MIDLAND, Mich., April 17 /PRNewswire-FirstCall/ -- Chemical Financial
Corporation's (Nasdaq: CHFC) Board of Directors today reported earnings of
$0.47 per diluted share for the first quarter of 2006 compared to first
quarter 2005 earnings per diluted share of $0.53, a decrease of 11.3
percent. Net income for the first quarter of 2006 was $11.9 million
compared to first quarter 2005 net income of $13.5 million.
"As anticipated, the effects of higher interest rates continued to
impact our financial results. During the first quarter of 2006, decreasing
net interest income resulted from higher interest paid on deposits and
short-term borrowings, which was only partially offset by increases in
interest earned on loans," said David B. Ramaker, President and Chief
Executive Officer of Chemical Financial Corporation.
As announced previously, Chemical Financial Corporation is in the midst
of a strategic restructuring which strives to position the Company to
better capitalize on growth opportunities in high potential markets and
enhance operating efficiencies.
"We have made substantial progress implementing the restructuring plan
during the first quarter of 2006 and are on schedule. We have also
initiated a comprehensive, system-wide sales and service training program
to help bolster our people and the growth initiatives at all of our 124
banking offices. While we believe the steps we are taking to control costs
and stimulate revenue growth will translate into improved financial
performance in the future, the short-term financial outlook remains
challenging," added Ramaker.
During the first quarter of 2006, restructuring costs of $385,000 were
incurred. Management had estimated that total costs for the restructuring
would not exceed $800,000 in 2006 and would be incurred primarily during
the first half of the year.
Net interest income totaled $33.6 million in the first quarter of 2006,
a decrease of 6.6 percent from first quarter 2005 net interest income of
$35.9 million. Increased interest income from interest-earning assets was
insufficient to overcome increased interest expense on interest-bearing
liabilities, as well as the effects of a lower level of average earning
assets. Net interest margin (on a tax equivalent basis) was 3.90 percent in
the first quarter of 2006, down from 3.99 percent in the fourth quarter of
2005 and down from 4.11 percent in the prior year's first quarter. The
decrease in the net interest margin during the first quarter of 2006
resulted primarily from increases in deposit rates.
Total assets were $3.74 billion at March 31, 2006, down slightly from
$3.75 billion at December 31, 2005 and down slightly from $3.80 billion at
March 31, 2005. At March 31, 2006, total loans were $2.70 billion, versus
$2.71 billion at December 31, 2005 and $2.58 billion at March 31, 2005.
Investment securities were $673 million at March 31, 2006, down from $722
million at December 31, 2005 and $880 million at March 31, 2005. The
decrease in investment securities was primarily attributable to the
Corporation using excess liquidity from maturing investment securities to
temporarily decrease wholesale borrowings.
Total deposits were $2.87 billion at March 31, 2006, up from $2.82
billion at December 31, 2005 and down from $2.93 billion at March 31, 2005.
In 2005, the markets in which the Company operates saw intense competition
for retail deposits translate into increases in deposit pricing and a
slight erosion in core deposits. In the first quarter of 2006, the Company
experienced an increase in seasonal/municipal customer deposits. Other
liabilities, which include Federal Home Loan Bank advances, totaled $367
million at March 31, 2006, down substantially from $428 million at December
31, 2005 and down from $382 million at March 31, 2005.
The provision for loan losses was $460,000 in the first quarter of
2006, compared to $1.33 million in the prior year fourth quarter and
$730,000 in the first quarter of 2005. Net loan losses were $454,000 in the
first quarter of 2006, compared to $1.78 million in the fourth quarter of
2005 and $725,000 in the first quarter of 2005. The allowance for loan
losses as a percentage of total loans was 1.27 percent at March 31, 2006,
up slightly from 1.26 percent at December 31, 2005 and down from 1.33
percent at March 31, 2005. At March 31, 2006, nonperforming loans as a
percentage of total loans were 0.73 percent, unchanged from 0.73 percent at
December 31, 2005 and up from 0.42 percent at March 31, 2005.
Noninterest income was $9.8 million in the first quarter of 2006,
reflecting a decrease of approximately $348,000 or 3.4 percent from the
first quarter of 2005, as increases in fee income were unable to offset
decreases in securities gains and mortgage banking revenue. For the first
quarter of 2006, there were no net gains on sales of investment securities,
whereas in the first quarter of 2005, the Company booked gains of
approximately $1.1 million. Excluding gains on sales of investment
securities, noninterest income increased 8.2 percent in the first quarter
of 2006 compared to the first quarter of 2005.
Services charges on deposit accounts increased 8.1 percent to $5.1
million in the first quarter of 2006 from $4.7 million in the first quarter
of 2005. Other charges and fees for customer services increased to $2.1
million in the first quarter of 2006 from $1.7 million in the first quarter
of 2005. First quarter 2006 trust and investment services revenue was
essentially unchanged from the first quarter of 2005, at $2.0 million.
