2008-07-24 23:12:16 -
- Fitch Ratings has affirmed the long-term Issuer Default Rating (IDR) for TCF Financial Corporation (TCF) and its principal banking subsidiary TCF National Bank at 'A-'. The short-term IDRs for TCF and TCF National Bank were also affirmed at 'F1'. Fitch has revised the Rating Outlook to Negative from Stable. (See complete list of ratings at the end of this
release.)
Fitch's revision in the Outlook to Negative from Stable reflects the deteriorating trend in TCF's credit losses and nonperforming assets (NPAs) and the resulting impact on earnings. Asset quality deterioration to date has occurred in the home equity and residential construction and development related loan books. In the second quarter of 2008, net charge-offs (NCOs) doubled to 84 basis points of average loans (annualized) and provisions exceeded NCOs by $36 million to build the reserve to $133 million or 1.03% of loans. NPAs jumped to $160.4 million or 1.25% of loans and leases. Fitch notes that TCF's direct exposure to residential builders is modest and it has no exposure to subprime lending. The home equity portfolio has maintained reasonable loan to value ratios with first liens comprising nearly two-thirds of the portfolio. That said, Fitch believes that given economic conditions in the Midwest and TCF's sizeable home equity portfolio, provisioning needs will likely remain elevated in the near term.
TCF's strong core deposit base remains vital to its business model and continues to provide rating support. It facilitates a solid net interest margin (NIM) and produces a high level of fee income.
However, the company's capital position remains lower than most peers and is no longer counterbalanced by strong earnings performance. Fitch will continue to assess TCF's risk profile in relation to its financial resources and earnings generation.
Fitch affirms the following ratings with a Negative Rating Outlook:
TCF Financial Corporation
--Long-term IDR 'A-';
--Short-term IDR 'F1';
--Individual 'B';
--Support '5';
--Support floor 'NF'.
TCF National Bank
--Long-term deposits 'A';
--Long-term IDR 'A-';
--Subordinated debt 'BBB+';
--Short-term deposits 'F1';
--Short-term IDR 'F1';
--Individual 'B';
--Support '5';
--Support floor 'NF'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings, Chicago
Doris Hoffmann, +1-312-368-2057
Julie Solar, +1-312-368-5472
Sandro Scenga, +1-212-908-0278
(Media Relations, New York)
