Chemical Financial Corporation, Inc. Exhibit 99.1 to Form 8-K (07-26-10)

EX-99.1 2 chemex991_072610.htm CHEMICAL FINANCIAL EXHIBIT 99.1 TO FORM 8-K Chemical Financial Corporation, Inc. Exhibit 99.1 to Form 8-K (07-26-10)

EXHIBIT 99.1

For further information:
David B. Ramaker, CEO
Lori A. Gwizdala, CFO
989-839-5350

Chemical Financial Corporation Reports Second Quarter 2010 Earnings
Completes Acquisition of O.A.K. Financial Corporation

MIDLAND, MI, July 26, 2010 -- Chemical Financial Corporation (NASDAQ:CHFC) today announced 2010 second quarter net income of $4.4 million, or $0.17 per diluted share, compared to net income of $2.3 million, or $0.10 per diluted share, in both the first quarter of 2010 and the second quarter of 2009. Net income was $6.7 million, or $0.27 per diluted share, for the six months ended June 30, 2010, compared to $5.0 million, or $0.21 per diluted share, for the six months ended June 30, 2009.

The Company's return on average assets during the second quarter of 2010 was 0.36 percent, up from 0.23 percent in the second quarter of 2009 and 0.22 percent in the first quarter of 2010. The return on average equity was 3.3 percent in the second quarter of 2010, up from 1.9 percent in the second quarter of 2009 and 2.0 percent in the first quarter of 2010.

Included in the second quarter and year-to-date 2010 results were $2.3 million and $3.0 million, respectively, of transaction costs related to the acquisition of O.A.K. Financial Corporation (OAK). The net impact of these costs reduced second quarter and year-to-date diluted earnings per share by $0.07 per share and $0.10 per share, respectively. As previously reported, the Company completed its acquisition of OAK, the parent company of Byron Bank, on April 30, 2010. Accordingly, results of OAK's operations are included since the acquisition date. The acquisition of OAK and Byron Bank resulted in increases in the Company's total assets of $820 million, total loans of $631 million, total deposits of $693 million (core deposits of $495 million) and goodwill of $39 million as of the acquisition date.

"The acquisition of Byron Bank will serve as a catalyst to drive Chemical Financial's growth in West Michigan and enhance operating earnings. The integration of Byron Bank is progressing

as planned, and the Company remains on target for the integration of all systems in the third quarter of 2010," said David B. Ramaker, Chairman, Chief Executive Officer and President of Chemical Financial Corporation. "Our progress is due in large part to the similar cultures of the organizations and the combined efforts of the expanded Chemical Bank team."

"Higher earnings in the second quarter of 2010, compared to both the prior year comparable quarter and first quarter of 2010, were attributable primarily to a lower provision for loan losses. In addition, performance in the second quarter of 2010 was positively impacted by slightly higher noninterest income across a number of categories," added Ramaker. "While it is premature to say that credit quality challenges have peaked, we have been modestly encouraged by certain trends we are seeing in the portfolio."

"We continue to seek additional avenues for growth," said Ramaker. "We believe our capital strength and market focus has positioned us well, relative to many of our competitors, to take advantage of other opportunities which may arise in Michigan."

In accordance with generally accepted accounting principles, all assets and liabilities acquired in the OAK transaction were recorded at fair value, including a reduction for estimated credit losses in the loan portfolio (acquired portfolio), and without carryover of that portfolio's historical allowance for loan losses. The fair value amounts were based on the Company's best estimates based on the information available and will be finalized upon receipt of third-party valuation reports. Accordingly, selected financial amounts and ratios distinguish between the "originated" portfolio and the "acquired" portfolio. For the Company's originated portfolio, representing all loans other than those acquired in the OAK transaction, nonperforming loans totaled $142.9 million at June 30, 2010, an increase from $130.1 million at March 31, 2010 and $135.8 million at December 31, 2009. The increase from March 31, 2010 was largely attributable to higher nonaccrual loans, while the increase from December 31, 2009 was largely attributable to a higher level of loans that have been modified / restructured due to cash flow difficulties of the customer. Loans in the acquired portfolio that meet the Company's definition of nonperforming but for which the risk of loss has already been considered in connection with the Company's estimated fair value of loans at acquisition, totaled $10.1 million at June 30, 2010.

