MIDLAND, Mich., Jan. 25, 2016 (GLOBE NEWSWIRE) -- Chemical Financial Corporation ("Corporation" or "Chemical") (NASDAQ:CHFC) today announced 2015 fourth quarter net income of $25.5 million, or $0.66 per diluted share, compared to 2014 fourth quarter net income of $15.3 million, or $0.46 per diluted share, and 2015 third quarter net income of $24.5 million, or $0.64 per diluted share. For the twelve months ended December 31, 2015, net income was $86.8 million, or $2.39 per diluted share, compared to net income for the twelve months ended December 31, 2014 of $62.1 million, or $1.97 per diluted share.

Excluding nonrecurring acquisition-related expenses, net income in the fourth quarter of 2015 was $26.9 million, or $0.70 per diluted share, compared to $18.4 million, or $0.56 per diluted share, in the fourth quarter of 2014 and $25.1 million, or $0.65 per diluted share, in the third quarter of 2015. Excluding nonrecurring acquisition-related expenses, net income in 2015 was $92.3 million, or $2.54 per diluted share, compared to $66.7 million, or $2.11 per diluted share, in 2014.

"2015 was a year of significant accomplishments for Chemical Financial Corporation, with strong acquisitive and organic growth leading to double digit percentage gains in earnings per share, excluding nonrecurring acquisition-related expenses. In the fourth quarter of 2015, we completed the integration into Chemical Bank of The Bank of Holland and The Bank of Northern Michigan, which were acquired in the Lake Michigan Financial Corporation transaction, the third major acquisition we’ve closed and integrated in the past fifteen months. In doing so, we have brought a number of new commercial and retail customers into the Chemical Bank fold, while ensuring that we continued to meet the needs of our existing customers and communities," noted David B. Ramaker, Chairman, Chief Executive Officer and President of the Corporation.

"I’m extremely proud of the work done by Chemical’s 2,100 employees as we have extended our community-focused approach to banking across Michigan, while successfully executing our core banking strategies. Looking ahead to the future, we see opportunities to extend our franchise even further. As we continue our recent pattern of growth to the $10-billion asset level and beyond, we are mindful of the increased regulatory burden we will face, and of the need to forge through, as opposed to merely cross over, that threshold," added Ramaker.

The double digit percentage increases in earnings per share, excluding nonrecurring acquisition-related expenses, for the three- and twelve-month periods ended December 31, 2015, compared to the same periods for the prior year, were primarily driven by higher net interest income due to organic loan growth over the last twelve months of $476 million, or 8%, and incremental earnings from the acquisitions of Northwestern Bancorp, Inc. ("Northwestern"), Monarch Community Bancorp, Inc. ("Monarch") and Lake Michigan Financial Corporation ("Lake Michigan") that closed on October 31, 2014, April 1, 2015 and May 31, 2015, respectively. The increase in earnings per share in the fourth quarter of 2015, compared to the third quarter of 2015, was attributable to higher net interest income and lower operating expenses.

The Corporation's return on average assets, excluding nonrecurring acquisition-related expenses, was 1.16% during the fourth quarter of 2015, compared to 1.04% in the fourth quarter of 2014 and 1.08% in the third quarter of 2015. The Corporation's return on average shareholders' equity, excluding nonrecurring acquisition-related expenses, was  10.7% in the fourth quarter of 2015, compared to 9.1% in the fourth quarter of 2014 and 10.1% in the third quarter of 2015.

Net interest income was $75.5 million in the fourth quarter of 2015, $17.2 million, or 30%, higher than the fourth quarter of 2014 and $1.9 million, or 2.5%, higher than the third quarter of 2015. The increase in net interest income in the fourth quarter of 2015 over the fourth quarter of 2014 was largely attributable to the positive impact of 2015 organic loan growth and the impact of the three aforementioned acquisitions. The increase in net interest income in the fourth quarter of 2015 over the third quarter of 2015 was largely attributable to additional interest income resulting from third and fourth quarter 2015 organic loan growth.

The net interest margin (on a tax-equivalent basis) was 3.64% in the fourth quarter of 2015, compared to 3.62% in the fourth quarter of 2014 and 3.55% in the third quarter of 2015. The increase in the net interest margin in the fourth quarter of 2015, compared to the third quarter of 2015, was primarily attributable to an increase in the average yield on the Corporation's investment securities portfolio and receipt in the fourth quarter of 2015 of a semi-annual dividend of $0.4 million on the Corporation's Federal Reserve Bank stock. The average yield on the loan portfolio was 4.16% in the fourth quarter of 2015, compared to 4.22% in the fourth quarter of 2014 and 4.15% in the third quarter of 2015. The average yield of the investment securities portfolio was 2.21% in the fourth quarter of 2015, compared to 2.02% in the fourth quarter of 2014 and 2.08% in the third quarter of 2015. The Corporation's average cost of funds was 0.25% in both the fourth quarter of 2015 and the third quarter of 2015, compared to 0.23% in the fourth quarter of 2014.

Net interest income was $274.0 million in 2015, $61.5 million, or 29%, higher than 2014, with the increase primarily attributable to a combination of organic loan growth and the impact of the three aforementioned acquisitions that occurred in 2014 and 2015. The average balance of loans outstanding during 2015 was up $1.61 billion over 2014, with the increase driven by $1.11 billion of loans acquired in the Lake Michigan and Monarch acquisitions and $476 million of organic loan growth during 2015. The net interest margin (on a tax equivalent basis) was 3.58% in 2015 and 3.59% in 2014.

