OREANDA-NEWS. S&P Global Ratings today said it affirmed its 'BBB-/A-3' ratings on TCF Financial Corp. We also affirmed our 'BBB/A-2' ratings on TCF National Bank. The outlook on both ratings remains stable.

"TCF's credit strengths include a consistent track record of profitability, geographic and loan diversification from its national lending footprint, and an ability to generate capital in excess of asset growth," said credit analyst Stephen Lynch. "The bank's limited market position in competitive specialized lending businesses and smaller than peers' investment portfolio, which limits on-balance-sheet liquidity, are rating weaknesses."

Minnesota-based TCF's focus on niche specialized lending businesses separates the bank from many of its regional peers. We view these asset classes as highly competitive and dominated by larger financial institutions. As of June 30, 2016, TCF's $17.5 billion loan portfolio was split among leasing and equipment finance (24%), commercial loans (18%), inventory finance (13%), auto finance (16%), junior-lien residential mortgages (16%), and first-lien residential mortgages (14%).

Our stable outlook on TCF reflects our view that the company's profitability, capital, and granular retail deposit base will continue to support the current rating over the next few years.

We could revise our outlook to negative or lower our ratings on TCF if the bank adopts a more aggressive capital strategy, if asset quality metrics weaken, or if liquidity further declines. More specifically, if the company's RAC ratio were to decline and approach 10% or if either asset quality or liquidity were to substantially weaken, we would reassess the rating and outlook.

We believe an upgrade is unlikely over the next two years.