Monday, January 24, 2011

TCF Financial (NYSE:TCB) Main Catalyst Debit Card Interchange, Durbin Questionable

As time goes on it appears the overzealousness of regulators in regard to debit cards is catching up with them, as Durbin is gathering more opposition daily, which is good news for TCF Financial (NYSE:TCB), which, according to Barclays, has as their chief catalyst, debit card interchange.

Barclays says, "Bottom-line, while 4Q10 results disappointed, we believe the larger performance driver near-term will remain developments with respect to debit card interchange. In our view, the tide appears to be shifting with respect to the Durbin amendment as other banks are joining TCB's Constitutional challenge, Barney Frank appears more willing to revisit the issue, several banks are pushing for a study that could delay implementation, and still others have the potential for product/pricing changes to substantially reduce its impact.

"Following its large 4Q10 core EPS miss and reflecting our increased provisioning expectations and reduced net interest margin outlook, we are reducing our 2011 EPS estimate to $0.95 from $1.10. As its stands, we estimate Durbin would reduce its annual earnings by $0.40 beginning in 2H11."

Barclays reiterates an 'Overweight' on TCF Financial (TCB), which closed Friday at $15.46, gaining $0.21, or 1.38 percent. Barclays has a price target of $22 on TCF.

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