Chemical Financial Corporation Reports Third Quarter 2012 Results

Chemical Financial Corporation Reports Third Quarter 2012 Results

MIDLAND, Mich., Oct. 22, 2012 (GLOBE NEWSWIRE) -- Chemical Financial
Corporation (Nasdaq:CHFC) today announced 2012 third quarter net income of
$13.1 million, or $0.48 per diluted share, compared to 2012 second quarter net
income of $13.9 million, or $0.50 per diluted share, and 2011 third quarter
net income of $11.6 million, or $0.42 per diluted share. For the nine months
ended September 30, 2012, net income was $39.3 million, or $1.43 per diluted
share, compared to net income for the nine months ended September 30, 2011 of
$31.8 million, or $1.16 per diluted share.

"Despite uneven economic conditions, Chemical Financial continues to post
strong operating performance and stable financial results. Furthermore, we are
making substantial progress working through our nonperforming loans and other
real estate (ORE) portfolio, while controlling costs. As a result, our key
credit quality and financial performance metrics continue to improve," said
David B. Ramaker, Chairman, Chief Executive Officer and President of the
Corporation.

"Our strong financial condition favorably positions us to pursue organic and
acquisitive growth opportunities, as evidenced by our pending acquisition of
21 branch offices from Independent Bank, which has received regulatory
approval and is expected to close in the fourth quarter of 2012.We will
selectively assess other potential growth opportunities that arise as we
expect Michigan's banking industry to continue to consolidate," said Ramaker.

The decrease in net income in the third quarter of 2012 from the second
quarter of 2012 of $0.8 million, or 5.5 percent, was primarily attributable to
a decrease of $1.2 million in noninterest income that was largely due to the
receipt of nonrecurring noninterest income of $0.8 million in the second
quarter of 2012. While net interest income was $0.5 million higher in the
third quarter of 2012 than in the second quarter of 2012, the increase in net
interest income was offset by $0.5 million increases in both the provision for
loan losses and operating expenses in the third quarter of 2012, as compared
to the second quarter of 2012.

The increase in net income in the third quarter of 2012 over the third quarter
of 2011 of $1.5 million, or 12.7 percent, was attributable to increases in
both net interest income and noninterest income and a decrease in the
provision for loan losses, which were partially offset by an increase in
operating expenses. The increase in operating expenses was attributable to
acquisition-related expenses incurred in the third quarter of 2012.

The Corporation's return on average assets during the third quarter of 2012
was 0.96 percent, compared to 1.04 percent in the second quarter of 2012 and
0.87 percent in the third quarter of 2011. The Corporation's return on average
equity was 8.8 percent in the third quarter of 2012, compared to 9.6 percent
in the second quarter of 2012 and 8.0 percent in the third quarter of 2011.

Net interest income was $46.9 million in the third quarter of 2012, which was
$0.5 million, or 1.0 percent, higher than the second quarter of 2012 and $0.6
million, or 1.4 percent, higher than the third quarter of 2011. The net
interest margin (on a tax-equivalent basis) in the third quarter of 2012 was
3.76 percent, compared to 3.80 percent in both the second quarter of 2012 and
the third quarter of 2011.

The increase in net interest income of $0.5 million in the third quarter of
2012 over the second quarter of 2012 was primarily attributable to an increase
in interest income that resulted from an increase in average loans of $87
million, or 2.2 percent, during the third quarter of 2012, which was partially
offset by the net impact of interest-earning assets and interest-bearing
liabilities repricing during the third quarter of 2012. The increase in net
interest income of $0.6 million in the third quarter of 2012 over the third
quarter of 2011 was primarily attributable to both an increase in interest
income that resulted from an increase in average loans of $218 million, or 5.8
percent, during the twelve months ended September 30, 2012 and a slight
decrease in interest expense resulting from a change in the mix of deposit
liabilities between these two quarters. The favorable impact on net interest
income of these two items was partially offset by the net impact of
interest-earning assets and interest-bearing liabilities repricing during the
twelve months ended September 30, 2012.

The provision for loan losses (provision) was $4.5 million in the third
quarter of 2012, compared to $4.0 million in the second quarter of 2012 and
$6.4 million in the third quarter of 2011, with $0.5 million of the provision
in the third quarter of 2012 and $1.3 million of the provision in the third
quarter of 2011 applicable to the acquired loan portfolio. Net loan
charge-offs were $6.5 million in the third quarter of 2012, compared to $5.1
million in the second quarter of 2012 and $7.4 million in the third quarter of
2011, with $2.2 million of net loan charge-offs in the third quarter of 2012
related to one loan relationship in the acquired loan portfolio.

