TCF Financial Corporation (TCB): Should We Follow the CEO Sale of This Banking Stock?

U.S. Bancorp might be the best pick

U.S. Bancorp (NYSE:USB) is one of the banks that Warren Buffett likes. Most of its lending practice focuses on commercial loan, accounting for 29.7% of the total loans outstanding. Retail loans (leasing, home equity and second mortgages and automobile) ranked second, representing 21.3% of the total loans in 2012. For the past five years, its net interest margin has been quite decent, fluctuating in the narrow range of 3.58%-3.88%. In 2012, its net interest margin stayed at 3.58%.

The reason Buffett likes U.S. Bancorp (NYSE:USB) might be its retail and commercial focus in its lending practices and its decent loan loss reserve ratio over the years. In the past ten years, its loan loss reserve ratio stayed in the range of 1.30%-2.58%. In 2012, its loan loss reserve ratio was 1.91%. U.S. Bancorp (NYSE:USB) is trading at $33.50 per share, with a total market cap of $61.95 billion. The market values the bank at only 10.34 times its forward earnings and 1.78 times its book value.

Among the three, U.S. Bancorp (NYSE:USB) pays the highest dividend yield at 2.3%. Associated Banc Corp (NASDAQ:ASBC) ranked second with a dividend yield of 2.2%. TCF offers investors the lowest dividend yield at only 1.4%.

My Foolish take

Investing in the banking business is not easy at all. Investors should dig deeper to understand the stickiness level of deposits, the lending practices and the conservativeness of the banking operations. At the moment, I would stay away from TCF Financial Corporation (NYSE:TCB) due to its lowest loan loss reserve ratio, the lowest dividend yield and huge CEO share sale amount. I personally like U.S. Bancorp (NYSE:USB) the most of the trio due to its high loan exposure to retail and commercial activities, highest dividend yield and the most conservative loan loss reserves.

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