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Section 1: 8-K (8-K)

 

 

 

 

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 20, 2011

 


 

 

TCF FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 


 

Delaware

 

001-10253

 

41-1591444

(State or other jurisdiction of

 

(Commission File Number)

 

(IRS Employer Identification No.)

incorporation or organization)

 

 

 

 

 

200 Lake Street East, Mail Code EX0-03-A, Wayzata, Minnesota 55391-1693

(Address of principal executive offices)

 

(952) 745-2760

(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:

 

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


 

Item 2.02  Results of Operations and Financial Condition.

 

In accordance with General Instruction B.2 of Form 8-K, 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.

 

The registrant issued a press release dated January 20, 2011, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter and year ended December 31, 2010.

 

The earnings release is also available on the Investor Relations section of the Company’s web site at http://ir.tcfbank.com.  TCF Financial 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 Company.

 

 

Item 9.01    Financial Statements and Exhibits.

 

(d)         Exhibits.

 

Exhibit No.

 Description

 

 

99.1

Earnings Release of TCF Financial Corporation,

dated January 20, 2011

 

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/ William A. Cooper

 

William A. Cooper,
Chairman and Chief Executive Officer
(Principal Executive Officer)

 

 

 

/s/ Thomas F. Jasper

 

Thomas F. Jasper, Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)

 

 

 

/s/ David M. Stautz

 

David M. Stautz, Senior Vice President,
Controller and Assistant Treasurer
(Principal Accounting Officer)

 

Dated:    January 20, 2011

 

2

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

 

Exhibit 99.1

 

NEWS RELEASE

 

 

CONTACT:

Jason Korstange

 

 

(952) 745-2755

 

 

 

 

 

www.tcfbank.com

 

 

 

 

FOR IMMEDIATE RELEASE

 

 

TCF FINANCIAL CORPORATION 200 Lake Street East, Wayzata, MN 55391-1693

 

TCF Reports 2010 Earnings Increase of 68.3% – Earns $146.6 Million, $1.05 Per Share

 

2010 HIGHLIGHTS

·                  Diluted earnings per common share of $1.05, up 94.4 percent

·                  Net income of $146.6 million, up 68.3 percent

·                  Net interest margin of 4.14 percent

·                  Increased total equity by $300.4 million, Tier 1 common capital increased 27 percent to 9.71 percent

·                  Specialty Finance loans and leases up $406.6 million, or 11.5 percent

·                  Total revenues of $1.2 billion, up 6.8 percent

 

FOURTH QUARTER HIGHLIGHTS

·                  Diluted earnings per common share of 22 cents, up 46.7 percent, from the fourth quarter of 2009

·                  Net income of $30.7 million, up 57.9 percent, from the fourth quarter of 2009

·                  Net interest margin of 4.04 percent

·                  Total non-performing assets down $19.6 million, or 3.9 percent, from September 30, 2010

·                  Announced quarterly cash dividend of five cents per common share, payable February 28, 2011

 

Earnings Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1

 

($ in thousands, except per-share data)

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

4Q
2010

 

3Q
2010

 

4Q
2009

 

4Q10 vs
3Q10

 

4Q10 vs
4Q09

 

YTD
2010

 

YTD
2009

 

Percent
Change

 

Net income

 

$

30,725

 

$

36,893

 

$

19,456

 

(16.7) %

 

57.9 %

 

$

146,564

 

$

87,097

 

68.3%

 

Diluted earnings per common
share
(1)

 

.22

 

.26

 

.15

 

(15.4)    

 

46.7    

 

1.05

 

.54

 

94.4   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Ratios(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

.68

%

.84

%

.43

%

 

 

 

 

.82 %

 

.49 %

 

 

 

Return on average common equity(1)

 

8.25

 

9.95

 

6.57

 

 

 

 

 

10.36    

 

5.95    

 

 

 

Net interest margin

 

4.04

 

4.12

 

4.07

 

 

 

 

 

4.14    

 

3.87    

 

 

 

Net charge-offs as a percentage of average loans and leases

 

1.75

 

1.58

 

1.35

 

 

 

 

 

1.47    

 

1.34    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes a non-cash deemed preferred stock dividend of $12,025 recorded during the year ended December 31, 2009. Excluding this amount, diluted earnings per common share was $.64 and the return on average common equity was 8.57% for the year ended December 31, 2009.

(2) Annualized.

 

 

 

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2

 

WAYZATA, MN, January 20, 2011 – TCF Financial Corporation (“TCF”) (NYSE: TCB) today reported diluted earnings per common share of 22 cents for the fourth quarter of 2010, compared with 15 cents in the fourth quarter of 2009, an increase of 46.7 percent.  Net income for the fourth quarter of 2010 was $30.7 million, compared with $19.5 million in the fourth quarter of 2009, an increase of 57.9 percent.

 

Diluted earnings per common share for the year ended December 31, 2010 was $1.05, compared with 54 cents for the same 2009 period, an increase of 94.4 percent.  Net income for the year ended December 31, 2010 was $146.6 million, compared with $87.1 million for the same 2009 period, an increase of 68.3 percent.

 

TCF declared a quarterly cash dividend of five cents per common share payable on February 28, 2011 to stockholders of record at the close of business on January 28, 2011.

 

Chairman’s Statement

 

“Despite a troubled economy and numerous legislative and regulatory burdens, TCF is reporting its 63rd consecutive quarter of profitability and a record high level of capital,” said William A. Cooper, TCF Chairman and CEO.  “We continue to focus on our conservative banking philosophy, which has proven its sustainability throughout the current economic cycle.  We are seeing encouraging signs on the credit front, such as a decrease of nearly $20 million in non-performing assets from the third quarter (the first decrease in non-performing assets in 18 quarters).  Throughout 2010, we have demonstrated an ability to meet our challenges head-on.  This proactive approach has proven to be the right thing to do for our customers and stockholders.”

