CHFC 8-K 2014 Q2

MIDLAND, MI, July 23, 2014 -- Chemical Financial Corporation (NASDAQ:CHFC) today announced 2014 second quarter net income of $16.2 million, or $0.54 per diluted share, compared to 2013 second quarter net income of $14.2 million, or $0.51 per diluted share, and 2014 first quarter net income of $13.8 million, or $0.46 per diluted share. For the six months ended June 30, 2014, net income was $30.0 million, or $1.00 per diluted share, compared to net income for the six months ended June 30, 2013 of $27.4 million, or $0.99 per diluted share.

As previously announced, on June 24, 2014, the Corporation completed an underwritten public offering of 2,500,000 shares of its common stock, and on June 30, 2014 completed the sale of an additional 375,000 shares of its common stock pursuant to the underwriters' exercise of the over-allotment option, at a price of $28.00 per share to the public. After the underwriting discount and other offering related expenses, the Corporation netted proceeds of approximately $76 million from the offering. David B. Ramaker, Chairman, Chief Executive Officer and President of Chemical Financial Corporation noted that "the Company took advantage of favorable market conditions to complete the equity raise, the proceeds from which we plan to rapidly deploy into organic and acquisitive growth opportunities."

Commenting on the quarter, Ramaker said “a strengthening Michigan economy and market share gains fueled continued growth for Chemical Financial Corporation in the second quarter of 2014, driving another solid quarter of earnings. Robust, multi-sector organic loan growth, led by gains in consumer and home equity lending, was reflected in total loan growth of 5.4% year-to-date and 13.0% over the past year. The resultant 6.3% increase in net interest income over the prior year’s second quarter, coupled with a lower loan loss provision reflective of improved credit quality, and continued expense controls, led to an over 14% increase in net income over the prior year's second quarter,” noted Ramaker.

“During the second quarter of 2014, shareholders of Northwestern Bancorp, Inc. ("Northwestern"), the holding company for Northwestern Bank, formally approved the Agreement and Plan of Merger pursuant to which Chemical will acquire all of the outstanding shares of Northwestern's common stock. We look forward to consummating, upon receipt of regulatory approval anticipated in the third quarter of 2014, our strategic partnership with Northwestern and its 25 locations across 11 northwestern Michigan counties, which will provide a compelling choice for the state's residents and businesses,” added Ramaker.

The Corporation's return on average assets was 1.04% during the second quarter of 2014, compared to 0.97% in the second quarter of 2013 and 0.90% in the first quarter of 2014. The Corporation's return on average shareholders' equity was 9.1% in the second quarter of 2014, compared to 9.4% in the second quarter of 2013 and 8.0% in the first quarter of 2014. The decrease in return on average shareholders' equity in the second quarter of 2014, compared to the second quarter of 2013, was primarily attributable to an increase in shareholders' equity resulting from the Corporation's September 2013 common equity offering.

Net interest income was $51.5 million in the second quarter of 2014, $3.1 million higher than the second quarter of 2013 and $1.7 million higher than the first quarter of 2014. The increase in net interest income in the second quarter of 2014 over the second quarter of 2013 was largely attributable to the positive impact of loan growth of $563 million, or 13.0%, during the twelve months ended June 30, 2014. The increase in net interest income in the second quarter of 2014 over the first quarter of 2014 was also largely attributable to the positive impact of loan growth, with average loans up $132 million, or 2.8%, in the second quarter of 2014 over the first quarter of 2014.

The net interest margin (on a tax-equivalent basis) was 3.59% in the second quarter of 2014, compared to 3.60% in the second quarter of 2013 and 3.53% in the first quarter of 2014. The slight decrease in the net interest margin in the second quarter of 2014, compared to the second quarter of 2013, was primarily attributable to the significant positive impact attributable to growth in loans during the twelve months ended June 30, 2014, that was largely offset by loans repricing downward. The increase in the net interest margin in the second quarter of 2014, compared to the first quarter of 2014, was primarily attributable to growth in loans. The average yield on the loan portfolio was 4.26% in the second quarter of 2014, compared to 4.56% in the second quarter of 2013 and 4.28% in the first quarter of 2014. The average yield of the investment securities portfolio was 2.13% in the second quarter of 2014, compared to 2.08% in the second quarter of 2013 and 2.11% in the first quarter of 2014. Modest changes in the mix of customer deposits and the repricing of matured customer certificates of deposit resulted in the Corporation's average cost of funds declining to 0.27% in the second quarter of 2014 from 0.34% in the second quarter of 2013 and 0.29% in the first quarter of 2014.

