þ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Michigan
(State or Other Jurisdiction of Incorporation or Organization) |
38-2022454
(I.R.S. Employer Identification No.) |
|
235 E. Main Street
Midland, Michigan (Address of Principal Executive Offices) |
48640
(Zip Code) |
Large accelerated filer o | Accelerated filer þ |
Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
Item 1.
Financial Statements
Consolidated Statements of Financial Position
June 30,
December 31,
June 30,
2011
2010
2010
(Unaudited)
(Unaudited)
(In thousands, except share data)
$
129,209
$
91,403
$
126,741
271,070
444,762
270,217
400,279
536,165
396,958
1,389
612,466
578,610
644,550
190,029
165,400
165,296
802,495
744,010
811,235
25,572
27,133
27,448
6,874
20,479
10,871
3,748,010
3,681,662
3,647,961
(89,733
)
(89,530
)
(89,502
)
3,658,277
3,592,132
3,558,459
65,252
65,961
68,611
113,414
113,414
109,149
12,327
13,521
15,023
119,568
133,394
122,762
$
5,204,058
$
5,246,209
$
5,120,516
$
813,863
$
753,553
$
680,751
3,437,113
3,578,212
3,518,431
4,250,976
4,331,765
4,199,182
33,919
37,533
36,378
276,600
242,703
242,271
71,928
74,130
86,635
4,633,423
4,686,131
4,564,466
27,457
27,440
27,434
430,134
429,511
429,021
126,477
117,238
111,804
(13,433
)
(14,111
)
(12,209
)
570,635
560,078
556,050
$
5,204,058
$
5,246,209
$
5,120,516
Table of Contents
Consolidated Statements of Income
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2011
2010
2011
2010
(In thousands, except per share data)
$
49,172
$
48,278
$
98,612
$
89,996
2,225
2,964
4,549
6,088
1,393
1,221
2,872
2,203
368
295
491
377
281
204
590
420
53,439
52,962
107,114
99,084
7,551
9,202
15,429
17,902
151
161
301
321
443
708
885
1,582
8,145
10,071
16,615
19,805
45,294
42,891
90,499
79,279
7,000
12,700
14,500
26,700
38,294
30,191
75,999
52,579
4,628
5,091
8,724
9,482
3,026
2,603
5,792
4,895
2,728
2,333
5,386
4,341
499
915
1,563
1,633
21
58
209
89
10,902
11,000
21,674
20,440
18,068
17,214
36,393
31,721
3,099
2,734
6,437
5,571
3,110
3,698
5,832
6,412
9,136
11,004
20,140
20,135
33,413
34,650
68,802
63,839
15,783
6,541
28,871
9,180
4,750
2,150
8,650
2,500
$
11,033
$
4,391
$
20,221
$
6,680
$
0.40
$
0.17
$
0.74
$
0.27
0.40
0.17
0.74
0.27
0.20
0.20
0.40
0.40
Table of Contents
Consolidated Statements of Changes in Shareholders Equity
(Unaudited)
Accumulated
Additional
Other
Common
Paid-in
Retained
Comprehensive
Stock
Capital
Earnings
Loss
Total
(In thousands, except per share data)
$
23,891
$
347,676
$
115,391
$
(12,647
)
$
474,311
6,680
384
54
7,118
1
41
42
3,530
80,167
83,697
(10,267
)
(10,267
)
12
238
250
899
899
$
27,434
$
429,021
$
111,804
$
(12,209
)
$
556,050
$
27,440
$
429,511
$
117,238
$
(14,111
)
$
560,078
20,221
444
234
20,899
(10,982
)
(10,982
)
12
254
266
5
369
374
$
27,457
$
430,134
$
126,477
$
(13,433
)
$
570,635
Table of Contents
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
2011
2010
(In thousands)
$
20,221
$
6,680
14,500
26,700
(2,208
)
(2,173
)
101,586
104,831
(85,773
)
(103,842
)
1,083
(703
)
(915
)
17
350
4,076
3,667
1,904
1,324
1,713
1,208
374
899
10,477
4,531
(3,166
)
1,217
63,018
45,560
185,803
163,935
(220,747
)
(149,449
)
30,763
21,510
(55,334
)
(55,552
)
1,561
(86,502
)
(52,817
)
8,767
9,585
(3,384
)
(4,016
)
17,177
(139,073
)
(49,627
)
(60,655
)
110,549
(20,134
)
(22,733
)
33,897
1,703
(2,202
)
(39,228
)
(10,982
)
(10,267
)
245
292
(59,831
)
40,316
(135,886
)
36,249
536,165
360,709
$
400,279
$
396,958
$
17,015
$
20,371
(849
)
3,900
5,857
10,550
753,671
49,555
736,706
83,697
Table of Contents
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Accretable Yield
(In thousands)
$
72,863
(17,098
)
$
55,765
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Investment Securities Available-for-Sale
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
(In thousands)
$
108,957
$
283
$
36
$
109,204
43,793
1,163
6
44,950
111,760
4,036
191
115,605
283,840
775
371
284,244
56,941
138
175
56,904
1,389
170
1,559
$
606,680
$
6,565
$
779
$
612,466
$
117,167
$
394
$
40
$
117,521
45,951
326
231
46,046
132,683
4,439
187
136,935
233,202
911
192
233,921
43,115
99
467
42,747
1,389
51
1,440
$
573,507
$
6,220
$
1,117
$
578,610
$
163,194
$
730
$
82
$
163,842
47,312
561
47,873
152,112
4,582
335
156,359
247,407
661
711
247,357
29,230
135
246
29,119
$
639,255
$
6,669
$
1,374
$
644,550
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Investment Securities Held-to-Maturity
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
(In thousands)
$
179,529
$
4,614
$
1,223
$
182,920
10,500
5,825
4,675
$
190,029
$
4,614
$
7,048
$
187,595
$
154,900
$
2,106
$
1,758
$
155,248
10,500
6,560
3,940
$
165,400
$
2,106
$
8,318
$
159,188
$
154,796
$
2,400
$
1,106
$
156,090
10,500
6,875
3,625
$
165,296
$
2,400
$
7,981
$
159,715
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
June 30, 2011
Amortized Cost
Fair Value
(In thousands)
$
102,789
$
103,451
365,277
367,800
82,693
83,886
54,532
55,770
1,389
1,559
$
606,680
$
612,466
$
27,053
$
27,108
82,904
83,729
50,426
51,995
29,646
24,763
$
190,029
$
187,595
Less Than 12 Months
12 Months or More
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
Value
Losses
Value
Losses
Value
Losses
(In thousands)
$
29,311
$
34
$
2,860
$
2
$
32,171
$
36
48,011
1,046
12,173
183
60,184
1,229
25,538
185
1,240
6
26,778
191
94,073
300
27,617
71
121,690
371
24,853
147
2,468
28
27,321
175
4,675
5,825
4,675
5,825
$
221,786
$
1,712
$
51,033
$
6,115
$
272,819
$
7,827
$
20,117
$
40
$
$
$
20,117
$
40
71,900
1,863
3,800
126
75,700
1,989
26,117
187
26,117
187
57,556
170
9,616
22
67,172
192
24,683
317
2,341
150
27,024
467
3,940
6,560
3,940
6,560
$
200,373
$
2,577
$
19,697
$
6,858
$
220,070
$
9,435
$
21,237
$
82
$
$
$
21,237
$
82
34,383
844
10,427
262
44,810
1,106
46,896
335
46,896
335
98,813
689
13,126
22
111,939
711
2,241
246
2,241
246
3,625
6,875
3,625
6,875
$
201,329
$
1,950
$
29,419
$
7,405
$
230,748
$
9,355
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
June 30,
December 31,
June 30,
2011
2010
2010
(In thousands)
$
842,404
$
818,997
$
769,287
1,065,606
1,076,971
1,081,860
91,152
89,234
119,449
51,199
53,386
59,555
2,050,361
2,038,588
2,030,151
825,860
798,046
768,156
517,405
503,132
509,508
354,384
341,896
340,146
1,697,649
1,643,074
1,617,810
$
3,748,010
$
3,681,662
$
3,647,961
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Commercial Loan Portfolio Credit Exposure
Credit Risk Profile by Creditworthiness Category
Real Estate
Real Estate
Land
Commercial
Commercial
Construction
Development
Total
(In thousands)
$
637,709
$
673,117
$
69,609
$
15,684
$
1,396,119
26,240
22,354
290
7,842
56,726
20,766
49,993
182
651
71,592
12,955
53,494
6,844
73,293
1,431
3,830
2,089
7,350
699,101
802,788
70,081
33,110
1,605,080
121,952
236,604
20,918
11,405
390,879
7,127
11,126
1,749
20,002
7,904
10,881
653
19,438
6,285
4,207
153
4,282
14,927
35
35
143,303
262,818
21,071
18,089
445,281
$
842,404
$
1,065,606
$
91,152
$
51,199
$
2,050,361
$
619,150
$
656,471
$
67,907
$
15,797
$
1,359,325
22,173
39,653
737
8,935
71,498
16,480
35,471
551
983
53,485
16,061
57,287
6,537
79,885
607
3,271
2,430
6,308
674,471
792,153
69,195
34,682
1,570,501
119,943
249,495
19,796
12,667
401,901
10,236
18,202
28,438
6,050
14,896
457
21,403
8,282
2,225
243
5,580
16,330
15
15
144,526
284,818
20,039
18,704
468,087
$
818,997
$
1,076,971
$
89,234
$
53,386
$
2,038,588
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Consumer Loan Portfolio Credit Exposure
Credit Risk Profile Based on
Aging Status and Payment Activity
Real Estate
Consumer
Total
Residential
Installment
Home Equity
Consumer
(In thousands)
$
771,086
$
509,114
$
300,828
$
1,581,028
30,930
3,215
4,926
39,071
802,016
512,329
305,754
1,620,099
22,750
5,076
48,245
76,071
1,094
385
1,479
23,844
5,076
48,630
77,550
$
825,860
$
517,405
$
