Chemical Financial Corporation declares cash dividend on common stock of $0.34 per share
DETROIT, Oct. 23, 2018 (GLOBE NEWSWIRE) -- Chemical Financial Corporation ("Chemical," "we," "us" or "our") (NASDAQ:CHFC) today announced 2018 third quarter net income of $70.4 million, or $0.98 per diluted share, compared to 2018 second quarter net income of $69.0 million, or $0.96 per diluted share and 2017 third quarter net income of $40.5 million, or $0.56 per diluted share. Net income in the third quarter of 2017 excluding merger and restructuring expenses ("significant items"), a non-GAAP financial measure, was $54.2 million, or $0.76 per diluted share.(1) In addition, on October 23, 2018, our Board of Directors declared a fourth quarter of 2018 dividend on our common stock of $0.34 per share. The fourth quarter of 2018 dividend will be payable on December 21, 2018, to shareholders of record on December 7, 2018.
"Our results for the quarter reflect our ability to drive growth in loans and substantial growth in customer deposits in a competitive market all while working diligently to finalize substantial upgrades to our core operating systems," noted David T. Provost, Chief Executive Officer of Chemical and Thomas C. Shafer, Vice Chairman of Chemical and Chief Executive Officer of Chemical Bank. "We believe we are well positioned to finish the year strong with increasing revenue and continuing our focus on driving strong organic growth while efficiently managing our operating expenses as we continue to build upon our solid foundation."
Our return on average assets was 1.37% during the third quarter of 2018, compared to 1.39% during the second quarter of 2018 and 0.86% in the third quarter of 2017. Our return on average tangible shareholders' equity was 17.5% in the third quarter of 2018, compared to 17.8% during the second quarter of 2018 and 10.9% in the third quarter of 2017. During the third quarter of 2017, our return on average assets and return on average tangible shareholder's equity, excluding significant items, both non-GAAP financial measures, was 1.15% and 14.6%, respectively.(1)
Our net interest income was $159.5 million in the third quarter of 2018, $1.9 million, or 1.2%, higher than the second quarter of 2018 and $15.9 million, or 11.0%, higher than the third quarter of 2017. The increase in our net interest income in the third quarter of 2018, compared to both the second quarter of 2018 and the third quarter of 2017, was primarily attributable to increases in average balances and yields earned on loans and investment securities, partially offset by increases in average deposit balances and cost of funds. Third quarter 2018 net loan growth was $216.6 million, or an annualized growth rate of 5.9%, and net loan growth over the past twelve months was $962.9 million, or 7.0%. Approximately 70% of our loan growth in the third quarter of 2018 was within our commercial loan portfolio. Our investment securities portfolio grew by $212.7 million, compared to the second quarter of 2018, and $658.4 million, compared to the third quarter of 2017.
Our net interest margin was 3.42% in the third quarter of 2018, compared to 3.54% in the second quarter of 2018 and 3.40% in the third quarter of 2017. Our net interest margin (fully taxable equivalent (FTE)), a non-GAAP financial measure, was 3.48% in the third quarter of 2018, compared to 3.59% in the second quarter of 2018 and 3.48% in the third quarter of 2017.(1) The decrease in our net interest margin (FTE), in the third quarter of 2018, compared to the second quarter of 2018, was primarily due to an increase in average deposit balances and cost of funds. Our net interest margin (FTE) in the third quarter of 2018, and the third quarter of 2017 remained the same, as the increase in average deposit balances and costs of funds in the third quarter of 2018 was offset by increases in yields and average balances on loans and investment securities . Our average cost of funds was 0.88% in the third quarter of 2018, compared to 0.76% in the second quarter of 2018 and 0.53% in the third quarter of 2017. The average yield on our loan portfolio increased to 4.68% in the third quarter of 2018, compared to 4.63% in the second quarter of 2018 and 4.31% in the third quarter of 2017. Interest accretion from purchase accounting discounts on acquired loans contributed 23 basis points to our net interest margin (FTE), in the third quarter of 2018, compared to 26 basis points in the second quarter of 2018 and 23 basis points in the third quarter of 2017.
Our total provision for loan losses was $6.0 million in the third quarter of 2018, compared to $9.6 million in the second quarter of 2018 and $5.5 million in the third quarter of 2017. The decrease in our total provision for loan losses in the third quarter of 2018, compared to the second quarter of 2018, was primarily the result of a lower amount of originated loan growth and improvements in the collateral position of loans that are individually evaluated for impairment and overall credit quality, partially offset by $970 thousand of impairment recorded during the third quarter of 2018 as a result of the quarterly re-estimation of cash flows on our acquired loan portfolio. The increase in the provision for loan losses in the third quarter of 2018, compared to the third quarter of 2017, was primarily the result of an increase in impairment recorded as a result of the quarterly re-estimation of cash flows on our acquired loan portfolio. All acquired loans were recorded at their estimated fair value at each respective acquisition date without a carryover of the related allowance and, as of September 30, 2018 and September 30, 2017, the allowance recorded for this population of loans was $970 thousand and $579 thousand, respectively. At June 30, 2018, we determined no allowance was needed for our acquired loan portfolio.
Net loan charge-offs were $2.0 million, or 0.05% of average loans, in the third quarter of 2018, compared to $4.3 million, or 0.12% of average loans, in the second quarter of 2018 and $3.5 million, or 0.10% of average loans, in the third quarter of 2017. The decrease in charge-offs in the third quarter of 2018, compared to both the second quarter of 2018 and the third quarter of 2017, was primarily due to improvement in the collateral position of impaired loans.
Our nonperforming loans totaled $96.7 million at September 30, 2018, compared to $66.7 million at June 30, 2018 and $54.3 million at September 30, 2017. Nonperforming loans comprised 0.65% of total loans at September 30, 2018, compared to 0.46% at June 30, 2018 and 0.39% at September 30, 2017. The increase in nonperforming loans in the third quarter of 2018, compared to the second quarter of 2018, was primarily due to one real estate construction loan relationship and one commercial loan relationship that we downgraded to nonaccrual status during the third quarter of 2018. For each of these nonaccrual loans, we have either established a specific reserve within our allowance for loan losses or charged the loan relationship down to the value of the underlying collateral.
Our total allowance for loan losses was $104.0 million at September 30, 2018, including $103.1 million for our originated loan portfolio and $970 thousand for our acquired loan portfolio. Our allowance for loan losses on our originated loan portfolio was $103.1 million, or 0.93% of originated loans, at September 30, 2018, compared to $100.0 million, or 0.94% of originated loans, at June 30, 2018 and $85.2 million, or 0.93% of originated loans, at September 30, 2017. Our allowance for loan losses on our originated loan portfolio as a percentage of nonperforming loans decreased to 106.6% at September 30, 2018, compared to 149.9% at June 30, 2018 and 156.9% at September 30, 2017, primarily due to improvements in the collateral position of loans that are individually evaluated for impairment and overall credit quality. The results of our quarterly re-estimation of cash flows on our acquired loan portfolio resulted in $970 thousand of allowance established for our acquired loan portfolios as of September 30, 2018, compared to no allowance as of June 30, 2018 and a $579 thousand allowance as of September 30, 2017.
Our noninterest income was $37.9 million in the third quarter of 2018, compared to $38.0 million in the second quarter of 2018 and $32.1 million in the third quarter of 2017. Noninterest income in the third quarter of 2018 decreased, compared to the second quarter of 2018, primarily due to a decrease in wealth management revenue of $1.1 million, partially offset by the change in the impact to earnings from the change in fair valuation in loan servicing rights, included within net gain on sale of loans and other mortgage banking revenue, of $1.0 million. Noninterest income in the third quarter of 2018 increased compared to the third quarter of 2017, primarily due to the change in the impact to earnings from the change in fair valuation in loan servicing rights of $5.0 million. Net gain on sale of loans and other mortgage banking revenue, included a $0.9 million benefit to earnings due to a change in fair value in loan servicing rights in the third quarter of 2018, compared to a $30 thousand detriment in the second quarter of 2018 and a $4.0 million detriment in the third quarter of 2017. The change in fair value in loan servicing rights provided $0.01 to diluted earnings per share in the third quarter of 2018, compared to no impact in the second quarter of 2018 and a $0.04 detriment in the third quarter of 2017.
Our operating expenses were $109.7 million in the third quarter of 2018, compared to $104.6 million in the second quarter of 2018 and $119.5 million in the third quarter of 2017. We had no merger and restructuring expenses during the third or second quarters of 2018, compared to $21.2 million in the third quarter of 2017. Third quarter of 2018 included $3.2 million of impairment related to a federal historic tax credit placed into service during the quarter, included within other operating expense in our Consolidated Statements of Income, compared to $1.7 million in the second quarter of 2018 and $3.1 million in the third quarter of 2017. The third quarter of 2018 also included expense related to our efforts to implement upgrades to our core operating systems of $2.7 million, compared to $3.2 million in the second quarter of 2018, and none in the third quarter of 2017. In addition, the third quarter of 2018 included $0.9 million of early lease termination expense resulting from the consolidation of office space housing our wealth management unit, which is expected to result in approximately $450 thousand of occupancy expense savings annually. Excluding the impact of federal historic tax credits, core operating system conversion expense, lease termination costs and merger and restructuring expense, the increase in operating expenses in the third quarter of 2018, compared to both the second quarter of 2018 and the third quarter of 2017, was primarily due to increases in salaries, wages and employee benefits and outside processing and service fees. Excluding core operating system conversion expenses included within salaries, wages and employee benefits of $0.7 million in the third quarter of 2018 and $0.5 million in the second quarter of 2018, salaries, wages and employee benefits in the third quarter of 2018 increased $0.5 million compared to the second quarter of 2018, and increased $3.6 million compared to the third quarter of 2017, primarily due to increases in staff to support our strategic focus on commercial lending growth opportunities. The increase in outside processing and service fees in the third quarter of 2018, compared to both the second quarter of 2018 and the third quarter of 2017, was primarily due to substantial enhancements in our overall technology platform.