Nonperforming assets, excluding nonperforming loans included in the acquired portfolio, totaled $164.7 million at June 30, 2010, a $15.7 million increase from March 31, 2010, of which $3.4 million was attributable to other real estate and repossessed assets acquired in connection with the OAK transaction. At June 30, 2010, the Company's nonperforming assets included nonaccrual loans of $108.0 million, accruing loans contractually past due 90 days or more as to interest or principal payments of $8.3 million and troubled debt restructurings of commercial and real estate residential loans of $26.6 million, in the originated portfolio, and other real estate and repossessed assets of $21.7 million.

At June 30, 2010, the allowance for loan losses of $89.5 million was 2.95 percent of originated loans, up from 2.82 percent at March 31, 2010 and 2.35 percent at June 30, 2009. The allowance for loan losses as a percentage of nonperforming loans of the originated portfolio was 63 percent at June 30, 2010, down from 65 percent at March 31, 2010, although up from 56 percent at June 30, 2009. At June 30, 2010, nonperforming loans of the originated portfolio as a percentage of originated loans were 4.71 percent, up from 4.35 percent at March 31, 2010 and 4.18 percent at June 30, 2009.

Net interest income was $42.9 million in the second quarter of 2010, up from $37.0 million in the second quarter of 2009 and $36.4 million in the first quarter of 2010. The increases in net interest income were primarily attributable to the acquisition of OAK, although also due to a slight decrease in the average cost of deposits related to maturing higher-cost customer certificates of deposit and maturing higher-cost wholesale funding. The net interest margin (on a tax-equivalent basis) in the second quarter of 2010 was 3.88 percent, down from 4.00 percent in the second quarter of 2009, although up from 3.72 percent in the first quarter of 2010. The decrease in net interest margin from the prior year's second quarter was primarily attributable to the Company's decision to enhance its liquidity position and to modestly adjust its liability sensitive position by increasing the amount of variable rate investment securities held in its investment securities portfolio.

The Company recorded a $12.7 million provision for loan losses in the second quarter of 2010, compared to $15.2 million in the second quarter of 2009 and $14.0 million in the first quarter of 2010. Second quarter 2010 net loan charge-offs were $7.3 million, compared to $7.8 million in the second quarter of 2009 and $10.7 million in the first quarter of 2010.

Total noninterest income was $11.0 million in the second quarter of 2010 and the second quarter of 2009, compared to $9.4 million in the first quarter of 2010. The increase in the second quarter of 2010, as compared to the first quarter of 2010, was attributable to the OAK transaction and modest increases across a broad array of noninterest income categories.

Operating expenses were $34.6 million in the second quarter of 2010, up from $30.0 million in the second quarter of 2009 and $29.2 million in the first quarter of 2010. The increases in operating expenses were primarily attributable to OAK operating expenses and acquisition-related transaction costs. Operating expenses in the second quarter of 2010 included $2.3 million of acquisition-related transaction costs applicable to the OAK transaction, compared to $0.7 million in the first quarter of 2010 and $0.8 million in the fourth quarter of 2009. Additional acquisition-related transaction costs of $0.8 million and $0.2 million are expected to be incurred in the third and fourth quarters of 2010, respectively. Credit-related operating expenses remained elevated at $1.8 million in the second quarter of 2010, although were $0.45 million lower than in the second quarter of 2009 and approximately the same as the first quarter of 2010. The Company's second quarter 2010 efficiency ratio was 63.1 percent, compared to 61.7 percent in the second quarter of 2009 and 62.4 percent in the first quarter of 2010.

Total assets were $5.12 billion at June 30, 2010, up from $4.29 billion at March 31, 2010 and $4.00 billion at June 30, 2009. At June 30, 2010, total loans were $3.65 billion, up from $2.99 billion at March 31, 2010 and $2.98 billion at June 30, 2009. Investment securities were $811 million at June 30, 2010, up from $691 million at March 31, 2010 and $637 million at June 30, 2009. The increases in assets, loans and investment securities during the second quarter of 2010 were primarily attributable to the acquisition of OAK.

