On Jun 24, we reiterated our recommendation on the retail and
wholesale banking products and services provider,
TCF Financial Corporation
) at Neutral based on its superior position in the market aided
by its positive approach to market conditions and decreasing
expenses. Moreover, a healthy capital position is indicative of
the company's robust standing. However, the regulatory reforms
and unsettled global economy might act as deterrents for the
Why the Neutral Stance?
We view TCF Financial as a sound asset for yield-seeking
investors. The company has been able to generate positive cash
flow even in an increasingly difficult operating environment.
Moreover, over the last three years, the company enhanced
shareholder value by returning over $90 million through
dividends, thereby enhancing investors' confidence.
With the growing level of deposits, TCF Financial has expanded
organically. The first quarter of 2013 reflects the 10th
consecutive quarter of positive deposits growth. A huge deposits
base should help the company generate loans and meet other
general business purposes.
Lower average cost of borrowings owing to the company's balance
sheet repositioning completed in Mar 2012 led to a significant
improvement in net interest margin (NIM). NIM improved 58 basis
points year over year to 4.72% in first-quarter 2013.
However, in the first quarter of 2013, TCF Financial was
marginally below the Zacks Consensus Estimate, impacted by a dip
in total revenue driven by reduced interest as well non-interest
Over the last 60 days, the Zacks Consensus Estimate for 2013 has
gone down by a penny to 88 cents, while it remained stable at
$1.13 per share for 2014. Hence, TCF Financial carries a Zacks
Rank #4 (Sell).
Other Stocks to Consider
Some stocks in the same sector that are currently performing well
Tower Financial Corporation
First Interstate Bancsystem Inc.
Old Second Bancorp Inc.
). All 3 companies carry a Zacks Rank #1 (Strong Buy).
FIRST INTST MT (FIBK): Free Stock Analysis
OLD SECOND BCP (OSBC): Free Stock Analysis
TCF FINL CORP (TCB): Free Stock Analysis
TOWER FINANCIAL (TOFC): Free Stock Analysis
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