Chemical Financial Corporation Reports Third Quarter 2009 Results

• Press Release
• Source: Chemical Financial Corporation
• On 8:12 am EDT, Monday October 26, 2009

MIDLAND, Mich., Oct. 26, 2009 (GLOBE NEWSWIRE) -- Chemical Financial Corporation (Nasdaq:CHFC - News) today announced third quarter 2009 net income of $2.5 million, or $0.10 per diluted share, versus a net loss of $1.0 million, or $0.04 per diluted share, in the third quarter of 2008.

Related Quotes

Symbol	Price	Change
CHFC	23.30	+0.21

{"s" : "chfc","k" : "c10,l10,p20,t10","o" : "","j" : ""}

Net income was $7.5 million, or $0.31 per diluted share, for the nine months ended September 30, 2009, compared to net income of $18.3 million, or $0.77 per diluted share, for the nine months ended September 30, 2008.

"The quarter's financial results benefitted from a decrease in our loan loss provision from $22.0 million in last year's third quarter to $14.2 million in this year's third quarter, which was partially offset by higher operating expenses. Although total assets have increased by over 12 percent during the past twelve months, this growth has not yet translated into higher net interest income due to the combination of a lack of sufficient quality lending opportunities in our markets and our decision to maintain a higher level of liquidity," said David B. Ramaker, Chairman, Chief Executive Officer and President of Chemical Financial Corporation.

"While we are pleased to maintain our profitability in light of the difficulties faced by our industry, the national and Michigan economies continue to face challenges. As a result, credit quality measures continued to deteriorate during the third quarter of 2009, although net charge-offs moderated slightly from the previous two quarters.

"Our strong balance sheet, ample liquidity, high capital ratios and risk management practices are reflective of our sound business practices, which continue to serve us well in this environment. We believe we remain well positioned to benefit from future economic recovery and take advantage of selected opportunities for growth that may result from the industry's current challenges," added Ramaker.

Net interest income was $36.7 million in the third quarter of 2009, essentially unchanged from third quarter 2008 net interest income, but slightly below second quarter 2009 net interest income of $37.0 million. As compared to the third quarter of 2008, increases in net interest-earning assets were offset by decreases in net interest margin. The net interest margin (on a tax-equivalent basis) in the third quarter of 2009 was 3.83 percent, down from 4.20 percent in the third quarter of 2008 and from 4.00 percent in the second quarter of 2009. The decreases in net interest margin were partially attributable to the Company's decision to maintain a higher degree of liquidity coupled with the loss of interest on nonaccrual loans.

Total assets were $4.27 billion at September 30, 2009, up substantially from $3.87 billion at December 31, 2008 and $3.79 billion at September 30, 2008. During the first nine months of 2009, the Company increased liquidity substantially, with $466 million in cash and cash equivalents at September 30, 2009, versus $173 million at December 31, 2008 and $114 million at September 30, 2008. Investment securities were $645 million at September 30, 2009, up from $547 million at December 31, 2008 and $566 million at September 30, 2008. At September 30, 2009, total loans were $3.00 billion, versus $2.98 billion at December 31, 2008 and $2.93 billion at September 30, 2008. Growth in the consumer loan portfolio more than offset a decline in the residential real estate portfolio.

Total deposits were $3.40 billion at September 30, 2009, up substantially from $2.98 billion at December 31, 2008, and $2.94 billion at September 30, 2008. A portion of the growth in the current year is attributable to a strong level of seasonal deposits at September 30, 2009. Federal Home Loan Bank advances totaled $115 million at September 30, 2009, down $20 million, or 14.8 percent, from $135 million at December 31, 2008, but up $25 million, or 27.7 percent, from $90 million at September 30, 2008.

The provision for loan losses was $14.2 million in the third quarter of 2009, compared to $15.2 million in the second quarter of 2009 and $22.0 million in the third quarter of 2008. Included in the third quarter 2008 provision for loan losses was $10.1 million attributable to a fraudulent loan transaction identified in that quarter. Net loan charge-offs were $6.7 million in the third quarter of 2009, down from $7.8 million in the second quarter of 2009 and down from $15.3 million in the third quarter of 2008, which included a $10.1 million charge-off for the fraudulent loan transaction.

