Saturday, May 26, 2018

Chemical Financial Investing For Future Growth

Chemical Financial's (CHFC) performance has been somewhat mixed since my last write-up on the company (in mid-September 2017). Although the company has reported some healthy quarters relative to expectations and the banking sector, in general, has benefited from the tax bill passed in 2017, investors have been surprised by the company's willingness to increase spending to build the business. With that, the shares are up close to 20%, which isn't bad, but isn't quite as strong as regional banks in general and other Michigan banks like Comerica (CMA) and Independent Bank (IBCP), though better than Mercantile (MBWM) and Flagstar (FBC).

Although Chemical Financial isn't exceptionally cheap, I believe there is still worthwhile upside here for long-term investors. Management's efforts to hire more commercial bankers should benefit loan growth in 2H'18 and beyond, and I believe the company is making investments to support a larger banking franchise long term (including additional M&A). I'd like to see more progress on improving the deposit mix, but that's not something any bank can fix in just a couple of quarters.

Read the full article here:
Chemical Financial Investing For Future Growth

No comments: