Does TCF Financial's Expanding Portfolio Signal Growth? - Analyst Blog

On Sep 10, 2014, we issued an updated research report on TCF Financial Corporation (TCB). While sustained top-line growth and improvement in loans and deposits enhanced profitability, poor expense management remained the undermining factor.

TCF Financial reaches out to a wide customer base by providing a diversified array of financial services via its several subsidiaries. Moreover, the company's focus on organic growth through development of new products and services as well as branch expansion has assisted it in improving revenue generation over the years. This could be witnessed in the 3.6% revenue increase in the first half of 2014.

TCF Financial has undertaken strong capital deployment initiatives to attract investors' attention. Also, the company's consistent rise in deposits along with an appreciable improvement in profitability metrics further strengthens its position. We expect TCF Financial to perform well in the upcoming quarters given the continuous strengthening of its consumer and commercial loan portfolio.

On the flip side, escalating costs continue to be a burden on the company's profitability. The 4.3% rise in expenses halfway through 2014 revealed the company's failure to keep expenses in check. Moreover, the additional regulatory costs are expected to further aggravate the pressure in the near term.

Though TCF Financial has the potential to take advantage of available opportunities on the back of a healthy capital position and improving credit quality, the sluggish economic recovery and constant regulatory pressure are bound to keep its financials under strain. Moreover, investors' apprehension regarding the company's future growth was evident from the marginal year-to-date increase in share price.

This can also be observed in the Zacks Consensus Estimate for 2014 and 2015, which remained flat over the last 30 days.

Currently, TCF Financial carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Some better-ranked Midwest banks include First Financial Corp. (THFF), German American Bancorp Inc. (GABC) and MidWest One Financial Group, Inc. (MOFG). All these stocks sport a Zacks Rank #2 (Buy).

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TCF FINL CORP (TCB): Free Stock Analysis Report
 
GERMAN AMER BCP (GABC): Free Stock Analysis Report
 
MIDWESTONE FINL (MOFG): Free Stock Analysis Report
 
FIRST FINL-IND (THFF): Free Stock Analysis Report
 
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