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Actionable news in CHFC: Chemical Financial Corporation,

Filed By Chemical Financial Corporation

The following excerpt is from the company's SEC filing.

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934

Subject Company: Talmer Bancorp, Inc.

Commission File Number: 001-36308

For further information:

David B. Ramaker, CEO

Lori A. Gwizdala, CFO

989-839-5350

Chemical Financial Corporation Reports

First Quarter

Operating Results

MIDLAND, MI,

April 15, 2016

-- Chemical Financial Corporation ("Corporation" or "Chemical") (NASDAQ:CHFC) today announced

first quarter

net in come of

$23.3 million

per diluted share, compared to

fourth quarter

$25.5 million

per diluted share and

$17.8 million

per diluted share. Excluding merger and acquisition-related transaction expenses ("transaction expenses"), net income in the

first quarter of 2016

$24.9 million

$26.9 million

per diluted share, in the

fourth quarter of 2015

$18.7 million

first quarter of 2015

Transaction expenses attributable to the pending merger with Talmer Bancorp, Inc. ("Talmer"), which was announced on January 26, 2016, were

$2.6 million

, while transaction expenses attributable to the April 1, 2015 acquisition of Monarch Community Bancorp, Inc. ("Monarch") and the May 31, 2015 acquisition of Lake Michigan Financial Corporation ("Lake Michigan") were

$2.1 million

$1.4 million

"Between these solid financial results, and our late January announcement of our partnership with Talmer, 2016 is off to a strong start for Chemical Financial Corporation. The improvement in our first quarter 2016 financial results over the prior year’s first quarter was driven, in large part, by the benefits and synergies of the two acquisitions we have completed in the intervening period, combined with solid organic loan and deposit growth over the past year. The resultant balance sheet and revenue growth, combined with our sustained high level of credit quality and ability to keep operating expenses in check, has translated into strong first quarter earnings performance," noted David B. Ramaker, Chairman, Chief Executive Officer and President of Chemical Financial Corporation.

"We continue to believe that our community-centric approach to commercial banking makes us an attractive financial service provider for the households and small- and middle-market businesses that operate in the communities we serve, while also making us an appealing potential partner for like-minded financial institutions. Our pending merger with Talmer represents another instance of our ability to bring strong, complementary, talented commercial banking operations into the Chemical Financial Corporation family. We look forward to continuing to execute on our growth strategy across select Midwestern markets in the months and years ahead," added Ramaker.

The Corporation's return on average assets was

during the

. The Corporation's return on average shareholders' equity was

. Excluding transaction expenses, the Corporation's return on average assets was

and the Corporation's return on average shareholders' equity was

Net interest income was

$74.3 million

$1.1 million

than the

although $15.1 million, or

higher

. The decrease in net interest income in the

, compared to the

, was largely attributable to lower interest income resulting from one less day in the first quarter of 2016 and semi-annual interest income from Federal Reserve Bank

(FRB) dividends and seasonal loan fees in the fourth quarter of 2015. Loan growth in the first quarter of 2016 was offset by a slight reduction in the average yield of the loan portfolio during the quarter. The increase in net interest income in the

was largely attributable to the positive impact of organic loan growth and the impact of the Corporation's acquisitions of Monarch and Lake Michigan.

The net interest margin (on a tax-equivalent basis) was

. The average yield on the loan portfolio was

in both the

. The average yield of the investment securities portfolio was

. The Corporation's average cost of funds was

The provision for loan losses was

$1.5 million

$2.0 million

. Net loan charge-offs were

$4.5 million

of average loans, in the

$4.3 million

$1.9 million

. Net loan charge-offs in the

included $2.9 million from one commercial loan relationship.

The Corporation's nonperforming loans, consisting of nonaccrual loans, accruing loans past due 90 days or more as to principal or interest payments and nonperforming troubled debt restructurings, totaled

$73.3 million

March 31, 2016

$83.9 million

December 31, 2015

$72.7 million

March 31, 2015

. The $10.6 million, or 13%, decrease in nonperforming loans during the first quarter of 2016 was primarily attributable to a combination of net loan charge-offs and $7.8 million of principal paydowns. Nonperforming loans comprised

of total loans at

. The decrease in the percentage of nonperforming loans to total loans at

, was partially due to the addition of $1.11 billion of total loans acquired in the Monarch and Lake Michigan transactions, with no corresponding increase in nonperforming loans as these acquired loans are not classified as nonperforming after the acquisition date since they are recorded in loan pools at their net realizable value.