354,384
$
1,697,649
$
733,461
$
495,203
$
286,854
$
1,515,518
37,638
1,846
3,895
43,379
771,099
497,049
290,749
1,558,897
25,406
6,083
50,873
82,362
1,541
274
1,815
26,947
6,083
51,147
84,177
$
798,046
$
503,132
$
341,896
$
1,643,074
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
June 30,
December 31,
June 30,
2011
2010
2010
(In thousands)
$
14,386
$
16,668
$
21,643
57,324
60,558
57,085
8,933
8,967
13,397
17,809
12,083
12,499
6,898
4,686
3,357
105,350
102,962
107,981
629
530
2,108
143
1,350
2,030
1,220
436
1,729
3,253
2,842
1,243
1,055
885
3,744
7,408
8,301
15,443
15,057
7,791
11,392
22,302
18,856
26,835
37,359
26,647
$
135,929
$
147,729
$
142,929
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Unpaid
Related
Recorded
Principal
Valuation
Investment
Balance
Allowance
(In thousands)
$
7,278
$
9,096
$
2,127
29,681
31,417
8,227
2,225
2,234
522
22,156
22,156
745
61,340
64,903
11,621
22,315
29,976
43,258
57,680
152
1,124
11,872
17,625
17,809
17,809
3,205
3,205
3,693
3,693
102,304
131,112
29,593
39,072
2,127
72,939
89,097
8,227
152
1,124
14,097
19,859
522
39,965
39,965
745
3,205
3,205
3,693
3,693
$
163,644
$
196,015
$
11,621
Three months ended June 30, 2011
Six months ended June 30, 2011
Interest Income
Interest Income
Average
Recognized
Average
Recognized
Recorded
While on
Recorded
While on
Investment
Impaired Status
Investment
Impaired Status
(In thousands)
$
29,814
$
216
$
31,279
$
541
71,050
152
72,464
396
196
15
216
30
13,750
107
14,203
196
39,369
248
37,777
485
3,032
2,808
3,384
3,091
$
160,595
$
738
$
161,838
$
1,648
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Unpaid
Related
Recorded
Principal
Valuation
Investment
Balance
Allowance
(In thousands)
$
8,289
$
8,675
$
2,947
34,681
35,744
11,356
1,881
1,984
663
22,302
22,302
806
67,153
68,705
15,772
28,597
39,927
38,689
51,722
10,498
15,039
12,083
12,083
1,751
1,751
2,935
2,935
94,553
123,457
36,886
48,602
2,947
73,370
87,466
11,356
12,379
17,023
663
34,385
34,385
806
1,751
1,751
2,935
2,935
$
161,706
$
192,162
$
15,772
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Related
Recorded
Valuation
Investment
Allowance
(In thousands)
$
45,014
$
14,459
18,856
991
63,870
15,450
63,725
12,499
3,357
79,581
$
143,451
$
15,450
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Accruing
Loans
31-60
61-89
Past Due
Days
Days
90 Days
Nonaccrual
Total
Total
Past Due
Past Due
or More
Loans
Past Due
Current
Loans
(In thousands)
$
6,480
$
2,888
$
629
$
14,386
$
24,383
$
674,718
$
699,101
11,256
3,479
143
57,324
72,202
730,586
802,788
290
290
69,791
70,081
209
8,933
9,142
23,968
33,110
7,284
226
1,729
17,809
27,048
774,968
802,016
4,302
1,056
3,205
8,563
503,766
512,329
2,635
702
1,243
3,693
8,273
297,481
305,754
$
32,166
$
8,641
$
3,744
$
105,350
$
149,901
$
3,075,278
$
3,225,179
$
18
$
$
7,659
$
$
7,677
$
135,626
$
143,303
368
4,235
4,603
258,215
262,818
152
152
20,919
21,071
5,045
5,045
13,044
18,089
128
1,094
1,222
22,622
23,844
168
62
230
4,846
5,076
370
107
385
862
47,768
48,630
$
1,052
$
169
$
18,570
$
$
19,791
$
503,040
$
522,831
$
6,788
$
3,645
$
530
$
16,668
$
27,631
$
646,840
$
674,471
9,960
4,139
1,350
60,558
76,007
716,146
792,153
689
689
68,506
69,195
119
1,220
8,967
10,306
24,376
34,682
1,126
6,610
3,253
12,083
23,072
748,027
771,099
6,179
1,741
95
1,751
9,766
487,283
497,049
3,046
825
960
2,935
7,766
282,983
290,749
$
27,788
$
17,079
$
7,408
$
102,962
$
155,237
$
2,974,161
$
3,129,398
$
131
$
64
$
10,445
$
$
10,640
$
133,886
$
144,526
993
3,302
4,295
280,523
284,818
736
243
979
19,060
20,039
2,697
5,580
8,277
10,427
18,704
685
1,541
2,226
24,721
26,947
19
43
62
6,021
6,083
85
34
274
393
50,754
51,147
$
5,346
$
141
$
21,385
$
$
26,872
$
525,392
$
552,264
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Three Months Ended June 30,
Six Months Ended June 30,
2011
2010
2011
2010
(In thousands)
$
89,674
$
84,155
$
89,530
$
80,841
7,000
