On Jan 8, Zacks Investment Research upgraded Chemical Financial Corporation (CHFC) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Chemical Financial has been exhibiting organic growth with expansion in Michigan. This banking and fiduciary products and services provider recorded an average positive earnings surprise of 6.62% in the last four trailing quarters.
Earlier this week, Chemical Financial announced a $184.1 million stock-cash-deal to acquire Lake Michigan Financial Corporation in an effort to further expand its operations in Michigan. The deal is expected to be accretive to earnings per share of about 10% in the first full year, excluding acquisition-related and integration costs. Further, net cost savings at an annual run rate of about $11 million is anticipated by Chemical Financial and is expected to be fully achieved within six months of closing. Notably, pre-tax acquisition-related and integration costs are expected to be about $15 million.
Previously in Nov 2014, Chemical Financial entered into a definitive merger agreement in an all-stock transaction valued at about $26 million with Monarch Community Bancorp, Inc. (MCBF) to increase its presence along the Michigan-Indiana border, expanding the south region footprint. As per the terms, shareholders of Monarch will receive 0.0982 shares of Chemical common stock for each share of Monarch common stock.
The deal awaits regulatory approvals and other closing conditions and is expected to be completed in the first quarter of 2015. Moreover, Chemical expects to record cost savings of about 40% of Monarch's operating expenses.
Chemical Financial has also completed the previously announced acquisition of Northwestern Bancorp, Inc. in Oct 2014 further expanding into northwestern Michigan. Upon completion of the $121 million deal, on a pro forma basis, as of Sep 30, 2014, Chemical Financial has about $7.4 billion in assets, $5.5 billion in loans, and $6.2 billion in deposits.
Chemical expects the deal with cost savings fully phased in to be accretive to earnings. The company has incurred $2.2 million non-recurring transaction-related expenses at the end of the third quarter of 2014 and expects additional expenses of about $3.6 million during the fourth-quarter 2014.
Over the last 60 days, the Zacks Consensus Estimate remained stable at $1.97 and $2.26 per share for 2014 and 2015, respectively.
Other Stocks to Consider
Some other stocks in the same sector worth considering include Baylake Corp. (BYLK) and Peoples Bancorp Inc. (PEBO) with a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment