Wednesday, February 29, 2012

Best Wall St. Stocks Today: TCB

TCF Financial Corporation (NYSE: TCB) has received approval from the U.S. Treasury to pay back TARP money it received.� The bank will repurchase all of its 361,172 outstanding shares of Series A 5% Fixed Rate Cumulative Perpetual Preferred Stock for $361.2 million plus a final pro-rata accrued dividend.� Instead of discussing how the capital helped, the aspect that this shines light on is that TCF said the TARP money has created a disadvantage for the bank.

TCF has the right to repurchase the common stock warrant issued to the U.S. Treasury under its Capital Purchase Program as part of the repurchase of the preferred stock.� If TCF does not repurchase the warrant, the U.S. Treasury is required by law to liquidate it.

As part of its cutting, TCF is cutting the $0.25 dividend on common stock down to $0.05.� It will manage the dividend policy based on earnings, capital, and the economic environment and said it was committed to increasing the dividend as soon as fiscally possible.

As far as the disadvantages, the bank did not exactly outline what they were. The bank said it safe and sound institution with the ability to repay its debt to the Treasury; and it noted that repaying the money will add more than $0.14 to its EPS annually.

TCF also said that with the TARP repayments its regulatory capital ratios will continue to be over the well-capitalized requirement of 6% in Tier 1 capital, and 10% in total risk-based capital. Its tangible common equity ratio is well over 5%.

The banking sector weakness and profit-taking are likely adding to the downdraft this morning.� So far, shares are down about 5% at $14.31; its 52-week trading range is $8.74 to $28.00.

Jon C. Ogg
April 20, 2009

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