The Corporation established an allowance for loan losses on the acquired loan
portfolio of $1.6 million in 2011 and increased it by $0.6 million and $0.5
million in the first and third quarters of 2012, respectively. The
establishment of the allowance for loan losses on the acquired loan portfolio
was primarily attributable to the impairment of one commercial loan
relationship which resulted in one of the acquired loan pools performing below
original expectations. During the third quarter of 2012, the Corporation
charged off $2.2 million of this loan relationship, resulting in a $0.2
million loan balance that remained outstanding at September 30, 2012. At
September 30, 2012, the allowance for loan losses on the acquired loan
portfolio was $0.5 million and was related to two consumer loan pools
performing slightly below original expectations. It is management's belief
that the remaining acquired loan pools at September 30, 2012, were performing,
overall, as or slightly better than expected compared to original
expectations.

Noninterest income was $12.1 million in the third quarter of 2012, compared to
$13.3 million in the second quarter of 2012 and $11.2 million in the third
quarter of 2011. Noninterest income in the second quarter of 2012 included
nonrecurring income of $0.6 million from the partial insurance recovery of a
2008 branch cash loss and $0.2 million of other nonrecurring income. Excluding
nonrecurring income, noninterest income in the third quarter of 2012 was $0.4
million lower than the second quarter of 2012, which was attributable to lower
wealth management revenue.

Noninterest income in the third quarter of 2012 was $0.9 million higher than
the third quarter of 2011, with the increase attributable to increases across
all major categories of noninterest income as a result of both fee increases
and volume growth. The largest increase in noninterest income was in mortgage
banking revenue (MBR), with MBR of $1.5 million in the third quarter of 2012
up $0.3 million from MBR of $1.2 million in the third quarter of 2011. The
increase in MBR between these two quarters was primarily driven by higher
volume, as the Corporation sold $71 million of mortgages in the secondary
market in the third quarter of 2012, compared to the sale of $48 million in
the third quarter of 2011.

Operating expenses were $36.1 million in the third quarter of 2012, compared
to $35.5 million in the second quarter of 2012 and $35.4 million in the third
quarter of 2011. The Corporation's control of operating expenses has resulted
in its ability to maintain its efficiency ratio favorably below the average
efficiency ratios of its Federal Reserve Bank peer group. The Corporation's
efficiency ratios were 59.9 percent in the third quarter of 2012, 58.3 percent
in the second quarter of 2012 and 60.2 percent in the third quarter of 2011.

Operating expenses in the second and third quarters of 2012 included
acquisition-related expenses applicable to the pending acquisition of branches
from Independent Bank of $0.5 million and $0.6 million, respectively.
Excluding acquisition-related expenses, operating expenses in the third
quarter of 2012 were $0.4 million higher than the second quarter of 2012 and
$0.1 million higher than the third quarter of 2011. The increase in operating
expenses in the third quarter of 2012 over the second quarter of 2012 was
primarily attributable to seasonally higher advertising and marketing costs.
The Corporation's operating expenses were essentially the same in the third
quarters of 2012 and 2011, as increases in various expense categories in the
third quarter of 2012, including an increase in compensation costs of $1.5
million, or 7.8 percent, were almost entirely offset by decreases in other
expense categories, including lower credit-related expenses.Credit-related
expenses were $0.5 million in the third quarter of 2012, a reduction of $1.7
million, or 75 percent, from credit-related expenses of $2.2 million in the
third quarter of 2011.

Credit-related expenses, comprised of loan collection costs and ORE net costs,
were $2.6 million during the nine months ended September 30, 2012, a decrease
of $3.2 million, or 55 percent, from credit-related expenses of $5.8 million
during the nine months ended September 30, 2011.Credit-related expenses were
lower in all three quarters of 2012, as compared to their respective quarters
in 2011.The decrease in credit-related expenses of $3.2 million was largely
attributable to the Corporation recognizing net gains of $1.4 million on the
sale/writedown of ORE properties during the nine months ended September 30,
2012, compared to incurring net expense of $0.6 million during the nine months
ended September 30, 2011. The additional reduction in credit-related expenses
of $1.2 million was largely attributable to lower legal collection costs and
lower appraisal fees on nonperforming and watch loan credits as the credit
quality of the Corporation's loan portfolio continued to improve.

