TEXT - S&P cuts TCF Financial

Overview
-- The rise in TCF Financial's nonperforming assets in the third quarter
and the resignation of its chief risk officer have compounded our concerns
about its credit quality and operational risk.
-- We are lowering our long-term issuer credit ratings on TCF Financial
and its main operating company, TCF National Bank, by one notch to 'BBB-' and
'BBB', respectively.
-- Our stable outlook reflects our belief that the company will gradually
reduce its NPAs over the next year and continue to grow its inventory and auto
finance businesses.

Rating Action
On Nov. 29, 2012, Standard & Poor's Ratings Services lowered its long-term
issuer credit ratings on TCF Financial Corp. (TCF) and TCF National Bank by
one notch to 'BBB-' and 'BBB', respectively. The outlook is stable. We also
lowered our short-term rating on TCF to 'A-3' from 'A-2'. At the same time, we
lowered our ratings on TCF's preferred stock to 'BB' from 'BB+' and our rating
on TCF National Bank's subordinated debt to 'BBB-' from 'BBB'.

Rationale
The downgrade reflects our lower assessment of TCF's risk position. The rise
in TCF's nonperforming assets (NPAs) in the third quarter and the recent
resignation of its chief risk officer have compounded our concerns about its
credit quality and operational risk. As a result, we are lowering our
assessment of the company's risk position to "moderate" from "adequate," as
our criteria describe the terms.

The company's NPAs, including a high level of restructured loans, rose to
about 7.5% of its loans and other real estate owned in the third quarter from
6.9% in the prior quarter--a level we previously said could trigger a
downgrade. New accounting guidance required the company to report all loans to
borrowers that were previously discharged from Chapter 7 bankruptcy as
nonaccrual and to charge off those loans to the value of their underlying
collateral, regardless of how the loan is currently performing.

Even when adjusting for this accounting change, TCF's credit quality has been
relatively stagnant while many other banks have reported substantial
improvements. TCF's measure of NPAs--excluding restructured loans and the
impact of the new accounting guidance--was slightly higher at the end of
third-quarter 2012 than a year earlier. In addition, in our view, the sharp
rise in NPAs that related to borrowers that have gone through Chapter 7
bankruptcy further underlines the higher credit risk of the company's customer
base. The company also has restructured more loans than most banks on a
proportional basis to help avoid higher charge-offs and nonaccruals.
Restructured loans, most of which are still accruing, made up about half of
the company's NPAs. We expect the reduction in TCF's NPAs to be gradual, and
we are uncertain how its restructured loans will ultimately perform.

TCF has said that the resignation of its chief risk officer did not result
from a disagreement with the company. Still, the departure of a senior
executive, particularly at somewhat of a challenging time, can raise some
questions and will force TCF to replace one of its most senior and
long-tenured employees.

These issues add to our concerns about a rise in TCF's operational risk,
relating to its growing national lending platforms and alterations to its
deposit account strategies. TCF's inventory finance business, which it
launched in 2008, has more than doubled in size since year-end 2011. In
addition, in 2011, it acquired an indirect auto lender that focused on
nonprime, used-car loans. We recognize that these types of out-of-market
lending platforms offer diversification. Still, in the near term, the
company's quick expansion brings a variety of new risks and management
challenges.

The company has also spent much of the last year experimenting with new
deposit fees--only to revert back to its original free-checking strategy. In
the process, it lost some customers and its fee income fell. The company,
which banks many lower-income consumers, believes that its customer fees have
stabilized, but we are less certain. Regulatory reform related to debit
interchange and overdraft fees have had a large impact on TCF's noninterest
income. That reform has probably also weakened the profitability of the
company's supermarket branches. We believe it historically collected
significant overdraft and debit card fees from customers that used those
branches.

Outlook
Our stable outlook reflects our belief that the company will gradually reduce
its NPAs over the next year, remain profitable--albeit a lower-than-historical
level--and continue to grow its inventory and auto finance businesses.

We could raise our ratings on TCF if it substantially reduces its NPAs,
stabilizes or grows its fee income, and demonstrates further success in its
national lending platforms over an extended period. We could lower our ratings
on TCF if its NPAs increase further, particularly if the company's nonaccruals
(excluding restructured loans) cause the increase. For instance, if the NPA
ratio rose to 8.5%, the rating could come under pressure.

Ratings Score Snapshot
To From
Issuer Credit Rating BBB/Stable/A-2 BBB+/Negative/A-2
Bank Holding Company Rating BBB-/Stable/A-3 BBB/Negative/A-2

SACP bbb bbb+
Anchor bbb+ bbb+
Business Position Adequate (0) Adequate (0)
Capital and Earnings Adequate (0) Adequate (0)
Risk Position Moderate (-1) Adequate (0)
Funding and Liquidity Average Average
And Adequate (0) and Adequate (0)

Support 0 0
GRE Support 0 0
Group Support 0 0
Sovereign Support 0 0

Additional Factors 0 0

Related Criteria And Research
Banks: Rating Methodology And Assumptions, Nov. 9, 2011

Ratings List

Downgraded
To From
TCF Financial Corp.
Issuer Credit Rating BBB-/Stable/A-3 BBB/Negative/A-2
Preferred Stock BB BB+

Downgraded; Ratings Affirmed
To From
TCF National Bank
Issuer Credit Rating BBB/Stable/A-2 BBB+/Negative/A-2
Certificate Of Deposit
Local Currency BBB/A-2 BBB+/A-2
Subordinated BBB- BBB

Downgraded
To From
TCF Capital I
Junior Subordinated BB BB+