Our efficiency ratio is a measure of operating expenses as a percentage of net interest income and noninterest income. Our efficiency ratio was 55.6% in the third quarter of 2018, compared to 53.5% in the second quarter of 2018 and 68.0% in the third quarter of 2017. Our adjusted efficiency ratio, a non-GAAP financial measure, which excludes, as applicable, amortization of intangibles, merger and restructuring expenses, impairment of income tax credits, the net interest income FTE adjustment, the change in fair value on loan servicing rights, and losses from sale of investment securities, was 52.8% in the third quarter of 2018, compared to 51.2% in both the second quarter of 2018 and the third quarter of 2017.(1)
Our effective tax rate was 13.8% in the third quarter of 2018, compared to 15.3% in the second quarter of 2018 and 20.2% in the third quarter of 2017. Our tax rates for periods during 2018 benefited from the enactment of the Tax Cuts and Jobs Act which reduced the federal corporate tax rate to 21% effective January 1, 2018. In addition, a benefit of $3.2 million in the third quarter of 2018, $1.9 million in the second quarter of 2018 and $2.3 million in the third quarter of 2017 was received from federal historic tax credits placed into service during each period.
Our total assets were $20.91 billion at September 30, 2018, compared to $20.28 billion at June 30, 2018 and $19.35 billion at September 30, 2017. The increase in our total assets during both the third quarter of 2018 and the twelve months ended September 30, 2018 was primarily attributable to net loan growth and additions to our investment securities portfolio.
Our total loans were $14.80 billion at September 30, 2018, an increase of $216.6 million, from total loans of $14.58 billion at June 30, 2018 and an increase of $962.9 million, from total loans of $13.83 billion at September 30, 2017. We experienced originated loan growth of $448.9 million during the third quarter of 2018, compared to $684.0 million in the second quarter of 2018 and $496.5 million in the third quarter of 2017. Growth in our originated loan portfolio was partially offset by run-off in our acquired loan portfolio of $232.4 million in the third quarter of 2018, compared to $323.1 million in the second quarter of 2018 and $330.5 million in the third quarter of 2017.
Our investment securities portfolio totaled $3.35 billion at September 30, 2018, an increase of $212.7 million, compared to $3.13 billion at June 30, 2018, and an increase of $658.4 million, compared to $2.69 billion at September 30, 2017. The increase in the investment securities portfolio in both the third quarter of 2018 and the twelve months ended September 30, 2018 reflects our long-term plan to increase our investment securities portfolio as a percentage of total assets.
Our total deposits increased to $15.44 billion at September 30, 2018, compared to $14.55 billion at June 30, 2018 and $13.81 billion at September 30, 2017. The increase in deposits during the three months ended September 30, 2018 was primarily due to an increase in customer deposits of $1.07 billion, partially offset by a decrease in brokered deposits of $172.6 million. Collateralized customer deposits were $377.5 million at September 30, 2018, compared to $378.9 million at June 30, 2018 and $414.6 million at September 30, 2017. Loans as a percentage of deposits plus collateralized customer deposits were 93.5% at September 30, 2018, compared to 97.7% at June 30, 2018 and 97.3% at September 30, 2017.
Our short-term borrowings were $1.67 billion at September 30, 2018, compared to $2.10 billion at June 30, 2018 and $1.90 billion at September 30, 2017. At September 30, 2018 our short-term borrowings included short-term FHLB advances that we used to fund our short-term liquidity needs. Our long-term borrowings were $431.0 million at September 30, 2018, compared to $331.0 million at June 30, 2018 and $397.8 million at September 30, 2017.
Our shareholders' equity to total assets ratio was 13.3% at September 30, 2018, compared to 13.6% at June 30, 2018 and 13.8% at September 30, 2017. Our tangible shareholders' equity to tangible assets ratio, a non-GAAP financial measure, and total risk-based capital ratio were 8.3% and 11.7% (estimated), respectively, at September 30, 2018 compared to 8.3% and 11.4%, respectively, at June 30, 2018 and 8.3% and 11.2%, respectively, at September 30, 2017.(1) Our book value was $39.04 per share at September 30, 2018, compared to $38.52 per share at June 30, 2018 and $37.57 per share at September 30, 2017. Our tangible book value, a non-GAAP financial measure, was $22.87 per share at September 30, 2018, compared to $22.33 per share at June 30, 2018 and $21.36 per share at September 30, 2017.(1)
(1) Please refer to the section entitled "Non-GAAP Financial Measures" in this press release and to the financial tables entitled "Reconciliation of Non-GAAP Financial Measures" for a reconciliation to the most directly comparable GAAP financial measures.
Conference Call Details
Chemical Financial Corporation will host a conference call to discuss our third quarter 2018 operating results on Wednesday, October 24, 2018, at 10:30 a.m. ET. Anyone interested may access the conference call on a live basis by dialing toll-free at 888-378-4398 and entering 494886 for the conference ID. The call will also be broadcast live over the Internet hosted at Chemical Financial Corporation's website at www.chemicalbank.com under the "Investor Information" section. A copy of the slide-show presentation and an audio replay of the call will remain available on Chemical Financial Corporation's website for at least 14 days.
About Chemical Financial Corporation
Chemical Financial Corporation is the largest banking company headquartered and operating branch offices in Michigan. We operate through our subsidiary bank, Chemical Bank, with 212 banking offices located primarily in Michigan, northeast Ohio and northern Indiana. At September 30, 2018, we had total consolidated assets of $20.91 billion. Chemical Financial Corporation's common stock trades on The NASDAQ Stock Market under the symbol CHFC and is one of the issuers comprising The NASDAQ Global Select Market and the S&P MidCap 400 Index. More information about Chemical Financial Corporation is available by visiting the "Investor Information" section of our website at www.chemicalbank.com.
Non-GAAP Financial Measures
This press release contains references to financial measures that are not defined in generally accepted accounting principles ("GAAP"). Such non-GAAP financial measures include net income (excluding significant items), diluted earnings per share (excluding significant items), return on average assets, return on average shareholders’ equity and return on average tangible shareholders’ equity (each excluding significant items), tangible book value per share, the presentation of net interest income and net interest margin on a FTE basis, core operating expenses, operating expenses-efficiency ratio, and the adjusted efficiency ratio.
These non-GAAP financial measures have been included because we believe they are helpful for investors to analyze and evaluate our financial condition. However, these non-GAAP financial measures have inherent limitations and should not be considered in isolation or as a substitute for GAAP measures. In addition, because non-GAAP measures are not standardized, it may not be possible to compare the non-GAAP historical measures in this press release with other companies' non-GAAP financial measures. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measure may be found in the financial tables included with this press release.
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. Words and phrases such as "anticipates," "believes," "plans," "continue," "estimates," "expects," "forecasts," "future," "intends," "is likely," "judgment," "look ahead," "look forward," "on schedule," "opinion," "opportunity," "potential," "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. These statements include, among others, our belief that we are well positioned to continue our strong revenue growth. 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 Chemical, specifically, are also inherently uncertain.
Forward-looking statements are based upon current beliefs and expectations and involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Accordingly, such 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. We undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise. Risk factors include, without limitation, a downturn in the economy, particularly in our markets, volatile credit and financial markets both domestic and foreign, potential deterioration in real estate values, operational and regulatory challenges associated with our information technology systems and policies and procedures in light of our rapid growth , regulatory changes, excessive loan losses, our inability to attract and retain new commercial lenders and other bankers as well as key operations staff in light of competition for experienced employees in the banking industry, our inability to execute on our strategy to expand investments and commercial lending, our inability to grow our deposits and our inability to efficiently manage our operating expenses.
In addition, risk factors include, but are not limited to, the risk factors described in Item 1A of Chemical's Annual Report on Form 10-K for the year ended December 31, 2017 and Quarterly Reports on Form 10-Q. 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.
