MIDLAND, Mich., April 20, 2009 (GLOBE NEWSWIRE) -- Chemical Financial Corporation (Nasdaq:CHFC) today announced 2009 first quarter net income of $2.7 million, or $0.11 per diluted share, versus net income of $9.7 million, or $0.41 per diluted share, in the first quarter of 2008.
"The decline in first quarter earnings was due in large part to credit quality issues and an increased provision for loan losses. Michigan's economy continued to have an adverse effect on our loan portfolio, resulting in charge-offs of $8.5 million and an increase in our allowance for loan losses of an additional $5.5 million, bringing the total provision for loan losses in the first quarter to $14.0 million," said David B. Ramaker, Chairman, President and Chief Executive Officer.
"In addition, loan collection expenses and costs related to our nonperforming assets were $2.2 million, up $0.7 million compared to the first quarter of 2008. Also, FDIC insurance premiums were $1.2 million for the quarter, an increase of $1.1 million, compared to last year's first quarter. These increases negatively impacted our efforts to control overall operating expense growth," said Ramaker. "Notwithstanding these factors, we did report a profit for the quarter."
"We experienced solid loan and deposit growth over the past twelve months, despite the depressed economic conditions nationally and locally. We believe that our business model, embodied by our community banking strategy, coupled with our financial strength have left Chemical Financial relatively well positioned to take advantage of opportunities that may arise in the markets we serve," added Ramaker.
Net interest income was $36.6 million in the first quarter of 2009, an increase of $2.2 million, or 6.4 percent, from first quarter 2008 net interest income of $34.4 million. The increase in net interest income was attributable to both an increase in net interest margin and growth in the balance sheet. The net interest margin (on a tax-equivalent basis) in the first quarter of 2009 was 4.06 percent, down from 4.38 percent in the fourth quarter of 2008, but up from 3.94 percent in the first quarter of 2008. The increase in net interest margin from the prior year's first quarter was primarily attributable to decreases in rates paid on interest-bearing liabilities exceeding decreases in rates earned on interest-earning assets. The decrease in net interest margin from the fourth quarter of 2008 was primarily attributable to the average yield on loans and investments decreasing more than the average cost of interest-bearing deposits.
Total assets were $3.98 billion at March 31, 2009, up from $3.87 billion at December 31, 2008 and $3.80 billion at March 31, 2008. At March 31, 2009, total loans were $2.95 billion, compared to $2.98 billion at December 31, 2008 and $2.78 billion at March 31, 2008. Investment securities were $610 million at March 31, 2009, up from $547 million at December 31, 2008 and $580 million at March 31, 2008.
Total deposits were $3.10 billion at March 31, 2009, up $126 million, or 4.2%, from $2.98 billion at December 31, 2008 and up $152 million, or 5.2%, from $2.95 billion at March 31, 2008. The Company experienced growth in core business and consumer deposits during the twelve months ended March 31, 2009. The Company maintained these new funds largely in interest-bearing balances at the Federal Reserve Bank, thereby further enhancing the Company's liquidity position. Federal Home Loan Bank advances totaled $125 million at March 31, 2009, compared to $135 million at December 31, 2008 and $130 million at March 31, 2008.
The provision for loan losses was $14.0 million in the first quarter of 2009, compared to $18.0 million in the fourth quarter of 2008 and $2.7 million in the first quarter of 2008. Net loan charge-offs were $8.5 million in the first quarter of 2009, up from $7.4 million in the fourth quarter of 2008 and up substantially from $2.5 million in the first quarter of 2008. The increase in the provision for loan losses in the first quarter of 2009, as compared to the first quarter of 2008, was primarily reflective of increased loan charge-offs coupled with continued deterioration in credit quality. The allowance for loan losses of $62.6 million at March 31, 2009 was 2.12 percent of total loans, up from 1.91 percent of total loans at December 31, 2008 and up significantly from 1.42 percent of total loans at March 31, 2008. At March 31, 2009, nonperforming loans as a percentage of total loans were 3.56 percent, up from 3.13 percent at December 31, 2008 and from 2.58 percent at March 31, 2008.