Total deposits were $4.20 billion at June 30, 2010, up from $3.47 billion at March 31, 2010 and $3.13 billion at June 30, 2009. In addition to the increase in deposits from the OAK acquisition, the Company experienced internal growth of $60 million in core business and consumer deposits during the quarter ended June 30, 2010. The Company has maintained a portion of these new funds in interest-bearing balances at the Federal Reserve Bank, thereby further enhancing the Company's liquidity position. The Company also used some of its liquidity to pay off maturing Federal Home Loan Bank (FHLB) advances during the twelve months ended June 30, 2010 and intends to continue to pay off maturing FHLB advances and brokered deposits acquired in the OAK transaction totaling $30.3 million during the remainder of 2010. FHLB advances totaled $86.6 million at June 30, 2010, up from $80 million at March 31, 2010 and down from $115 million at June 30, 2009.

At June 30, 2010, the Company's tangible equity to assets ratio and total risk-based capital ratio were 8.8 percent and 13.6 percent, respectively, compared to 9.5 percent and 15.5 percent, respectively, at March 31, 2010. The declines in the Company's regulatory capital ratios during the second quarter of 2010 were primarily attributable to the purchase price of OAK exceeding the fair value of the net assets acquired. At June 30, 2010, the Company's book value stood at $20.27 per share, compared to $19.76 per share at March 31, 2010.

Chemical Financial Corporation is the third-largest bank holding company headquartered in Michigan. The Company operates through a single subsidiary bank, Chemical Bank, with 143 banking offices spread over 32 counties in the lower peninsula of Michigan. At June 30, 2010, the Company had total assets of $5.1 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.

Forward Looking Statements

This press release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and Chemical Financial Corporation (Chemical Financial or Company) 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. 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, 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 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, 2009; 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 capital levels and 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.

Risk factors also include, but are not limited to, risks and uncertainties related both to the acquisition of OAK and to the integration of the acquired business into Chemical Financial including:

The transaction may be more expensive to complete and the anticipated benefits, including anticipated cost savings and strategic gains, may be significantly harder or take longer to achieve than expected or may not be achieved in their entirety as a result of unexpected factors or events.

Chemical Financial's ability to achieve anticipated results from the transaction is dependent on the state of the economic and financial markets going forward, which have been under significant stress recently. Specifically, Chemical Financial may incur more credit losses from OAK's loan portfolio than expected and deposit attrition may be greater than expected.

The complete integration of OAK's business and operations into Chemical Financial, which will include conversion of OAK's operating systems and procedures, may take longer than anticipated or be more costly than anticipated or have unanticipated adverse results relating to OAK's or Chemical Financial's existing businesses.

Chemical Financial Corporation Announces Second Quarter Operating Results

Consolidated Statements of Financial Position (Unaudited)
Chemical Financial Corporation

(In thousands, except per share data)	June 30 2010			December 31 2009			June 30 2009
Assets:
Cash and cash equivalents:
Cash and cash due from banks	$	126,741		$	131,383		$	88,210
Interest-bearing deposits with unaffiliated banks and others		270,217			229,326			119,413
Total cash and cash equivalents		396,958			360,709			207,623
Investment securities:
Trading		1,389			-			-
Available-for-sale		644,550			592,521			492,096
Held-to-maturity		165,296			131,297			144,556
Total Investment Securities		811,235			723,818			636,652
Other securities		27,448			22,128			22,128
Loans held-for-sale		10,871			8,362			26,008

Loans:
Commercial		769,287			584,286			560,187
Real estate commercial		1,081,860			785,675			774,881
Real estate construction		179,004			121,305			119,674
Real estate residential		768,156			739,380			773,126
Consumer		849,654			762,514			749,032
Total Loans		3,647,961			2,993,160			2,976,900
Allowance for loan losses		(89,502	)		(80,841	)		(69,956	)
Net Loans		3,558,459			2,912,319			2,906,944

Premises and equipment		68,611			53,934			52,578
Goodwill		109,149			69,908			69,908
Other intangible assets		15,023			5,408			5,498
Interest receivable and other assets		122,762			94,126			71,417
Total Assets	$	5,120,516		$	4,250,712		$	3,998,756

Liabilities:
Deposits:
Noninterest-bearing	$	680,751		$	573,159		$	551,060
Interest-bearing		3,518,431			2,844,966			2,579,367
Total Deposits		4,199,182			3,418,125			3,130,427
Interest payable and other liabilities		36,378			27,708			36,329
Short-term borrowings		242,271			240,568			233,674
Federal Home Loan Bank advances		86,635			90,000			115,000
Total Liabilities		4,564,466			3,776,401			3,515,430

