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Section 1: 8-K (8-K TCF Q4 2019 EARNINGS)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

 FORM 8-K
 
 CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):
January 27, 2020
 402455964_tcf123119form8kearnin_image1.jpg
 
TCF FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Michigan
000-08185
38-2022454
(State or other jurisdiction of
incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
333 W. Fort Street, Suite 1800, Detroit, Michigan 48226
(Address of principal executive offices, including Zip Code)
 
(800) 867-9757
(Registrant’s telephone number, including area code)
  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
(Title of each class)
(Trading Symbol(s))
(Name of exchange on which registered)
Common Stock (par value $1 per share)
TCF
The NASDAQ Stock Market
Depositary shares, each representing a 1/1000th interest in a share of the 5.70% Series C Non-Cumulative Perpetual Preferred Stock
TCFCP
The NASDAQ Stock Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.





Item 2.02 Results of Operations and Financial Condition.
 
The following information, including Exhibit 99.1, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, except as may be expressly set forth by specific reference in such a filing.
 
TCF Financial Corporation (the "Corporation") issued an earnings press release dated January 27, 2020, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended December 31, 2019.
 
The earnings press release is also available on the Investor Relations section of the Corporation’s website at http://ir.tcfbank.com. The Corporation’s Annual Report to Shareholders and its reports on Forms 10-K, 10-Q and 8-K and other publicly available information should be consulted for other important information about the Corporation.
 
Item 7.01 Regulation FD Disclosure.
 
Information is being furnished herein in Exhibit 99.2 with respect to the slide presentation prepared for use with the earnings press release. This information includes selected financial and operational information through the fourth quarter of 2019 and does not represent a complete set of financial statements and related notes prepared in conformity with generally accepted accounting principles ("GAAP"). Most, but not all, of the selected financial information furnished herein is derived from the Corporation’s consolidated financial statements and related notes prepared in accordance with GAAP and management’s discussion and analysis of financial condition and results of operations included in the Corporation’s reports on Forms 10-K and 10-Q. The Corporation’s annual financial statements are subject to independent audit. These materials are dated January 27, 2020 and TCF does not undertake to update the materials after that date.
 
The presentation is also available on the Investor Relations section of the Corporation’s website at http://ir.tcfbank.com. The Corporation’s Annual Report to Shareholders and its reports on Forms 10-K, 10-Q and 8-K and other publicly available information should be consulted for other important information about the Corporation.
 
Information contained herein, including Exhibit 99.2, shall not be deemed filed for the purposes of the Securities Exchange Act of 1934, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.
 
(d)         Exhibits.
Exhibit No.
Description
99.1
99.2
101.1
Interactive Data File






SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
TCF FINANCIAL CORPORATION
 
 
 
 
 
/s/ Craig R. Dahl
 
Craig R. Dahl, 
President and Chief Executive Officer  
(Principal Executive Officer)
 
 
 
 
 
/s/ Dennis L. Klaeser
 
Dennis L. Klaeser, 
Executive Vice President and Chief Financial Officer 
(Principal Financial Officer)
 
 
 
 
 
/s/ Kathleen S. Wendt
 
Kathleen S. Wendt, 
Executive Vice President and Chief Accounting Officer 
(Principal Accounting Officer)
 
Dated:  January 27, 2020



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
402455964_tcf123119form8kexhibi_image1.jpg
NEWS RELEASE
 
TCF Financial Corporation • 333 West Fort Street, Suite 1800 • Detroit, MI 48226
 
FOR IMMEDIATE RELEASE
Contact:
 
 
 
 
  Tom Wennerberg
(248) 498-2872
(Media)
 
Timothy Sedabres
(952) 745-2766
(Investors)
 
 
 
 
 
 
TCF REPORTS FOURTH QUARTER 2019 RESULTS
TCF also announces quarterly cash dividends on common and preferred stock

Fourth Quarter Highlights
Quarterly net income of $112.4 million, or $0.72 per diluted share
Adjusted diluted earnings per common share of $1.04(1), excluding $49.2 million, or $0.32 per share, after-tax impact of merger-related expenses and notable items
Efficiency ratio of 73.49%; adjusted efficiency ratio of 58.51%(1) 
Return on average common equity ("ROACE") of 8.00%; return on average tangible common equity ("ROATCE") of 11.35%(1); adjusted ROATCE of 16.25%(1) 
Commercial loan and lease balances up $1.0 billion, or 4.5%, compared to September 30, 2019
Completed sale of $1.1 billion Legacy TCF auto finance portfolio
Net charge-off rate as a percentage of average loans and leases of 0.07%, annualized
Nonaccrual loans and leases of $169.7 million, or 0.49% of total loans and leases
Common equity Tier 1 capital ratio of 10.99%
Repurchased 657,817 common shares at a cost of $27.5 million
Declared quarterly cash dividends on common stock of $0.35 per share payable on March 2, 2020

Merger-related Expenses and Notable items in the Fourth Quarter(1) 
Pre-tax merger-related expenses of $47.0 million, $36.1 million net of tax, or $0.24 per diluted common share for the fourth quarter
Pre-tax loss of $22.1 million, $13.1 million net of tax, or $0.08 per diluted common share related to notable items for the fourth quarter, see summary of notable items adjustments below

(1)
Denotes a non-GAAP financial measure. See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables and the following table detailing merger-related expenses and notable items.