At March 31, 2009, nonperforming assets totaled $125.7 million, up from $113.3 million at December 31, 2008 and up from $84.6 million at March 31, 2008. The increase in nonperforming assets from the previous quarter's end was due primarily to increases in nonaccrual real estate commercial loans and real estate construction loans. At March 31, 2009, the Company's nonperforming assets included $94.7 million in nonaccrual loans, $10.3 million in accruing loans contractually past due 90 days or more as to interest or principal payments and $20.7 million of other real estate and repossessed assets.
Total noninterest income was $9.9 million in the first quarter of 2009, up slightly from $9.6 million in the first quarter of 2008. Increases in mortgage banking revenue and other charges and fees for customer services were partially offset by a decrease in service charges on deposit accounts and trust and investment services revenue.
Operating expenses of $29.2 million in the first quarter of 2009 were up $2.4 million, or 8.8 percent, from the first quarter of 2008, with the increases in credit-related operating expenses and FDIC insurance premiums primarily responsible for the increase. The Company's first quarter 2009 efficiency ratio of 62.0 percent was up from 58.7 percent in the fourth quarter of 2008 and 60.3 percent in the first quarter of 2008.
The Company's return on average assets during the first quarter of 2009 was 0.28 percent, up modestly from 0.17 percent in the fourth quarter of 2008 and down from 1.03 percent in the first quarter of 2008. At March 31, 2009, the Company's book value stood at $20.40 per share, versus $20.58 per share at December 31, 2008 and $21.60 per share at March 31, 2008. The decrease in net income resulted in a decrease in return on average equity to 2.3 percent in the first quarter of 2009 from 7.7 percent in the first quarter of 2008.
This morning, April 20, 2009, the Board announced the declaration of the second quarter 2009 cash dividend of $0.295 per share, the same as the prior quarter's dividend level.
Chemical Financial Corporation is the third-largest bank holding company headquartered in Michigan. The Company operates through a single subsidiary bank, Chemical Bank, with 129 banking offices spread over 31 counties in the lower peninsula of Michigan. At March 31, 2009, the Company had total assets of $3.98 billion. Chemical Financial Corporation's common stock trades on The Nasdaq Stock Market under the symbol CHFC and is one of the issues comprising the Nasdaq Global Select Market.
SAFE HARBOR STATEMENT
This report contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and Chemical Financial Corporation itself. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "judgment," "plans," "predicts," "projects," "should," "will," variations of such words and similar expressions are intended to identify such forward-looking statements. Management's determination of the provision and allowance for loan losses involves judgments that are inherently forward-looking. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") 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. Chemical Financial Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
Risk factors include, but are not limited to, the risk factors described in Item 1A in Chemical Financial Corporation's Annual Report on Form 10-K for the year ended December 31, 2008; the timing and level of asset growth; changes in banking laws and regulations; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances and issues; governmental and regulatory policy changes; opportunities for acquisitions and the effective completion of acquisitions and integration of acquired entities; the possibility that anticipated cost savings and revenue enhancements from acquisitions, restructurings, reorganizations and bank consolidations may not be realized fully or at all or within expected time frames; the local and global effects of the ongoing war on terrorism and other military actions, including actions in Iraq; and current uncertainties and fluctuations in the financial markets and stocks of financial services providers due to concerns about credit availability and concerns about the Michigan economy in particular. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.