12,700
14,500
26,700
(8,306
)
(8,297
)
(16,948
)
(20,195
)
1,365
944
2,651
2,156
(6,941
)
(7,353
)
(14,297
)
(18,039
)
$
89,733
$
89,502
$
89,733
$
89,502
Commercial
Consumer
Loan
Loan
Portfolio
Portfolio
Unallocated
Total
(In thousands)
Changes in allowance for loan losses for the three months ended June 30, 2011:
$
57,526
$
27,417
$
4,731
$
89,674
5,395
4,458
(2,853
)
7,000
(5,276
)
(3,030
)
(8,306
)
927
438
1,365
$
58,572
$
29,283
$
1,878
$
89,733
Changes in allowance for loan losses for the six months ended June 30, 2011:
$
59,443
$
27,338
$
2,749
$
89,530
9,090
6,281
(871
)
14,500
(11,190
)
(5,758
)
(16,948
)
1,229
1,422
2,651
$
58,572
$
29,283
$
1,878
$
89,733
Allowance for loan losses balance at June 30, 2011 attributable to:
$
10,876
$
745
$
$
11,621
47,696
28,538
1,878
78,112
$
58,572
$
29,283
$
1,878
$
89,733
Recorded investment (loan balance) at June 30, 2011:
$
98,211
$
22,156
$
$
120,367
1,506,869
1,597,943
3,104,812
445,281
77,550
522,831
$
2,050,361
$
1,697,649
$
$
3,748,010
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
(1)
Loans acquired with deteriorated credit quality and loans to
which the Corporation elected to apply ASC 310-30 by analogy were
originally recorded at fair value at the acquisition date and the
risk of credit loss was recognized at that date based on estimates
of expected cash flows. There have been no material changes in
expected cash flows since the acquisition date.
June 30,
December 31,
June 30,
2011
2010
2010
(In thousands)
$
113,414
$
113,414
$
109,149
8,643
9,406
10,791
3,577
3,782
3,641
107
333
591
$
125,741
$
126,935
$
124,172
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
June 30,
December 31,
June 30,
2011
2010
2010
(In thousands)
$
26,468
$
26,468
$
26,978
17,825
17,062
16,187
$
8,643
$
9,406
$
10,791
$
381
$
336
$
763
$
485
$
764
1,469
1,309
1,146
1,066
2,889
$
8,643
June 30,
December 31,
June 30,
2011
2010
2010
(In thousands)
$
3,577
$
3,782
$
3,641
6,000
5,674
4,788
904,468
891,937
865,613
Three Months Ended June 30,
Six Months Ended June 30,
2011
2010
2011
2010
(In thousands)
$
3,832
$
3,059
$
3,782
$
3,077
691
691
203
269
711
626
(458
)
(378
)
(916
)
(753
)
$
3,577
$
3,641
$
3,577
$
3,641
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
June 30,
December 31,
June 30,
2011
2010
2010
(In thousands)
$
3,761
$
3,317
$
3,442
(17,194
)
(17,428
)
(15,651
)
$
(13,433
)
$
(14,111
)
$
(12,209
)
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Required to be
Minimum
Well Capitalized
Required for
Under Prompt
Capital Adequacy
Corrective Action
Actual
Purposes
Regulations
Capital
Capital
Capital
Amount
Ratio
Amount
Ratio
Amount
Ratio
(In thousands)
$
486,917
13.0
%
$
300,744
8.0
%
N/A
N/A
478,734
12.7
300,517
8.0
$
375,646
10.0
%
439,394
11.7
150,372
4.0
N/A
N/A
431,247
11.5
150,258
4.0
225,388
6.0
439,394
8.6
203,915
4.0
N/A
N/A
431,247
8.5
203,878
4.0
254,847
5.0
$
473,471
12.9
%
$
293,856
8.0
%
N/A
N/A
465,709
12.7
293,573
8.0
$
366,966
10.0
%
427,014
11.6
146,928
4.0
N/A
N/A
419,296
11.4
146,786
4.0
220,179
6.0
427,014
8.4
204,426
4.0
N/A
N/A
419,296
8.2
204,291
4.0
255,363
5.0
$
497,838
13.6
%
$
293,818
8.0
%
N/A
N/A
485,947
13.2
293,819
8.0
$
367,273
10.0
%
451,387
12.3
146,909
4.0
N/A
N/A
439,496
12.0
146,909
4.0
220,364
6.0
451,387
9.6
188,515
4.0
N/A
N/A
439,496
9.3
188,498
4.0
235,623
5.0
(1)
Includes combined capital amounts and ratios of Chemical Bank and Byron Bank at June 30, 2010 as Byron Bank
was merged with and into Chemical Bank on July 23, 2010.
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Valuation is based upon quoted prices for identical instruments
traded in active markets. Level 1 valuations for the Corporation
include U.S. Treasury securities that are traded by dealers or
brokers in active over-the-counter markets. Valuations are
obtained from a third party pricing service for these investment
securities.