Shareholders' Equity:
Preferred stock, no par value per share		-			-			-
Common stock, $1 par value per share		27,434			23,891			23,890
Additional paid-in capital		429,021			347,676			347,447
Retained earnings		111,804			115,391			124,496
Accumulated other comprehensive loss		(12,209	)		(12,647	)		(12,507	)
Total Shareholders' Equity		556,050			474,311			483,326
Total Liabilities and Shareholders' Equity	$	5,120,516		$	4,250,712		$	3,998,756

Chemical Financial Corporation Announces Second Quarter Operating Results

Consolidated Statements of Income (Unaudited)
Chemical Financial Corporation

	Three Months Ended June 30				Six Months Ended June 30
(In thousands, except per share data)	2010		2009		2010		2009
Interest Income:
Interest and fees on loans	$	48,278	$	42,997	$	89,996	$	85,790
Interest on investment securities:
Taxable		2,964		4,024		6,088		8,526
Tax-exempt		1,221		893		2,203		1,670
Dividends on other securities		295		267		377		430
Interest on deposits with unaffiliated banks and others		204		102		420		189
Total Interest Income		52,962		48,283		99,084		96,605

Interest Expense:
Interest on deposits		9,202		9,808		17,902		19,975
Interest on short-term borrowings		161		239		321		472
Interest on Federal Home Loan Bank advances		708		1,258		1,582		2,590
Total Interest Expense		10,071		11,305		19,805		23,037
Net Interest Income		42,891		36,978		79,279		73,568
Provision for loan losses		12,700		15,200		26,700		29,200
Net Interest Income after Provision for Loan Losses		30,191		21,778		52,579		44,368

Noninterest Income:
Service charges on deposit accounts		5,091		4,781		9,482		9,256
Trust and investment services revenue		2,603		2,374		4,895		4,749
Other charges and fees for customer services		2,333		1,994		4,341		3,795
Mortgage banking revenue		915		1,462		1,633		2,612
Investment securities gains		-		95		-		95
Other		58		252		89		308
Total Noninterest Income		11,000		10,958		20,440		20,815

Operating Expenses:
Salaries, wages and employee benefits		17,214		14,683		31,721		30,100
Occupancy		2,734		2,407		5,571		5,114
Equipment		3,698		2,364		6,412		4,706
Other		11,004		10,562		20,135		19,301
Total Operating Expenses		34,650		30,016		63,839		59,221
Income Before Income Taxes		6,541		2,720		9,180		5,962
Federal Income Tax Expense		2,150		426		2,500		950
Net Income	$	4,391	$	2,294	$	6,680	$	5,012

Net income per common share:
Basic	$	0.17	$	0.10	$	0.27	$	0.21
Diluted		0.17		0.10		0.27		0.21

Cash dividends declared per common share		0.20		0.295		0.400		0.590

Average common shares outstanding:
Basic		26,270		23,890		25,093		23,890
Diluted		26,300		23,908		25,117		23,904

Chemical Financial Corporation Announces Second Quarter Operating Results

Financial Summary (Unaudited)
Chemical Financial Corporation

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in thousands)	2010		2009		2010		2009
Average Balances
Total assets	$	4,841,022	$	4,001,155	$	4,562,212	$	3,964,318
Total interest-earning assets		4,534,743		3,776,766		4,294,427		3,737,963
Total loans		3,435,677		2,968,039		3,211,238		2,964,528
Total deposits		3,941,357		3,130,678		3,697,946		3,089,126
Total interest-bearing liabilities		3,626,955		2,926,290		3,426,803		2,905,601
Total shareholders' equity		528,428		488,765		501,502		488,432

	Three Months Ended June 30				Six Months Ended June 30
	2010		2009		2010		2009
Key Ratios (annualized where applicable)
Net interest margin (taxable equivalent basis)		3.88%		4.00%		3.81%		4.03%
Efficiency ratio		63.1%		61.7%		62.7%		61.9%
Return on average assets		0.36%		0.23%		0.30%		0.25%
Return on average shareholders' equity		3.3%		1.9%		2.7%		2.1%
Average shareholders' equity as a
percent of average assets		10.9%		12.2%		11.0%		12.3%
Tangible shareholders' equity as a
percent of total assets						8.8%		10.5%
Total risk-based capital ratio						13.6%		16.0%