 

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3

 

 Total Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

 ($ in thousands)

 

4Q

 

3Q

 

 

4Q

 

4Q10 vs

 

 

4Q10 vs

 

 

YTD

 

YTD

 

Percent

 

 

 

2010

 

2010

 

 

2009

 

3Q10

 

 

4Q09

 

 

2010

 

2009

 

Change

 

 Net interest income

 

$174,286

 

$173,755

 

 

$169,641

 

 

.3

%

 

2.7

%

 

 

$   699,202

 

$   633,006

 

10.5

 Fees and other revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Fees and service charges

 

61,480

 

67,684

 

 

74,875

 

 

(9.2

)

 

(17.9

)

 

 

273,181

 

286,908

 

(4.8

)

 Card revenue

 

27,625

 

27,779

 

 

26,813

 

 

(.6

)

 

3.0

 

 

 

111,067

 

104,770

 

6.0

 

 ATM revenue

 

6,985

 

7,985

 

 

7,006

 

 

(12.5

)

 

(.3

)

 

 

29,836

 

30,438

 

(2.0

)

Total banking fees

 

96,090

 

103,448

 

 

108,694

 

 

(7.1

)

 

(11.6

)

 

 

414,084

 

422,116

 

(1.9

)

 Leasing and equipment finance

 

23,402

 

24,912

 

 

24,408

 

 

(6.1

)

 

(4.1

)

 

 

89,194

 

69,113

 

29.1

 

 Other

 

817

 

1,077

 

 

2,764

 

 

(24.1

)

 

(70.4

)

 

 

5,584

 

5,239

 

6.6

 

Total fees and other revenue

 

120,309

 

129,437

 

 

135,866

 

 

(7.1

)

 

(11.5

)

 

 

508,862

 

496,468

 

2.5

 

 Gains on securities, net

 

21,185

 

8,505

 

 

7,283

 

 

149.1

 

 

190.9

 

 

 

29,123

 

29,387

 

(.9

)

Total non-interest income

 

141,494

 

137,942

 

 

143,149

 

 

2.6

 

 

(1.2

)

 

 

537,985

 

525,855

 

2.3

 

Total revenue

 

$315,780

 

$311,697

 

 

$312,790

 

 

1.3

 

 

1.0

 

 

 

$1,237,187

 

$1,158,861

 

6.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net interest margin(1) 

 

4.04

 

%

4.12

 

%

 

4.07

 

%

 

 

 

 

 

 

 

 

4.14

 

%

3.87

 

%

 

 

 Fees and other revenue as
a % of total revenue

38.10

 

 

41.53

 

 

 

43.44

 

 

 

 

 

 

 

 

 

 

41.13

 

 

42.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

·                  Net interest income increased $4.6 million, or 2.7 percent, from the fourth quarter of 2009 and was up slightly from the third quarter of 2010. The increase in net interest income from the fourth quarter of 2009 was primarily due to decreased rates paid on deposits and increases in Specialty Finance loans and leases, partially offset by the impact of increased asset liquidity and decreased income from consumer loans.

 

·                  Net interest margin in the fourth quarter of 2010 was 4.04 percent, compared with 4.07 percent in the fourth quarter of 2009 and 4.12 percent in the third quarter of 2010. The decrease in net interest margin from the fourth quarter of 2009 was primarily due to increased asset liquidity and lower asset yields as a result of the lower interest rate environment, the mix of fixed- and variable-rate loans and leases and higher average balances of non-accrual loans and leases, partially offset by lower average rates on deposits. The decrease from the third quarter of 2010 was primarily due to increased asset liquidity and lower yields on loans and leases primarily due to the impact of Specialty Finance acquisitions late in the third quarter of 2010, partially offset by slightly lower average rates on deposits and the impact of lower average borrowing costs. Since the end of 2009, TCF has been repositioning its balance sheet for an eventual increase in interest rates. While this has negatively impacted the net interest margin rate in the short term, the balance sheet

 

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4

 

composition, based on TCF’s interest rate gap assumptions, has shifted to an asset sensitive position of 2.8 percent as of December 31, 2010, from a liability sensitive position of 6.6 percent at December 31, 2009.

 

·                  During the fourth quarter of 2010, TCF continued to increase its asset-based liquidity position by increasing the average balance of its interest-bearing deposits held at the Federal Reserve by $211.8 million from the fourth quarter of 2009 and $82.6 million, or 56.2 percent, from the third quarter of 2010.

 

Non-interest Income

 

·                  Banking fees and service charges in the fourth quarter of 2010 were $61.5 million, down $13.4 million, or 17.9 percent, from the fourth quarter of 2009 and down $6.2 million, or 9.2 percent, from the third quarter of 2010. The decrease in banking fees and service charges from the fourth quarter of 2009 was primarily due to a decrease in activity-based fee revenue as a result of the implementation of recent overdraft fee regulations and changes in customer banking and spending behavior, partially offset by increased monthly maintenance fee income. The decrease in banking fees and service charges from the third quarter of 2010 was primarily due to a full quarter effect of the overdraft fee regulations implemented in August 2010 and lower monthly maintenance fees as more customers qualify for fee waivers.

 

·                  Card revenues were $27.6 million in the fourth quarter of 2010, up $812 thousand, or 3 percent, from the fourth quarter of 2009 and relatively flat from the third quarter of 2010. The increase from the fourth quarter of 2009 was primarily the result of an increase in average spending per active account, partially offset by a decrease in active accounts. Card revenues were flat from the third quarter of 2010 due primarily to increases in average spending per account, offset by decreases in active accounts and in the average interchange rate.

 

·                  Leasing and equipment finance revenues were $23.4 million in the fourth quarter of 2010, down $1 million, or 4.1 percent, from the fourth quarter of 2009 and down $1.5 million, or 6.1 percent, from the third quarter of 2010. The decrease from the fourth quarter of 2009 was primarily due to decreased operating lease revenue as a result of operating lease runoff from the Fidelity National Capital, Inc. acquisition that occurred during the third quarter of 2009, which was partially offset by a corresponding decrease in operating lease depreciation. The decrease in leasing revenues from the third quarter of 2010 was primarily

 

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5

 

due to decreased sales-type lease activity, due mainly to a high level of customer buyout activity during the third quarter of 2010 and other customer-driven factors not within TCF’s control.

 

Securities Available for Sale

 

 Average Securities Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3

 

 

 

 

 

 

 

 

 

 

Yield

 

 

 

 

 

 

Yield

 

 ($ in thousands)

 

 

4Q

 

3Q

 

4Q

 

 

 

 

 

 

 

 

YTD

 

YTD

 

YTD

 

 

YTD

 

 

 

 

 

2010

 

2010

 

2009

 

4Q10

 

4Q09

 

 

2010

 

2009

 

2010

 

 

2009

 

 

 U.S. Government sponsored entities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

 

$1,729,928

 

$1,796,348

 

$1,497,672

 

4.16

%

 

4.73

%

 

 

$1,817,413

 

$1,645,544

 

4.42

%

 

4.92

%

 

Debentures

 

 

-

 

-

 

413,647

 

-  

 

 

2.23

 

 

 

-

 

389,245

 

-  

 

 

2.18

 

 

 U.S. Treasury Bills

 

 

198,895

 

69,705

 

67,932

 

.13

 

 

.07

 

 

 

71,233

 

17,123

 

.13

 

 

.07

 

 

 Other securities

 

 

2,945

 

3,473

 

540

 

.54

 

 

4.42

 

 

 

3,963

 

508

 

.50

 

 

5.12

 

 

Total

 

 

$1,931,768

 

$1,869,526

 

$1,979,791

 

3.74

 

 

4.05

 

 

 

$1,892,609

 

$2,052,420

 

4.25

 

 

4.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  At December 31, 2010, net unrealized losses in the available for sale security portfolio were $25.8 million.