The provision for loan losses was $2.0 million in the fourth quarter of 2015, compared to $1.5 million in the fourth quarter of 2014 and the third quarter of 2015. The increase in the provision for loan losses in the fourth quarter of 2015, compared to both the fourth quarter of 2014 and the third quarter of 2015, was primarily due to growth in the loan portfolio. The provision for loan losses was $6.5 million in 2015, compared to $6.1 million in 2014. The Corporation's provision for loan losses remained relatively consistent during 2015, compared to 2014, despite significant organic growth in its loan portfolio, due primarily to an overall modest reduction in net loan charge-offs and strong credit quality.

Net loan charge-offs were $4.3 million, or 0.24% of average loans, in the fourth quarter of 2015, compared to $2.8 million, or 0.21% of average loans, in the fourth quarter of 2014 and $0.8 million, or 0.05% of average loans, in the third quarter of 2015. The increase in net loan charge-offs in the fourth quarter of 2015, compared to the fourth quarter of 2014 and the third quarter of 2015, was partially attributable to a $1.6 million net loan charge-off from one commercial loan relationship. Net loan charge-offs totaled $8.9 million, or 0.13% of average loans, in 2015, compared to $9.5 million, or 0.19% of average loans, in 2014.

The Corporation's nonperforming loans, consisting of nonaccrual loans, accruing loans past due 90 days or more as to principal or interest payments and nonperforming troubled debt restructurings, totaled $83.9 million at December 31, 2015, compared to $81.2 million at September 30, 2015 and $71.2 million at December 31, 2014. Nonperforming loans comprised 1.15% of total loans at December 31, 2015, compared to 1.13% at September 30, 2015 and 1.25% at December 31, 2014. The reduction in nonperforming loans as a percentage of total loans at December 31, 2015, compared to December 31, 2014, was partially due to the addition of $1.11 billion of loans acquired in the Lake Michigan and Monarch transactions, with no corresponding increase in nonperforming loans as these acquired loans are not classified as nonperforming loans after the acquisition date since they are recorded in pools at their net realizable value.

At December 31, 2015, the allowance for loan losses of the originated loan portfolio was $73.3 million, or 1.26% of originated loans, compared to $75.6 million, or 1.33% of originated loans, at September 30, 2015 and $75.2 million, or 1.51% of originated loans, at December 31, 2014. The allowance for loan losses of the originated loan portfolio as a percentage of nonperforming loans was 87% at December 31, 2015, compared to 93% at September 30, 2015 and 106% at December 31, 2014.

Noninterest income was $20.1 million in the fourth quarter of 2015, compared to $18.2 million in the fourth quarter of 2014 and $20.2 million in the third quarter of 2015. Noninterest income in the fourth quarter of 2015 was higher than the fourth quarter of 2014 due primarily to higher wealth management revenue and an increase in customer service fees resulting from the three aforementioned acquisitions. Noninterest income in the fourth quarter of 2015 was slightly lower than the third quarter of 2015, with higher wealth management revenue being offset by lower overdraft and electronic banking fees. The increase in wealth management revenue in the fourth quarter of 2015, compared to both the fourth quarter of 2014 and third quarter of 2015, was primarily due to an increase in fees resulting from new assets under management.

Noninterest income was $80.2 million in 2015, compared to $63.1 million in 2014, with the increase largely attributable to increases in all major categories of noninterest income that was largely driven by the three aforementioned acquisitions. Wealth management revenue was $20.6 million in 2015, compared to $16.0 million in 2014, with the increase primarily due to increased assets under management resulting from the Northwestern acquisition, which added approximately $1.0 billion of assets under management to the Corporation's Wealth Management department as of the acquisition date.

Operating expenses were $57.8 million in the fourth quarter of 2015, compared to $52.6 million in the fourth quarter of 2014 and $58.3 million in the third quarter of 2015. Operating expenses included nonrecurring acquisition-related expenses of $2.1 million in the fourth quarter of 2015, $4.1 million in the fourth quarter of 2014 and $0.9 million in the third quarter of 2015. Excluding these nonrecurring acquisition-related expenses, operating expenses were $55.7 million in the fourth quarter of 2015, $7.3 million, or 15%, higher than the fourth quarter of 2014 and $1.6 million, or 2.8%, lower than the third quarter of 2015. The increase in operating expenses in the fourth quarter of 2015, compared to the fourth quarter of 2014, was primarily attributable to incremental operating costs associated with the three aforementioned acquisitions. The decrease in operating expenses in the fourth quarter of 2015, compared to the  third quarter of 2015, was largely attributable to reductions in expenses for incentive compensation, employee benefits, outside services and advertising, which were partially offset by higher equipment expenses and lower gains from the sale of other real estate properties.

Operating expenses were $223.9 million in 2015, compared to $179.9 million in 2014. Operating expenses included nonrecurring acquisition-related expenses of $7.8 million in 2015 and $6.4 million in 2014. Excluding these nonrecurring acquisition-related expenses, operating expenses were $216.1 million in 2015, an increase of $42.6 million, or 25%, over 2014, with the increase due primarily to incremental operating costs associated with the three aforementioned acquisitions.

The Corporation's efficiency ratio was 57.1% in the fourth quarter of 2015, 62.2% in the fourth quarter of 2014 and 59.9% in the third quarter of 2015. The Corporation's efficiency ratio was 59.8% for 2015 and 61.6% for 2014.