Chemical Financial Corporation Announces
First Quarter Operating Results
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation
(In thousands, except per March 31 Dec. 31 March 31
share data) 2009 2008 2008
---------- ---------- ----------
Assets:
Cash and cash equivalents:
Cash and cash due from banks $ 83,976 $ 168,650 $ 93,063
Federal funds sold -- -- 135,000
Interest-bearing deposits
with unaffiliated banks
and others 142,184 4,572 34,066
---------- ---------- ----------
Total Cash and Cash
Equivalents 226,160 173,222 262,129
Investment securities:
Available-for-sale 501,594 449,947 490,950
Held-to-maturity 108,600 97,511 88,659
---------- ---------- ----------
Total Investment Securities 610,194 547,458 579,609
Other securities 22,128 22,128 22,142
Loans held for sale 28,336 8,463 10,792
Loans:
Commercial 563,118 587,554 527,514
Real estate commercial 784,475 786,404 764,768
Real estate construction 112,102 119,001 128,878
Real estate residential 809,262 839,555 817,348
Consumer 682,632 649,163 546,486
---------- ---------- ----------
Total Loans 2,951,589 2,981,677 2,784,994
Allowance for loan losses (62,562) (57,056) (39,662)
---------- ---------- ----------
Net Loans 2,889,027 2,924,621 2,745,332
Premises and equipment 52,914 53,036 49,339
Goodwill 69,908 69,908 69,908
Other intangible assets 5,224 5,241 6,342
Interest receivable and other
assets 71,860 70,236 53,705
---------- ---------- ----------
Total Assets $3,975,751 $3,874,313 $3,799,298
========== ========== ==========
Liabilities:
Deposits:
Noninterest-bearing $ 526,343 $ 524,464 $ 519,405
Interest-bearing 2,578,193 2,454,328 2,432,994
---------- ---------- ----------
Total Deposits 3,104,536 2,978,792 2,952,399
Interest payable and other
liabilities 37,573 35,214 24,274
Short-term borrowings 221,247 233,738 178,000
Federal Home Loan Bank
advances - long-term 125,025 135,025 130,049
---------- ---------- ----------
Total Liabilities 3,488,381 3,382,769 3,284,722
Shareholders' Equity:
Common stock, $1 par value
per share 23,890 23,881 23,823
Surplus 347,264 346,916 344,935
Retained earnings 129,249 133,578 144,510
Accumulated other
comprehensive income (loss) (13,033) (12,831) 1,308
---------- ---------- ----------
Total Shareholders' Equity 487,370 491,544 514,576
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $3,975,751 $3,874,313 $3,799,298
========== ========== ==========
Chemical Financial Corporation Announces
First Quarter Operating Results
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation
Three Months Ended
March 31
---------------------
(In thousands, except per share data) 2009 2008
-------- --------
Interest Income:
Interest and fees on loans $ 42,793 $ 45,570
Interest on investment securities:
Taxable 4,502 5,839
Tax-exempt 777 695
Dividends on other securities 163 194
Interest on federal funds sold -- 1,018
Interest on deposits with unaffiliated
banks and others 87 121
-------- --------
Total Interest Income 48,322 53,437
Interest Expense:
Interest on deposits 10,167 16,327
Interest on short-term borrowings 233 959
Interest on Federal Home Loan Bank
advances - long-term 1,332 1,765
-------- --------
Total Interest Expense 11,732 19,051
-------- --------
Net Interest Income 36,590 34,386
Provision for loan losses 14,000 2,700
-------- --------
Net Interest Income after
Provision for Loan Losses 22,590 31,686
Noninterest Income:
Service charges on deposit accounts 4,475 4,774
Trust and investment services revenue 2,375 2,654
Other charges and fees for customer
services 1,801 1,596
Mortgage banking revenue 1,150 536
Other 56 20
-------- --------
Total Noninterest Income 9,857 9,580
Operating Expenses:
