It has been about a month since the last earnings report for TCF Financial Corporation . Shares have added about 8.8% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is TCF due for a pullback? 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 Beats Q1 Earnings Estimates on Higher Revenues
TCF Financial reported earnings per share of 39 cents, beating the Zacks Consensus Estimate of 37 cents. Further, the figure compared favorably with the prior-year quarter figure of 25 cents. Notably, results include non-recurring items of 2 cents per share associated with the redemption of perpetual preferred stock.
Also, top-line strength was experienced in the reported quarter. Furthermore, margin pressure seems to be easing. The quarter also witnessed continued rise in loans and deposits while maintaining a solid capital position and lower provisions. However, elevated expenses were on the downside.
The company reported net income of $73.8 million or 39 cents compared with $46.3 million or 25 cents recorded in the year-ago quarter.
Revenues Rise, Cost Pressure Persists
Total revenues came in at $355.4 million in the quarter, up 9.1% year over year. Moreover, the top line comfortably surpassed the Zacks Consensus Estimate of $349.4 million.
Net interest income (NIM) was up nearly 9.5% year over year to $243.2 million. The rise was mainly attributable to increased interest income on loans and leases held for investment, partially mitigated by decreased interest income on loans held for sale and rise in total interest expenses.
NIM of 4.59% expanded 13 basis points (bps) year over year due to elevated average yields on the variable and adjustable-rate loan portfolios on rising rates, partly offset by escalated average rates on increased average balances of certificates of deposit, along with higher average rates on long-term borrowings and savings accounts.
Non-interest income came in at $112.2 million, up 8.4% on a year-over-year basis. Higher fees and other revenues, along with elevated card revenues, mainly led to the rise.
TCF Financial reported non-interest expenses of $246 million, up 0.8% from the year-earlier quarter. The rise mainly reflected significant increase in operating lease depreciation, and higher occupancy and equipment expenses.
As of Mar 31, 2018, average deposits improved 7% year over year to $18.3 billion. Average loans and leases climbed 6.7% to $19.3 billion in the reported quarter.
Credit Quality: A Mixed Bag
Credit quality for TCF Financial reflected mixed credit metrics. Non-accrual loans and leases, and other real estate owned slipped 16% year over year to $143.6 million.
Further, provisions for credit losses were $11.4 million, down 6.8% year over year, primarily due to the auto finance portfolio run-off and lower net charge-offs in the commercial portfolio. These benefits were partly mitigated by rise in net charge-offs in the consumer real estate portfolio.
However, net charge-offs, as a percentage of average loans and leases, expanded 18 bps year over year to 0.29%. The upsurge chiefly stemmed from the recovery recorded in the prior-year quarter, partly mitigated by lower net charge-offs in the commercial portfolio.
Robust Capital Position
TCF Financial’s capital ratios remained strong. As of Mar 31, 2018, Common equity Tier 1 capital ratio was 10.57% compared with 10.79% as of Dec 31, 2017. Total risk-based capital ratio was 13.26% compared with 13.90% as of Dec 31, 2017. Tier 1 leverage capital ratio was 10.52%, down from 11.12% as of Dec 31, 2017.
During the reported quarter, the company repurchased 2.57 million shares of its common stock for a total cost of $57.6 million and at an average price of $22.45 per share.
Outlook
The company expects mid-single digit growth in loan and lease (excluding auto) in 2018 with continued investment portfolio expansion.
Management expects return on an average tangible common equity to be in the range of 11.5-13.5% in 2018 compared with its average of about 10% over the past five years.
Efficiency ratio is anticipated to lie in the range of 66-68% in 2018 compared with the company’s average over the past five years of nearly 70%.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed an upward trend in fresh estimates. There have been eight revisions higher for the current quarter. Last month, the consensus estimate has shifted by 5.8% due to these changes.
TCF Financial Corporation Price and Consensus
VGM Scores
At this time, TCF has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 momentum based on our styles scores.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Notably, TCF has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is TCF Financial (TCF) Up 8.8% Since Its Last Earnings Report?