Note: TCF’s financial results for periods ended prior to August 1, 2019 reflect Legacy TCF financial results only on a standalone basis. In addition, TCF’s reported financial results for the third quarter of 2019 and the year ended December 31, 2019 reflect Legacy TCF financial results for the period before August 1, 2019 and the post-merger combined TCF financial results on and after August 1, 2019, with the fourth quarter of 2019 financial results being solely of the post-merger combined TCF. As a result, TCF’s financial results for the fourth quarter, third quarter and year ended December 31, 2019 may not be directly comparable to prior reported periods. The number of shares issued and outstanding, earnings per share, additional paid-in-capital, dividends paid and all references to share quantities of TCF have been retrospectively restated to reflect the equivalent number of shares issued in the Merger as the Merger was treated as a reverse merger.

1



Summary of Financial Results(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
At or For the Quarter Ended
 
Change From
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
Dec. 31,
(Dollars in thousands, except per share data)
2019
 
2019
 
2019
 
2019
 
2018
 
2019
2018
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to TCF
$
112,399

 
$
22,148

 
$
90,427

 
$
70,494

 
$
85,652

 
N.M.

%
31.2

%
Net interest income
408,753

 
371,793

 
254,057

 
254,429

 
253,153

 
9.9

 
61.5

 
Basic earnings per common share
$
0.72

 
$
0.15

 
$
1.07

 
$
0.83

 
$
1.00

 
N.M.

 
(28.0
)
 
Diluted earnings per common share
0.72

 
0.15

 
1.07

 
0.83

 
1.00

 
N.M.

 
(28.0
)
 
Return on average assets ("ROAA")(3)
0.99
%
 
0.26
%
 
1.54
%
 
1.22
%
 
1.52
%
 
73

bps
(53
)
bps
ROACE(3)
8.00

 
1.75

 
14.27

 
11.40

 
14.30

 
625

 
(630
)
 
ROATCE (non-GAAP)(2)(3)
11.35

 
2.68

 
15.46

 
12.42

 
15.58

 
867

 
(423
)
 
Net interest margin
3.86

 
4.12

 
4.46

 
4.58

 
4.63

 
(26
)
 
(77
)
 
Net interest margin (FTE)(2)(3)
3.89

 
4.14

 
4.49

 
4.61

 
4.67

 
(25
)
 
(78
)
 
Net charge-offs as a percentage of average loans and leases(3)
0.07

 
0.39

 
0.29

 
0.39

 
0.46

 
(32
)
 
(39
)
 
Nonperforming assets as a percentage of total loans and leases and other real estate owned
0.59

 
0.62

 
0.62

 
0.63

 
0.65

 
(3
)
 
(6
)
 
Efficiency ratio
73.49

 
91.32

 
65.11

 
70.70

 
66.30

 
(1,783
)
 
719

 
Adjusted Financial Results (non-GAAP)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income attributable to TCF(2)
$
161,581

 
$
128,301

 
$
93,650

 
$
77,700

 
$
85,652

 
25.9

%
88.6

%
Adjusted diluted earnings per common
share(2)
$
1.04

 
$
0.98

 
$
1.11

 
$
0.91

 
$
1.00

 
6.1

 
4.0

 
Adjusted ROAA(2)(3)
1.42
%
 
1.34
%
 
1.59
%
 
1.34
%
 
1.52
%
 
8

bps
(10
)
bps
Adjusted ROACE(2)(3)
11.57

 
11.21

 
14.79

 
12.61

 
14.30

 
36

 
(273
)
 
Adjusted ROATCE(2)(3)
16.25

 
14.96

 
16.02

 
13.72

 
15.58

 
129

 
67

 
Adjusted efficiency ratio(2)
58.51

 
58.74

 
61.48

 
65.67

 
63.89

 
(23
)
 
(538
)
 
N.M. Not meaningful
(1)
Financial results for any periods ended prior to August 1, 2019 reflect Legacy TCF financials on a standalone basis. Certain reclassifications have been made to prior period financial information to conform to the current period presentation.
(2)
Denotes a non-GAAP financial measure. See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables.
(3)
Annualized.

The following table includes merger-related expenses and notable items used to arrive at adjusted net income in the Adjusted Financial Results (non-GAAP) (see Reconciliation of Non-GAAP Financial Measures).
 
For the Quarter Ended December 31, 2019
(Dollars in thousands, except per share data)
Pre-tax income (loss)
 
After-tax benefit (loss)(1)
 
Per Share
Merger-related expenses
$
(47,025
)
 
$
(36,059
)
 
$
(0.24
)
Notable items:
 
 
 
 
 
Sale of Legacy TCF auto finance portfolio(2)
(12,864
)
 
(9,865
)
 
(0.06
)
Branch exit costs(3)
(3,494
)
 
(2,679
)
 
(0.02
)
Loan servicing rights impairment recovery(4)
638

 
490

 

Pension fair valuation adjustment(3)
(6,341
)
 
(4,862
)
 
(0.03
)
Tax basis adjustment benefit(5)

 
3,793

 
0.03

Total notable items
(22,061
)
 
(13,123
)
 
(0.08
)
Total merger-related and notable items
$
(69,086
)
 
$
(49,182
)
 
$
(0.32
)
(1)
Net of tax benefit at TCF's normal tax rate and other tax benefits.
(2)
Included within net (loss) gain on sales of loans and leases ($8.2 million), other noninterest expense ($2.2 million), occupancy and equipment ($1.5 million) and compensation and employee benefits ($0.9 million).
(3)
Included within Other noninterest expense.
(4)
Included within Other noninterest income.
(5)
Included within Income tax expense (benefit).


