The timing of the new tax-cut law couldn't have been better for TCF Financial in Wayzata, Minn., which realized a large net tax benefit in the same quarter it took a big charge to exit auto lending.

Fourth-quarter net income for the $23 billion-asset TCF doubled from a year earlier to $101.4 million.

TCF recorded a net tax benefit of $130.7 million in the quarter related to the recent tax reform law. That helped overcome an $88.2 million charge tied to its recent decision to discontinue its auto lending business.

It also reported some strong underlying results that could bode well for the future.

Net interest income grew 14.4% to $241.9 million. The net interest margin expanded 27 basis points to 4.57%.

Total loans grew 7.1% to $19.1 billion. Consumer real estate declined 5.2%, while commercial lending increased 8.2%, leasing and equipment finance increased 9.8% and inventory finance climbed 10.9%.

Total deposits increased 6.3% to $18.1 billion.

Retooling
"We discontinued auto finance loan originations and began deploying capital into other areas that we believe will provide a better return for our shareholders," Chairman and CEO Craig Dahl says.


Noninterest income increased 4.5% to $120.9 million in the fourth quarter. TCF saw a 36.8% increase in fee income from its leasing and equipment finance business, while servicing fee income and card income declined.

"During the year, we successfully improved core earnings trends, reduced our risk profile and executed on our key initiatives,” Chairman and CEO Craig R. Dahl said in a press release Tuesday. "During the fourth quarter, we discontinued auto finance loan originations and began deploying capital into other areas that we believe will provide a better return for our shareholders. We expect this initiative to result in a meaningful earnings improvement in 2018.”

Noninterest expenses increased 54.3% to $347.8 million because of the auto-related charge as well as operating lease depreciation and expenses related to foreclosed real estate and repossessed assets.

Net chargeoffs in the fourth quarter totaled 0.38% of total loans, up 11 basis points from the fourth quarter in 2016. TCF said this was due to increased chargeoffs in its leasing and equipment finance and auto finance portfolios.

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