updated 1/26/2011 4:48:10 PM ET 2011-01-26T21:48:10

MIDLAND, Mich., Jan. 26, 2011 (GLOBE NEWSWIRE) -- Chemical Financial Corporation (Nasdaq:CHFC) today announced 2010 fourth quarter net income of $7.5 million, or $0.27 per diluted share, compared to net income of $8.9 million, or $0.32 per diluted share, in the third quarter of 2010 and $2.5 million, or $0.11 per diluted share, in the fourth quarter of 2009. Net income was $23.1 million, or $0.88 per diluted share, for the twelve months ended December 31, 2010, compared to $10.0 million, or $0.42 per diluted share, for the twelve months ended December 31, 2009.

"Our earnings recovery in 2010 was primarily driven by two factors. First, stabilization in credit quality resulted in a $13.4 million lower provision for loan losses for the year. Second, our acquisition of O.A.K. Financial Corporation (OAK), which closed on April 30, 2010, has been accretive to earnings starting in the third quarter of 2010," said David B. Ramaker, Chairman, Chief Executive Officer, and President. "Although the fourth quarter of 2010 saw modestly lower profitability than the year's third quarter due to a $1.7 million higher provision for loan losses, we believe that the credit quality of the loan portfolio continues to stabilize, as evidenced by a $9.9 million reduction in nonaccrual loans during the quarter on the originated portfolio."

"We believe we are seeing small, positive signs of recovery and growth in certain areas of the Michigan economy, but uncertainty remains over whether and when this will translate into sustained, widespread growth. As a result, credit quality concerns remain top of mind," said Ramaker.

"We expect 2011 will be characterized by the ongoing pursuit of strategies to profitably grow our core community banking franchise, including opportunistic acquisitions where appropriate. With strong capital ratios, positive earnings and a growing franchise focused exclusively on Michigan, we remain well positioned to capitalize on investment opportunities in the markets we serve," added Ramaker. 

The Company's return on average assets during the fourth quarter of 2010 was 0.57 percent, down from 0.67 percent in the third quarter of 2010, but up from 0.24 percent in the fourth quarter of 2009. The return on average equity was 5.3 percent in the fourth quarter of 2010, down from 6.3 percent in the third quarter of 2010, but up from 2.1 percent in the fourth quarter of 2009.

Included in the fourth quarter and year-end 2010 results were $0.2 million and $4.3 million, respectively, of merger-related costs related to the acquisition of OAK. The net impact of these costs reduced 2010 diluted earnings by $0.12 per share. The acquisition of OAK and its subsidiary, Byron Bank, resulted in increases in the Company's total assets of $820 million, total loans of $627 million, total deposits of $693 million (core deposits of $495 million) and goodwill of $44 million as of the acquisition date.  Assets and liabilities acquired in the OAK transaction were recorded at fair value, with selected financial amounts and ratios reported separately for the "acquired loan" portfolio. The consolidation and systems conversion of Byron Bank into Chemical Bank was completed in the third quarter of 2010.

Lower net income in the fourth quarter of 2010, compared to the third quarter of 2010, was attributable primarily to a higher provision for loan losses, higher compensation costs and higher credit-related expenses that were partially offset by lower merger-related acquisition costs.

Net interest income was $45.9 million in the fourth quarter of 2010, unchanged from the third quarter of 2010 and up from $37.2 million in the fourth quarter of 2009. The net interest margin (on a tax-equivalent basis) in the fourth quarter of 2010 was 3.79 percent, compared to 3.80 percent in the third quarter of 2010 and 3.77 percent in the fourth quarter of 2009. The increase in net interest income during the fourth quarter of 2010 compared to the same quarter in 2009 was primarily attributable to the acquisition of OAK and a decrease in the average cost of deposits related to maturing higher-cost customer certificates of deposit and maturing higher-cost wholesale funding.

The Company recorded a $10.3 million provision for loan losses in the fourth quarter of 2010, compared to $8.6 million in the third quarter of 2010 and $15.6 million in the fourth quarter of 2009. Fourth quarter 2010 net loan charge-offs were $10.3 million, compared to $8.6 million in the third quarter of 2010 and $12.3 million in the fourth quarter of 2009.

Total noninterest income was $10.9 million in the fourth quarter of 2010, compared to $11.1 million in the third quarter of 2010 and $10.2 million in the fourth quarter of 2009.  The decrease in the fourth quarter of 2010, as compared to the third quarter of 2010, was due primarily to lower service charges on deposit accounts. Service charges on deposit accounts were $0.3 million less in the fourth quarter of 2010, as compared to the third quarter of 2010, due to a full quarter's impact of changes in regulatory requirements regarding the processing of certain electronic ATM and debit card transactions. Service charges on deposits accounts were $4.4 million for the fourth quarter of 2010; by comparison, service charges on deposit accounts in the second quarter of 2010, prior to the change in regulatory requirements, were $5.1 million.

Operating expenses were $36.7 million in the fourth quarter of 2010, up slightly from $36.2 million in the third quarter of 2010 and up from $28.8 million in the fourth quarter of 2009.  The increase in operating expenses in the fourth quarter of 2010, as compared to the third quarter of 2010, was primarily attributable to higher salary, wages and employee benefits expense and credit-related operating expenses that were partially offset by reductions in various expense categories, including the reversal of $0.6 million in state tax reserves. Acquisition-related costs of $0.2 million were incurred in the fourth quarter of 2010.  Credit-related operating expenses remained elevated at $2.8 million in the fourth quarter of 2010, up from $1.8 million incurred in the third quarter of 2010 and unchanged from $2.8 million incurred in the fourth quarter of 2009. The Company's fourth quarter 2010 efficiency ratio was 63.3 percent, compared to 62.3 percent in the third quarter of 2010 and 59.8 percent in the fourth quarter of 2009.  

Total assets were $5.25 billion at December 31, 2010, down from $5.40 billion at September 30, 2010, but up from $4.25 billion at December 31, 2009. The decline in assets during the fourth quarter of 2010, as compared to the third quarter of 2010, was attributable to a seasonal decline in municipal customer deposits. At December 31, 2010, total loans were $3.68 billion, compared to $3.64 billion at September 30, 2010 and $2.99 billion at December 31, 2009. The increase in total loans during the fourth quarter of 2010, as compared to the third quarter of 2010, was primarily attributable to the origination of $48 million of fifteen-year fixed-rate residential mortgages that the Corporation elected to keep in its portfolio rather than sell in the secondary market, as is generally its practice. Investment securities were $744 million at December 31, 2010, compared to $766 million at September 30, 2010 and $724 million at December 31, 2009. The increases in assets, loans and investment securities during the twelve months ended December 31, 2010 were primarily attributable to the acquisition of OAK.

Total deposits were $4.33 billion at December 31, 2010, compared to $4.47 billion at September 30, 2010 and $3.42 billion at December 31, 2009. The Company experienced a decrease of $136 million, or 3.0 percent, in total deposits during the quarter ended December 31, 2010, with the majority attributable to a seasonal decrease in municipal customer deposits. These types of deposits declined $228 million in the fourth quarter of 2010. The Company continues to maintain significant amounts of funds generated from deposit growth in interest-bearing balances at the Federal Reserve Bank (FRB), thereby further enhancing the Company's liquidity position, with $440 million in balances held at the FRB at December 31, 2010. The Company has used a portion of its liquidity to pay off maturing Federal Home Loan Bank (FHLB) advances and brokered deposits acquired in the OAK transaction in 2010 and intends to continue to pay off these wholesale funding sources as they mature. FHLB advances totaled $74.1 million at December 31, 2010, down from $85.4 million at September 30, 2010 and $90.0 million at December 31, 2009. Brokered deposits acquired in the OAK transaction totaled $163 million at December 31, 2010, compared to $182 million at September 30, 2010, and $199 million at June 30, 2010.