At September 30, 2009, nonperforming assets totaled $157.5 million, up from $142.8 million at June 30, 2009 and up substantially from $98.4 million at September 30, 2008. Nonperforming loans were $138.5 million at September 30, 2009, compared to $124.4 million at June 30, 2009 and $82.7 million at September 30, 2008. At September 30, 2009, nonperforming loans as a percentage of total loans were 4.61 percent, up from 4.18 percent at June 30, 2009 and 2.83 percent at September 30, 2008.

The allowance for loan losses totaled $77.5 million at September 30, 2009, up 10.8 percent from $70.0 million at June 30, 2009 and up 67.0 percent from $46.4 million at September 30, 2008. The allowance at September 30, 2009 was 2.58 percent of total loans, up from 2.35 percent of total loans at June 30, 2009 and 1.58 percent of total loans at September 30, 2008. The allowance for loan losses as a percent of nonperforming loans was 56 percent at September 30, 2009, June 30, 2009 and September 30, 2008.

As part of Chemical Financial Corporation's ongoing credit portfolio monitoring program, the Company makes regular, periodic assessments of the quality of each nonperforming credit, the financial condition of the borrower and the value of any underlying collateral to identify potential loss exposure on nonperforming loans. The Company's nonperforming loans at September 30, 2009, June 30, 2009 and September 30, 2008 included commercial, real estate commercial and real estate construction loans totaling $49.6 million, $48.6 million and $27.3 million, respectively, which after being analyzed were deemed to have sufficient collateral values so as not to require allocation of the allowance for loan losses to these loans.

Total noninterest income was $10.1 million in the third quarter of 2009, down from $11.0 million in the second quarter of 2009, but essentially unchanged from the third quarter of 2008. The reduction in noninterest income in the third quarter of 2009, as compared to the second quarter of 2009, was primarily attributable to lower mortgage banking revenue as the refinancing volume of residential real estate loans into long-term fixed interest rate loans significantly declined during the latest quarter. The reduced volume resulted in lower revenue generated from the sale of these loans into the secondary market. As compared to the third quarter of 2008, this year's third quarter found increases in mortgage banking revenues largely offsetting decreases in service charges on deposit accounts and trust and investment services revenues. In addition, during the third quarter of 2008, noninterest income included recognition of an other-than-temporary impairment loss of $0.4 million on an investment security. During the third quarter of 2009, the Company had no investment securities gains or losses.

Operating expenses in the third quarter of 2009 were $29.6 million, down slightly from $30.0 million in the second quarter of 2009, but up $2.8 million, or 10.6 percent, from $26.8 million in the third quarter of 2008. FDIC insurance costs were $1.3 million, $3.1 million and $0.1 million during the third quarter of 2009, second quarter of 2009 and third quarter of 2008, respectively. Excluding FDIC insurance costs, operating expenses were up $1.3 million, or 5.0 percent, during the third quarter of 2009 compared to the second quarter of 2009. This increase was largely driven by higher seasonal salaries, group health benefit costs and marketing expenses. The increase over the third quarter of the prior year was attributable primarily to higher FDIC insurance costs and higher costs associated with nonperforming assets and other real estate.

The Company's return on average assets during the third quarter of 2009 was 0.24 percent, up marginally from 0.23 percent in the second quarter of 2009, and up from (0.11) percent in the third quarter of 2008. At September 30, 2009, the Company's book value stood at $20.06 per share versus $20.23 per share at June 30, 2009 and $21.19 per share at September 30, 2008.

Chemical Financial Corporation is the third-largest bank holding company headquartered in Michigan. The Company operates through a single subsidiary bank, Chemical Bank, with 129 banking offices spread over 31 counties in the lower peninsula of Michigan. At September 30, 2009, the Company had total assets of $4.3 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.