The Corporation's nonperforming loans, consisting of nonaccrual loans, accruing loans past due 90 days or more as to principal or interest payments and nonperforming troubled debt restructurings, totaled $73.7 million at June 30, 2014, compared to $76.5 million at March 31, 2014 and $79.3 million at June 30, 2013. Nonperforming loans comprised 1.51% of total loans at June 30, 2014, compared to 1.61% at March 31, 2014 and 1.83% at June 30, 2013. The reduction in nonperforming loans during the three and twelve months ended June 30, 2014 was attributable to a combination of improving economic conditions and loan charge-offs.

Noninterest income was $15.8 million in the second quarter of 2014, compared to $15.9 million in the second quarter of 2013 and $13.7 million in the first quarter of 2014. Noninterest income in the second quarter of 2014 was only $0.1 million lower than the second quarter of 2013 as modest increases in electronic banking fees and wealth management revenue, as well as a $0.4 million reduction in the Corporation's secondary mortgage market indemnification reserve, offset reduced secondary mortgage market net loan sale gains. The reduction in net loan sale gains was primarily attributable to a decrease in the volume of loans sold. The Corporation had no investment securities gains in the second quarter of 2014, compared to $0.3 million in the same quarter of the prior year. Noninterest income in the second quarter of 2014 was $2.1 million higher than the first quarter of 2014, with the increase primarily attributable to increases in mortgage banking revenue and title insurance revenue of $0.5 million, an increase in service charges and fees on deposit accounts of $0.6 million, an increase in wealth management revenue of $0.3 million and the $0.4 million reduction in the indemnification reserve discussed above.

Operating expenses were $42.4 million in the second quarter of 2014, compared to $41.0 million in the second quarter of 2013 and $42.2 million in the first quarter of 2014. Operating expenses included nonrecurring transaction-related costs attributable to the pending acquisition of Northwestern of $0.7 million in the second quarter of 2014 and $0.3 million in the first quarter of 2014. Excluding these nonrecurring costs, operating expenses in the second quarter of 2014 were just $0.7 million, or 1.8%, higher than the second quarter of 2013 and $0.1 million lower than the first quarter of 2014.

Total assets were $6.23 billion at June 30, 2014, compared to $6.34 billion at March 31, 2014 and $5.81 billion at June 30, 2013. The increase in total assets during the twelve months ended June 30, 2014 was largely attributable to an increase in deposits that was used to partially fund loan growth. The increase was also partially attributable to $130 million of net proceeds received by the Corporation as part of its June 2014 and September 2013 common equity offerings. Interest-bearing balances at the Federal Reserve Bank (FRB) were $1.3 million at June 30, 2014, compared to $260.1 million at March 31, 2014 and $69.4 million at June 30, 2013. Investment securities were $924.1 million at June 30, 2014, compared to $935.9 million at March 31, 2014 and $1.01 billion at June 30, 2013. The decreases in interest-bearing balances at the FRB and investment securities during the twelve months ended June 30, 2014 were attributable to the Corporation utilizing some of the liquidity from its excess funds held at the FRB and maturing investment securities to also fund loan growth. The decrease in interest-bearing balances at the FRB during the second quarter of 2014 was largely attributable to a seasonal decrease in municipal customer deposits and a $100 million reduction in temporary funds from one customer.