At December 31, 2010, the Company's tangible equity to assets ratio and total risk-based capital ratio were 8.6 percent and 12.9 percent, respectively, compared to 8.4 percent and 13.7 percent, respectively, at September 30, 2010. At December 31, 2010, the Company's book value was $20.41 per share, compared to $20.44 per share at September 30, 2010.

We believe the credit quality of the Company's loan portfolio is showing signs of stabilization. At December 31, 2010, the Company's originated loan portfolio, representing all loans other than those acquired in the OAK transaction, had nonaccrual loans and loans past due 90 days or more totaling $110.4 million, compared to $119.4 million at September 30, 2010 and $118.3 million at December 31, 2009. The Company's nonperforming loans at December 31, 2010 also included commercial, real estate commercial and real estate residential loans that have been modified due to financial difficulties being experienced by customers of $37.4 million, compared to $28.5 million at September 30, 2010 and $17.4 million at December 31, 2009. The carrying value (net of a fair value discount that was recognized at acquisition) of nonperforming loans in the acquired portfolio totaled $21.4 million at December 31, 2010, compared to $12.5 million at September 30, 2010.

Other real estate and repossessed assets totaled $27.5 million at December 31, 2010, compared to $22.7 million at September 30, 2010 and $17.5 million at December 31, 2009. The increase in the fourth quarter of 2010 was primarily attributable to the addition of one piece of property with a net investment of $4.3 million. This property is vacant land intended for commercial development. It was a loan acquired in the OAK transaction.

At December 31, 2010, the allowance for loan losses was $89.5 million, or 2.86 percent of originated loans, down slightly from 2.94 percent at September 30, 2010, although up from 2.70 percent at December 31, 2009. The allowance for loan losses as a percentage of nonperforming loans of the originated portfolio was 61 percent at December 31, 2010, unchanged from 61 percent at September 30, 2010, although up nominally from 60 percent at December 31, 2009. At December 31, 2010, nonperforming loans of the originated portfolio as a percentage of originated loans were 4.72 percent, down from 4.86 percent at September 30, 2010, but up from 4.54 percent at December 31, 2009.

Chemical Financial Corporation is the second-largest bank holding company headquartered in Michigan. The Company operates through a single subsidiary bank, Chemical Bank, with 142 banking offices spread over 32 counties in the lower peninsula of Michigan. At December 31, 2010, the Company had total assets of $5.25 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 Company 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 Chemical Financial Corporation. Words such as "believe," "expect," "intend," "will," "continue," "ongoing," "strategy" and variations of such words and 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 the credit quality of our loan portfolio, future levels of nonperforming loans, future opportunities for acquisitions, future market disruptions and investment opportunities, future growth opportunities, and future profitability levels. All statements referencing future time periods are forward-looking. Management's determination of the provision and allowance for loan losses, the carrying value of goodwill and mortgage servicing rights and 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. The future effect of changes in the financial and credit markets and the national and regional economy on the banking industry, generally, and on the Company, 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 Company 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 Company's Annual Report on Form 10-K for the year ended December 31, 2009 and in Part II, Item 1A of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010. 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 Operating Results
     
Consolidated Statements of Financial Position (Unaudited)    
Chemical Financial Corporation     
     
     
(In thousands, except per share data) December 31

2010
December 31

2009
Assets:    
Cash and cash equivalents:    
Cash and cash due from banks  $ 91,403  $ 131,383
Interest-bearing deposits with unaffiliated banks and others  444,762  229,326
Total cash and cash equivalents  536,165  360,709
Investment securities:    
Available-for-sale  578,610  592,521
Held-to-maturity  165,400  131,297
Total Investment Securities  744,010  723,818
Other securities  27,133  22,128
Loans held-for-sale  20,479  8,362
     
Loans:    
Commercial   818,997  584,286
Real estate commercial   1,076,971  785,675
Real estate construction   142,620  121,305
Real estate residential   798,046  739,380
Consumer   845,028  762,514
Total Loans  3,681,662  2,993,160
Allowance for loan losses  (89,530)  (80,841)
Net Loans  3,592,132  2,912,319
     
