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TCF Financial’s focus on attracting deposits from middle-and-lower-income customers has enabled it to make money on its Jewel Food Stores branches – something its predecessor, banking behemoth Bank of America, was unable to do. TCF purchased the struggling food store branches from Bank of America.

TCF has since become a big player in Chicago’s financial services market, where it now has 132 supermarket units (including 11 with Cub Foods) and 32 traditional branches.“Our product line is more suited to a larger portion of customers at Jewel,” says Mike Johnstone, president of TCF Illinois.“Our cornerstone product, `Totally Free Checking,’ has been a tremendous hit.”

TCF is now looking for opportunities to expand through grocery store branches in the Detroit area, where it sees great opportunities. At this point, however, none of the big supermarket chains are looking for bank branches, said a TCF spokeswoman.

Johnstone says TCF plans to add five more branches this year and 25 branches next year in the Chicago and greater Illinois markets, then slow down its expansion rate to eight to 10 Jewel branches a year, following Jewel’s growth. With 32 traditional branches in Illinois, TCF also plans to add two traditional branches a year there, Johnstone said.

While a Jewel branch is typically 550 sf, a traditional branch averages from 4,000 to 5,000 sf with its largest branch at 15,000 sf, Johnstone said.

The Minneapolis-based financial services company, formerly a thrift, anticipates it will make money on the 76 Jewel grocery store branches it bought two years ago from Bank of America, and analysts predict the units will make increasing contributions to TCF’s bottomline as they mature. TCF lures customers by offering no-fee checking accounts with low minimum deposits and no minimum balances.

TCF, with $10.9 billion in assets, has 347 branches in Minnesota, Illinois, Colorado, Wisconsin and Michigan, of which 207 are in supermarkets.While the bank has lending officers at more than third of its Chicago supermarket branches, its strategy has been to use the stores branches as a source of inexpensive deposits which can be reinvested in higher-yielding assets, says Jon Arfstrom, a securities analyst with Dain Rauscher Wessels in Minneapolis.

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