SAFE HARBOR STATEMENT

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 itself. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "judgment," "plans," "predicts," "projects," "should," "will," variations of such words and similar expressions are intended to identify such forward-looking statements. Management's determination of the provision and allowance for loan losses, the carrying value of goodwill and mortgage servicing rights, and the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary) and management's assumptions concerning pension and post retirement benefit plans involve judgments that are inherently forward-looking. The future effect of changes in the financial and credit markets and the national and regional economy on the banking industry, generally, and on Chemical Financial 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. Chemical Financial 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 in Chemical Financial Corporation's Annual Report on Form 10-K for the year ended December 31, 2008; the timing and level of asset growth; changes in market interest rates; changes in banking laws and regulations; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances and issues; governmental and regulatory policy changes; opportunities for acquisitions and the effective completion of acquisitions and integration of acquired entities; the possibility that anticipated cost savings and revenue enhancements from acquisitions, restructurings, reorganizations and bank consolidations may not be realized fully or at all or within expected time frames; the local and global effects of current and future military actions, and current uncertainties and fluctuations in the financial markets and stocks of financial services providers due to concerns about credit availability and concerns about the Michigan economy in particular. 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 Third Quarter Operating
                                Results
 ---------------------------------------------------------------------

 Consolidated Statements of Financial Position (Unaudited)
 Chemical Financial Corporation

 (In thousands, except per      September 30  December 31 September 30
  share data)                       2009         2008         2008
 ---------------------------------------------------------------------
 Assets:
 Cash and cash equivalents:
   Cash and cash due from banks $    90,215  $   168,650  $   107,311
   Federal funds sold                    --           --        2,000
   Interest-bearing deposits
    with unaffiliated banks and
    others                          375,489        4,572        4,579
                                ------------ ------------ ------------
     Total Cash and Cash
      Equivalents                   465,704      173,222      113,890
 Investment securities:
   Available-for-sale               512,413      449,947      455,158
   Held-to-maturity                 132,438       97,511      111,261
                                ------------ ------------ ------------
     Total Investment Securities    644,851      547,458      566,419
 Other securities                    22,128       22,128       22,142
 Loans held for sale                  7,043        8,463       10,861

 Loans:
   Commercial                       575,062      587,554      574,006
   Real estate commercial           782,640      786,404      776,617
   Real estate construction         118,116      119,001      133,615
   Real estate residential          753,744      839,555      831,700
   Consumer                         773,902      649,163      612,433
                                ------------ ------------ ------------
     Total Loans                  3,003,464    2,981,677    2,928,371
   Allowance for loan losses        (77,491)     (57,056)     (46,412)
                                ------------ ------------ ------------
     Net Loans                    2,925,973    2,924,621    2,881,959

 Premises and equipment              53,172       53,036       51,471
 Goodwill                            69,908       69,908       69,908
 Other intangible assets              5,477        5,241        5,594
 Interest receivable and other
  assets                             74,107       70,236       65,842
                                ------------ ------------ ------------
     Total Assets               $ 4,268,363  $ 3,874,313  $ 3,788,086
                                ============ ============ ============

 Liabilities:
 Deposits:
   Noninterest-bearing          $   533,430  $   524,464  $   531,355
   Interest-bearing               2,870,069    2,454,328    2,412,521
                                ------------ ------------ ------------
     Total Deposits               3,403,499    2,978,792    2,943,876
 Interest payable and other
  liabilities                        36,891       35,214       23,606
 Short-term borrowings              233,693      233,738      224,684
 Federal Home Loan Bank advances    115,000      135,025       90,025
                                ------------ ------------ ------------
     Total Liabilities            3,789,083    3,382,769    3,282,191

 Shareholders' Equity:
   Preferred stock, no par value
    per share                            --           --           --
   Common stock, $1 par value
    per share                        23,890       23,881       23,877
   Surplus                          347,667      346,916      346,652
   Retained earnings                119,920      133,578      139,037
   Accumulated other
    comprehensive loss              (12,197)     (12,831)      (3,671)
                                ------------ ------------ ------------
     Total Shareholders' Equity     479,280      491,544      505,895
                                ------------ ------------ ------------
     Total Liabilities and
      Shareholders' Equity      $ 4,268,363  $ 3,874,313  $ 3,788,086
                                ============ ============ ============


   Chemical Financial Corporation Announces Third Quarter Operating
                                Results
 ---------------------------------------------------------------------

 Consolidated Statements of Income (Unaudited)
 Chemical Financial Corporation

                               Three Months Ended   Nine Months Ended
 (In thousands, except per         September 30       September 30
  share data)                    2009      2008      2009     2008
 ---------------------------------------------------------------------
 Interest Income:
 Interest and fees on loans    $ 43,289  $ 45,211  $129,079  $135,272
 Interest on investment
  securities:
   Taxable                        3,527     5,333    12,053    16,645
   Tax-exempt                       962       738     2,632     2,120
 Dividends on other securities      132       211       562       795
 Interest on federal funds sold      --       180        --     1,610
 Interest on deposits with
  unaffiliated banks and others     156        15       345       191
                               --------- --------- --------- ---------
   Total Interest Income         48,066    51,688   144,671   156,633