Total loans were $4.90 billion at June 30, 2014, up from $4.75 billion at March 31, 2014 and $4.34 billion at June 30, 2013. During the three and twelve months ended June 30, 2014, total loans increased $145.5 million, or 3.1%, and $562.9 million, or 13.0%, respectively. The increases in loans during the three and twelve months ended June 30, 2014 generally occurred across all major loan categories, although most notably in the Corporation's consumer loan portfolio, and were largely attributable to a combination of continued improving economic conditions and increased market share. The increase in loans of $145.5 million during the second quarter of 2014 was primarily attributable to increases in consumer installment and home equity loans of $100.9 million, or 8.4%, commercial real estate loans of $19.2 million, or 1.5%, and real estate construction loans of $16.1 million, or 18.9%.

Total deposits were $5.09 billion at June 30, 2014, compared to $5.23 billion at March 31, 2014 and $4.81 billion at June 30, 2013. The decrease in total deposits during the second quarter of 2014 was largely attributable to a seasonal decrease in municipal customer deposits and a $50 million reduction in temporary interest-bearing deposits from one customer. The Corporation experienced an increase in total deposits of $279 million, or 5.8%, during the twelve months ended June 30, 2014. The increase in deposits during the twelve months ended June 30, 2014 was partially attributable to the Corporation converting approximately $40 million of securities sold under agreements to repurchase with business customers, which are classified as short-term borrowings, into interest-bearing checking deposit accounts. Securities sold under agreements to repurchase, which the Corporation considers to be a stable source of liquidity much like its core deposit base, totaled $293.4 million at June 30, 2014, a decrease of $53.6 million, or 15.4%, during the twelve months ended June 30, 2014.

At June 30, 2014, the Corporation's tangible equity to assets ratio and total risk-based capital ratio were 11.0% and 15.3%, respectively, compared to 9.3% and 13.8%, respectively, at March 31, 2014 and 8.5% and 13.1%, respectively, at June 30, 2013. The increases in the Corporation's capital ratios at June 30, 2014, compared to both March 31, 2014 and June 30, 2013 were largely attributable to the Corporation’s June 2014 and September 2013 public offerings of common stock. At June 30, 2014, the Corporation's book value was $24.22 per share, compared to $23.63 per share at March 31, 2014 and $22.14 per share at June 30, 2013. At June 30, 2014, the Corporation's tangible book value was $20.42 per share, compared to $19.44 per share at March 31, 2014 and $17.53 per share at June 30, 2013.

Chemical Financial Corporation will host a conference call to discuss its second quarter 2014 results on Wednesday, July 23, 2014 at 11:00 a.m. EDT. Anyone interested may access the conference call on a live basis by dialing toll-free at 1-888-389-5997 and entering 5007788 for the conference ID. The call will also be broadcast live over the Internet hosted at Chemical Financial Corporation's website at www.chemicalbankmi.com under the "Investor Info" 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.

Chemical Financial Corporation is the second largest banking company headquartered and operating branch offices in Michigan. The Corporation operates through a single subsidiary bank, Chemical Bank, with 157 banking offices spread over 38 counties in the lower peninsula of Michigan. At June 30, 2014, the Corporation had total assets of $6.2 billion. Chemical Financial Corporation's common stock trades on The NASDAQ Stock Market under the symbol CHFC and is one of the issues comprising The NASDAQ Global Select Market. More information about the Corporation is available by visiting the investor relations section of its website at www.chemicalbankmi.com.

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

Management's determination of the provision and allowance for loan losses; the carrying value of acquired loans, goodwill and mortgage servicing rights; the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment); and management's assumptions concerning pension and other postretirement benefit plans involve judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated. All of the information concerning interest rate sensitivity is forward-looking. The future effect of changes in the financial and credit markets and the national and regional economies on the banking industry, generally, and on the Corporation, specifically, are also inherently uncertain. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Risk factors also include, but are not limited to, the risk factors described under "Risk Factors" (including the risk factors under the heading "Risk Factors - Risks Related to the Pending Merger with Northwestern") in the Corporation's Prospectus Supplement, dated June 19, 2014, and in Item 1A of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013. 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.



