A year into TCF Financial Corp.'s restructuring, it has become more diverse and less concentrated on residential property.
It's also a bit less predictable, analysts are finding.
A drop-off in fee income caused the Wayzata-based lender to miss on first-quarter earnings Friday, although it cranked out stronger-than-expected growth in revenue.
The culprit wasn't the fading mortgage refinance party that has zapped some of the country's biggest banks, including TCF's larger crosstown rivals. Slower activity in the bank's less predictable, or lumpy, leasing and equipment finance business, as well as lower fees from reintroducing free checking last year, chopped its fee income.
The bank, the state's third largest by deposits, said the leasing and equipment finance business tends to be lumpy quarter to quarter. It blamed other parts of the drop-off on the same downshift in consumer sentiment that other bankers have noted.
"People appear to have cut back on their spending," TCF Chairman and CEO Bill Cooper told analysts. "We're not really sure what's caused it. There's something going on there in the first quarter."
Overall, TCF reported first-quarter profits of $25.5 million, or 16 cents per share, up 8 percent from the previous quarter. A year ago the bank lost nearly $300 million as it overhauled its balance sheet and embarked on a transformation to focus more on specialty short-term lending, such as auto and inventory financing. Cooper likes to say it's the third time he's had to re-invent the bank.
That overhaul appears largely on track.
