Hoping to draw new investors for its stock and to shed the negative image attached to a savings and loan, TCF Financial Corp. has applied to the Office of the Comptroller of the Currency to convert its four thrift subsidiaries to national banks.

Under the plan, TCF would convert its savings bank charters in Minnesota, Illinois, Michigan, and Wisconsin to commercial bank charters. TCF hopes to have its application approved by the second quarter. The Minneapolis company plans to file applications for bank charters in Ohio and Colorado later. TCF has branches in Ohio through its Michigan bank, and it plans to enter Colorado with supermarket branches next year.

Lynn Nagorske, TCF president, said the company wants to be compared with the best-performing banks in the nation, and that doesn't happen when it's compared only with other thrifts. Though return on assets is 1.5% and a return on equity 20%, Mr. Nagorske said TCF's stock is tainted because the company is an S&L. He also said he hopes to gain more small-business customers after the change; there's a perception that S&Ls aren't commercial lenders.

The biggest advantage for TCF would be that it could attract more investors, said analyst Thomas O'Donnell of Smith Barney.

"There should be an immediate appreciation," Mr. O'Donnell said. "The market will see it as a bank, rather than an S&L."

Although he doesn't predict TCF's stock price would go through the roof as a result of the conversion, Mr. O'Donnell said the $7 billion-asset company doesn't trade at the same multiple as a bank because there are still many investors who are reticent about investing in S&Ls.

Moreover, Mr. O'Donnell believes TCF has long been overlooked as an investment even though it has acted like a commercial bank for about 10 years, its earnings have been strong, and its asset mix and net interest margin are more like a bank's. The thrift charter has been a technicality for TCF, he said. "It's a consumer bank disguised as an S&L," he added.

Joseph Duwan, an analyst with Keefe, Bruyette & Woods, said TCF trades at a "modest discount" compared with the 24 largest banks his firm follows. While the average bank trades at 12 times 1997 estimated earnings, TCF trades at 11.8 times earnings, Mr. Duwan said. "That's a modest discount to the average bank stock, yet they have above average performance," Mr. Duwan said.

TCF's latest move wasn't entirely surprising. It was the first thrift to join the American Bankers Association Nov. 7, the date the trade association changed its bylaws to allow savings banks as members.

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