In recent months, TCF Financial Corp. has mounted an aggressive marketing blitz to keep tens of millions of dollars in overdraft fees flowing its way.
At every turn, the Wayzata-based regional bank has encouraged customers to sign up for overdraft protection, after new federal rules went into affect in August that bar banks from automatically enrolling people. Some customers, like David Hill of Edina, say TCF employees are asking them to sign up every time they walk into a branch or pull up to a TCF drive-through. "I'm just about ready to tell them to stick it," Hill said.
So far, TCF's marketing push isn't working as well as many investors had hoped.
The bank, Minnesota's third-largest by assets, reported Thursday that its income from fees and service charges fell nearly 13 percent to $67.7 million in the third quarter. It was one of the few bleak spots in an otherwise strong quarter from TCF, in which it reported doubling its profits. But given TCF's longtime reliance on fee income, the news was enough to send the stock down 8 percent Thursday.
Shares of TCF fell $1.22 to $13.88 a share. They are up 1.4 percent for the year.
Analysts expressed concern that TCF may have more difficulty replacing lost income from regulatory changes than previously thought. "It's going to be very tricky for them," said Peyton Green, a senior bank analyst at Stern Agee & Leach Inc. in Nashville. "When those fees go away, there's no offset on the expense side of the equation. ... That's why they are so actively engaged in getting people to sign up" for overdraft protection.
In addition to new restrictions on overdraft fees, TCF faces a potential revenue hit from planned new fee limits on debit-card transactions. As part of the financial regulatory overhaul passed this summer, the Federal Reserve is allowed to severely restrict the amount that banks like TCF can collect from retailers in interchange fees each time consumers swipe their debit cards at the register.
TCF has sued Federal Reserve Chairman Ben Bernanke and the Fed's Board of Governors in federal court to overturn the provision, known as the Durbin Amendment, arguing that it violates the equal protection clause of the U.S. Constitution because it only affects banks with assets of $10 billion or more.