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TCF Financial's Digitization Efforts on Track: Time to Buy?

On Jan 2, we issued an updated research report on TCF Financial Corporation TCF. The company’s digitization efforts to fulfill customer requirements and solid organic growth indicate its upside potential.

Though escalating expenses and declining fee income remain concerns, the company’s strong capital position keeps it well poised to undertake opportunistic growth ventures.

Shares of the company have gained 4.4% in a year’s time, outperforming 3.3% growth of the industry it belongs to.

Moreover, the Zacks Consensus Estimate for 2017 earnings has been revised 1.1% upward, over the last 30 days. As a result, it currently carries a Zacks Rank #2 (Buy).

TCF Financial’s consistent organic growth keeps us encouraged. Over the five years ended 2016, the company’s loans and deposits have witnessed a CAGR of 3.7% and 5.1%, respectively. Also, aided by the improving economy, uptrend in these balances is likely to continue in the near term.

The company’s focus on strengthening footprint in the Chicago region along with introduction of digital platforms are likely to help it better serve customers. In February 2016, it had announced its plan to close 33 retail branches located inside Jewel-Osco grocery stores in Chicago and replace them with advanced ATMs.

Recently, TCF Financial closed the acquisition of Rubicon Mortgage Advisors, LLC. With offices in Minnesota and North Dakota, Rubicon is a residential mortgage lender. Such inorganic growth activities reflect its strong capital position.

Further, its credit metrics have been improving over the last few quarters. Also, its diversified loan portfolio helps in keeping credit quality at normalized levels.

However, consistently increasing expenses and falling fee income are likely to deter bottom-line growth to some extent.

Other Stocks to Consider

Texas Capital Bancshares’ TCBI Zacks Consensus Estimate for earnings for 2017 was revised slightly upward, in the last 60 days. Also, its share price has increased 13.2% in the past 12 months. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cullen/Frost Bankers CFR currently carries a Zacks Rank #2. The stock’s 2017 earnings estimates were revised slightly upward, in the last 60 days. Further, the company’s shares have gained 8% in a year’s time.

Banc of California’s BANC Zacks Consensus Estimate for earnings for 2017 was slightly revised upward, over the last 60 days. Moreover, in the past year, its shares have gained 17%. Also, it carries a Zacks Rank of 2.

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Texas Capital Bancshares, Inc. (TCBI): Free Stock Analysis Report
Banc of California, Inc. (BANC): Free Stock Analysis Report
Cullen/Frost Bankers, Inc. (CFR): Free Stock Analysis Report
TCF Financial Corporation (TCF): Free Stock Analysis Report
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