For further information:
David T. Provost, CEO
Dennis L. Klaeser, CFO
800-867-9757
Chemical Financial Corporation Announces 2018 Third Quarter Operating Results
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation
(In thousands, except per share data)
| September 30, 2018 | June 30, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||
| Assets | ||||||||||||||||
| Cash and cash equivalents: | ||||||||||||||||
| Cash and cash due from banks | $ | 285,605 | $ | 222,748 | $ | 226,003 | $ | 223,498 | ||||||||
| Interest-bearing deposits with the Federal Reserve Bank and other banks and federal funds sold | 379,158 | 302,532 | 229,988 | 485,713 | ||||||||||||
| Total cash and cash equivalents | 664,763 | 525,280 | 455,991 | 709,211 | ||||||||||||
| Investment securities: | ||||||||||||||||
| Available-for-sale | 2,736,880 | 2,529,910 | 1,963,546 | 2,029,672 | ||||||||||||
| Held-to-maturity | 608,367 | 602,687 | 677,093 | 657,176 | ||||||||||||
| Total investment securities | 3,345,247 | 3,132,597 | 2,640,639 | 2,686,848 | ||||||||||||
| Loans held-for-sale | 93,736 | 46,849 | 52,133 | 87,198 | ||||||||||||
| Loans: | ||||||||||||||||
| Total loans | 14,796,252 | 14,579,693 | 14,155,267 | 13,833,368 | ||||||||||||
| Allowance for loan losses | (104,041 | ) | (100,015 | ) | (91,887 | ) | (85,760 | ) | ||||||||
| Net loans | 14,692,211 | 14,479,678 | 14,063,380 | 13,747,608 | ||||||||||||
| Premises and equipment | 123,305 | 125,970 | 126,896 | 141,550 | ||||||||||||
| Loan servicing rights | 72,707 | 70,364 | 63,841 | 62,195 | ||||||||||||
| Goodwill | 1,134,568 | 1,134,568 | 1,134,568 | 1,134,568 | ||||||||||||
| Other intangible assets | 29,981 | 31,407 | 34,271 | 35,797 | ||||||||||||
| Interest receivable and other assets | 748,971 | 735,890 | 709,154 | 749,333 | ||||||||||||
| Total Assets | $ | 20,905,489 | $ | 20,282,603 | $ | 19,280,873 | $ | 19,354,308 | ||||||||
| Liabilities | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Noninterest-bearing | $ | 4,015,323 | $ | 3,894,259 | $ | 3,725,779 | $ | 3,688,848 | ||||||||
| Interest-bearing | 11,429,529 | 10,657,277 | 9,917,024 | 10,116,397 | ||||||||||||
| Total deposits | 15,444,852 | 14,551,536 | 13,642,803 | 13,805,245 | ||||||||||||
| Collateralized customer deposits | 377,471 | 378,938 | 415,236 | 414,597 | ||||||||||||
| Short-term borrowings | 1,670,000 | 2,095,000 | 2,000,000 | 1,900,000 | ||||||||||||
| Long-term borrowings | 430,971 | 330,956 | 372,882 | 397,845 | ||||||||||||
| Interest payable and other liabilities | 193,271 | 175,174 | 181,203 | 163,532 | ||||||||||||
| Total liabilities | 18,116,565 | 17,531,604 | 16,612,124 | 16,681,219 | ||||||||||||
| Shareholders' Equity | ||||||||||||||||
| Preferred stock, no par value per share | — | — | — | — | ||||||||||||
| Common stock, $1 par value per share | 71,438 | 71,418 | 71,207 | 71,152 | ||||||||||||
| Additional paid-in capital | 2,207,631 | 2,205,402 | 2,203,637 | 2,201,334 | ||||||||||||
| Retained earnings | 567,510 | 521,530 | 419,403 | 425,433 | ||||||||||||
| Accumulated other comprehensive loss | (57,655 | ) | (47,351 | ) | (25,498 | ) | (24,830 | ) | ||||||||
| Total shareholders' equity | 2,788,924 | 2,750,999 | 2,668,749 | 2,673,089 | ||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 20,905,489 | $ | 20,282,603 | $ | 19,280,873 | $ | 19,354,308 | ||||||||
Chemical Financial Corporation Announces 2018 Third Quarter Operating Results
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation
(In thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, 2018 | June 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | ||||||||||||||||
| Interest Income | ||||||||||||||||||||
| Interest and fees on loans | $ | 172,686 | $ | 165,388 | $ | 148,771 | $ | 494,892 | $ | 422,570 | ||||||||||
| Interest on investment securities: | ||||||||||||||||||||
| Taxable | 16,360 | 14,706 | 9,326 | 43,485 | 21,207 | |||||||||||||||
| Tax-exempt | 6,178 | 5,998 | 4,577 | 17,732 | 13,238 | |||||||||||||||
| Dividends on nonmarketable equity securities | 1,368 | 2,189 | 1,039 | 5,458 | 2,906 | |||||||||||||||
| Interest on deposits with the Federal Reserve Bank and other banks and federal funds sold | 1,785 | 1,301 | 1,231 | 4,326 | 3,052 | |||||||||||||||
| Total interest income | 198,377 | 189,582 | 164,944 | 565,893 | 462,973 | |||||||||||||||
| Interest Expense | ||||||||||||||||||||
| Interest on deposits | 27,250 | 19,707 | 12,926 | 62,874 | 32,424 | |||||||||||||||
| Interest on collateralized customer deposits | 721 | 641 | 462 | 1,886 | 808 | |||||||||||||||
| Interest on short-term borrowings | 9,510 | 10,408 | 6,129 | 28,084 | 12,100 | |||||||||||||||
| Interest on long-term borrowings | 1,415 | 1,289 | 1,799 | 4,168 | 5,968 | |||||||||||||||
| Total interest expense | 38,896 | 32,045 | 21,316 | 97,012 | 51,300 | |||||||||||||||
| Net Interest Income | 159,481 | 157,537 | 143,628 | 468,881 | 411,673 | |||||||||||||||
| Provision for loan losses | 6,028 | 9,572 | 5,499 | 21,856 | 15,778 | |||||||||||||||
| Net interest income after provision for loan losses | 153,453 | 147,965 | 138,129 | 447,025 | 395,895 | |||||||||||||||
| Noninterest Income | ||||||||||||||||||||
| Service charges and fees on deposit accounts | 8,187 | 8,615 | 9,147 | 25,265 | 25,928 | |||||||||||||||
| Wealth management revenue | 6,040 | 7,188 | 6,188 | 19,539 | 18,973 | |||||||||||||||
| Other charges and fees for customer services | 6,481 | 5,874 | 6,624 | 18,109 | 25,249 | |||||||||||||||
| Net gain on sale of loans and other mortgage banking revenue | 9,837 | 8,844 | 5,241 | 31,216 | 24,280 | |||||||||||||||
| Gain on sale of investment securities | — | 3 | 1 | 3 | 168 | |||||||||||||||
| Other | 7,372 | 7,494 | 4,921 | 22,357 | 17,102 | |||||||||||||||
| Total noninterest income | 37,917 | 38,018 | 32,122 | 116,489 | 111,700 | |||||||||||||||
| Operating Expenses | ||||||||||||||||||||
| Salaries, wages and employee benefits | 56,894 | 56,148 | 52,590 | 168,599 | 164,731 | |||||||||||||||
| Occupancy | 8,620 | 7,679 | 6,871 | 24,310 | 23,008 | |||||||||||||||
| Equipment and software | 8,185 | 8,276 | 7,582 | 24,120 | 24,248 | |||||||||||||||
| Outside processing and service fees | 12,660 | 10,673 | 9,626 | 33,689 | 26,061 | |||||||||||||||
| Merger expenses | — | — | 2,379 | — | 7,011 | |||||||||||||||
| Restructuring expenses | — | — | 18,824 | — | 18,824 | |||||||||||||||
| Other | 23,302 | 21,785 | 21,667 | 65,114 | 58,089 | |||||||||||||||
| Total operating expenses | 109,661 | 104,561 | 119,539 | 315,832 | 321,972 | |||||||||||||||
| Income before income taxes | 81,709 | 81,422 | 50,712 | 247,682 | 185,623 | |||||||||||||||
| Income tax expense | 11,312 | 12,434 | 10,253 | 36,701 | 45,546 | |||||||||||||||
| Net Income | $ | 70,397 | $ | 68,988 | $ | 40,459 | $ | 210,981 | $ | 140,077 | ||||||||||
| Earnings Per Common Share: | ||||||||||||||||||||
| Weighted average common shares outstanding-basic | 71,385 | 71,329 | 70,911 | 71,316 | 70,787 | |||||||||||||||
| Weighted average common shares outstanding-diluted | 72,087 | 72,026 | 71,505 | 72,007 | 71,454 | |||||||||||||||
| Basic earnings per share | $ | 0.99 | $ | 0.97 | $ | 0.57 | $ | 2.96 | $ | 1.98 | ||||||||||
| Diluted earnings per share | 0.98 | 0.96 | 0.56 | 2.93 | 1.95 | |||||||||||||||
| Diluted earnings per share, excluding significant items (non-GAAP) | 0.98 | 0.96 | 0.76 | 2.93 | 2.19 | |||||||||||||||
| Cash Dividends Declared Per Common Share | 0.34 | 0.28 | 0.28 | 0.90 | 0.82 | |||||||||||||||
| Key Ratios (annualized where applicable): | ||||||||||||||||||||
| Return on average assets | 1.37 | % | 1.39 | % | 0.86 | % | 1.41 | % | 1.03 | % | ||||||||||
| Return on average tangible shareholders' equity, excluding significant items (non-GAAP) | 17.5 | % | 17.8 | % | 14.6 | % | 18.0 | % | 14.4 | % | ||||||||||
| Net interest margin (tax-equivalent basis) (non-GAAP) | 3.48 | % | 3.59 | % | 3.48 | % | 3.54 | % | 3.48 | % | ||||||||||
| Efficiency ratio - GAAP | 55.6 | % | 53.5 | % | 68.0 | % | 54.0 | % | 61.5 | % | ||||||||||
| Efficiency ratio - adjusted (non-GAAP) | 52.8 | % | 51.2 | % | 51.2 | % | 51.9 | % | 53.5 | % | ||||||||||
Chemical Financial Corporation Announces 2018 Third Quarter Operating Results
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation
(Dollars in thousands, except per share data)
| 3rd Quarter 2018 | 2nd Quarter 2018 | 1st Quarter 2018 | 4th Quarter 2017 | 3rd Quarter 2017 | 2nd Quarter 2017 | 1st Quarter 2017 | |||||||||||||||||||||
| Summary of Operations | |||||||||||||||||||||||||||
| Interest income | $ | 198,377 | $ | 189,582 | $ | 177,934 | $ | 169,162 | $ | 164,944 | $ | 155,133 | $ | 142,896 | |||||||||||||
| Interest expense | 38,896 | 32,045 | 26,071 | 23,257 | 21,316 | 17,185 | 12,799 | ||||||||||||||||||||
| Net interest income | 159,481 | 157,537 | 151,863 | 145,905 | 143,628 | 137,948 | 130,097 | ||||||||||||||||||||
