TCF profits fall on credit costs, lackluster fee income

TCF Financial in Wayzata, Minn., reported lower quarterly profits after treading water on fee income and setting aside more money for problem loans.

The $21.9 billion-asset company earned $45.2 million, or 5% less than a year earlier. Earnings per share were 27 cents, missing an estimate of analysts polled by Bloomberg by 4 cents.

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Lackluster performance in fee-based lines of business weighed on the quarterly results. Noninterest income was flat at $115.7 million as sharp declines in gains on the sale of auto loans, as well as lower service-charge income, were partially offset by a higher servicing revenue and real estate loan sales.

In a press release, CEO Craig Dahl said that the company experienced “some near-term headwinds” in the auto industry but remains well positioned to weather volatility in the market.

Auto loans and leases were $2.7 billion, flat from a year earlier and down slightly from the previous quarter. Total loans grew 2% to $17.8 billion year over year thanks to increases in inventory finance.

The provision for loan losses rose 13% to $19.9 million; the company attributed the increase to overall loan growth. Net chargeoffs as a percentage of loans declined 2 basis points to 0.27%.

Net interest income grew 3% to $211.4 million. The net interest margin declined 5 basis points to 4.30%.

Noninterest expenses climbed 1% to $225.4 million, mostly from increases in compensation and benefits.

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Consumer banking Earnings Auto lending Non-interest income
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