MIDLAND, Mich., Jan. 31 /PRNewswire-FirstCall/ -- The Board of Directors
of Chemical Financial Corporation (Nasdaq: CHFC) today announced 2004 fourth
quarter net income of $14.4 million or $0.57 per diluted share, as compared to
net income of $13.6 million or $0.54 per diluted share in the fourth quarter
of 2003. The Corporation's 2004 net income was $56.7 million or $2.25 per
diluted share, compared to net income of $55.7 million or $2.23 per diluted
share in 2003.
Fourth Quarter Operating Results
Net income and earnings per share in the fourth quarter of 2004 were up
6.2% and 5.6%, respectively, over the fourth quarter of 2003. The increases
in net income and earnings per share were attributable to higher net interest
income and a slightly lower effective federal income tax rate. These two
items were partially offset by an increase in the provision for loan losses
and higher operating expenses. Significantly lower mortgage banking revenue
was offset by increases in service charges on deposit accounts and trust
services revenue, and gains from the sales of a branch office and the
Corporation's insurance agency book of business.
Net interest income of $37.25 million in the fourth quarter of 2004 was up
$2.40 million, or 6.9% over the fourth quarter of 2003. The increase was
attributable to the Caledonia Financial Corporation ("Caledonia") acquisition
that was completed on December 1, 2003, the net interest spread earned on a
$150 million borrowing from the Federal Home Loan Bank that was invested in
mortgage-backed securities, increased loans, and a slightly higher net
interest margin. The net interest margin was 4.18% in the fourth quarter of
2004, compared to 4.15% in the fourth quarter of 2003.
The Corporation's provision for loan losses in the fourth quarter of 2004
was $1.7 million, compared to net loan charge-offs of $1.2 million during the
same period. The provision for loan losses in the fourth quarter of 2004 was
$1.0 million higher than in the fourth quarter of 2003, primarily as a result
of increased net loan charge-offs during the period. Even though net loan
charge-offs were higher in the fourth quarter than in the previous three
quarters of 2004, we believe the credit quality of the loan portfolio remained
strong. As of December 31, 2004, nonperforming loans as a percentage of total
loans were 0.39%, compared to 0.46% as of December 31, 2003.
Noninterest income was $9.7 million in the fourth quarter of 2004, an
increase of $0.3 million or 3.4% over the fourth quarter of 2003. We
experienced an increase in trust services revenue of $0.2 million, or 11% and
an increase in service charges on deposit accounts of $0.4 million, or 9%. We
also recognized gains of $0.6 million from the sales of a branch banking
office in Lansing, Michigan that had deposits of approximately $6 million and
the Corporation's insurance agency book of business. These increases were
partially offset by a decrease in mortgage banking revenue. Mortgage banking
revenue of $0.5 million in the fourth quarter of 2004 was $0.7 million or 59%
lower than in the fourth quarter of 2003 as a result of the significant
decline in residential mortgage loan refinance volume.
Operating expenses of $23.9 million in the fourth quarter of 2004 were up
$0.9 million or 3.8% over the fourth quarter of 2003. This increase was
primarily attributable to the Caledonia acquisition.
The Corporation's effective federal income tax rate was 32.7% in the
fourth quarter of 2004, compared to 33.9% during the fourth quarter of 2003.
The decrease in the effective federal income tax rate resulted in
approximately a $0.3 million reduction in federal income tax expense in the
fourth quarter of 2004 compared to the prior year. The decrease in the
effective federal income tax rate was attributable to a reduction in federal
income tax provisions previously recorded that are no longer required.
Annual Operating Results
Net income of $56.7 million in 2004 was up $1.0 million or 1.7% over 2003
net income. The increase in net income was primarily attributable to an
increase in net interest income. The increase in net interest income was
partially offset by an increase in the provision for loan losses and higher
operating expenses.
Net interest income was $147.6 million in 2004, an increase of $7.9
million or 5.6% over 2003 net interest income. The increase in net interest
income was attributable to the accretive effect of the Caledonia acquisition,
the net interest spread earned on a $150 million Federal Home Loan Bank
borrowing transaction and growth in loans during 2004.
The Corporation's provision for loan losses was $3.82 million for the
twelve months ended December 31, 2004, compared to $2.83 million for 2003.
Net loan charge-offs for 2004 totaled $2.81 million as compared to $3.35
million in 2003. Operating expenses of $98.5 million in 2004 were $6.5
million or 7.1% higher than in 2003. Over one-half of the increase in
operating expenses in 2004 was attributable to the Caledonia acquisition.
Balance Sheet and Capital Position
Total assets of the Corporation at December 31, 2004 were $3.76 billion,
up 1.5% over the $3.71 billion in total assets reported at December 31, 2003.
Total deposits at December 31, 2004 were $2.86 billion, down 3.5% from total
deposits of $2.97 billion at December 31, 2003.
Total loans were $2.59 billion at December 31, 2004, up $104 million or
4.2% from total loans of $2.48 billion at December 31, 2003. The increase in
loans was attributable to increases in commercial and commercial real estate
loans.