 Interest Expense:
 Interest on deposits             9,942    12,986    29,917    43,047
 Interest on short-term
  borrowings                        251       482       723     1,942
 Interest on Federal Home Loan
  Bank advances                   1,210     1,500     3,800     4,902
                               --------- --------- --------- ---------
   Total Interest Expense        11,403    14,968    34,440    49,891
                               --------- --------- --------- ---------
   Net Interest Income           36,663    36,720   110,231   106,742
 Provision for loan losses       14,200    22,000    43,400    31,200
                               --------- --------- --------- ---------
   Net Interest Income after
    Provision for Loan Losses    22,463    14,720    66,831    75,542

 Noninterest Income:
 Service charges on deposit
  accounts                        4,949     5,316    14,205    15,097
 Trust and investment services
  revenue                         2,306     2,616     7,055     8,108
 Other charges and fees for
  customer services               1,971     1,927     5,766     5,236
 Mortgage banking revenue           840       348     3,452     1,408
 Investment securities gains         --         6        95     1,722
 Other-than-temporary
  impairment writedown of
  investment security                --      (444)       --      (444)
 Other                               26       285       334       466
                               --------- --------- --------- ---------
   Total Noninterest Income      10,092    10,054    30,907    31,593

 Operating Expenses:
 Salaries, wages and employee
  benefits                       15,765    15,075    45,865    44,364
 Occupancy                        2,497     2,472     7,611     7,602
 Equipment                        2,435     2,346     7,141     6,666
 Other                            8,885     6,857    28,186    21,847
                               --------- --------- --------- ---------
   Total Operating Expenses      29,582    26,750    88,803    80,479
                               --------- --------- --------- ---------
 Income (Loss) Before Income
  Taxes                           2,973    (1,976)    8,935    26,656
   Federal Income Tax Expense
    (Benefit)                       500      (951)    1,450     8,400
                               --------- --------- --------- ---------
 Net Income (Loss)             $  2,473  $ (1,025) $  7,485  $ 18,256
                               ========= ========= ========= =========

 Net income (loss) per share:
   Basic                       $   0.10  $  (0.04) $   0.31  $   0.77
   Diluted                         0.10     (0.04)     0.31      0.77

 Cash dividends per share         0.295     0.295     0.885     0.885

 Average shares outstanding:
   Basic                         23,890    23,836    23,890    23,827
   Diluted                       23,912    23,836    23,907    23,839


   Chemical Financial Corporation Announces Third Quarter Operating
                                Results
 ---------------------------------------------------------------------

 Financial Summary (Unaudited)
 Chemical Financial Corporation

                    Three Months Ended            Nine Months Ended
 (Dollars in           September 30                  September 30
  thousands)       2009           2008          2009          2008
 ---------------------------------------------------------------------
 Average
  Balances
 Total assets   $ 4,111,923   $ 3,782,391   $ 4,014,060   $ 3,777,057
 Total interest-
  earning assets  3,894,124     3,542,031     3,790,588     3,544,785
 Total loans      2,985,388     2,889,648     2,971,557     2,834,790
 Total deposits   3,235,959     2,923,912     3,138,608     2,922,438
 Total interest-
  bearing
  liabilities     3,036,864     2,689,248     2,949,836     2,702,251
 Total
  shareholders'
  equity            480,064       512,504       485,612       510,893


                    Three Months Ended           Nine Months Ended
                       September 30                September 30
                     2009        2008            2009        2008
 ---------------------------------------------------------------------
 Key Ratios
  (annualized
  where
  applicable)
 Net interest
  margin
  (taxable
  equivalent
  basis)               3.83%         4.20%         3.96%         4.08%
 Efficiency
  ratio                62.3%         56.5%         62.0%         57.5%
 Return on
  average assets       0.24%        (0.11)%        0.25%         0.65%
 Return on
  average
  shareholders'
  equity                2.0%         (0.8)%         2.1%          4.8%
 Average
  shareholders'
  equity as a
  percent of
  average assets       11.7%         13.5%         12.1%         13.5%
 Tangible
  shareholders'
  equity as a
  percent of
  total assets                                      9.7%         11.6%
 Total risk-
  based capital
  ratio                                            15.7%         16.7%


