TCF Financial reported higher profits in the first quarter, as a ramp-up in equipment and inventory financing, as well as a wider margin, helped the Wayzata, Minn., company offset its recent exit from auto lending.
The $23.4 billion-asset company earned $73.8 million in the quarter, 59% more than in last year's first quarter. Earnings per share were 39 cents, beating by 3 cents the mean estimate of analysts polled by FactSet Research Systems.
“We are seeing the continued benefits of an asset-sensitive balance sheet,” Chairman and CEO Craig Dahl said in a press release announcing the results, noting that yields on adjustable- and variable-rate loans increased during the quarter.
Dahl added that efficiency improvements also contributed to the jump in profits. “We project further improvement throughout 2018,” he said.
Aggressive growth in the TCF’s loan book was a bright spot during the quarter, helping to counterbalance the company’s planned exit from auto lending, announced in November. Inventory finance jumped 20%, to $3.5 billion, while equipment finance and commercial lending both rose 9%, to $4.7 billion and $3.7 billion, respectively. Total loans climbed 8% to $19.4 billion.
Net interest income increased 10% to $243.2 million. The net interest margin expanded 13 basis points to 4.59%.
Fee-based income rose 8% to $112.2 million as a a 48% increase in revenue from leasing and equipment finance revenue helped make up for declines in servicing fees and auto loan sales.
Noninterest expenses were mostly flat, edging up by just under 1% to $245.9 million, mostly due to an increase in operating lease depreciation. The efficiency ratio was 69.2%, compared with 74.9% a year earlier.