	June 30, 2014			March 31, 2014			December 31, 2013			June 30, 2013
	(In thousands, except per share data)
Assets
Cash and cash equivalents:
Cash and cash due from banks	$	139,023		$	122,288		$	130,811		$	137,586
Interest-bearing deposits with the Federal Reserve Bank	1,271			260,097			179,977			69,371
Total cash and cash equivalents	140,294			382,385			310,788			206,957
Investment securities:
Available-for-sale	615,975			657,818			684,570			734,052
Held-to-maturity	308,130			278,099			273,905			274,715
Total investment securities	924,105			935,917			958,475			1,008,767
Loans held-for-sale	6,329			3,814			5,219			9,180
Loans:
Commercial	1,212,383			1,208,641			1,176,307			1,091,894
Commercial real estate	1,298,365			1,279,167			1,232,658			1,172,347
Real estate construction and land development	112,124			98,845			109,861			100,629
Residential mortgage	970,397			962,009			960,423			898,816
Consumer installment and home equity	1,305,535			1,204,627			1,168,372			1,072,185
Total loans	4,898,804			4,753,289			4,647,621			4,335,871
Allowance for loan losses	(77,793		)	(78,473		)	(79,072		)	(82,184		)
Net loans	4,821,011			4,674,816			4,568,549			4,253,687
Premises and equipment	74,291			74,779			75,308			73,379
Goodwill	120,164			120,164			120,164			120,164
Other intangible assets	12,454			12,872			13,424			14,354
Interest receivable and other assets	133,327			133,581			132,781			119,723
Total Assets	$	6,231,975		$	6,338,328		$	6,184,708		$	5,806,211
Liabilities
Deposits:
Noninterest-bearing	$	1,283,439		$	1,219,081		$	1,227,768		$	1,107,453
Interest-bearing	3,809,474			4,012,212			3,894,617			3,706,732
Total deposits	5,092,913			5,231,293			5,122,385			4,814,185
Interest payable and other liabilities	40,142			40,209			38,395			35,460
Short-term borrowings	305,422			361,231			327,428			346,995
Total liabilities	5,438,477			5,632,733			5,488,208			5,196,640
Shareholders' Equity
Preferred stock, no par value per share	—			—			—			—
Common stock, $1 par value per share	32,760			29,866			29,790			27,538
Additional paid-in capital	563,393			489,045			488,177			434,479
Retained earnings	215,333			205,985			199,053			182,619
Accumulated other comprehensive loss	(17,988		)	(19,301		)	(20,520		)	(35,065		)
Total shareholders' equity	793,498			705,595			696,500			609,571
Total Liabilities and Shareholders' Equity	$	6,231,975		$	6,338,328		$	6,184,708		$	5,806,211



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
	(In thousands, except per share data)
Interest Income
Interest and fees on loans	$	50,751		$	48,029		$	99,946		$	95,934
Interest on investment securities:
Taxable	2,248			2,585			4,631			5,023
Tax-exempt	1,671			1,587			3,375			3,151
Dividends on nonmarketable equity securities	411			400			649			551
Interest on deposits with the Federal Reserve Bank	99			180			224			501
Total interest income	55,180			52,781			108,825			105,160
Interest Expense
Interest on deposits	3,626			4,264			7,371			8,830
Interest on short-term borrowings	94			121			215			235
Interest on FHLB advances	—			—			—			47
Total interest expense	3,720			4,385			7,586			9,112
Net Interest Income	51,460			48,396			101,239			96,048
Provision for loan losses	1,500			3,000			3,100			6,000
Net interest income after provision for loan losses	49,960			45,396			98,139			90,048
Noninterest Income
Service charges and fees on deposit accounts	5,486			5,535			10,416			10,730
Wealth management revenue	3,958			3,879			7,589			7,324
Other charges and fees for customer services	4,682			4,303			8,876			8,954
Mortgage banking revenue	1,491			1,649			2,285			3,661
Gain on sale of investment securities	—			257			—			1,104
Other	184			325			351			414
Total noninterest income	15,801			15,948			29,517			32,187
Operating Expenses
Salaries, wages and employee benefits	24,860			24,628			49,044			47,997
Occupancy	3,638			3,380			8,012			7,043
Equipment and software	3,792			3,447			7,253			6,897
Other	10,135			9,586			20,298			21,061
Total operating expenses	42,425			41,041			84,607			82,998
Income before income taxes	23,336			20,303			43,049			39,237
Federal income tax expense	7,100			6,100			13,000			11,800
Net Income	$	16,236		$	14,203		$	30,049		$	27,437
Earnings Per Common Share:
Weighted average common shares outstanding for basic earnings per share	30,068			27,534			29,947			27,527
Weighted average common shares outstanding for diluted earnings per share, including common stock equivalents	30,279			27,674			30,159			27,658
Basic earnings per share	$	0.54		$	0.52		$	1.00		$	1.00
Diluted earnings per share	0.54			0.51			1.00			0.99