 

·                  During the fourth quarter of 2010, TCF recognized net gains of $21.9 million on the sale of $408.4 million of mortgage-backed securities in the available for sale securities portfolio.

 

·                  At December 31, 2010, TCF held $1.9 billion of mortgage-backed securities and $25 million of U.S. Treasury Bills.

 

Loans and Leases

 

 Average Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 4

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

 ($ in thousands)

 

4Q

 

3Q

 

4Q

 

4Q10 vs

 

4Q10 vs

 

YTD

 

YTD

 

Percent

 

 

 

2010

 

2010

 

2009

 

3Q10

 

4Q09

 

2010

 

2009

 

Change

 

 Consumer real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First mortgage lien

 

$  4,924,399

 

$  4,935,583

 

$  4,954,306

 

(.2

)%

 

(.6

)%

 

$  4,934,257

 

$  4,932,315

 

-

%

 

Junior lien

 

2,272,857

 

2,297,433

 

2,321,045

 

(1.1

)

 

(2.1

)

 

2,296,400

 

2,351,033

 

(2.3

)

 

Total

 

7,197,256

 

7,233,016

 

7,275,351

 

(.5

)

 

(1.1

)

 

7,230,657

 

7,283,348

 

(.7

)

 

 Consumer other

 

23,283

 

25,130

 

32,676

 

(7.3

)

 

(28.7

)

 

26,577

 

35,849

 

(25.9

)

 

Total consumer

 

7,220,539

 

7,258,146

 

7,308,027

 

(.5

)

 

(1.2

)

 

7,257,234

 

7,319,197

 

(.8

)

 

 Commercial real estate

 

3,322,619

 

3,327,417

 

3,241,269

 

(.1

)

 

2.5

 

 

3,311,634

 

3,136,699

 

5.6

 

 

 Commercial business

 

328,287

 

346,431

 

443,013

 

(5.2

)

 

(25.9

)

 

375,390

 

475,674

 

(21.1

)

 

Total commercial

 

3,650,906

 

3,673,848

 

3,684,282

 

(.6

)

 

(.9

)

 

3,687,024

 

3,612,373

 

2.1

 

 

 Leasing and equipment finance

 

3,155,472

 

3,002,714

 

3,049,093

 

5.1

 

 

3.5

 

 

3,056,006

 

2,826,835

 

8.1

 

 

 Inventory finance

 

803,157

 

655,485

 

383,291

 

22.5

 

 

109.5

 

 

677,214

 

179,990

 

N.M.

 

 

Total

 

$14,830,074

 

$14,590,193

 

$14,424,693

 

1.6

 

 

2.8

 

 

$14,677,478

 

$13,938,395

 

5.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  Average consumer real estate loan balances decreased $78.1 million, or 1.1 percent, from the fourth quarter of 2009 and declined slightly compared with balances in the third quarter of 2010. This reflects low consumer demand for financing due in part to declines in home values and reduced levels of consumer spending in the weak economy.

 

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6

 

·                  Variable-rate consumer real estate loans increased $407.9 million from the fourth quarter of 2009 and increased $109.5 million from the third quarter of 2010, while fixed-rate consumer real estate loans decreased $486 million from the fourth quarter of 2009 and decreased $145.3 million from the third quarter of 2010. Variable-rate loans comprised 33 percent of total consumer real estate loans at December 31, 2010, up from 26.8 percent at December 31, 2009 and 31.6 percent at September 30, 2010.

 

·                  As of December 31, 2010, 74.9 percent of TCF’s consumer real estate lending portfolio consisted of closed-end loans with amortizing principal payments, while 25.1 percent were lines of credit.

 

·                  Average commercial loan balances in the fourth quarter of 2010 declined slightly compared with balances in the fourth quarter of 2009 and the third quarter of 2010. Excluding declines in loans in Michigan, the commercial portfolio grew 1.7 percent from the fourth quarter of 2009 and was flat from the third quarter of 2010. Average commercial real estate balances increased $81.4 million or 2.5 percent from the fourth quarter of 2009 and were flat from the third quarter of 2010. Average commercial business balances decreased $114.7 million from the fourth quarter of 2009 and $18.1 million from the third quarter of 2010 due primarily to decreases in demand for commercial business loans due to the continued weakened economy.

 

·                  Average leasing and equipment finance balances increased $106.4 million, or 3.5 percent, from the fourth quarter of 2009 and $152.8 million, or 5.1 percent, from the third quarter of 2010.  Average leasing and equipment finance balances in 2010 increased $229.2 million, or 8.1 percent, from 2009. These increases were primarily due to portfolio acquisitions near the end of the third quarter of 2010 and the acquisition of Fidelity National Capital, Inc., which occurred late in the third quarter of 2009.

 

·                  Average inventory finance loans increased $419.9 million, or 109.5 percent, from the fourth quarter of 2009 and $147.7 million, or 22.5 percent, from the third quarter of 2010. The increase from the fourth quarter of 2009 was primarily due to growth in lawn and garden programs and TCF’s entrance in the power sports industry in the third quarter of 2010. The increase from the third quarter of 2010 was primarily due to TCF’s entrance into the power sports industry with the acquisition of $125.8 million in loans from Arctic Cat Sales Inc. late in the third quarter of 2010. This acquisition contributed $175.3 million to the increase in

 

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7

 

year-over-year average balances and $144.1 million to the increase in average balances from the third quarter of 2010.

 

Credit Quality

 

The following table summarizes TCF’s loan and lease portfolio based on the most important credit quality data components that should be used to understand the overall conditions of the portfolio.

