UPDATE: J.P. Morgan Reiterates Neutral Rating, Raises PT on TCF Financial Corporation

In a report published Monday, J.P. Morgan & Co. reiterated its Neutral rating on TCF Financial Corporation TCB, and slightly raised its price target from $11.50 to $12.50. J.P. Morgan noted, “In the second quarter, TCB reported provision expense that was $11 million above forecast (tied in part to some one-time items which added $10 million to provision this quarter). Credit trends have been fairly sticky at TCB compared to peers at this stage seeing credit normalization. Where credit took a step back, PTPP benefited from stronger-than-expected NII following the prior-quarter balance sheet repositioning as well as service charges turning a corner in the quarter. Looking forward, the company has several challenges to overcome including seeing the ultimate revenue loss from moving back to free checking, seeing more meaningful improvement in credit, overcoming NIM pressure, with a ~4.60% range guided to on the call (12-18 months out), and a new hurdle on capital, with the company disclosing a ~7.8% Tier 1 common pro forma for proposed capital rules. With the revenue model shifting to be more spread reliant, a capital constraint relative to peers is a factor to be considered.” TCF Financial Corporation closed on Friday at $11.98.