Cash Dividends Declared Per Common Share	0.23			0.21			0.46			0.42

Key Ratios (annualized where applicable):
Return on average assets	1.04		%	0.97		%	0.97		%	0.94		%
Return on average shareholders' equity	9.1		%	9.4		%	8.6		%	9.2		%
Net interest margin	3.59		%	3.60		%	3.56		%	3.57		%
Efficiency ratio	60.9		%	63.3		%	62.6		%	63.8		%



	2nd Quarter 2014			1st Quarter 2014			4th Quarter 2013			3rd Quarter 2013			2nd Quarter 2013			1st Quarter 2013
Average Balances
Total assets	$	6,253,574		$	6,210,569		$	6,117,217		$	5,966,988		$	5,859,822		$	5,924,820
Total interest-earning assets	5,907,549			5,860,429			5,782,141			5,621,542			5,530,262			5,579,789
Total loans	4,824,299			4,692,430			4,588,448			4,424,332			4,249,708			4,152,570
Total deposits	5,151,581			5,142,276			5,065,671			4,960,270			4,878,214			4,950,956
Total interest-bearing liabilities	4,250,158			4,276,677			4,211,647			4,167,915			4,126,751			4,221,638
Total shareholders' equity	714,355			701,878			678,487			620,911			606,607			599,406
Key Ratios (annualized where applicable)
Net interest margin (taxable equivalent basis)	3.59		%	3.53		%	3.63		%	3.58		%	3.60		%	3.54		%
Efficiency ratio	60.9		%	64.5		%	63.7		%	61.0		%	63.3		%	64.4		%
Return on average assets	1.04		%	0.90		%	0.93		%	1.00		%	0.97		%	0.91		%
Return on average shareholders' equity	9.1		%	8.0		%	8.4		%	9.6		%	9.4		%	9.0		%
Average shareholders' equity as a percent of average assets	11.4		%	11.3		%	11.1		%	10.4		%	10.4		%	10.1		%
Capital ratios (period end):
Tangible shareholders' equity as a percent of total assets	11.0		%	9.3		%	9.4		%	8.9		%	8.5		%	8.1		%
Total risk-based capital ratio	15.3		%	13.8		%	14.0		%	14.2		%	13.1		%	13.3		%



	2nd Quarter 2014			1st Quarter 2014			4th Quarter 2013			3rd Quarter 2013			2nd Quarter 2013			1st Quarter 2013
Credit Quality Statistics
Originated loans	$	4,624,409		$	4,464,465		$	4,352,924		$	4,213,728		$	3,990,633		$	3,810,989
Acquired loans	274,395			288,824			294,697			308,943			345,238			374,272
Nonperforming assets:
Nonperforming loans	73,735			76,544			81,984			75,818			79,342			86,417
Other real estate / repossessed assets (ORE)	10,392			10,056			9,776			12,033			13,659			18,194
Total nonperforming assets	84,127			86,600			91,760			87,851			93,001			104,611
Performing troubled debt restructurings	44,133			41,823			39,571			34,071			32,657			30,723
Allowance for loan losses - originated as a percent of:
Total originated loans	1.67		%	1.75		%	1.81		%	1.92		%	2.05		%	2.16		%
Nonperforming loans	105		%	102		%	96		%	107		%	103		%	95		%
Nonperforming loans as a percent of total loans	1.51		%	1.61		%	1.76		%	1.68		%	1.83		%	2.06		%
Nonperforming assets as a percent of:
Total loans plus ORE	1.71		%	1.82		%	1.97		%	1.94		%	2.14		%	2.49		%
Total assets	1.35		%	1.37		%	1.48		%	1.40		%	1.60		%	1.75		%
Net loan charge-offs (year-to-date):
Originated	$	4,379		$	2,199		$	16,419		$	11,959		$	8,307		$	4,657
Acquired	—			—			—			—			—			—
Total loan charge-offs (year-to-date)	4,379			2,199			16,419			11,959			8,307			4,657
Net loan charge-offs as a percent of average loans (year-to-date, annualized)	0.18		%	0.19		%	0.38		%	0.37		%	0.40		%	0.45		%