Salaries, wages and employee benefits 15,417 14,479
Occupancy 2,707 2,770
Equipment 2,342 2,187
Other 8,739 7,408
-------- --------
Total Operating Expenses 29,205 26,844
-------- --------
Income Before Income Taxes 3,242 14,422
Federal Income Tax Expense 524 4,751
-------- --------
Net Income $ 2,718 $ 9,671
======== ========
Net income per share:
Basic $ 0.11 $ 0.41
Diluted 0.11 0.41
Cash dividends per share 0.295 0.295
Average shares outstanding:
Basic 23,890 23,823
Diluted 23,900 23,827
Chemical Financial Corporation Announces
First Quarter Operating Results
Financial Summary (Unaudited)
Chemical Financial Corporation
Three Months Ended
March 31
------------------------
(Dollars in thousands) 2009 2008
----------- -----------
Average Balances
Total assets $ 3,927,103 $ 3,790,841
Total interest-earning assets 3,698,726 3,561,603
Total loans 2,960,977 2,788,223
Total deposits 3,047,112 2,933,028
Total interest-bearing liabilities 2,884,681 2,737,096
Total shareholders' equity 488,095 508,231
Three Months Ended
March 31
------------------------
2009 2008
----------- -----------
Key Ratios (annualized where applicable)
Net interest margin (taxable equivalent
basis) 4.06% 3.94%
Efficiency ratio 62.0% 60.3%
Return on average assets 0.28% 1.03%
Return on average shareholders' equity 2.3% 7.7%
Average shareholders' equity as a
percent of average assets 12.4% 13.4%
Tangible shareholders' equity as a
percent of total assets 10.6% 11.8%
Total risk-based capital ratio 16.2% 17.4%
March 31 Dec 31 Sept 30 June 30 March 31
2009 2008 2008 2008 2008
-------- -------- -------- -------- --------
Credit Quality
Statistics
Nonaccrual loans $ 94,737 $ 76,466 $ 69,719 $ 61,635 $ 61,360
Loans 90 or more days
past due and still
accruing 10,240 16,862 13,012 10,288 10,570
Total nonperforming
loans 104,977 93,328 82,731 71,923 71,930
Repossessed
assets (RA) 20,688 19,923 15,699 15,897 12,664
Total nonperforming
assets 125,665 113,251 98,430 87,820 84,594
Net loan charge-offs
(year-to-date) 8,494 31,566 24,210 8,958 2,460
Allowance for loan
losses as a percent
of total loans 2.12% 1.91% 1.58% 1.39% 1.42%
Allowance for loan losses
as a percent of
nonperforming loans 60% 61% 56% 55% 55%
Nonperforming loans as a
percent of total loans 3.56% 3.13% 2.83% 2.52% 2.58%
Nonperforming assets as a
percent of total loans
plus RA 4.23% 3.77% 3.34% 3.06% 3.02%
Nonperforming assets as a
percent of total assets 3.16% 2.92% 2.60% 2.35% 2.23%
Net loan charge-offs as a
percent of average loans
(year-to-date,
annualized) 1.15% 1.10% 1.14% 0.64% 0.35%
March 31 Dec 31 Sept 30 June 30 March 31
2009 2008 2008 2008 2008
-------- -------- -------- -------- --------
Additional Data -
Intangibles
Goodwill $ 69,908 $ 69,908 $ 69,908 $ 69,908 $ 69,908
Core deposit intangibles 2,847 3,050 3,266 3,609 4,062
Mortgage servicing
rights (MSR) 2,377 2,191 2,328 2,354 2,280
Amortization of core
deposit intangibles
(quarter only) 203 216 343 453 531
Chemical Financial Corporation Announces
First Quarter Operating Results
Nonperforming Assets (Unaudited)
Chemical Financial Corporation
March 31 Dec 31 Sept 30 June 30 March 31
(Dollars in thousands) 2009 2008 2008 2008 2008
-------- -------- -------- -------- --------
Nonaccrual loans:
Commercial $ 16,419 $ 16,324 $13,320 $10,918 $11,595
Real estate commercial 41,826 27,344 24,230 17,915 19,235
Real estate
construction 18,504 15,310 14,513 15,157 17,206
Real estate residential 12,803 12,175 12,869 11,955 9,267
Consumer 5,185 5,313 4,787 5,690 4,057
-------- -------- -------- -------- --------
Total nonaccrual loans 94,737 76,466 69,719 61,635 61,360
Accruing loans
contractually past due
90 days or more as to
interest or principal