Valuation is based upon quoted prices for similar instruments in
active markets, quoted prices for identical or similar instruments
in markets that are not active, and model-based valuation
techniques for which all significant assumptions are observable in
the market. Level 2 valuations for the Corporation include
government sponsored agency securities, including securities
issued by the Federal Home Loan Bank, Federal Home Loan Mortgage
Corporation, Federal National Mortgage Association, Federal Farm
Credit Bank, Student Loan Marketing Corporation and the Small
Business Administration, securities issued by certain state and
political subdivisions, residential mortgage-backed securities,
collateralized mortgage obligations, corporate bonds and preferred
stock. Valuations are obtained from a third-party pricing service
for these investment securities.
Valuation is generated from model-based techniques that use at
least one significant assumption not observable in the market.
These unobservable assumptions reflect estimates of assumptions
that market participants would use in pricing the asset or
liability. Valuation techniques include use of option pricing
models, discounted cash flow models, yield curves and similar
techniques. The determination of fair value requires management
judgment or estimation and generally is corroborated by external
data, which includes third-party pricing services. Level 3
valuations for the Corporation include securities issued by
certain state and political subdivisions, trust preferred
securities, impaired loans, goodwill, core deposit intangible
assets, MSRs and other real estate and repossessed assets.
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Fair Value Measurements Recurring Basis
Quoted Prices
In Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
(Level 1)
(Level 2)
(Level 3)
Total
(In thousands)
$
$
109,204
$
$
109,204
44,950
44,950
115,605
115,605
284,244
284,244
56,904
56,904
1,559
1,559
$
$
612,466
$
$
612,466
$
$
117,521
$
$
117,521
46,046
46,046
136,935
136,935
233,921
233,921
42,747
42,747
1,440
1,440
$
$
578,610
$
$
578,610
$
$
1,389
$
$
1,389
163,842
163,842
47,873
47,873
156,359
156,359
247,357
247,357
29,119
29,119
644,550
644,550
$
$
645,939
$
$
645,939
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Fair Value Measurements - Nonrecurring Basis
Quoted Prices
In Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
(Level 1)
(Level 2)
(Level 3)
Total
(In thousands)
$
$
$
68,766
$
68,766
24,607
24,607
$
$
$
93,373
$
93,373
$
$
$
64,883
$
64,883
27,510
27,510
$
$
$
92,393
$
92,393
$
$
$
66,450
$
66,450
21,724
21,724
$
$
$
88,174
$
88,174
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
June 30, 2011
December 31, 2010
June 30, 2010
Carrying
Fair
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Amount
Value
(In thousands)
$
400,279
$
400,279
$
536,165
$
536,165
$
396,958
$
396,958
828,067
825,633
771,143
764,931
838,683
833,102
6,874
6,874
20,479
20,479
10,871
10,871
3,658,277
3,651,307
3,592,132
3,601,805
3,558,459
3,528,397
15,621
15,621
15,761
15,761
15,604
15,604
$
2,678,064
$
2,678,064
$
2,738,719
$
2,738,719
$
2,617,734
$
2,617,734
1,572,912
1,596,321
1,593,046
1,614,854
1,581,448
1,597,671
2,487
2,487
2,887
2,887
3,217
3,217
276,600
276,600
242,703
242,703
242,271
242,271
71,928
73,380
74,130
75,166
86,635
88,500
Three Months Ended
Six Months Ended
June 30,
June 30,
2011
2010
2011
2010
(In thousands, except per share data)
$
11,033
$
4,391
$
20,221
$
6,680
27,454
26,270
27,453
25,093
43
30
37
24
27,497
26,300
27,490
25,117
$
0.40
$
0.17
$
0.74
$
0.27
0.40
0.17
0.74
0.27
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Non-Vested
Stock Options Outstanding
Stock Options Outstanding
Weighted-
Weighted-
Average
Average
Weighted-
Exercise
Grant Date
Average
Number of
Price
Fair Value
Number of
Exercise Price
Options
Per Share
Per Share
Options
Per Share
126,670
$
23.29
$
6.99
757,665
$
29.42
99,172
19.95
6.12
99,172
19.95
(62,459
)
23.29
6.77
(16,162
)
30.68
163,383
$
21.27
$
6.54
840,675
$
28.28
677,292
$
29.97
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Weighted-
Average
Number of
Grant Date
Shares
Fair Value
80,852
$
22.99
51,598
17.87
(2,427
)
23.70
130,023
$
20.99
Defined Benefit Pension Plans
Three Months Ended
Six Months Ended
June 30,
June 30,
2011
2010
2011
2010
(In thousands)
$
291
$
313
$
582
$
627
1,208
1,209
2,415
2,418
(1,582
)
(1,431
)
(3,164
)
(2,862
)
(1
)
(1
)
269
124
539
247
$
186
$
215
$
371
$
429
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2011
Postretirement Benefits Plan
Three Months Ended
Six Months Ended
June 30,
June 30,
2011
2010
2011
2010
(In thousands)
$
41
$
54
$
83
$
108
(81
)
(81
)
(162
)
(162
)
(8
)
(16
)
$
(48
)
$
(27
)
$
(95
)
$
(54
)
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
June 30,
March 31,
December 31,
2011
2011
2010
(In thousands)
$
14,386
$
15,672
$
16,668
57,324
59,931
60,558
8,933
9,414
8,967
17,809
15,505
12,083
6,898
5,774
4,686
105,350
106,296
102,962
629
455
530
143
459
1,350
1,220
1,729
191
3,253
1,243
1,091
1,055
3,744
2,196
7,408
15,443
15,201
15,057
11,392
22,166
22,302
26,835
37,367
37,359
135,929
145,859
147,729
24,607
26,355
27,510
$
160,536
$
172,214
$
175,239
3.63
%
3.96
%
4.01
%
3.08
%
3.23
%
3.34
%
(1)
Includes property acquired through foreclosure and by
acceptance of a deed in lieu of foreclosure and other
property held for sale, including properties acquired as a
result of the OAK transaction.