	Three Months Ended June 30, 2014						Three Months Ended June 30, 2013
	Average Balance		Interest (FTE)		Effective Yield/Rate*		Average Balance		Interest (FTE)		Effective Yield/Rate*
Assets	(Dollars in thousands)
Interest-earning assets:
Loans**	$	4,830,341	$	51,284	4.26	%	$	4,264,009	$	48,510	4.56	%
Taxable investment securities	651,685		2,248		1.38		734,767		2,585		1.41
Tax-exempt investment securities	253,468		2,576		4.07		229,773		2,423		4.22
Other interest-earning assets	25,572		411		6.45		25,572		400		6.27
Interest-bearing deposits with the Federal Reserve Bank	146,483		99		0.27		276,141		180		0.26
Total interest-earning assets	5,907,549		56,618		3.84		5,530,262		54,098		3.92
Less: allowance for loan losses	78,626						83,850
Other assets:
Cash and cash due from banks	116,390						114,988
Premises and equipment	74,353						73,802
Interest receivable and other assets	233,908						224,620
Total assets	$	6,253,574					$	5,859,822
Liabilities and shareholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,149,063	$	273	0.10	%	$	1,032,580	$	231	0.09	%
Savings deposits	1,416,961		315		0.09		1,353,769		301		0.09
Time deposits	1,336,551		3,038		0.91		1,398,716		3,732		1.07
Short-term borrowings	347,583		94		0.11		341,686		121		0.14
FHLB advances	—		—		—		—		—		—
Total interest-bearing liabilities	4,250,158		3,720		0.35		4,126,751		4,385		0.43
Noninterest-bearing deposits	1,249,006		—		—		1,093,149		—		—
Total deposits and borrowed funds	5,499,164		3,720		0.27		5,219,900		4,385		0.34
Interest payable and other liabilities	40,055						33,315
Shareholders' equity	714,355						606,607
Total liabilities and shareholders' equity	$	6,253,574					$	5,859,822
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities)					3.49	%					3.49	%
Net Interest Income (FTE)			$	52,898					$	49,713
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)					3.59	%					3.60	%



*	Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.
**	Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.



	Six Months Ended June 30, 2014						Six Months Ended June 30, 2013
	Average Balance		Interest (FTE)		Effective Yield/Rate*		Average Balance		Interest (FTE)		Effective Yield/Rate*
Assets	(Dollars in thousands)
Interest-earning assets:
Loans**	$	4,763,748	$	101,028	4.27	%	$	4,216,078	$	96,871	4.63	%
Taxable investment securities	671,662		4,631		1.38		700,976		5,023		1.43
Tax-exempt investment securities	255,310		5,191		4.07		222,789		4,811		4.32
Other interest-earning assets	25,572		649		5.12		25,572		551		4.34
Interest-bearing deposits with the Federal Reserve Bank	167,827		224		0.27		389,474		501		0.26
Total interest-earning assets	5,884,119		111,723		3.82		5,554,889		107,757		3.90
Less: allowance for loan losses	78,972						84,411
Other assets:
Cash and cash due from banks	118,269						116,297
Premises and equipment	74,557						74,203
Interest receivable and other assets	234,217						231,163
Total assets	$	6,232,190					$	5,892,141
Liabilities and shareholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,180,623	$	560	0.10	%	$	1,067,290	$	483	0.09	%
Savings deposits	1,416,045		630		0.09		1,345,637		597		0.09
Time deposits	1,328,878		6,181		0.94		1,425,053		7,750		1.10
Short-term borrowings	337,798		215		0.13		332,051		235		0.14
FHLB advances	—		—		—		3,902		47		2.43
Total interest-bearing liabilities	4,263,344		7,586		0.36		4,173,933		9,112		0.44
Noninterest-bearing deposits	1,221,408		—		—		1,076,404		—		—
Total deposits and borrowed funds	5,484,752		7,586		0.28		5,250,337		9,112		0.35
Interest payable and other liabilities	39,287						38,777
Shareholders' equity	708,151						603,027
Total liabilities and shareholders' equity	$	6,232,190					$	5,892,141
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities)					3.46	%					3.46	%
Net Interest Income (FTE)			$	104,137					$	98,645
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)					3.56	%					3.57	%