Total assets were $9.19 billion at December 31, 2015, compared to $9.26 billion at September 30, 2015 and $7.32 billion at December 31, 2014. The increase in total assets during the twelve months ended December 31, 2015 was primarily attributable to the Lake Michigan and Monarch acquisitions, and also due to an organic increase in customer deposits, that was used to partially fund loan growth. Interest-bearing balances with the Federal Reserve Bank (FRB) totaled $15 million at December 31, 2015, compared to $109 million at September 30, 2015 and $8 million at December 31, 2014. Investment securities were $1.06 billion at December 31, 2015, compared to $1.14 billion at September 30, 2015 and $1.07 billion at December 31, 2014.

Total loans were $7.27 billion at December 31, 2015, up $56 million, from total loans of $7.22 billion at September 30, 2015 and up $1.58 billion, or 28%, from total loans of $5.69 billion at December 31, 2014. The increase in loans during the twelve months ended December 31, 2015 was attributable to $1.11 billion of loans acquired in the Lake Michigan and Monarch acquisitions and $476 million of organic loan growth.

Total deposits were $7.46 billion at December 31, 2015, compared to $7.62 billion at September 30, 2015 and $6.08 billion at December 31, 2014. The decrease in total deposits during the fourth quarter of 2015 was attributable to a decline in seasonal municipal deposit accounts. The increase in total deposits during the twelve months ended December 31, 2015 was attributable to the Corporation acquiring $1.07 billion in deposits, including $278 million of brokered deposits, in the acquisitions of Lake Michigan and Monarch and organic growth in customer deposits of $382 million, or 6.3%. The Corporation does not intend to renew the brokered deposits, which totaled $208 million at December 31, 2015, as they mature.

Short-term borrowings were $397 million at December 31, 2015, compared to $330 million at September 30, 2015 and $389 million at December 31, 2014. The increase in short-term borrowings during the fourth quarter of 2015 was due to the Corporation borrowing $100 million of short-term Federal Home Loan Bank (FHLB) advances, which were partially used to fund loan growth during the quarter. Other borrowings were $242 million at December 31, 2015 and $248 million at September 30, 2015. The Corporation had no other borrowings at December 31, 2014. The increase in other borrowings during the twelve months ended December 31, 2015 was primarily attributable to the acquisition of Lake Michigan and the Corporation borrowing $100 million of long-term FHLB advances during the third quarter of 2015 in anticipation of increases in market interest rates.

At December 31, 2015, the Corporation's tangible equity to assets ratio and total risk-based capital ratio were 8.1% and 11.8%, respectively, compared to 7.8% and 11.5%, respectively, at September 30, 2015 and 8.4% and 12.4%, respectively, at December 31, 2014. The decrease in the Corporation's capital ratios at December 31, 2015, compared to December 31, 2014, was attributable to the Lake Michigan and Monarch acquisitions. At December 31, 2015, the Corporation's book value was $26.62 per share, compared to $26.18 per share at September 30, 2015 and $24.32 per share at December 31, 2014. At December 31, 2015, the Corporation's tangible book value was $18.78 per share, compared to $18.32 per share at September 30, 2015 and $18.57 per share at December 31, 2014.

This press release contains references to financial measures which are not defined in generally accepted accounting principles ("GAAP"). Such non-GAAP financial measures include the Corporation's tangible equity to assets ratio, presentation of net interest income and net interest margin on a fully taxable equivalent basis (FTE), information presented excluding nonrecurring acquisition-related expenses, including net income, diluted earnings per share, return on average assets, return on average shareholders' equity and operating expenses. These non-GAAP financial measures have been included as the Corporation believes they are helpful for investors to analyze and evaluate the Corporation's financial condition. A reconciliation of non-GAAP financial measures may be found in the financial tables included with this press release.

Chemical Financial Corporation is the second largest banking company headquartered and operating branch offices in Michigan. The Corporation operates through its subsidiary bank, Chemical Bank, with 185 banking offices spread over 47 counties in Michigan. At December 31, 2015, the Corporation had total assets of $9.2 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. More information about the Corporation is available by visiting the investor relations section of its website at www.chemicalbankmi.com.

Forward-Looking Statements

This press release 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 the Corporation. Words and phrases such as "anticipates," "believes," "continue," "estimates," "expects," "forecasts," "future," "intends," "is likely," "judgment," "look ahead," "look forward," "on schedule," "opinion," "opportunity," "plans," "predicts," "probable," "projects," "should," "strategic," "trend," "will," and variations of such words and phrases or similar expressions are intended to identify such forward-looking statements. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to future levels of loan charge-offs, future levels of provisions for loan losses, real estate valuation, future levels of nonperforming assets, the rate of asset dispositions, future capital levels, future dividends, future growth and funding sources, future liquidity levels, future profitability levels, future deposit insurance premiums, future asset levels, the effects on earnings of future changes in interest rates, the future level of other revenue sources, future economic trends and conditions, future initiatives to expand the Corporation’s market share, expected performance and cash flows from acquired loans, future effects of new or changed accounting standards, future opportunities for acquisitions, opportunities to increase top line revenues, the Corporation’s ability to grow its core franchise, future cost savings and the Corporation’s ability to maintain adequate liquidity and capital based on the requirements adopted by the Basel Committee on Banking Supervision and U.S. regulators. All statements referencing future time periods are forward-looking.