	June 30 2010		March 31 2010		Dec 31 2009		Sept 30 2009		June 30 2009		March 31 2009
Credit Quality Statistics
Originated Loans	$	3,034,515
Acquired Loans		613,446
Originated Portfolio:
Nonaccrual loans		107,981	$	100,882	$	106,589	$	120,186	$	109,944	$	94,737
Loans 90 or more days past due
and still accruing		8,301		7,204		11,733		8,699		10,502		10,240
Troubled debt restructurings - commercial loans		7,791		6,243		-		-		-		-
Troubled debt restructurings - real estate residential loans		18,856		15,799		17,433		9,567		3,981		-
Total nonperforming loans - originated portfolio		142,929		130,128		135,755		138,452		124,427		104,977
Other real estate and repossessed assets (ORE)		21,724		18,813		17,540		19,067		18,344		20,688
Total nonperforming assets		164,653		148,941		153,295		157,519		142,771		125,665
Acquired portfolio - total nonperforming loans		10,050		-		-		-		-		-
Net loan charge-offs (year-to-date)		18,039		10,686		35,215		22,965		16,300		8,494

Allowance for loan losses as a
percent of total originated loans		2.95%		2.82%		2.70%		2.58%		2.35%		2.12%
Allowance for loan losses as a
percent of nonperforming originated loans		63%		65%		60%		56%		56%		60%
Nonperforming originated loans as a
percent of total originated loans		4.71%		4.35%		4.54%		4.61%		4.18%		3.56%
Nonperforming assets as a
percent of total originated loans plus ORE		5.39%		4.95%		5.09%		5.21%		4.77%		4.23%
Nonperforming assets as a
percent of total assets		3.22%		3.47%		3.61%		3.69%		3.57%		3.16%
Net loan charge-offs as a percent of
average loans (year-to-date, annualized)		1.12%		1.43%		1.18%		1.03%		1.10%		1.15%

	June 30 2010		March 31 2010		Dec 31 2009		Sept 30 2009		June 30 2009		March 31 2009
Additional Data - Intangibles
Goodwill	$	109,149	$	69,908	$	69,908	$	69,908	$	69,908	$	69,908
Core deposit intangibles		10,791		2,183		2,331		2,480		2,629		2,847
Mortgage servicing rights (MSR)		3,641		3,059		3,077		2,997		2,869		2,377
Other intangible assets		591		-		-		-		-		-
Amortization of core deposit intangibles (quarter only)		337		148		149		149		217		203

Chemical Financial Corporation Announces Second Quarter Operating Results

Nonperforming Assets (Unaudited)
Chemical Financial Corporation

(Dollars in thousands)	June 30 2010		March 31 2010		Dec 31 2009		Sept 30 2009		June 30 2009		March 31 2009
Originated Portfolio:
Nonaccrual loans:
Commercial	$	21,643	$	18,382	$	19,309	$	21,379	$	20,371	$	16,419
Real estate commercial		57,085		51,865		49,419		58,930		50,067		41,826
Real estate construction		13,397		15,870		15,184		18,196		17,935		18,504
Real estate residential		12,499		10,913		15,508		15,739		15,905		12,803
Consumer		3,357		3,852		7,169		5,942		5,666		5,185
Total nonaccrual loans		107,981		100,882		106,589		120,186		109,944		94,737
Accruing loans contractually past due 90 days or more as to interest or principal payments:
Commercial		2,108		2,576		1,371		1,073		1,201		2,581
Real estate commercial		2,030		1,483		3,971		2,138		1,542		4,352
Real estate construction		436		988		1,990		675		259		538
Real estate residential		2,842		1,636		3,614		3,839		6,236		1,699
Consumer		885		521		787		974		1,264		1,070
Total accruing loans contractually past due 90 days or more as to interest or principal payments		8,301		7,204		11,733		8,699		10,502		10,240
Troubled debt restructurings - commercial loans		7,791		6,243		-		-		-		-
Troubled debt restructurings - real estate residential loans		18,856		15,799		17,433		9,567		3,981		-
Total nonperforming loans		142,929		130,128		135,755		138,452		124,427		104,977
Other real estate and repossessed assets		21,724		18,813		17,540		19,067		18,344		20,688
Total nonperforming assets	$	164,653	$	148,941	$	153,295	$	157,519	$	142,771	$	125,665