June 30, 2011
March 31, 2011
December 31, 2010
Percent
Percent
Percent
Amount
of Total
Amount
of Total
Amount
of Total
(In thousands)
$
20,186
15
%
$
21,946
15
%
$
22,511
15
%
67,620
50
69,772
48
71,652
49
9,052
6
9,414
6
10,187
7
96,858
71
101,132
69
104,350
71
30,930
23
37,862
26
37,638
25
8,141
6
6,865
5
5,741
4
$
135,929
100
%
$
145,859
100
%
$
147,729
100
%
Table of Contents
Three Months Ended
Six Months Ended
June 30, 2011
June 30, 2011
(In thousands)
$
106,296
$
102,962
17,687
39,462
(7,027
)
(15,192
)
(2,386
)
(4,305
)
(1,519
)
(6,342
)
(7,701
)
(11,235
)
$
105,350
$
105,350
June 30, 2011
March 31, 2011
December 31, 2010
Number of
Number of
Number of
Borrowers
Amount
Borrowers
Amount
Borrowers
Amount
(In thousands)
1
$
7,114
1
$
7,277
1
$
7,227
3
8,834
4
11,577
6
17,071
16
28,552
17
28,684
18
29,246
21
14,999
23
15,827
22
14,483
56
20,386
54
19,999
50
18,188
192
16,973
187
17,768
202
18,135
289
$
96,858
286
$
101,132
299
$
104,350
Table of Contents
Table of Contents
June 30,
March 31,
December 31,
2011
2011
2010
(In thousands)
$
7,811
$
8,501
$
9,149
8,564
9,102
8,604
5,236
5,088
6,189
2,529
3,106
3,035
24,140
25,797
26,977
467
558
533
$
24,607
$
26,355
$
27,510
Three Months Ended
Six Months Ended
June 30, 2011
June 30, 2011
(In thousands)
$
26,355
$
27,510
3,443
6,085
(430
)
(924
)
(4,761
)
(8,064
)
$
24,607
$
24,607
Table of Contents
June 30,
March 31,
December 31,
2011
2011
2010
(In thousands)
$
80,643
$
85,017
$
86,193
24,707
21,279
16,769
15,443
15,201
15,057
11,392
22,166
22,302
2,125
10,764
18,570
17,747
21,385
$
163,644
$
161,410
$
161,706
Table of Contents
Cumulative
Inherent
Valuation
Confirmed
Loss
Amount
Allowance
Losses
Percentage
(In thousands)
$
24,196
$
5,987
$
25
%
14,988
4,889
3,563
46
29,582
19,021
39
29,445
98,211
$
10,876
$
22,584
28
%
18,570
$
116,781
$
23,697
$
7,595
$
32
%
14,226
3,581
3,157
39
26,492
20,120
43
35,804
100,219
$
11,176
$
23,277
28
%
17,747
$
117,966
$
33,056
$
12,015
$
36
%
11,795
2,951
1,551
34
20,033
18,277
48
36,366
101,250
$
14,966
$
19,828
29
%
21,385
$
122,635
Table of Contents
June 30,
March 31,
December 31,
2011
2011
2010
(In thousands)
$
89,733
$
89,674
$
89,530
135,929
145,859
147,729
66
%
61
%
61
%
84
%
75
%
70
%
Table of Contents
$
28,871
8,767
28,025
5,734
531
$
71,928
Table of Contents
More
Less than
1-3
3-5
than
1 year
years
years
5 years
Total
(In thousands)
$
427,243
$
98,757
$
65,227
$
58,928
$
650,155
157,125
157,125
30,741
13,243
3,795
10
47,789
$
615,109
$
112,000
$
69,022
$
58,938
$
855,069
Tier 1
Total
Risk-Based
Risk-Based
Leverage
Capital
Capital
8.6
%
11.7
%
13.0
%
8.5
11.5
12.7
4.0
4.0
8.0
5.0
6.0
10.0
Table of Contents
Table of Contents
Table of Contents
Three Months Ended
June 30,
2011
2010
Tax
Effective
Tax
Effective
Average
Equivalent
Yield/
Average
Equivalent
Yield/
Balance
Interest
Rate
Balance
Interest
Rate
$
3,712,538
$
49,700
5.37
%
$
3,443,507
$
48,715
5.67
%
592,064
2,225
1.50
629,039
2,964
1.88
168,085
2,116
5.04
136,479
1,848
5.42
26,755
368
5.52
25,753
295
4.59
429,148
281
0.26
299,965
204
0.27
4,928,590
54,690
4.45
4,534,743
54,026
4.77
91,497
88,534
108,993
111,842
65,159
64,613
243,999
218,358
$
5,255,244
$
4,841,022
$
790,197
$
362
0.18
%
$
723,193
$
462
0.26
%
1,148,380
663
0.23
1,086,083
1,085
0.40
1,563,892
6,526
1.67
1,480,472
7,655
2.07
282,806
151
0.21
242,261
161
0.27
72,403
443
2.45
94,946
708
2.99
3,857,678
8,145
0.85
3,626,955
10,071
1.11
797,259
651,609
4,654,937
4,278,564
34,807
34,030
565,500
528,428
$
5,255,244
$
4,841,022
3.60
%
3.66
%
$
46,545
$
43,955
3.78
%
3.88
%
*
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.