 

 Credit Quality Summary of Performing and Underperforming Loans and Leases

 

 

 

 

 

 

 

Table 5

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2010:

 

Performing Loans and Leases

 

60+ Days

 

 

 

Non-accrual

 

 

 

 

 

 

 

 

 

 

 

Delinquent and

 

Accruing

 

loans and

 

Total Loans

 

(In thousands)

 

Non-classified

 

Classified(1)

 

Total

 

Accruing(2)

 

TDRs

 

leases

 

and Leases

 

Consumer real estate and other

 

$ 6,613,610

 

$           —

 

$ 6,613,610

 

$  76,711

 

$ 337,401

 

$167,547

 

$  7,195,269

 

Commercial real estate and commercial business

 

3,091,911

 

354,185

 

3,446,096

 

9,021

 

48,838

 

142,248

 

3,646,203

 

Leasing and equipment finance

 

3,073,347

 

35,695

 

3,109,042

 

11,029

 

 

34,407

 

3,154,478

 

Inventory finance

 

785,245

 

5,710

 

790,955

 

344

 

 

1,055

 

792,354

 

Total loans and leases

 

$13,564,113

 

$  395,590

 

$13,959,703

 

$  97,105

 

$ 386,239

 

$345,257

 

$14,788,304

 

Percent of total loans and leases

 

91.7

%

2.7

%

94.4

%

.7

%

2.6

%

2.3

%

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2010:

 

Performing Loans and Leases

 

60+ Days

 

 

 

Non-accrual

 

 

 

 

 

 

 

 

 

 

 

Delinquent and

 

Accruing

 

loans and

 

Total Loans

 

 

 

Non-classified

 

Classified(1)

 

Total

 

Accruing(2)

 

TDRs

 

leases

 

and Leases

 

Consumer real estate and other

 

$ 6,714,413

 

$           —

 

$ 6,714,413

 

$  83,856

 

$ 315,588

 

$166,597

 

$  7,280,454

 

Commercial real estate and commercial business

 

3,115,812

 

378,624

 

3,494,436

 

1,260

 

5,468

 

161,889

 

3,663,053

 

Leasing and equipment finance

 

3,074,445

 

32,616

 

3,107,061

 

9,956

 

 

40,455

 

3,157,472

 

Inventory finance

 

788,084

 

6,403

 

794,487

 

264

 

 

871

 

795,622

 

Total loans and leases

 

$13,692,754

 

$  417,643

 

$14,110,397

 

$  95,336

 

$ 321,056

 

$369,812

 

$14,896,601

 

Percent of total loans and leases

 

91.9

%

2.8

%

94.7

%

.6

%

2.2

%

2.5

%

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing Loans and Leases

 

60+ Days

 

 

 

Non-accrual

 

 

 

December 31, 2009:

 

 

 

 

 

 

 

Delinquent and

 

Accruing

 

loans and

 

Total Loans

 

 

 

Non-classified

 

Classified(1)

 

Total

 

Accruing(2)

 

TDRs

 

leases

 

and Leases

 

Consumer real estate and other

 

$ 6,863,222

 

$           —

 

$ 6,863,222

 

$  76,959

 

$ 252,510

 

$139,300

 

$  7,331,991

 

Commercial real estate and commercial business

 

3,280,957

 

331,298

 

3,612,255

 

68

 

 

106,196

 

3,718,519

 

Leasing and equipment finance

 

2,967,540

 

31,767

 

2,999,307

 

22,114

 

 

50,008

 

3,071,429

 

Inventory finance

 

467,319

 

 

467,319

 

715

 

 

771

 

468,805

 

Total loans and leases

 

$13,579,038

 

$  363,065

 

$13,942,103

 

$  99,856

 

$ 252,510

 

$296,275

 

$14,590,744

 

Percent of total loans and leases

 

93.1

%

2.5

%

95.6

%

.7

%

1.7

%

2.0

%

100.0

%

 

 

(1) Excludes classified loans and leases that are 60+ days delinquent or accruing TDRs.
(2) Excludes accruing TDRs that are 60+ delinquent.

 

 

 

·                  Within the current performing loans and leases, TCF classifies customers within regulatory classification guidelines. Loans and leases that are “classified” mean that management has concerns regarding the ability of the borrowers to meet existing loan terms but may never become non-performing or result in a loss.

 

·                  Performing loans that are 60+ days delinquent have a higher potential to become non-performing and generally are a leading indicator for future charge-off trends.

 

·                  Accruing troubled debt restructurings (“TDRs”) are loans to borrowers that have been modified such that TCF has granted a concession in terms to improve the likelihood of collection of all principal owed.

 

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8

 

·                  Non-accrual loans and leases generally have been charged down to the estimated fair value of the collateral less selling costs or reserved for expected loss upon workout.

 

When classified loans and leases become 60 or more days delinquent, they are included within “60+ days delinquent and accruing” in the previous table.  Accruing TDRs, regardless of classification or delinquency status, are included within “accruing TDRs” in the previous table.

 

At December 31, 2010:

 

·                  Over 60-day delinquency rate was .79 percent, up from .69 percent at December 31, 2009 and flat compared with .78 percent at September 30, 2010. The increase from the fourth quarter of 2009 was primarily due to increases in commercial real estate and consumer real estate, partially offset by decreases in equipment finance and inventory finance loan delinquencies.  The delinquency rate increased from the third quarter of 2010 as increases in commercial real estate loans and leasing and equipment finance delinquencies were offset by decreases in consumer real estate.

 

·                  Total accruing consumer real estate TDRs were $337.4 million, up $84.9 million, or 33.6 percent, from December 31, 2009 and up $21.8 million, or 6.9 percent, from September 30, 2010. The allowance for loan losses on accruing consumer real estate TDRs was $36.8 million, or 10.9 percent of the outstanding balance, at December 31, 2010.  The over 60-day delinquencies included in accruing consumer real estate TDRs were $17.9 million, or 5.3 percent, at December 31, 2010, compared with $17.4 million, or 5.5 percent, at September 30, 2010.

 

·                  Total accruing commercial real estate TDRs were $48.8 million at December 31, 2010, compared with $5.5 million at September 30, 2010, as TCF continues to work with financially stressed commercial customers to reduce the likelihood of default and potential charge-offs. These loans have been reviewed for impairment on an individual basis. The allowance for loan losses on accruing commercial real estate TDRs was $695 thousand, or just 1.4 percent of the outstanding balance at December 31, 2010, due to the secured nature of these loans. None of the accruing commercial TDRs were over 60-days delinquent.

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9

 

·                  Non-accrual loans and leases increased $49 million, or 16.5 percent, from December 31, 2009 and decreased $24.6 million, or 6.6 percent, from September 30, 2010. The increase from the fourth quarter of 2009 was primarily due to increases in non-accrual consumer real estate and commercial loans, partially offset by decreases in non-accrual equipment finance loans and leases. The decrease from the third quarter of 2010 was primarily due to a $51.7 million decrease in new non-accrual loans, primarily in commercial loans.

 

Allowance for Loan and Lease Losses

 

Allowance for Loan and Lease Losses

 

Table 6

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

($ in thousands)

 

4Q
2010

 

3Q
2010

 

4Q
2009

 

4Q10 vs
3Q10

 

4Q10 vs
4Q09

 

YTD
2010

 

YTD
2009

 

Percent
Change

 

Allowance for Loan and Lease Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

253,120

 

$

251,643

 

$

215,732

 

.6 %   

 

17.3 %   

 

$

244,471

 

$

172,442

 

41.8 %   

 

Charge-offs

 

(69,913

)

(62,945

)

(52,841

)

11.1       

 

32.3       

 

(237,063

)

(202,398

)

17.1       

 

Recoveries

 

4,966

 

5,135

 

4,191

 

3.3       

 

(18.5)      

 

21,974

 

15,891

 

(38.3)      

 

Net charge-offs

 

(64,947

)

(57,810

)

(48,650

)

12.3       

 

33.5       

 

(215,089

)

(186,507

)

15.3       

 

Provision for credit losses

 

77,646

 

59,287

 

77,389

 

31.0       

 

.3       

 

236,437

 

258,536

 

(8.5)      

 

Balance at end of period

 

$

265,819

 

$

253,120

 

$

244,471

 

5.0       

 

8.7       

 

$

265,819

 

$

244,471

 

8.7       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Charge-Offs (Recoveries) as a Percentage of Average Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer real estate and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First mortgage lien

 

1.88

 %

1.63

 %

1.34

 %

25 bps

 

54 bps

 

1.55

 %

1.11

 %

44 bps

 

Junior lien

 

2.37

 

2.50

 

2.54

 

(13)      

 

(17)      

 

2.33

 

2.21

 

12       

 

Total consumer real estate

 

2.04

 

1.91

 

1.73

 

13       

 

31       

 

1.80

 

1.46

 

34       

 

Consumer other

 

N.M.

 

N.M.

 

N.M.

 

-       

 

-       

 

N.M.

 

N.M.

 

-       

 

Total consumer real estate and other

 

2.10

 

2.00

 

1.84

 

10       

 

26       

 

1.86

 

1.56

 

30       

 

Commercial real estate

 

2.08

 

1.56

 

.69

 

52       

 

139       

 

1.36

 

1.13

 

23       

 

Commercial business

 

1.58

 

(.16

)

1.51

 

174       

 

7       

 

.92

 

1.92

 

(100)      

 

Total commercial real estate and commercial business

 

2.04

 

1.40

 

.79

 

64       

 

125       

 

1.31

 

1.24

 

7       

 

Leasing and equipment finance

 

.99

 

1.16

 

1.01

 

(17)      

 

(2)      

 

1.00

 

.97

 

3       

 

Inventory finance

 

.28

 

.05

 

.09

 

23       

 

19       

 

.17

 

.10

 

7       

 

Total

 

1.75

 

1.58

 

1.35

 

17       

 

40       

 

1.47

 

1.34

 

13       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance as a percentage of period end loans and leases

 

1.80

 %

1.70

 %

1.68

 %

 

 

 

 

1.80

 %

1.68

 %

 

 

Ratio of allowance to net charge-offs(1)

 

1.0

 X

1.1

 X

1.3

 X

 

 

 

 

1.2

 X

1.3

 X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Loss Reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan and lease losses

 

$

265,819

 

$

253,120

 

$

244,471

 

5.0 %   

 

8.7 %   

 

 

 

 

 

 

 

Reserves for unfunded commitments

 

2,353

 

2,696

 

3,850

 

(12.7)      

 

(38.9)      

 

 

 

 

 

 

 

Total credit loss reserves

 

$

268,172

 

$

255,816

 

$

248,321

 

4.8       

 

8.0       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-more-


 

10

 

 

At December 31, 2010:

 

·                  Allowance for loan and lease losses was $265.8 million, or 1.80 percent of loans and leases, compared with $244.5 million, or 1.68 percent, at December 31, 2009 and $253.1 million, or 1.70 percent, at September 30, 2010.

 

For the quarter ended December 31, 2010:

 

·                  Provision for credit losses was $77.6 million, flat from $77.4 million in the fourth quarter of 2009 and up from $59.3 million recorded in the third quarter of 2010. The increase from the third quarter of 2010 was primarily due to increased reserves and charge-offs in the commercial real estate portfolio.

 

·                  Net loan and lease charge-offs were $64.9 million, or 1.75 percent, annualized, of average loans and leases, up from $48.7 million, or 1.35 percent, annualized, in the fourth quarter of 2009 and up from $57.8 million, or 1.58 percent, annualized, in the third quarter of 2010. Increases over the fourth quarter of 2009 were primarily due to increases in commercial real estate and consumer real estate net charge-offs, with increased consumer real estate net charge-offs occurring primarily in Illinois, partially offset by lower net charge-offs in Minnesota and Michigan. The increase from the third quarter of 2010 was primarily the result of increases in commercial real estate, consumer real estate and commercial business net charge-offs. Leasing and equipment finance net charge-offs were $7.8 million, or .99 percent annualized, of average loans and leases, down from $8.7 million, or 1.16 percent annualized, of average loans and leases in the third quarter of 2010, primarily due to charge-offs of previously reserved non-accrual loans and leases, which resulted in a decrease in the non-accrual balances in the leasing and equipment finance portfolio.

 

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11

 

Deposits

 

Average Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 7

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

($ in thousands)

 

4Q
2010

 

3Q
2010

 

4Q
2009

 

4Q10 vs
3Q10

 

4Q10 vs
4Q09

 

YTD
2010

 

YTD
2009

 

Percent
Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$  4,358,771

 

$  4,341,803

 

$  4,116,290

 

.4%

 

5.9%

 

$  4,408,853

 

$  4,038,964

 

9.2%

 

Savings

 

5,412,094

 

5,446,852

 

5,231,159

 

(.6)  

 

3.5   

 

5,429,416

 

4,748,774

 

14.3   

 

Money market

 

643,801

 

654,030

 

671,755

 

(1.6)  

 

(4.2)  

 

656,691

 

683,030

 

(3.9)  

 

Subtotal

 

10,414,666

 

10,442,685

 

10,019,204

 

(.3)  

 

3.9   

 

10,494,960

 

9,470,768

 

10.8   

 

Certificates

 

1,040,348

 

1,006,685

 

1,366,871

 

3.3   

 

(23.9)  

 

1,054,179

 

1,915,467

 

(45.0)  

 

Total deposits

 

$11,455,014

 

$11,449,370

 

$11,386,075

 

-    

 

.6   

 

$11,549,139

 

$11,386,235

 

1.4   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest rate on deposits

 

.46%

 

.48%

 

.74%

 

 

 

 

 

.53%

 

1.07%

 

 

 

 

·                  Total average deposits increased $68.9 million, or .6 percent, from the fourth quarter of 2009 and were flat with the third quarter of 2010. Total average deposits in 2010 increased $162.9 million, or 1.4 percent, from 2009. The increase from the fourth quarter of 2009 and from the full year of 2009 was primarily due to increases in core deposits, partially offset by decreases in average certificates of deposit resulting from pricing strategies to reduce higher cost funds.