Total assets were $5.58 billion at September 30, 2012, up from $5.35 billion
at June 30, 2012 and $5.44 billion at September 30, 2011. The increase in
total assets during the third quarter of 2012 was attributable to an increase
in interest-bearing balances held at the Federal Reserve Bank (FRB) due to a
seasonal increase in municipal customer deposits. The Corporation has
maintained significant amounts of funds at the FRB, with $315 million in
balances held at the FRB at September 30, 2012, compared to $120 million at
June 30, 2012 and $479 million at September 30, 2011.

Total loans were $4.02 billion at September 30, 2012, up from $3.96 billion at
June 30, 2012 and $3.76 billion at September 30, 2011. Total loans increased
$57 million, or 1.4%, in the third quarter of 2012. The Corporation's loan
growth during the third quarter of 2012 occurred primarily in the commercial
and consumer loan portfolios, with commercial loans increasing $37 million, or
4 percent, and consumer loans increasing $19 million, or 2 percent. During the
twelve months ended September 30, 2012, total loans increased $259 million, or
6.9 percent, with commercial loans increasing $93 million, or 10.8 percent,
real estate commercial loans increasing $61 million, or 5.8 percent, real
estate residential loans increasing $40 million, or 4.8 percent, and consumer
installment and home equity loans increasing $93 million, or 10.6 percent,
while real estate construction and land development loans decreased $29
million, or 24.2 percent. The increases in loans during the three and twelve
months ended September 30, 2012 were attributable to a combination of
improving economic conditions and higher loan demand, as well as the
Corporation increasing its market share. The average yield on the loan
portfolio was 4.86 percent in the third quarter of 2012, compared to 4.96
percent in the second quarter of 2012 and 5.29 percent in the third quarter of
2011.

Investment securities were $868 million at September 30, 2012, compared to
$893 million at June 30, 2012 and $797 million at September 30, 2011. The
average yield of the investment securities portfolio, on a fully taxable
equivalent basis, was 2.13 percent in the third quarter of 2012, compared to
2.17 percent in the second quarter of 2012 and 2.35 percent in the third
quarter of 2011.

Total deposits were $4.60 billion at September 30, 2012, up from $4.38 billion
at June 30, 2012 and $4.48 billion at September 30, 2011. The Corporation
experienced an increase in total deposits of $215 million, or 4.9 percent,
during the third quarter of 2012, which was attributable to a seasonal
increase in deposits of municipal customers. Remaining brokered deposits
acquired in the Corporation's 2010 acquisition of Byron Bank were $75 million
at September 30, 2012, compared to $84 million at June 30, 2012 and $98
million at September 30, 2011. Federal Home Loan Bank (FHLB) advances totaled
$37.2 million at September 30, 2012, compared to $38.2 million at June 30,
2012 and $46.0 million at September 30, 2011. The repricing of matured
customer certificates of deposit and the decrease in interest rates on various
interest-bearing deposit accounts to reflect lower market interest rates
resulted in the Corporation's average cost of funds declining to 0.46 percent
in the third quarter of 2012 from 0.51 percent in the second quarter of 2012
and 0.65 percent in the third quarter of 2011.

At September 30, 2012, the Corporation's tangible equity to assets ratio and
total risk-based capital ratio were 8.8 percent and 13.6 percent,
respectively, compared to 9.0 percent and 13.6 percent, respectively, at June
30, 2012 and 8.6 percent and 13.1 percent, respectively, at September 30,
2011. At September 30, 2012, the Corporation's book value was $21.75 per
share, compared to $21.42 per share at June 30, 2012 and $21.02 per share at
September 30, 2011.

The credit quality of the Corporation's loan portfolio continued to show
further improvement during the third quarter of 2012. At September 30, 2012,
the Corporation's nonperforming loans, consisting of nonaccrual loans,
accruing loans past due 90 days or more as to principal or interest and
nonperforming troubled debt restructurings, totaled $90.9 million, compared to
$92.8 million at June 30, 2012 and $120.4 million at September 30, 2011,
representing declines of 2.1 percent and 24.5 percent, respectively. At
September 30, 2012, nonperforming loans as a percentage of total loans were
2.26 percent, compared to 2.34 percent at June 30, 2012 and 3.20 percent at
September 30, 2011.

Other real estate and repossessed assets totaled $19.5 million at September
30, 2012, compared to $23.5 million at June 30, 2012 and $28.7 million at
September 30, 2011. The decrease in other real estate during the third quarter
of 2012 was primarily attributable to the sale of one ORE property, which
consisted of vacant land with a carrying value of $4.1 million.This ORE
property was obtained as a result of the Corporation receiving a deed in lieu
of foreclosure on this property during the fourth quarter of 2010 that was
attributable to a loan acquired in the Corporation's acquisition of Byron
Bank.This loan was impaired at the acquisition date and was recorded at the
estimated fair value of the collateral at that time.

