TCF Financial (TCB) in Wayzata, Minn., reported a significant increase in second-quarter earnings as a surge in automobile lending and improved asset quality offset a decline in fees from deposit accounts.

The $18.8 billion-asset company said Friday that it earned $53.1 million in the second quarter, an increase of 37% from a year earlier. Earnings per share climbed 38%, to 29 cents.

Total loans and leases increased 3.9%, to $16.1 billion, as originations increased 8.6%, to $3.5 billion, primarily due to a 70% jump in car loans, a 10% increase in inventory finance loans and an 8% jump in leasing and equipment loans. Net interest income climbed 2% year over year, to $206 million, but the net interest margin fell seven basis points, to 4.65%, due to lower loan yields.

The results were also aided by a decline in problem loans. TCF reduced its provision for credit losses by 70%, to $9.9 million, from the prior-year period as net chargeoffs fell 33.7%, to $18.4 million. Nonaccrual loans and leases and other real estate owned assets declined 5.6%, to $325 million due to continued efforts to workout distressed commercial loans.

Net interest income increased 2%, to $206 million, driven by 100.3% higher gains on sales of consumer real estate loans, to over $8 million; a 56.4% increase in servicing fee income, to $4.8 million; and other loan gains, which increased 138%, to nearly$2.8 million.

These gains were offset in part by a 5.9% decline in total banking fees, to $57 million. However, total fees climbed 3.5% year over year, to $103.2 million, driven largely by gains on sales of loans. Overall revenue rose 2.7% year over year, to $310 million.

 

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