LONDON (Thomson Financial) - Standard & Poor's Ratings Services said it has
revised its outlook on TCF Financial Corp and its subsidiaries to stable from
positive due to the bank's high concentration in home equity lending, a line
that is experiencing weaker credit performance.
About half of TCF's loan book is made up of home equity lending.
S&P also affirmed its ratings on TCF and its subsidiaries, including the
'BBB+' long-term counter party credit rating on the company.
"These negative credit quality trends and potential economic softness will
preclude an upgrade in the medium term," said S&P credit analyst Jeffrey Zaun.
Although performance through the third-quarter of 2007 has been solid, both
earnings and asset quality have deteriorated modestly. Home equity lending makes
up about half of the firm's loan book, the agency said.
S&P said it anticipates that additional credit costs and some lingering
pressure on TCF's net interest margin will limit earnings.
"Our concerns are partly allayed because two-thirds of the bank's home
equity book is first-lien and because TCF has not originated sub-prime or
adjustable-rate mortgages," it said.
Also, TCF's HELOC business is customer focused and not dependent on
wholesale origination channels, which to date have shown the weakest
performance, S&P added.
TFN.newsdesk@thomson.com
yos/faj
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