                 Sept 30    June 30    March 31    Dec 31     Sept 30
                   2009       2009       2009       2008        2008
 ---------------------------------------------------------------------
 Credit Quality
  Statistics
 Nonaccrual
  loans         $ 120,186  $ 109,944  $  94,737   $ 76,466   $ 69,719
 Loans 90 or
  more days past
  due and still
  accruing          8,699     10,502     10,240     16,862     13,012
 Loans modified
  under troubled
  debt
  restructurings    9,567      3,981         --         --         --
 Total
  nonperforming
  loans           138,452    124,427    104,977     93,328     82,731
 Repossessed
  assets (RA)      19,067     18,344     20,688     19,923     15,699
 Total
  nonperforming
  assets          157,519    142,771    125,665    113,251     98,430
 Net loan
  charge-offs
  (year-to-date)   22,965     16,300      8,494     31,566     24,210

 Allowance for
  loan losses as
  a percent of
  total loans        2.58%      2.35%      2.12%      1.91%      1.58%
 Allowance for
  loan losses as
  a percent of
  nonperforming
  loans                56%        56%        60%        61%        56%
 Nonperforming
  loans as a
  percent of
  total loans        4.61%      4.18%      3.56%      3.13%      2.83%
 Nonperforming
  assets as a
  percent of
  total loans
  plus RA            5.21%      4.77%      4.23%      3.77%      3.34%
 Nonperforming
  assets as a
  percent of
  total assets       3.69%      3.57%      3.16%      2.92%      2.60%
 Net loan
  charge-offs as
  a percent of
  average loans
  (year-to-date,
  annualized)        1.03%      1.10%      1.15%      1.10%      1.14%


                 Sept 30     June 30   March 31    Dec 31    Sept 30
                   2009       2009        2009      2008      2008
 ---------------------------------------------------------------------
 Additional Data
  - Intangibles
 Goodwill       $  69,908  $  69,908  $  69,908  $  69,908  $  69,908
 Core deposit
  intangibles       2,480      2,629      2,847      3,050      3,266
 Mortgage
  servicing
  rights (MSR)      2,997      2,869      2,377      2,191      2,328
 Amortization of
  core deposit
  intangibles
  (quarter only)      149        217        203        216        343


   Chemical Financial Corporation Announces Third Quarter Operating
                                Results
 ---------------------------------------------------------------------

 Nonperforming Assets (Unaudited)
 Chemical Financial Corporation

 (Dollars in          Sept 30   June 30   March 31   Dec 31   Sept 30
  thousands)            2009      2009      2009      2008      2008
 ---------------------------------------------------------------------
 Nonaccrual loans:
   Commercial        $ 21,379  $ 20,371  $ 16,419  $ 16,324  $ 13,320
   Real estate
    commercial         58,930    50,067    41,826    27,344    24,230
   Real estate
    construction       18,196    17,935    18,504    15,310    14,513
   Real estate
    residential        15,739    15,905    12,803    12,175    12,869
   Consumer             5,942     5,666     5,185     5,313     4,787
                     -------------------------------------------------
   Total nonaccrual
    loans             120,186   109,944    94,737    76,466    69,719
 Accruing loans
  contractually past
  due 90 days or more
  as to interest or
  principal payments:
   Commercial           1,073     1,201     2,581     1,652     1,735
   Real estate
    commercial          2,138     1,542     4,352     9,995     6,586
   Real estate
    construction          675       259       538       759     1,096
   Real estate
    residential         3,839     6,236     1,699     3,369     2,910
   Consumer               974     1,264     1,070     1,087       685
                     -------------------------------------------------
   Total accruing
    loans
    contractually
    past due 90 days
    or more as to
    interest or
    principal
    payments            8,699    10,502    10,240    16,862    13,012
 Loans modified under
  troubled debt
  restructurings        9,567     3,981        --        --        --
                     -------------------------------------------------
 Total nonperforming
  loans               138,452   124,427   104,977    93,328    82,731
 Other real estate
  and repossessed
  assets               19,067    18,344    20,688    19,923    15,699
                     -------------------------------------------------
 Total nonperforming
  assets             $157,519  $142,771  $125,665  $113,251  $ 98,430
                     -------------------------------------------------


