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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 24, 2011

 


 

 

TCF FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 


 

Delaware

 

001-10253

 

41-1591444

(State of other jurisdiction of

 

(Commission File Number)

 

(IRS Employer Identification No.)

incorporation)

 

 

 

 

 

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

(Address of principal executive offices) (Zip Code)

 

(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.

 

Information is being furnished herein in Exhibit 99.1 with respect to presentations to investors and others that may be made by executive officers of TCF Financial Corporation (the “Company”).  This information includes selected financial and operational information through the fourth quarter of 2010 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 Company’s consolidated financial statements and related notes prepared in accordance with GAAP and management’s discussion and analysis included in the Company’s reports on Forms 10-K and 10-Q.  The Company’s annual financial statements are subject to independent audit.  These materials replace and supersede investor presentation materials previously furnished as an exhibit to Current Reports on Form 8-K.  These materials are dated January 24, 2011, and TCF does not undertake to update the materials after that date.

 

The presentation 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.

 

Information contained herein, including Exhibit 99.1, 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 7.01  Regulation FD Disclosure.

 

Information is being furnished herein in Exhibit 99.1 with respect to presentations to investors and others that may be made by executive officers of TCF Financial Corporation (the “Company”).  This information includes selected financial and operational information through the fourth quarter of 2010 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 Company’s consolidated financial statements and related notes prepared in accordance with GAAP and management’s discussion and analysis included in the Company’s reports on Forms 10-K and 10-Q.  The Company’s annual financial statements are subject to independent audit.  These materials replace and supersede investor presentation materials previously furnished as an exhibit to Current Reports on Form 8-K.  These materials are dated January 24, 2011, and TCF does not undertake to update the materials after that date.

 

The presentation 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.

 

Information contained herein, including Exhibit 99.1, 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.

 

2


 

Item 9.01  Financial Statements and Exhibits.

 

(d)         Exhibits.

 

Exhibit No.

 

Description

 

 

 

     99.1

 

Investor Presentation of TCF Financial Corporation, dated January 24, 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 hereunto 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)

 

Date:       January 24, 2011

 

3

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

 

Exhibit 99.1

 

TCF Financial Corporation

2010 Fourth Quarter Investor Presentation

Built on convenience, stability and trust.

 

1.)           Corporate Profile

 

At December 31, 2010

 

·                  $18.5 billion national bank holding company headquartered in Minnesota

 

·                  35th largest publicly traded U.S. based bank by asset size

 

·                  442 bank branches in eight states, 70 branches opened since January 1, 2005

 

·                  24th largest U.S. branch network

 

·                  Seven campus alliances; 5th largest in campus card banking relationships

 

·                  968 ATMs free to TCF customers; 486 off-site

 

·                  11th largest issuer of Visa® Classic debit cards

 

·                  12th largest issuer of Visa Commercial debit cards

 

·                  13th largest bank-affiliated leasing company in the U.S.

 

·                  Total equity to total assets of 8.02%

 

·                  Tangible realized common equity of 7.37% 1

 

·                  63rd consecutive quarter of profitability

 

Branch Summary

 

Minnesota

 

111

 

Illinois

 

201

 

Michigan

 

55

 

Colorado

 

36

 

Wisconsin

 

26

 

Arizona

 

7

 

Indiana

 

5

 

South Dakota

 

1

 

Total

 

442

 

 

Well-Diversified Loan Portfolio

($ millions)

 

 

 

12/31/99

 

% of Total

 

12/31/10

 

% of Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Lending

 

$

5,978

 

76

%

$

 7,195

 

49

%

 

 

Commercial Lending

 

1,425

 

18

 

3,646

 

25

 

 

 

Leasing

 

493

 

6

 

3,155

 

21

 

 

 

Inventory Finance

 

 

 

792

 

5

 

 

 

Total

 

$

7,896

 

100

%

$

 14,788

 

100

%

 

 

 

1   See “Reconciliation of GAAP to Non-GAAP Measures - Tangible Realized Common Equity” slide

 


 

2.)                                  What Makes TCF Different

 

At December 31, 2010

 

·                 Convenience

TCF banks a large and diverse customer base by offering a host of convenient banking services:

·                 Traditional, supermarket and campus branches open seven days a week

·                 Free debit cards, free coin counting and 968 free ATMs

·                 TCF Free Online Banking

·                 TCF Mobile Banking introduced on January 4, 2011

 

·                 Credit Quality

·                 TCF is primarily a secured portfolio lender, emphasizing credit quality over asset growth

 