*	Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%.
**	Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.



	June 30, 2014		March 31, 2014		Dec 31, 2013		Sept 30, 2013		June 30, 2013		March 31, 2013
	(In thousands)
Nonperforming Loans:
Nonaccrual loans:
Commercial	$	18,773	$	18,251	$	18,374	$	11,809	$	11,052	$	12,186
Commercial real estate	25,361		27,568		28,598		28,623		28,498		35,849
Real estate construction	160		160		371		183		183		168
Land development	2,184		2,267		2,309		2,954		3,434		4,105
Residential mortgage	6,325		6,589		8,921		8,029		9,241		10,407
Consumer installment	536		806		676		665		552		699
Home equity	2,296		2,046		2,648		3,023		3,064		2,837
Total nonaccrual loans	55,635		57,687		61,897		55,286		56,024		66,251
Accruing loans contractually past due 90 days or more as to interest or principal payments:
Commercial	15		43		536		281		1		4
Commercial real estate	69		730		190		—		78		177
Real estate construction	—		—		—		—		—		—
Land development	—		—		—		—		—		—
Residential mortgage	376		—		537		692		164		196
Consumer installment	—		—		—		—		—		—
Home equity	1,075		622		734		686		689		874
Total accruing loans contractually past due 90 days or more as to interest or principal payments	1,535		1,395		1,997		1,659		932		1,251
Nonperforming troubled debt restructurings:
Commercial loan portfolio	11,049		11,218		13,414		15,744		19,140		14,587
Consumer loan portfolio	5,516		6,244		4,676		3,129		3,246		4,328
Total nonperforming troubled debt restructurings	16,565		17,462		18,090		18,873		22,386		18,915
Total nonperforming loans	73,735		76,544		81,984		75,818		79,342		86,417
Other real estate and repossessed assets	10,392		10,056		9,776		12,033		13,659		18,194
Total nonperforming assets	$	84,127	$	86,600	$	91,760	$	87,851	$	93,001	$	104,611



	2nd Quarter 2014			1st Quarter 2014			4th Quarter 2013			3rd Quarter 2013			2nd Quarter 2013			1st Quarter 2013			Six Months Ended
	2nd Quarter 2014			1st Quarter 2014			4th Quarter 2013			3rd Quarter 2013			2nd Quarter 2013			1st Quarter 2013			June 30, 2014			June 30, 2013
	(In thousands)
Allowance for loan losses - originated loan portfolio
Allowance for loan losses - beginning of period	$	77,973		$	78,572		$	81,032		$	81,684		$	82,334		$	83,991		$	78,572		$	83,991
Provision for loan losses	1,500			1,600			2,000			3,000			3,000			3,000			3,100			6,000
Net loan (charge-offs) recoveries:
Commercial	(569		)	(233		)	(448		)	(615		)	(59		)	(1,199		)	(802		)	(1,258		)
Commercial real estate	(783		)	(241		)	(1,233		)	(1,248		)	(1,786		)	(2,010		)	(1,024		)	(3,796		)
Real estate construction	—			(100		)	(37		)	—			—			—			(100		)	—
Land development	127			142			(207		)	(400		)	(50		)	(96		)	269			(146		)
Residential mortgage	(341		)	(704		)	(527		)	(409		)	(1,023		)	(573		)	(1,045		)	(1,596		)
Consumer installment	(612		)	(801		)	(836		)	(786		)	(574		)	(447		)	(1,413		)	(1,021		)
Home equity	(2		)	(262		)	(1,172		)	(194		)	(158		)	(332		)	(264		)	(490		)
Net loan charge-offs	(2,180		)	(2,199		)	(4,460		)	(3,652		)	(3,650		)	(4,657		)	(4,379		)	(8,307		)
Allowance for loan losses - end of period	77,293			77,973			78,572			81,032			81,684			82,334			77,293			81,684
Allowance for loan losses - acquired loan portfolio
Allowance for loan losses - beginning of period	500			500			500			500			500			500			500			500
Provision for loan losses	—			—			—			—			—			—			—			—
Net loan charge-offs	—			—			—			—			—			—			—			—
Allowance for loan losses - end of period	500			500			500			500			500			500			500			500
Total allowance for loan losses	$	77,793		$	78,473		$	79,072		$	81,532		$	82,184		$	82,834		$	77,793		$	82,184
Net loan charge-offs as a percent of average loans (quarter only, annualized)	0.18		%	0.19		%	0.39		%	0.33		%	0.34		%	0.45		%	0.18		%	0.40		%



