Saturday, July 28, 2018

Chemical Financial Seeing Decent Growth, But There's Still Work To Do

Michigan’s Chemical Financial (CHFC) has been doing alright. The shares had basically been tracking the regional bank indices on a year-to-date basis, but still outperforming on a full-year basis, and second quarter results should have investors feeling reasonably good about the near-term growth prospects. In addition to decent loan growth, Chemical Financial announced that it won the banking business of the city of Detroit, a relationship that should bring in around $500 million of lower-cost deposits that the bank can use.

I’m a little concerned about the jump in provisions, but Chemical Financial’s credit is still healthy on balance. I’m also a little concerned about the company’s fairly weak spread leverage – while Chemical’s cumulative deposit beta remains low, so too is the cumulative loan beta. There still appears to be some upside on the basis of high single-digit earnings growth and a high-teens ROTCE, and Chemical Financial does have the option to use further M&A to drive more growth.

Read more here:
Chemical Financial Seeing Decent Growth, But There's Still Work To Do

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