Premises and equipment  65,961  53,934
Goodwill  113,414  69,908
Other intangible assets  13,521  5,408
Interest receivable and other assets  133,394  94,126
Total Assets  $ 5,246,209  $ 4,250,712
     
Liabilities:    
Deposits:    
Noninterest-bearing   $ 753,553  $ 573,159
Interest-bearing   3,578,212  2,844,966
Total Deposits  4,331,765  3,418,125
Interest payable and other liabilities  37,533  27,708
Short-term borrowings  242,703  240,568
Federal Home Loan Bank advances   74,130  90,000
Total Liabilities  4,686,131  3,776,401
     
Shareholders' Equity:    
Preferred stock, no par value per share  --  --
Common stock, $1 par value per share  27,440  23,891
Additional paid-in capital  429,511  347,676
Retained earnings  117,238  115,391
Accumulated other comprehensive loss  (14,111)  (12,647)
Total Shareholders' Equity  560,078  474,311
Total Liabilities and Shareholders' Equity  $ 5,246,209  $ 4,250,712
Chemical Financial Corporation Announces Fourth Quarter Operating Results
         
Consolidated Statements of Income (Unaudited)        
Chemical Financial Corporation         
         
         
  Three Months Ended

December 31
Twelve Months Ended

December 31
(In thousands, except per share data) 2010 2009 2010 2009
Interest Income:        
Interest and fees on loans  $ 50,766  $ 43,309  $ 192,247  $ 172,388
Interest on investment securities:        
Taxable  2,557  3,332  11,363  15,385
Tax-exempt  1,405  964  4,999  3,596
Dividends on other securities  308  259  766  821
Interest on deposits with unaffiliated banks and others  312  196  1,055  541
Total Interest Income  55,348  48,060  210,430  192,731
         
Interest Expense:        
Interest on deposits  8,679  9,583  35,895  39,500
Interest on short-term borrowings  161  183  650  906
Interest on Federal Home Loan Bank advances   560  1,081  2,765  4,881
Total Interest Expense  9,400  10,847  39,310  45,287
Net Interest Income   45,948  37,213  171,120  147,444
Provision for loan losses  10,300  15,600  45,600  59,000
Net Interest Income after Provision for Loan Losses  35,648  21,613  125,520  88,444
         
Noninterest Income:        
Service charges on deposit accounts  4,400  4,911  18,562  19,116
Trust and investment services revenue  2,690  2,218  10,106  9,273
Other charges and fees for customer services  2,703  1,970  9,599  7,736
Mortgage banking revenue  1,088  960  3,925  4,412
Investment securities gains (losses)  (82)  --  --  95
Other   114  153  280  487
Total Noninterest Income  10,913  10,212  42,472  41,119
         
Operating Expenses:        
Salaries, wages and employee benefits  18,766  14,353  68,416  60,218
Occupancy   3,017  2,748  11,491  10,359
Equipment  3,336  2,582  13,446  9,723
Other  11,628  9,124  43,449  37,310
Total Operating Expenses  36,747  28,807  136,802  117,610
Income Before Income Taxes  9,814  3,018  31,190  11,953
Federal Income Tax Expense   2,275  500  8,100  1,950
Net Income   $ 7,539  $ 2,518  $ 23,090  $ 10,003
         
Net income per common share:        
Basic  $ 0.27  $ 0.11  $ 0.88  $ 0.42
Diluted  0.27  0.11  0.88  0.42
         
Cash dividends declared per common share  0.20  0.295  0.80  1.180
         
Average common shares outstanding:        
Basic  27,440  23,890  26,276  23,890
Diluted  27,476  23,914  26,305  23,909
Chemical Financial Corporation Announces Fourth Quarter Operating Results
                 