| Provision for loan losses | 6,028 | 9,572 | 6,256 | 7,522 | 5,499 | 6,229 | 4,050 | ||||||||||||||||||||
| Net interest income after provision for loan losses | 153,453 | 147,965 | 145,607 | 138,383 | 138,129 | 131,719 | 126,047 | ||||||||||||||||||||
| Noninterest income | 37,917 | 38,018 | 40,554 | 32,319 | 32,122 | 41,568 | 38,010 | ||||||||||||||||||||
| Operating expenses, excluding merger and restructuring expenses and impairment of income tax credits (non-GAAP) | 106,499 | 102,845 | 99,976 | 91,298 | 95,241 | 97,772 | 100,029 | ||||||||||||||||||||
| Merger and restructuring expenses | — | — | — | 2,567 | 21,203 | 465 | 4,167 | ||||||||||||||||||||
| Impairment of income tax credits | 3,162 | 1,716 | 1,634 | 6,157 | 3,095 | — | — | ||||||||||||||||||||
| Income before income taxes | 81,709 | 81,422 | 84,551 | 70,680 | 50,712 | 75,050 | 59,861 | ||||||||||||||||||||
| Income tax expense | 11,312 | 12,434 | 12,955 | 61,234 | 10,253 | 23,036 | 12,257 | ||||||||||||||||||||
| Net income | $ | 70,397 | $ | 68,988 | $ | 71,596 | $ | 9,446 | $ | 40,459 | $ | 52,014 | $ | 47,604 | |||||||||||||
| Significant items, net of tax | — | — | — | 53,240 | 13,782 | 302 | 2,709 | ||||||||||||||||||||
| Net income, excluding significant items | $ | 70,397 | $ | 68,988 | $ | 71,596 | $ | 62,686 | $ | 54,241 | $ | 52,316 | $ | 50,313 | |||||||||||||
| Per Common Share Data | |||||||||||||||||||||||||||
| Net income: | |||||||||||||||||||||||||||
| Basic | $ | 0.99 | $ | 0.97 | $ | 1.01 | $ | 0.13 | $ | 0.57 | $ | 0.73 | $ | 0.67 | |||||||||||||
| Diluted | 0.98 | 0.96 | 0.99 | 0.13 | 0.56 | 0.73 | 0.67 | ||||||||||||||||||||
| Diluted, excluding significant items (non-GAAP) | 0.98 | 0.96 | 0.99 | 0.87 | 0.76 | 0.73 | 0.70 | ||||||||||||||||||||
| Cash dividends declared | 0.34 | 0.28 | 0.28 | 0.28 | 0.28 | 0.27 | 0.27 | ||||||||||||||||||||
| Book value - period-end | 39.04 | 38.52 | 37.91 | 37.48 | 37.57 | 37.11 | 36.56 | ||||||||||||||||||||
| Tangible book value - period-end (non-GAAP) | 22.87 | 22.33 | 21.68 | 21.21 | 21.36 | 20.89 | 20.32 | ||||||||||||||||||||
| Market value - period-end | 53.40 | 55.67 | 54.68 | 53.47 | 52.26 | 48.41 | 51.15 | ||||||||||||||||||||
| Key Ratios (annualized where applicable) | |||||||||||||||||||||||||||
| Net interest margin (taxable equivalent basis) (non-GAAP) | 3.48 | % | 3.59 | % | 3.56 | % | 3.47 | % | 3.48 | % | 3.48 | % | 3.49 | % | |||||||||||||
| Efficiency ratio - adjusted (non-GAAP) | 52.8 | % | 51.2 | % | 51.6 | % | 47.4 | % | 51.2 | % | 52.2 | % | 57.4 | % | |||||||||||||
| Return on average assets | 1.37 | % | 1.39 | % | 1.47 | % | 0.20 | % | 0.86 | % | 1.14 | % | 1.09 | % | |||||||||||||
| Return on average assets, excluding significant items (non-GAAP) | 1.37 | % | 1.39 | % | 1.47 | % | 1.31 | % | 1.15 | % | 1.15 | % | 1.15 | % | |||||||||||||
| Return on average shareholders' equity | 10.2 | % | 10.2 | % | 10.7 | % | 1.4 | % | 6.1 | % | 8.0 | % | 7.4 | % | |||||||||||||
| Return on average tangible shareholders' equity (non-GAAP) | 17.5 | % | 17.8 | % | 19.0 | % | 2.5 | % | 10.9 | % | 14.3 | % | 13.3 | % | |||||||||||||
| Return on average shareholders' equity, excluding significant items (non-GAAP) | 17.5 | % | 17.8 | % | 19.0 | % | 16.5 | % | 14.6 | % | 14.4 | % | 14.1 | % | |||||||||||||
| Average shareholders' equity as a percent of average assets | 13.5 | % | 13.6 | % | 13.7 | % | 13.9 | % | 14.0 | % | 14.3 | % | 14.8 | % | |||||||||||||
| Capital ratios (period end): | |||||||||||||||||||||||||||
| Tangible shareholders' equity as a percent of tangible assets (non-GAAP) | 8.3 | % | 8.3 | % | 8.3 | % | 8.3 | % | 8.3 | % | 8.4 | % | 8.8 | % | |||||||||||||
| Total risk-based capital ratio (1) | 11.7 | % | 11.4 | % | 11.2 | % | 11.0 | % | 11.2 | % | 11.1 | % | 11.4 | % | |||||||||||||
(1) Estimated at September 30, 2018.
Chemical Financial Corporation Announces 2018 Third Quarter Operating Results
Average Balances, Fully Tax Equivalent (FTE) Interest and Effective Yields and Rates(1) (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
| Three Months Ended | ||||||||||||||||||||||||||||||||
| September 30, 2018 | June 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||||||
| Average Balance | Interest (FTE) | Effective Yield/ Rate (1) | Average Balance | Interest (FTE) | Effective Yield/ Rate (1) | Average Balance | Interest (FTE) | Effective Yield/ Rate (1) | ||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||
| Loans (1)(2) | $ | 14,740,445 | $ | 173,453 | 4.68 | % | $ | 14,389,574 | $ | 166,125 | 4.63 | % | $ | 13,795,750 | $ | 149,595 | 4.31 | % | ||||||||||||||
| Taxable investment securities | 2,187,644 | 16,360 | 2.99 | 2,019,003 | 14,706 | 2.91 | 1,629,344 | 9,326 | 2.29 | |||||||||||||||||||||||
| Tax-exempt investment securities(1) | 1,038,301 | 7,797 | 3.00 | 1,020,567 | 7,592 | 2.98 | 896,854 | 7,013 | 3.13 | |||||||||||||||||||||||
| Other interest-earning assets | 193,350 | 1,368 | 2.81 | 189,654 | 2,189 | 4.63 | 180,188 | 1,039 | 2.29 | |||||||||||||||||||||||
| Interest-bearing deposits with the FRB and other banks and federal funds sold | 330,940 | 1,785 | 2.14 | 228,464 | 1,301 | 2.28 | 313,104 | 1,231 | 1.56 | |||||||||||||||||||||||
| Total interest-earning assets | 18,490,680 | 200,763 | 4.32 | 17,847,262 | 191,913 | 4.31 | 16,815,240 | 168,204 | 3.98 | |||||||||||||||||||||||
| Less: allowance for loan losses | (101,689 | ) | (96,332 | ) | (84,640 | ) | ||||||||||||||||||||||||||
| Other assets: | ||||||||||||||||||||||||||||||||
| Cash and cash due from banks | 223,038 | 219,751 | 250,743 | |||||||||||||||||||||||||||||
| Premises and equipment | 125,153 | 126,570 | 146,266 | |||||||||||||||||||||||||||||
| Interest receivable and other assets | 1,764,041 | 1,753,742 | 1,730,539 | |||||||||||||||||||||||||||||
| Total assets | $ | 20,501,223 | $ | 19,850,993 | $ | 18,858,148 | ||||||||||||||||||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||
| Interest-bearing checking deposits | $ | 2,705,746 | $ | 2,836 | 0.42 | % | $ | 2,597,610 | $ | 1,393 | 0.22 | % | $ | 2,725,807 | $ | 1,321 | 0.19 | % | ||||||||||||||
| Savings deposits | 4,378,620 | 8,417 | 0.76 | 4,116,683 | 6,074 | 0.59 | 4,012,299 | 3,985 | 0.39 | |||||||||||||||||||||||
| Time deposits | 3,846,857 | 15,997 | 1.65 | 3,468,395 | 12,240 | 1.42 | 3,007,109 | 7,620 | 1.01 | |||||||||||||||||||||||
| Collateralized customer deposits | 374,833 | 721 | 0.76 | 399,911 | 641 | 0.64 | 385,976 | 462 | 0.47 | |||||||||||||||||||||||
| Short-term borrowings | 1,885,741 | 9,510 | 2.00 | 2,249,655 | 10,408 | 1.86 | 1,894,022 | 6,129 | 1.28 | |||||||||||||||||||||||
| Long-term borrowings | 341,282 | 1,415 | 1.65 | 336,985 | 1,289 | 1.53 | 426,155 | 1,799 | 1.67 | |||||||||||||||||||||||
| Total interest-bearing liabilities | 13,533,079 | 38,896 | 1.14 | 13,169,239 | 32,045 | 0.98 | 12,451,368 | 21,316 | 0.68 | |||||||||||||||||||||||
| Noninterest-bearing deposits | 4,004,433 | — | — | 3,792,803 | — | — | 3,643,765 | — | — | |||||||||||||||||||||||
| Total deposits and borrowed funds | 17,537,512 | 38,896 | 0.88 | 16,962,042 | 32,045 | 0.76 | 16,095,133 | 21,316 | 0.53 | |||||||||||||||||||||||
| Interest payable and other liabilities | 194,610 | 181,605 | 119,782 | |||||||||||||||||||||||||||||
| Shareholders' equity | 2,769,101 | 2,707,346 | 2,643,233 | |||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 20,501,223 | $ | 19,850,993 | $ | 18,858,148 | ||||||||||||||||||||||||||
| Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities) | 3.18 | % | 3.33 | % | 3.30 | % | ||||||||||||||||||||||||||
| Net Interest Income (FTE) | $ | 161,867 | $ | 159,868 | $ | 146,888 | ||||||||||||||||||||||||||
| Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets) | 3.48 | % | 3.59 | % | 3.48 | % | ||||||||||||||||||||||||||
| Reconciliation to Reported Net Interest Income | ||||||||||||||||||||||||||||||||
| Net interest income, fully taxable equivalent (non-GAAP) | $ | 161,867 | $ | 159,868 | $ | 146,888 | ||||||||||||||||||||||||||
| Adjustments for taxable equivalent interest (1): | ||||||||||||||||||||||||||||||||
| Loans | (767 | ) | (737 | ) | (824 | ) | ||||||||||||||||||||||||||
| Tax-exempt investment securities | (1,619 | ) | (1,594 | ) | (2,436 | ) | ||||||||||||||||||||||||||
| Total taxable equivalent interest adjustments | (2,386 | ) | (2,331 | ) | (3,260 | ) | ||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 159,481 | $ | 157,537 | $ | 143,628 | ||||||||||||||||||||||||||
| Net interest margin (GAAP) | 3.42 | % | 3.54 | % | 3.40 | % | ||||||||||||||||||||||||||
(1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 21% for the three months ended September 30, 2018 and June 30, 2018 and 35% for the three months ended September 30, 2017. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry.
