TCF Financial in Wayzata, Minn., reported lower second-quarter profit as it paid more in salaries and employee benefits and a larger loss provision ate into net interest income.

The $19.8 billion-asset company's net income fell 1.8% to $47.4 million, or 29 cents per share, from a year earlier. That's a penny better than the average estimate of analysts polled by Bloomberg.

TCF's provision for credit losses rose 26% to $12.5 million. Net interest income after the provision fell 1.4% to $193.5 million. The net interest margin compressed 21 basis points to 4.44%.

Fee income rose 9.1% to $113.4 million. TCF benefited on higher gains on sales of both auto loans and consumer real estate loans. Fees from leasing and equipment finance also increased. Those categories helped offset a 4.6% decline in deposit service charges to $36.3 million.

TCF's second auto loan securitization contributed to the higher gains on sales from auto loans, William Cooper, chairman and chief executive, said in a news release.

Noninterest expense rose 4.7% to $223.1 million. Compensation and employee benefits rose 5.9% to $116.2 million. TCF added more staff during the quarter for its auto-finance unit.

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