Wayzata-based TCF Financial Corporation said Tuesday that it has launched a new commercial banking division that specializes in lending to smaller middle-market companies throughout the United States.

The new division, called TCF Capital Funding, is headquartered in Burr Ridge, Illinois. TCF hired Joe Gaffigan-who most recently served as president and CEO of Minneapolis-based MFC Capital Funding-as president of its new division. Gaffigan will report to Jim Urbanek, TCF's managing director of commercial banking.

TCF Capital Funding will focus on asset-based and cash flow lending to companies with fewer than $100 million in annual sales and between $2 million and $10 million in earnings, according to spokesman Jason Korstange.

“TCF is committed to developing new products and services targeted at the commercial middle-market segment,” Craig Dahl, vice chairman of lending, said in a statement. “The expansion of our commercial lending business into leverage finance will continue to diversify and grow TCF's assets on a disciplined basis.”

TCF last week announced that it had repositioned its balance sheet by prepaying $3.6 billion of long-term debt and selling $1.9 billion of mortgage-backed securities. The company expects the move to increase its net interest margin while also reducing interest rate risk.

TCF Financial Corporation is Minnesota's second-largest bank holding company based on its assets, which totaled $19 billion as of December 31.