Chemical Financial in Midland, Mich., reported net income Monday of $14.4 million for the fourth quarter, 14.3% better than a year earlier.
The $6.2 billion-asset Chemical Financial's earnings per share of 48 cents fell one cent short of what analysts polled by Bloomberg had projected. Its shares were trading at $30.27 at midday, virtually unchanged from Friday.
Chief Executive David Ramaker attributed the bank's higher profit to balance sheet growth, improving credit quality metrics and cost control.
"While we remain confident in our prospects going forward, it is important to remember that future earnings improvement will be driven increasingly by overall balance sheet and fee-income growth coupled with vigilant cost discipline, as opposed to credit quality improvements and cost cutting," Ramaker said in a news release Monday.
Net interest income was $51.3 million for the fourth quarter of 2013, a 6.9% jump from the fourth quarter of 2012. Total loans increased 11.5% year over year, to $4.6 billion, and fueled the rise in interest income.
Noninterest income dipped 7.5% from the fourth quarter of 2012; lower mortgage banking revenue, caused by declines in the volume of loans sold in the secondary market, was the main culprit. Net interest margin declined by 11 basis points, to 3.63%, largely because of the repricing of loans.
Provision for loan losses decreased 60% to $2 million in the fourth quarter, thanks to continued improvement in the overall credit quality of Chemical Financial's loan portfolio. Net loan chargeoffs fell to 0.39% of average loans from 0.51% of average loans in the fourth quarter of 2012. Operating expenses remained steady at $42.4 million for the fourth quarter of 2013, slightly up from $42 million a year earlier.