(2) Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Tax equivalent interest also includes net loan fees.
Chemical Financial Corporation Announces 2018 Third Quarter Operating Results
Average Balances, Fully Tax Equivalent (FTE) Interest and Effective Yields and Rates (1) (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
| Nine Months Ended | ||||||||||||||||||||||
| September 30, 2018 | September 30, 2017 | |||||||||||||||||||||
| Average Balance | Interest (FTE) | Effective Yield/ Rate (1) | Average Balance | Interest (FTE) | Effective Yield/ Rate (1) | |||||||||||||||||
| Assets | ||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||
| Loans (1)(2) | $ | 14,453,537 | $ | 497,146 | 4.60 | % | $ | 13,490,851 | $ | 425,016 | 4.21 | % | ||||||||||
| Taxable investment securities | 1,997,700 | 43,485 | 2.90 | 1,335,349 | 21,207 | 2.12 | ||||||||||||||||
| Tax-exempt investment securities (1) | 1,023,090 | 22,422 | 2.92 | 880,398 | 20,290 | 3.07 | ||||||||||||||||
| Other interest-earning assets | 187,745 | 5,458 | 3.89 | 150,203 | 2,906 | 2.59 | ||||||||||||||||
| Interest-bearing deposits with the FRB and other banks and federal funds sold | 274,353 | 4,326 | 2.11 | 294,967 | 3,052 | 1.38 | ||||||||||||||||
| Total interest-earning assets | 17,936,425 | 572,837 | 4.27 | 16,151,768 | 472,471 | 3.91 | ||||||||||||||||
| Less: allowance for loan losses | (96,923 | ) | (81,337 | ) | ||||||||||||||||||
| Other assets: | ||||||||||||||||||||||
| Cash and cash due from banks | 223,136 | 234,379 | ||||||||||||||||||||
| Premises and equipment | 126,150 | 145,877 | ||||||||||||||||||||
| Interest receivable and other assets | 1,757,251 | 1,753,337 | ||||||||||||||||||||
| Total assets | $ | 19,946,039 | $ | 18,204,024 | ||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 2,689,982 | $ | 5,454 | 0.27 | % | $ | 2,768,209 | $ | 3,628 | 0.18 | % | ||||||||||
| Savings deposits | 4,181,983 | 19,427 | 0.62 | 3,912,672 | 8,753 | 0.30 | ||||||||||||||||
| Time deposits | 3,528,080 | 37,993 | 1.44 | 2,973,070 | 20,043 | 0.90 | ||||||||||||||||
| Collateralized customer deposits | 394,481 | 1,886 | 0.64 | 352,629 | 808 | 0.31 | ||||||||||||||||
| Short-term borrowings | 2,063,083 | 28,084 | 1.82 | 1,495,696 | 12,100 | 1.08 | ||||||||||||||||
| Long-term borrowings | 350,214 | 4,168 | 1.59 | 479,344 | 5,968 | 1.66 | ||||||||||||||||
| Total interest-bearing liabilities | 13,207,823 | 97,012 | 0.98 | 11,981,620 | 51,300 | 0.57 | ||||||||||||||||
| Noninterest-bearing deposits | 3,829,764 | — | — | 3,484,125 | — | — | ||||||||||||||||
| Total deposits and borrowed funds | 17,037,587 | 97,012 | 0.76 | 15,465,745 | 51,300 | 0.44 | ||||||||||||||||
| Interest payable and other liabilities | 187,632 | 126,649 | ||||||||||||||||||||
| Shareholders' equity | 2,720,820 | 2,611,630 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 19,946,039 | $ | 18,204,024 | ||||||||||||||||||
| Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities) | 3.29 | % | 3.34 | % | ||||||||||||||||||
| Net Interest Income (FTE) | $ | 475,825 | $ | 421,171 | ||||||||||||||||||
| Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets) | 3.54 | % | 3.48 | % | ||||||||||||||||||
| Reconciliation to Reported Net Interest Income | ||||||||||||||||||||||
| Net interest income, fully taxable equivalent (non-GAAP) | $ | 475,825 | $ | 421,171 | ||||||||||||||||||
| Adjustments for taxable equivalent interest (1): | ||||||||||||||||||||||
| Loans | (2,254 | ) | (2,446 | ) | ||||||||||||||||||
| Tax-exempt investment securities | (4,690 | ) | (7,052 | ) | ||||||||||||||||||
| Total taxable equivalent interest adjustments | (6,944 | ) | (9,498 | ) | ||||||||||||||||||
| Net interest income (GAAP) | $ | 468,881 | $ | 411,673 | ||||||||||||||||||
| Net interest margin (GAAP) | 3.49 | % | 3.40 | % | ||||||||||||||||||
(1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 21% for the nine months ended September 30, 2018 and 35% for the nine months ended September 30, 2017. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry.
(2) Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Tax equivalent interest also includes net loan fees.
Chemical Financial Corporation Announces 2018 Third Quarter Operating Results
Noninterest Income and Operating Expenses Information (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
| 3rd Quarter 2018 | 2nd Quarter 2018 | 1st Quarter 2018 | 4th Quarter 2017 | 3rd Quarter 2017 | 2nd Quarter 2017 | 1st Quarter 2017 | |||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||||
| Service charges and fees on deposit accounts | $ | 8,187 | $ | 8,615 | $ | 8,463 | $ | 9,073 | $ | 9,147 | $ | 8,777 | $ | 8,004 | |||||||||||||
| Wealth management revenue | 6,040 | 7,188 | 6,311 | 6,539 | 6,188 | 6,958 | 5,827 | ||||||||||||||||||||
| Other fees for customer services(1) | 1,688 | 1,624 | 1,697 | 1,944 | 2,254 | 2,252 | 2,074 | ||||||||||||||||||||
| Electronic banking fees(1) | 4,793 | 4,250 | 4,057 | 5,578 | 4,370 | 7,482 | 6,817 | ||||||||||||||||||||
| Net gain on sale of loans and other mortgage banking revenue(2) | 8,905 | 8,874 | 8,783 | 7,938 | 9,282 | 11,681 | 9,679 | ||||||||||||||||||||
| Change in fair value in loan servicing rights(2) | 932 | (30 | ) | 3,752 | (13 | ) | (4,041 | ) | (1,802 | ) | (519 | ) | |||||||||||||||
| Gain (loss) on sale of investment securities | — | 3 | — | (7,556 | ) | 1 | 77 | 90 | |||||||||||||||||||
| Bank-owned life insurance(3) | 1,167 | 1,669 | 891 | 1,377 | 1,124 | 1,106 | 1,211 | ||||||||||||||||||||
| Other(3) | 6,205 | 5,825 | 6,600 | 7,439 | 3,797 | 5,037 | 4,827 | ||||||||||||||||||||
| Total noninterest income | $ | 37,917 | $ | 38,018 | $ | 40,554 | $ | 32,319 | $ | 32,122 | $ | 41,568 | $ | 38,010 | |||||||||||||
(1) Included within the line item "Other charges and fees for customer services" in the Consolidated Statements of Income.
(2) Included within the line item "Net gain on sale of loans and other mortgage banking revenue" in the Consolidated Statements of Income.