 

·                  The average interest cost of deposits in the fourth quarter of 2010 was .46 percent, down 28 basis points from the fourth quarter of 2009 and down slightly from the third quarter of 2010.  The average interest cost of deposits during 2010 was .53 percent, down 54 basis points from 2009. Declines in the average interest cost of deposits were primarily due to pricing strategies on certain deposit products, mix changes and lower market interest rates.  The weighted average interest cost of deposits on December 31, 2010 was .41 percent, compared with .48 percent on September 30, 2010 and .65 percent on December 31, 2009.

 

-more-

 


 

12

 

Non-interest Expense

 

Non-interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

($ in thousands)

 

4Q
2010

 

3Q
2010

 

4Q
2009

 

4Q10 vs
3Q10

 

4Q10 vs
4Q09

 

YTD
2010

 

YTD
2009

 

Percent
Change

 

Compensation and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

employee benefits

 

$  87,371

 

$  90,282

 

$  89,374

 

   (3.2)%

 

   (2.2)%

 

$352,861

 

$356,996

 

   (1.2)%

 

Occupancy and equipment

 

30,968

 

32,091

 

31,099

 

(3.5)

 

  (.4)

 

126,551

 

126,292

 

  .2

 

FDIC insurance

 

7,398

 

5,486

 

5,288

 

34.9  

 

39.9  

 

23,584

 

19,109

 

23.4  

 

Deposit account premiums

 

1,688

 

3,340

 

9,347

 

(49.5)  

 

(81.9)  

 

17,304

 

30,682

 

(43.6)  

 

Advertising and marketing

 

3,154

 

3,354

 

3,789

 

(6.0)

 

(16.8)  

 

13,062

 

17,134

 

(23.8)  

 

Other

 

37,309

 

39,481

 

40,193

 

(5.5)

 

(7.2)

 

146,253

 

142,818

 

2.4

 

Core operating expenses

 

167,888

 

174,034

 

179,090

 

(3.5)

 

(6.3)

 

679,615

 

693,031

 

(1.9)

 

Foreclosed real estate and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

repossessed assets, net

 

12,781

 

9,588

 

12,537

 

33.3  

 

1.9

 

40,385

 

31,886

 

26.7  

 

Operating lease depreciation

 

8,289

 

8,965

 

10,750

 

(7.5)

 

(22.9)  

 

37,106

 

22,368

 

65.9  

 

Other credit costs, net

 

1,542

 

(834

)

4,386

 

N.M.

 

(64.8)  

 

6,018

 

12,137

 

(50.4)  

 

FDIC special assessment

 

-

 

-

 

-

 

-

 

-

 

-

 

8,362

 

(100.0)    

 

Total non-interest expense

 

$190,500

 

$191,753

 

$206,763

 

  (.7)

 

(7.9)

 

$763,124

 

$767,784

 

  (.6)

 

N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  Core operating expenses decreased $11.2 million, or 6.3 percent, from the fourth quarter of 2009, $6.1 million, or 3.5 percent from the third quarter of 2010 and $13.4 million, or 1.9 percent, from the full year of 2010 from 2009. The decrease in all periods was primarily attributable to decreases in deposit account premiums and compensation and employee benefits costs.

 

·                  Compensation and employee benefits costs decreased $2 million, or 2.2 percent, from the fourth quarter of 2009 and $2.9 million, or 3.2 percent from the third quarter of 2010. Compensation and employee benefits costs declined $4.1 million, or 1.2 percent, for the full year of 2010 from 2009. The decreases in all periods were primarily due to headcount reductions and decreased employee medical plan expenses, partially offset by increased costs in the Specialty Finance businesses as a result of expansion and growth.

 

·                  FDIC insurance increased $2.1 million, or 39.9 percent, from the fourth quarter of 2009 and $1.9 million, or 34.9 percent, from the third quarter of 2010. FDIC insurance increased $4.5 million, or 23.4 percent, for the full year of 2010 from 2009. The increases in all periods were primarily due to higher deposit insurance rates. The Dodd-Frank Act requires changes to a number of components of the FDIC insurance assessment, with an expected implementation date by the FDIC of April 1, 2011. The changes amend the current methodology used to determine the assessments paid by institutions with assets greater than $10 billion, including changing the assessment base from deposits to total average assets less tier one capital.

 

-more-


 

13

 

 

Additionally, the FDIC has developed a scorecard approach to determine a separate assessment rate for each institution with assets greater than $10 billion. As a result of these changes, TCF’s FDIC insurance may increase significantly in 2011.

 

·                  Deposit account premiums decreased $7.7 million, or 81.9 percent, from the fourth quarter of 2009 and $1.7 million, or 49.5 percent, from the third quarter of 2010. Deposit account premiums decreased $13.4 million, or 43.6 percent, for the full year of 2010 from 2009.  The decreases in deposit account premiums were due to revised marketing strategies and lower checking account production.

 

·                  Advertising and marketing expenses decreased $635 thousand, or 16.8 percent, from the fourth quarter of 2009 and $200 thousand, or 6 percent, from the third quarter of 2010. Advertising and marketing expenses decreased $4.1 million, or 23.8 percent, for the full year of 2010 from 2009. The decrease in all periods was primarily the result of retail banking product strategies and a related decrease in spending on media advertisements.

 

·                  Other non-interest expense decreased $2.9 million, or 7.2 percent, from the fourth quarter of 2009 and $2.2 million, or 5.5 percent, from the third quarter of 2010. Other non-interest expense increased $3.4 million, or 2.4 percent, for the full year of 2010 from 2009. The decrease from the fourth quarter of 2009 was primarily due to a decrease in severance costs, as a result of the reorganization of the company’s structure and business segments in the fourth quarter of 2009. The decrease from the third quarter of 2010 was due in part to decreased deposit losses. In addition, during the fourth quarter of 2010 TCF, based on information made public by Visa U.S.A. Inc. (“Visa”), reduced the contingency obligation related to the Visa indemnification for certain covered litigation matters by $1 million, further contributing to the decrease in other non-interest expense from the fourth quarter of 2009 and the third quarter of 2010. The increase for 2010 compared with 2009 was primarily attributable to increased consulting costs related to administration of the company’s Bank Secrecy Act program and, to a lesser extent, other legal costs including the challenge of the Durbin Amendment of the Dodd-Frank Act, partially offset by lower severance costs.