As of December 31, 2004, the allowance for loan losses was $34.17 million
or 1.32% of total loans, while nonperforming loans were $10.05 million or
0.39% of total loans. Nonperforming loans were down $1.7 million or 14.1%
from September 30, 2004, and down $1.3 million or 11.4% from December 31,
2003. Nonperforming assets as a percentage of loans plus repossessed assets
were 0.65% as of December 31, 2004, compared to 0.70% as of December 31, 2003.
Net loan losses as a percentage of average total loans were 0.11% in 2004,
compared to 0.15% in 2003.
Shareholders' equity at December 31, 2004 was $485 million or $19.26 per
share and represented 12.9% of total assets. The Corporation's total risk-
based capital and tangible equity to asset ratios were 17.5% and 11.1%,
respectively, as of December 31, 2004.
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 32 counties in the lower peninsula
of Michigan.
Chemical Financial Corporation common stock trades on The Nasdaq Stock
Market under the symbol CHFC and is one of the issues comprising the Nasdaq
Financial 100 index.
Forward Looking Statements
This press release contains forward-looking statements. Words such as
"anticipates," "believes," "estimates," "expects," "intends," "should,"
"will," variations of such words and similar expressions are intended to
identify forward-looking statements. These statements reflect management's
current beliefs as to the expected outcomes of future events and are not
guarantees of future performance. These statements involve certain risks,
uncertainties and assumptions that are difficult to predict with regard to
timing, extent, likelihood and degree of occurrence. Therefore, actual
results and outcomes may materially differ from what may be expressed or
forecasted in such forward-looking statements. Factors that could cause a
difference include, among others: changes in the national and local economies
or market conditions; changes in interest rates and banking regulations; the
impact of competition from traditional or new sources; and the possibility
that anticipated cost savings and revenue enhancements from mergers and
acquisitions and bank consolidations may not be fully realized at all or
within the expected time frames. These and other factors that may emerge
could cause 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 Fourth Quarter Operating Results
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation and Subsidiaries
December 31, December 31,
(In thousands) 2004 2003
Assets:
Cash and demand deposits due from
banks $106,565 $131,184
Federal funds sold 34,500 25,900
Interest-bearing deposits with
unaffiliated banks 5,869 5,107
Investment securities - available for
sale 716,757 728,499
Investment securities - held to
maturity 176,517 193,363
Total Investment Securities 893,274 921,862
Commercial loans 468,970 405,929
Real estate construction loans 120,900 138,280
Real estate commercial loans 697,779 628,815
Real estate residential loans 760,834 767,199
Consumer loans 537,102 541,052
Total Loans 2,585,585 2,481,275
Less: Allowance for loan losses 34,166 33,179
Net Loans 2,551,419 2,448,096
Premises and equipment 47,577 49,616
Intangible assets 74,421 76,846
Other assets 50,500 50,277
Total Assets $3,764,125 $3,708,888
Liabilities and Shareholders' Equity:
Noninterest-bearing deposits $555,287 $532,752
Interest-bearing deposits 2,308,186 2,434,484
Total Deposits 2,863,473 2,967,236
FHLB borrowings 284,996 155,373
Other borrowings - short term 101,834 91,524
Interest payable and other
liabilities 28,986 36,706
Total Liabilities 3,279,289 3,250,839
Shareholders' Equity:
Common stock, $1 par value 25,169 23,801
Surplus 378,694 328,774
Retained earnings 80,266 94,746
Accumulated other comprehensive
income 707 10,728
Total Shareholders' Equity 484,836 458,049
Total Liabilities and
Shareholders' Equity $3,764,125 $3,708,888
Chemical Financial Corporation Announces Fourth Quarter Operating Results
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation and Subsidiaries
Quarter Ended Twelve Months Ended
December 31, December 31,
(In thousands, except per share
data) 2004 2003 2004 2003
Interest Income:
Interest and fees on loans $39,228 $36,046 $152,534 $144,835
Interest on investment securities:
Taxable 7,906 8,029 33,124 36,700
Nontaxable 502 590 2,104 2,518
Total Interest on Investment
Securities 8,408 8,619 35,228 39,218
Interest on federal funds sold 409 137 1,077 749
Interest on deposits with
unaffiliated banks 119 55 411 235
Total Interest Income 48,164 44,857 189,250 185,037
Interest Expense:
Interest on deposits 8,090 7,790 30,741 36,345
Interest on FHLB borrowings 2,599 2,108 10,293 8,381
Interest on other borrowings - short
term 225 104 582 539
Total Interest Expense 10,914 10,002 41,616 45,265
Net Interest Income 37,250 34,855 147,634 139,772
