Cost-cutting efforts by Chemical Financial in Midland, Mich., are starting to show up in its bottom line.
The $19 billion-asset company reported on Tuesday that its fourth-quarter profit, excluding one-time items, rose by 33% from a year earlier, to $62.7 million.
Technically, Chemical's profit fell 80%, to $9.4 million, reflecting a $46.7 million charge tied to the revaluation of the company's deferred tax asset and a $7.6 million securities loss.
Operating expenses fell 12% to $100 million. Expenses tied to salaries and benefits fell 16%, while merger-related costs fell significantly. Chemical recently closed 25 branches and cut more than 200 jobs. It also decided to scale back its involvement in indirect auto lending.
Net chargeoffs totaled $1.4 million, or 0.04% of total loans, compared with 0.1% a year earlier. Nonperforming assets jumped 44% to $63.1 million, after a previously accruing restructured commercial loan was downgraded to nonaccrual status.
Total loans rose 9%, to $14.2 billion. Chemical said it originated $591 million of loans in the fourth quarter.
"We believe the efforts that we have undergone put us in a solid position for a successful 2018," David Provost, Chemical's CEO, said in the release. “We look forward to further growth in our markets to be achieved through investments in expanding our commercial lending and banking teams in high growth areas, key operation staff adds to support our customer service enhancements and enhancing our core systems."