UPDATE 2-TCF Financial Q2 profit jumps; shrs down on NPAs

Thu Jul 15, 2010 12:06pm EDT

* Q2 EPS $0.32 vs est $0.27

* Net interest income up 13 pct

* Provision for credit losses fall 21 pct

* NPAs rise 10 pct sequentially (Recasts; adds analysts' comments, details, updates stock movement)

By Abhinav Sharma

BANGALORE, July 15 (Reuters) - TCF Financial Corp's (TCB.N) second-quarter profit nearly doubled, beating market estimates, helped by a jump in interest income, but a rise in non-performing assets pulled the stock down 6 percent.

Investors seem concerned with the increase in the company's non-performing assets and some of the underlying credit trends, analyst Terry McEvoy of Oppenheimer & Co told Reuters.

Non-performing assets were up 10 percent at $448.1 million from the first quarter, mainly due to a 16 percent rise in OREOS, or other real estate-owned loans.

"They certainly have a lot of real-estate exposure, specifically consumer real estate, but what drove this sequential increase was the commercial real estate," analyst Scott Siefers of Sandler O'Neill said.

For the second quarter, the company earned $45 million, or 32 cents a share, compared with $23.5 million, or 8 cents a share, last year.

Analysts on average expected a profit of 27 cents a share, before items, according to Thomson Reuters I/B/E/S.

"Our improving financial results are fueled by both increased revenues and decreased expenses, including a decrease in credit costs," Chief Executive William Cooper said in a statement.

The company said net interest income rose to $176.5 million from $156.5 million, while fee income was up marginally at $114.3 million.

Provision for credit losses fell about 21 percent to $49 million. Net charge-offs dropped 13 basis points to 1.3 percent.

Shares of the company were down $1.07 at $16.45 in midday trade Thursday on the New York Stock Exchange. (Reporting by Abhinav Sharma in Bangalore; Editing by Aradhana Aravindan, Unnikrishnan Nair)

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