2



DETROIT (January 27, 2020) - TCF Financial Corporation ("TCF" or the "Corporation") (NASDAQ: TCF) today reported net income of $112.4 million and diluted earnings per common share of $0.72 for the fourth quarter of 2019. Adjusted net income was $161.6 million, or $1.04 per diluted common share, for the fourth quarter of 2019, excluding merger-related expenses and notable items of $0.32 per common share (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

"We closed out the year with our first full quarter as a combined organization following our merger of equals and we produced strong business results, driven by robust loan growth led by our commercial businesses, strong credit quality, and continued progress on our integration roadmap," said Craig R. Dahl, president and chief executive officer. "We continued to execute on our business strategies, including completing the sale of the legacy auto finance portfolio, adding key talent to our commercial banking teams, and ensuring we maintain our business momentum as we go into 2020. We remained focused on executing on our targeted expense synergies and integration activities throughout the year. Our strong capital position allows us to continue to pursue organic growth opportunities and leverage our scale and product breadth created by our strategic partnership. I am confident in our opportunities in 2020, and we will continue to focus on our commitment to delivering value for our shareholders."

Net Interest Income and Net Interest Margin
Net interest income was $408.8 million for the fourth quarter of 2019. Purchase accounting accretion and amortization included in net interest income was $30.5 million. Net interest income, excluding purchase accounting accretion and amortization, was $378.3 million. Net interest margin was 3.86% for the fourth quarter of 2019 while net interest margin on a fully tax-equivalent basis (FTE) was 3.89%. Net interest margin FTE, excluding purchase accounting accretion and amortization, was 3.60% (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

Noninterest Income
Noninterest income was $158.1 million for the fourth quarter of 2019. Noninterest income included the following notable items: an $8.2 million loss related to the sale of the Legacy TCF auto finance portfolio, included in net gains (losses) on sales of loans and leases, and a $0.6 million recovery of prior loan servicing rights impairment, included in other noninterest income. Adjusted noninterest income for the fourth quarter of 2019 was $165.6 million (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables). The fourth quarter of 2019 also included a $3.7 million gain on sale of loans and leases related to a nonaccrual and TDR loan sale, included in net gains (losses) on sales of loans and leases and a $2.4 million favorable interest rate swap mark-to-market adjustment resulting from changes in the interest rate environment, included in other noninterest income.


3



Noninterest Expense
Noninterest expense was $416.6 million for the fourth quarter of 2019 and included $47.0 million of merger-related expenses. Noninterest expense also included the following notable items: $6.3 million of expense related to pension fair valuation adjustment on plans with previously announced terminations, included in other noninterest expense, $4.6 million of expense related to the sale of the Legacy TCF auto finance portfolio ($2.2 million in other noninterest expense, $1.5 million in occupancy and equipment expense and $0.9 million in compensation and employee benefits) and $3.5 million of expense related to branch exit costs, included in other noninterest expense. Excluding merger-related expenses and notable items, adjusted noninterest expense was $355.0 million (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables). The fourth quarter of 2019 also included $4.0 million of impairment related to federal historic tax credits placed into service, included in other noninterest expense, and a $1.3 million impairment charge recognized on a branch we intend to sell in the future, included within occupancy and equipment expense. The $4.0 million of impairment related to federal historic tax credits placed into service was more than offset by an income tax benefit of $3.6 million related to the same tax credits.

Income Tax Expense
Income tax expense for the fourth quarter of 2019 was $21.4 million. In addition to the $3.6 million historic tax credit benefit noted above, the fourth quarter of 2019 also included a $3.8 million tax basis adjustment benefit.

Credit Quality
Provision for credit losses Provision for credit losses was $14.4 million for the fourth quarter of 2019. Provision for credit losses for the fourth quarter of 2019 was reduced by $4.7 million of recoveries of previous charge-offs related to the sale of consumer nonaccrual and TDR loans.

Net charge-off rate The annualized net charge-offs as a percentage of average loans and leases was 0.07% for the fourth quarter of 2019. Net charge-offs for the fourth quarter of 2019 were reduced by $4.7 million of recoveries of previous charge-offs related to the sale of consumer nonaccrual and TDR loans. The annualized net charge-off rate excluding this recovery was 0.13% (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

Allowance for Loan and Lease Losses Allowance for loan and lease losses was $113.1 million, or 0.33% of total loans and leases, at December 31, 2019, down from $121.2 million, or 0.36%, at September 30, 2019.

Nonaccrual loans and leases Nonaccrual loans and leases were $169.7 million at December 31, 2019 and represented 0.49% of total loans and leases, compared to $181.8 million, or 0.54% of total loans and leases, at September 30, 2019. The decrease of nonaccrual loans and leases from September 30, 2019 was primarily due to $17.3 million of consumer nonaccrual loans sold in the fourth quarter of 2019.


