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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of regional bank TCF Financial (NYSE: TCB ) slipped more than 10% in intraday trading as third-quarter earnings fell short of expectations.
So what: Investors have not been particularly forgiving of regional banks that have missed Wall Street's earnings estimates. Yesterday, I looked at Marshall & Ilsley (NYSE: MI ) and Comerica (NYSE: CMA ) , both of which were paddled by investors after falling short in their respective earnings reports. In TCF's case, the $0.26 in per-share earnings was $.03 cents shy of the $0.29 that analysts were expecting.
Now what: Wall Street's earnings expectations tend to get far too much attention, so it's important to look past the headline numbers to figure out if there's really something to be concerned about. For TCF, investors will want to keep a very close eye on credit quality. During the quarter, both charge-offs and non-performing assets rose significantly, even as the bank let its credit-loss reserves drop. In addition, TCF is taking legal action against the debit card fee section of the Dodd-Frank financial reform bill, suggesting that if the section stands it will have a significant impact on TCF. TCF has thus far weathered the financial storm better than many other banks, but this quarterly report does make it clear that the bank isn't through the bumpy ride quite yet.
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