Magazine article American Banker

TCF of Minn. Said Making Progress in Sheet Revamp

Magazine article American Banker

TCF of Minn. Said Making Progress in Sheet Revamp

Article excerpt

TCF Financial Corp.'s second-quarter profits fell from a year earlier, but analysts saw signs of a silver lining -- headway in its effort to demonstrate a more sustainable earnings mix.

The $14.2 billion-asset Wayzata, Minn., company said Wednesday that profits fell 5.1% from a year earlier, to $67 million. But the decline was not as large as Wall Street had expected; earnings of 52 cents a share beat the average estimate of analysts by 4 cents.

Deposits rose 14.2%, to $9.6 billion, and loans rose 11.7%, to $10.9 billion. Commercial lending and home equity were standouts. Home equity, by far the larger component of TCF's loan book, climbed 16%, to $5.6 billion, while commercial loans rose 21.3%, to $543 million.

"We're hitting on all pistons in each of the power asset categories," which include consumer loans, commercial loans, and leasing and equipment finance, said Lynn A. Nagorske, TCF's chief executive.

That growth came amid somewhat lower spreads. TCF's net interest margin fell 3 basis points from the first quarter and 31 basis points from a year earlier, to 4.22%.

Mr. Nagorske called the quarter one of "intense competition on both sides of the balance sheet," and he attributed some of the margin decline to customers' preference for fixed-rate loans.

Shifting customer preferences also affected the deposit mix, he said. The number of checking accounts rose at an annual rate of 6.9% in the first half, to 1.66 million, TCF said. Certificates of deposit rose 37.8%, to $2.4 billion.

Noninterest income rose 5.1%, to $123.6 million, and expenses rose 7.9%, to $162 million.

TCF added six branches during the quarter. It now has 455 and plans to add another 17 this year.

Shares of TCF rose nearly 6% Wednesday morning.

The quality of its earnings "was probably the best I have seen in six to eight quarters," said Terry McEvoy, an analyst at Oppenheimer & Co. …

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