Nonperforming loans - Acquired portfolio (1):
Nonaccrual loans	$	7,692
Troubled debt restructurings		2,358
	$	10,050

(1)	Represents the fair value of those loans acquired in the OAK transaction that met the Company's definition of a nonperforming loan at June 30, 2010, but for which the risk of credit loss was already considered in the fair value estimate at the acquisition date.

Chemical Financial Corporation Announces Second Quarter Operating Results

Summary of Loan Loss Experience (Unaudited)
Chemical Financial Corporation

	Three Months Ended
(Dollars in thousands)	June 30 2010			March 31 2010			Dec 31 2009			Sept 30 2009			June 30 2009			March 31 2009
Allowance for loan losses at beginning of period	$	84,155		$	80,841		$	77,491		$	69,956		$	62,562		$	57,056
Provision for loan losses		12,700			14,000			15,600			14,200			15,200			14,000

Originated portfolio:
Loans charged off:
Commercial		(1,438	)		(1,365	)		(3,636	)		(1,786	)		(3,289	)		(3,290	)
Real estate commercial		(2,108	)		(2,289	)		(3,009	)		(1,703	)		(1,930	)		(2,589	)
Real estate construction		(643	)		(644	)		(3,633	)		(874	)		(762	)		(1,700	)
Real estate residential		(1,747	)		(3,173	)		(1,070	)		(1,346	)		(1,043	)		(235	)
Consumer		(2,361	)		(4,427	)		(1,998	)		(1,996	)		(1,544	)		(1,253	)
Total loan charge-offs		(8,297	)		(11,898	)		(13,346	)		(7,705	)		(8,568	)		(9,067	)
Recoveries of loans previously charged off:
Commercial		171			373			220			349			130			205
Real estate commercial		29			170			91			91			226			87
Real estate construction		1			-			261			46			-			-
Real estate residential		175			185			174			231			127			82
Consumer		568			484			350			323			279			199
Total loan recoveries		944			1,212			1,096			1,040			762			573
Net loan charge-offs		(7,353	)		(10,686	)		(12,250	)		(6,665	)		(7,806	)		(8,494	)
Allowance for loan losses at end of period	$	89,502		$	84,155		$	80,841		$	77,491		$	69,956		$	62,562

Chemical Financial Corporation Announces Second Quarter Operating Results

Selected Quarterly Information (Unaudited)
Chemical Financial Corporation

(Dollars in thousands, except per share data)	2nd Qtr. 2010		1st Qtr. 2010		4th Qtr. 2009		3rd Qtr. 2009		2nd Qtr. 2009		1st Qtr. 2009
Summary of Operations
Interest income	$	52,962	$	46,122	$	48,060	$	48,066	$	48,283	$	48,322
Interest expense		10,071		9,734		10,847		11,403		11,305		11,732
Net interest income		42,891		36,388		37,213		36,663		36,978		36,590
Provision for loan losses		12,700		14,000		15,600		14,200		15,200		14,000
Net interest income after provision
for loan losses		30,191		22,388		21,613		22,463		21,778		22,590
Noninterest income		11,000		9,440		10,212		10,092		10,958		9,857
Operating expenses		34,650		29,189		28,807		29,582		30,016		29,205
Income before income taxes		6,541		2,639		3,018		2,973		2,720		3,242
Federal income tax expense		2,150		350		500		500		426		524
Net income	$	4,391	$	2,289	$	2,518	$	2,473	$	2,294	$	2,718

Net interest margin		3.88%		3.72%		3.77%		3.83%		4.00%		4.06%

Per Common Share Data
Net income:
Basic	$	0.17	$	0.10	$	0.11	$	0.10	$	0.10	$	0.11
Diluted		0.17		0.10		0.11		0.10		0.10		0.11
Cash dividends		0.200		0.200		0.295		0.295		0.295		0.295
Book value - period-end		20.27		19.76		19.85		20.06		20.23		20.40
Market value - period-end		21.78		23.62		23.58		21.79		19.91		20.81