It has been about a month since the last earnings report for TCF Financial Corporation . Shares have added about 8.8% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is TCF due for a pullback? 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 Beats Q1 Earnings Estimates on Higher Revenues
TCF Financial reported earnings per share of 39 cents, beating the Zacks Consensus Estimate of 37 cents. Further, the figure compared favorably with the prior-year quarter figure of 25 cents. Notably, results include non-recurring items of 2 cents per share associated with the redemption of perpetual preferred stock.
Also, top-line strength was experienced in the reported quarter. Furthermore, margin pressure seems to be easing. The quarter also witnessed continued rise in loans and deposits while maintaining a solid capital position and lower provisions. However, elevated expenses were on the downside.
The company reported net income of $73.8 million or 39 cents compared with $46.3 million or 25 cents recorded in the year-ago quarter.
Revenues Rise, Cost Pressure Persists
Total revenues came in at $355.4 million in the quarter, up 9.1% year over year. Moreover, the top line comfortably surpassed the Zacks Consensus Estimate of $349.4 million.
Net interest income (NIM) was up nearly 9.5% year over year to $243.2 million. The rise was mainly attributable to increased interest income on loans and leases held for investment, partially mitigated by decreased interest income on loans held for sale and rise in total interest expenses.
NIM of 4.59% expanded 13 basis points (bps) year over year due to elevated average yields on the variable and adjustable-rate loan portfolios on rising rates, partly offset by escalated average rates on increased average balances of certificates of deposit, along with higher average rates on long-term borrowings and savings accounts.
Non-interest income came in at $112.2 million, up 8.4% on a year-over-year basis. Higher fees and other revenues, along with elevated card revenues, mainly led to the rise.
TCF Financial reported non-interest expenses of $246 million, up 0.8% from the year-earlier quarter. The rise mainly reflected significant increase in operating lease depreciation, and higher occupancy and equipment expenses.
As of Mar 31, 2018, average deposits improved 7% year over year to $18.3 billion. Average loans and leases climbed 6.7% to $19.3 billion in the reported quarter.
Credit Quality: A Mixed Bag
Credit quality for TCF Financial reflected mixed credit metrics. Non-accrual loans and leases, and other real estate owned slipped 16% year over year to $143.6 million.
Further, provisions for credit losses were $11.4 million, down 6.8% year over year, primarily due to the auto finance portfolio run-off and lower net charge-offs in the commercial portfolio. These benefits were partly mitigated by rise in net charge-offs in the consumer real estate portfolio.
However, net charge-offs, as a percentage of average loans and leases, expanded 18 bps year over year to 0.29%. The upsurge chiefly stemmed from the recovery recorded in the prior-year quarter, partly mitigated by lower net charge-offs in the commercial portfolio.
Robust Capital Position
TCF Financial’s capital ratios remained strong. As of Mar 31, 2018, Common equity Tier 1 capital ratio was 10.57% compared with 10.79% as of Dec 31, 2017. Total risk-based capital ratio was 13.26% compared with 13.90% as of Dec 31, 2017. Tier 1 leverage capital ratio was 10.52%, down from 11.12% as of Dec 31, 2017.
During the reported quarter, the company repurchased 2.57 million shares of its common stock for a total cost of $57.6 million and at an average price of $22.45 per share.
Outlook
The company expects mid-single digit growth in loan and lease (excluding auto) in 2018 with continued investment portfolio expansion.
Management expects return on an average tangible common equity to be in the range of 11.5-13.5% in 2018 compared with its average of about 10% over the past five years.
Efficiency ratio is anticipated to lie in the range of 66-68% in 2018 compared with the company’s average over the past five years of nearly 70%.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed an upward trend in fresh estimates. There have been eight revisions higher for the current quarter. Last month, the consensus estimate has shifted by 5.8% due to these changes.
TCF Financial Corporation Price and Consensus
TCF Financial Corporation Price and Consensus | TCF Financial Corporation Quote
VGM Scores
At this time, TCF has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 momentum based on our styles scores.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Notably, TCF has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.