MIDLAND, Mich., July 25 /PRNewswire-FirstCall/ -- 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 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-bearing
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, 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.
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.
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
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 Second Quarter Operating Results
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation and Subsidiaries
June 30, December 31, June 30,
(In thousands) 2005 2004 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
Chemical Financial Corporation Announces Second Quarter Operating Results
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation and Subsidiaries
Quarter Ended Six Months Ended
June 30, 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
Chemical Financial Corporation Announces Second Quarter Operating Results
Financial Summary (Unaudited)
Chemical Financial Corporation and Subsidiaries
(Dollars in thousands)
Quarter Ended Six Months Ended
June 30, 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 Six Months Ended
June 30, 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%
December September
June 30, March 31, 31, 30, June 30,
2005 2005 2004 2004 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, March 31, December September
31, 30, June 30,
2005 2005 2004 2004 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
Chemical Financial Corporation Announces Second Quarter Operating Results
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation and Subsidiaries
(Dollars in thousands)
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
2005 2005 2004 2004 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
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, President & Chief Executive
Officer, +1-989-839-5269, or Lori A. Gwizdala, Executive Vice
President & Chief Financial Officer, +1-989-839-5358, both of
Chemical Financial Corporation
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