It has been about a month since the last earnings report for TCF Financial Corporation . Shares have lost about 8.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
TCF Financial’s Q4 Earnings Lag; Costs Up
TCF Financial reported earnings per share of $0.27, lagging the Zacks Consensus Estimate of $0.30 and also lower than the prior-year quarter figure of $0.29.
Lower-than-expected results were due to concerns over persistent decline in net interest margin (NIM) as well as elevated expenses. However, on a positive note, the quarter witnessed top-line growth and continued rise in loans and deposits, while maintaining a solid capital position.
The company reported net income of $50.1 million, down 4.6% from $52.4 million in the prior-year quarter.
For full-year 2016, the company reported earnings per share of $1.15, improving 7.5% year over year from $1.07. Further, net income for the year increased 7.6% year over year to $212.1 million.
Revenue Escalates, Cost Pressure Persists
For 2016, TCF Financial reported total revenue of $1.3 billion, up 4.1% year over year. However, the figure was almost in line with the Zacks Consensus Estimate.
Total revenue came in at $327.1 million in the quarter, up 1.8% year over year. However, the top line missed the Zacks Consensus Estimate of $332.0 million.
Net interest income was up nearly 2.8% year over year to $211.4 million. The rise was mainly attributable to higher average loan and lease balances held for sale, inventory finance and leasing, equipment finance and securities available for sale, partially offset by reduced consumer real estate loan balances and reduced average yield on the overall loan and lease portfolio.
NIM of 4.30% contracted 5 basis points (bps) year over year due to reduced yields on commercial loans, leasing and equipment finance loans and leases, auto finance loans and loans and leases held for sale.
Non-interest income came in at $115.5 million, slightly down on a year-over-year basis. Ongoing consumer behavior changes, along with higher average checking account balances per customer, mainly led to the fall.
TCF Financial reported non-interest expenses of $225.4 million, up 1.2% from the prior-year quarter. The rise mainly reflected significant increases in compensation and employee benefits expenses and other expenses.
As of Dec 31, 2016, average deposits improved 4.8% year over year to $17.1 billion. Average loans and leases inched up 1.1% year over year to $17.5 billion in the quarter.
Credit Quality: A Mixed Bag
Credit quality for TCF Financial reflected mixed credit metrics. Net charge-offs, as a percentage of average loans and leases, declined 2 bps year over year to 0.27%. The decline was chiefly attributable to an improved credit quality in the consumer real estate portfolio, partially offset by increase in net charge-offs in the auto finance portfolio.
Moreover, non-accrual loans and leases and other real estate owned fell 8.9% year over year to $228.2 million.
However, provisions for credit losses were $19.9 million, up 13% year over year, primarily driven by growth in the overall loan and lease portfolio, partially mitigated by a decline in net charge-offs.
Robust Capital Position
TCF Financial’s capital ratios remained strong. As of Dec 31, 2016, Common equity Tier 1 capital ratio was 10.24% compared with 10.00% as of Dec 31, 2015. Total risk-based capital ratio was 13.69% compared with 13.71% as of Dec 31, 2015. Tier 1 leverage capital ratio was 10.73%, up from 10.46% as of Dec 31, 2015.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimate. There have been five revisions lower for the current quarter. While looking back an additional 30 days, we can see even more downward momentum. There have been five downward revisions in the last two months.
VGM Scores
At this time, TCF Financial's stock has a poor score of 'F' both on growth and momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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TCF Financial (TCB) Down 8.6% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for TCF Financial Corporation . Shares have lost about 8.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
TCF Financial’s Q4 Earnings Lag; Costs Up
TCF Financial reported earnings per share of $0.27, lagging the Zacks Consensus Estimate of $0.30 and also lower than the prior-year quarter figure of $0.29.
Lower-than-expected results were due to concerns over persistent decline in net interest margin (NIM) as well as elevated expenses. However, on a positive note, the quarter witnessed top-line growth and continued rise in loans and deposits, while maintaining a solid capital position.
The company reported net income of $50.1 million, down 4.6% from $52.4 million in the prior-year quarter.
For full-year 2016, the company reported earnings per share of $1.15, improving 7.5% year over year from $1.07. Further, net income for the year increased 7.6% year over year to $212.1 million.
Revenue Escalates, Cost Pressure Persists
For 2016, TCF Financial reported total revenue of $1.3 billion, up 4.1% year over year. However, the figure was almost in line with the Zacks Consensus Estimate.
Total revenue came in at $327.1 million in the quarter, up 1.8% year over year. However, the top line missed the Zacks Consensus Estimate of $332.0 million.
Net interest income was up nearly 2.8% year over year to $211.4 million. The rise was mainly attributable to higher average loan and lease balances held for sale, inventory finance and leasing, equipment finance and securities available for sale, partially offset by reduced consumer real estate loan balances and reduced average yield on the overall loan and lease portfolio.
NIM of 4.30% contracted 5 basis points (bps) year over year due to reduced yields on commercial loans, leasing and equipment finance loans and leases, auto finance loans and loans and leases held for sale.
Non-interest income came in at $115.5 million, slightly down on a year-over-year basis. Ongoing consumer behavior changes, along with higher average checking account balances per customer, mainly led to the fall.
TCF Financial reported non-interest expenses of $225.4 million, up 1.2% from the prior-year quarter. The rise mainly reflected significant increases in compensation and employee benefits expenses and other expenses.
As of Dec 31, 2016, average deposits improved 4.8% year over year to $17.1 billion. Average loans and leases inched up 1.1% year over year to $17.5 billion in the quarter.
Credit Quality: A Mixed Bag
Credit quality for TCF Financial reflected mixed credit metrics. Net charge-offs, as a percentage of average loans and leases, declined 2 bps year over year to 0.27%. The decline was chiefly attributable to an improved credit quality in the consumer real estate portfolio, partially offset by increase in net charge-offs in the auto finance portfolio.
Moreover, non-accrual loans and leases and other real estate owned fell 8.9% year over year to $228.2 million.
However, provisions for credit losses were $19.9 million, up 13% year over year, primarily driven by growth in the overall loan and lease portfolio, partially mitigated by a decline in net charge-offs.
Robust Capital Position
TCF Financial’s capital ratios remained strong. As of Dec 31, 2016, Common equity Tier 1 capital ratio was 10.24% compared with 10.00% as of Dec 31, 2015. Total risk-based capital ratio was 13.69% compared with 13.71% as of Dec 31, 2015. Tier 1 leverage capital ratio was 10.73%, up from 10.46% as of Dec 31, 2015.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimate. There have been five revisions lower for the current quarter. While looking back an additional 30 days, we can see even more downward momentum. There have been five downward revisions in the last two months.
TCF Financial Corporation Price and Consensus
TCF Financial Corporation Price and Consensus | TCF Financial Corporation Quote
VGM Scores
At this time, TCF Financial's stock has a poor score of 'F' both on growth and momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.