·                 Low-cost core deposit funding for national diverse lending platform

·                 Grew core deposits by $2.9 billion since December 31, 2008. As of December 31, 2010, core deposits carried an average rate of .37%

·                 Increased nationally-oriented specialty finance businesses by $406.6 million or 11.5%, in 2010

 


 

3.)                                  What Makes TCF Different

 

·                 No deficient foreclosure procedures

 

·                 No teaser rate or subprime lending programs

 

·                 No option ARM loans

 

·                 No mortgage repurchase risk

 

·                 No low-doc/no-doc loans

 

·                 No Freddie Mac or Fannie Mae preferred stock

 

·                 No non-agency mortgage-backed securities

 

·                 No off-balance-sheet funding or securitizations

 

·                 No bank-owned life insurance

 

·                 No mortgage servicing rights

 


 

4.)           Diversified Revenue Base

 

At December 31, 2010

 

Good Revenue Growth +7%*

($ millions)

 

 

12/06

 

12/07

 

12/08

 

12/09

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

$

538

 

$

 550

 

$

 594

 

$

 633

 

$

699

 

Non-interest Income

 

489

 

542

 

498

 

526

 

538

 

Total

 

$

1,027

 

$

 1,092

 

$

 1,092

 

$

 1,159

 

$

1,237

 

 

Strong Net Interest Margin

(Percent)

 

 

2006

 

2007

 

2008

 

2009

 

2010

 

TCF, 4.04%

 

 

 

 

 

 

 

 

 

 

 

First Quarter

 

4.25

%

4.00

%

3.84

%

3.66

%

4.20

%

Second Quarter

 

4.22

 

4.02

 

4.00

 

3.80

 

4.18

 

Third Quarter

 

4.11

 

3.90

 

3.97

 

3.92

 

4.12

 

Fourth Quarter

 

4.07

 

3.83

 

3.84

 

4.07

 

4.04

 

 

KBW Regional Banking

Index Median, 3.78% 1

First Quarter

 

3.79

%

3.66

%

3.61

%

3.49

%

3.71

%

Second Quarter

 

3.84

 

3.69

 

3.64

 

3.57

 

3.73

 

Third Quarter

 

3.81

 

3.68

 

3.64

 

3.64

 

3.78

 

Fourth Quarter

 

3.70

 

3.69

 

3.65

 

3.68

 

 

 

 

Strong Mix of Fee Revenues

($ millions)

 

 

12/10

 

% of Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Fees and Service Charges

 

$

273

 

53

%

 

 

 

 

 

 

Card Revenue

 

111

 

22

 

 

 

 

 

 

 

Specialty Finance

 

93

 

18

 

 

 

 

 

 

 

ATM Revenue and Other

 

32

 

7

 

 

 

 

 

 

 

Total

 

$

509

 

100

%

 

 

 

 

 

 

 

1-Year Interest Rate GAP

 

 

At 12/31/09

 

At 12/31/10

 

 

 

 

 

 

 

Asset (Liability) Sensitive

 

(6.6

)%

2.8

%

 

 

 

 

 

 

 

*  Annual growth rate (‘10 vs. ‘09)

1   QTD September 30, 2010

 


 

5.)                                  Capital Ratios - Holding Company

($ millions)

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Tier 1 Common Capital

 

$

914

 

$

964

 

$

999

 

$

1,042

 

$

1,352

 

Total Tier 1 Common Capital Ratio 1

 

8.65

%

8.28

%

8.05

%

7.65

%

9.71

%

 

At December 31, 2010

 

·                  Other Capital Ratios

·                  Total equity to total assets — 8.02%

 

·                  Tangible realized common equity — 7.37% 2

 

·                  Total tier 1 risk-based capital — 10.59%

 

·                  Total risk-based capital — 12.98%

 

·                  Tangible realized common equity has increased seven consecutive quarters

 

1   See “Reconciliation of GAAP to Non-GAAP Measures - Total Tier 1 Common Capital Ratio” slide

2   See “Reconciliation of GAAP to Non-GAAP Measures - Tangible Realized Common Equity” slide

 


 

6.)                                  Strong Deposit Franchise

Quarterly Average Balances

($ millions)

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

4,141

 

$

3,981

 

$

3,914

 

$

4,116

 

$

4,359

 

Savings

 

2,321

 

2,596

 

2,861

 

5,231

 

5,412

 

Money Market

 

594

 

598

 

625

 

672

 

644

 

Certificates of Deposit (CDs)

 

2,471

 

2,307

 

2,449

 