4



Balance Sheet
Loans and leases Loans and leases were $34.5 billion at December 31, 2019, an increase of $986.7 million compared to $33.5 billion at September 30, 2019. The increase from September 30, 2019 was primarily due to growth in the commercial and industrial and commercial real estate portfolios. During the fourth quarter of 2019, TCF completed the sale of the $1.1 billion Legacy TCF auto finance portfolio, which had been included within loans held-for-sale at September 30, 2019.

Investment securities The investment securities portfolio was $6.9 billion at December 31, 2019, compared to $5.7 billion at September 30, 2019. The increase from September 30, 2019 was primarily due to the continued reinvestment into the investment securities portfolio following repositioning actions taken in the third quarter of 2019.

Deposits Deposits were $34.5 billion at December 31, 2019, compared to $35.3 billion at September 30, 2019. The decrease from September 30, 2019 was primarily due to the run-off of $930.4 million of certificates of deposit, which included $402.3 million of brokered certificates of deposit.

Capital The common equity Tier 1 capital ratio was 10.99% at December 31, 2019.

TCF repurchased $27.5 million of its common stock during the fourth quarter of 2019 and had the authority to repurchase an additional $122.5 million in aggregate value of shares as of December 31, 2019 pursuant to its share repurchase program.

TCF's board of directors also declared a regular quarterly cash dividend of $0.35 per common share payable on March 2, 2020 to shareholders of record at the close of business on February 14, 2020. In addition, the board of directors declared a quarterly cash dividend of $0.35625 per depositary share payable on March 2, 2020 to shareholders of record of the depositary shares, representing a 1/1,000th interest in a share of the 5.70% Series C Non-Cumulative Perpetual Preferred Stock, at the close of business on February 14, 2020.

Conference Call Details TCF will host a conference call to discuss fourth quarter 2019 results on Tuesday, January 28, 2020 at 10:00 a.m. Eastern Time. The conference call will be available via a live webcast on the Investor Relations section of TCF's website, ir.tcfbank.com, and archived for replay. The conference call can also be accessed by dialing (844) 512-2926 and entering access code 7648346. To listen to the replay via phone, please dial (877) 344-7529 and enter access code 10138016. The replay begins approximately one hour after the call is completed on Tuesday, January 28, 2020 and will be available through Tuesday, February 4, 2020.

 
 
 
 
 

5



TCF Financial Corporation (NASDAQ: TCF) is a Detroit, Michigan-based financial holding company with $47 billion in total assets at December 31, 2019 and a top 10 deposit market share in the Midwest. TCF’s primary banking subsidiary, TCF National Bank, is a premier Midwest bank offering consumer and commercial banking, trust and wealth management, and specialty leasing and lending products and services to consumers, small businesses and commercial clients. TCF has approximately 500 branches primarily located in Michigan, Illinois and Minnesota with additional locations in Arizona, Colorado, Ohio, South Dakota and Wisconsin. TCF also conducts business across all 50 states and Canada through its specialty lending and leasing businesses. To learn more about TCF, visit ir.tcfbank.com.
 
 
 
 
 

Cautionary Statements for Purposes of the Safe Harbor Provisions of the Securities Litigation Reform Act
Any statements contained in this earnings release regarding the outlook for the Corporation's businesses and their respective markets, such as projections of future performance, targets, guidance, statements of the Corporation's plans and objectives, forecasts of market trends and other matters are forward-looking statements based on the Corporation's assumptions and beliefs. Such statements may be identified by such words or phrases as "will likely result," "are expected to," "will continue," "outlook," "will benefit," "is anticipated," "estimate," "project," "management believes" or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such statements and no assurance can be given that the results in any forward-looking statement will be achieved. For these statements, TCF claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any forward-looking statement speaks only as of the date on which it is made and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.

Certain factors could cause the Corporation's future results to differ materially from those expressed or implied in any forward-looking statements contained herein. These factors include the factors discussed in Part I, Item 1A. of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2018 under the heading "Risk Factors" and any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statements. Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive.
 


6



Use of Non-GAAP Financial Measures
Management uses the adjusted net income, adjusted diluted earnings per common share, adjusted ROAA, adjusted ROACE, ROATCE, adjusted ROATCE, adjusted efficiency ratio, adjusted net interest income, net interest margin (FTE), adjusted net interest margin (FTE), adjusted noninterest income, adjusted noninterest expense, tangible book value per common share and tangible common equity to tangible assets internally to measure performance and believes that these financial measures not recognized under generally accepted accounting principles in the United States ("GAAP") (i.e. non-GAAP) provide meaningful information to investors that will permit them to assess the Corporation's capital and ability to withstand unexpected market or economic conditions and to assess the performance of the Corporation in relation to other banking institutions on the same basis as that applied by management, analysts and banking regulators. TCF adjusts certain results to exclude merger-related expenses and notable items in addition to presenting net interest income and net interest margin (FTE) excluding purchase accounting accretion and amortization. Management believes these measures are useful to investors in understanding TCF's business and operating results.
These non-GAAP financial measures are not defined by GAAP and other entities may calculate them differently than TCF does. Non-GAAP financial measures have inherent limitations and are not required to be uniformly applied. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a corporation, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes selected items does not represent the amount that effectively accrues directly to shareholders.

