Michigan’s largest bank is trimming more than 200 hundred employees and closing a tenth of its branches as part of a restructuring.
On September 12, Chemical Financial Corporation filed an 8-K with the Securities and Exchange Commission notifying it of a reduction in its total employee count and elimination of branches.
“These actions were guided by a focus on enhancing operating efficiency and achieving the long-term growth prospects that were established as part of Chemical’s most recent merger performance target,” the bank said in its filing. “These actions further provide Chemical the ability to reallocate resources to best serve our communities and growing customer base.”
The bank intends to reduce its total number of employees by seven percent, which means about 230 people of the bank’s 3,500 employees have already received layoff notification. The bank has 225 offices in Michigan, 26 in Ohio and 2 in Indiana. The Ohio and Indiana offices were acquired in the Talmer acquisition in 2016. The bank said most of the layoffs will be in Michigan. Staff departures are expected to be complete by month-end.
Leonardo Amat, the bank’s chief operating officer of business operations, will leave his position effective September 30 as well. This follows closely on the retirement of chairman, president and CEO David Ramaker, who announced he was retiring during third quarter 2017.
The bank plans to close 25 of its branches in fourth quarter 2017, the filing also reported. This is in addition to 13 branches that were closed in third quarter this year. This will leave Chemical with 211 branches in the three states. The bank cited the “evolving banking environment and physical branch overlap resulting from Chemical’s merger and acquisition transactions” as the reason for the branch closures.
“Chemical has and will continue to adapt to changes in how customers transact their banking business and interact with our team of Chemical bankers. To that end, Chemical Bank recently made significant upgrades to its electronic banking technology by implementing additional online products and services, enhanced security and other convenience additions for both retail and business customers,” the filing said.
The bank estimates it will cost $15 million in severance and retirement-related expenses for impacted employees and $3 million in market value adjustments. However, the bank expects to save $20 million annually once the restructuring is completed although the cost-savings will be somewhat offset by the hiring of additional commercial lenders and bankers in key markets as well as operations staff to support customer service enhancements.
Chemical also stated its intention to discontinue its title insurance services, which had been operating with about breakeven results, and reduce resources related to indirect auto lending which have produced lower returns on allocated equity than other loan types.
Chemical Bank is headquartered in Midland, Mich., and has $18.7 billion in assets. It is Michigan’s largest bank headquartered in the state.