NEW YORK ( TheStreet) -- TCF Financial ( TCB) is close to completing its transition away from heavy reliance on transaction fee income to high-margin specialty lending, according to BMO analyst Lana Chan. Chan upgraded TCF to "Outperform," and raised her price target for the shares to $13, saying that key factors for the stock will be strong growth in specialty lending, credit quality improvement and "less risk on fees, as the hits from reg reform should be largely reflected in TCF's run rate even as the bank re-tools the deposit product offering, which includes free checking. TCF Financial had $17.9 in total assets as of June 30. The Wayzata, Minn., bank was among the most reliant among larger institutions on checking account overdraft fees, before new rules requiring banks only to provide overdraft coverage for debit card and ATM transactions for customers who previously opted-in for the service were implemented in July 2010. TCF was also among the hardest hit by the Durbin Amendment's limitation on interchange fees charged to merchants to process debit card purchases, which went into effect in October 2011. During the first quarter, TCF underwent a major balance sheet restructuring, prepaying $3.6 billion in wholesale borrowings and selling $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. The restructuring resulted in an after-tax charge of $293 million, or $1.85 a share, feeding a first-quarter net loss of $282.9 million, or $1.78 a share. For the second-quarter, TCF reported net income available to common shareholders of $31.5 million, or 20 cents a share, increasing from $30.4 million, or 19 cents a share, during the second quarter of 2011. Second-quarter net interest income increased 9% year-over-year, to $144.1 million, which together with $13.1 million in gains on securities, more than offset a 14% year-over-year decline in fees and other revenue to, to $99.8 million, mainly reflecting the Durbin rule's implementation during the fourth quarter of 2011.