7



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
 
 
 
 
 
Consolidated Statements of Financial Condition (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change From
(Dollars in thousands)
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30, 2019
Dec. 31, 2018
2019
 
2019
 
2019
 
2019
 
2018
 
$
%
$
%
ASSETS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 

 
 
 
Cash and due from banks
$
491,787

 
$
586,060

 
$
294,566

 
$
283,659

 
$
279,267

 
$
(94,273
)
(16.1
)%
$
212,520

76.1%
Interest-bearing deposits with other banks
736,584

 
736,954

 
260,705

 
180,163

 
307,790

 
(370
)
(0.1
)
428,794

139.3
Total cash and cash equivalents
1,228,371

 
1,323,014

 
555,271

 
463,822

 
587,057

 
(94,643
)
(7.2
)
641,314

109.2
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost
442,440

 
290,238

 
105,659

 
103,644

 
91,654

 
152,202

52.4

350,786

N.M.
Investment securities:
 
 
 
 
 
 
 
 
 
 







Available-for-sale, at fair value
6,720,001

 
5,579,835

 
3,109,803

 
2,945,342

 
2,470,065

 
1,140,166

20.4

4,249,936

172.1
Held-to-maturity, at amortized cost
139,445

 
144,000

 
144,919

 
148,024

 
148,852

 
(4,555
)
(3.2
)
(9,407
)
(6.3)
Total investment securities
6,859,446

 
5,723,835

 
3,254,722

 
3,093,366

 
2,618,917

 
1,135,611

19.8

4,240,529

161.9
Loans and leases held-for-sale
199,786

 
1,436,069

 
74,410

 
64,468

 
90,664

 
(1,236,283
)
(86.1)
109,122

120.4
Loans and leases
34,497,464

 
33,510,752

 
19,185,137

 
19,384,210

 
19,073,020

 
986,712

2.9

15,424,444

80.9
Allowance for loan and lease losses
(113,052
)
 
(121,218
)
 
(146,503
)
 
(147,972
)
 
(157,446
)
 
8,166

6.7

44,394

28.2
Loans and leases, net
34,384,412

 
33,389,534

 
19,038,634

 
19,236,238

 
18,915,574

 
994,878

3.0

15,468,838

81.8
Premises and equipment, net
533,138

 
554,194

 
432,751

 
429,711

 
427,534

 
(21,056
)
(3.8
)
105,604

24.7
Goodwill
1,299,878

 
1,265,111

 
154,757

 
154,757

 
154,757

 
34,767

2.7

1,145,121

N.M.
Other intangible assets, net
168,368

 
215,910

 
18,885

 
19,684

 
20,496

 
(47,542
)
(22.0)
147,872

N.M.
Loan servicing rights
56,313

 
55,301

 
19

 
20

 
23

 
1,012

1.8

56,290

N.M.
Other assets
1,479,401

 
1,439,305

 
991,722

 
853,005

 
792,936

 
40,096

2.8

686,465

86.6
Total assets
$
46,651,553

 
$
45,692,511

 
$
24,626,830

 
$
24,418,715

 
$
23,699,612

 
$
959,042

2.1

$
22,951,941

96.8
LIABILITIES AND EQUITY:
 
 
 
 
 
 
 
 
 






Deposits:
 
 
 
 
 
 
 
 
 
 






Noninterest-bearing
$
7,970,590

 
$
7,979,900

 
$
4,062,912

 
$
4,104,652

 
$
3,936,155

 
$
(9,310
)
(0.1)%
$
4,034,435

102.5%
Interest-bearing
26,497,873

 
27,306,174

 
15,049,475

 
14,919,459

 
14,967,531

 
(808,301
)
(3.0)
11,530,342

77.0
Total deposits
34,468,463

 
35,286,074

 
19,112,387

 
19,024,111

 
18,903,686

 
(817,611
)
(2.3)
15,564,777

82.3
Short-term borrowings
2,669,145

 
2,607,300

 
350,764

 
355,992

 

 
61,845

2.4
2,669,145

N.M.
Long-term borrowings
2,354,448

 
860,482

 
1,617,531

 
1,411,426

 
1,449,472

 
1,493,966

173.6
904,976

62.4
Other liabilities
1,432,256

 
1,245,238

 
835,630

 
981,341

 
790,194

 
187,018

15.0
642,062

81.3
Total liabilities
40,924,312

 
39,999,094

 
21,916,312

 
21,772,870

 
21,143,352

 
925,218

2.3
19,780,960

93.6
Equity:
 
 
 
 
 
 
 
 
 
 






Preferred stock
169,302

 
169,302

 
169,302

 
169,302

 
169,302

 


Common stock
152,966

 
153,571

 
87,944

 
88,063

 
88,198

 
(605
)
(0.4)
64,768

73.4
Additional paid-in capital
3,462,080

 
3,478,159

 
781,788

 
789,467

 
798,627

 
(16,079
)
(0.5)
2,663,453

N.M.
Retained earnings
1,896,427

 
1,840,214

 
1,874,308

 
1,810,701

 
1,766,994

 
56,213

3.1
129,433

7.3
Accumulated other comprehensive income (loss)
54,277

 
56,228

 
37,334

 
5,481

 
(33,138
)
 