   Chemical Financial Corporation Announces Third Quarter Operating
                                Results
 ---------------------------------------------------------------------

 Summary of Loan Loss Experience (Unaudited)
 Chemical Financial Corporation

                                     Three Months Ended
                     -------------------------------------------------
 (Dollars in          Sept 30    June 30  March 31   Dec 31    Sept 30
  thousands)            2009      2009      2009      2008      2008
 ---------------------------------------------------------------------
 Allowance for loan
  losses at beginning
  of period          $ 69,956  $ 62,562  $ 57,056  $ 46,412  $ 39,664
 Provision for loan
  losses               14,200    15,200    14,000    18,000    22,000

 Loans charged off:
   Commercial          (1,786)   (3,289)   (3,290)   (3,254)  (11,468)
   Real estate
    commercial         (1,703)   (1,930)   (2,589)   (1,645)     (673)
   Real estate
    construction         (874)     (762)   (1,700)     (954)     (923)
   Real estate
    residential        (1,346)   (1,043)     (235)   (1,106)     (749)
   Consumer            (1,996)   (1,544)   (1,253)   (1,811)   (1,776)
                     -------------------------------------------------
   Total loan charge-
    offs               (7,705)   (8,568)   (9,067)   (8,770)  (15,589)
 Recoveries of loans
  previously charged
  off:
   Commercial             349       130       205     1,094        74
   Real estate
    commercial             91       226        87        11        68
   Real estate
    construction           46        --        --        --        --
   Real estate
    residential           231       127        82        83        50
   Consumer               323       279       199       226       145
                     -------------------------------------------------
   Total loan
    recoveries          1,040       762       573     1,414       337
                     -------------------------------------------------
   Net loan charge-
    offs               (6,665)   (7,806)   (8,494)   (7,356)  (15,252)
                     -------------------------------------------------
 Allowance for loan
  losses at end of
  period             $ 77,491  $ 69,956  $ 62,562  $ 57,056  $ 46,412
                     -------------------------------------------------


   Chemical Financial Corporation Announces Third Quarter Operating
                                Results
 ---------------------------------------------------------------------

 Selected Quarterly Information (Unaudited)
 Chemical Financial Corporation

 (In thousands,
  except per share    3rd Qtr.  2nd Qtr.  1st Qtr.  4th Qtr.  3rd Qtr.
  data)                2009       2009      2009      2008      2008
 ---------------------------------------------------------------------
 Summary of
  Operations
 Interest income     $ 48,066  $ 48,283  $ 48,322  $ 51,703  $ 51,688
 Interest expense      11,403    11,305    11,732    13,192    14,968
                     -------------------------------------------------
 Net interest income   36,663    36,978    36,590    38,511    36,720
 Provision for loan
  losses               14,200    15,200    14,000    18,000    22,000
                     -------------------------------------------------
 Net interest income
  after provision for
  loan losses          22,463    21,778    22,590    20,511    14,720
 Noninterest income    10,092    10,958     9,857     9,604    10,054
 Operating expenses    29,582    30,016    29,205    28,629    26,750
                     -------------------------------------------------
 Income (loss) before
  income taxes          2,973     2,720     3,242     1,486    (1,976)
 Federal income tax
  expense (benefit)       500       426       524      (100)     (951)
                     -------------------------------------------------
 Net income (loss)   $  2,473  $  2,294  $  2,718  $  1,586  $ (1,025)
                     =================================================
 ---------------------------------------------------------------------
 Per Common Share
  Data
 Net income (loss):
   Basic             $   0.10  $   0.10  $   0.11  $   0.06  $  (0.04)
   Diluted               0.10      0.10      0.11      0.06     (0.04)
 Cash dividends         0.295     0.295     0.295     0.295     0.295
 Book value - period-
  end                   20.06     20.23     20.40     20.58     21.19
 Market value -
  period-end            21.79     19.91     20.81     27.88     31.14

Chemical Financial Corporation
David B. Ramaker, CEO
Lori A. Gwizdala, CFO
989-839-5350