Mortgage banking revenue fell by 13.5 percent to $423,000 in the first
quarter of 2006 from $489,000 in the first quarter of 2005, but was up from
fourth quarter 2005 mortgage banking revenue of $371,000. The Corporation
was servicing $533 million of residential mortgage loans that were sold in
the secondary market at March 31, 2006, compared to $589 million at March
31, 2005.
Operating expenses were $25.1 million in the first quarter of 2006, up
from $23.9 million in the fourth quarter of 2005 and up slightly from $25.0
million in the first quarter of 2005. Excluding $385,000 in expenses
incurred with the strategic restructuring, operating expenses in the first
quarter of 2006 were $24.7 million. The Company's efficiency ratio rose to
57.3 percent in the first quarter of 2006 from 54.7 percent in the first
quarter of 2005, primarily as a result of the decrease in net interest
income.
The Company's return on average assets during the first quarter of 2006
was 1.28 percent, down from 1.43 percent in the prior year's first quarter.
Shareholders' equity increased from $487 million at March 31, 2005 to $505
million at March 31, 2006. At March 31, 2006, the Company's book value
stood at $20.10 per share versus $19.32 per share at March 31, 2005. The
decline in return on assets combined with the increase in shareholders'
equity resulted in a decline in return on average equity to 9.6 percent in
the first quarter of 2006 from 11.2 percent in the first quarter of 2005.
Chemical Financial Corporation is the fourth largest bank holding
company headquartered in Michigan. The Company operates through a single
subsidiary bank, Chemical Bank, with 124 banking offices spread over 32
counties in the lower peninsula of Michigan. At March 31, 2006, the Company
had total assets of $3.74 billion. 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 enhancements
from acquisitions, restructurings 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,
(In thousands, except per share data) 2006 2005 2005
Assets:
Cash due from banks $92,404 $145,575 $94,135
Federal funds sold 85,600 6,600 51,500
Interest-bearing deposits with
unaffiliated banks 22,448 5,321 37,151
Investment securities - available
for sale 571,262 594,491 720,752
Investment securities - held to
maturity 102,222 127,806 159,467
Total Investment Securities 673,484 722,297 880,219
Other securities 25,683 21,051 19,986
Commercial loans 521,792 517,852 480,553
Real estate commercial loans 704,547 704,684 696,018
Real estate construction loans 157,087 158,376 122,951
Real estate residential loans 791,869 788,679 756,468
Consumer loans 522,558 540,623 520,800
Total Loans 2,697,853 2,710,214 2,576,790
Less: Allowance for loan losses 34,154 34,148 34,171
Net Loans 2,663,699 2,676,066 2,542,619
Premises and equipment 44,699 45,058 46,671
Intangible assets 70,822 71,496 73,728
Other assets 59,240 55,852 50,881
Total Assets $3,738,079 $3,749,316 $3,796,890
Liabilities:
Noninterest-bearing deposits 522,790 $542,014 $525,272
Interest-bearing deposits 2,343,349 2,277,866 2,402,675
Total Deposits 2,866,139 2,819,880 2,927,947
Interest payable and other
liabilities 34,934 28,008 33,828
Securities sold under agreements
to repurchase 129,392 125,598 94,445
Reverse repurchase agreements 10,000 10,000 -
Federal Home Loan Bank advances -
short-term 35,000 68,000 -
Federal Home Loan Bank advances -
long-term 158,093 196,765 253,979
Total Liabilities 3,233,558 3,248,251 3,310,199
Shareholders' Equity:
Common stock, $1 par value 25,101 25,079 25,185
Surplus 376,501 376,046 379,149
Retained earnings 111,501 106,507 87,096
Accumulated other comprehensive
loss (8,582) (6,567) (4,739)
Total Shareholders' Equity 504,521 501,065 486,691
Total Liabilities and
Shareholders' Equity $3,738,079 $3,749,316 $3,796,890
Chemical Financial Corporation Announces First Quarter Operating Results
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation and Subsidiaries
Three Months Ended
March 31,
(In thousands, except per share data) 2006 2005
Interest Income:
Interest and fees on loans $43,710 $38,811
Interest on investment securities:
Taxable 6,342 7,564
Nontaxable 620 490
Total Interest on Investment
Securities 6,962 8,054
Interest on other securities 341 217
Interest on federal funds sold 951 653
Interest on deposits with
unaffiliated banks 313 225
Total Interest Income 52,277 47,960
Interest Expense:
Interest on deposits 15,074 9,193
Interest on securities sold under
