TCF Financial Corporation
) reported first-quarter 2013 net income of 16 cents per share,
marginally below the Zacks Consensus Estimate of 19 cents.
However, results improved slightly on a sequential basis.
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Loans and deposits growth coupled with improving credit quality
were the tailwinds for the quarter. Moreover, decreased
non-interest expenses reflect better expense management. However,
a decline in total revenue driven by reduced interest as well
non-interest income was a headwind for the quarter.
Performance in Detail
TCF Financial reported total revenue of $292 million in the
quarter, down 3.1% sequentially, attributable to lower
non-interest and net interest income. Moreover, the results
lagged the Zacks Consensus Estimate of $298.0 million.
Net interest income dipped 1% sequentially to $199 million. The
fall was driven by lower interest income from loan and leases.
Net interest margin was 4.72%, contracting 7 basis points
sequentially, primarily due to lower yields in the commercial
Non-interest income came in at $93 million, down 7.9%
sequentially. The decrease was primarily attributable to lower
fees and service charges, and reduced leasing and equipment
However, TCF Financial reported non-interest expenses of $204
million, down 4.7% sequentially. Lower FDIC insurance, reduced
operating lease depreciation and decreased other expenses led to
a contraction in expenses.
Evaluation of Credit Quality
With the decreased level of non-performing assets in the quarter,
overall credit quality improved. Provisions for credit losses
dipped 22.4% sequentially to $38 million, owing to decreased
charge-offs in the consumer real estate portfolio and reduced
reserve balances on the leasing and equipment finance portfolio.
Net charge-offs were $41 million in the quarter, down 9.9%
sequentially. The fall compared with the prior period was mainly
attributable to improved credit quality in the consumer real
Moreover, non-accrual loans and leases inched down 9.5%
sequentially to $343 million, driven by a dip in commercial and
consumer real estate non-accrual loans.
TCF Financial exhibited a strong capital position in the quarter.
As of Mar 31, 2013, the company's Tier 1 risk-based capital ratio
was 11.14% compared with 11.09% as of Dec 31, 2012. The tier 1
common capital ratio was 9.24% compared with 9.21% in the prior
quarter. Moreover, Tier 1 leverage capital ratio was 9.23%, up
from 9.21% in the prior quarter.
As of Mar 31, 2013, total average deposits improved 2%
sequentially to $14 billion. Period end loans and leases were
$15.6 billion, up 1.2% sequentially.
Commerce Bancshares, Inc.
) first-quarter 2013 earnings of 67 cents per share missed the
Zacks Consensus Estimate by a penny. Further, the earnings came
in below 72 cents reported in the prior quarter and 70 cents in
the prior-year quarter.
Marginally lower-than-expected results were attributable to
reduced top-line growth, partially offset by a fall in operating
expenses. Further, capital and profitability ratios deteriorated.
Yet, a marked improvement in the credit quality as well as
sustained growth in loans and deposits was the tailwind.
We expect the company to maintain its superior position in the
market based on 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 pressure and decline in top line remain looming
TCF Financial currently carries a Zacks Rank #3 (Hold). Among
other Midwest banks,
Mercantile Bank Corp.
) carries a Zacks Rank #1 (Strong Buy) while
) carries a Zacks Rank #2 (Buy).