(3) Included within the line item "Other" noninterest income in the Consolidated Statements of Income.
| 3rd Quarter 2018 | 2nd Quarter 2018 | 1st Quarter 2018 | 4th Quarter 2017 | 3rd Quarter 2017 | 2nd Quarter 2017 | 1st Quarter 2017 | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||
| Salaries and wages(1) | $ | 49,182 | $ | 47,810 | $ | 45,644 | $ | 41,866 | $ | 44,641 | $ | 44,959 | $ | 48,526 | |||||||||||||
| Employee benefits(1) | 7,712 | 8,338 | 9,913 | 5,497 | 7,949 | 7,288 | 11,368 | ||||||||||||||||||||
| Occupancy | 8,620 | 7,679 | 8,011 | 7,546 | 6,871 | 8,745 | 7,392 | ||||||||||||||||||||
| Equipment and software | 8,185 | 8,276 | 7,659 | 8,000 | 7,582 | 8,149 | 8,517 | ||||||||||||||||||||
| Outside processing and service fees | 12,660 | 10,673 | 10,356 | 9,081 | 9,626 | 8,924 | 7,511 | ||||||||||||||||||||
| FDIC insurance premiums(2) | 4,823 | 4,473 | 5,629 | 4,556 | 2,768 | 2,460 | 1,406 | ||||||||||||||||||||
| Professional fees(2) | 3,399 | 3,004 | 2,458 | 3,483 | 3,489 | 2,567 | 1,968 | ||||||||||||||||||||
| Intangible asset amortization(2) | 1,426 | 1,425 | 1,439 | 1,525 | 1,526 | 1,525 | 1,513 | ||||||||||||||||||||
| Credit-related expenses(2) | 1,239 | 1,467 | 1,306 | 803 | 1,874 | 1,895 | 1,200 | ||||||||||||||||||||
| Merger expenses | — | — | — | 1,511 | 2,379 | 465 | 4,167 | ||||||||||||||||||||
| Restructuring expenses | — | — | — | 1,056 | 18,824 | — | — | ||||||||||||||||||||
| Impairment of income tax credit(2) | 3,162 | 1,716 | 1,634 | 6,157 | 3,095 | — | — | ||||||||||||||||||||
| Other(2) | 9,253 | 9,700 | 7,561 | 8,941 | 8,915 | 11,260 | 10,628 | ||||||||||||||||||||
| Total operating expenses | $ | 109,661 | $ | 104,561 | $ | 101,610 | $ | 100,022 | $ | 119,539 | $ | 98,237 | $ | 104,196 | |||||||||||||
(1) Included within the line item "Salaries, wages and employee benefits" in the Consolidated Statements of Income.
(2) Included within the line item "Other" operating expenses in the Consolidated Statements of Income.
Chemical Financial Corporation Announces 2018 Third Quarter Operating Results
Composition of Loans and Deposits and Additional Information on Intangible Assets (Unaudited)
Chemical Financial Corporation
(Dollars in Thousands)
| Loan Growth(1) | Loan Growth | ||||||||||||||||||||||||
| Sep 30, 2018 | Jun 30, 2018 | Three Months Ended September 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Twelve Months Ended September 30, 2018 | |||||||||||||||||||
| Composition of Loans | |||||||||||||||||||||||||
| Commercial loan portfolio: | |||||||||||||||||||||||||
| Commercial | $ | 3,719,922 | $ | 3,576,438 | 16.0 | % | $ | 3,427,285 | $ | 3,385,642 | $ | 3,319,965 | 12.0 | % | |||||||||||
| Commercial real estate: | |||||||||||||||||||||||||
| Owner-occupied | 1,897,934 | 1,863,563 | 7.4 | 1,832,824 | 1,813,562 | 1,718,404 | 10.4 | ||||||||||||||||||
| Non-owner occupied | 2,739,700 | 2,728,103 | 1.7 | 2,680,801 | 2,606,761 | 2,514,538 | 9.0 | ||||||||||||||||||
| Vacant land | 73,987 | 79,606 | (28.2 | ) | 74,751 | 80,347 | 83,036 | (10.9 | ) | ||||||||||||||||
| Total commercial real estate | 4,711,621 | 4,671,272 | 3.5 | 4,588,376 | 4,500,670 | 4,315,978 | 9.2 | ||||||||||||||||||
| Real estate construction | 622,147 | 618,985 | 2.0 | 559,780 | 574,215 | 501,413 | 24.1 | ||||||||||||||||||
| Subtotal - commercial loans | 9,053,690 | 8,866,695 | 8.4 | 8,575,441 | 8,460,527 | 8,137,356 | 11.3 | ||||||||||||||||||
| Consumer loan portfolio: | |||||||||||||||||||||||||
| Residential mortgage | 3,391,987 | 3,325,277 | 8.0 | 3,264,620 | 3,252,487 | 3,221,307 | 5.3 | ||||||||||||||||||
| Consumer installment | 1,560,265 | 1,587,327 | (6.8 | ) | 1,572,240 | 1,613,008 | 1,615,983 | (3.4 | ) | ||||||||||||||||
| Home equity | 790,310 | 800,394 | (5.0 | ) | 806,446 | 829,245 | 858,722 | (8.0 | ) | ||||||||||||||||
| Subtotal - consumer loans | 5,742,562 | 5,712,998 | 2.1 | 5,643,306 | 5,694,740 | 5,696,012 | 0.8 | ||||||||||||||||||
| Total loans | $ | 14,796,252 | $ | 14,579,693 | 5.9 | % | $ | 14,218,747 | $ | 14,155,267 | $ | 13,833,368 | 7.0 | % | |||||||||||
(1) Annualized
| Deposit Growth(1) | Deposit Growth | ||||||||||||||||||||||||
| Sep 30, 2018 | Jun 30, 2018 | Three Months Ended September 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Twelve Months Ended September 30, 2018 | |||||||||||||||||||
| Composition of Deposits | |||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 4,015,323 | $ | 3,894,259 | 12.4 | % | $ | 3,801,125 | $ | 3,725,779 | $ | 3,688,848 | 8.9 | % | |||||||||||
| Savings and money market accounts | 4,220,658 | 3,841,540 | 39.5 | 3,774,975 | 3,655,671 | 3,743,826 | 12.7 | ||||||||||||||||||
| Interest-bearing checking | 3,037,289 | 2,514,232 | 83.2 | 2,701,055 | 2,724,415 | 2,974,478 | 2.1 | ||||||||||||||||||
| Brokered deposits | 915,348 | 1,087,959 | (63.5 | ) | 651,846 | 453,227 | 416,926 | 119.5 | |||||||||||||||||
| Other time deposits | 3,256,234 | 3,213,546 | 5.3 | 3,038,816 | 3,083,711 | 2,981,167 | 9.2 | ||||||||||||||||||
| Total deposits | $ | 15,444,852 | $ | 14,551,536 | 24.6 | % | $ | 13,967,817 | $ | 13,642,803 | $ | 13,805,245 | 11.9 | % | |||||||||||
(1) Annualized
| September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||||
| Additional Data - Intangibles | |||||||||||||||||||
| Goodwill | $ | 1,134,568 | $ | 1,134,568 | $ | 1,134,568 | $ | 1,134,568 | $ | 1,134,568 | |||||||||
| Loan servicing rights | 72,707 | 70,364 | 68,837 | 63,841 | 62,195 | ||||||||||||||
| Core deposit intangibles (CDI) | 29,981 | 31,407 | 32,833 | 34,259 | 35,747 | ||||||||||||||
| Noncompete agreements | — | — | — | 13 | 50 | ||||||||||||||
Chemical Financial Corporation Announces 2018 Third Quarter Operating Results
Nonperforming Assets (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
| Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | |||||||||||||||||||||
| Nonperforming Assets | |||||||||||||||||||||||||||
| Nonperforming Loans (1): | |||||||||||||||||||||||||||
| Nonaccrual loans: | |||||||||||||||||||||||||||
| Commercial | $ | 25,328 | $ | 20,741 | $ | 20,000 | $ | 19,691 | $ | 15,648 | $ | 18,773 | $ | 16,717 | |||||||||||||
| Commercial real estate: | |||||||||||||||||||||||||||
| Owner-occupied | 14,936 | 16,103 | 19,855 | 19,070 | 16,295 | 11,683 | 12,575 | ||||||||||||||||||||
| Non-owner occupied | 8,991 | 9,168 | 5,489 | 5,270 | 4,361 | 3,600 | 3,793 | ||||||||||||||||||||
| Vacant land | 4,711 | 3,135 | 4,829 | 5,205 | 4,494 | 4,440 | 4,460 | ||||||||||||||||||||
| Total commercial real estate | 28,638 | 28,406 | 30,173 | 29,545 | 25,150 | 19,723 | 20,828 | ||||||||||||||||||||
| Real estate construction | 28,477 | 5,704 | 77 | 77 | 78 | 56 | 79 | ||||||||||||||||||||
| Residential mortgage | 9,608 | 7,974 | 7,621 | 8,635 | 8,646 | 7,714 | 6,749 | ||||||||||||||||||||
| Consumer installment | 1,350 | 945 | 922 | 842 | 875 | 757 | 755 | ||||||||||||||||||||
| Home equity | 3,269 | 2,972 | 3,039 | 4,305 | 3,908 | 3,871 | 2,713 | ||||||||||||||||||||
| Total nonaccrual loans(1) | 96,670 | 66,742 | 61,832 | 63,095 | 54,305 | 50,894 | 47,841 | ||||||||||||||||||||
| Other real estate and repossessed assets | 6,584 | 5,828 | 7,719 | 8,807 | 10,605 | 14,582 | 16,395 | ||||||||||||||||||||
| Total nonperforming assets | $ | 103,254 | $ | 72,570 | $ | 69,551 | $ | 71,902 | $ | 64,910 | $ | 65,476 | $ | 64,236 | |||||||||||||
| Accruing loans contractually past due 90 days or more as to interest or principal payments, excluding acquired loans accounted for under ASC 310-30: | |||||||||||||||||||||||||||
| Commercial | $ | 632 | $ | 472 | $ | 322 | $ | — | $ | 3,521 | $ | 58 | $ | 1,823 | |||||||||||||
| Commercial real estate: | |||||||||||||||||||||||||||
| Owner-occupied | 47 | 461 | — | — | 144 | — | 700 | ||||||||||||||||||||
| Non-owner occupied | — | — | — | 13 | — | — | — | ||||||||||||||||||||
| Vacant land | — | 16 | — | — | — | 262 | — | ||||||||||||||||||||
| Total commercial real estate | 47 | 477 | — | 13 | 144 | 262 | 700 | ||||||||||||||||||||
| Real estate construction | 38 | — | — | — | — | — | — | ||||||||||||||||||||
| Home equity | 475 | 713 | 913 | 1,364 | 2,367 | 2,026 | 1,169 | ||||||||||||||||||||
| Total accruing loans contractually past due 90 days or more as to interest or principal payments | $ | 1,192 | $ | 1,662 | $ | 1,235 | $ | 1,377 | $ | 6,032 | $ | 2,346 | $ | 3,692 | |||||||||||||
(1) Acquired loans, accounted for under Accounting Standards Codification 310-30, that are not performing in accordance with contractual terms are not reported as nonperforming loans because these loans are recorded in pools at their net realizable value based on the principal and interest we expect to collect on these loans.