At September 30, 2012, the allowance for loan losses of the originated loan
portfolio was $84.2 million, or 2.33 percent of originated loans, compared to
2.40 percent at June 30, 2012 and 2.68 percent at September 30, 2011. The
allowance for loan losses of the originated loan portfolio as a percentage of
nonperforming loans was 93 percent at September 30, 2012, compared to 91
percent at June 30, 2012 and 73 percent at September 30, 2011. The allowance
for loan losses of the acquired loan portfolio was $0.5 million at September
30, 2012, compared to $2.2 million at June 30, 2012 and $1.3 million at
September 30, 2011. Management believes that the Corporation's acquired loan
portfolio at September 30, 2012 totaling $413 million, was performing,
overall, as or slightly better than original expectations.

Chemical Financial Corporation is the second largest bank holding company
headquartered and operating branch offices in Michigan. The Corporation
operates through a single subsidiary bank, Chemical Bank, with 142 banking
offices spread over 32 counties in the lower peninsula of Michigan. At
September 30, 2012, the Corporation had total assets of $5.6 billion. Chemical
Financial Corporation's common stock trades on The NASDAQ Stock Market under
the symbol CHFC and is one of the issues comprising The NASDAQ Global Select
Market. More information about the Corporation is available by visiting the
investor relations section of its website at www.chemicalbankmi.com.

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. Words such as "anticipated," "awaiting," "believe,"
"continue," "estimated," "expects," "further," "improving," "opportunities,"
"pending," "positions," "potential," "strategies," "trends," "will" and
variations of such words and 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 the credit quality of the loan portfolio, future levels of
nonperforming loans, future economic trends and conditions, anticipated
consolidation opportunities in Michigan's banking industry, potential growth
opportunities, future income levels, and our ability to grow our loan
portfolio, improve credit quality and control operating costs. 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, mortgage servicing rights and other real
estate owned and 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) involve judgments that are inherently
forward-looking. 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 or that other real estate owned can be sold
for its carrying value or at all. The future effect of changes in the
financial and credit markets and the national and regional economy 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.

This press release contains forward-looking statements regarding the
Corporation's outlook or expectations with respect to the planned acquisition
of branches from Independent Bank, the expected costs to be incurred in
connection with the acquisition, the future performance of the branches to be
acquired, the consequences of their integration into Chemical Bank, and the
impact of the transaction on the Corporation's future performance. Even though
regulatory approval has been received, circumstances could arise which may
delay or impede the completion of the transaction, although none are known at
this time. The impact of the completion of the transaction on the
Corporation's financial statements will be affected by the timing of the
transaction, including, in particular, the ability to complete the acquisition
in the fourth quarter of 2012. The transaction may be more expensive to
complete and the anticipated benefits, including anticipated strategic gains,
may be significantly harder or take longer to achieve than expected or may not
be achieved in their entirety or at all as a result of unexpected factors or
events.

Risk factors include, but are not limited to, the risk factors described in
Item1A of the Corporation's Annual Report on Form10-K for the year ended
December31, 2011. 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 share   September 30 December 31  September 30
data)                             2012         2011         2011
Assets:                                                   
Cash and cash equivalents:                                
Cash and cash due from banks      $123,519   $121,294   $126,712
Interest-bearing deposits with    315,201     260,646     484,572
unaffiliated banks and others
Total cash and cash equivalents   438,720     381,940     611,284
Investment securities:                                    
Available-for-sale                646,578     667,276     610,493
Held-to-maturity                  221,536     183,339     186,432
Total Investment Securities       868,114     850,615     796,925
Loans held-for-sale               15,075      18,818      15,212
                                                         
Loans:                                                    
Commercial                       951,938     895,150     858,969
Real estate commercial           1,117,073   1,071,999   1,056,092
Real estate construction and land 90,882      118,176     119,829
development
Real estate residential          880,295     861,716     840,044
Consumer installment and home     978,971     884,244     885,492
equity
Total Loans                       4,019,159   3,831,285   3,760,426
Allowance for loan losses         (84,694)    (88,333)    (88,713)
Net Loans                         3,934,465   3,742,952   3,671,713
                                                         
