TCF Financial Corp. has yet to find a supermarket it doesn't like.

The Minneapolis banking company nurtured much of its growth in the last 12 years by opening scores of branches, mostly in grocery stores, throughout its five-state territory. These increasingly profitable store branches, the company says, now boast $1 billion of deposits and 635,000 accounts - 415,000 of which are low-cost checking accounts.

TCF said it will continue the supermarket expansion through next year, when it plans to have another 45 sites in operation. But the company is already charting its next move, anticipating the day when it will run out of supermarket sites and when the existing in-store branches reach maturity.

Traditional, stand-alone branches will be the solution, said Lynn Nagorske, president of TCF Financial, in a recent interview. The company will begin adding brick-and-mortar offices in areas, including Chicago, where it has been expanding in supermarkets. Analysts said the same strategy could work in Detroit and Denver.

The company says its bit-by-bit approach is easier to manage than outright acquisitions. "Today we don't need to do a deal because we have a growth strategy that we can control," Mr. Nagorske said.

TCF's infiltration of Chicago began two years ago when it bought 76 struggling branches in Jewel grocery stores from the former BankAmerica Corp. The Minneapolis company now has 137 in-store offices and 32 traditional branches in Chicago, where it has the second-largest retail branch network behind Bank One Corp.

TCF, now the fourth-largest operator of in-store bank branches, began the expansion in 1988 when it opened its first supermarket office in a Cub Foods store in Eagan, Minn.

"That was an immediate hit, and we began making investments in supermarket branches ever since," Mr. Nagorske said. "The strategy is a very simple one. It revolves around convenience. The things that we do there that make us successful is that we are open seven days a week, 360-plus days a year. In Chicago, those (store) branches are only closed on Christmas."

The company has 352 branches in Michigan, Minnesota, Illinois, Wisconsin and Colorado. Mr. Nagorske said supermarket branch deposits should double, to $2 billion, in the next couple of years.

Analysts said TCF has managed to wring profits out of supermarket branches where many other companies have failed, including BankAmerica's Chicago operation. Analysts said TCF may have had an easier time because it stuck to basics, offering low-cost deposit accounts, basic home equity loans, and free debit cards to a customer base that is mostly low- to middle-income. It steered clear of trying to sell mutual funds.

"They view the grocery store markets as a convenience and a deposit gatherer," said Timothy Willi, an analyst at A.G. Edwards & Sons Inc. in St. Louis, "and that's all that they worry about doing there. Most other banks don't think grocery stores are sexy enough because you can't sell trust and investment management there, you can't sell commercial loans there or credit cards."

When its branch network fully matures, the question becomes: Can the company keep up the pace of growth? "This isn't about building a bunch of supermarket branches and then having nothing else to do," Mr. Willi said. "TCF is one of the few banks in the industry that thinks like a retailer and is always looking for additional places to put a branch location and build out their franchise."

"I would expect them to continue a de novo strategy," said Ben Crabtree, an analyst at George K. Baum & Co. in Minneapolis.


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