Seeking to drive growth and reach further into middle market companies across the Midwest, Chemical Bank has steadily added to its roster of commercial bankers since last summer and developed lending specialties.
The latest hire was Brad Haverkamp, who joined the Midland-based Chemical Bank this spring as lakeshore community bank president and commercial group manager. Haverkamp, who previously worked 12 years at Chase Bank as a senior vice president, oversees commercial lending and business development for Chemical Bank in a market that spans from Holland, Grand Haven and Muskegon over to Fremont.
The hiring “fits exactly” with Chemical Bank’s move to add experienced commercial bankers in the key growth markets of West Michigan, Southeast Michigan and Cleveland, Ohio, said Dan Terpsma, the institution’s executive vice president for regional and commercial banking. Since last July, Chemical Bank has hired 25 commercial bankers across the three markets.
“We’ve really taken the opportunity, when we can, to attract top talent,” said Terpsma, who’s based in Grand Rapids and oversees commercial banking across Chemical’s entire footprint.
Haverkamp made the move for several reasons. Among them is Chemical Bank’s vision to become the leading bank in the Midwest while retaining local decision-making within its seven regions. That strategy was “compelling and something I wanted to be a part of,” Haverkamp wrote in an email to MiBiz.
“I find the vision very energizing,” he wrote. “We have a community bank culture, but we have the resources of a large regional financial institution.”
The largest bank headquartered in Michigan, Chemical Bank doubled in size with the 2016 acquisition of Talmer Bancorp Inc. The bank has 212 offices in Michigan, northeast Ohio and northern Indiana with nearly $20 billion in assets at the end of the first quarter.
Moves made since the acquisition — including a cost restructuring that started in the third quarter of last year — have “much better prepared” Chemical Bank to compete and gain market share in middle-market banking, Terpsma said.
“We’ve evolved into a regional bank,” he said. “In the last 24 months, we have taken giant strides with skill, talent and product and we continue to invest in that to be even more competitive by 2019.”
Chemical Bank’s commercial loans grew 11.4 percent in 2017 to $8.46 billion. Growth in 2018 has been trending in the range of 9.5 percent to 10 percent, Terpsma said.
As the group of newly hired commercial bankers gain traction in their markets, Chemical Bank expects commercial loan growth of more than 11 percent for 2018.
“When you hire talent, there’s usually a bit of a lag because you have to get acclimated, but then the volume follows,” Terpsma said.
Under the restructuring plan that began last July, Chemical Bank consolidated 25 branches, reduced staff, closed a title service and cut back resources to direct auto lending.
The bank reallocated resources to business arms that can better drive growth and create shareholder value, including reinvesting half of the $20 million in expected annualized cost savings to grow commercial banking.
In an April conference call to discuss first quarter results, executives told brokerage analysts they expect to start seeing the benefits from hiring additional commercial bankers in the coming quarters.
“For the most part, these new hires contributed very little to loan growth in the first quarter of 2018 as they’re just beginning to ramp up their calling efforts,” bank President and CEO Tom Shafer said. “We expect our new bankers will have a smaller impact on commercial loan growth in the second quarter, but more significant impact on growth during the latter half of this year and into ’19.”
CONTINUING TO ADD
Chemical Bank’s strategy includes better targeting of middle market companies and developing specialty segments such as growing a small asset-based lending arm. The bank recently hired a Chicago-based leader for asset-based lending that will focus on companies with annual revenues of $25 million to $250 million. Chemical also plans to hire an asset-based lender to focus on the market in Michigan.
Chemical Bank has a “really nice sweet spot” of $5 million to $30 million for asset-based loans, Terpsma said. Asset-based lending represents a “nice business segment to complement what we do in commercial banking and middle market banking,” he said.
In the last year, the bank also formed a commercial finance group that launched in January to specialize in financing equipment for industries such as aviation, trucking, and maritime transportation. Other specialties are under consideration, Terpsma said.
In the first quarter of 2018, holding company Chemical Financial Corp. (Nasdaq: CFHC) recorded net income of $70.2 million, or 97 cents per diluted share. Analysts expect the corporation to report net income of 94 cents per share for the second quarter, versus 74 cents in the same period of 2017, according to a consensus estimate at Yahoo Finance.
Analysts expect third quarter net income of $1 per share, versus 77 cents per share in the same period for 2017. They also forecast fullyear earnings of $3.92 per share for this year and $4.35 per share in 2019.
Chemical reported earnings of $2.08 per diluted share in 2017.