TCF Financial in Wayzata, Minn., has agreed to acquire Rubicon Mortgage Advisors, a residential mortgage lender based in nearby Minnetonka, Minn.

The financial terms of the deal were not disclosed. The transaction is expected to close by the end of the year.

The acquisition comes as TCF looks to diversify its streams of revenue as it dials back auto lending amid concerns about weakening credit quality.

The $23 billion-asset company scaled back its auto lending earlier this year as it struggled to find buyers for its car loans. With delinquencies on auto loans rising, investors have becoming increasingly concerned about the quality of loans they are buying.

The company on Friday reported a 6% decline in profits from a year earlier, to $48.3 million, due to the decline in auto loan sales.

“As we continue to broaden the products and services we provide to help our customers achieve their financial goals, increasing our capability to originate first mortgages is an important priority for TCF,” Mike Jones, the head of consumer banking, said in a press release Monday.

At Sept. 30, TCF had a total of $1.9 billion of first-lien mortgages on its books, which was down 16% from a year earlier. Total consumer real estate loans fell 1% year over year to $4.9 billion.

Rubicon has licenses to operate in South Dakota, Wisconsin, Colorado and California. Its 34 employees are expected to join TCF when the sale closes.

"Our team of experienced mortgage lending professionals will benefit from having the backing of a strong, well-capitalized bank," said Brian Call, Rubicon's president.

TCF has over 300 branches in Arizona, Colorado, Illinois, Michigan, Minnesota, South Dakota and Wisconsin.

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Kristin Broughton

Kristin Broughton

Kristin Broughton is a reporter for American Banker, where she writes about the business of national and regional banking.