Exhibit
For further information:
David B. Ramaker, CEO
Dennis L. Klaeser, CFO
989-839-5350
Chemical Financial Corporation Reports Fourth Quarter and Full Year 2016 Results
MIDLAND, MI, January 25, 2017 -- Chemical Financial Corporation ("Corporation" or "Chemical") (NASDAQ:CHFC) today announced 2016 fourth quarter net income of $47.2 million, or $0.66 per diluted share, compared to 2016 third quarter net income of $11.5 million, or $0.23 per diluted share, and 2015 fourth quarter net income of $25.5 million, or $0.66 per diluted share. For the year ended December 31, 2016, net income was $108.0 million, or $2.17 per diluted share, compared to net income for the year ended December 31, 2015 of $86.8 million, or $2.39 per diluted share. The increase in net income in the fourth quarter, compared to both the third quarter of 2016 and the fourth quarter of 2015, was driven significantly by the reduction in merger and transaction-related expenses ("transaction expenses") from the completion of the Corporation's merger with Talmer Bancorp, Inc. ("Talmer") and the inclusion of Talmer operations for the full quarter compared to one month's inclusion of operations in the third quarter of 2016 and no inclusion during the fourth quarter of 2015.
Excluding transaction expenses, net gain on the sale of branches and the change in fair value in loan servicing rights ("significant items"), net income for the fourth quarter of 2016 was $49.9 million, or $0.70 per diluted share, compared to $37.5 million, or $0.75 per diluted share, and $26.9 million, or $0.70 per diluted share in the third quarter of 2016 and the fourth quarter of 2015, respectively.(1) Net income for the full year 2016, excluding significant items was $140.5 million, or $2.81 per diluted share, compared to $92.3 million, or $2.54 per diluted share for the full year 2015.(1)
During the fourth quarter of 2016, transaction expenses of $18.0 million were partially offset by $7.4 million of net gain on the sale of branches and a $6.4 million gain due to the change in fair value in loan servicing rights. The third quarter of 2016 included the impact of $37.5 million of transaction expenses and a $1.3 million detriment to earnings due to the change in fair value in loan servicing rights, while the fourth quarter of 2015 included $2.1 million of transaction expenses.
"Our fourth quarter financial results reflect both a solid finish to a milestone year and a strong base from which Chemical Financial Corporation will move forward. During the quarter, we completed the integration of Talmer Bank and Chemical Bank, our fourth successful integration over the past two years. Continued stable economic conditions in our core markets facilitated significant organic loan growth during the quarter, and we believe we have an attractive pipeline as we look forward to 2017," noted David B. Ramaker, Chief Executive Officer and President of the Corporation. “Since year-end 2014, we have more than doubled our asset base and expanded our delivery network beyond Michigan into northeast Ohio and northern Indiana. We have paired a targeted acquisition strategy with attractive organic growth across the Chemical franchise to achieve these results, never losing sight of our primary goal of meeting the financial service needs of the communities we serve and delivering strong results for our shareholders.”
The Corporation's return on average assets was 1.09% during the fourth quarter of 2016, compared to 0.37% in the third quarter of 2016 and 1.11% in the fourth quarter of 2015. The Corporation's return on average shareholders' equity was 7.4% in the fourth quarter of 2016, compared to 2.9% in the third quarter of 2016 and 10.2% in the fourth quarter of 2015. Excluding significant items, the Corporation's return on average assets was 1.16% during the fourth quarter of 2016, compared to 1.22% in the third quarter of 2016 and 1.17% in the fourth quarter of 2015 and the Corporation's return on average shareholders' equity was 7.8% in the fourth quarter of 2016, compared to 9.6% in the third quarter of 2016 and 10.7% in the fourth quarter of 2015.(2)
Net interest income was $132.4 million in the fourth quarter of 2016, $35.6 million, or 36.8%, higher than the third quarter of 2016 and $57.0 million, or 75.5%, higher than the fourth quarter of 2015. The increase in net interest income in the fourth quarter of 2016 over the third quarter of 2016 was primarily attributable to loans acquired
in the merger with Talmer, although also partially attributable to organic loan growth. The increase in net interest income in the fourth quarter of 2016 over the fourth quarter of 2015 was attributable to the positive impact of 2016 organic loan growth and the impact of the merger with Talmer. The Corporation experienced net organic loan growth of $275.0 million during the fourth quarter of 2016 and $837.2 million during the year ended December 31, 2016. The merger with Talmer added $4.88 billion of loans on August 31, 2016.
The net interest margin was 3.48% in the fourth quarter of 2016, compared to 3.49% in the third quarter of 2016 and 3.55% in the fourth quarter of 2015. The net interest margin (on a tax-equivalent basis) was 3.56% in the fourth quarter of 2016, compared to 3.58% in the third quarter of 2016 and 3.64% in the fourth quarter of 2015.(3) The decrease in the net interest margin (on a tax-equivalent basis) in the fourth quarter of 2016, compared to the third quarter of 2016, was due primarily to an increase in FHLB borrowing costs, while the decrease in the fourth quarter of 2016, compared to the fourth quarter of 2015, was largely due to an increase in cost of funds significantly due to debt obtained related to transactions. The average yield on the loan portfolio was 4.18% in the fourth quarter of 2016, compared to 4.12% in the third quarter of 2016 and 4.16% in the fourth quarter of 2015. Interest accretion from purchase accounting discounts on acquired loans contributed 14 basis points to the Corporation's net interest margin (on a tax-equivalent basis) in the fourth quarter of 2016, compared to 11 basis points in the third quarter of 2016 and four basis points in the fourth quarter of 2015. Interest accretion on acquired loans comprised 16 basis points of the yield on the Corporation's loan portfolio in the fourth quarter of 2016, compared to 13 basis points in the third quarter of 2016 and five basis points in the fourth quarter of 2015. The Corporation's average cost of funds was 0.33% in the fourth quarter of 2016, compared to 0.25% in both the third quarter of 2016 and the fourth quarter of 2015.
Net interest income was $381.1 million for the year ended December 31, 2016, $107.1 million, or 39.1%, higher than 2015, with the increase attributable to a combination of organic loan growth and the impact of the merger with Talmer. The average balance of loans outstanding during the year ended December 31, 2016 were up $2.71 billion compared to the prior year, with the increase driven by the $4.88 billion of loans added on August 31, 2016 from the merger with Talmer and the $837.2 million of organic loan growth during 2016. The net interest margin was 3.51% in 2016 and 3.49% in 2015. The net interest margin (on a tax equivalent basis) was 3.60% in 2016 and 3.58% in 2015.(3)
The provision for loan losses was $6.3 million in the fourth quarter of 2016, compared to $4.1 million in the third quarter of 2016 and $2.0 million in the fourth quarter of 2015. The increase in the provision for loan losses in the fourth quarter of 2016, compared to both the third quarter of 2016 and the fourth quarter of 2015, was primarily due to organic growth in the loan portfolio. The provision for loan losses was $14.9 million for the year ended December 31, 2016, compared to $6.5 million in 2015, with the increase primarily due to organic growth in the loan portfolio.
Net loan charge-offs were $1.8 million, or 0.06% of average loans, in the fourth quarter of 2016, compared to $1.8 million, or 0.08% of average loans, in the third quarter of 2016 and $4.3 million, or 0.24% of average loans, in the fourth quarter of 2015. The decrease in net loan charge-offs in the fourth quarter of 2016, compared to the fourth quarter of 2015, was partially attributable to a $1.6 million net loan charge-off from one commercial loan relationship occurring in the fourth quarter of 2015. Net loan charge-offs totaled $9.9 million, or 0.11% of average loans, during the year ended December 31, 2016, compared to $8.9 million, or 0.13% of average loans, in 2015.
The Corporation's nonperforming loans totaled $44.3 million at December 31, 2016, compared to $41.3 million at September 30, 2016 and $62.2 million at December 31, 2015. Nonperforming loans comprised 0.34% of total loans at December 31, 2016, compared to 0.32% at September 30, 2016 and 0.86% at December 31, 2015. The reduction in nonperforming loans as a percentage of total loans at December 31, 2016, compared to December 31, 2015, was due to the combined impact of overall improvements in credit quality within the Corporation's loan portfolios and the addition of $4.88 billion of loans acquired in the Talmer merger that are all classified as performing as these acquired loans are recorded in pools at their net realizable value.
At December 31, 2016, the allowance for loan losses of the originated loan portfolio was $78.3 million, or 1.05% of originated loans, compared to $73.8 million, or 1.09% of originated loans, at September 30, 2016 and $73.3
million, or 1.26% of originated loans, at December 31, 2015. The decrease in the allowance coverage as a percentage of originated loans at December 31, 2016, compared to December 31, 2015, was primarily due to an overall improvement in credit quality and a decline in net credit charge-offs. The allowance for loan losses of the originated loan portfolio as a percentage of nonperforming loans was 176.5% at December 31, 2016, compared to 178.6% at September 30, 2016 and 117.8% at December 31, 2015.
Noninterest income was $54.3 million in the fourth quarter of 2016, compared to $27.8 million in the third quarter of 2016 and $20.1 million in the fourth quarter of 2015. Noninterest income in the fourth quarter of 2016 was higher than the third quarter of 2016 and the fourth quarter of 2015 primarily due to incremental revenue resulting from the merger with Talmer, in addition to a net gain on the sales of the Chicago, Illinois and Las Vegas, Nevada branches totaling $7.4 million and a $6.4 million benefit to earnings due to a change in fair value in loan servicing rights included within "mortgage banking revenue".
Noninterest income was $122.4 million for the year ended December 31, 2016, compared to $80.2 million in 2015. The increase was primarily due to incremental revenue resulting from the merger with Talmer in August 2016 and the acquisitions of Lake Michigan Financial Corporation in May 2015 and Monarch Community Bancorp in April 2015.