Management's determination of the provision and allowance for loan losses; the carrying value of acquired loans, goodwill and mortgage servicing rights; the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment); and management's assumptions concerning pension and other postretirement benefit plans involve judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated. All of the information concerning interest rate sensitivity is forward-looking. The future effect of changes in the financial and credit markets and the national and regional economies on the banking industry, generally, and on the Corporation, specifically, are also inherently uncertain. 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. The 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 of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014. 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 Fourth Quarter and Full Year 2015 Operating Results
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation
		December 31,				September 30,				December 31,
		2015				2015				2014
		(In thousands, except per share data)
Assets
Cash and cash equivalents:
Cash and cash due from banks		$	194,136			$	157,512			$	144,892
Interest-bearing deposits with the Federal Reserve Bank and other banks		44,653				134,025				38,128
Total cash and cash equivalents		238,789				291,537				183,020
Investment securities:
Available-for-sale		553,731				635,641				748,864
Held-to-maturity		509,971				501,083				316,413
Total investment securities		1,063,702				1,136,724				1,065,277
Loans held-for-sale		10,327				12,319				9,128
Loans:
Commercial		1,905,879				1,829,870				1,354,881
Commercial real estate		2,112,162				2,227,364				1,557,648
Real estate construction and land development		232,076				145,581				171,495
Residential mortgage		1,429,636				1,394,427				1,110,390
Consumer installment and home equity		1,591,394				1,618,953				1,493,816
Total loans		7,271,147				7,216,195				5,688,230
Allowance for loan losses		(73,328		)		(75,626		)		(75,683		)
Net loans		7,197,819				7,140,569				5,612,547
Premises and equipment		106,317				110,670				97,496
Goodwill		287,393				286,454				180,128
Other intangible assets		38,104				39,864				33,080
Interest receivable and other assets		246,346				246,417				141,467
Total Assets		$	9,188,797			$	9,264,554			$	7,322,143
Liabilities
Deposits:
Noninterest-bearing		$	1,934,583			$	1,875,636			$	1,591,661
Interest-bearing		5,522,184				5,739,575				4,487,310
Total deposits		7,456,767				7,615,211				6,078,971
Interest payable and other liabilities		76,466				72,568				56,572
Short-term borrowings		397,199				330,016				389,467
Other borrowings		242,391				248,396				—
Total liabilities		8,172,823				8,266,191				6,525,010
Shareholders' Equity
Preferred stock, no par value per share		—				—				—
Common stock, $1 par value per share		38,168				38,131				32,774
Additional paid-in capital		725,280				723,427				565,166
Retained earnings		281,558				265,991				231,646
Accumulated other comprehensive loss		(29,032		)		(29,186		)		(32,453		)
Total shareholders' equity		1,015,974				998,363				797,133
Total Liabilities and Shareholders' Equity		$	9,188,797			$	9,264,554			$	7,322,143

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2015				2014				2015				2014
		(In thousands, except per share data)
Interest Income
Interest and fees on loans		$	75,253			$	57,140			$	271,772			$	209,429
Interest on investment securities:
Taxable		2,044				2,322				8,786				9,147
Tax-exempt		2,583				1,841				9,073				7,054
Dividends on nonmarketable equity securities		633				415				1,648				1,224
Interest on deposits with the Federal Reserve Bank and other banks		116				89				510				407
Total interest income		80,629				61,807				291,789				227,261
Interest Expense
Interest on deposits		4,120				3,414				15,406				14,254
Interest on short-term borrowings		110				107				453				414
Interest on other borrowings		923				42				1,922				42
Total interest expense		5,153				3,563				17,781				14,710
Net Interest Income		75,476				58,244				274,008				212,551
Provision for loan losses		2,000				1,500				6,500				6,100
Net interest income after provision for loan losses		73,476				56,744				267,508				206,451
Noninterest Income
Service charges and fees on deposit accounts		6,398				6,386				25,481				22,414
Wealth management revenue		5,151				4,696				20,552				16,015
Other charges and fees for customer services		6,189				5,366				25,513				18,928
Mortgage banking revenue		1,606				1,590				6,133				5,041
Gain on sale of investment securities		18				—				630				—
Other		690				189				1,907				697
Total noninterest income		20,052				18,227				80,216				63,095
Operating Expenses
Salaries, wages and employee benefits		32,971				28,628				127,920				102,557
Occupancy		4,620				4,201				18,213				15,842
Equipment and software		5,102				4,272				18,569				14,737
Acquisition-related expenses		2,085				4,139				7,804				6,388
Other		13,046				11,376				51,388				40,401
Total operating expenses		57,824				52,616				223,894				179,925
Income before income taxes		35,704				22,355				123,830				89,621
Federal income tax expense		10,200				7,050				37,000				27,500
Net Income		$	25,504			$	15,305			$	86,830			$	62,121
Earnings Per Common Share:
Weighted average common shares outstanding for basic earnings per share		38,150				32,767				36,081				31,367
Weighted average common shares outstanding for diluted earnings per share, including common stock equivalents		38,498				33,033				36,353				31,588
Basic earnings per common share		$	0.67			$	0.47			$	2.41			$	1.98
Diluted earnings per common share		$	0.66			$	0.46			$	2.39			$	1.97
Cash Dividends Declared Per Common Share		$	0.26			$	0.24			$	1.00			$	0.94
Key Ratios (annualized where applicable):
Return on average assets		1.10		%		0.87		%		1.02		%		0.96		%
Return on average shareholders' equity		10.1		%		7.5		%		9.4		%		8.2		%
Net interest margin		3.64		%		3.62		%		3.58		%		3.59		%
Efficiency ratio		57.1		%		62.2		%		59.8		%		61.6		%