Financial Summary (Unaudited)        
Chemical Financial Corporation         
          Three Months Ended December 31 Twelve Months Ended December 31
(Dollars in thousands) 2010 2009 2010 2009
Average Balances         
Total assets  $ 5,270,529  $ 4,221,031  $ 4,913,310  $ 4,066,229
Total interest-earning assets  4,947,539  4,014,422  4,618,012  3,847,006
Total loans  3,659,385  3,005,554  3,438,550  2,980,126
Total deposits  4,336,523  3,363,967  4,017,230  3,195,411
Total interest-bearing liabilities  3,932,149  3,156,993  3,685,186  3,002,050
Total shareholders' equity  561,388  475,384  530,819  483,034
                 
          Three Months Ended December 31 Twelve Months Ended December 31
  2010 2009 2010 2009
Key Ratios (annualized where applicable)        
Net interest margin (taxable equivalent basis) 3.79% 3.77% 3.80% 3.91%
Efficiency ratio  63.3% 59.8% 62.8% 61.4%
Return on average assets 0.57% 0.24% 0.47% 0.25%
Return on average shareholders' equity 5.3% 2.1% 4.3% 2.1%
Average shareholders' equity as a percent of average assets 10.7% 11.3% 10.8% 11.9%
                 
Tangible shareholders' equity as a percent of total assets     8.6% 9.6%
Total risk-based capital ratio         12.9% 15.5%
                 
  Dec 31 2010 Sept 30 2010 June 30 2010 March 31 2010 Dec 31 2009 Sept 30 2009 June 30 2009 March 31 2009
Credit Quality Statistics                
Originated Loans  $ 3,129,399  $ 3,045,872  $ 3,034,515          
Acquired Loans  552,263  594,999  613,446          
Originated Portfolio:                
Nonaccrual loans  102,962  112,832  107,981  $ 100,882  $ 106,589  $ 120,186  $ 109,944  $ 94,737
Accruing loans contractually past due 90 days or more as to interest or principal payments 7,408 6,526 8,301 7,204 11,733 8,699 10,502 10,240
Troubled debt restructurings - commercial loans 15,057 9,834 7,791 6,243  --  --  --  --
Troubled debt restructurings - real estate residential loans 22,302 18,712 18,856  15,799  17,433  9,567  3,981  --
Total nonperforming loans - originated portfolio  147,729  147,904  142,929  130,128  135,755  138,452  124,427  104,977
Other real estate and repossessed assets (ORE) 27,510 22,704 21,724 18,813 17,540 19,067 18,344 20,688
Total nonperforming assets  175,239  170,608  164,653  148,941  153,295  157,519  142,771  125,665
Acquired portfolio - total nonperforming loans  21,385  12,500  10,050  --  --  --  --  --
Net loan charge-offs (year-to-date) 36,911 26,620 18,039 10,686 35,215 22,965 16,300 8,494
                 
Allowance for loan losses as a percent of total originated loans 2.86% 2.94% 2.95% 2.82% 2.70% 2.58% 2.35% 2.12%
Allowance for loan losses as a percent of nonperforming originated loans 61% 61% 63% 65% 60% 56% 56% 60%
Nonperforming originated loans as a percent of total originated loans 4.72% 4.86% 4.71% 4.35% 4.54% 4.61% 4.18% 3.56%
Nonperforming assets as a percent of total originated loans plus ORE 5.55% 5.56% 5.39% 4.95% 5.09% 5.21% 4.77% 4.23%
Nonperforming assets as a percent of total assets 3.34% 3.16% 3.22% 3.47% 3.61% 3.69% 3.57% 3.16%
Net loan charge-offs as a percent of average loans (year-to-date, annualized) 1.07% 1.06% 1.12% 1.43% 1.18% 1.03% 1.10% 1.15%
                 