1,367

 

1,040

 

Total

 

$

9,527

 

$

9,482

 

$

9,849

 

$

11,386

 

$

11,455

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rate 1:

 

2.33

%

2.29

%

1.51

%

.74

%

.46

%

 

 

 

 

 

 

 

 

 

 

 

 

CDs as a % of total deposits:

 

25.9

%

24.3

%

24.9

%

12.0

%

9.1

%

 

1   Quarter-to-date (annualized)

 


 

7.)                                  Significant Liquidity & Borrowing Capacity

 

At December 31, 2010

 

·                  Asset Liquidity

 

·                  Balance at the Federal Reserve - $371.3 million

 

·                  Unemcumbered securities - $136 million

 

·                  Borrowing Capacity

 

·                  Federal Home Loan Bank of Des Moines - $1.7 billion

 

·                  Federal Reserve Discount Window - $529 million

 


 

8.)                                  Non-Interest Expense

($ millions)

 

 

 

 

 

 

Change

 

 

 

 

 

2010

 

2009

 

$

 

%

 

 

 

Compensation and employee benefits

 

$

352.9

 

$

357.0

 

$

(4.1

)

(1.2

)%

 

 

Occupancy and equipment

 

126.5

 

126.3

 

.2

 

.2

 

 

 

FDIC insurance

 

23.6

 

19.1

 

4.5

 

23.4

 

 

 

Advertising and marketing

 

13.0

 

17.1

 

(4.1

)

(23.8

)

 

 

Deposit account premiums

 

17.3

 

30.7

 

(13.4

)

(43.6

)

 

 

Other

 

146.3

 

142.8

 

3.5

 

2.4

 

 

 

Core operating expenses

 

679.6

 

693.0

 

(13.4

)

(1.9

)

 

 

Foreclosed real estate and repossessed assets, net

 

40.4

 

31.9

 

8.5

 

26.7

 

 

 

Operating lease depreciation

 

37.1

 

22.4

 

14.7

 

65.9

 

 

 

Other credit costs, net

 

6.0

 

12.1

 

(6.1

)

(50.4

)

 

 

FDIC assessment

 

 

8.4

 

(8.4

)

(100.0

)

 

 

Total non-interest expense

 

$

763.1

 

$

767.8

 

$

(4.7

)

(.6

)%

 

 

 


 

9.)                                  Banking Fees & Other Revenue 1
($ millions)

 

 

 

2006

 

2007

 

2008

 

2009

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

 

$

92

 

$

94

 

$

96

 

$

90

 

$

100

 

Second Quarter

 

104

 

106

 

103

 

112

 

115

 

Third Quarter

 

105

 

107

 

107

 

111

 

103

 

Fourth Quarter

 

99

 

106

 

100

 

109

 

96

 

Total

 

$

400

 

$

413

 

$

406

 

$

422

 

$

414

 

 

1      Consisting of fees and service charges, card revenue and ATM revenue

 


 

10.)                           Card Revenue +6%*
($ millions)

 

 

 

2006

 

2007

 

2008

 

2009

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

 

$

21

 

$

23

 

$

25

 

$

25

 

$

27

 

Second Quarter

 

23

 

25

 

27

 

27

 

29

 

Third Quarter

 

24

 

26

 

26

 

26

 

27

 

Fourth Quarter

 

24

 

25

 

25

 

27

 

28

 

Total

 

$

92

 

$

99

 

$

103

 

$

105

 

$

111

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Volume:

 

$

6,465

 

$

6,949

 

$

7,280

 

$

7,308

 

$

7,630

 

Average Interchange Rate:

 

1.36

%

1.35

%

1.34

%

1.34

%

1.38

%

 

At December 31, 2010

 

·      27% of total banking fees

 

·      11th largest issuer of Visa Classic debit cards

 

·      12th largest issuer of Visa Commercial debit cards

 

·      $7.6 billion in sales volume, up 4.4%

 

·      22.2 transactions per month on active cards, up 7.3%

 

·      Interchange fees paid by merchants

 

*      Annual growth rate (‘10 vs. ‘09)

 


 

11.)                           Durbin Amendment Lawsuit

 

·                  On October 12, 2010, TCF filed a lawsuit challenging the constitutionality of the debit card interchange fee limitations of the Dodd-Frank Act (the Durbin Amendment)

 

·                  Amendment orders Federal Reserve to enact regulations that strictly limit the amount of interchange fees banks can charge retailers on debit card transactions

