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6 Banks Actually Growing Their Banking Business

3. TCF Financial

Shares of TCF Financial (TCB) of Wayzata, Minn., closed at $11.30 Tuesday, returning 10% year-to-date, following a 30% decline during 2011.

Based on a five-cent quarterly payout, the shares have a dividend yield of 1.77%.

TCF reported first-quarter net interest income of $180.2 million, increasing 4% from the previous quarter and 3.5% year-over-year. The first-quarter net interest margin was 4.11%, according to HighlineFI, increasing from 3.94% in the second quarter, and 4.02% in the first quarter of 2011.

The company on March 13 announced it would prepay $3.6 billion in wholesale borrowings and sell $1.9 billion in mortgage-backed securities, as part of its strategy of moving away from longer-term residential and commercial real estate loans and MBS investments, to a focus on "originating high-yielding, low-risk, secured loans and leases funded by a low-cost, core deposit base," according to CEO William Cooper.

TCF said it had "replaced $2.1 billion of 4 percent weighted average fixed-rate, Federal Home Loan Bank advances with a mix of floating and fixed-rate borrowings with a current rate of .5 percent," while terminating "$1.5 billion of 4 percent weighted average fixed-rate repurchase agreement borrowings." The company expects its net interest income to improve by $74 million, annualized, and for its net interest margin to increase by 96 basis points on an annual basis.

The balance sheet repositioning led to one-time charges totaling $295.8 million, leading to a first-quarter net loss of $282.9 million, or $1.78 a share, compared to fourth-quarter earnings of $16.4 million, or 10 cents a share, and first-quarter 2011 earnings of $30.3 million, or 21 cents a share.

On a positive note, TCF reported very strong sequential growth in average loans during the first quarter of 7%, to $15.2 billion, primarily through its inventory finance business.

The shares trade for 1.4 times tangible book value, according to HighlineFI, and for 10 times the consensus 2013 EPS estimate of $1.15. The consensus 2012 EPS estimate is for a loss of $1.20.

Deutsche Bank analyst Matt O'Connor last Thursday reiterated his "Buy" rating for TCF Financial, with a $13 price target, saying that "from here, EPS should accelerate nicely given strong loan growth, a full quarter's impact of the balance sheet restructuring and an eventual decline in credit costs."

Interested in more on TCF Financial? See TheStreet Ratings' report card for this stock.

Stock quotes in this article: COF, DFS, TCB, CVBF, WAFD, CATY, BRKL, SFNC 

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