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Financial Summary (Unaudited)
Chemical Financial Corporation
(Dollars in Thousands)
		4th				3rd				2nd				1st				4th				3rd				2nd				1st
		Quarter				Quarter				Quarter				Quarter				Quarter				Quarter				Quarter				Quarter
			2015				2015				2015				2015				2014				2014				2014				2014
Average Balances
Total assets		$	9,175,224			$	9,203,856			$	8,117,138			$	7,401,258			$	7,007,879			$	6,412,460			$	6,253,574			$	6,210,569
Total interest-earning assets			8,457,464				8,467,939				7,534,733				6,920,734				6,558,147				6,046,991				5,907,549				5,860,429
Total loans			7,227,680				7,125,896				6,262,072				5,696,961				5,418,743				4,962,948				4,824,299				4,692,430
Total deposits			7,449,478				7,452,556				6,709,428				6,204,095				5,808,187				5,249,317				5,151,581				5,142,276
Total interest-bearing liabilities			6,162,033				6,233,944				5,442,676				4,959,123				4,632,769				4,237,626				4,250,158				4,276,677
Total shareholders' equity			1,000,347				987,727				884,863				801,438				804,328				794,711				714,355				701,878
Key Ratios (annualized where applicable)
Net interest margin (taxable equiv basis)			3.64	%			3.55	%			3.59	%			3.55	%			3.62	%			3.59	%			3.59	%			3.53	%
Efficiency ratio			57.1	%			59.9	%			60.5	%			62.4	%			62.2	%			59.2	%			60.9	%			64.5	%
Return on average assets			1.10	%			1.05	%			0.94	%			0.98	%			0.87	%			1.04	%			1.04	%			0.90	%
Return on average shareholders' equity			10.1	%			9.8	%			8.6	%			9.0	%			7.5	%			8.4	%			9.1	%			8.0	%
Average shareholders' equity as a percent of average assets			10.9	%			10.7	%			10.9	%			10.8	%			11.5	%			12.4	%			11.4	%			11.3	%
Capital ratios (period end):
Tangible shareholders' equity as a percent of total assets			8.1	%			7.8	%			7.8	%			8.4	%			8.4	%			10.5	%			11.0	%			9.3	%
Total risk-based capital ratio			11.8	%			11.5	%			11.7	%			13.0	%			12.4	%			15.0	%			15.3	%			13.8	%
		4th				3rd				2nd				1st				4th				3rd				2nd				1st
		Quarter				Quarter				Quarter				Quarter				Quarter				Quarter				Quarter				Quarter
		2015				2015				2015				2015				2014				2014				2014				2014
Credit Quality Statistics
Originated Loans		$	5,807,934			$	5,667,159			$	5,351,011			$	5,048,662			$	4,990,067			$	4,777,614			$	4,624,409			$	4,464,465
Acquired Loans			1,463,213				1,549,036				1,683,732				654,212				698,163				263,306				274,395				288,824
Nonperforming Assets:
Nonperforming loans (NPLs)			83,880				81,217				70,906				72,741				71,184				70,742				73,735				76,544
Other real estate / repossessed assets (ORE)			9,935				11,207				14,197				14,744				14,205				10,354				10,392				10,056
Total nonperforming assets			93,815				92,424				85,103				87,485				85,389				81,096				84,127				86,600
Performing troubled debt restructurings			47,810				44,803				45,808				45,981				45,664				44,588				44,133				41,823
Allowance for loan losses - originated as a percent of:
Total originated loans			1.26	%			1.33	%			1.40	%			1.49	%			1.51	%			1.60	%			1.67	%			1.75	%
Nonperforming loans			87	%			93	%			106	%			103	%			106	%			108	%			105	%			102	%
NPLs as a percent of total loans			1.15	%			1.13	%			1.01	%			1.28	%			1.25	%			1.40	%			1.51	%			1.61	%
Nonperforming assets as a percent of:
Total loans plus ORE			1.29	%			1.28	%			1.21	%			1.53	%			1.50	%			1.61	%			1.71	%			1.82	%
Total assets			1.02	%			1.00	%			0.94	%			1.16	%			1.17	%			1.23	%			1.35	%			1.37	%
Net loan charge-offs (year-to-date)			8,855				4,557				3,742				1,927				9,489				6,666				4,379				2,199
Net loan charge-offs as a percent of average loans (year-to-date, annualized)			0.13	%			0.10	%			0.13	%			0.14	%			0.19	%			0.18	%			0.18	%			0.19	%
		Dec 31,				Sept 30,				June 30,				Mar 31,				Dec 31,				Sept 30,				June 30,				Mar 31,
			2015				2015				2015				2015				2014				2014				2014				2014
Additional Data - Intangibles
Goodwill		$	287,393			$	286,454			$	285,512			$	180,128			$	180,128			$	120,164			$	120,164			$	120,164
Core deposit intangibles (CDI)			26,654				27,890				28,353				20,072				20,863				8,665				9,110				9,556
Mortgage servicing rights (MSR)			11,122				11,540				12,307				11,583				12,217				3,293				3,344				3,316
Noncompete agreements			328				434				541			—				—				—				—				—
Amortization of CDI and noncompete agreements (quarter only)			1,341				1,270				987				791				693				445				446				445

 