·                  TCF average interchange rate of 1.38% at December 31, 2010

·                  Federal Reserve announced proposed rates of 7 to 12 cents per transaction based only on incremental processing fees while specifically excluding other costs such as network costs

 

·                  Challenge of constitutionality:

·                  Due Process - price cap prevents TCF from earning a fair rate of return on its invested capital

·                  Equal Protection - only applies to banks with $10 billion or more in total assets;  99% of all U.S. banks and 48% of U.S. branches are exempt as of September 30, 2010

·                  Takings Clause - taking of TCF property without just compensation

 


 

12.)                           Stable Loan Growth +7%*
($ millions)

 

 

 

Diverse Products and Geographies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Lending

 

$

6,717

 

$

7,274

 

$

7,364

 

$

7,332

 

$

7,195

 

Commercial Lending

 

2,943

 

3,116

 

3,491

 

3,719

 

3,646

 

Leasing and Equipment Finance

 

1,818

 

2,104

 

2,486

 

3,071

 

3,155

 

Inventory Finance

 

 

 

5

 

469

 

792

 

Total

 

$

11,478

 

$

12,494

 

$

13,346

 

$

14,591

 

$

14,788

 

 

*      Five-year compound annual growth rate

 


 

13.)                           Leasing & Equipment Finance 1
($ millions)

 

 

 

Growth Opportunities Still Exist

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing and Equipment Finance

 

$

1,899

 

$

2,175

 

$

2,545

 

$

3,177

 

$

3,232

 

 

At December 31, 2010

 

·                  13th largest bank-affiliated leasing company and 29th largest equipment finance/leasing company in the U.S.

 

·                  Diverse equipment types

·                  20% specialty vehicles, 18% manufacturing, 14% medical, 11% construction

 

·                  6.43% average yield

 

·                  Government stimulus of 100% year-one depreciation creates volume and spread opportunities

 

·                  Over 60-day delinquency rate .19%  2

 

·                  Non-accrual loans and leases have decreased three consecutive quarters

 

·      Net charge-offs:

 

2010

 

2009

 

2008

 

 

 

1.00%

 

.97%

 

.50%

 

 

·                  Uninstalled backlog of $402.6 million

 

·                  Unguaranteed residuals of only $109.6 million, or 4.9% of leases

 

1          Includes operating leases ($77.4 million at December 31, 2010)

2          Excludes non-accrual loans and leases and acquired portfolios

 


 

14.)                           TCF Inventory Finance
($ millions)

 

 

 

Experienced and Seasoned

 

 

 

 

 

 

 

 

 

Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/09

 

3/10

 

6/10

 

9/10

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronics & Appliances

 

$

122.3

 

$

119.6

 

$

122.4

 

$

120.1

 

$

130.2

 

Lawn & Garden

 

346.5

 

580.8

 

521.8

 

462.9

 

441.7

 

Power Sports & Other

 

 

 

 

212.6

 

220.5

 

Total

 

$

468.8

 

$

700.4

 

$

644.2

 

$

795.6

 

$

792.4

 

 

At December 31, 2010

 

·                  Inventory floorplan finance business with a focus on lawn and garden products, consumer electronics, household appliances and power sports

 

·                  Operates in the U.S. and Canada

 

·                  235 employees

 

·                  100% variable rate receivables

 

·                  Average yield 7.37%

 

·      Net charge-offs:

 

2010

 

2009

 

 

 

.17%

 

.10%

 

 

·                  Credit support from equipment manufacturers

 

·                  Credit risk spread across 8,670 active dealers

 


 

15.)                           Commercial Lending
($ millions)

 

 

 

Secured Lending Philosophy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate

 

$

2,391

 

$

2,558

 

$

2,984

 

$

3,269

 

$

3,328

 

Commercial Business

 

552

 

558

 

507

 

450

 

318

 

Total

 

$

2,943

 

$

3,116

 

$

3,491

 

$

3,719

 

$

3,646

 

 

At December 31, 2010

 

·                  Commercial real estate — $3.3 billion

·                  26% retail services

·                  23% apartment loans

·                  18% office buildings

·                  14% industrial buildings

·                  7% hotels and motels

 

·                  Commercial business — $318 million

 

·                  Commercial highlights

·                  5.57% average yield

·                  86% fixed rate, 14% variable rate

·                  Over 60-day delinquency rate .26% 1

·      Net charge-offs:

 

2010

 

2009

 

2008

 

 

 

1.31%

 

1.24%

 

.54%

 

 