Operating expenses were $114.3 million in the fourth quarter of 2016, compared to $106.1 million in the third quarter of 2016 and $57.8 million in the fourth quarter of 2015. Operating expenses included transaction expenses of $18.0 million in the fourth quarter of 2016, $37.5 million in the third quarter of 2016 and $2.1 million in the fourth quarter of 2015. Excluding transaction expenses, operating expenses were $96.3 million in the fourth quarter of 2016, $27.6 million, or 40.2%, higher than the third quarter of 2016 and $40.5 million, or 72.7%, higher than the fourth quarter of 2015. The increase in operating expenses, excluding transaction expenses, in the fourth quarter of 2016, compared to both the third quarter of 2016 and the fourth quarter of 2015, was due to the incremental expenses resulting from the merger with Talmer.
Operating expenses were $338.4 million for the year ended December 31, 2016, compared to $223.9 million in 2015. Operating expenses included transaction expenses of $61.1 million in 2016 and $7.8 million in 2015. Excluding these transaction expenses, operating expenses were $277.3 million in 2016, an increase of $61.2 million, or 28.3%, over 2015, with the increase due primarily to incremental operating costs associated with the merger with Talmer.
The efficiency ratio is a measure of operating expenses as a percentage of net interest income and noninterest income. The Corporation's efficiency ratio was 61.2% in the fourth quarter of 2016, 85.2% in the third quarter of 2016 and 60.5% in the fourth quarter of 2015. The Corporation's efficiency ratio was 67.2% for the year ended December 31, 2016 and 63.2% for 2015. The Corporation's adjusted efficiency ratio, which excludes transaction expenses, changes in fair value of the legacy Talmer loan servicing portfolio, amortization of intangibles and net gains on sales of branches, closed branch locations and investment securities, was 53.7% in the fourth quarter of 2016, 52.6% in the third quarter of 2016 and 55.8% in the fourth quarter of 2015. The Corporation's adjusted efficiency ratio was 54.4% for the year ended December 31, 2016 and 58.7% for 2015.(4)
Total assets were $17.36 billion at December 31, 2016, compared to $17.38 billion at September 30, 2016 and $9.18 billion at December 31, 2015. The increase in total assets during the twelve months ended December 31, 2016 was primarily attributable to the merger with Talmer. As of the merger date, Talmer added total assets of $7.71 billion, including total loans of $4.88 billion and goodwill of $846.7 million.
Total loans were $12.99 billion at December 31, 2016, up $275.0 million, or 2.2%, from total loans of $12.72 billion at September 30, 2016 and up $5.72 billion, or 78.7%, from total loans of $7.27 billion at December 31, 2015. As of the merger date, the Corporation added $4.88 billion of loans as part of the merger with Talmer. Loan growth of $275.0 million during the fourth quarter of 2016 resulted from the impact of $702.5 million growth in the originated loan portfolio, partially offset by a $427.5 million decrease in the acquired loan portfolios. Loan growth, excluding the impact of the Talmer acquisition, of $837.2 million during the year ended December 31, 2016 resulted from the
impact of $1.65 billion growth in the originated loan portfolio, partially offset by an $813.2 million decrease in the acquired loan portfolios.
Total deposits were $12.87 billion at December 31, 2016, compared to $13.27 billion at September 30, 2016 and $7.46 billion at December 31, 2015. As of the merger date, the Corporation added $5.29 billion of deposits as part of the merger with Talmer, including $403.2 million of brokered deposits. During the fourth quarter of 2016, the Corporation reduced the balance of brokered deposits by $248.5 million. The Corporation experienced net run-off in customer deposits of $402.4 million during the fourth quarter of 2016; however, the Corporation also experienced net organic growth in customer deposits of $317.3 million for the year ended December 31, 2016.
Securities sold under agreements to repurchase with customers were $343.0 million at December 31, 2016, compared to $326.8 million at September 30, 2016 and $297.2 million at December 31, 2015. Short-term borrowings were $825.0 million at December 31, 2016, compared to $400.0 million at September 30, 2016 and $100.0 million at December 31, 2015 and consisted of short-term FHLB advances utilized by the Corporation to fund short-term liquidity needs. Long-term borrowings were $597.8 million at December 31, 2016, compared to $676.6 million at September 30, 2016 and $242.4 million at December 31, 2015. The increase in borrowings during the twelve months ended December 31, 2016 was primarily attributable to the merger with Talmer and the Corporation borrowing $125.0 million under a three-year credit facility to partially fund the cash portion of the merger consideration.
The Corporation's shareholders' equity to total assets ratio was 14.9% at December 31, 2016, compared to 14.7% at September 30, 2016 and 11.1% at December 31, 2015. The Corporation's tangible shareholders' equity to assets ratio and total risk-based capital ratio were 8.8% and 11.5% (estimated), respectively, at December 31, 2016, compared to 8.7% and 11.1%, respectively, at September 30, 2016 and 8.1% and 11.8%, respectively, at December 31, 2015.(5) The Corporation's book value was $36.57 per share at December 31, 2016, compared to $36.37 per share at September 30, 2016 and $26.62 per share at December 31, 2015. The Corporation's tangible book value was $20.20 per share at December 31, 2016, compared to $19.99 per share at September 30, 2016 and $18.78 per share at December 31, 2015.(6)
(1) Net income, excluding significant items, and diluted earnings per share, excluding significant items, are non-GAAP financial measures. 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.
(2) Return on average assets, excluding significant items, and return on average shareholders’ equity, excluding significant items, are non-GAAP financial measures. 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.
(3) Net interest margin, on a tax equivalent basis, is a non-GAAP financial measure. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Average Balances, Fully Tax Equivalent (FTE) Interest and Effective Yields and Rates” for a reconciliation of net interest income used to compute net interest margin on a tax equivalent basis to the most directly comparable GAAP financial measure.
(4) Adjusted efficiency ratio is a non-GAAP financial measure. 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 measure.
(5) Tangible equity to tangible assets ratio is a non-GAAP financial measure. 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 measure.
(6) Tangible book value per share is a non-GAAP financial measure. 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 measure.
Conference Call Details
Chemical Financial Corporation will host a conference call to discuss its fourth quarter and full year 2016 operating results on Thursday, January 26, 2017 at 10:00 am ET. Anyone interested may access the conference call on a live basis by dialing toll-free at 1-888-797-3007 and entering 879991 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 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.
About Chemical Financial Corporation
Chemical Financial Corporation is the largest banking company headquartered and operating branch offices in Michigan. The Corporation operates through its subsidiary bank, Chemical Bank, with 249 banking offices located in Michigan, northeast Ohio and northern Indiana. At December 31, 2016, the Corporation had total assets of $17.36 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 the Corporation is available by visiting the "Investor Info" section of its website at www.chemicalbank.com.
Non-GAAP Financial Measures
This press release contains references to financial measures which are not defined in generally accepted accounting principles ("GAAP"). Such non-GAAP financial measures include the Corporation's tangible equity to tangible assets ratio, tangible book value per share, presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis, and information presented excluding significant items, including net income, diluted earnings per share, return on average assets, return on average shareholders' equity, operating expenses and the efficiency ratio. These non-GAAP financial measures have been included as the Corporation believes they are helpful for investors to analyze and evaluate the Corporation's financial condition. 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 the Corporation. Words and phrases such as "anticipates," "believes," "continue," "estimates," "expects," "forecasts," "future," "intends," "is likely," "judgment," "look ahead," "look forward," "on schedule," "opinion," "opportunity," "plans," "predicts," "probable," "projects," "should," "strategic," "trend," "will," and variations of such words and phrases or similar expressions are intended to identify such forward-looking statements. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to future levels of loan charge-offs, future levels of provisions for loan losses, real estate valuation, future levels of nonperforming assets, the rate of asset dispositions, future capital levels, future dividends, future growth and funding sources, future liquidity levels, future profitability levels, future deposit insurance premiums, future asset levels, the effects on earnings of future changes in interest rates, the future level of other revenue sources, future economic trends and conditions, future initiatives to expand the Corporation’s market share, expected performance and cash flows from acquired loans, future effects of new or changed accounting standards, future opportunities for acquisitions, opportunities to increase top line revenues, the Corporation’s ability to grow its core franchise, future cost savings and the Corporation’s ability to maintain adequate liquidity and capital based on the requirements adopted by the Basel Committee on Banking Supervision and U.S. regulators. All statements referencing future time periods are forward-looking.
