MIDLAND, Mich., Oct. 19 /PRNewswire-FirstCall/ -- Chemical Financial
Corporation's (Nasdaq: CHFC) Board of Directors today announced third quarter
net income of $14.3 million, or $0.59 per diluted share, down $0.2 million as
compared with net income of $14.5 million, or $0.61 per diluted share, in the
third quarter of 2003. This represents a decrease of 1.2% in net income for
the third quarter 2004. The returns on average assets and average equity
during the third quarter of 2004 were 1.48% and 12.0%, respectively, as
compared to 1.60% and 12.9%, respectively, for the third quarter of 2003.
Net income was $42.3 million, or $1.76 per diluted share in the first nine
months of 2004, compared to net income of $42.2 million, or $1.78 per diluted
share in the first nine months of 2003. This represents an increase of 0.3%
in net income for the first nine months of 2004. Net income per share was
lower than the prior year due to additional shares outstanding, primarily
attributable to the exercise of employee stock options issued in connection
with the acquisition of Caledonia Financial Corporation (Caledonia). The
returns on average assets and average equity during the first nine months of
2004 were 1.46% and 12.0%, respectively, as compared to 1.58% and 12.8%,
respectively, for the first nine months of 2003.
The most significant item impacting the financial results in the third
quarter of 2004 as compared to the third quarter of 2003 was the reduction in
mortgage refinance volume. The Corporation recognized record mortgage banking
revenue in the third quarter of 2003 of $2.3 million as mortgage interest
rates were at their lowest level in over forty years. In comparison, mortgage
banking revenue was $1.0 million in the third quarter of 2004; a reduction of
$1.3 million. Mortgage banking revenue in the third quarter of 2004 included
a $.4 million recovery of a previously recorded impairment charge on
capitalized mortgage loan servicing rights.
The Corporation was successful in offsetting the decline in mortgage
banking revenue through an increase in net interest income. Net interest
income increased $2.4 million, or 6.9%, to $37.2 million in the third quarter
of 2004, as compared to the third quarter of 2003. The increase was primarily
attributable to the acquisition of Caledonia on December 1, 2003. The
remainder of the increase in net interest income was attributable to the net
interest spread earned on the Corporation's transaction entered into during
the first quarter of 2004, whereby $150 million was borrowed from the Federal
Home Loan Bank and invested in mortgage-backed securities.
The Corporation's operating expenses increased $1.8 million, or 7.9%, in
the third quarter of 2004, compared to the third quarter of 2003.
Approximately $1.1 million of the increase was attributable to the Caledonia
acquisition. Excluding expenses attributable to the operations acquired in
the Caledonia transaction, operating expenses were up $0.7 million, or 3.1%.
In addition, the provision for loan losses was $0.2 million higher and
investment securities gains were $0.4 million lower in the third quarter of
2004 than in the third quarter of 2003. These items were partially offset by
the Corporation realizing increases in trust services revenue and service
charges on deposit accounts.
The Corporation's provision for loan losses for the quarter ended
September 30, 2004 was $701 thousand as compared to net loan charge-offs of
$624 thousand. As of September 30, 2004, the allowance for loan losses was
$33.6 million and represented 1.29% of total loans. Nonperforming loans were
$11.7 million, or .45% of total loans, at the current quarter-end. Net loan
losses as a percentage of average loans (annualized) during the nine months
ended September 30, 2004 were .09%, compared to .15% during the twelve months
ended December 31, 2003.
Total assets of the Corporation at September 30, 2004 were $3.87 billion,
up $164 million, or 4.4% over total assets reported at December 31, 2003. The
$150 million Federal Home Loan Bank borrowing in the first quarter of this
year increased total assets by this amount. Total loans increased $125
million, or 5.0%, during the nine months ended September 30, 2004 to $2.61
billion. Total deposits at September 30, 2004 were $2.98 billion, up $8
million, or 0.3% over total deposits at December 31, 2003.
Shareholders' equity at September 30, 2004 was $479 million, or $19.99 per
share, and represented 12.4% of total assets and a tangible equity to asset
ratio of 10.6% as of September 30, 2004.