Table of Contents
Six Months Ended
June 30,
2011
2010
Tax
Effective
Tax
Effective
Average
Equivalent
Yield/
Average
Equivalent
Yield/
Balance
Interest
Rate
Balance
Interest
Rate
$
3,699,978
$
99,679
5.42
%
$
3,218,708
$
90,883
5.68
%
583,334
4,549
1.56
619,360
6,088
1.97
169,158
4,362
5.16
121,001
3,334
5.51
26,943
491
3.67
23,950
377
3.17
466,478
590
0.26
311,408
420
0.27
4,945,891
109,671
4.46
4,294,427
101,102
4.74
91,940
86,342
110,597
102,404
65,346
59,309
245,454
192,414
$
5,275,348
$
4,562,212
$
825,385
$
780
0.19
%
$
681,215
$
851
0.25
%
1,147,954
1,348
0.24
1,033,771
2,116
0.41
1,576,700
13,301
1.70
1,380,825
14,935
2.18
276,816
301
0.22
240,439
321
0.27
72,952
885
2.45
90,553
1,582
3.52
3,899,807
16,615
0.86
3,426,803
19,805
1.17
781,037
602,135
4,680,844
4,028,938
31,410
31,772
563,094
501,502
$
5,275,348
$
4,562,212
3.60
%
3.57
%
$
93,056
$
81,297
3.78
%
3.81
%
*
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.
Table of Contents
Three Months Ended June 30,
2011 Compared to 2010
Increase (Decrease)
Due to Changes in
Combined
Average
Average
Increase/
Volume
**
Yield/Rate
**
(Decrease)
$
3,636
$
(2,651
)
$
985
(156
)
(510
)
(666
)
407
(139
)
268
85
(8
)
77
3,972
(3,308
)
664
30
(130
)
(100
)
31
(453
)
(422
)
476
(1,605
)
(1,129
)
25
(35
)
(10
)
(150
)
(115
)
(265
)
412
(2,338
)
(1,926
)
$
3,560
$
(970
)
$
2,590
*
Taxable equivalent basis using a federal income tax rate of 35%.
**
The change in interest income and interest expense due to both volume
and rate has been allocated to the volume and rate changes in
proportion to the relationship of the absolute dollar amounts of the
change in each.
Table of Contents
Six Months Ended June 30,
2011 Compared to 2010
Increase (Decrease)
Due to Changes in
Combined
Average
Average
Increase/
Volume
**
Yield/Rate
**
(Decrease)
$
13,079
$
(4,283
)
$
8,796
(286
)
(1,139
)
(1,425
)
1,256
(228
)
1,028
194
(24
)
170
14,243
(5,674
)
8,569
145
(216
)
(71
)
154
(922
)
(768
)
1,914
(3,548
)
(1,634
)
45
(65
)
(20
)
(271
)
(426
)
(697
)
1,987
(5,177
)
(3,190
)
$
12,256
$
(497
)
$
11,759
*
Taxable equivalent basis using a federal income tax rate of 35%.
**
The change in interest income and interest expense due to both volume
and rate has been allocated to the volume and rate changes in
proportion to the relationship of the absolute dollar amounts of the
change in each.
Table of Contents
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2011
2011
2010
2011
2010
(In thousands)
$
4,628
$
4,096
$
5,091
$
8,724
$
9,482
3,026
2,766
2,603
5,792
4,895
1,443
1,607
1,357
3,050
2,420
897
769
668
1,666
1,346
499
1,064
915
1,563
1,633
388
282
308
670
575
21
188
58
209
89
$
10,902
$
10,772
$
11,000
$
21,674
$
20,440
Table of Contents
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2011
2011
2010
2011
2010
(In thousands)
$
14,970
$
14,949
$
14,573
$
29,919
$
26,143
3,098
3,376
2,641
6,474
5,578
3,099
3,338
2,734
6,437
5,571
3,110
2,722
3,698
5,832
6,412
1,640
1,668
1,081
3,308
2,031
1,219
1,769
1,920
2,988
3,408
1,290
1,259
1,890
2,549
3,307
871
1,128
1,173
1,999
2,294
559
964
637
1,523
1,259
830
822
767
1,652
1,549
674
514
620
1,188
1,094
479
511
337
990
485
445
406
421
851
784
308
441
462
749
843
821
1,522
1,696
2,343
3,081
$
33,413
$
35,389
$
34,650
$
68,802
$
63,839
Table of Contents
Table of Contents
Table of Contents
Twelve month interest rate change projection (in basis points)
-200
-100
0
+100
+200
(5.3
)%
(2.7
)%
1.4
%
1.8
%
Table of Contents
Table of Contents
74
75
76
77
Table of Contents
Exhibit
Number
Document
Restated Articles of Incorporation. Previously filed as Exhibit 3.1 to the
registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2011,
filed with the SEC on May 5, 2011. Here incorporated by reference.