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)*
Chemical Financial Corporation
		Three Months Ended December 31, 2015											Three Months Ended December 31, 2014
						Tax											Tax
		Average				Equivalent				Effective			Average				Equivalent				Effective
		Balance				Interest				Yield/Rate			Balance				Interest				Yield/Rate
Assets		(Dollars in thousands)
Interest-earning assets:
Loans**		$	7,241,339			$	75,905			4.16	%		$	5,426,664			$	57,680			4.22	%
Taxable investment securities		609,406				2,044				1.34			712,516				2,322				1.30
Tax-exempt investment securities		481,968				3,973				3.30			306,446				2,832				3.70
Other interest-earning assets		36,799				633				6.82			27,139				415				6.07
Interest-bearing deposits with the Federal Reserve Bank and other banks		87,952				116				0.52			85,382				89				0.41
Total interest-earning assets		8,457,464				82,671				3.89			6,558,147				63,338				3.84
Less: allowance for loan losses		(75,225		)									(77,053		)
Other assets:
Cash and cash due from banks		157,939											134,309
Premises and equipment		110,141											93,111
Interest receivable and other assets		524,905											299,365
Total assets		$	9,175,224										$	7,007,879
Liabilities and shareholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,816,694			$	414			0.09	%		$	1,368,314			$	329			0.10	%
Savings deposits		2,024,543				393				0.08			1,613,338				367				0.09
Time deposits		1,671,913				3,313				0.79			1,306,712				2,718				0.83
Short-term borrowings		405,713				110				0.11			337,681				107				0.13
Other borrowings		243,170				923				1.51			6,724				42				2.48
Total interest-bearing liabilities		6,162,033				5,153				0.33			4,632,769				3,563				0.31
Noninterest-bearing deposits		1,936,328				—				—			1,519,823				—				—
Total deposits and borrowed funds		8,098,361				5,153				0.25			6,152,592				3,563				0.23
Interest payable and other liabilities		76,516											50,959
Shareholders' equity		1,000,347											804,328
Total liabilities and shareholders' equity		$	9,175,224										$	7,007,879
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities)										3.56	%										3.53	%
Net Interest Income (FTE)						$	77,518										$	59,775
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)										3.64	%										3.62	%
* Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.
** Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)*
Chemical Financial Corporation
		Twelve Months Ended December 31, 2015											Twelve Months Ended December 31, 2014
						Tax											Tax
		Average				Equivalent				Effective			Average				Equivalent				Effective
		Balance				Interest				Yield/Rate			Balance				Interest				Yield/Rate
Assets		(Dollars in thousands)
Interest-earning assets:
Loans**		$	6,594,507			$	274,341			4.16	%		$	4,982,986			$	211,608			4.25	%
Taxable investment securities		683,612				8,786				1.29			667,978				9,147				1.37
Tax-exempt investment securities		415,092				13,956				3.36			279,709				10,850				3.88
Other interest-earning assets		34,188				1,648				4.82			25,967				1,224				4.71
Interest-bearing deposits with the Federal Reserve Bank and other banks		123,735				510				0.41			138,424				407				0.29
Total interest-earning assets		7,851,134				299,241				3.81			6,095,064				233,236				3.83
Less: allowance for loan losses		(75,378		)									(78,126		)
Other assets:
Cash and cash due from banks		155,109											126,142
Premises and equipment		105,904											79,278
Interest receivable and other assets		444,459											250,786
Total assets		$	8,481,228										$	6,473,144
Liabilities and shareholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,661,592			$	1,465			0.09	%		$	1,234,347			$	1,197			0.10	%
Savings deposits		1,947,659				1,512				0.08			1,472,092				1,325				0.09
Time deposits		1,557,425				12,429				0.80			1,307,058				11,732				0.90
Short-term borrowings		420,529				453				0.11			334,785				414				0.12
Other borrowings		117,000				1,922				1.64			1,695				42				2.48
Total interest-bearing liabilities		5,704,205				17,781				0.31			4,349,977				14,710				0.34
Noninterest-bearing deposits		1,791,991				—				—			1,325,925				—				—
Total deposits and borrowed funds		7,496,196				17,781				0.24			5,675,902				14,710				0.26
Interest payable and other liabilities		65,704											43,031
Shareholders' equity		919,328											754,211
Total liabilities and shareholders' equity		$	8,481,228										$	6,473,144
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities)										3.50	%										3.49	%
Net Interest Income (FTE)						$	281,460										$	218,526
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)										3.58	%										3.59	%
* Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.
** Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Nonperforming Assets (Unaudited)
Chemical Financial Corporation
		Dec 31,				Sept 30,				June 30,				Mar 31,				Dec 31,				Sept 30,				June 30,				Mar 31,
		2015				2015				2015				2015				2014				2014				2014				2014
		(In thousands)
Nonperforming Loans:
Nonaccrual loans:
Commercial		$	28,554			$	26,463			$	17,260			$	18,904			$	16,418			$	18,213			$	18,773			$	18,251
Commercial real estate		25,163				24,969				25,287				24,766				24,966				23,858				25,361				27,568
Real estate construction		247				247				247				663				162				162				160				160
Land development		274				297				255				290				225				1,467				2,184				2,267
Residential mortgage		5,557				6,248				6,004				6,514				6,706				6,693				6,325				6,589
Consumer installment		451				536				393				433				500				527				536				806
Home equity		1,979				1,876				1,769				1,870				1,667				2,116				2,296				2,046
Total nonaccrual loans		62,225				60,636				51,215				53,440				50,644				53,036				55,635				57,687
Accruing loans contractually past due 90 days or more as to interest or principal payments:
Commercial		364				122				711				52				170				16				15				43
Commercial real estate		254				216				56				148				—				87				69				730
Real estate construction		—				—				—				—				—				—				—				—
Land development		—				—				—				—				—				—				—				—
Residential mortgage		402				572				424				172				557				380				376				—
Consumer installment		—				—				—				—				—				—				—				—
Home equity		1,267				558				588				429				1,346				1,779				1,075				622
Total accruing loans contractually past due 90 days or more as to interest or principal payments		2,287				1,468				1,779				801				2,073				2,262				1,535				1,395
Nonperforming troubled debt restructurings:
Commercial loan portfolio		16,297				15,559				14,547				15,810				15,271				11,797				11,049				11,218
Consumer loan portfolio		3,071				3,554				3,365				2,690				3,196				3,647				5,516				6,244
Total nonperforming troubled debt restructurings		19,368				19,113				17,912				18,500				18,467				15,444				16,565				17,462
Total nonperforming loans		83,880				81,217				70,906				72,741				71,184				70,742				73,735				76,544
Other real estate and repossessed assets		9,935				11,207				14,197				14,744				14,205				10,354				10,392				10,056
Total nonperforming assets		$	93,815			$	92,424			$	85,103			$	87,485			$	85,389			$	81,096			$	84,127			$	86,600

