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Why Is TCF Financial (TCF) Up 4.7% Since Last Earnings Report?

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A month has gone by since the last earnings report for TCF Financial (TCF - Free Report) . Shares have added about 4.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is TCF Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

TCF Financial Q3 Earnings Top Estimates, Revenues Rise

TCF Financial delivered a positive earnings surprise of 2.1% in third-quarter 2019. Adjusted earnings per share of 98 cents surpassed the Zacks Consensus Estimate of 96 cents. However, the bottom line was nearly 2% down from the prior-year quarter.

Third-quarter results reflect positive impact of merger with Chemical Financial Corporation. The company benefited from improved loans and deposits balance. Also, the company witnessed rise in top line. However, contraction of margin and higher expenses were headwinds.

Per the combined company’s latest filing, Legacy TCF's historical financial statements are to be assumed historical financial statements of the combined company for all periods before the Merger Date (Aug 1, 2019). Also, TCF Financial 's results of operations for third-quarter 2019 and the first nine months of 2019 include the results of operations of Chemical Financial on and after the merger date.

After considering after-tax impact of merger-related expenses and non-core items, the company reported net income of $22.1 million, down 74.3% from $86.2 million in the year-ago quarter.

Revenues & Loans Increase, Expenses Rise

Total revenues for the third quarter came in at $466.1 million, up 27.5% year over year. However, the top line missed the Zacks Consensus Estimate of $496 million.

Net interest income for the quarter increased 46.7% year over year to $371.8 million. The rise stemmed from higher interest income. Net interest margin on a fully tax-equivalent basis came in at 4.14% contracting 59 basis points (bps).

Non-interest income came in at $94.3 million, down nearly 16% on a year-over-year basis. This decrease primarily resulted from fall in almost all components of income, partially mitigated by higher card revenues.

TCF Financial incurred non-interest expenses of $425.6 million for the September quarter, up 72.7% from the year-earlier quarter. The rise primarily resulted from higher compensation and employee benefits and merger-related expenses.

As of Sep 30, 2019, deposits were $35.3 billion, up 84.6% from the prior-quarter end. Also, total loans and leases climbed 74.7% sequentially to $33.5 billion.

Credit Quality Worsens                                                               

Total non-performing assets climbed considerably year over year to $209.4 million in the third quarter. Further, net charge-offs, as a percentage of average loans and leases, expanded 24 bps to 0.39%. The upsurge chiefly resulted from elevated net charge-offs in the commercial and inventory finance portfolios.

Also, provisions for credit losses were $27.2 million, up slightly year over year.

Capital Position

As of Sep 30, 2019, Common equity Tier 1 capital ratio was 10.88% compared with 11.04% as of Sep 30, 2018. Also, total risk-based capital ratio was 12.63% compared with 13.66% on Sep 30, 2018. Tier 1 leverage capital ratio was 11.16% on Sep 30, 2019, up from 10.58%.


The company expects modest margin pressure to continue in the remaining 2019 on account of expectations of another rate cut in 2019 and redeployment of cash flow into securities and other loans.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, TCF Financial has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise TCF Financial has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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