TCF Financial Corp reported a 42 percent drop in quarterly profit that missed market expectations, hurt by a higher provision for credit losses.

For the third quarter, the Wayzata, Minnesota-based lender earned $17.5 million, or 14 cents a share, compared with $30.1 million, or 24 cents a share, last year.

Analysts on average were looking for a profit of 16 cents a share, before items, according to Thomson Reuters I/B/E/S.

Net interest income rose 6 percent to $161.5 million.

The increase in net interest income from the third quarter of 2008 was primarily due to an increase in average loans and leases, partially offset by a decrease in net interest margin, TCF Financial said in a statement.

Provision for credit losses were up 45 percent to $75.5 million during the third quarter, while total non-performing assets were at $363 million, up from $200 million a year ago.

Shares of the company were down 8 percent at $13.20 Wednesday morning on Nasdaq. They fell to a low of $13.03 earlier in the session.

(Reporting by Brenton Cordeiro in Bangalore; Editing by Unnikrishnan Nair)