·                  Non-accrual loans decreased $19.6 million during 4Q10

·                  Approximately 99% of all commercial loans secured

·                  CRE location mix: 92% TCF banking markets, 8% other

·                  Michigan exposure is $752 million, down 8.8% from December 31, 2009

 

1          Excludes non-accrual loans

 


 

16.)                           Wholesale Banking1 Credit Quality
($ millions)

 

 

 

12/09

 

9/10

 

12/10

 

 

 

 

 

 

 

 

 

Performing loans and leases:

 

 

 

 

 

 

 

Non-classified

 

$

6,716

 

$

6,979

 

$

6,950

 

Classified 2

 

363

 

418

 

396

 

Subtotal performing

 

$

7,079

 

$

7,397

 

$

7,346

 

60+ days delinquent and accruing 3

 

23

 

11

 

20

 

Accruing TDRs 4

 

 

5

 

49

 

Non-accrual loans and leases

 

157

 

203

 

178

 

Subtotal underperforming

 

$

180

 

$

219

 

$

247

 

Total loans and leases

 

$

7,259

 

$

7,616

 

$

7,593

 

 

1          Includes commercial banking and specialty finance

2          Excludes classified loans and leases that are 60+ days delinquent or accruing TDRs

3          Excludes accruing TDRs that are 60+ days delinquent

4          No over 60-day delinquencies as of December 31, 2010

 


 

17.)                           Classified Wholesale Loans & Leases 1
($ millions)

 

 

 

12/09

 

3/10

 

6/10

 

9/10

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified Wholesale Loans and Leases

 

$

370

 

$

435

 

$

439

 

$

429

 

$

454

 

 

At December 31, 2010

 

·                  By type

·                  Commercial real estate — $386 million

·                  Up 33.6% from December 31, 2009

·                  Commercial business — $22.3 million

·                  Down 47.5% from December 31, 2009

·                  Leasing and equipment finance — $39.8 million

·                  Up 2% from December 31, 2009

·                  Inventory finance — $5.7 million

 

·                  Over 60-day delinquency rate of 2.05%2, up from 1.94%2 at December 31, 2009

 

1          See “Source References & Footnotes” slide for a detailed description of classified wholesale loans and leases

2       As a percent of classified wholesale loans and leases

 


 

18.)                           Consumer Real Estate
($ millions)

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

First Mortgages

 

$

4,409

 

$

4,707

 

$

4,882

 

$

4,962

 

$

4,894

 

Junior Liens

 

2,101

 

2,344

 

2,420

 

2,319

 

2,262

 

Total

 

$

6,510

 

$

7,051

 

$

7,302

 

$

7,281

 

$

7,156

 

 

At December 31, 2010

 

·                  74% first mortgage lien positions, average loan amount of $122,926

 

·                  26% junior lien positions, average loan amount of $40,960

 

·                  67% fixed-rate, 33% variable-rate

 

·                  Average home value of $255,296 1

 

·                  5.95% average yield

 

·                  Over 60-day delinquency rate of 1.35% 2; down in consecutive quarters

 

·      Net charge-offs:

 

2010

 

2009

 

2008

 

 

 

1.80%

 

1.46%

 

.86%

 

 

·                  Average FICO score of the retail lending operation:
At origination — 726
Updated 4Q10 — 725

 

·                  Michigan exposure is $1 billion

 

·                  $2 billion of loans originated since January 1, 2009 with 2010 net charge-offs of .03%

 

1          Based on value at origination

2          Excludes non-accrual loans

 


 

19.)                           Consumer Credit Quality
($ millions)

 

 

 

12/09

 

9/10

 

12/10

 

Performing loans

 

$

6,863

 

$

6,713

 

$

6,613

 

60+ days delinquent and accruing 1

 

77

 

84

 

77

 

Accruing TDRs

 

253

 

316

 

337

 

Non-accrual loans

 

139

 

167

 

168

 

Subtotal underperforming

 

469

 

567

 

582

 

Total loans

 

$

7,332

 

$

7,280

 

$

7,195

 

% of total past due with a recent payment 2

 

14.5

%

28.0

%

28.0

%

 

1          Excludes accruing TDRs that are 60+ days delinquent

2          Retail lending accruing loans over 30-days delinquent that made a payment during the last month of the period

 


 

20.)                           Consumer Real Estate TDRs

 

·                  Loans modified to assist customers with their financial hardship by lowering their monthly loan payments  for up to 18 months

 

·                  At December 31, 2010, TCF held $337.4 million of modified consumer real estate loans that are considered TDRs and continue to accrue interest

 

