Fee income, niche financing lines and auto lending drove second-quarter profits at TCF Financial in Wayzata, Minn.
The $21 billion-asset company said net income grew 10.4% year over year to $58 million.
Noninterest income rose 4% to $118 million, spurred on by gains in card revenue, leasing and equipment finance, servicing fee income and other categories.
"Operating leverage … remained in focus during the quarter as we generated strong noninterest income from our national lending businesses while continuing to manage our overall expense base," Chief Executive Craig Dahl said in a press release Friday.
Noninterest expenses actually rose 2% to $227 million, as compensation and employee benefits costs increased 1.7%. But TCF officials said they basically had to spend some money to make more.
"The increase [in compensation costs] from the second quarter of 2015 was primarily due to higher incentives based on production results," the release said.
Total loans and leases rose 4.3% to $18 billion, and loan and lease originations were up 8% to $4.3 billion. The big gainers were leasing and equipment finance, inventory finance and auto lending.
However, the benefits were limited by tighter margins. Net interest income rose 3.4% to $213 million as the net interest margin dipped to 4.35% from 4.44%.
Credit costs rose. The provision for credit losses were $13.3 million, a 5.8% increase from a year earlier, which TCF attributed primarily to increases in reserve requirements for growth in auto finance leasing, equipment finance and inventory finance portfolios.
Total deposits rose 9% to $17 billion.