, the allowance for loan losses of the originated loan portfolio was

$70.3 million

of originated loans, compared to

of originated loans, at

$75.3 million

. The allowance for loan losses of the originated loan portfolio as a percentage of nonperforming loans was

Noninterest income was

$19.4 million

$20.1 million

$19.3 million

. Noninterest income in the

, due primarily to lower seasonal overdraft fees and mortgage banking revenue.

Operating expenses were

$58.9 million

$57.8 million

$51.0 million

. Operating expenses included transaction expenses of

. Excluding these transaction expenses, operating expenses were

$56.3 million

$0.6 million

$6.6 million

. The increase in operating expenses in the

, was primarily attributable to higher employee benefit costs related to $1.1 million of higher payroll tax expenses, which are highest in the first quarter of the year, and $0.4 million higher group health costs. These and other increases were partially offset by lower expenses in other categories, including variable and incentive compensation, equipment and software and credit-related expenses. The increase in operating expenses in the

, was primarily attributable to incremental operating costs associated with the Monarch and Lake Michigan transactions.

The Corporation's efficiency ratio was

Total assets were

$9.30 billion

$9.19 billion

$7.55 billion

. The increase in total assets during the three months ended

was primarily attributable to loan growth that was funded by an increase in seasonal municipal deposit accounts. The increase in total assets during the twelve months ended

was attributable to $1.47 billion of assets acquired in the Monarch and Lake Michigan acquisitions and loan growth that was partially funded by $355 million of organic growth in customer deposits. Interest-bearing balances at the Federal Reserve Bank totaled $90 million at

, compared to $15 million at

and $239 million at

. Investment securities were

$1.03 billion

$1.06 billion

at both

Total loans were

$7.37 billion

$96 million

, from total loans of

$7.27 billion

and up

$1.66 billion

$5.70 billion

. During the first quarter of 2016, commercial real estate loans grew $42 million, residential mortgage loans grew $32 million and commercial loans grew $16 million. The increase in loans during the twelve months ended

was attributable to $1.11 billion of loans acquired in the Monarch and Lake Michigan acquisitions and $557 million of organic loan growth.

Total deposits were

$7.65 billion

$7.46 billion

$6.32 billion

. The increase in deposits during the first quarter of 2016 was primarily attributable to a $131 million increase in seasonal municipal deposit accounts. The increase in total deposits during the twelve months ended

was attributable to the Corporation acquiring $1.07 billion of deposits in the Monarch and Lake Michigan acquisitions and organic growth in customer deposits of $355 million, which were partially offset by a decrease of $94 million related to maturing brokered deposits that were acquired in the Lake Michigan transaction.

Securities sold under agreements to repurchase with customers were

$283 million

$297 million

$372 million

, with the decrease from

due largely to $50 million of temporary funds received from one customer of Chemical Bank that were withdrawn during the second quarter of 2015. Short-term borrowings were

$100 million

(none at

) and consisted of short-term FHLB advances utilized by the Corporation to fund short-term liquidity needs. The decrease in short-term borrowings during the first quarter of 2016 was due to the Corporation utilizing a portion of funds received from the seasonal increase in municipal deposit accounts to pay off maturing short-term FHLB advances. Long-term borrowings were

$274 million

$242 million

. The Corporation had no long-term borrowings at

. The increase in long-term borrowings during the first quarter of 2016 was attributable to the Corporation borrowing an additional $50 million of long-term FHLB advances to fund future liquidity needs and in anticipation of increases in market interest rates. During the first quarter of 2016, the Corporation paid off its subordinated debt obligations of $18 million that were acquired in the Lake Michigan transaction.

, the Corporation's tangible equity to assets ratio and total risk-based capital ratio were

, respectively, compared to

, respectively, at

. The decrease in the Corporation's capital ratios at

, was attributable to the Monarch and Lake Michigan acquisitions. At

, the Corporation's book value was

$26.99

per share, compared to

$26.62

per share at

$24.68

, the Corporation's tangible book value was

$19.20

$18.78

$18.95

This press release contains references to financial measures which are not defined in generally accepted accounting...


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