payments:
Commercial 2,581 1,652 1,735 3,130 1,631
Real estate commercial 4,352 9,995 6,586 2,948 2,865
Real estate
construction 538 759 1,096 676 392
Real estate
residential 1,699 3,369 2,910 2,746 4,742
Consumer 1,070 1,087 685 788 940
-------- -------- -------- -------- --------
Total accruing loans
contractually past
due 90 days or more
as to interest or
principal payments 10,240 16,862 13,012 10,288 10,570
-------- -------- -------- -------- --------
Total nonperforming
loans 104,977 93,328 82,731 71,923 71,930
Other real estate and
repossessed assets 20,688 19,923 15,699 15,897 12,664
-------- -------- -------- -------- --------
Total nonperforming
assets $125,665 $113,251 $98,430 $87,820 $84,594
======== ======== ======== ======== ========
Chemical Financial Corporation Announces
First Quarter Operating Results
Summary of Loan Loss Experience (Unaudited)
Chemical Financial Corporation
Three Months Ended
--------------------------------------------
March 31 Dec 31 Sept 30 June 30 March 31
(Dollars in thousands) 2009 2008 2008 2008 2008
-------- -------- -------- -------- --------
Allowance for loan
losses at beginning
of period $ 57,056 $ 46,412 $ 39,664 $ 39,662 $ 39,422
Provision for loan
losses 14,000 18,000 22,000 6,500 2,700
Loans charged off:
Commercial (3,290) (3,254) (11,468) (1,474) (591)
Real estate
commercial (2,589) (1,645) (673) (3,373) (1,304)
Real estate
construction (1,700) (954) (923) (1,070) (16)
Real estate
residential (235) (1,106) (749) (358) (245)
Consumer (1,253) (1,811) (1,776) (612) (540)
-------- -------- -------- -------- --------
Total loan
charge-offs (9,067) (8,770) (15,589) (6,887) (2,696)
Recoveries of loans
previously charged
off:
Commercial 205 1,094 74 228 77
Real estate
commercial 87 11 68 32 20
Real estate
construction -- -- -- -- 29
Real estate
residential 82 83 50 5 22
Consumer 199 226 145 124 88
-------- -------- -------- -------- --------
Total loan recoveries 573 1,414 337 389 236
-------- -------- -------- -------- --------
Net loan charge-offs (8,494) (7,356) (15,252) (6,498) (2,460)
-------- -------- -------- -------- --------
Allowance for loan
losses at end of
period $ 62,562 $ 57,056 $ 46,412 $ 39,664 $ 39,662
-------- -------- -------- -------- --------
Chemical Financial Corporation Announces
First Quarter Operating Results
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation
1st 4th 3rd 2nd 1st
(In thousands, except Qtr. Qtr. Qtr. Qtr. Qtr.
per share data) 2009 2008 2008 2008 2008
-------- -------- -------- -------- --------
Summary of Operations
Interest income $ 48,322 $ 51,703 $ 51,688 $ 51,508 $ 53,437
Interest expense 11,732 13,192 14,968 15,872 19,051
-------- -------- -------- -------- --------
Net interest income 36,590 38,511 36,720 35,636 34,386
Provision for loan
losses 14,000 18,000 22,000 6,500 2,700
-------- -------- -------- -------- --------
Net interest income
after provision for
loan losses 22,590 20,511 14,720 29,136 31,686
Noninterest income 9,857 9,604 10,054 11,959 9,580
Operating expenses 29,205 28,629 26,750 26,885 26,844
-------- -------- -------- -------- --------
Income (loss) before
income taxes 3,242 1,486 (1,976) 14,210 14,422
Federal income tax
expense (benefit) 524 (100) (951) 4,600 4,751
-------- -------- -------- -------- --------
Net income (loss) $ 2,718 $ 1,586 $(1,025) $ 9,610 $ 9,671
======== ======== ======== ======== ========
Per Common Share Data
Net income (loss):
Basic $ 0.11 $ 0.06 $ (0.04) $ 0.40 $ 0.41
Diluted 0.11 0.06 (0.04) 0.40 0.41
Cash dividends 0.295 0.295 0.295 0.295 0.295
Book value
- period-end 20.40 20.58 21.19 21.58 21.60
Market value
- period-end 20.81 27.88 31.14 20.40 23.84