TCF Financial Corp. of Wayzata, Minn., is looking to Canada in a bid to expand its commercial finance operations.

The $16.4 billion-asset TCF has filed an application with the Federal Reserve Board to form a so-called Edge corporation, which would allow it to conduct international banking. The June 13 application said TCF Commercial Finance Canada Inc. would focus on inventory acquisition financing to retailers.

TCF did not return calls. In April, Lynn Nagorske, its chief executive, voiced support for its leasing and equipment finance business, despite credit deterioration that hampered the unit's first-quarter profit.

Profit in the division fell 23.9% from a year earlier, to $6.7 million, despite a 20-basis-point improvement in the average yield for leasing and equipment finance assets. The unit's $3.7 million provision for loan losses in the first quarter compared to $5.3 million for all of 2007. Net chargeoffs were $2.1 million, or 0.39% of average loans and leases, in the quarter, versus $3.9 million, or 0.2%, in the 12 months of 2007. (TCF's highest concentrations of leasing and equipment finance assets are in California, at 12.8% at the end of last year, and Florida, at 6.5%.)

However, the unit accounted for 14.1% of TCF's first-quarter earnings, up from 10.7% a year earlier.

Mr. Nagorske downplayed the profit decline, and during an April 22 earnings conference call he described the business as "lumpy in nature." On March 31 TCF's pipeline of such loans was up 19% from a year earlier, to $407 million, he said. "I wouldn't read too much into one quarter of decline," he said.

Kenneth E. Bentson Jr., the president of the Equipment Leasing and Finance Association, said it is not surprising to see companies such as TCF target Canada, because cross-border finance "is doing quite well," though he said a number of the association's members are feeling "some pressure" in the United States from deteriorating asset quality. "We're seeing chargeoffs and delinquencies move up slightly," he said. "And we're seeing loan approvals decline on a steady pace as people bear down on credit underwriting standards."

Sean J. Ryan, an analyst at Sterne, Agee & Leach Co., said the proposed expansion seems logical given TCF's proximity to many Canadian markets. "This is their only national business, and there must be plenty of cross-border activity across their small to midsize customer base," Mr. Ryan said.

TCF said its leasing and equipment finance business had assets of $2.18 billion through March 31. That was essentially flat from the end of last year, when TCF was the nation's 34th-biggest equipment finance company by assets, according to The Monitor, a trade publication. It was No. 29 by annual volume, at $1.13 billion.

About one-fifth of TCF's equipment leasing involves specialty vehicles such as tow trucks, garbage trucks, and funeral cars, Mr. Nagorske said during the company's annual meeting on April 23.

Another 18% is construction-related and 17% is to manufacturers. Other areas of focus are medical, which Mr. Nagorske called a "growing business that we like" at 14%, and technology and data processing, a "very profitable" line that makes up 11% of the portfolio.

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