Chemical Financial Corporation is the fourth largest bank holding company
headquartered in Michigan. The Company's three subsidiary banks operate 133
banking offices and 2 loan production offices spread over 33 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.
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation and Subsidiaries
September 30, December 31, September 30,
(In thousands) 2004 2003 2003
Assets:
Cash and demand deposits due
from banks $104,173 $131,184 $146,428
Federal funds sold 108,100 25,900 44,700
Interest-bearing deposits with
unaffiliated banks 15,219 5,107 19,905
Investment securities -
available for sale 743,343 728,499 767,562
Investment securities -
held to maturity 156,692 193,363 236,911
Total Investment Securities 900,035 921,862 1,004,473
Commercial loans 475,977 405,929 333,822
Real estate construction loans 141,547 138,280 93,282
Real estate commercial loans 669,880 628,815 562,937
Real estate residential loans 771,201 767,199 765,539
Consumer loans 547,893 541,052 521,310
Total Loans 2,606,498 2,481,275 2,276,890
Less: Allowance for loan losses 33,629 33,179 30,414
Net Loans 2,572,869 2,448,096 2,246,476
Premises and equipment 47,646 49,616 47,044
Intangible assets 75,306 76,846 39,017
Other assets 49,602 50,277 42,983
Total Assets $3,872,950 $3,708,888 $3,591,026
Liabilities and Shareholders'
Equity:
Noninterest-bearing deposits $546,387 $532,752 $500,463
Interest-bearing deposits 2,428,916 2,434,484 2,369,351
Total Deposits 2,975,303 2,967,236 2,869,814
FHLB borrowings 285,191 155,373 148,573
Other borrowings - short term 100,439 91,524 93,447
Interest payable and other
liabilities 33,189 36,706 30,548
Total Liabilities 3,394,122 3,250,839 3,142,382
Shareholders' Equity:
Common stock, $1 par value 23,948 23,801 23,685
Surplus 333,569 328,774 324,413
Retained earnings 118,000 94,746 87,106
Accumulated other comprehensive
income 3,311 10,728 13,440
Total Shareholders' Equity 478,828 458,049 448,644
Total Liabilities and
Shareholders' Equity $3,872,950 $3,708,888 $3,591,026
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation and Subsidiaries
Quarter Ended Nine Months Ended
September 30, September 30,
(In thousands, except per share 2004 2003 2004 2003
data)
Interest Income:
Interest and fees on loans $38,347 $36,220 $113,306 $108,789
Interest on investment securities:
Taxable 8,066 8,213 25,218 28,671
Nontaxable 511 612 1,602 1,928
Total Interest on Investment
Securities 8,577 8,825 26,820 30,599
Interest on federal funds sold 265 169 668 612
Interest on deposits with
unaffiliated banks 129 23 292 180
Total Interest Income 47,318 45,237 141,086 140,180
Interest Expense:
Interest on deposits 7,437 8,262 22,651 28,555
Interest on FHLB borrowings 2,570 2,083 7,694 6,273
Interest on other borrowings -
short term 158 128 357 435
Total Interest Expense 10,165 10,473 30,702 35,263
Net Interest Income 37,153 34,764 110,384 104,917
Provision for loan losses 701 540 2,108 2,107
Net Interest Income after
Provision for Loan Losses 36,452 34,224 108,276 102,810
Noninterest Income:
Service charges on deposit accounts 4,970 4,181 14,281 12,334
Trust services revenue 1,761 1,605 5,541 5,123
Other charges and fees for customer
services 1,706 1,623 5,060 5,372
Mortgage banking revenue 960 2,308 2,820 5,716
Investment securities gains 9 417 1,259 909
Other 217 140 629 220
Total Noninterest Income 9,623 10,274 29,590 29,674
Operating Expenses:
Salaries and employee benefits 14,385 13,287 43,879 40,570
Occupancy and equipment 4,613 4,058 13,897 12,087
Other 5,501 5,356 16,803 16,252
Total Operating Expenses 24,499 22,701 74,579 68,909