·                  Reserved for based on present value of expected cash flows - $36.8 million, or 10.9% at December 31, 2010

 

·                  The over 60-day delinquency rate was 5.3% at December 31, 2010, down from 5.5% at September 30, 2010

 

·                  TCF’s current modification program started in August 2009 and represents 80.1% of the December 31, 2010 balance of accruing TDRs

 


 

21.)                           Loan & Lease Geographic Diversification
($000s)

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

Consumer

 

Real Estate

 

Leasing and

 

 

 

 

 

 

 

Real Estate

 

and Commercial

 

Equipment

 

Inventory

 

 

 

At December 31, 2010:

 

and Other

 

Business

 

Finance

 

Finance

 

Total

 

Minnesota

 

$

2,816,387

 

$

882,343

 

$

84,346

 

$

15,848

 

$

3,798,924

 

Illinois

 

2,180,769

 

891,780

 

105,479

 

22,527

 

3,200,555

 

Michigan

 

1,038,430

 

752,337

 

114,830

 

24,026

 

1,929,623

 

Wisconsin

 

476,683

 

551,937

 

54,964

 

20,768

 

1,104,352

 

Colorado

 

571,446

 

139,552

 

44,985

 

6,701

 

762,684

 

California

 

2,651

 

18,102

 

400,813

 

17,274

 

438,840

 

Texas

 

1,795

 

2,765

 

251,376

 

43,782

 

299,718

 

Florida

 

3,682

 

62,729

 

181,229

 

34,994

 

282,634

 

Ohio

 

3,342

 

53,373

 

132,975

 

33,580

 

223,270

 

Indiana

 

24,089

 

104,682

 

62,310

 

21,302

 

212,383

 

New York

 

3,537

 

3,400

 

175,109

 

28,332

 

210,378

 

Canada

 

 

 

4,275

 

189,949

 

194,224

 

Arizona

 

54,115

 

35,770

 

68,634

 

7,616

 

166,135

 

Other

 

18,343

 

147,433

 

1,473,153

 

325,655

 

1,964,584

 

Total

 

$

7,195,269

 

$

3,646,203

 

$

3,154,478

 

$

792,354

 

$

14,788,304

 

 


 

22.)                           Allowance for Loan & Lease Losses
($ millions)

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Loan & Lease Losses

 

$

58.5

 

$

80.9

 

$

172.4

 

$

244.5

 

$

265.8

 

Net Charge-offs

 

.16

%

.29

%

.78

%

1.34

%

1.47

%

 

 

 

 

 

 

 

 

 

 

 

 

Allowance as a % of
period end loans & leases:

 

.51

%

.65

%

1.29

%

1.68

%

1.80

%

Ratio of allowance to net charge-offs:

 

3.3

X

2.3

X

1.7

X

1.3

X

1.2

X

 


 

23.)                           Credit Trends
(Percent)

 

 

 

3/09

 

6/09

 

9/09

 

12/09

 

3/10

 

6/10

 

9/10

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Accrual Loans and Leases

 

1.49

%

1.72

%

1.88

%

2.03

%

2.08

%

2.26

%

2.48

%

2.33

%

Net Charge-offs 1

 

1.04

%

1.43

%

1.52

%

1.35

%

1.22

%

1.30

%

1.58

%

1.75

%

Over 60-day Delinquencies 2

 

.60

%

.72

%

.81

%

.69

%

.82

%

.87

%

.78

%

.79

%

 

1          Annualized

2      Excludes acquired portfolios

 


 

24.)                           Other Real Estate Owned
($ millions)

 

 

 

12/09

 

3/10

 

6/10

 

9/10

 

12/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Properties in Foreclosure

 

$

20.6

 

$

20.7

 

$

28.4

 

$

28.1

 

$

27.2

 

Properties Owned

 

85.2

 

80.7

 

89.5

 

108.0

 

113.9

 

Total

 

$

105.8

 

$

101.4

 

$

117.9

 

$

136.1

 

$

141.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential properties owned

 

 

 

 

 

 

 

 

 

 

 

Number:

 

298

 

350

 

410

 

480

 

520

 

$

 (millions)

 

$

46.3

 

$

44.5

 

$

53.5

 

$

60.2

 

$

62.9

 

 


 

25).                           Net Charge-offs 1 vs. Other Banks
(Percent)

 

 

 

2006

 

2007

 

2008

 

2009

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

TCF

 

.16

%

.29

%

.78

%

1.34

%

1.47

%

Bank of America

 

.68

 

.81

 

1.72

 