	2nd Quarter 2014			1st Quarter 2014			4th Quarter 2013			3rd Quarter 2013			2nd Quarter 2013			1st Quarter 2013
	(Dollars in thousands, except per share data)
Summary of Operations
Interest income	$	55,180		$	53,645		$	55,323		$	53,578		$	52,781		$	52,379
Interest expense	3,720			3,866			4,018			4,284			4,385			4,727
Net interest income	51,460			49,779			51,305			49,294			48,396			47,652
Provision for loan losses	1,500			1,600			2,000			3,000			3,000			3,000
Net interest income after provision for loan losses	49,960			48,179			49,305			46,294			45,396			44,652
Noninterest income	15,801			13,716			13,578			14,644			15,948			16,239
Operating expenses	42,425			42,182			42,405			39,545			41,041			41,957
Income before income taxes	23,336			19,713			20,478			21,393			20,303			18,934
Federal income tax expense	7,100			5,900			6,100			6,400			6,100			5,700
Net income	$	16,236		$	13,813		$	14,378		$	14,993		$	14,203		$	13,234
Net interest margin	3.59		%	3.53		%	3.63		%	3.58		%	3.60		%	3.54		%

Per Common Share Data
Net income:
Basic	$	0.54		$	0.46		$	0.48		$	0.54		$	0.52		$	0.48
Diluted	0.54			0.46			0.48			0.53			0.51			0.48
Cash dividends declared	0.23			0.23			0.23			0.22			0.21			0.21
Book value - period-end	24.22			23.63			23.38			22.61			22.14			21.97
Tangible book value - period-end	20.42			19.44			19.17			18.36			17.53			17.34
Market value - period-end	28.08			32.45			31.67			27.92			25.99			26.38



Dated:	July 23, 2014	CHEMICAL FINANCIAL CORPORATION (Registrant)


		/s/ Lori A. Gwizdala
		Lori A. Gwizdala
		Executive Vice President, Chief Financial Officer and Treasurer



	June 30, 2014		March 31, 2014		Dec 31, 2013		Sept 30, 2013		June 30, 2013		March 31, 2013
Additional Data - Intangibles
Goodwill	$	120,164	$	120,164	$	120,164	$	120,164	$	120,164	$	120,164
Core deposit intangibles (CDI)	9,110		9,556		10,001		10,466		10,933		11,417
Mortgage servicing rights (MSR)	3,344		3,316		3,423		3,399		3,421		3,485
Amortization of CDI (during quarter ended)	446		445		465		467		484		493



Michigan (State or Other Jurisdiction of Incorporation)	000-08185 (Commission File Number)	38-2022454 (IRS Employer Identification No.)



235 E. Main Street Midland, Michigan (Address of Principal Executive Offices)		48640 (Zip Code)


99.1	Press Release dated July 23, 2014. This Exhibit is furnished to, and not filed with, the Commission.



Item 9.01	Financial Statements and Exhibits.



Exhibit Number		Document