Premises and equipment            67,796      65,997      64,998
Goodwill                          113,414     113,414     113,414
Other intangible assets           10,243      11,472      11,849
Interest receivable and other     132,594     154,245     154,209
assets
Total Assets                      $5,580,421 $5,339,453 $5,439,604
                                                         
Liabilities:                                              
Deposits:                                                 
Noninterest-bearing              $952,126   $875,791   $891,363
Interest-bearing                 3,646,746   3,491,066   3,589,223
Total Deposits                    4,598,872   4,366,857   4,480,586
Interest payable and other        34,738      54,024      33,700
liabilities
Short-term borrowings             311,471     303,786     302,298
Federal Home Loan Bank advances  37,237      43,057      45,991
Total Liabilities                 4,982,318   4,767,724   4,862,575
                                                         
Shareholders' Equity:                                     
Preferred stock, no par value per --          --          --
share
Common stock, $1 par value per    27,498      27,457      27,457
share
Additional paid-in capital        432,627     431,277     430,462
Retained earnings                 160,884     138,324     132,611
Accumulated other comprehensive   (22,906)    (25,329)    (13,501)
loss
Total Shareholders' Equity        598,103     571,729     577,029
Total Liabilities and             $5,580,421 $5,339,453 $5,439,604
Shareholders' Equity

                                                        
                                                        
Chemical Financial Corporation Announces Third Quarter Operating          
Results
                                                        
Consolidated Statements of Income (Unaudited)                             
Chemical Financial Corporation                                           
                                                        
                            Three Months Ended  Nine Months Ended
                             September 30        September 30
(In thousands, except per    2012      2011      2012       2011
share data)
Interest Income:                                         
Interest and fees on loans   $48,322 $49,770 $144,472 $148,382
Interest on investment                                   
securities:
Taxable                      2,458    2,335    7,610     6,884
Tax-exempt                   1,457    1,513    4,407     4,385
Dividends on nonmarketable   128      114      638       605
equity securities
Interest on deposits with
unaffiliated banks and       136      266      505       856
others
Total Interest Income        52,501   53,998   157,632   161,112
                                                        
Interest Expense:                                        
Interest on deposits         5,238    7,199    16,999    22,628
Interest on short-term       105      117      317       418
borrowings
Interest on Federal Home     248      413      765       1,298
Loan Bank advances
Total Interest Expense       5,591    7,729    18,081    24,344
Net Interest Income         46,910   46,269   139,551   136,768
Provision for loan losses    4,500    6,400    13,500    20,900
Net Interest Income after    42,410   39,869   126,051   115,868
Provision for Loan Losses
                                                        
Noninterest Income:                                      
Service charges and fees on  5,028    4,780    14,546    13,504
deposit accounts
Wealth management revenue    2,745    2,638    8,835     8,430
Other charges and fees for   2,778    2,581    8,489     7,967
customer services
Mortgage banking revenue     1,457    1,173    4,059     2,736
Gain on sale of merchant     --       --       1,280     --
card services
Other                       54       53       784       262
Total Noninterest Income     12,062   11,225   37,993    32,899
                                                        
Operating Expenses:                                      
Salaries, wages and employee 20,738   19,229   61,846    55,622
benefits
Occupancy                   3,137    3,093    9,264     9,530
Equipment and software       3,406    3,162    9,651     8,994
Other                        8,785    9,910    27,137    30,050
Total Operating Expenses     36,066   35,394   107,898   104,196
Income Before Income Taxes   18,406   15,700   56,146    44,571
Federal Income Tax Expense  5,300    4,075    16,800    12,725
Net Income                  $13,106 $11,625 $39,346  $31,846
                                                        
Net income per common share:                             
Basic                        $0.48   $0.42   $1.43    $1.16
Diluted                      0.48     0.42     1.43      1.16
                                                        
Key Ratios:                                              
Return on average assets     0.96%     0.87%     0.97%      0.80%
Return on average            8.8%      8.0%      9.0%       7.5%
shareholders' equity
Net interest margin         3.76%     3.80%     3.77%      3.79%
Efficiency ratio            59.9%     60.2%     59.5%      60.0%


