Confident that their team has successfully recruited some of the top commercial lenders in their markets and made investments in banking teams in high growth areas, Chemical Financial Corporation CEO David Provost and his colleague, Chemical Bank CEO Thomas Shafer are reflecting on a first quarter report that beat Wall Street estimates for both earnings per share and revenues this week.
Pointing to first quarter net income of $70.2-million, or $0.97 per diluted share as compared to 2017 1st quarter net income of $47.6-million, or $0.67 per diluted share, the bank holding company beat the street by 6-cents per share.
Revenues of $192.42-million also topped analyst estimates by $4.64-million, scoring a 14.5-percent increase year over year on the revenue side of the card.
Provost and Shafer say, “We are pleased with our earnings results for the quarter which benefited from an increase in net interest income driven by improvement in our net interest margin, a $3.8-million benefit to earnings due to a change in fair value in loan servicing rights and a lower effective tax rate.” They add, “Over the last few months we have successfully recruited who we believe to be some of the top commercial lenders in our markets and made investments in banking teams in our high growth areas. Additionally, we have keenly focused on growing our core deposits and are pleased with the progress we are making with both retail and institutional customers.” Furthermore, they add, “Our teams are working diligently to implement substantial upgrades to our core operating systems and are on schedule to complete this project in the third quarter of this year.”
The two institutional leaders say, “We look forward to the growth we believe these investments will bring to our loan and deposit portfolios in addition to the optimal best-in-class customer service experience we are creating for our customers.”
Chemical’s return on average assets in the quarter was 1.44-percent as compared to 1.09-percent in the first quarter of 2017, and 0.20-percent in the fourth quarter of 2017. Meanwhile, net interest income was $151.9-million in first quarter 2018, coming in $21.8-million higher than the same quarter a year ago, representing a 16.7-percent boost. That gain was primarily attributable to increases in average balances and yields earned on loans in addition to an increase in average investment securities.
Core operating expenses were $101.7-million in the first quarter as compared to $91.3-million in the fourth quarter of 2017 equating to an increase of $10.4-million primarily due to an $8.7-million increase in salaries, wages and employee benefits and a $2.3-million increase in outside processing and service fees primarily due to costs incurred related to preparing for the conversion of the bank’s core operating system. Salary, wage and benefit increases were the result of annual merit increases, the hiring of additional lenders, key management and operations staff, an increase in payroll taxes, the beginning of a new tax year and a decrease in the deferral of loan origination costs due to lower loan production.
Total assets for Chemical Financial at March 31, 2018 were $19.78-billion, as compared to $17.64-billion at the same time one year earlier, primarily attributable to an increase in investment securities portfolios and net loan growth.
Chemical Financial, which has multiple Chemical Bank branches throughout Michigan’s Great Southwest, is the largest banking company headquartered and operating branch offices in Michigan. They currently have 212 banking offices primarily in Michigan, northeast Ohio, and northern Indiana.