(1,951
)
(3.5)
87,415

N.M.
Treasury stock at cost and other
(28,037
)
 
(27,370
)
 
(265,016
)
 
(246,621
)
 
(252,182
)
 
(667
)
(2.4)
224,145

88.9
Total TCF Financial Corporation shareholders' equity
5,707,015

 
5,670,104

 
2,685,660

 
2,616,393

 
2,537,801

 
36,911

0.7
3,169,214

124.9
Non-controlling interest
20,226

 
23,313

 
24,858

 
29,452

 
18,459

 
(3,087
)
(13.2)
1,767

9.6
Total equity
5,727,241

 
5,693,417

 
2,710,518

 
2,645,845

 
2,556,260

 
33,824

0.6
3,170,981

124.0
Total liabilities and equity
$
46,651,553

 
$
45,692,511

 
$
24,626,830

 
$
24,418,715

 
$
23,699,612

 
$
959,042

2.1
$
22,951,941

96.8
N.M. Not Meaningful

8



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
 
 
Consolidated Statements of Income (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Change From
(Dollars in thousands)
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30, 2019
 
Dec. 31, 2018
2019
 
2019
 
2019
 
2019
 
2018
 
$
 
%
 
$
 
%
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans and leases
$
446,738

 
$
417,370

 
$
283,282

 
$
283,238

 
$
275,200

 
$
29,368

 
7.0
 %
 
$
171,538

 
62.3
 %
Interest on investment securities:
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
Taxable
36,282

 
31,038

 
22,041

 
16,666

 
13,915

 
5,244

 
16.9

 
22,367

 
160.7

Tax-exempt
4,374

 
3,385

 
1,208

 
2,684

 
4,147

 
989

 
29.2

 
227

 
5.5

Interest on loans held-for-sale
15,767

 
1,408

 
599

 
825

 
1,405

 
14,359

 
N.M.

 
14,362

 
N.M.

Interest on other earning assets
6,617

 
6,607

 
3,651

 
3,481

 
3,242

 
10

 
0.2

 
3,375

 
104.1

Total interest income
509,778

 
459,808

 
310,781

 
306,894

 
297,909

 
49,970

 
10.9

 
211,869

 
71.1

Interest expense:
 
 
 
 
 
 
 
 
 
 


 


 


 


Interest on deposits
77,003

 
70,900

 
40,646

 
37,608

 
33,462

 
6,103

 
8.6

 
43,541

 
130.1

Interest on borrowings
24,022

 
17,115

 
16,078

 
14,857

 
11,294

 
6,907

 
40.4

 
12,728

 
112.7

Total interest expense
101,025

 
88,015

 
56,724

 
52,465

 
44,756

 
13,010

 
14.8

 
56,269

 
125.7

Net interest income
408,753

 
371,793

 
254,057

 
254,429

 
253,153

 
36,960

 
9.9

 
155,600

 
61.5

Provision for credit losses
14,403

 
27,188

 
13,569

 
10,122

 
18,894

 
(12,785
)
 
(47.0
)
 
(4,491
)
 
(23.8
)
Net interest income after provision for credit losses
394,350

 
344,605

 
240,488

 
244,307

 
234,259

 
49,745

 
14.4

 
160,091

 
68.3

Noninterest income:
 
 
 
 
 
 
 
 
 
 


 


 


 


Fees and service charges on deposit accounts
39,356

 
34,384

 
27,842

 
26,278

 
29,539

 
4,972

 
14.5

 
9,817

 
33.2

Leasing revenue
46,686

 
39,590

 
39,277

 
38,165

 
51,602

 
7,096

 
17.9

 
(4,916
)
 
(9.5
)
Wealth management revenue
6,172

 
4,241

 

 

 

 
1,931

 
45.5

 
6,172

 
N.M.

Card and ATM revenue
24,751

 
23,315

 
20,496

 
18,659

 
20,093

 
1,436

 
6.2

 
4,658

 
23.2

Net gains (losses) on sales of loans and leases
12,934

 
(5,984
)
 
11,141

 
8,217

 
8,795

 
18,918

 
N.M.

 
4,139

 
47.1

Servicing fee revenue
6,022

 
5,121

 
4,523

 
5,110

 
5,523

 
901

 
17.6

 
499

 
9.0

Net gains on investment securities
8

 
5,900

 
1,066

 
451

 
167

 
(5,892
)
 
(99.9
)
 
(159
)
 
(95.2
)
Other
22,123

 
(12,309
)
 
5,373

 
6,624

 
8,149

 
34,432

 
N.M.

 
13,974

 
171.5

Total noninterest income
158,052

 
94,258

 
109,718

 
103,504

 
123,868

 
63,794

 
67.7

 
34,184

 
27.6

Noninterest expense:
 
 
 
 
 
 
 
 
 
 


 


 


 


Compensation and employee benefits
180,969

 
155,745

 
116,266

 
123,942

 
130,022

 
25,224

 
16.2

 
50,947

 
39.2

Occupancy and equipment
56,771

 
49,229

 
41,850

 
41,710

 
42,277

 
7,542

 
15.3

 
14,494

 
34.3

Lease financing equipment depreciation
18,629

 
19,408

 
19,133

 
19,256

 
19,085

 
(779
)
 
(4.0
)
 
(456
)
 
(2.4
)
Net foreclosed real estate and repossessed assets
4,242

 
2,203

 
2,448

 
4,630

 
4,396

 
2,039

 
92.6

 
(154
)
 
(3.5
)
Merger-related expenses
47,025

 
111,259

 
4,226

 
9,458

 

 
(64,234
)
 
(57.7
)
 
47,025

 
N.M.