Management's determination of the provision and allowance for loan losses; the carrying value of acquired loans, goodwill and mortgage servicing rights; the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment);
and management's assumptions concerning pension and other postretirement benefit plans involve judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated. All of the information concerning interest rate sensitivity is forward-looking. The future effect of changes in the financial and credit markets and the national and regional economies on the banking industry, generally, and on the Corporation, specifically, are also inherently uncertain. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
Risk factors include, but are not limited to, the risk factors described in Item 1A of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation
(In thousands, except per share data)
|
| | | | | | | | | | | | |
| | December 31, 2016 | | September 30, 2016 | | December 31, 2015 |
Assets | | | | | | |
Cash and cash equivalents: | | | | | | |
Cash and cash due from banks | | $ | 272,048 |
| | $ | 286,351 |
| | $ | 194,136 |
|
Interest-bearing deposits with the Federal Reserve Bank and other banks and federal funds sold | | 202,354 |
| | 270,216 |
| | 44,653 |
|
Total cash and cash equivalents | | 474,402 |
| | 556,567 |
| | 238,789 |
|
Investment securities: | | | | | | |
Available-for-sale | | 1,234,964 |
| | 1,303,381 |
| | 553,731 |
|
Held-to-maturity | | 623,427 |
| | 563,721 |
| | 509,971 |
|
Total investment securities | | 1,858,391 |
| | 1,867,102 |
| | 1,063,702 |
|
Loans held-for-sale | | 81,830 |
| | 276,061 |
| | 10,327 |
|
Loans: | | | | | | |
Total loans | | 12,990,779 |
| | 12,715,789 |
| | 7,271,147 |
|
Allowance for loan losses | | (78,268 | ) | | (73,775 | ) | | (73,328 | ) |
Net loans | | 12,912,511 |
| | 12,642,014 |
| | 7,197,819 |
|
Premises and equipment | | 145,012 |
| | 144,165 |
| | 106,317 |
|
Loan servicing rights | | 58,315 |
| | 51,393 |
| | 11,122 |
|
Goodwill | | 1,133,534 |
| | 1,137,166 |
| | 287,393 |
|
Other intangible assets | | 40,211 |
| | 35,700 |
| | 26,982 |
|
Interest receivable and other assets | | 650,973 |
| | 673,469 |
| | 246,346 |
|
Total Assets | | $ | 17,355,179 |
| | $ | 17,383,637 |
| | $ | 9,188,797 |
|
Liabilities | | | | | | |
Deposits: | | | | | | |
Noninterest-bearing | | $ | 3,341,520 |
| | $ | 3,264,934 |
| | $ | 1,934,583 |
|
Interest-bearing | | 9,531,602 |
| | 10,007,928 |
| | 5,522,184 |
|
Total deposits | | 12,873,122 |
| | 13,272,862 |
| | 7,456,767 |
|
Interest payable and other liabilities | | 134,637 |
| | 143,708 |
| | 76,466 |
|
Securities sold under agreements to repurchase with customers | | 343,047 |
| | 326,789 |
| | 297,199 |
|
Short-term borrowings | | 825,000 |
| | 400,000 |
| | 100,000 |
|
Long-term borrowings | | 597,847 |
| | 676,612 |
| | 242,391 |
|
Total liabilities | | 14,773,653 |
| | 14,819,971 |
| | 8,172,823 |
|
Shareholders' Equity | | | | | | |
Preferred stock, no par value per share | | — |
| | — |
| | — |
|
Common stock, $1 par value per share | | 70,599 |
| | 70,497 |
| | 38,168 |
|
Additional paid-in capital | | 2,210,762 |
| | 2,207,345 |
| | 725,280 |
|
Retained earnings | | 340,201 |
| | 310,966 |
| | 281,558 |
|
Accumulated other comprehensive loss | | (40,036 | ) | | (25,142 | ) | | (29,032 | ) |
Total shareholders' equity | | 2,581,526 |
| | 2,563,666 |
| | 1,015,974 |
|
Total Liabilities and Shareholders' Equity | | $ | 17,355,179 |
| | $ | 17,383,637 |
| | $ | 9,188,797 |
|
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation
(In thousands, except per share data)
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Twelve Months Ended |
| December 31, 2016 | | September 30, 2016(1) | | December 31, 2015 | | December 31, 2016 | | December 31, 2015 |
Interest Income | | | | | | | | | |
Interest and fees on loans | $ | 134,463 |
| | $ | 97,103 |
| | $ | 75,253 |
| | $ | 383,545 |
| | $ | 271,772 |
|
Interest on investment securities: | | | | | | | | | |
Taxable | 4,687 |
| | 2,575 |
| | 2,044 |
| | 10,989 |
| | 8,786 |
|
Tax-exempt | 3,940 |
| | 3,072 |
| | 2,583 |
| | 12,317 |
| | 9,073 |
|
Dividends on nonmarketable equity securities | 582 |
| | 358 |
| | 633 |
| | 1,973 |
| | 1,648 |
|
Interest on deposits with the Federal Reserve Bank and other banks and federal funds sold | 744 |
| | 454 |
| | 116 |
| | 1,555 |
| | 510 |
|
Total interest income | 144,416 |
| | 103,562 |
| | 80,629 |
| | 410,379 |
| | 291,789 |
|
Interest Expense | | | | | | | | | |
Interest on deposits | 8,866 |
| | 5,836 |
| | 4,120 |
| | 23,021 |
| | 15,406 |
|
Interest on short-term borrowings | 875 |
| | 459 |
| | 110 |
| | 1,660 |
| | 453 |
|
Interest on long-term borrowings | 2,228 |
| | 458 |
| | 923 |
| | 4,617 |
| | 1,922 |
|
Total interest expense | 11,969 |
| | 6,753 |
| | 5,153 |
| | 29,298 |
| | 17,781 |
|
Net Interest Income | 132,447 |
| | 96,809 |
| | 75,476 |
| | 381,081 |
| | 274,008 |
|
Provision for loan losses | 6,272 |
| | 4,103 |
| | 2,000 |
| | 14,875 |
| | 6,500 |
|
Net interest income after provision for loan losses | 126,175 |
| | 92,706 |
| | 73,476 |
| | 366,206 |
| | 267,508 |
|
Noninterest Income | | | | | | | | | |
Service charges and fees on deposit accounts | 8,414 |
| | 7,665 |
| | 6,398 |
| | 28,136 |
| | 25,481 |
|
Wealth management revenue | 6,034 |
| | 5,584 |
| | 5,151 |
| | 22,601 |
| | 20,552 |
|
Other charges and fees for customer services | 9,981 |
| | 7,410 |
| | 6,189 |
| | 30,246 |
| | 25,513 |
|
Mortgage banking revenue | 14,420 |
| | 4,439 |
| | 1,606 |
| | 21,859 |
| | 6,133 |
|
Gain on sale of branches | 7,391 |
| | — |
| | — |
| | 7,391 |
| | — |
|
Gain on sale of investment securities | 76 |
| | 16 |
| | 18 |
| | 129 |
| | 630 |
|
Other | 7,948 |
| | 2,656 |
| | 690 |
| | 11,988 |
| | 1,907 |
|
Total noninterest income | 54,264 |
| | 27,770 |
| | 20,052 |
| | 122,350 |
| | 80,216 |
|
Operating Expenses | | | | | | | | | |
Salaries, wages and employee benefits | 57,631 |
| | 40,565 |
| | 32,971 |
| | 165,213 |
| | 127,920 |
|
Occupancy | 7,644 |
| | 5,462 |
| | 4,620 |
| | 23,525 |
| | 18,213 |
|
Equipment and software | 8,709 |
| | 6,420 |
| | 5,102 |
| | 24,408 |
| | 18,569 |
|
Merger and acquisition-related transaction expenses (transaction expenses) | 18,016 |
| | 37,470 |
| | 2,085 |
| | 61,134 |
| | 7,804 |
|
Other | 22,302 |
| | 16,227 |
| | 13,046 |
| | 64,138 |
| | 51,388 |
|
Total operating expenses | 114,302 |
| | 106,144 |
| | 57,824 |
| | 338,418 |
| | 223,894 |
|
Income before income taxes | 66,137 |
| | 14,332 |
| | 35,704 |
| | 150,138 |
| | 123,830 |
|
Income tax expense | 18,969 |
| | 2,848 |
| | 10,200 |
| | 42,106 |
| | 37,000 |
|
Net Income | $ | 47,168 |
| | $ | 11,484 |
| | $ | 25,504 |
| | $ | 108,032 |
| | $ | 86,830 |
|
Earnings Per Common Share: | | | | | | | | | |
Weighted average common shares outstanding-basic | 70,171 |
| | 49,107 |
| | 38,150 |
| | 49,091 |
| | 36,081 |
|
Weighted average common shares outstanding-diluted | 71,304 |
| | 49,631 |
| | 38,498 |
| | 49,603 |
| | 36,353 |
|
Basic earnings per common share | $ | 0.67 |
| | $ | 0.23 |
| | $ | 0.67 |
| | $ | 2.21 |
| | $ | 2.41 |
|
Diluted earnings per common share | $ | 0.66 |
| | $ | 0.23 |
| | $ | 0.66 |
| | $ | 2.17 |
| | $ | 2.39 |
|
Cash Dividends Declared Per Common Share | $ | 0.27 |
| | $ | 0.27 |
| | $ | 0.26 |
| | $ | 1.06 |
| | $ | 1.00 |
|
Key Ratios (annualized where applicable): | |
| | | | |
| | | | |
Return on average assets | 1.09 | % | | 0.37 | % | | 1.11 | % | | 0.90 | % | | 1.02 | % |
Return on average shareholders' equity | 7.4 | % | | 2.9 | % | | 10.2 | % | | 7.0 | % | | 9.4 | % |
Net interest margin (tax-equivalent basis) (non-GAAP) | 3.56 | % | | 3.58 | % | | 3.64 | % | | 3.60 | % | | 3.58 | % |
Efficiency ratio - GAAP | 61.2 | % | | 85.2 | % | | 60.5 | % | | 67.2 | % | | 63.2 | % |
Efficiency ratio - adjusted (non-GAAP) | 53.7 | % | | 52.6 | % | | 55.8 | % | | 54.4 | % | | 58.7 | % |
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Selected Quarterly Information (Unaudited)
Chemical Financial Corporation
(Dollars in thousands, except per share data)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 4th Quarter 2016 | | 3rd Quarter 2016(1) | | 2nd Quarter 2016(1) | | 1st Quarter 2016(1) | | 4th Quarter 2015 | | 3rd Quarter 2015 | | 2nd Quarter 2015 | | 1st Quarter 2015 |
| | | | | | | | | | | | | | | |
Summary of Operations | | | | | | | | | | | | | | | |
|
Interest income | $ | 144,416 |
| | $ | 103,562 |
| | $ | 82,937 |
| | $ | 79,464 |
| | $ | 80,629 |
| | $ | 78,851 |
| | $ | 69,679 |
| | $ | 62,630 |
|
Interest expense | 11,969 |
| | 6,753 |
| | 5,442 |
| | 5,134 |
| | 5,153 |
| | 5,234 |