Chemical Financial Corporation Announces 2018 Third Quarter Operating Results
Summary of Allowance and Loan Loss Experience (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
| 3rd Quarter 2018 | 2nd Quarter 2018 | 1st Quarter 2018 | 4th Quarter 2017 | 3rd Quarter 2017 | 2nd Quarter 2017 | 1st Quarter 2017 | Nine Months Ended | ||||||||||||||||||||||||||||
| Sep 30, 2018 | Sep 30, 2017 | ||||||||||||||||||||||||||||||||||
| Allowance for loan losses - originated loan portfolio | |||||||||||||||||||||||||||||||||||
| Allowance for loan losses - beginning of period | $ | 100,015 | $ | 94,762 | $ | 91,887 | $ | 85,181 | $ | 83,797 | $ | 78,774 | $ | 78,268 | $ | 91,887 | $ | 78,268 | |||||||||||||||||
| Provision for loan losses | 5,058 | 9,572 | 6,256 | 8,101 | 4,920 | 6,229 | 4,050 | 20,886 | 15,199 | ||||||||||||||||||||||||||
| Net loan (charge-offs) recoveries: | |||||||||||||||||||||||||||||||||||
| Commercial | (564 | ) | (517 | ) | (1,252 | ) | (613 | ) | (2,348 | ) | (239 | ) | (1,999 | ) | (2,333 | ) | (4,586 | ) | |||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||||||||||||||
| Owner-occupied | 255 | (1,656 | ) | 341 | (232 | ) | (170 | ) | (173 | ) | 725 | (1,060 | ) | 382 | |||||||||||||||||||||
| Non-owner occupied | 392 | 92 | (456 | ) | 748 | (7 | ) | (35 | ) | 21 | 28 | (21 | ) | ||||||||||||||||||||||
| Vacant land | 2 | (921 | ) | (448 | ) | 267 | 3 | 3 | (16 | ) | (1,367 | ) | (10 | ) | |||||||||||||||||||||
| Total commercial real estate | 649 | (2,485 | ) | (563 | ) | 783 | (174 | ) | (205 | ) | 730 | (2,399 | ) | 351 | |||||||||||||||||||||
| Real estate construction | — | — | 26 | (1 | ) | — | — | (9 | ) | 26 | (9 | ) | |||||||||||||||||||||||
| Residential mortgage | (773 | ) | (88 | ) | (53 | ) | (142 | ) | (44 | ) | 19 | (567 | ) | (914 | ) | (592 | ) | ||||||||||||||||||
| Consumer installment | (1,410 | ) | (994 | ) | (997 | ) | (1,318 | ) | (857 | ) | (747 | ) | (1,310 | ) | (3,401 | ) | (2,914 | ) | |||||||||||||||||
| Home equity | 96 | (235 | ) | (542 | ) | (104 | ) | (113 | ) | (34 | ) | (389 | ) | (681 | ) | (536 | ) | ||||||||||||||||||
| Net loan charge-offs | (2,002 | ) | (4,319 | ) | (3,381 | ) | (1,395 | ) | (3,536 | ) | (1,206 | ) | (3,544 | ) | (9,702 | ) | (8,286 | ) | |||||||||||||||||
| Allowance for loan losses - end of period | 103,071 | 100,015 | 94,762 | 91,887 | 85,181 | 83,797 | 78,774 | 103,071 | 85,181 | ||||||||||||||||||||||||||
| Allowance for loan losses - acquired loan portfolio | |||||||||||||||||||||||||||||||||||
| Allowance for loan losses - beginning of period | — | — | — | 579 | — | — | — | — | — | ||||||||||||||||||||||||||
| Provision for loan losses | 970 | — | — | (579 | ) | 579 | — | — | 970 | 579 | |||||||||||||||||||||||||
| Allowance for loan losses - end of period | 970 | — | — | — | 579 | — | — | 970 | 579 | ||||||||||||||||||||||||||
| Total allowance for loan losses | $ | 104,041 | $ | 100,015 | $ | 94,762 | $ | 91,887 | $ | 85,760 | $ | 83,797 | $ | 78,774 | $ | 104,041 | $ | 85,760 | |||||||||||||||||
| Net loan charge-offs as a percent of average loans (annualized) | 0.05 | % | 0.12 | % | 0.10 | % | 0.04 | % | 0.10 | % | 0.04 | % | 0.11 | % | 0.09 | % | 0.08 | % | |||||||||||||||||
| September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||||
| Originated loans | $ | 11,145,442 | $ | 10,696,533 | $ | 10,012,516 | $ | 9,747,429 | $ | 9,156,096 | |||||||||
| Acquired loans | 3,650,810 | 3,883,160 | 4,206,231 | 4,407,838 | 4,677,272 | ||||||||||||||
| Total loans | $ | 14,796,252 | $ | 14,579,693 | $ | 14,218,747 | $ | 14,155,267 | $ | 13,833,368 | |||||||||
| Allowance for loan losses (originated loan portfolio) as a percent of: | |||||||||||||||||||
| Total originated loans | 0.93 | % | 0.94 | % | 0.95 | % | 0.94 | % | 0.93 | % | |||||||||
| Nonperforming loans | 106.6 | % | 149.9 | % | 153.3 | % | 145.6 | % | 156.9 | % | |||||||||
| Credit mark as a percent of unpaid principal balance on acquired loans | 1.7 | % | 1.8 | % | 1.8 | % | 2.4 | % | 2.7 | % | |||||||||
Chemical Financial Corporation Announces 2018 Third Quarter Operating Results
Reconciliation of Non-GAAP Financial Measures (Unaudited)
Chemical Financial Corporation
(Amounts in thousands)
| 3rd Quarter 2018 | 2nd Quarter 2018 | 4th Quarter 2017 | 3rd Quarter 2017 | 2nd Quarter 2017 | 1st Quarter 2017 | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||
| 1st Quarter 2018 | Sep 30, 2018 | Sep 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP Operating Results | |||||||||||||||||||||||||||||||||||||||||||||
| Net Income | |||||||||||||||||||||||||||||||||||||||||||||
| Net income, as reported | $ | 70,397 | $ | 68,988 | $ | 71,596 | $ | 9,446 | $ | 40,459 | $ | 52,014 | $ | 47,604 | $ | 210,981 | $ | 140,077 | |||||||||||||||||||||||||||
| Merger and restructuring expenses | — | — | — | 2,567 | 21,203 | 465 | 4,167 | — | 25,835 | ||||||||||||||||||||||||||||||||||||
| Loss on sale of investment securities (1) | — | — | — | 7,556 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Significant items | — | — | — | 10,123 | 21,203 | 465 | 4,167 | — | 25,835 | ||||||||||||||||||||||||||||||||||||
| Income tax benefit (2) | — | — | — | (3,543 | ) | (7,421 | ) | (163 | ) | (1,458 | ) | — | (9,042 | ) | |||||||||||||||||||||||||||||||
| Revaluation of net deferred tax assets | — | — | — | 46,660 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Significant items, net of tax | — | — | — | 53,240 | 13,782 | 302 | 2,709 | — | 16,793 | ||||||||||||||||||||||||||||||||||||
| Net income, excluding significant items | $ | 70,397 | $ | 68,988 | $ | 71,596 | $ | 62,686 | $ | 54,241 | $ | 52,316 | $ | 50,313 | $ | 210,981 | $ | 156,870 | |||||||||||||||||||||||||||
| Diluted Earnings Per Share | |||||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings per share, as reported | $ | 0.98 | $ | 0.96 | $ | 0.99 | $ | 0.13 | $ | 0.56 | $ | 0.73 | $ | 0.67 | $ | 2.93 | $ | 1.95 | |||||||||||||||||||||||||||
| Effect of significant items, net of tax | — | — | — | 0.74 | 0.20 | — | 0.03 | — | 0.24 | ||||||||||||||||||||||||||||||||||||
| Diluted earnings per share, excluding significant items | $ | 0.98 | $ | 0.96 | $ | 0.99 | $ | 0.87 | $ | 0.76 | $ | 0.73 | $ | 0.70 | $ | 2.93 | $ | 2.19 | |||||||||||||||||||||||||||
| Return on Average Assets | |||||||||||||||||||||||||||||||||||||||||||||
| Return on average assets, as reported | 1.37 | % | 1.39 | % | 1.47 | % | 0.20 | % | 0.86 | % | 1.14 | % | 1.09 | % | 1.41 | % | 1.03 | % | |||||||||||||||||||||||||||
| Effect of significant items, net of tax | — | — | — | 1.11 | 0.29 | 0.01 | 0.06 | — | 0.12 | ||||||||||||||||||||||||||||||||||||
| Return on average assets, excluding significant items | 1.37 | % | 1.39% | 1.47 | % | 1.31 | % | 1.15 | % | 1.15 | % | 1.15 | % | 1.41 | % | 1.15 | % | ||||||||||||||||||||||||||||
| Return on Average Shareholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Return on average shareholders' equity, as reported | 10.2 | % | 10.2% | 10.7 | % | 1.4 | % | 6.1 | % | 8.0 | % | 7.4 | % | 10.3 | % | 7.2 | % | ||||||||||||||||||||||||||||
| Effect of significant items, net of tax | — | — | — | 8.0 | 2.1 | — | 0.4 | — | 0.8 | ||||||||||||||||||||||||||||||||||||
| Return on average shareholders' equity, excluding significant items | 10.2 | % | 10.2% | 10.7 | % | 9.4 | % | 8.2 | % | 8.0 | % | 7.8 | % | 10.3 | % | 8.0 | % | ||||||||||||||||||||||||||||
| Return on Average Tangible Shareholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Average shareholders' equity | $ | 2,769,101 | $ | 2,707,346 | $ | 2,668,325 | $ | 2,676,029 | $ | 2,643,233 | $ | 2,606,517 | $ | 2,584,501 | $ | 2,720,820 | $ | 2,611,630 | |||||||||||||||||||||||||||
| Average goodwill, CDI and noncompete agreements, net of tax | 1,155,679 | 1,156,877 | 1,158,084 | 1,156,122 | 1,153,394 | 1,154,229 | 1,155,177 | 1,156,870 | 1,154,243 | ||||||||||||||||||||||||||||||||||||
| Average tangible shareholders' equity | $ | 1,613,422 | $ | 1,550,469 | $ | 1,510,241 | $ | 1,519,907 | $ | 1,489,839 | $ | 1,452,288 | $ | 1,429,324 | $ | 1,563,950 | $ | 1,457,387 | |||||||||||||||||||||||||||
| Return on average tangible shareholders' equity | 17.5 | % | 17.8 | % | 19.0 | % | 2.5 | % | 10.9 | % | 14.3 | % | 13.3 | % | 18.0 | % | 12.8 | % | |||||||||||||||||||||||||||
| Effect of significant items, net of tax | — | — | — | 14.0 | 3.7 | 0.1 | 0.8 | — | 1.6 | ||||||||||||||||||||||||||||||||||||
| Return on average tangible shareholders' equity, excluding significant items | 17.5 | % | 17.8% | 19.0 | % | 16.5 | % | 14.6 | % | 14.4 | % | 14.1 | % | 18.0 | % | 14.4 | % | ||||||||||||||||||||||||||||
(1) Represents losses on sales of investment securities in the fourth quarter of 2017 as part of our treasury and tax management objectives.