agreements to repurchase 1,059 348
Interest on reverse repurchase
agreements 92 -
Interest on Federal Home Loan Bank
advances - short-term 417 -
Interest on Federal Home Loan Bank
advances - long-term 2,044 2,472
Total Interest Expense 18,686 12,013
Net Interest Income 33,591 35,947
Provision for loan losses 460 730
Net Interest Income after
Provision for Loan Losses 33,131 35,217
Noninterest Income:
Service charges on deposit accounts 5,097 4,716
Trust and investment services revenue 2,005 2,017
Other charges and fees for customer
services 2,132 1,688
Mortgage banking revenue 423 489
Net gains on sales of investment
securities - 1,089
Other 175 181
Total Noninterest Income 9,832 10,180
Operating Expenses:
Salaries, wages and employee benefits 14,590 14,544
Occupancy and equipment 4,786 4,756
Other 5,745 5,683
Total Operating Expenses 25,121 24,983
Income Before Income Taxes 17,842 20,414
Provision for federal income
taxes 5,945 6,910
Net Income $11,897 $13,504
Net income per share:
Basic $0.47 $0.54
Diluted 0.47 0.53
Cash dividends per share $0.275 $0.265
Average shares outstanding:
Basic 25,097 25,183
Diluted 25,140 25,247
Chemical Financial Corporation Announces First Quarter Operating Results
Financial Summary (Unaudited)
Chemical Financial Corporation and Subsidiaries
Three Months Ended
March 31,
(Dollars in thousands) 2006 2005
Average Balances
Total assets $3,770,833 $3,822,046
Total interest-earning assets 3,535,728 3,585,659
Total loans 2,695,742 2,575,331
Total deposits 2,872,473 2,929,347
Total shareholders' equity 503,990 487,557
Three Months Ended
March 31,
2006 2005
Key Ratios (annualized where applicable)
Net interest margin 3.90% 4.11%
Efficiency ratio 57.3% 54.7%
Return on average assets 1.28% 1.43%
Return on average shareholders' equity 9.6% 11.2%
Average shareholders' equity as a
percent of average assets 13.4% 12.8%
Tangible shareholders' equity as a
percent of total assets 11.8% 11.1%
Total risk-based capital ratio 18.1% 17.7%
March December September June March
31, 2006 31, 2005 30, 2005 30, 2005 31, 2005
Credit Quality Statistics
Nonaccrual loans $13,902 $14,561 $9,913 $8,639 $7,823
Loans 90 or more days past
due and still accruing 5,773 5,136 10,364 7,426 2,914
Total nonperforming loans 19,675 19,697 20,277 16,065 10,737
Repossessed assets (RA) 8,411 6,801 6,511 5,848 6,544
Total nonperforming assets 28,086 26,498 26,788 21,913 17,281
Net loan charge-offs (year-
to-date) 454 4,303 2,523 1,804 725
Allowance for loan losses as
a percent of total loans 1.27% 1.26% 1.28% 1.27% 1.33%
Allowance for loan losses as
a percent of nonperforming
loans 174% 173% 171% 211% 318%
Nonperforming loans as a
percent of total loans 0.73% 0.73% 0.75% 0.61% 0.42%
Nonperforming assets as a
percent of total loans
plus RA 1.04% 0.98% 0.99% 0.82% 0.67%
Nonperforming assets as a
percent of total assets 0.75% 0.71% 0.70% 0.59% 0.46%
Net loan charge-offs as a
percent of average loans
(year-to-date, annualized) 0.07% 0.16% 0.13% 0.14% 0.11%
March December September June March
31, 2006 31, 2005 30, 2005 30, 2005 31, 2005
Additional Data
Goodwill $63,293 $63,293 $63,293 $63,293 $63,293
Core deposits and other
intangibles 5,246 5,780 6,306 6,797 7,324
Mortgage servicing rights
(MSR) 2,283 2,423 2,595 2,941 3,111
Amortization of intangibles
(quarter-to-date) 718 776 903 793 800
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.
(In thousands, except per
share data) 2006 2005 2005 2005 2005
Summary of Operations
Interest income $52,277 $51,912 $50,420 $49,012 $47,960
Interest expense 18,686 16,852 15,274 13,314 12,013
Net interest income 33,591 35,060 35,146 35,698 35,947
Provision for loan losses 460 1,325 1,500 730 730
Net interest income after
provision for loan losses 33,131 33,735 33,646 34,968 35,217
Noninterest income 9,832 9,038 10,249 9,753 10,180
Noninterest expense 25,121 23,878 24,839 24,763 24,983
Income taxes 5,945 6,341 5,451 6,743 6,910
Net income 11,897 12,554 13,605 13,215 13,504
Per Common Share Data
Net income:
Basic $0.47 $0.50 $0.54 $0.53 $0.54
Diluted 0.47 0.50 0.54 0.53 0.53
Cash dividends 0.275 0.265 0.265 0.265 0.265
Book value 20.10 19.98 19.82 19.68 19.32
SOURCE Chemical Financial Corporation
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Related links:
http://chemicalbankmi.com
http://www.prnewswire.com/comp/157448.html/
CONTACT:
Lori A. Gwizdala, Chief Financial Officer of
Chemical Financial Corporation, +1-989-839-5358
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