3.42

 

3.44

 

US Bancorp

 

.38

 

.52

 

1.10

 

2.16

 

2.34

 

Wells Fargo

 

.64

 

.93

 

1.84

 

2.10

 

2.19

 

JPMorgan Chase

 

.67

 

.95

 

1.67

 

3.36

 

3.36

 

Fifth Third

 

.43

 

.59

 

3.16

 

3.10

 

2.94

 

PNC

 

.27

 

.31

 

.72

 

1.60

 

1.87

 

 

1                   As a percent of average loans & leases

 


 

26.)                           Non-Accrual Loans & Leases
($ millions)

 

 

 

 

 

 

 

Leasing and

 

 

 

 

 

 

 

 

 

 

 

Equipment

 

Inventory

 

 

 

 

 

Consumer

 

Commercial

 

Finance

 

Finance

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2009

 

$

139.3

 

$

106.2

 

$

50.0

 

$

.8

 

$

296.3

 

Additions

 

245.7

 

137.6

 

56.0

 

6.3

 

445.6

 1

Charge-offs

 

(57.2

)

(45.8

)

(27.9

)

(.1

)

(131.0

)

Transfers to other assets

 

(98.5

)

(33.1

)

(15.3

)

(.3

)

(147.2

)

Return to accrual status

 

(49.0

)

 

(4.4

)

(4.1

)

(57.5

)

Payments received

 

(8.6

)

(26.5

)

(24.0

)

(1.6

)

(60.7

)

Other, net

 

(4.2

)

3.9

 

 

.1

 

(.2

)

Balance at December 31, 2010

 

$

167.5

 

$

142.3

 

$

34.4

 

$

1.1

 

$

345.3

 

Net change

 

$

28.2

 

$

36.1

 

$

(15.6

)

$

.3

 

$

49.0

 

 

1                   4Q10 additions of $92.2 million are down 36% from 3Q10 additions of $143.9 million


 

27.)                           Summary of Non-Accrual Loans
($ millions)

 

 

 

 

 

Charge-offs and

 

 

 

 

 

 

 

Contractual

 

Allowance

 

Net

 

 

 

At Dec. 31, 2010:

 

Balance

 

Recorded

 

Exposure

 

Impairment1

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

$

212.8

 

$

46.8

 

$

166.0

 

   22.0%

 

Commercial

 

200.6

 

86.4

 

114.2

 

43.1

 

Leasing and equipment finance

 

34.5

 

8.4

 

26.1

 

24.3

 

Inventory finance

 

1.0

 

.2

 

.8

 

17.5

 

Total

 

$

448.9

 

$

141.8

 

$

307.1

 

31.6

 

 

1                   Represents the ratio of charge-offs and allowance recorded to the contractual loan balances prior to non-accrual status


 

28.)                           Summary of Real Estate Owned
($ millions)

 

 

 

Contractual Loan

 

 

 

 

 

 

 

 

 

Balance Prior to

 

Charge-offs and

 

 

 

 

 

 

 

Non-performing

 

Writedowns

 

Other Real Estate

 

 

 

At Dec. 31, 2010:

 

Status

 

Recorded

 

Owned Balance

 

Impairment1

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

$

134.5

 

$

44.4

 

$

90.1

 

   33.0%

 

Commercial

 

69.5

 

18.5

 

51.0

 

26.6

 

Total

 

$

204.0

 

$

62.9

 

$

141.1

 

30.8

 

 

1                   Represents the ratio of charge-offs and writedowns recorded to the contractual loan balances prior to non-performing status

 


 

29.)                           Real Estate Owned

($ millions)

 

 

 

Consumer

 

Commercial

 

Total

 

 

 

 

 

 

 

 

 

Balance at December 31, 2009

 

$

67.0

 

$

38.8

 

$

105.8

 

Transferred in

 

121.6

 

29.5

 

151.1

 

Sales  

 

(88.4

)

(10.6

)

(99.0

)

Writedowns

 

(12.6

)

(4.0

)

(16.6

)

Other, net

 

2.5

 

(2.7

)

(.2

)

Balance at December 31, 2010

 

$

90.1

 

$

51.0

 

$

141.1

 

Net change

 

$

23.1

 

$

12.2

 

$

35.3

 

 


 

30.)                           Well-Positioned for Future Success

 

·                  Experienced and tenured management team in all TCF markets to take advantage of the marketplace opportunities created by increased M&A activity

 

·                 “New” industry approach of portfolio lending funded with retail deposits has been a part of TCF’s business philosophy for many years

 

·                  Current management structure (Wholesale, Retail and Treasury & Support Services) improves execution, reduces overhead and increases our ability to quickly react to changes and new opportunities

 

·                  Strong wholesale banking management team positions us for profitable growth

 

·                  Core profitability is still very high when credit costs normalize


 

31.)                           Cautionary Statement

 

This presentation 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 and Other 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; foreign currency exchange risks.

