 1.11 | |
Diluted | | 0.53 | | | 0.55 | | | 1.06 | | | 1.11 | |
| | | | | | | | | | | | |
Cash dividends per share | $ | 0.265 | | $ | 0.252 | | $ | 0.530 | | $ | 0.505 | |
| | | | | | | | | | | | |
Average shares outstanding: | | | | | | | | | | | | |
Basic | | 25,152 | | | 25,131 | | | 25,167 | | | 25,109 | |
Diluted | | 25,200 | | | 25,209 | | | 25,224 | | | 25,198 | |
7
Chemical Financial Corporation Announces Second Quarter Operating Results
|
Financial Summary (Unaudited)
Chemical Financial Corporation and Subsidiaries
(Dollars in thousands)
| Quarter Ended
June 30, | | Six Months Ended
June 30, |
| 2005
|
| 2004
|
| 2005
|
| 2004
|
Average Balances | | | | | | | | | | | |
Total assets | $ | 3,760,798 | | $ | 3,876,665 | | $ | 3,791,253 | | $ | 3,877,963 |
Total interest-earning assets | | 3,527,087 | | | 3,632,968 | | | 3,556,211 | | | 3,628,558 |
Total loans | | 2,604,615 | | | 2,559,608 | | | 2,590,054 | | | 2,538,344 |
Total deposits | | 2,892,240 | | | 3,001,871 | | | 2,910,691 | | | 3,009,285 |
Total shareholders' equity | | 490,813 | | | 469,366 | | | 489,194 | | | 466,317 |
| Quarter Ended
June 30, | | Six Months Ended
June 30, |
| 2005
|
| 2004
|
| 2005
|
| 2004
|
Key Ratios (annualized where applicable) | | | | | | | | | | | |
Net interest margin | | 4.10% | | | 4.07% | | | 4.11% | | | 4.09% |
Efficiency ratio | | 54.0% | | | 53.3% | | | 54.4% | | | 53.6% |
Return on average assets | | 1.41% | | | 1.44% | | | 1.42% | | | 1.45% |
Return on average shareholders' equity | | 10.8% | | | 11.9% | | | 11.0% | | | 12.1% |
Average shareholders' equity as a | | | | | | | | | | | |
percent of average assets | | 13.1% | | | 12.1% | | | 12.9% | | | 12.0% |
Tangible shareholders' equity as a | | | | | | | | | | | |
percent of total assets | | | | | | | | 11.6% | | | 10.4% |
Total risk-based capital ratio | | | | | | | | 17.7% | | | 16.9% |
| June 30,
2005
|
| March 31,
2005
|
| December 31,
2004
|
| September 30,
2004
|
| June 30,
2004
|
Credit Quality Statistics | | | | | | | | | | | | | | |
Nonaccrual loans | $ | 8,639 | | $ | 7,823 | | $ | 8,397 | | $ | 5,787 | | $ | 5,413 |
Loans 90 or more days past due | | | | | | | | | | | | | | |
and still accruing | | 7,426 | | | 2,914 | | | 1,653 | | | 5,914 | | | 5,488 |
Total nonperforming loans | | 16,065 | | | 10,737 | | | 10,050 | | | 11,701 | | | 10,901 |
Repossessed assets acquired (RAA) | | 5,848 | | | 6,544 | | | 6,799 | | | 6,924 | | | 7,344 |
Total nonperforming assets | | 21,913 | | | 17,281 | | | 16,849 | | | 18,625 | | | 18,245 |
Net loan charge offs - year-to-date | | 1,804 | | | 725 | | | 2,832 | | | 1,658 | | | 1,034 |
| | | | | | | | | | | | | | |
Allowance for loan losses as a | | | | | | | | | | | | | | |
percent of total loans | | 1.27% | | | 1.33% | | | 1.32% | | | 1.29% | | | 1.30% |
Allowance for loan losses as a | | | | | | | | | | | | | | |
percent of nonperforming loans | | 211% | | | 318% | | | 340% | | | 288% | | | 308% |
Nonperforming loans as a | | | | | | | | | | | | | | |
percent of total loans | | 0.61% | | | 0.42% | | | 0.39% | | | 0.45% | | | 0.42% |
Nonperforming assets as a | | | | | | | | | | | | | | |
percent of total loans plus RAA | | 0.82% | | | 0.67% | | | 0.65% | | | 0.71% | | | 0.70% |
Net loan charge-offs as a percent of | | | | | | | | | | | | | | |
average loans - year-to-date (annualized) | | 0.14% | | | 0.11% | | | 0.11% | | | 0.09% | | | 0.08% |
| June 30,
2005
|
| March 31,
2005
|
| December 31,
2004
|
| September 30,
2004
|
| June 30,
2004
|
Additional Data | | | | | | | | | | | | | | |
Goodwill | $ | 63,293 | | $ | 63,293 | | $ | 63,293 | | $ | 63,293 | | $ | 63,293 |
Core deposits and other intangibles | | 6,797 | | | 7,324 | | | 7,931 | | | 8,572 | | | 9,138 |
Mortgage servicing rights (MSR), | | | | | | | | | | | | | | |
net of MSR impairment reserve | | 2,941 | | | 3,111 | | | 3,197 | | | 3,441 | | | 3,252 |
MSR impairment reserve | | - | | | - | | | - | | | - | | | 443 |
Amortization of intangibles | | 793 | | | 800 | | | 948 | | | 931 | | | 1,079 |
8
Chemical Financial Corporation Announces Second Quarter Operating Results
|
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation and Subsidiaries
(Dollars in thousands)
| 2nd Qtr.
2005
|
| 1st Qtr.
2005
|
| 4th Qtr.
2004
|
| 3rd Qtr.
2004
|
| 2nd Qtr.
2004
|
Summary of Operations | | | | | | | | | |
Interest income | $49,012 | | $47,960 | | $48,164 | | $47,318 | | $46,583 |
Interest expense | 13,314 | | 12,013 | | 10,914 | | 10,165 | | 10,174 |
Net interest income | 35,698 | | 35,947 | | 37,250 | | 37,153 | | 36,409 |
Provision for loan losses | 730 | | 730 | | 1,711 | | 701 | | 661 |
Net interest income after provision | | | | | | | | | |
for loan losses | 34,968 | | 35,217 | | 35,539 | | 36,452 | | 35,748 |
Noninterest income | 9,753 | | 10,180 | | 9,739 | | 9,623 | | 10,005 |
Noninterest expense | 24,763 | | 24,983 | | 23,890 | | 24,499 | | 24,920 |
Income taxes | 6,743 | | 6,910 | | 6,987 | | 7,280 | | 6,967 |
Net income | 13,215 | | 13,504 | | 14,401 | | 14,296 | | 13,866 |
|
|
|
|
|
|
|
|
|
|
Per Common Share Data | | | | | | | | | |
Net income: | | | | | | | | | |
Basic | $0.53 | | $0.54 | | $0.57 | | $0.58 | | $0.55 |
Diluted | 0.53 | | 0.53 | | 0.57 | | 0.57 | | 0.55 |
Cash dividends | 0.265 | | 0.265 | | 0.252 | | 0.252 | | 0.252 |
Book value | 19.68 | | 19.32 | | 19.26 | | 19.04 | | 18.63 |
9
