5. TCF Financial
Shares of TCF Financial (TCB) of Wayzata, Minn., closed at $11.63 Friday, returning 14% year-to-date, following a 29% decline during 2011.
The shares trade for 1.5 times tangible book value, according to Worldscope data provided by Thomson Reuters, and for 10 times the consensus 2013 EPS estimate of $1.15, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is a loss of $1.15 a share.
The company had $17.9 billion in total assets as of March 31.TCF in March repositioned its balance sheet by prepaying $3.6 billion in long-term borrowings and selling $1.9 billion in in mortgage-backed securities, in order to "increase net interest margin and reduce interest rate risk." The repositioning resulted in $293 million in one-time charges, or a loss of $1.85 a share. Sterne Agee's #5 ranking for TCF Financial's risk from the coming stress tests factors-in a tangible common equity ratio of 7.4%, ranking 39th out of 54 banks subject to the firm's analysis; a loans-to-deposits ratio of 118.9%, ranking 51st; and a Texas Ratio-- nonperforming loans divided by Tier 1 capital and loan loss reserves -- of 60.4%, for a 52nd-place ranking. The company reported that during the first quarter, its net interest margin -- a bank's average yield on loans and investments less its average cost for deposits and wholesale borrowings -- improved to 4.14% from 3.92% the previous quarter. Sterne Agee analyst Peyton Green Peyton Green rates TCF Financial a "Buy," with a $13.50 price target, saying in April that "the 1Q12 balance sheet restructuring, improving loan growth, and credit leverage should drive material EPS & [return on equity] improvement through 2013." The analyst estimates TCF will post a loss of $1.20 a share for all of 2012, followed by 2013 EPS of $1.20. Interested in more on TCF Financial? See TheStreet Ratings' report card for this stock.
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