| | 3,944 |
| | 3,450 |
|
Net interest income | 132,447 |
| | 96,809 |
| | 77,495 |
| | 74,330 |
| | 75,476 |
| | 73,617 |
| | 65,735 |
| | 59,180 |
|
Provision for loan losses | 6,272 |
| | 4,103 |
| | 3,000 |
| | 1,500 |
| | 2,000 |
| | 1,500 |
| | 1,500 |
| | 1,500 |
|
Net interest income after provision for loan losses | 126,175 |
| | 92,706 |
| | 74,495 |
| | 72,830 |
| | 73,476 |
| | 72,117 |
| | 64,235 |
| | 57,680 |
|
Noninterest income | 54,264 |
| | 27,770 |
| | 20,897 |
| | 19,419 |
| | 20,052 |
| | 20,215 |
| | 20,674 |
| | 19,275 |
|
Operating expenses, excluding transaction expenses (non-GAAP) | 96,286 |
| | 68,674 |
| | 56,031 |
| | 56,293 |
| | 55,739 |
| | 57,365 |
| | 53,328 |
| | 49,658 |
|
Transaction expenses | 18,016 |
| | 37,470 |
| | 3,054 |
| | 2,594 |
| | 2,085 |
| | 900 |
| | 3,457 |
| | 1,362 |
|
Income before income taxes | 66,137 |
| | 14,332 |
| | 36,307 |
| | 33,362 |
| | 35,704 |
| | 34,067 |
| | 28,124 |
| | 25,935 |
|
Income tax expense | 18,969 |
| | 2,848 |
| | 10,532 |
| | 9,757 |
| | 10,200 |
| | 9,600 |
| | 9,100 |
| | 8,100 |
|
Net income | $ | 47,168 |
| | $ | 11,484 |
| | $ | 25,775 |
| | $ | 23,605 |
| | $ | 25,504 |
| | $ | 24,467 |
| | $ | 19,024 |
| | $ | 17,835 |
|
Significant items, net of tax | 2,777 |
| | 25,992 |
| | 1,985 |
| | 1,686 |
| | 1,355 |
| | 585 |
| | 2,659 |
| | 885 |
|
Net income, excluding significant items | $ | 49,945 |
| | $ | 37,476 |
| | $ | 27,760 |
| | $ | 25,291 |
| | $ | 26,859 |
| | $ | 25,052 |
| | $ | 21,683 |
| | $ | 18,720 |
|
| | | | | | | | | | | | | | | |
Per Common Share Data | | | | | | | | | | | | | | | |
|
Net income: | | | | | | | | | | | | | | | |
|
Basic | $ | 0.67 |
| | $ | 0.23 |
| | $ | 0.67 |
| | $ | 0.61 |
| | $ | 0.67 |
| | $ | 0.64 |
| | $ | 0.54 |
| | $ | 0.54 |
|
Diluted | 0.66 |
| | 0.23 |
| | 0.67 |
| | 0.60 |
| | 0.66 |
| | 0.64 |
| | 0.54 |
| | 0.54 |
|
Diluted, excluding significant items (non-GAAP) | 0.70 |
| | 0.75 |
| | 0.72 |
| | 0.65 |
| | 0.70 |
| | 0.65 |
| | 0.61 |
| | 0.57 |
|
Cash dividends declared | 0.27 |
| | 0.27 |
| | 0.26 |
| | 0.26 |
| | 0.26 |
| | 0.26 |
| | 0.24 |
| | 0.24 |
|
Book value - period-end | 36.57 |
| | 36.37 |
| | 27.45 |
| | 26.99 |
| | 26.62 |
| | 26.18 |
| | 25.74 |
| | 24.68 |
|
Tangible book value - period-end | 20.20 |
| | 19.99 |
| | 19.68 |
| | 19.20 |
| | 18.78 |
| | 18.32 |
| | 17.89 |
| | 18.95 |
|
Market value - period-end | 54.17 |
| | 44.13 |
| | 37.29 |
| | 35.69 |
| | 34.27 |
| | 32.35 |
| | 33.06 |
| | 31.36 |
|
| | | | | | | | | | | | | | | |
Net interest margin (taxable equivalent basis) (non-GAAP) | 3.56 | % | | 3.58 | % | | 3.70 | % | | 3.60 | % | | 3.64 | % | | 3.55 | % | | 3.59 | % | | 3.55 | % |
Efficiency ratio - adjusted (non-GAAP) | 53.7 | % | | 53.2 | % | | 54.6 | % | | 57.6 | % | | 55.8 | % | | 58.6 | % | | 59.4 | % | | 61.5 | % |
Return on average assets | 1.09 | % | | 0.37 | % | | 1.10 | % | | 1.02 | % | | 1.11 | % | | 1.05 | % | | 0.94 | % | | 0.98 | % |
Return on average shareholders' equity | 7.4 | % | | 2.9 | % | | 10.0 | % | | 9.3 | % | | 10.2 | % | | 9.8 | % | | 8.6 | % | | 9.0 | % |
Average shareholders' equity as a percent of average assets | 14.9 | % | | 12.7 | % | | 11.1 | % | | 11.0 | % | | 10.9 | % | | 10.7 | % | | 10.9 | % | | 10.8 | % |
Capital ratios (period end): | | | | | | | | | | | | | | | |
Tangible shareholders' equity as a percent of tangible assets | 8.8 | % | | 8.7 | % | | 8.2 | % | | 8.2 | % | | 8.1 | % | | 7.8 | % | | 7.8 | % | | 8.5 | % |
Total risk-based capital ratio (2) | 11.5 | % | | 11.1 | % | | 11.4 | % | | 11.5 | % | | 11.8 | % | | 11.6 | % | | 11.6 | % | | 13.0 | % |
(1) The third quarter, second quarter and first quarter of 2016 information is revised to reflect the impact of the early adoption of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." The early adoption resulted in $752 thousand, $68 thousand and $343 thousand of excess tax benefits recognized within "Income tax expense" during the three months ended September 30, June 30 and March 31, 2016, respectively, rather than previously recognized directly into equity within "Additional paid-in-capital."
(2) Estimated at December 31, 2016.
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)(1)
Chemical Financial Corporation
(Dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| December 31, 2016 | | September 30, 2016 | | December 31, 2015 |
| 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) | $ | 12,895,557 |
| | $ | 135,301 |
| | 4.18 | % | | $ | 9,470,650 |
| | $ | 97,880 |
| | 4.12 | % | | $ | 7,241,339 |
| | $ | 75,905 |
| | 4.16 | % |
Taxable investment securities | 1,065,453 |
| | 4,687 |
| | 1.76 |
| | 687,259 |
| | 2,575 |
| | 1.50 |
| | 609,406 |
| | 2,044 |
| | 1.34 |
|
Tax-exempt investment securities(1) | 807,093 |
| | 6,047 |
| | 3.00 |
| | 592,747 |
| | 4,721 |
| | 3.19 |
| | 481,968 |
| | 3,973 |
| | 3.30 |
|
Other interest-earning assets | 80,202 |
| | 582 |
| | 2.89 |
| | 57,756 |
| | 358 |
| | 2.47 |
| | 36,799 |
| | 633 |
| | 6.82 |
|
Interest-bearing deposits with the FRB and other banks and federal funds sold | 307,802 |
| | 744 |
| | 0.96 |
| | 249,731 |
| | 454 |
| | 0.72 |
| | 87,952 |
| | 116 |
| | 0.52 |
|
Total interest-earning assets | 15,156,107 |
| | 147,361 |
| | 3.87 |
| | 11,058,143 |
| | 105,988 |
| | 3.82 |
| | 8,457,464 |
| | 82,671 |
| | 3.89 |
|
Less: allowance for loan losses | (74,822 | ) | | | | | | (72,242 | ) | | | | | | (75,225 | ) | | | | |
Other assets: | | | | | | | | | | | | | | | | | |
Cash and cash due from banks | 245,613 |
| | | | | | 194,171 |
| | | | | | 157,939 |
| | | | |
Premises and equipment | 144,652 |
| | | | | | 116,944 |
| | | | | | 110,141 |
| | | | |
Interest receivable and other assets | 1,793,118 |
| | | | | | 953,714 |
| | | | | | 524,905 |
| | | | |
Total assets | $ | 17,264,668 |
| | | | | | $ | 12,250,730 |
| | | | | | $ | 9,175,224 |
| | | | |
Liabilities and shareholders' equity | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | $ | 2,680,241 |
| | $ | 1,266 |
| | 0.19 | % | | $ | 2,327,762 |
| | $ | 961 |
| | 0.16 | % | | $ | 1,816,694 |
| | $ | 414 |
| | 0.09 | % |
Savings deposits | 3,490,972 |
| | 1,263 |
| | 0.14 |
| | 2,512,620 |
| | 749 |
| | 0.12 |
| | 2,024,543 |
| | 393 |
| | 0.08 |
|
Time deposits | 3,209,695 |
| | 6,337 |
| | 0.79 |
| | 2,186,781 |
| | 4,126 |
| | 0.75 |
| | 1,671,913 |
| | 3,313 |
| | 0.79 |
|
Short-term borrowings | 949,292 |
| | 875 |
| | 0.38 |
| | 593,903 |
| | 459 |
| | 3.10 |
| | 405,713 |
| | 110 |
| | 0.11 |
|
Long-term borrowings | 600,066 |
| | 2,228 |
| | 1.41 |
| | 494,810 |
| | 458 |
| | 0.37 |
| | 243,170 |
| | 923 |
| | 1.51 |
|
Total interest-bearing liabilities | 10,930,266 |
| | 11,969 |
| | 0.44 |
| | 8,115,876 |
| | 6,753 |
| | 0.33 |
| | 6,162,033 |
| | 5,153 |
| | 0.33 |
|
Noninterest-bearing deposits | 3,622,365 |
| | — |
| | — |
| | 2,456,469 |
| | — |
| | — |
| | 1,936,328 |
| | — |
| | — |
|
Total deposits and borrowed funds | 14,552,631 |
| | 11,969 |
| | 0.33 |
| | 10,572,345 |
| | 6,753 |
| | 0.25 |
| | 8,098,361 |
| | 5,153 |
| | 0.25 |
|
Interest payable and other liabilities | 147,094 |
| | | | | | 118,717 |
| | | | | | 76,516 |
| | | | |
Shareholders' equity | 2,564,943 |
| | | | | | 1,559,668 |
| | | | | | 1,000,347 |
| | | | |
Total liabilities and shareholders' equity | $ | 17,264,668 |
| | | | | | $ | 12,250,730 |
| | | | | | $ | 9,175,224 |
| | | | |
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities) | | 3.43 | % | | | | | | 3.49 | % | | | | | | 3.56 | % |
Net Interest Income (FTE) | | | $ | 135,392 |
| | | | | | $ | 99,235 |
| | | | | | $ | 77,518 |
| | |
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets) | | 3.56 | % | | | | | | 3.58 | % | | | | | | 3.64 | % |
| | | | | | | | | | | | | | | | | |
Reconciliation to Reported Net Interest Income | | | | | | | | | | | | | | | | |
Net interest income, fully taxable equivalent (non-GAAP) | | $ | 135,392 |
| | | | | | $ | 99,235 |
| | | | | | $ | 77,518 |
| | |
Adjustments for taxable equivalent interest(1): | | | | | | | | | | | | | | | | |
Loans | | | (838 | ) | | | | | | (777 | ) | | | | | | (652 | ) | | |
Tax-exempt investment securities | | | (2,107 | ) | | | | | | (1,649 | ) | | | | | | (1,390 | ) | | |
Total taxable equivalent interest adjustments | | (2,945 | ) | | | | | | (2,426 | ) | | | | | | (2,042 | ) | | |
Net interest income (GAAP) | | | $ | 132,447 |
| | | | | | $ | 96.809 |
| | | | | | $ | 75,476 |
| | |
Net interest margin (GAAP) | | | 3.48 | % | | | | | | 3.49 | % | | | | | | 3.55 | % | | |
(1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%. 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. Also, tax equivalent interest includes net loan fees.