  Dec 31 2010 Sept 30 2010 June 30 2010 March 31 2010 Dec 31 2009 Sept 30 2009 June 30 2009 March 31 2009
Additional Data - Intangibles                
Goodwill  $ 113,414  $ 110,266  $ 109,149  $ 69,908  $ 69,908  $ 69,908  $ 69,908  $ 69,908
Core deposit intangibles  9,406  10,352  10,791  2,183  2,331  2,480  2,629  2,847
Mortgage servicing rights (MSR)  3,782  3,718  3,641  3,059  3,077  2,997  2,869  2,377
Other intangible assets  333  462  591  --  --  --  --  --
Amortization of core deposit intangibles (quarter only)  436  439  337  148  149  149  217  203
Chemical Financial Corporation Announces Fourth Quarter Operating Results
                 
Nonperforming Assets (Unaudited)                
Chemical Financial Corporation                 
                 
(Dollars in thousands) Dec 31

2010
Sept 30

2010
June 30

2010
March 31

2010
Dec 31

2009
Sept 30

2009
June 30

2009
March 31

2009
Originated Portfolio:                
Nonaccrual loans:                
Commercial  $ 16,668  $ 19,440  $ 21,643  $ 18,382  $ 19,309  $ 21,379  $ 20,371  $ 16,419
Real estate commercial  55,104  59,353 57,085 51,865  49,419  58,930  50,067  41,826
Real estate construction  14,421  16,085 13,397 15,870  15,184  18,196  17,935  18,504
Real estate residential  12,083  13,485 12,499 10,913  15,508  15,739  15,905  12,803
Consumer  4,686  4,469 3,357 3,852  7,169  5,942  5,666  5,185
Total nonaccrual loans  102,962  112,832 107,981 100,882  106,589  120,186  109,944  94,737
Accruing loans contractually past due 90 days or more as to

interest or principal payments:
             
Commercial  530  909 2,108 2,576  1,371  1,073  1,201  2,581
Real estate commercial  1,350  2,265 2,030 1,483  3,971  2,138  1,542  4,352
Real estate construction  1,220  -- 436 988  1,990  675  259  538
Real estate residential  3,253  2,316 2,842 1,636  3,614  3,839  6,236  1,699
Consumer  1,055  1,036 885 521  787  974  1,264  1,070
Total accruing loans contractually past due 90 days or more as to

interest or principal payments
 7,408  6,526 8,301 7,204  11,733  8,699  10,502  10,240
Troubled debt restructurings - commercial loans  15,057  9,834 7,791 6,243  --  --  --  --
Troubled debt restructurings - real estate residential loans  22,302  18,712 18,856 15,799  17,433  9,567  3,981  --
Total nonperforming loans  147,729  147,904 142,929 130,128  135,755  138,452  124,427  104,977
Other real estate and repossessed assets  27,510  22,704 21,724 18,813 17,540 19,067 18,344 20,688
Total nonperforming assets  $ 175,239  $ 170,608  $ 164,653  $ 148,941  $ 153,295  $ 157,519  $ 142,771  $ 125,665
                 
Nonperforming loans - Acquired portfolio (1):                
Nonaccrual loans  $ 17,357  $ 8,974  $ 7,692          
Accruing loans contractually past due 90 days or more as to

interest or principal payments
 1,605  1,539  --          
Troubled debt restructurings  2,423  1,987  2,358          
   $ 21,385  $ 12,500  $ 10,050          
                 
(1) Represents the fair value of those loans acquired in the OAK transaction that met the Company's definition of a nonperforming loan, but for which the risk of credit loss was already considered in the fair value estimate at the acquisition date.
Chemical Financial Corporation Announces Fourth Quarter Operating Results
                 
Summary of Loan Loss Experience (Unaudited)                
Chemical Financial Corporation                 
                 
  Three Months Ended
(Dollars in thousands) Dec 31

2010
Sept 30

2010
June 30

2010
March 31

2010
Dec 31

2009
Sept 30

2009
June 30

2009
March 31

2009
Allowance for loan losses at beginning of period  $ 89,521  $ 89,502  $ 84,155  $ 80,841  $ 77,491  $ 69,956  $ 62,562  $ 57,056
Provision for loan losses  10,300  8,600 12,700 14,000 15,600 14,200 15,200 14,000
                 