Bylaws. Previously filed as Exhibit 3.2 to the registrants Current Report on
Form 8-K dated January 20, 2009, filed with the SEC on January 23, 2009. Here
incorporated by reference.
Restated Articles of Incorporation. Exhibit 3.1 is here incorporated by reference.
Bylaws. Exhibit 3.2 is here incorporated by reference.
Amended and Restated Stock Incentive Plan of 2006.
Certification of Chief Executive Officer.
Certification of Chief Financial Officer.
Certification pursuant to 18 U.S.C. §1350.
Interactive Data File.*
As provided in Rule 406T of
Regulation S-T, this information shall not be deemed
Filed for purposes of Section 11 and 12 of the Securities
Act of 1933 and Section 18 of the Securities Exchange Act of 1934 or
otherwise subject to liability under those sections.
Table of Contents
CHEMICAL FINANCIAL CORPORATION
Date: August 3, 2011
By:
/s/ David B. Ramaker
David B. Ramaker
Chairman of the Board, Chief Executive Officer and
President
(Principal Executive Officer)
Date: August 3, 2011
By:
/s/ Lori A. Gwizdala
Lori A. Gwizdala
Executive Vice President, Chief Financial
Officer and Treasurer
(Principal Financial and Accounting Officer)
Table of Contents
Exhibit
Number
Document
Restated Articles of Incorporation. Previously filed as Exhibit 3.1 to the
registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2011,
filed with the SEC on May 5, 2011. Here incorporated by reference.
Bylaws. Previously filed as Exhibit 3.2 to the registrants Current Report on
Form 8-K dated January 20, 2009, filed with the SEC on January 23, 2009. Here
incorporated by reference.
Restated Articles of Incorporation. Exhibit 3.1 is here incorporated by reference.
Bylaws. Exhibit 3.2 is here incorporated by reference.
Amended and Restated Stock Incentive Plan of 2006.
Certification of Chief Executive Officer.
Certification of Chief Financial Officer.
Certification pursuant to 18 U.S.C. §1350.
Interactive Data File.*
As provided in Rule 406T of
Regulation S-T, this information shall not be deemed
Filed for purposes of Section 11 and 12 of the Securities
Act of 1933 and Section 18 of the Securities Exchange Act of 1934 or
otherwise subject to liability under those sections.
(a) | Net income (before or after taxes, interest, depreciation, and/or amortization); | ||
(b) | Net income per share; | ||
(c) | Return on equity; | ||
(d) | Cash earnings; | ||
(e) | Cash earnings per share (reflecting dilution of the Common Stock as the Committee deems appropriate and, if the Committee so determines, net of or including dividends); | ||
(f) | Cash earnings return on equity; | ||
(g) | Operating income; | ||
(h) | Operating income per share; | ||
(i) | Operating income return on equity; | ||
(j) | Return on assets; | ||
(k) | Cash flow; | ||
(l) | Cash flow return on capital; | ||
(m) | Return on capital; | ||
(n) | Productivity ratios; | ||
(o) | Share price (including without limitation growth measures, total shareholder return or comparison to indices); | ||
(p) | Expense or cost levels; |
(q) | Margins; | ||
(r) | Operating efficiency; | ||
(s) | Efficiency ratio; | ||
(t) | Customer satisfaction, satisfaction based on specified objective goals or a Company-sponsored customer survey; | ||
(u) | Economic value added measurements; | ||
(v) | Market share or market penetration with respect to specific designated products or services, product or service groups and/or specific geographic areas; | ||
(w) | Reduction of losses, loss ratios, expense ratios or fixed costs; | ||
(x) | Employee turnover; and | ||
(y) | Specified objective social goals. |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 of Chemical Financial Corporation; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ David B. Ramaker | ||||
David B. Ramaker | ||||
Chairman of the Board, Chief Executive Officer and
President
Chemical Financial Corporation |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 of Chemical Financial Corporation; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Lori A. Gwizdala | ||||
Lori A. Gwizdala | ||||
Executive Vice President, Chief Financial
Officer and Treasurer
Chemical Financial Corporation |
Dated: August 3, 2011 | /s/ David B. Ramaker | |||
David B. Ramaker | ||||
Chairman of the Board, Chief Executive Officer and President | ||||
Dated: August 3, 2011 | /s/ Lori A. Gwizdala | |||
Lori A. Gwizdala | ||||
Executive Vice President, Chief Financial Officer and Treasurer | ||||