Last week, TCF National Bank, a wholly-owned subsidiary of
Minnesota-based
TCF Financial Corporation
(
TCB
) completed the acquisition of Gateway One Lending & Finance
LLC. Now onwards, Gateway will be a wholly-owned subsidiary of TCF
National Bank.
Based in California, Gateway One is a private lending company in
the indirect auto finance market. The company is working with more
than 3,100 active dealer relationships while originating loans to
consumers in 30 states. As of October 31, 2011, the company had
originated $239 million in auto loans.
As part of the deal, TCF is retaining back Gateway One's
experienced executive management team. J.P. Morgan Securities LLC,
a division of
JPMorgan Chase & Co.
(
JPM
), served as private financial advisor to TCF, while Morgan Keegan
& Company Inc. acted as financial advisor to Gateway One.
TCF Financial has a track record of acquiring, assimilating and
operating specialty finance businesses nationwide. With the
acquisition of Gateway One, TCF Financial will be able to diversify
its business while providing plenty of growth opportunities in the
large U.S. auto lending market.
Further, the company will be able to expand high quality assets
with solid risk-adjusted returns with the help of national
specialty finance lending programs. Moreover, TCF Financial will
have new revenue source and opportunities for balance sheet growth
in the current challenging economic environment.
On the other hand, Gateway One is hoping to utilize financial
capabilities of TCF Financial for pursuing growth opportunities.
Moreover, dealers, customers and employees of Gateway One will even
get the benefit of the financial strength of TCF Financial.
During the quarter, TCF Financial has also signed an agreement
with BRP, one of the world's premier manufacturers of powersports
equipment. The company expects the transaction to deliver
considerable loan balances in both the U.S. and Canada's inventory
finance business beginning in 2012.
Despite sluggish economic recovery and regulatory issues, TCF
reported positive net income in the third quarter 2011. We expect
TCF to maintain its superior position in the market based on its
positive approach to market conditions, recent acquisitions and
improving credit quality. However, the regulatory reforms and low
interest rate environment might affect the company's near-term
results to some extent.
TCF Financial currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating.
JPMORGAN CHASE (
JPM
): Free Stock Analysis Report
TCF FINL CORP (
TCB
): Free Stock Analysis Report
Zacks Investment
Research