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Average Balances, Tax Equivalent Interest and Effective Yields and Rates (Unaudited)(1)
Chemical Financial Corporation
(Dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Twelve Months Ended December 31, 2016 | | Twelve Months Ended December 31, 2015 |
| | Average Balance | | Interest (FTE) | | Effective Yield/Rate(1) | | Average Balance | | Interest (FTE) | | Effective
Yield/Rate(1) |
Assets | | |
Interest-earning assets: | | | | | | | | | | | | |
Loans(1)(2) | | $ | 9,304,573 |
| | $ | 386,575 |
| | 4.15 | % | | $ | 6,594,507 |
| | $ | 274,341 |
| | 4.16 | % |
Taxable investment securities | | 706,567 |
| | 10,989 |
| | 1.56 |
| | 683,612 |
| | 8,786 |
| | 1.29 |
|
Tax-exempt investment securities(1) | | 595,677 |
| | 18,929 |
| | 3.18 |
| | 415,092 |
| | 13,956 |
| | 3.36 |
|
Other interest-earning assets | | 55,341 |
| | 1,973 |
| | 3.57 |
| | 34,188 |
| | 1,648 |
| | 4.82 |
|
Interest-bearing deposits with the FRB and other banks and federal funds sold | | 194,637 |
| | 1,555 |
| | 0.80 |
| | 123,735 |
| | 510 |
| | 0.41 |
|
Total interest-earning assets | | 10,856,795 |
| | 420,021 |
| | 3.87 |
| | 7,851,134 |
| | 299,241 |
| | 3.81 |
|
Less: allowance for loan losses | | (73,136 | ) | | | | | | (75,378 | ) | | | | |
Other assets: | | | | | | | | | | | | |
Cash and cash due from banks | | 186,706 |
| | | | | | 155,109 |
| | | | |
Premises and equipment | | 118,080 |
| | | | | | 105,904 |
| | | | |
Interest receivable and other assets | | 948,710 |
| | | | | | 444,459 |
| | | | |
Total assets | | $ | 12,037,155 |
| | | | | | $ | 8,481,228 |
| | | | |
Liabilities and shareholders' equity | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | |
Interest-bearing demand deposits | | $ | 2,143,064 |
| | $ | 3,277 |
| | 0.15 | % | | $ | 1,661,592 |
| | $ | 1,465 |
| | 0.09 | % |
Savings deposits | | 2,534,038 |
| | 2,877 |
| | 0.11 |
| | 1,947,659 |
| | 1,512 |
| | 0.08 |
|
Time deposits | | 2,154,118 |
| | 16,867 |
| | 0.78 |
| | 1,557,425 |
| | 12,429 |
| | 0.80 |
|
Short-term borrowings | | 571,510 |
| | 1,660 |
| | 0.29 |
| | 420,529 |
| | 453 |
| | 0.11 |
|
Other borrowings | | 418,636 |
| | 4,617 |
| | 1.10 |
| | 117,000 |
| | 1,922 |
| | 1.64 |
|
Total interest-bearing liabilities | | 7,821,366 |
| | 29,298 |
| | 0.37 |
| | 5,704,205 |
| | 17,781 |
| | 0.31 |
|
Noninterest-bearing deposits | | 2,566,342 |
| | — |
| | — |
| | 1,791,991 |
| | — |
| | — |
|
Total deposits and borrowed funds | | 10,387,708 |
| | 29,298 |
| | 0.28 |
| | 7,496,196 |
| | 17,781 |
| | 0.24 |
|
Interest payable and other liabilities | | 102,726 |
| | | | | | 65,704 |
| | | | |
Shareholders' equity | | 1,546,721 |
| | | | | | 919,328 |
| | | | |
Total liabilities and shareholders' equity | | $ | 12,037,155 |
| | | | | | $ | 8,481,228 |
| | | | |
Net Interest Spread (Average yield earned on interest-earning assets minus average rate paid on interest-bearing liabilities) | | | | 3.50 | % | | | | | | 3.50 | % |
Net Interest Income (FTE) | | | | $ | 390,723 |
| | | | | | $ | 281,460 |
| | |
Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets) | | | | 3.60 | % | | | | | | 3.58 | % |
| | | | | | | | | | | | |
Reconciliation to Reported Net Interest Income | | | | | | | | | | |
Net interest income, fully taxable equivalent (non-GAAP) | | $ | 390,723 |
| | | | | | $ | 281,460 |
| | |
Adjustments for taxable equivalent interest(1): | | | |
| | | | | |
| | |
Loans | | | | (3,030 | ) | | | | | | (2,569 | ) | | |
Tax-exempt investment securities | | | | (6,612 | ) | | | | | | (4,883 | ) | | |
Total taxable equivalent interest adjustments | | | | (9,642 | ) | | | | | | (7,452 | ) | | |
Net interest income (GAAP) | | | | $ | 381,081 |
| | | | | | $ | 274,008 |
| | |
Net interest margin (GAAP) | | | | 3.51 | % | | | | | | 3.49 | % | | |
(1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%. 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. Also, tax equivalent interest includes net loan fees.