Chemical Financial Corporation Announces Third Quarter Operating Results
                                                                                         
Financial Summary (Unaudited)                                                                                      
Chemical Financial Corporation                                                                                    
                 Three Months Ended
(Dollars in       Sept 30      June 30      March 31     Dec 31       Sept 30      June 30      March 31
thousands)        2012         2012         2012         2011         2011         2011         2011
Average Balances                                                                         
Total assets      $5,433,491 $5,360,598 $5,396,420 $5,341,079 $5,323,962 $5,255,244 $5,302,558
Total
interest-earning  5,105,101   5,044,629   5,061,882   5,008,813   4,985,380   4,928,590   4,963,384
assets
Total loans       3,987,928   3,901,321   3,824,604   3,772,140   3,769,745   3,707,468   3,672,301
Total deposits    4,464,582   4,383,628   4,416,273   4,378,066   4,358,658   4,299,728   4,362,774
Total
interest-bearing  3,823,954   3,817,753   3,903,986   3,847,003   3,853,443   3,857,678   3,942,406
liabilities
Total
shareholders'     591,683     582,873     574,261     578,105     573,580     565,500     560,661
equity
                                                                                         
Key Ratios
(annualized where                                                                         
applicable)
Net interest
margin (taxable   3.76%        3.80%        3.76%        3.84%        3.80%        3.78%        3.78%
equivalent basis)
Efficiency ratio 59.9%        58.3%        60.4%        63.1%        60.2%        58.2%        61.8%
Return on average 0.96%        1.04%        0.92%        0.83%        0.87%        0.84%        0.70%
assets
Return on average
shareholders'     8.8%         9.6%         8.7%         7.7%         8.0%         7.8%         6.6%
equity
Average
shareholders'
equity as a       10.9%        10.9%        10.6%        10.8%        10.8%        10.8%        10.6%
percent of
average assets
Capital ratios                                                                            
(period end):
Tangible
shareholders'
equity as a       8.8%         9.0%         8.7%         8.7%         8.6%         8.9%         8.5%
percent of total
assets
Total risk-based  13.6%        13.6%        13.7%        13.3%        13.1%        13.0%        13.0%
capital ratio
                                                                                         
                 Sept 30      June 30      March 31     Dec 31       Sept 30      June 30      March 31
                  2012         2012         2012         2011         2011         2011         2011
Credit Quality                                                                            
Statistics
Originated Loans  $3,606,547 $3,515,110 $3,370,279 $3,338,502 $3,265,054 $3,225,179 $3,143,489
Acquired Loans    412,612     447,232     472,819     492,783     495,372     522,831     539,027
Nonperforming                                                                             
Assets:
Nonperforming     90,877      92,811      98,548      106,269     120,395     135,929      145,859
loans
Other real estate
and repossessed   19,467      23,509      25,944      25,484      28,679      24,607       26,355
assets (ORE)
Total
nonperforming     110,344     116,320     124,492     131,753     149,074     160,536      172,214
assets
                                                                                         
Performing
troubled debt     26,806      26,383      27,177      20,394      15,543      12,889      --
restructurings
                                                                                         
Allowance for
loan                                                                                      
losses-originated
as a percent of:
Total originated  2.33%        2.40%        2.54%        2.60%        2.68%        2.78%        2.85%
loans
Nonperforming     93%          91%          87%          82%          73%          66%          61%
loans
                                                                                         
Nonperforming
loans as a        2.26%        2.34%        2.56%        2.77%        3.20%        3.63%        3.96%
percent of total
loans
Nonperforming
assets as a                                                                               
percent of:
Total loans plus  2.73%        2.92%        3.22%        3.42%        3.93%        4.26%        4.64%
ORE
Total assets      1.98%        2.17%        2.28%        2.47%        2.74%        3.08%        3.23%
                                                                                         
Net loan
charge-offs                                                                               
(year-to-date):
Originated        14,939      10,622      5,548       27,197      21,717      14,297      7,356
Acquired          2,200       --          --          --          --          --          --
Total loan
charge-offs       17,139      10,622      5,548       27,197      21,717      14,297      7,356
(year-to-date)
Net loan
charge-offs as a
percent of        0.59%        0.55%        0.58%        0.73%        0.78%        0.77%        0.80%
average loans
(year-to-date,
annualized)
                                                                                         
                 Sept 30      June 30     March 31     Dec 31       Sept 30      June 30     March 31
                  2012         2012         2012         2011         2011         2011         2011
Additional Data -                                                                         
Intangibles
Goodwill          $113,414   $113,414   $113,414   $113,414   $113,414   $113,414   $113,414
Core deposit      6,777       7,144       7,512       7,879       8,261       8,643       9,024
intangibles
Mortgage
servicing rights  3,466       3,463       3,427       3,593       3,561       3,577       3,832
(MSR)
Other intangible  --          --          --          --          27          107         204
assets
Amortization of
core deposit      367         368         367         382         382         381         382
intangibles
(quarter only)


