Chemical closing dozens of branches, scaling back in indirect auto
Chemical Financial in Midland, Mich., is planning to close several dozen branches and scale back its dealings in indirect auto lending.
The $19 billion-asset company disclosed in a regulatory filing late Tuesday that it will close 25 branches during the fourth quarter. Chemical already shuttered 13 locations during the current quarter.
Chemical also said that it plans to cut about 7% of its employees by Sept. 30. That would represent about 235 jobs, based on the number of employees listed on the second-quarter call report for Chemical's bank.
Chemical will incur a total of $18 million in charges in the third and fourth quarters, largely to cover severance and retirement expenses. The closures will save the company $20 million annually.
The company’s branch network will shrink by 15%, to 211 locations, compared to what it reported just five weeks ago. The company said much of the overlap is due to its recent purchase of Talmer Bancorp and improvements to its electronic banking offerings.
Chemical also said it is scaling back in indirect auto after determining that such loans are producing lower rates of return compared to other forms of credit.
The company’s consumer installment portfolio, which includes indirect auto, had been growing. That loan portfolio increased by 8.4% in the second quarter compared to the end of 2016, to $1.6 billion.
Chemical, which earned $52 million in the second quarter, also plans to stop offering title insurance, which had been a breakeven business.
The company also said Leonardo Amat, its chief operating officer of business operations, is leaving on Sept. 30.
Efforts to reach the company for additional comment were unsuccessful.