 

·                  Foreclosed real estate and repossessed asset expenses increased $244 thousand, or 1.9 percent, from the fourth quarter of 2009 and $3.2 million, or 33.3 percent, from the third quarter of 2010. Foreclosed real

 

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14

 

estate and repossessed asset expenses increased $8.5 million, or 26.7 percent, for the full year of 2010 from 2009.  The increase from the fourth quarter of 2009 and the third quarter of 2010 was primarily due to increased valuation adjustments and tax expenses, partially offset by increases in the number of sales and the average net gain or loss at sale. The increase in 2010 from 2009 was primarily due to an increase in the number of consumer real estate properties owned and the associated expenses.

 

·                  Other credit costs decreased $2.8 million, or 64.8 percent, from the fourth quarter of 2009 and increased $2.4 million from the third quarter of 2010. Other credit costs decreased $6.1 million, or 50.4 percent, for the full year of 2010 from 2009. The decrease from the fourth quarter of 2009 and from the full year of 2009 was primarily attributable to the reversal of reserves on several unfunded commitments that were closed and lower costs related to consumer real estate loan pool insurance. The increase from the third quarter of 2010 was primarily due to a decrease in reserves on commercial letters of credit due to the elimination of an exposure on an impaired loan in Michigan during the third quarter of 2010.

 

Income Taxes

 

·                  Income tax expense was $16 million for the fourth quarter of 2010, or 33.6 percent of pre-tax income, compared with $9.4 million, or 32.8 percent of pre-tax income, for the comparable 2009 period and $22.9 million, or 37.7 percent of pre-tax income, for the third quarter of 2010. The effective tax rate for the fourth quarter of both 2010 and 2009 included the effects of year-to-date changes in the estimated annual effective tax rate of approximately $1 million.

 

·                  Income tax expense was $87.8 million for 2010, or 36.9 percent of pre-tax income, compared with $45.9 million, or 34.6 percent of pre-tax income, for 2009. Income tax expense for 2009 included a $4.2 million decrease in income tax expense related to favorable developments in uncertain tax positions, partially offset by a slight increase in the effective income tax rate.

 

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15

 

Capital and Borrowing Capacity

 

Capital Information

 

 

 

Table 9 

 

At period end

 

 

 

 

 

($ in thousands, except per-share data)

 

4Q
2010

 

4Q
2009

 

Total equity

 

$1,480,163

 

 

 

$1,179,755

 

 

 

Total equity to total assets

 

8.02

 %

 

 

6.60

 %

 

 

Book value per common share

 

$       10.30

 

 

 

$         9.10

 

 

 

Tangible realized common equity to tangible assets(1)

 

7.37

 %

 

 

5.86

 %

 

 

 

 

 

 

 

 

 

 

 

 

Risk-based capital

 

 

 

 

 

 

 

 

 

Tier 1

 

$1,475,525

 

10.59 %

 

$1,161,750

 

8.52 %

 

Total

 

1,808,412

 

12.98    

 

1,514,940

 

11.12    

 

Excess over stated “10% well-capitalized” requirement

 

415,502

 

2.98    

 

152,153

 

1.12    

 

 

 

 

 

 

 

 

 

 

 

Tier 1 common capital(2)

 

$1,352,025

 

9.71 %

 

$1,042,357

 

7.65 %

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes the impact of goodwill, other intangibles and accumulated other comprehensive income (loss) (see “Reconciliation of GAAP to Non-GAAP Measures” table).

(2) Excludes the effect of qualifying trust preferred securities and qualifying non-controlling interest in subsidiaries (see “Reconciliation of GAAP to Non-GAAP Measures” table). 

 

 

·                  Total risk-based capital at December 31, 2010 of $1.8 billion, or 12.98 percent of risk-weighted assets, was $415.5 million in excess of the stated “10 percent well-capitalized” requirement.

 

·                  On January 18, 2011, the Board of Directors of TCF declared a regular quarterly cash dividend of five cents per common share payable on February 28, 2011 to stockholders of record at the close of business on January 28, 2011.

 

·                  At December 31, 2010, TCF had $1.7 billion in unused, secured borrowing capacity at the FHLB of Des Moines and $529 million in unused, secured borrowing capacity at the Federal Reserve Discount Window.

 

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16

 

Website Information

 

A live webcast of TCF’s conference call to discuss fourth quarter earnings will be hosted at TCF’s website, ir.tcfbank.com, on January 20, 2011 at 10:00 a.m., CT.  Additionally, the webcast is available for replay at TCF’s website after the conference call. The website also includes free access to company news releases, TCF’s annual report, quarterly reports, investor presentations and SEC filings.

 

 

TCF is a Wayzata, Minnesota-based national bank holding company with $18.5 billion in total assets. TCF has 442 banking offices in Minnesota, Illinois, Michigan, Colorado, Wisconsin, Indiana, Arizona and South Dakota, providing retail and commercial banking services. TCF also conducts commercial leasing and equipment finance business in all 50 states and commercial inventory finance business in the U.S. and Canada. For more information about TCF, please visit www.tcfbank.com.

 

 

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17

 

Forward-Looking Information

 

This earnings release and other reports issued by the Company, including reports filed with the SEC, may contain “forward-looking” statements that deal with future results, plans or performance. In addition, TCF’s management may make such statements orally to the media, or to securities analysts, investors or others. Forward-looking statements deal with matters that do not relate strictly to historical facts. TCF’s future results may differ materially from historical performance and forward-looking statements about TCF’s expected financial results or other plans and are subject to a number of risks and uncertainties. These include, but are not limited to the following:

 

Adverse Economic or Business Conditions, Credit Risks.  Continued or deepening deterioration in general economic and banking industry conditions, or continued increases in unemployment in TCF’s primary banking markets; adverse economic, business and competitive developments such as shrinking interest margins, deposit outflows, deposit account attrition, or an inability to increase the number of deposit accounts; adverse changes in credit and other risks posed by TCF’s loan, lease, investment, and securities available for sale portfolios, including continuing declines in commercial or residential real estate values or changes in the allowance for loan and lease losses dictated by new market conditions or regulatory requirements; interest rate risks resulting from fluctuations in prevailing interest rates or other factors that result in a mismatch between yields earned on TCF’s interest-earning assets and the rates paid on its deposits and borrowings.

 

Earnings/Capital Constraints, Liquidity Risks.  Limitations on TCF’s ability to pay dividends or to increase dividends in the future because of financial performance deterioration, regulatory restrictions or limitations; increased deposit insurance premiums, special assessments or other costs related to adverse conditions in the banking industry, the economic impact on banks of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Act”) and Emergency Economic Stabilization Act of 2008, as amended (“EESA”), and other regulatory reform legislation; the impact of financial regulatory reform, including the phase out of trust preferred securities in Tier 1 capital called for by the Act, or additional capital, leverage, liquidity and risk management requirements or changes in the composition of qualifying regulatory capital; adverse changes in securities markets directly or indirectly affecting TCF’s ability to sell assets or to fund its operations; diminished unsecured borrowing capacity resulting from TCF credit rating downgrades and unfavorable conditions in the credit markets that restrict or limit various funding sources; costs associated with new regulatory requirements or interpretive guidance relating to liquidity.