Chemical Financial Corporation Announces Third Quarter Operating Results
                                                            
Average Balances, Tax Equivalent Interest and Effective Yields and Rates
(Unaudited)*
                                                            
                                 Three Months Ended September 30, 2012
                                                 Tax
(Dollars in thousands)            Average        Equivalent    Effective
                                  Balance        Interest      Yield/Rate
Assets                                                       
Interest-Earning Assets:                                     
Loans**                           $4,001,117   $48,807     4.86 %
Taxable investment securities     685,580        2,458         1.43
Tax-exempt investment securities  191,902        2,221         4.63
Other interest-earning assets     25,572         128           1.99
Interest-bearing deposits with    200,930        136           0.27
unaffiliated banks and others
Total interest-earning assets     5,105,101      53,750        4.19
Less: Allowance for loan losses   87,796                      
Other Assets:                                                
Cash and cash due from banks      119,107                     
Premises and equipment            67,911                      
Interest receivable and other     229,168                     
assets
Total Assets                      $5,433,491                
                                                            
Liabilities and shareholders'                                
equity
Interest-bearing Liabilities:                                
Interest-bearing demand deposits  $890,457     $228        0.10 %
Savings deposits                  1,158,985      303           0.10
Time deposits                     1,434,738      4,707         1.31
Short-term borrowings             302,051        105           0.14
FHLB advances                     37,723         248           2.62
Total interest-bearing            3,823,954      5,591         0.58
liabilities
Noninterest-bearing deposits      980,402        --          --
Total deposits and borrowed funds 4,804,356      5,591         0.46
Interest payable and other        37,452                      
liabilities
Shareholders' equity              591,683                     
Total Liabilities and             $5,433,491                
Shareholders' Equity
Net Interest Spread (Average yield earned on interest-earning
assets minus average rate paid on interest-bearing             3.61 %
liabilities)
Net Interest Income (FTE)                       $48,159     
Net Interest Margin (Net Interest Income (FTE) divided by      3.76 %
total average interest-earning assets)
                                                            
*Taxable equivalent basis using                             
a federal income tax rate of 35%.
** Nonaccrual loans and loans held-for-sale are included in average balances
reported and are included in the calculation of yields.
Also, tax equivalent interest                               
includes net loan fees.


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    June 30    March 31
thousands)      2012       2012       2012       2011       2011       2011       2011
Nonperforming                                                               
Loans:
Nonaccrual                                                                  
loans:
Commercial      $15,217  $12,673  $11,443  $10,726  $10,804  $14,386  $15,672
Real estate     41,311    41,691    46,870    44,438    48,854    57,324    59,931
commercial
Real estate
construction    6,664     3,485     3,809     6,190     7,877     8,933     9,414
and land
development
Real estate     11,307    12,613    12,687    12,573    17,544    17,809    15,505
residential
Consumer
installment and 3,825     3,994     4,344     4,467     6,033     6,898     5,774
home equity
Total
nonaccrual      78,324    74,456    79,153    78,394    91,112    105,350   106,296
loans
Accruing loans
contractually
past due 90
days or more as                                                             
to interest or
principal
payments:
Commercial      273       300       1,005     1,381     282       629       455
Real estate     247       269       75        374       415       143       459
commercial
Real estate
construction    --        --        --        287       --        --        --
and land
development
Real estate     431       840       333       752       974       1,729     191
residential
Consumer
installment and 1,147     1,157     1,233     1,023     1,344     1,243     1,091
home equity
Total accruing
loans
contractually
past due 90     2,098     2,566     2,646     3,817     3,015     3,744     2,196
days or more as
to interest or
principal
payments
Nonperforming
troubled debt                                                               
restructurings:
Commercial loan 6,553     11,691    11,258    14,675    16,457    15,443    15,201
portfolio
Consumer loan   3,902     4,098     5,491     9,383     9,811     11,392    22,166
portfolio
Total
nonperforming   10,455    15,789    16,749    24,058    26,268    26,835    37,367
troubled debt
restructurings
Total
nonperforming   90,877    92,811    98,548    106,269   120,395   135,929   145,859
loans
Other real
estate and      19,467    23,509    25,944    25,484    28,679    24,607    26,355
repossessed
assets
Total
nonperforming   $110,344 $116,320 $124,492 $131,753 $149,074 $160,536 $172,214
assets


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   June 30   March 31
thousands)   2012      2012      2012      2011      2011      2011      2011
                                                                  