Other
108,935

 
87,776

 
52,926

 
54,079

 
54,178

 
21,159

 
24.1

 
54,757

 
101.1

Total noninterest expense
416,571

 
425,620

 
236,849

 
253,075

 
249,958

 
(9,049
)
 
(2.1
)
 
166,613

 
66.7

Income before income tax expense
135,831

 
13,243

 
113,357

 
94,736

 
108,169

 
122,588

 
N.M.

 
27,662

 
25.6

Income tax expense (benefit)
21,375

 
(11,735
)
 
19,314

 
21,287

 
20,013

 
33,110

 
N.M.

 
1,362

 
6.8

Income after income tax expense (benefit)
114,456

 
24,978

 
94,043

 
73,449

 
88,156

 
89,478

 
N.M.

 
26,300

 
29.8

Income attributable to non-controlling interest
2,057

 
2,830

 
3,616

 
2,955

 
2,504

 
(773
)
 
(27.3
)
 
(447
)
 
(17.9
)
Net income attributable to TCF Financial Corporation
112,399

 
22,148

 
90,427

 
70,494

 
85,652

 
90,251

 
N.M.

 
26,747

 
31.2

Preferred stock dividends
2,494

 
2,494

 
2,494

 
2,493

 
2,494

 

 

 

 

Net income available to common shareholders
$
109,905

 
$
19,654

 
$
87,933

 
$
68,001

 
$
83,158

 
$
90,251

 
N.M.

 
$
26,747

 
32.2

N.M. Not Meaningful

9



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
Change
(Dollars in thousands, except per share data)
2019
 
2018
 
$
 
%
Interest income:
 
 
 
 
 
 
 
Interest and fees on loans and leases
$
1,430,628

 
$
1,082,135

 
$
348,493

 
32.2
 %
Interest on investment securities:
 
 
 
 


 


Taxable
106,027

 
41,406

 
64,621

 
156.1

Tax-exempt
11,651

 
17,138

 
(5,487
)
 
(32.0
)
Interest on loans held-for-sale
18,599

 
6,686

 
11,913

 
178.2

Interest on other earning assets
20,356

 
11,964

 
8,392

 
70.1

Total interest income
1,587,261

 
1,159,329

 
427,932

 
36.9

Interest expense:
 
 
 
 


 


Interest on deposits
226,157

 
107,690

 
118,467

 
110.0

Interest on borrowings
72,072

 
43,144

 
28,928

 
67.0

Total interest expense
298,229

 
150,834

 
147,395

 
97.7

Net interest income
1,289,032

 
1,008,495

 
280,537

 
27.8

Provision for credit losses
65,282

 
46,768

 
18,514

 
39.6

Net interest income after provision for credit losses
1,223,750

 
961,727

 
262,023

 
27.2

Noninterest income:
 
 
 
 


 


Fees and service charges on deposit accounts
127,860

 
113,242

 
14,618

 
12.9

Leasing revenue
163,718

 
172,603

 
(8,885
)
 
(5.1
)
Wealth management revenue
10,413

 

 
10,413

 
N.M.

Card and ATM revenue
87,221

 
78,406

 
8,815

 
11.2

Net gains on sales of loans and leases
26,308

 
33,695

 
(7,387
)
 
(21.9
)
Servicing fee revenue
20,776

 
27,334

 
(6,558
)
 
(24.0
)
Net gains on investment securities
7,425

 
348

 
7,077

 
N.M.

Other
21,811

 
28,769

 
(6,958
)
 
(24.2
)
Total noninterest income
465,532

 
454,397

 
11,135

 
2.5

Noninterest expense:
 
 
 
 


 


Compensation and employee benefits
576,922

 
502,196

 
74,726

 
14.9

Occupancy and equipment
189,560

 
165,839

 
23,721

 
14.3

Lease financing equipment depreciation
76,426

 
73,829

 
2,597

 
3.5

Net foreclosed real estate and repossessed assets
13,523

 
17,050

 
(3,527
)
 
(20.7
)
Merger-related expenses
171,968

 

 
171,968

 
N.M.

