On Apr 2, we initiated our coverage on 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 improving net
interest income. 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 this Zacks Rank #3 (Hold) stock.
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Why the Neutral Stance?
TCF Financial's organic growth through its huge deposits base,
diversification in revenue avenues and capital boosting
initiatives prompted us to initiate with this stance.
Further, the company witnessed a rise in net interest margin
attributed to lower average cost of borrowings due to the effects
of the company's balance sheet repositioning completed in Mar
2012. Moreover, with a stable capital position and regular
dividend payments, TCF Financial remains an asset for
However, with the growing level of non-interest expenses, the
company is exposed to operational risks. In addition, the
company's profitability remains vulnerable to the stringent
regulatory landscape and exposure to residential real estate.
Further, in the fourth quarter of 2012, TCF Financial was
marginally below the Zacks Consensus Estimate, impacted by a dip
in total revenue and elevated non-interest expenses. The company
is expected to announce its first-quarter 2013 results on Apr 19.
The Zacks Consensus Estimate for the first quarter is pegged at
19 cents per share. Further, over the last 30 days, the Zacks
Consensus Estimate for 2013 has remained stable at 93 cents,
while it moved north by 0.9% to $1.17 per share for 2014.
Other Stocks to Consider
Besides TCF Financial, other stocks in the financial industry
that are currently performing well include
) with a Zacks Rank #1 (Strong Buy), while
First Interstate Bancsystem Inc.
Old National Bancorp.
) carry a Zacks Rank #2 (Buy).