 

Legislative and Regulatory Requirements.  New consumer protection and supervisory requirements, including the Act’s creation of a new consumer protection bureau and limits on Federal preemption for state laws that could be applied to national banks; the imposition of requirements with an adverse impact relating to TCF’s lending, loan collection and other business activities as a result of the EESA and the Act, or other legislative or regulatory developments such as mortgage foreclosure moratorium laws or imposition of underwriting or other limitations that impact the ability to use certain variable-rate products; reduction of interchange revenue from debit card transactions resulting from the so-called Durbin Amendment to the Act, which limits debit card interchange fees to amounts that will only allow issuers to recover incremental costs of authorization, clearance and settlement of debit card transactions, plus possibly some costs relating to fraud prevention; impact of legislative, regulatory or other changes affecting customer account charges and fee income; changes to bankruptcy laws which would result in the loss of all or part of TCF’s security interest due to collateral value declines (so-called “cramdown” provisions); any material failure of TCF to comply with the terms of its Consent Order with the Office of the Comptroller of the Currency relating to TCF’s Bank Secrecy Act compliance, which may result in regulatory enforcement action including monetary penalties; increased health care costs resulting from recently enacted Federal health care reform legislation; adverse regulatory examinations and resulting enforcement actions or other adverse consequences such as increased capital requirements or higher deposit insurance assessments; heightened regulatory practices, requirements or expectations, including, but not limited to, requirements related to the Bank Secrecy Act and anti-money laundering compliance activity.

 

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18

 

Risks Relating to New Product Introduction.  TCF has introduced a new anchor retail deposit account product that replaces TCF Totally Free Checking, and that calls for a monthly maintenance fee on accounts not meeting certain specific requirements. TCF has also implemented new regulatory requirements that prohibit financial institutions from charging NSF fees on point-of-sale and ATM transactions unless customers opt-in.  Customer acceptance of the new product changes and regulatory requirements cannot be predicted with certainty, and these changes may have an adverse impact on TCF’s ability to generate and retain accounts and on its fee revenue.

 

Litigation Risks.  Results of litigation, including class action litigation concerning TCF’s lending or deposit activities including account servicing processes or fees or charges, or employment practices, and possible increases in indemnification obligations for certain litigation against Visa U.S.A. (“covered litigation”) and potential reductions in card revenues resulting from covered litigation or other litigation against Visa.

 

Competitive Conditions; Supermarket Branching Risk.  Reduced demand for financial services and loan and lease products; adverse developments affecting TCF’s supermarket banking relationships or any of the supermarket chains in which TCF maintains supermarket branches.

 

Accounting, Audit, Tax and Insurance Matters.  Changes in accounting standards or interpretations of existing standards; federal or state monetary, fiscal or tax policies, including adoption of state legislation that would increase state taxes; adverse state or Federal tax assessments or findings in tax audits; lack of or inadequate insurance coverage for claims against TCF.

 

Technological and Operational Matters.  Technological, computer-related or operational difficulties or loss or theft of information and the possibility that deposit account losses (fraudulent checks, etc.) may increase.

 

Investors should consult TCF’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K for additional important information about the Company.

 

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19

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

 

 

 

 

December 31,

 

Change

 

 

 

2010

 

2009

 

$

 

%

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

220,772

 

$

222,300

 

$

(1,528)

 

(.7)

%

Securities available for sale

 

18,072

 

20,035

 

(1,963)

 

(9.8)

 

Investments and other

 

1,900

 

1,160

 

740

 

63.8

 

Total interest income

 

240,744

 

243,495

 

(2,751)

 

(1.1)

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

13,370

 

21,171

 

(7,801)

 

(36.8)

 

Borrowings

 

53,088

 

52,683

 

405

 

.8

 

Total interest expense

 

66,458

 

73,854

 

(7,396)

 

(10.0)

 

Net interest income

 

174,286

 

169,641

 

4,645

 

2.7

 

Provision for credit losses

 

77,646

 

77,389

 

257

 

.3

 

Net interest income after provision for
credit losses

 

96,640

 

92,252

 

4,388

 

4.8

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

61,480

 

74,875

 

(13,395)

 

(17.9)

 

Card revenue

 

27,625

 

26,813

 

812

 

3.0

 

ATM revenue

 

6,985

 

7,006

 

(21)

 

(.3)

 

Subtotal

 

96,090

 

108,694

 

(12,604)

 

(11.6)

 

Leasing and equipment finance

 

23,402

 

24,408

 

(1,006)

 

(4.1)

 

Other

 

817

 

2,764

 

(1,947)

 

(70.4)

 

Fees and other revenue

 

120,309

 

135,866

 

(15,557)

 

(11.5)

 

Gains on securities, net

 

21,185

 

7,283

 

13,902

 

190.9

 

Total non-interest income

 

141,494

 

143,149

 

(1,655)

 

(1.2)

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

87,371

 

89,374

 

(2,003)

 

(2.2)

 

Occupancy and equipment

 

30,968

 

31,099

 

(131)

 

(.4)

 

FDIC insurance

 

7,398

 

5,288

 

2,110

 

39.9

 

Deposit account premiums

 

1,688

 

9,347

 

(7,659)

 

(81.9)

 

Advertising and marketing

 

3,154

 

3,789

 

(635)

 

(16.8)

 

Other

 

37,309

 

40,193

 

(2,884)

 

(7.2)

 

Subtotal

 

167,888

 

179,090

 

(11,202)

 

(6.3)

 

Foreclosed real estate and repossessed assets, net

 

12,781

 

12,537

 

244

 

1.9

 

Operating lease depreciation

 

8,289

 

10,750

 

(2,461)

 

(22.9)

 

Other credit costs, net

 

1,542

 

4,386

 

(2,844)

 

(64.8)

 

Total non-interest expense

 

190,500

 

206,763

 

(16,263)

 

(7.9)

 

Income before income tax expense

 

47,634

 

28,638

 

18,996

 

66.3

 

Income tax expense

 

16,011

 

9,385

 

6,626

 

70.6

 

Income after income tax expense

 

31,623

 

19,253

 

12,370

 

64.2

 

Income (loss) attributable to non-controlling interest

 

898

 

(203)

 

1,101

 

N.M.

 

Net income available to common stockholders

 

$

30,725

 

$

19,456

 

$

11,269

 

57.9

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

.22

 

$

.15

 

$

.07

 

46.7

 

Diluted

 

.22

 

.15

 

.07

 

46.7

 

 

 

 

 

 

 

 

 

 </