Other
303,716

 
255,486

 
48,230

 
18.9

Total noninterest expense
1,332,115

 
1,014,400

 
317,715

 
31.3

Income before income tax expense
357,167

 
401,724

 
(44,557
)
 
(11.1
)
Income tax expense
50,241

 
86,096

 
(35,855
)
 
(41.6
)
Income after income tax expense
306,926

 
315,628

 
(8,702
)
 
(2.8
)
Income attributable to non-controlling interest
11,458

 
11,270

 
188

 
1.7

Net income attributable to TCF Financial Corporation
295,468

 
304,358

 
(8,890
)
 
(2.9
)
Preferred stock dividends
9,975

 
11,588

 
(1,613
)
 
(13.9
)
Impact of preferred stock redemption

 
3,481

 
(3,481
)
 
(100.0
)
Net income available to common shareholders
$
285,493

 
$
289,289

 
$
(3,796
)
 
(1.3
)
 
 
 
 
 


 


Earnings per common share:
 
 
 
 


 


Basic
$
2.56

 
$
3.44

 
$
(0.88
)
 
(25.6
)%
Diluted
2.55

 
3.43

 
(0.88
)
 
(25.7
)
N.M. Not Meaningful


10



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
 
Quarter Ended
 
Dec. 31, 2019
 
Sep. 30, 2019
 
Dec. 31, 2018
 
Average
 
Yields &
 
Average
 
Yields &
 
Average
 
Yields &
(Dollars in thousands)
Balance
Interest(1)
Rates(1)(2)
 
Balance
Interest(1)
Rates(1)(2)
 
Balance
Interest(1)
Rates(1)(2)
ASSETS:
 
 
 
 
 
 
 
 
 
 
 
Federal Home Loan Bank and Federal Reserve Bank stocks
$
388,640

$
3,170

3.24%
 
$
230,767

$
806

1.39%
 
$
87,321

$
920

4.19%
Investment securities held-to-maturity
140,434

889

2.53
 
143,078

602

1.68
 
150,016

965

2.58
Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
Taxable
4,960,520

35,393

2.85
 
4,232,878

30,436

2.88
 
1,779,654

12,949

2.91
Tax-exempt(3)
778,994

5,536

2.84
 
643,576

4,283

2.66
 
788,806

5,250

2.66
Loans and leases held-for-sale
1,121,326

15,767

5.58
 
118,482

1,408

4.74
 
86,169

1,405

6.48
Loans and leases(3)(4)
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
10,955,937

156,246

5.63
 
9,290,978

146,865

6.25
 
6,116,369

98,019

6.36
Commercial real estate
9,057,834

124,431

5.38
 
6,964,643

97,042

5.45
 
2,795,403

35,851

5.02
Lease financing
2,616,360

33,431

5.11
 
2,570,567

32,833

5.11
 
2,479,045

32,984

5.32
Residential mortgage
6,023,647

61,072

4.05
 
4,853,627

51,511

4.23
 
1,957,323

25,951

5.27
Consumer installment
1,546,952

19,382

4.97
 
2,389,830

34,543

5.73
 
2,134,568

30,246

5.62
Home equity
3,604,153

53,910

5.93
 
3,433,830

56,166

6.49
 
3,072,697

53,146

6.86
Total loans and leases(3)(4)
33,804,883

448,472

5.24
 
29,503,475

418,960

5.62
 
18,555,405

276,197

5.90
Interest-bearing deposits with banks and other
656,555

3,448

2.07
 
933,014

5,800

2.44
 
243,038

2,322

3.79
Total interest-earning assets
41,851,352

512,675

4.85
 
35,805,270

462,295

5.11
 
21,690,409

300,008

5.49
Other assets
4,268,162

 
 
 
3,289,096

 
 
 
1,463,844

 
 
Total assets
$
46,119,514

 
 
 
$
39,094,366

 
 
 
$
23,154,253

 
 
LIABILITIES AND EQUITY:
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
7,968,769

 
 
 
$
6,564,195

 
 
 
$
3,873,023

 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Checking
5,891,566

7,614

0.51%
 
4,805,843

5,520

0.46%
 
2,403,370

248

0.04%
Savings
8,404,460

14,993

0.71
 
7,676,165

14,110

0.73
 
5,922,724

8,114

0.54
Money market
4,463,476

15,537

1.38
 
3,490,922

13,037

1.48
 
1,449,531

3,612

0.99
Certificates of deposit
7,825,573

38,859

1.97
 
7,320,720

38,233

2.07
 
4,818,211

21,487

1.77
Total interest-bearing deposits
26,585,075

77,003

1.15
 
23,293,650

70,900

1.21
 
14,593,836

33,461

0.91
Total deposits
34,553,844

77,003

0.88
 
29,857,845

70,900

0.94
 
18,466,859

33,461

0.72
Borrowings:
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
2,585,682

11,403

1.73
 
1,884,228

5,345

1.11
 
2,738

19

2.74
Long-term borrowings
1,739,852

12,620

2.87
 
1,472,150

11,769

3.17
 
1,344,228

11,275

3.31
Total borrowings
4,325,534

24,023

2.19
 
3,356,378

17,114

2.01
 
1,346,966

11,294

3.31
Total interest-bearing liabilities
30,910,609

101,026

1.29
 
26,650,028

88,014

1.31
 
15,940,802

44,755

1.11
Total deposits and borrowings
38,879,378

101,026

1.03
 
33,214,223

88,014

1.05
 
19,813,825

44,755

0.89
Accrued expenses and other liabilities
1,549,017

 
 
 
1,197,014

 
 
 
822,558

 
 
Total liabilities
40,428,395

 
 
 
34,411,237

 
 
 
20,636,383

 
 
Total TCF Financial Corporation shareholders' equity
5,667,436

 
 
 
4,657,613

 
 
 
2,495,952

 
 
Non-controlling interest in subsidiaries
23,683

 
 
 
25,516

 
 
 
21,918