Originated portfolio:                
Loans charged off:                
Commercial  (2,797)  (2,830)  (1,438)  (1,365)  (3,636)  (1,786)  (3,289)  (3,290)
Real estate commercial  (3,828)  (2,586)  (2,108)  (2,289)  (3,009)  (1,703)  (1,930)  (2,589)
Real estate construction  (1,111)  (146)  (643)  (644)  (3,633)  (874)  (762)  (1,700)
Real estate residential  (1,349)  (1,767)  (1,747)  (3,173)  (1,070)  (1,346)  (1,043)  (235)
Consumer  (1,961)  (1,916)  (2,361)  (4,427)  (1,998)  (1,996)  (1,544)  (1,253)
Total loan charge-offs  (11,046)  (9,245)  (8,297)  (11,898)  (13,346)  (7,705)  (8,568)  (9,067)
Recoveries of loans previously charged off:                
Commercial  165  212  171  373  220  349  130  205
Real estate commercial  189  38  29  170  91  91  226  87
Real estate construction  --  19  1  --  261  46  --  --
Real estate residential  74  109  175  185  174  231  127  82
Consumer  327  286  568  484  350  323  279  199
Total loan recoveries  755  664  944  1,212  1,096  1,040  762  573
Net loan charge-offs  (10,291)  (8,581)  (7,353)  (10,686)  (12,250)  (6,665)  (7,806)  (8,494)
Allowance for loan losses at end of period  $ 89,530  $ 89,521  $ 89,502  $ 84,155  $ 80,841  $ 77,491  $ 69,956  $ 62,562
Chemical Financial Corporation Announces Fourth Quarter Operating Results
                 
Selected Quarterly Information (Unaudited)                
Chemical Financial Corporation                 
                 
(Dollars in thousands, except per share data) 4th Qtr.

2010
3rd Qtr.

2010
2nd Qtr.

2010
1st Qtr.

2010
4th Qtr.

2009
3rd Qtr.

2009
2nd Qtr.

2009
1st Qtr.

2009
Summary of Operations                
Interest income  $ 55,348  $ 55,998  $ 52,962  $ 46,122  $ 48,060  $ 48,066  $ 48,283  $ 48,322
Interest expense  9,400  10,105  10,071  9,734  10,847  11,403  11,305  11,732
Net interest income  45,948  45,893 42,891 36,388 37,213 36,663 36,978 36,590
Provision for loan losses  10,300  8,600  12,700  14,000  15,600  14,200  15,200  14,000
Net interest income after provision for loan losses  35,648  37,293  30,191  22,388  21,613  22,463  21,778  22,590
Noninterest income  10,913  11,119  11,000  9,440  10,212  10,092  10,958  9,857
Operating expenses   36,747  36,216  34,650  29,189  28,807  29,582  30,016  29,205
Income before income taxes  9,814  12,196  6,541  2,639  3,018  2,973  2,720  3,242
Federal income tax expense  2,275  3,325  2,150  350  500  500  426  524
Net income   $ 7,539  $ 8,871  $ 4,391  $ 2,289  $ 2,518  $ 2,473  $ 2,294  $ 2,718
                 
Net interest margin 3.79% 3.80% 3.88% 3.72% 3.77% 3.83% 4.00% 4.06%
 
Per Common Share Data                
Net income:                
Basic  $ 0.27  $ 0.32  $ 0.17  $ 0.10  $ 0.11  $ 0.10  $ 0.10  $ 0.11
Diluted  0.27  0.32  0.17  0.10  0.11  0.10  0.10  0.11
Cash dividends  0.200  0.200  0.200  0.200  0.295  0.295  0.295  0.295
Book value - period-end  20.41  20.44  20.27  19.76  19.85  20.06  20.23  20.40
Market value - period-end  22.15  20.64  21.78  23.62  23.58  21.79  19.91  20.81
CONTACT:  David B. Ramaker, CEO
          Lori A. Gwizdala, CFO
          989-839-5350

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