TCF's profits dip on costs associated with CFPB settlement

TCF Financial on Friday reported a decline in profits, weighed down in part by expenses stemming from its recent settlement with federal regulators over its overdraft protection services.

The Wayzata, Minn., company earned $58.7 million, or 3% less than a year earlier. It earned 34 cents per share, but excluding the 15-cent hit from the settlement, the bank's EPS was 3 cents better than the mean estimate of analysts tracked by FactSet Research Systems.

Thomas Strand

TCF last week agreed to pay $25 million in restitution to customers for the way it marketed and charged customers for overdraft protection. It also agreed to pay a total of $5 million fines to the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency.

The CFPB sued TCF last year, arguing that the company engaged in deceptive practices.

In a press release, Chairman and CEO Craig Dahl said the settlement “removes legacy risk and uncertainty and allows us to remain fully focused on executing our strategy and pursuing growth opportunities."

Noninterest expenses jumped 17%, to $272 million. In addition to the $30 million in restitution and fines related to the CFPB settlement, TCF paid $2 million in related expenses. Additionally, higher compensation and lease depreciation costs were a factor in the increase in expenses from a year earlier.

Noninterest income was flat, at $114.1 million, as an uptick in leasing and equipment finance fees offset the loss of gain-on-sale revenue from auto loans.

TCF in November said it would no longer originate auto loans, after announcing six months earlier that it would no longer sell them to the secondary market.

Net interest income, meanwhile, climbed 10%, to $250.8 million. The net interest margin rose 15 basis points, to 4.67%.

Total loans increased 1%, to $18.6 billion, as stronger inventory finance, leasing and commercial lending outweighed ongoing declines in the company’s auto book.