Income Before Income Taxes 21,576 21,797 63,287 63,575
Federal income taxes 7,280 7,328 21,006 21,422
Net Income $14,296 $14,469 $42,281 $42,153
Net income per share:
Basic $0.60 $0.61 $1.77 $1.78
Diluted 0.59 0.61 1.76 1.78
Cash dividends per share $0.265 $0.250 $0.795 $0.750
Average shares outstanding:
Basic 23,946 23,674 23,924 23,685
Diluted 24,021 23,735 24,006 23,737
Financial Summary (Unaudited)
Chemical Financial Corporation and Subsidiaries
(Dollars in thousands)
Quarter Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
Average Balances
Total assets $3,843,070 $3,591,135 $3,865,987 $3,576,236
Total interest-earning
assets 3,591,860 3,384,140 3,615,976 3,383,906
Total loans 2,596,355 2,260,656 2,557,822 2,179,041
Total deposits 2,954,315 2,870,826 2,990,828 2,863,047
Total shareholders' equity 473,617 444,421 468,768 439,961
Quarter Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
Key Ratios (annualized
where applicable)
Net interest margin 4.16% 4.12% 4.12% 4.20%
Efficiency ratio 52.0% 50.0% 53.1% 50.7%
Return on average assets 1.48% 1.60% 1.46% 1.58%
Return on average
shareholders' equity 12.0% 12.9% 12.0% 12.8%
Average shareholders'
equity as a percent of
average assets 12.3% 12.4% 12.1% 12.3%
Tangible shareholders'
equity as a percent of
total assets 10.6% 11.5%
Total risk-based capital
ratio 17.1% 18.8%
September 30, June 30, March 31, December 31,
2004 2004 2004 2003
Credit Quality Statistics
Nonaccrual loans $5,787 $5,413 $5,317 $6,691
Loans 90 or more days past
due and still accruing 5,914 5,488 6,559 4,656
Total nonperforming loans 11,701 10,901 11,876 11,347
Repossessed assets
acquired (RAA) 6,924 7,344 6,294 6,002
Total nonperforming assets 18,625 18,245 18,170 17,349
Net loan charge-offs* 624 603 431 3,352
Allowance for loan losses
as a percent of total
loans 1.29% 1.30% 1.31% 1.34%
Allowance for loan losses
as a percent of
nonperforming loans 288% 308% 282% 292%
Nonperforming loans as a
percent of total loans 0.45% 0.42% 0.47% 0.46%
Nonperforming assets as a
percent of total loans
plus RAA 0.71% 0.70% 0.71% 0.70%
Net loan charge-offs as a
percent of average loans
(annualized)* 0.10% 0.09% 0.07% 0.15%
September 30, June 30, March 31, December 31,
2004 2004 2004 2003
Additional Data
Goodwill $63,293 $63,293 $63,293 $63,293
Core deposits and other
intangibles 8,572 9,138 9,613 10,289
Mortgage servicing rights
(MSR), net of MSR
impairment reserve 3,441 3,252 3,235 3,264
MSR impairment reserve - 443 693 793
Amortization of
intangibles* 931 1,079 851 3,718
* Quarter only, except December 31, 2003 amount is twelve months ended.
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation and Subsidiaries
(Dollars in thousands)
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr.
2004 2004 2004 2003 2003
Summary of Operations
Interest income $47,318 $46,583 $47,185 $44,857 $45,237
Interest expense 10,165 10,174 10,363 10,002 10,473
Net interest income 37,153 36,409 36,822 34,855 34,764
Provision for loan losses 701 661 746 727 540
Net interest income after
provision for loan losses 36,452 35,748 36,076 34,128 34,224
Noninterest income 9,623 10,005 9,962 9,420 10,274
Noninterest expense 24,499 24,920 25,160 23,014 22,701
Income taxes 7,280 6,967 6,759 6,971 7,328
Net income 14,296 13,866 14,119 13,563 14,469
Per Common Share Data
Net income:
Basic $0.60 $0.58 $0.59 $0.57 $0.61
Diluted 0.59 0.58 0.59 0.57 0.61
Cash dividends 0.265 0.265 0.265 0.25 0.25
Book value 19.99 19.56 19.63 19.25 18.94
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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