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Summary of Loan Loss Experience (Unaudited)
Chemical Financial Corporation
		Twelve																														Twelve
		Months																														Months
		Ended																														Ended
		Dec 31,						Three Months Ended																								Dec 31,						Three Months Ended
		2015						Dec 31, 2015						Sept 30, 2015						June 30, 2015						Mar 31, 2015						2014						Dec 31, 2014						Sept 30, 2014						June 30, 2014						Mar 31, 2014
		(In thousands)
Allowance for loan losses - originated loan portfolio
Allowance for loan losses - beginning of period		$		75,183				$		75,626				$		74,941				$		75,256				$		75,183				$		78,572				$		76,506				$		77,293				$		77,973				$		78,572
Provision for loan losses		7,000						2,000						1,500						1,500						2,000						6,100						1,500						1,500						1,500						1,600
Net loan charge-offs:
Commercial		(2,581			)			(2,207			)			86						(36			)			(424			)			(2,269			)			(932			)			(535			)			(569			)			(233			)
Commercial real estate		(1,475			)			(624			)			145						(581			)			(415			)			(2,056			)			(620			)			(412			)			(783			)			(241			)
Real estate construction		(129			)			—						—						(49			)			(80			)			(113			)			—						(13			)			—						(100			)
Land development		(12			)			—						(1			)			—						(11			)			648						363						16						127						142
Residential mortgage		(1,912			)			(545			)			(214			)			(661			)			(492			)			(1,626			)			(277			)			(304			)			(341			)			(704			)
Consumer installment		(2,791			)			(770			)			(782			)			(590			)			(649			)			(2,915			)			(813			)			(689			)			(612			)			(801			)
Home equity		45						(152			)			(49			)			102						144						(1,158			)			(544			)			(350			)			(2			)			(262			)
Net loan charge-offs		(8,855			)			(4,298			)			(815			)			(1,815			)			(1,927			)			(9,489			)			(2,823			)			(2,287			)			(2,180			)			(2,199			)
Allowance for loan losses - end of period		73,328						73,328						75,626						74,941						75,256						75,183						75,183						76,506						77,293						77,973
Allowance for loan losses - acquired loan portfolio
Allowance for loan losses - beginning of period		500						—						—						—						500						500						500						500						500						500
Provision for loan losses		(500			)			—						—						—						(500			)			—						—						—						—						—
Allowance for loan losses - end of period		—						—						—						—						—						500						500						500						500						500
Total allowance for loan losses		$		73,328				$		73,328				$		75,626				$		74,941				$		75,256				$		75,683				$		75,683				$		77,006				$		77,793				$		78,473
Net loan charge-offs as a percent of average loans (quarterly amounts annualized)			0.13			%			0.24			%			0.05			%			0.12			%			0.14			%			0.19			%			0.21			%			0.18			%			0.18			%			0.19			%