Provision for loan losses 1,711 727 3,819 2,834
Net Interest Income after
Provision for Loan Losses 35,539 34,128 143,815 136,938
Noninterest Income:
Service charges on deposit accounts 5,020 4,601 19,301 16,935
Trust services revenue 1,855 1,671 7,396 6,794
Other charges and fees for customer
services 1,535 1,233 6,595 6,605
Mortgage banking revenue 508 1,238 3,328 6,954
Investment securities gains 108 387 1,367 1,296
Other 713 290 1,342 510
Total Noninterest Income 9,739 9,420 39,329 39,094
Operating Expenses:
Salaries and employee benefits 13,672 13,910 57,551 54,480
Occupancy and equipment 4,223 3,879 18,120 15,966
Other 5,995 5,225 22,798 21,477
Total Operating Expenses 23,890 23,014 98,469 91,923
Income Before Income Taxes 21,388 20,534 84,675 84,109
Federal income taxes 6,987 6,971 27,993 28,393
Net Income $14,401 $13,563 $56,682 $55,716
Net income per share:
Basic $0.57 $0.55 $2.26 $2.24
Diluted 0.57 0.54 2.25 2.23
Cash dividends per share $0.252 $0.238 $1.010 $0.952
Average shares outstanding:
Basic 25,159 24,904 25,130 24,878
Diluted 25,253 25,004 25,218 24,944
Chemical Financial Corporation Announces Fourth Quarter Operating Results
Financial Summary (Unaudited)
Chemical Financial Corporation and Subsidiaries
(Dollars in thousands)
Quarter Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
Average Balances
Total assets $3,825,625 $3,585,924 $3,856,036 $3,578,678
Total interest-earning
assets 3,584,096 3,372,706 3,608,157 3,381,083
Total loans 2,598,138 2,352,269 2,567,956 2,222,704
Total deposits 2,932,435 2,883,412 2,976,150 2,868,180
Total shareholders' equity 482,525 436,855 472,226 439,178
Quarter Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
Key Ratios (annualized
where applicable)
Net interest margin 4.18% 4.15% 4.13% 4.18%
Efficiency ratio 51.0% 51.5% 52.6% 50.9%
Return on average assets 1.50% 1.50% 1.47% 1.56%
Return on average
shareholders' equity 11.9% 12.3% 12.0% 12.7%
Average shareholders'
equity as a percent
of average assets 12.6% 12.2% 12.2% 12.3%
Tangible shareholders'
equity as a percent
of total assets 11.1% 10.5%
Total risk-based capital
ratio 17.5% 16.6%
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2004 2004 2004 2004 2003
Credit Quality Statistics
Nonaccrual loans $8,397 $5,787 $5,413 $5,317 $6,691
Loans 90 or more days past
due and still accruing 1,653 5,914 5,488 6,559 4,656
Total nonperforming loans 10,050 11,701 10,901 11,876 11,347
Repossessed assets acquired
(RAA) 6,799 6,924 7,344 6,294 6,002
Total nonperforming assets 16,849 18,625 18,245 18,170 17,349
Net loan charge offs -
year-to-date 2,832 1,658 1,034 431 3,352
Allowance for loan losses as
a percent of total loans 1.32% 1.29% 1.30% 1.31% 1.34%
Allowance for loan losses as
a percent of
nonperforming loans 340% 288% 308% 282% 292%
Nonperforming loans as a
percent of total loans 0.39% 0.45% 0.42% 0.47% 0.46%
Nonperforming assets as a
percent of total loans plus
RAA 0.65% 0.71% 0.70% 0.71% 0.70%
Net loan charge-offs as a
percent of average loans
- year-to-date (annualized) 0.11% 0.09% 0.08% 0.07% 0.15%
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2004 2004 2004 2004 2003
Additional Data
Goodwill $63,293 $63,293 $63,293 $63,293 $63,293
Core deposits and other
intangibles 7,931 8,572 9,138 9,613 10,289
Mortgage servicing rights
(MSR), net of MSR
impairment reserve 3,197 3,441 3,252 3,235 3,264
MSR impairment reserve - - 443 693 793
Amortization of intangibles* 948 931 1,079 851 3,779
* Quarter only, except December 31, 2003 amount is twelve months ended.
Chemical Financial Corporation Announces Fourth Quarter Operating Results
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation and Subsidiaries
(Dollars in thousands)
4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr.
2004 2004 2004 2004 2003
Summary of Operations
Interest income $48,164 $47,318 $46,583 $47,185 $44,857
Interest expense 10,914 10,165 10,174 10,363 10,002
Net interest income 37,250 37,153 36,409 36,822 34,855
Provision for loan losses 1,711 701 661 746 727
Net interest income after
provision
for loan losses 35,539 36,452 35,748 36,076 34,128
Noninterest income 9,739 9,623 10,005 9,962 9,420
Noninterest expense 23,890 24,499 24,920 25,160 23,014
Income taxes 6,987 7,280 6,967 6,759 6,971
Net income 14,401 14,296 13,866 14,119 13,563
Per Common Share Data
Net income:
Basic $0.57 $0.58 $0.55 $0.56 $0.55
Diluted 0.57 0.57 0.55 0.56 0.54
Cash dividends 0.252 0.252 0.252 0.252 0.238
Book value 19.26 19.04 18.63 18.70 18.33
SOURCE Chemical Financial Corporation
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Related links:
http://chemicalbankmi.com
Company News On-Call:
http://www.prnewswire.com/comp/157448.html
CONTACT:
David B. Ramaker, +1-989-839-5269, or Lori A.
Gwizdala, +1-989-839-5358, both of Chemical Financial Corporation
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