(2) Assumes merger and restructuring expenses and other significant items are deductible at an income tax rate of 35% for each quarter during 2017.
Chemical Financial Corporation Announces 2018 Third Quarter Operating Results
Reconciliation of Non-GAAP Financial Measures (Unaudited)
Chemical Financial Corporation
(Amounts in thousands, except per share data)
| 3rd Quarter 2018 | 2nd Quarter 2018 | 1st Quarter 2 018 | 4th Quarter 2017 | 3rd Quarter 2017 | 2nd Quarter 2017 | 1st Quarter 2017 | Nine Months Ended | ||||||||||||||||||||||||||||
| Sep 30, 2018 | Sep 30, 2017 | ||||||||||||||||||||||||||||||||||
| Efficiency Ratio | |||||||||||||||||||||||||||||||||||
| Net interest income | $ | 159,481 | $ | 157,537 | $ | 151,863 | $ | 145,905 | $ | 143,628 | $ | 137,948 | $ | 130,097 | $ | 468,881 | $ | 411,673 | |||||||||||||||||
| Noninterest income | 37,917 | 38,018 | 40,554 | 32,319 | 32,122 | 41,568 | 38,010 | 116,489 | 111,700 | ||||||||||||||||||||||||||
| Total revenue - GAAP | 197,398 | 195,555 | 192,417 | 178,224 | 175,750 | 179,516 | 168,107 | 585,370 | 523,373 | ||||||||||||||||||||||||||
| Net interest income FTE adjustment | 2,386 | 2,331 | 2,227 | 3,580 | 3,260 | 3,169 | 3,068 | 6,944 | 9,498 | ||||||||||||||||||||||||||
| Loan servicing rights change in fair value (gains) losses | (932 | ) | 30 | (3,752 | ) | 13 | 4,041 | 1,802 | 519 | (4,654 | ) | 6,362 | |||||||||||||||||||||||
| Losses (gains) from sale of investment securities | — | (3 | ) | — | 7,556 | (1 | ) | (77 | ) | (90 | ) | (3 | ) | (168 | ) | ||||||||||||||||||||
| Total revenue - Non-GAAP | $ | 198,852 | $ | 197,913 | $ | 190,892 | $ | 189,373 | $ | 183,050 | $ | 184,410 | $ | 171,604 | $ | 587,657 | $ | 539,065 | |||||||||||||||||
| Operating expenses - GAAP | $ | 109,661 | $ | 104,561 | $ | 101,610 | $ | 100,022 | $ | 119,539 | $ | 98,237 | $ | 104,196 | $ | 315,832 | $ | 321,972 | |||||||||||||||||
| Merger and restructuring expenses | — | — | — | (2,567 | ) | (21,203 | ) | (465 | ) | (4,167 | ) | — | (25,835 | ) | |||||||||||||||||||||
| Impairment of income tax credits | (3,162 | ) | (1,716 | ) | (1,634 | ) | (6,157 | ) | (3,095 | ) | — | — | (6,512 | ) | (3,095 | ) | |||||||||||||||||||
| Operating expense, core - Non-GAAP | 106,499 | 102,845 | 99,976 | 91,298 | 95,241 | 97,772 | 100,029 | 309,320 | 293,042 | ||||||||||||||||||||||||||
| Amortization of intangibles | (1,426 | ) | (1,425 | ) | (1,439 | ) | (1,525 | ) | (1,526 | ) | (1,525 | ) | (1,513 | ) | (4,290 | ) | (4,564 | ) | |||||||||||||||||
| Operating expenses, efficiency ratio - Non-GAAP | $ | 105,073 | $ | 101,420 | $ | 98,537 | $ | 89,773 | $ | 93,715 | $ | 96,247 | $ | 98,516 | $ | 305,030 | $ | 288,478 | |||||||||||||||||
| Efficiency ratio - GAAP | 55.6 | % | 53.5 | % | 52.8 | % | 56.1 | % | 68.0 | % | 54.7 | % | 62.0 | % | 54.0 | % | 61.5 | % | |||||||||||||||||
| Efficiency ratio - adjusted Non-GAAP | 52.8 | % | 51.2 | % | 51.6 | % | 47.4 | % | 51.2 | % | 52.2 | % | 57.4 | % | 51.9 | % | 53.5 | % | |||||||||||||||||
| Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | |||||||||||||||||||||
| Tangible Book Value | |||||||||||||||||||||||||||
| Shareholders' equity, as reported | $ | 2,788,924 | $ | 2,750,999 | $ | 2,704,703 | $ | 2,668,749 | $ | 2,673,089 | $ | 2,639,442 | $ | 2,600,051 | |||||||||||||
| Goodwill, CDI and noncompete agreements, net of tax | (1,155,083 | ) | (1,156,307 | ) | (1,157,505 | ) | (1,158,738 | ) | (1,153,576 | ) | (1,153,595 | ) | (1,154,915 | ) | |||||||||||||
| Tangible shareholders' equity | $ | 1,633,841 | $ | 1,594,692 | $ | 1,547,198 | $ | 1,510,011 | $ | 1,519,513 | $ | 1,485,847 | $ | 1,445,136 | |||||||||||||
| Common shares outstanding | 71,438 | 71,418 | 71,350 | 71,207 | 71,152 | 71,131 | 71,118 | ||||||||||||||||||||
| Book value per share (shareholders' equity, as reported, divided by common shares outstanding) | $ | 39.04 | $ | 38.52 | $ | 37.91 | $ | 37.48 | $ | 37.57 | $ | 37.11 | $ | 36.56 | |||||||||||||
| Tangible book value per share (tangible shareholders' equity divided by common shares outstanding) | $ | 22.87 | $ | 22.33 | $ | 21.68 | $ | 21.21 | $ | 21.36 | $ | 20.89 | $ | 20.32 | |||||||||||||
| Tangible Shareholders' Equity to Tangible Assets | |||||||||||||||||||||||||||
| Total assets, as reported | $ | 20,905,489 | $ | 20,282,603 | $ | 19,757,510 | $ | 19,280,873 | $ | 19,354,308 | $ | 18,781,405 | $ | 17,636,973 | |||||||||||||
| Goodwill, CDI and noncompete agreements, net of tax | (1,155,083 | ) | (1,156,307 | ) | (1,157,505 | ) | (1,158,738 | ) | (1,153,576 | ) | (1,153,595 | ) | (1,154,915 | ) | |||||||||||||
| Tangible assets | $ | 19,750,406 | $ | 19,126,296 | $ | 18,600,005 | $ | 18,122,135 | $ | 18,200,732 | $ | 17,627,810 | $ | 16,482,058 | |||||||||||||
| Shareholders' equity to total assets | 13.3 | % | 13.6 | % | 13.7 | % | 13.8 | % | 13.8 | % | 14.1 | % | 14.7 | % | |||||||||||||
| Tangible shareholders' equity to tangible assets | 8.3 | % | 8.3 | % | 8.3 | % | 8.3 | % | 8.3 | % | 8.4 | % | 8.8 | % | |||||||||||||