Allowance
for loan
losses -                                                           
originated
loan
portfolio
Allowance
for loan
losses -     $84,511 $85,585 $86,733 $87,413 $89,733 $89,674 $89,530
originated,
at beginning
of period
Provision
for loan     4,000    4,000     4,400     4,800     5,100     7,000     7,500
losses -
originated
Loans                                                              
charged off:
Commercial   (551)    (974)    (1,079)  (1,768)  (1,234)  (1,972)  (1,976)
Real estate  (1,952)  (2,178)  (2,268)  (2,120)  (3,969)  (3,168)  (3,875)
commercial
Real estate
construction (51)     (45)     (32)     (54)     (236)    (136)    (63)
and land
development
Real estate  (1,357)  (1,140)  (1,717)  (945)    (1,884)  (1,198)  (944)
residential
Consumer
installment  (1,485)  (1,835)  (1,451)  (1,434)  (1,516)  (1,832)  (1,784)
and home
equity
Total loan   (5,396)  (6,172)  (6,547)  (6,321)  (8,839)  (8,306)  (8,642)
charge-offs
Recoveries
of loans                                                           
previously
charged off:
Commercial   135      140      191      137      614      710      215
Real estate  325      298      421      272      285      212      87
commercial
Real estate
construction --       --       2        40       --       5        --
and land
development
Real estate  237      199      22       80       207      106      456
residential
Consumer
installment  382      461      363      312      313      332      528
and home
equity
Total loan   1,079    1,098    999      841      1,419    1,365    1,286
recoveries
Net loan
charge-offs  (4,317)  (5,074)  (5,548)  (5,480)  (7,420)  (6,941)  (7,356)
- originated
Allowance
for loan
losses -     84,194   84,511   85,585   86,733   87,413   89,733   89,674
originated,
at end of
period
                                                                  
Allowance
for loan
losses -                                                           
acquired
loan
portfolio
Allowance
for loan
losses -     2,200    2,200    1,600    1,300    --       --       --
acquired, at
beginning of
period
Provision
for loan     500      --       600      300      1,300    --       --
losses -
acquired
Net loan
charge-offs  (2,200)  --       --       --       --       --       --
- acquired
(commercial)
Allowance
for loan
losses -     500      2,200    2,200    1,600    1,300    --       --
acquired, at
end of
period
                                                                  
Total
allowance    $84,694 $86,711 $87,785 $88,333 $88,713 $89,733 $89,674
for loan
losses


Chemical Financial Corporation Announces Third Quarter Operating Results
                                                                 
Selected Quarterly Information (Unaudited)                                              
Chemical Financial Corporation                                                         
                                                                 
(Dollars in
thousands,  3rd Qtr.  2nd Qtr.  1st Qtr.  4th Qtr.  3rd Qtr.  2nd Qtr.  1st Qtr.
except per  2012      2012      2012      2011      2011      2011      2011
share data)
Summary of                                                        
Operations
Interest    $52,501 $52,467 $52,664 $54,130 $53,998 $53,439 $53,675
income
Interest    5,591    6,021    6,469    7,045    7,729    8,145     8,470
expense
Net
interest    46,910   46,446   46,195   47,085   46,269   45,294    45,205
income
Provision
for loan    4,500    4,000    5,000    5,100    6,400    7,000     7,500
losses
Net
interest
income
after       42,410   42,446   41,195   41,985   39,869   38,294    37,705
provision
for loan
losses
Noninterest 12,062   13,282   12,649   11,501   11,225   10,902    10,772
income
Operating   36,066   35,537   36,295   37,807   35,394   33,413    35,389
expenses
Income
before      18,406   20,191   17,549   15,679   15,700   15,783    13,088
income
taxes
Federal
income tax  5,300    6,325    5,175    4,475    4,075    4,750     3,900
expense
Net income $13,106 $13,866 $12,374 $11,204 $11,625 $11,033 $9,188
                                                                 
Net
interest    3.76%     3.80%     3.76%     3.84%     3.80%     3.78%     3.78%
margin
                                                                                       
Per Common                                                        
Share Data
Net income:                                                       
Basic       $0.48   $0.50   $0.45   $0.41   $0.42   $0.40   $0.33
Diluted     0.48     0.50     0.45      0.41     0.42     0.40      0.33
Cash
dividends   0.21     0.20     0.20     0.20     0.20     0.20      0.20
declared
Book value
-           21.75    21.42    21.10    20.82    21.02    20.78     20.54
period-end
Tangible
book value  17.52    17.17    16.84    16.54    16.71    16.46    16.19
-
period-end
Market
value -     24.20    21.50    23.44    21.32    15.31    18.76     19.93
period-end

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