Magazine article American Banker

Chemical Is Retrenching

Magazine article American Banker

Chemical Is Retrenching

Article excerpt

A week after reporting a nearly 5% drop in third-quarter earnings, Chemical Financial Corp. of Midland, Mich., announced a broad restructuring Friday aimed at cutting costs and boosting profits.

The $3.8 billion-asset company said it is consolidating its three banking charters into one, closing eight of its 132 branches, and shuffling its senior management. President and chief executive David B. Ramaker said the moves would free up individual bank presidents from administrative duties to focus on business development.

"We have a strategic plan for the company, and as part of the strategic plan is a review of the delivery system and how we go about generating loans," Mr. Ramaker said Friday.

Chemical said last week that it earned $40 million in the third quarter, 4.8% less than a year earlier. It blamed a decline in net interest income, a larger provision for loan losses, and higher operating expenses.

Brad Milsaps, an analyst in Atlanta with Sandler O'Neill & Partners LP, said the restructuring is a positive step.

"By consolidating the charters they are able to have these people more focused on revenue activities," Mr. Milsaps said. "It sounds like they have realigned some of their people to take on a little less of a management role and being more of a producer. That's important."

Wilson L. Smith, an analyst with Boenning & Scattergood Inc. of Conshocken, Pa., said that like other banking companies Chemical is struggling to increase earnings in the current rate climate.

Michigan's sluggish economy makes that especially hard, he said. …

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