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Noninterest Income and Operating Expenses Information (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 4th Quarter 2016 | | 3rd Quarter 2016 | | 2nd Quarter 2016 | | 1st Quarter 2016 | | 4th Quarter 2015 | | 3rd Quarter 2015 | | 2nd Quarter 2015 | | 1st Quarter 2015 |
| | | |
Noninterest income | | | | | | | | | | | | | | | |
Service charges and fees on deposit accounts | $ | 8,414 |
| | $ | 7,665 |
| | $ | 6,337 |
| | $ | 5,720 |
| | $ | 6,398 |
| | $ | 6,722 |
| | $ | 6,445 |
| | $ | 5,916 |
|
Wealth management revenue | 6,034 |
| | 5,584 |
| | 5,782 |
| | 5,201 |
| | 5,151 |
| | 4,725 |
| | 5,605 |
| | 5,071 |
|
Electronic banking fees | 8,196 |
| | 5,533 |
| | 4,786 |
| | 4,918 |
| | 4,712 |
| | 5,059 |
| | 4,775 |
| | 4,572 |
|
Mortgage banking revenue | 14,420 |
| | 4,439 |
| | 1,595 |
| | 1,405 |
| | 1,606 |
| | 1,436 |
| | 1,688 |
| | 1,403 |
|
Other fees for customer services | 1,785 |
| | 1,877 |
| | 1,677 |
| | 1,474 |
| | 1,839 |
| | 1,759 |
| | 1,741 |
| | 1,418 |
|
Gain on sale of investment securities | 76 |
| | 16 |
| | 18 |
| | 19 |
| | 18 |
| | 5 |
| | 28 |
| | 579 |
|
Gain on sale of branch offices | 7,391 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Other | 7,948 |
| | 2,656 |
| | 702 |
| | 682 |
| | 328 |
| | 509 |
| | 392 |
| | 316 |
|
Total noninterest income | $ | 54,264 |
| | $ | 27,770 |
| | $ | 20,897 |
| | $ | 19,419 |
| | $ | 20,052 |
| | $ | 20,215 |
| | $ | 20,674 |
| | $ | 19,275 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 4th Quarter 2016 | | 3rd Quarter 2016 | | 2nd Quarter 2016 | | 1st Quarter 2016 | | 4th Quarter 2015 | | 3rd Quarter 2015 | | 2nd Quarter 2015 | | 1st Quarter 2015 |
| | | |
Operating expenses | | | | | | | | | | | | | | | |
Salaries and wages | $ | 47,936 |
| | $ | 33,841 |
| | $ | 26,887 |
| | $ | 26,743 |
| | $ | 27,341 |
| | $ | 27,872 |
| | $ | 25,535 |
| | $ | 23,741 |
|
Employee benefits | 9,695 |
| | 6,724 |
| | 6,240 |
| | 7,147 |
| | 5,630 |
| | 6,113 |
| | 6,176 |
| | 5,512 |
|
Occupancy | 7,644 |
| | 5,462 |
| | 5,514 |
| | 4,905 |
| | 4,620 |
| | 4,781 |
| | 4,386 |
| | 4,426 |
|
Equipment and software | 8,709 |
| | 6,420 |
| | 4,875 |
| | 4,404 |
| | 5,102 |
| | 4,589 |
| | 4,480 |
| | 4,398 |
|
Outside processing and service fees | 7,290 |
| | 5,365 |
| | 4,833 |
| | 3,711 |
| | 3,576 |
| | 4,146 |
| | 3,926 |
| | 3,558 |
|
FDIC insurance premiums | 2,813 |
| | 1,849 |
| | 1,338 |
| | 1,407 |
| | 1,482 |
| | 1,441 |
| | 1,337 |
| | 1,225 |
|
Professional fees | 2,304 |
| | 1,472 |
| | 1,020 |
| | 1,036 |
| | 1,112 |
| | 1,235 |
| | 1,258 |
| | 1,237 |
|
Intangible asset amortization | 1,843 |
| | 1,292 |
| | 1,195 |
| | 1,194 |
| | 1,341 |
| | 1,270 |
| | 987 |
| | 791 |
|
Credit-related expenses | (1,029 | ) | | (371 | ) | | (1,331 | ) | | 30 |
| | 600 |
| | 90 |
| | (192 | ) | | 133 |
|
Transaction expenses | 18,016 |
| | 37,470 |
| | 3,054 |
| | 2,594 |
| | 2,085 |
| | 900 |
| | 3,457 |
| | 1,362 |
|
Other | 9,081 |
| | 6,620 |
| | 5,460 |
| | 5,716 |
| | 4,935 |
| | 5,828 |
| | 5,435 |
| | 4,637 |
|
Total operating expenses | $ | 114,302 |
| | $ | 106,144 |
| | $ | 59,085 |
| | $ | 58,887 |
| | $ | 57,824 |
| | $ | 58,265 |
| | $ | 56,785 |
| | $ | 51,020 |
|
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Composition of Loans and Deposits and Additional Information on Intangible Assets (Unaudited)
Chemical Financial Corporation
(Dollars in Thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dec 31,
2016 | | Sept 30, 2016 | | Organic Growth - Three Months Ended Dec 31, 2016 | | Talmer Merger Aug 31, 2016 | | June 30, 2016 | | March 31, 2016 | | Dec 31,
2015 | | Organic Growth - Twelve Months Ended Dec 31, 2016 |
| | | | | | | | | | | | | | | |
Composition of Loans | | | | | | | | | | | | | | | |
Commercial loan portfolio: | | | | | | | | | | | | | | | |
Commercial | $ | 3,444,376 |
| | $ | 3,435,283 |
| | 0.3 | % | | $ | 1,453,628 |
| | $ | 1,953,301 |
| | $ | 1,922,259 |
| | $ | 1,905,879 |
| | 4.5 | % |
Commercial real estate | 3,746,064 |
| | 3,497,670 |
| | 7.1 |
| | 1,359,451 |
| | 2,157,733 |
| | 2,143,051 |
| | 2,112,162 |
| | 13.0 |
|
Real estate construction | 403,772 |
| | 500,494 |
| | (19.3 | ) | | 166,364 |
| | 285,848 |
| | 242,899 |
| | 232,076 |
| | 2.3 |
|
Subtotal - commercial loans | 7,594,212 |
| | 7,433,447 |
| | 2.2 |
| | 2,979,443 |
| | 4,396,882 |
| | 4,308,209 |
| | 4,250,117 |
| | 8.6 |
|
Consumer loan portfolio: | | | | | | | | | | | | | | | |
Residential mortgage | 3,086,474 |
| | 3,046,959 |
| | 1.3 |
| | 1,531,641 |
| | 1,494,192 |
| | 1,461,120 |
| | 1,429,636 |
| | 8.8 |
|
Consumer installment | 1,433,884 |
| | 1,335,707 |
| | 7.4 |
| | 158,835 |
| | 1,048,622 |
| | 897,078 |
| | 877,457 |
| | 45.3 |
|
Home equity | 876,209 |
| | 899,676 |
| | (2.6 | ) | | 212,483 |
| | 707,573 |
| | 700,478 |
| | 713,937 |
| | (7.0 | ) |
Subtotal - consumer loans | 5,396,567 |
| | 5,282,342 |
| | 2.2 |
| | 1,902,959 |
| | 3,250,387 |
| | 3,058,676 |
| | 3,021,030 |
| | 15.6 |
|
Total loans | $ | 12,990,779 |
| | $ | 12,715,789 |
| | 2.2 | % | | $ | 4,882,402 |
| | $ | 7,647,269 |
| | $ | 7,366,885 |
| | $ | 7,271,147 |
| | 11.5 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dec 31,
2016 | | Sept 30, 2016 | | Organic Growth - Three Months Ended Dec 31, 2016 | | Talmer Merger Aug 31, 2016 | | June 30, 2016 | | March 31, 2016 | | Dec 31,
2015 | | Organic Growth - Twelve Months Ended Dec 31, 2016 |
| | | | | | | | | | | | | | | |
Composition of Deposits | | | | | | | | | | | | | | | |
Noninterest-bearing demand | $ | 3,341,520 |
| | $ | 3,264,934 |
| | 2.3 | % | | $ | 1,236,902 |
| | $ | 2,007,629 |
| | $ | 1,951,193 |
| | $ | 1,934,583 |
| | 8.8 | % |
Savings | 1,662,115 |
| | 1,650,276 |
| | 0.7 |
| | 549,428 |
| | 1,107,558 |
| | 1,080,940 |
| | 1,026,269 |
| | 8.4 |
|
Interest-bearing demand | 2,825,801 |
| | 3,316,635 |
| | (14.8 | ) | | 894,748 |
| | 1,819,865 |
| | 2,005,053 |
| | 1,870,197 |
| | 3.3 |
|
Money market accounts | 2,033,319 |
| | 1,692,656 |
| | 20.1 |
| | 699,739 |
| | 969,566 |
| | 1,006,271 |
| | 978,306 |
| | 36.3 |
|
Brokered deposits | 226,429 |
| | 474,902 |
| | (52.3 | ) | | 403,210 |
| | 173,092 |
| | 186,143 |
| | 207,785 |
| | (185.1 | ) |
Other time deposits | 2,783,938 |
| | 2,873,459 |
| | (3.1 | ) | | 1,510,591 |
| | 1,386,936 |
| | 1,420,516 |
| | 1,439,627 |
| | (11.6 | ) |
Total deposits | $ | 12,873,122 |
| | $ | 13,272,862 |
| | (3.0 | )% | | $ | 5,294,618 |
| | $ | 7,464,646 |
| | $ | 7,650,116 |
| | $ | 7,456,767 |
| | 1.6 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2016 | | Sept 30, 2016 | | June 30, 2016 | | March 31, 2016 | | Dec 31,
2015 | | Sept 30, 2015 | | June 30, 2015 | | March 31, 2015 |
| | | | | | | | | | | | | | | |
Additional Data - Intangibles | | | | | | | | | | | | | | | |
Goodwill | $ | 1,133,534 |
| | $ | 1,137,166 |
| | $ | 286,867 |
| | $ | 286,867 |
| | $ | 287,393 |
| | $ | 286,454 |
| | $ | 285,512 |
| | $ | 180,128 |
|
Loan servicing rights | 58,315 |
| | 51,393 |
| | 9,677 |
| | 10,478 |
| | 11,122 |
| | 11,540 |
| | 12,307 |
| | 11,583 |
|
Core deposit intangibles (CDI) | 40,211 |
| | 35,618 |
| | 24,429 |
| | 25,542 |
| | 26,654 |
| | 27,890 |
| | 28,353 |
| | 20,072 |
|
Noncompete agreements | — |
| | 82 |
| | 164 |
| | 246 |
| | 328 |
| | 434 |
| | 541 |
| | — |
|
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Nonperforming Assets (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Dec 31, 2016 | | Sept 30, 2016 | | June 30, 2016 | | Mar 31, 2016 | | Dec 31, 2015 | | Sept 30, 2015 | | June 30, 2015 | | Mar 31, 2015 |
Nonperforming Assets | | | | | | | | | | | | | | | | |
Nonperforming Loans(1): | | | | | | | | | | | | | | | | |
Nonaccrual loans: | | | | | | | | | | | | | | | | |
Commercial | | $ | 13,178 |
| | $ | 13,742 |
| | $ | 14,577 |
| | $ | 19,264 |
| | $ | 28,554 |
| | $ | 26,463 |
| | $ | 17,260 |
| | $ | 18,904 |
|
Commercial real estate | | 19,877 |
| | 19,914 |
| | 21,325 |
| | 25,859 |
| | 25,163 |
| | 24,969 |
| | 25,287 |
| | 24,766 |
|
Real estate construction | | 80 |
| | 80 |
| | 496 |
| | 546 |
| | 521 |
| | 544 |
| | 502 |
| | 953 |
|
Residential mortgage | | 6,969 |
| | 5,119 |
| | 5,343 |
| | 5,062 |
| | 5,557 |
| | 6,248 |
| | 6,004 |
| | 6,514 |
|
Consumer installment | | 879 |
| | 378 |
| | 285 |
| | 360 |
| | 451 |
| | 536 |
| | 393 |
| | 433 |
|
Home equity | | 3,351 |
| | 2,064 |
| | 1,971 |
| | 2,328 |
| | 1,979 |
| | 1,876 |
| | 1,769 |
| | 1,870 |
|
Total nonaccrual loans(1) | | 44,334 |
| | 41,297 |
| | 43,997 |
| | 53,419 |
| | 62,225 |
| | 60,636 |
| | 51,215 |
| | 53,440 |
|
Other real estate and repossessed assets | | 17,187 |
| | 20,730 |
| | 8,440 |
| | 9,248 |
| | 9,935 |
| | 11,207 |
| | 14,197 |
| | 14,744 |
|
Total nonperforming assets | | $ | 61,521 |
| | $ | 62,027 |
| | $ | 52,437 |
| | $ | 62,667 |
| | $ | 72,160 |
| | $ | 71,843 |
| | $ | 65,412 |
| | $ | 68,184 |
|
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 | | 11 |
| | 221 |
| | 3 |
| | 370 |
| | 364 |
| | 122 |
| | 711 |
| | 52 |
|
Commercial real estate | | 277 |
| | 739 |
| | 3 |
| | — |
| | 254 |
| | 216 |
| | 56 |
| | 148 |
|
Real estate construction | | — |
| | 1,439 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Residential mortgage | | — |
| | 375 |
| | 407 |
| | 423 |
| | 402 |
| | 572 |
| | 424 |
| | 172 |
|
Consumer installment | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Home equity | | 995 |
| | 628 |
| | 1,071 |
| | 679 |
| | 1,267 |
| | 558 |
| | 588 |
| | 429 |
|
Total accruing loans contractually past due 90 days or more as to interest or principal payments | | $ | 1,283 |
| | $ | 3,402 |
| | $ | 1,484 |
| | $ | 1,472 |
| | $ | 2,287 |
| | $ | 1,468 |
| | $ | 1,779 |
| | $ | 801 |
|
(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 the Corporation expects to collect on these loans.