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation
		4th				3rd				2nd				1st				4th				3rd				2nd				1st
		Quarter				Quarter				Quarter				Quarter				Quarter				Quarter				Quarter				Quarter
		2015				2015				2015				2015				2014				2014				2014				2014
		(Dollars in thousands, except per share data)
Summary of Operations
Interest income		$	80,629			$	78,851			$	69,679			$	62,630			$	61,807			$	56,629			$	55,180			$	53,645
Interest expense		5,153				5,234				3,944				3,450				3,563				3,561				3,720				3,866
Net interest income		75,476				73,617				65,735				59,180				58,244				53,068				51,460				49,779
Provision for loan losses		2,000				1,500				1,500				1,500				1,500				1,500				1,500				1,600
Net interest income after provision for loan losses		73,476				72,117				64,235				57,680				56,744				51,568				49,960				48,179
Noninterest income		20,052				20,215				20,674				19,275				18,227				15,351				15,801				13,716
Operating expenses		55,739				57,365				53,328				49,658				48,477				41,423				41,778				41,859
Acquisition-related expenses		2,085				900				3,457				1,362				4,139				1,279				647				323
Income before income taxes		35,704				34,067				28,124				25,935				22,355				24,217				23,336				19,713
Federal income tax expense		10,200				9,600				9,100				8,100				7,050				7,450				7,100				5,900
Net income		$	25,504			$	24,467			$	19,024			$	17,835			$	15,305			$	16,767			$	16,236			$	13,813
Net interest margin		3.64		%		3.55		%		3.59		%		3.55		%		3.62		%		3.59		%		3.59		%		3.53		%
Per Common Share Data
Net income:
Basic		$	0.67			$	0.64			$	0.54			$	0.54			$	0.47			$	0.51			$	0.54			$	0.46
Diluted		0.66				0.64				0.54				0.54				0.46				0.51				0.54				0.46
Diluted, excluding acquisition-related expenses		0.70				0.65				0.61				0.57				0.56				0.53				0.55				0.47
Cash dividends declared		0.26				0.26				0.24				0.24				0.24				0.24				0.23				0.23
Book value - period-end		26.62				26.18				25.74				24.68				24.32				24.47				24.22				23.63
Tangible book value - period-end		18.78				18.32				17.89				18.95				18.57				20.68				20.42				19.44
Market value - period-end		34.27				32.35				33.06				31.36				30.64				26.89				28.08				32.45

Chemical Financial Corporation Announces Fourth Quarter and Full Year 2015 Operating Results
Non-GAAP Financial Measures (Unaudited)
Chemical Financial Corporation
		Twelve																				Twelve
		Months																				Months
		Ended				4th				3rd				2nd				1st				Ended				4th				3rd				2nd				1st
		Dec 31,				Quarter				Quarter				Quarter				Quarter				Dec 31,				Quarter				Quarter				Quarter				Quarter
		2015				2015				2015				2015				2015				2014				2014				2014				2014				2014
		(Dollars in thousands, except per share data)
Non-GAAP Operating Results
Net Income
Net income, as reported		$	86,830			$	25,504			$	24,467			$	19,024			$	17,835			$	62,121			$	15,305			$	16,767			$	16,236			$	13,813
Acquisition-related expenses, net of tax		5,484				1,355				585				2,659				885				4,555				3,094				831				420				210
Net income, excluding acquisition-related expenses		$	92,314			$	26,859			$	25,052			$	21,683			$	18,720			$	66,676			$	18,399			$	17,598			$	16,656			$	14,023
Diluted Earnings Per Share
Diluted earnings per share, as reported		$	2.39			$	0.66			$	0.64			$	0.54			$	0.54			$	1.97			$	0.46			$	0.51			$	0.54			$	0.46
Effect of acquisition-related expenses, net of tax		0.15				0.04				0.01				0.07				0.03				0.14				0.10				0.02				0.01				0.01
Diluted earnings per share, excluding acquisition-related expenses		$	2.54			$	0.70			$	0.65			$	0.61			$	0.57			$	2.11			$	0.56			$	0.53			$	0.55			$	0.47
Return on Average Assets
Return on average assets, as reported		1.02		%		1.10		%		1.05		%		0.94		%		0.98		%		0.96		%		0.87		%		1.04		%		1.04		%		0.90		%
Effect of acquisition-related expenses, net of tax		0.07				0.06				0.03				0.13				0.05				0.07				0.17				0.05				0.03				0.02
Return on average assets, excluding acquisition-related expenses		1.09		%		1.16		%		1.08		%		1.07		%		1.03		%		1.03		%		1.04		%		1.09		%		1.07		%		0.92		%
Return on Average Shareholders' Equity
Return on average shareholders' equity, as reported		9.4		%		10.1		%		9.8		%		8.6		%		9.0		%		8.2		%		7.5		%		8.4		%		9.1		%		8.0		%
Effect of acquisition-related expenses, net of tax		0.6				0.6				0.3				1.2				0.5				0.6				1.6				0.4				0.3				0.1
Return on average shareholders' equity, excluding acquisition-related expenses		10.0		%		10.7		%		10.1		%		9.8		%		9.5		%		8.8		%		9.1		%		8.8		%		9.4		%		8.1		%

		Dec 31,				Sept 30,				June 30,				Mar 31,				Dec 31,				Sept 30,				June 30,				Mar 31,
		2015				2015				2015				2015				2014				2014				2014				2014
		(Amounts in thousands, except per share data)
Tangible Book Value
Shareholders' equity, as reported		$	1,015,974			$	998,363			$	980,791			$	810,501			$	797,133			$	801,606			$	793,498			$	705,595
Goodwill, CDI and noncompete agreements, net of tax		(299,123		)		(299,681		)		(299,109		)		(187,991		)		(188,505		)		(124,149		)		(124,594		)		(125,040		)
Tangible shareholders' equity		$	716,851			$	698,682			$	681,682			$	622,510			$	608,628			$	677,457			$	668,904			$	580,555
Common shares outstanding		38,168				38,131				38,110				32,847				32,774				32,763				32,760				29,866
Book value per share (shareholders' equity, as reported, divided by common shares outstanding)		$	26.62			$	26.18			$	25.74			$	24.68			$	24.32			$	24.47			$	24.22			$	23.63
Tangible book value per share (tangible shareholders' equity divided by common shares outstanding)		$	18.78			$	18.32			$	17.89			$	18.95			$	18.57			$	20.68			$	20.42			$	19.44

 

For further information:
David B. Ramaker, CEO
Lori A. Gwizdala, CFO
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