Chemical Financial's profits surged in the second quarter compared to last year, due to strong loan growth and fewer chargeoffs.
The $6.2 billion-asset bank reported earnings of $16.2 million, up 14% year over year. Earnings were 54 cents per share, five cents higher than estimates of analysts polled by Bloomberg.
Net interest income climbed 6%, to $51.4 million. Expansion in the bank's loan portfolio fueled the increase, as total loans grew 13%, to $4.9 billion.
Asset quality also improved from last year. The bank slashed its provision for bad loans by 50%, to $1.5 million. Net chargeoffs were down 47%, to $4.4 million.
The net interest margin remained steady, dropping a single basis point to 3.59%.
Strong returns from loans offset a slight drop in fee-based revenue. Noninterest income dipped 1%, to $15.8 million. The bank attributed the decline to lower gains on loan sales.
Operating expenses were up 3%, to $42.4 million.
Chemical, which is based in Midland, Mich., recently announced plans to expand within its home state. The bank agreed in March to purchase the $837 million-asset Northwestern Bank in Traverse City. The deal is expected to close next quarter, according to a press release Wednesday.
Additionally, the bank intends to "rapidly deploy" proceeds from a recent $76 million capital raise "into organic and acquisitive growth opportunities," said David B. Ramaker, Chemical's president and chief executive, in the release.
Chemical's shares were up 2.4% in midday trading Wednesday, to $27.86.