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Summary of Loan Loss Experience (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended | | Twelve months ended |
| Dec 31, 2016 | | Sept 30, 2016 | | June 30, 2016 | | Mar 31, 2016 | | Dec 31, 2015 | | Sept 30, 2015 | | June 30, 2015 | | Mar 31, 2015 | | Dec 31, 2016 | | Dec 31, 2015 |
Allowance for loan losses - originated portfolio | | | | |
Allowance for loan losses - beginning of period | $ | 73,775 |
| | $ | 71,506 |
| | $ | 70,318 |
| | $ | 73,328 |
| | $ | 75,626 |
| | $ | 74,941 |
| | $ | 75,256 |
| | $ | 75,183 |
| | $ | 73,328 |
| | $ | 75,183 |
|
Provision for loan losses | 6,272 |
| | 4,103 |
| | 3,000 |
| | 1,500 |
| | 2,000 |
| | 1,500 |
| | 1,500 |
| | 2,000 |
| | 14,875 |
| | 7,000 |
|
Net loan charge-offs: | | | | | | | | | | | | | | | | | | | |
Commercial | (336 | ) | | (150 | ) | | (1,153 | ) | | (3,115 | ) | | (2,207 | ) | | 86 |
| | (36 | ) | | (424 | ) | | (4,754 | ) | | (2,581 | ) |
Commercial real estate | (280 | ) | | (154 | ) | | (187 | ) | | (440 | ) | | (624 | ) | | 145 |
| | (581 | ) | | (415 | ) | | (1,061 | ) | | (1,475 | ) |
Real estate construction | 36 |
| | (31 | ) | | — |
| | (11 | ) | | — |
| | (1 | ) | | (49 | ) | | (91 | ) | | (6 | ) | | (141 | ) |
Residential mortgage | (236 | ) | | (304 | ) | | 8 |
| | (172 | ) | | (545 | ) | | (214 | ) | | (661 | ) | | (492 | ) | | (704 | ) | | (1,912 | ) |
Consumer installment | (823 | ) | | (1,137 | ) | | (486 | ) | | (602 | ) | | (770 | ) | | (782 | ) | | (590 | ) | | (649 | ) | | (3,048 | ) | | (2,791 | ) |
Home equity | (140 | ) | | (58 | ) | | 6 |
| | (170 | ) | | (152 | ) | | (49 | ) | | 102 |
| | 144 |
| | (362 | ) | | 45 |
|
Net loan charge-offs | (1,779 | ) | | (1,834 | ) | | (1,812 | ) | | (4,510 | ) | | (4,298 | ) | | (815 | ) | | (1,815 | ) | | (1,927 | ) | | (9,935 | ) | | (8,855 | ) |
Allowance for loan losses - end of period | $ | 78,268 |
| | $ | 73,775 |
| | $ | 71,506 |
| | $ | 70,318 |
| | $ | 73,328 |
| | $ | 75,626 |
| | $ | 74,941 |
| | $ | 75,256 |
| | $ | 78,268 |
| | $ | 73,328 |
|
Allowance for loan losses - acquired loan portfolio | | | | | | | | | | | | | | | | |
Allowance for loan losses - beginning of period | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 500 |
| | — |
| | 500 |
|
Provision for loan losses | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (500 | ) | | — |
| | (500 | ) |
Allowance for loan losses - end of period | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Total allowance for loan losses | $ | 78,268 |
| | $ | 73,775 |
| | $ | 71,506 |
| | $ | 70,318 |
| | $ | 73,328 |
| | $ | 75,626 |
| | $ | 74,941 |
| | $ | 75,256 |
| | $ | 78,268 |
| | $ | 73,328 |
|
Net loan charge-offs as a percent of average loans (quarterly amounts annualized) | 0.06% | | 0.08% | | 0.10% | | 0.25% | | 0.24% | | 0.05% | | 0.12% | | 0.14% | | 0.11% | | 0.13% |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2016 | | Sept 30, 2016 | | June 30, 2016 | | March 31, 2016 | | December 31, 2015 | | Sept 30, 2015 | | June 30, 2015 | | March 31, 2015 |
| | | | | | | | | | | | | | | |
Originated loans | $ | 7,458,401 |
| | $ | 6,755,931 |
| | $ | 6,378,934 |
| | $ | 6,001,714 |
| | $ | 5,807,934 |
| | $ | 5,667,159 |
| | $ | 5,351,010 |
| | $ | 5,048,662 |
|
Acquired loans | 5,532,378 |
| | 5,959,858 |
| | 1,268,335 |
| | 1,365,171 |
| | 1,463,213 |
| | 1,549,036 |
| | 1,683,733 |
| | 654,212 |
|
Total loans | $ | 12,990,779 |
| | $ | 12,715,789 |
| | $ | 7,647,269 |
| | $ | 7,366,885 |
| | $ | 7,271,147 |
| | $ | 7,216,195 |
| | $ | 7,034,743 |
| | $ | 5,702,874 |
|
| | | | | | | | | | | | | | | |
Allowance for loan losses as a percent of: | | | | | | | | | | |
Total originated loans | 1.05% | | 1.09% | | 1.12% | | 1.17% | | 1.26% | | 1.33% | | 1.40% | | 1.49% |
Nonperforming loans | 176.5% | | 178.6% | | 162.5% | | 131.6% | | 117.8% | | 124.7% | | 146.3% | | 140.8% |
Credit mark as a percent of unpaid principal balance on acquired loans | 3.1% | | 3.0% | | 4.1% | | 4.5% | | 4.4% | | 4.2% | | 3.9% | | 5.7% |
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Reconciliation of Non-GAAP Financial Measures (Unaudited)
Chemical Financial Corporation
(Dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 4th Quarter 2016 | | 3rd Quarter 2016(2) | | 2nd Quarter 2016(2) | | 1st Quarter 2016(2) | | 4th Quarter 2015 | | 3rd Quarter 2015 | | 2nd Quarter 2015 | | 1st Quarter 2015 | | Twelve months ended |
| | | | | | | | | Dec 31, 2016 | | Dec 31, 2015 |
| | | | | | | |
Non-GAAP Operating Results | | | | | | | | | | |
Net Income | | | | | | | | | | | | | | | | |
Net income, as reported | $ | 47,168 |
| | $11,484 | | $25,775 | | $23,605 | | $25,504 | | $24,467 | | $19,024 | | $17,835 | | $108,032 | | $86,830 |
Transaction expenses | 18,016 |
| | 37,470 | | 3,054 | | 2,594 | | 2,085 | | 900 | | 3,457 | | 1,362 | | 61,134 | | 7,804 |
Gain on sales of branch offices | (7,391 | ) | | — | | — | | — | | — | | — | | — | | — | | (7,391) | | — |
Loan servicing rights change in fair valuation | (6,352 | ) | | 1,344 | | — | | — | | — | | — | | — | | — | | (5,008) | | — |
Significant items | 4,273 |
| | 38,814 | | 3,054 | | 2,594 | | 2,085 | | 900 | | 3,457 | | 1,362 | | 48,735 | | 7,804 |
Income tax benefit (1) | (1,496 | ) | | (12,822) | | (1,069) | | (908) | | (730) | | (315) | | (798) | | (477) | | (16,295) | | (2,320) |
Significant items, net of tax | 2,777 |
| | 25,992 | | 1,985 | | 1,686 | | 1,355 | | 585 | | 2,659 | | 885 | | 32,440 | | 5,484 |
Net income, excluding significant items | $ | 49,945 |
| | $37,476 | | $27,760 | | $25,291 | | $26,859 | | $25,052 | | $21,683 | | $18,720 | | $140,472 | | $92,314 |
Diluted Earnings Per Share | | | | | | | | | | | | | | | | | | |
Diluted earnings per share, as reported | $ | 0.66 |
| | $ | 0.23 |
| | $ | 0.67 |
| | $ | 0.60 |
| | $ | 0.66 |
| | $ | 0.64 |
| | $ | 0.54 |
| | $ | 0.54 |
| | $ | 2.17 |
| | $ | 2.39 |
|
Effect of significant items, net of tax | 0.04 |
| | 0.52 |
| | 0.05 |
| | 0.05 |
| | 0.04 |
| | 0.01 |
| | 0.07 |
| | 0.03 |
| | 0.64 |
| | 0.15 |
|
Diluted earnings per share, excluding significant items | $ | 0.70 |
| | $ | 0.75 |
| | $ | 0.72 |
| | $ | 0.65 |
| | $ | 0.70 |
| | $ | 0.65 |
| | $ | 0.61 |
| | $ | 0.57 |
| | $ | 2.81 |
| | $ | 2.54 |
|
Return on Average Assets | | | | | | | | | | | | | | | | | | | |
Return on average assets, as reported | 1.09 | % | | 0.37 | % | | 1.10 | % | | 1.02 | % | | 1.11 | % | | 1.05 | % | | 0.94 | % | | 0.98 | % | | 0.90 | % | | 1.02 | % |
Effect of significant items, net of tax | 0.07 |
| | 0.85 |
| | 0.09 |
| | 0.07 |
| | 0.06 |
| | 0.03 |
| | 0.13 |
| | 0.05 |
| | 0.27 |
| | 0.07 |
|
Return on average assets, excluding significant items | 1.16 | % | | 1.22 | % | | 1.19 | % | | 1.09 | % | | 1.17 | % | | 1.08 | % | | 1.07 | % | | 1.03 | % | | 1.17 | % | | 1.09 | % |
Return on Average Shareholders' Equity | | | | | | | | | | | | | | | | |
Return on average shareholders' equity, as reported | 7.4 | % | | 2.9 | % | | 10.0 | % | | 9.3 | % | | 10.2 | % | | 9.8 | % | | 8.6 | % | | 9.0 | % | | 7.0 | % | | 9.4 | % |
Effect of significant items, net of tax | 0.4 |
| | 6.7 |
| | 0.7 |
| | 0.6 |
| | 0.5 |
| | 0.3 |
| | 1.2 |
| | 0.5 |
| | 2.1 |
| | 0.6 |
|
Return on average shareholders' equity, excluding significant items | 7.8 | % | | 9.6 | % | | 10.7 | % | | 9.9 | % | | 10.7 | % | | 10.1 | % | | 9.8 | % | | 9.5 | % | | 9.1 | % | | 10.0 | % |
(1) Assumes transaction expenses and other significant items are deductible at an income tax rate of 35%, except for the impact of estimated nondeductible expenses incurred in periods when the Corporation completes merger and acquisition transactions.
