TCF Financial Corp. said Friday its third-quarter net profit grew 7 percent from the same period last year, shaped by growth in loan originations and lucrative sales of portions of its loan portfolio.
Executives described the July-to-September performance as solid, but they also noted that the company's net interest margin would come under some pressure during the last three months of the year.
"A lot of it is driven in the mix of the portfolio and the yield on different aspects of the portfolio," Brian Maass, the company's chief financial officer, told analysts.
He said inventory finance yields were higher in the just-completed quarter than they are expected to be in the current one. In addition, new loans showing up on the company's books are at lower interest rates than in the past.
Overall, TCF's net interest income grew 3.3 percent and noninterest income grew at an even faster rate of 4.5 percent, led by gains from sales of portions of its auto and consumer real estate loan portfolios.
"Our model provides for more diverse revenue sources and higher profitability compared to our peers," Craig Dahl, the company's chief executive, told analysts.
Plymouth-based TCF said its net profit was $56.3 million, or 31 cents a share and a penny higher than the consensus forecast of investment analysts. That's up from $52.6 million, or 29 cents a share, a year ago.
Revenue was $331.7 million, up 4.5 percent from $317.5 million a year ago.
The company's overall loan portfolio of $17.4 billion was up 1.1 percent from a year ago. Its deposit base grew 7.3 percent to $17.1 billion.
TCF's total equity grew to $2.45 billion by the end of the third quarter, up from $2.3 billion at the start of the year. The company's board earlier this week declared a 7.5 cent per share cash dividend. Dahl said the board discussed increasing the dividend and buying back shares but took no further action.
TCF shares fell 1.4 percent Friday.