(2) The third quarter, second quarter and first quarter of 2016 information is revised to reflect the impact of the early adoption of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." The early adoption resulted in $752 thousand, $68 thousand and $343 thousand of excess tax benefits recognized within "Income tax expense" during the three months ended September 30, June 30 and March 31, 2016, respectively, rather than previously recognized directly into equity within "Additional paid-in-capital."
Chemical Financial Corporation Announces Fourth Quarter and Full Year 2016 Operating Results
Reconciliation of Non-GAAP Financial Measures (Unaudited)
Chemical Financial Corporation
(Dollars in thousands, except per share data)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 4th Quarter 2016 | | 3rd Quarter 2016 | | 2nd Quarter 2016 | | 1st Quarter 2016 | | 4th Quarter 2015 | | 3rd Quarter 2015 | | 2nd Quarter 2015 | | 1st Quarter 2015 | | Twelve months ended |
| | | | | | | | | Dec 31, 2016 | | Dec 31, 2015 |
| | | | | | | | | | | | | | | | | | | |
Efficiency Ratio | | | | | | | | | | | | | | | | |
Net interest income | $ | 132,447 |
| | $ | 96,809 |
| | $ | 77,495 |
| | $ | 74,330 |
| | $ | 75,476 |
| | $ | 73,617 |
| | $ | 65,735 |
| | $ | 59,180 |
| | $ | 381,081 |
| | $ | 274,008 |
|
Noninterest income | 54,264 |
| | 27,770 |
| | 20,897 |
| | 19,419 |
| | 20,052 |
| | 20,215 |
| | 20,674 |
| | 19,275 |
| | 122,350 |
| | 80,216 |
|
Total revenue - GAAP | 186,711 |
| | 124,579 |
| | 98,392 |
| | 93,749 |
| | 95,528 |
| | 93,832 |
| | 86,409 |
| | 78,455 |
| | 503,431 |
| | 354,224 |
|
Net interest income FTE adjustment | 2,945 |
| | 2,426 |
| | 2,138 |
| | 2,133 |
| | 2,042 |
| | 2,031 |
| | 1,790 |
| | 1,589 |
| | 9,642 |
| | 7,452 |
|
Loan servicing rights change in fair valuation | (6,352 | ) | | 1,344 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (5,008 | ) | | — |
|
Gains on sale of branches | (7,391 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (7,391 | ) | | — |
|
Gains from sale of investment securities and closed branch locations | (76 | ) | | (301 | ) | | (123 | ) | | (169 | ) | | (42 | ) | | (111 | ) | | (47 | ) | | (579 | ) | | (669 | ) | | (779 | ) |
Total revenue - Non-GAAP | $ | 175,837 |
| | $ | 128,048 |
| | $ | 100,407 |
| | $ | 95,713 |
| | $ | 97,528 |
| | $ | 95,752 |
| | $ | 88,152 |
| | $ | 79,465 |
| | $ | 500,005 |
| | $ | 360,897 |
|
Operating expenses - GAAP | $ | 114,302 |
| | $ | 106,144 |
| | $ | 59,085 |
| | $ | 58,887 |
| | $ | 57,824 |
| | $ | 58,265 |
| | $ | 56,785 |
| | $ | 51,020 |
| | $ | 338,418 |
| | $ | 223,894 |
|
Transaction expenses | (18,016 | ) | | (37,470 | ) | | (3,054 | ) | | (2,594 | ) | | (2,085 | ) | | (900 | ) | | (3,457 | ) | | (1,362 | ) | | (61,134 | ) | | (7,804 | ) |
Amortization of intangibles | (1,843 | ) | | (1,292 | ) | | (1,195 | ) | | (1,194 | ) | | (1,341 | ) | | (1,270 | ) | | (987 | ) | | (791 | ) | | (5,524 | ) | | (4,389 | ) |
Operating expenses - Non-GAAP | $ | 94,443 |
| | $ | 67,382 |
| | $ | 54,836 |
| | $ | 55,099 |
| | $ | 54,398 |
| | $ | 56,095 |
| | $ | 52,341 |
| | $ | 48,867 |
| | $ | 271,760 |
| | $ | 211,701 |
|
Efficiency ratio - GAAP | 61.2 | % | | 85.2 | % | | 60.1 | % | | 62.8 | % | | 60.5 | % | | 62.1 | % | | 65.7 | % | | 65.0 | % | | 67.2 | % | | 63.2 | % |
Efficiency ratio - adjusted | 53.7 | % | | 52.6 | % | | 54.6 | % | | 57.6 | % | | 55.8 | % | | 58.6 | % | | 59.4 | % | | 61.5 | % | | 54.4 | % | | 58.7 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2016 | | September 30, 2016 | | June 30, 2016 | | March 31, 2016 | | December 31, 2015 | | September 30, 2015 | | June 30, 2015 | | March 31, 2015 |
| | | |
Tangible Book Value | | | | | | | | | | | | | | | |
Shareholders' equity, as reported | $ | 2,581,526 |
| | $ | 2,563,666 |
| | $ | 1,050,299 |
| | $ | 1,032,291 |
| | $ | 1,015,974 |
| | $ | 998,363 |
| | $ | 980,791 |
| | $ | 810,501 |
|
Goodwill, CDI and noncompete agreements, net of tax | (1,155,617 | ) | | (1,154,121 | ) | | (297,044 | ) | | (297,821 | ) | | (299,123 | ) | | (299,681 | ) | | (299,109 | ) | | (187,991 | ) |
Tangible shareholders' equity | $ | 1,425,909 |
| | $ | 1,409,545 |
| | $ | 753,255 |
| | $ | 734,470 |
| | $ | 716,851 |
| | $ | 698,682 |
| | $ | 681,682 |
| | $ | 622,510 |
|
Common shares outstanding | 70,599 |
| | 70,497 |
| | 38,267 |
| | 38,248 |
| | 38,168 |
| | 38,131 |
| | 38,110 |
| | 32,847 |
|
Book value per share (shareholders' equity, as reported, divided by common shares outstanding) | $ | 36.57 |
| | $ | 36.37 |
| | $ | 27.45 |
| | $ | 26.99 |
| | $ | 26.62 |
| | $ | 26.18 |
| | $ | 25.74 |
| | $ | 24.68 |
|
Tangible book value per share (tangible shareholders' equity divided by common shares outstanding) | $ | 20.20 |
| | $ | 19.99 |
| | $ | 19.68 |
| | $ | 19.20 |
| | $ | 18.78 |
| | $ | 18.32 |
| | $ | 17.89 |
| | $ | 18.95 |
|
| | | | | | | | | | | | | | | |
Tangible Shareholders' Equity to Tangible Assets | | | | | | | | | | | | |
Total assets, as reported | $ | 17,355,179 |
| | $ | 17,383,637 |
| | $ | 9,514,172 |
| | $ | 9,303,632 |
| | $ | 9,188,797 |
| | $ | 9,264,554 |
| | $ | 9,020,725 |
| | $ | 7,551,635 |
|
Goodwill, CDI and noncompete agreements, net of tax | (1,155,617 | ) | | (1,154,121 | ) | | (297,044 | ) | | (297,821 | ) | | (299,123 | ) | | (299,681 | ) | | (299,109 | ) | | (187,991 | ) |
Tangible assets | $ | 16,199,562 |
| | $ | 16,229,516 |
| | $ | 9,217,128 |
| | $ | 9,005,811 |
| | $ | 8,889,674 |
| | $ | 8,964,873 |
| | $ | 8,721,616 |
| | $ | 7,363,644 |
|
Shareholders' equity to total assets | 14.9 | % | | 14.7 | % | | 11.0 | % | | 11.1 | % | | 11.1 | % | | 10.8 | % | | 10.9 | % | | 10.7 | % |
Tangible shareholders' equity to tangible assets | 8.8 | % | | 8.7 | % | | 8.2 | % | | 8.2 | % | | 8.1 | % | | 7.8 | % | | 7.8 | % | | 8.5 | % |