 

* 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, (continued)

 


 

32.)                           Cautionary Statement (continued)

 

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.

 

* 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.

 


 

33.)                           Reconciliation of GAAP to Non-GAAP Measures - Tangible Realized Common Equity1

($000s)

 

 

 

December 31, 2010

Computation of total equity to total assets:

 

 

 

Total equity

 

$

1,480,163

 

Total assets

 

$

18,465,025

 

Total equity to total assets

 

8.02

%

 

 

 

 

Computation of tangible realized common equity to tangible assets:

 

 

 

Total equity

 

$

1,480,163

 

Less: Non-controlling interest in subsidiaries

 

8,500

 

Total TCF stockholders’ equity

 

1,471,663

 

Less:

 

 

 

Goodwill

 

152,599

 

Other intangibles

 

1,232

 

Add:

 

 

 

Accumulated other comprehensive income

 

31,514

 

Tangible realized common equity

 

$

1,349,346

 

 

 

 

 

Total assets

 

$

18,465,025

 

Less:

 

 

 

Goodwill

 

152,599

 

Other intangibles

 

1,232

 

Tangible assets

 

$

18,311,194

 

 

 

 

 

Tangible realized common equity to tangible assets

 

7.37

%

 

1      In contrast to GAAP-basis measures, tangible realized common equity excludes the effect of goodwill, other intangibles and accumulated other comprehensive income (loss). Management reviews tangible realized common equity as an ongoing measure and has included this information because of current interest in the industry.  The methodology for calculating tangible realized common equity may vary between companies.

 


 

34.)                           Reconciliation of GAAP to Non-GAAP Measures - Total Tier 1 Common Capital Ratio1

($000s)

 

 

 

Dec. 31, 2006

 

Dec. 31, 2007

 

Dec. 31, 2008

 

Dec. 31, 2009

 

Dec. 31, 2010

 

Total Tier 1 risk-based capital ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total tier 1 capital

 

$

914,128

 

 

$

964,467

 

 

$

1,461,973

 

 

$

1,161,750

 

 

$

1,475,525

 

 

Total risk-weighted assets

 

$

10,566,936

 

 

$

11,648,286

 

 

$

12,401,467

 

 

$

13,627,871

 

 

$

13,929,097

 

 

Total tier 1 risk-based capital ratio

 

8.65

%

 

8.28

%

 

11.79

%

 

8.52

%

 

10.59

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computation of tier 1 common capital ratio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total tier 1 capital

 

$

914,128

 

 

$

964,467

 

 

$

1,461,973

 

 

$

1,161,750

 

 

$

1,475,525

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Qualifying trust preferred securities

 

 

 

 

 

115,000

 

 

115,000

 

 

115,000

 

 

Qualifying non-controlling interest in subsidiaries

 

 

 

 

 

 

 

4,393

 

 

8,500

 

 

Preferred stock

 

 

 

 

 

348,437

 

 

 

 

 

 

Total tier 1 common capital

 

$

914,128

 

 

$

964,467

 

 

$

998,536

 

 

$

1,042,357

 

 

$

1,352,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-weighted assets

 

$

10,566,936

 

 

$

11,648,286

 

 

$

12,401,467

 

 

$

13,627,871

 

 

$

13,929,097

 

 

Total tier 1 common capital ratio

 

8.65

%

 

8.28

%

 

8.05

%

 

7.65

%

 

9.71

%

 

 

1      In contrast to GAAP-basis measures, the total tier 1 common capital ratio excludes the effect of qualifying trust preferred securities and qualifying  non-controlling interest in subsidiaries. Management reviews the total tier 1 common capital ratio as an ongoing measure and has included this information because of current interest in the industry.  The  methodology for calculating total tier 1 common capital may vary between companies.

 


 

35.)                           Source References & Footnotes

 

Slide: Corporate Profile

35th largest U.S. bank - SNL; 9/30/10

24th largest branch network - SNL Financial, LC; 4Q10

5th largest in campus card relationships - CR80News; Spring 2010

11th largest issuer of Visa Classic - Visa; 3Q10; ranked by sales volume

12th largest issuer of Visa Commercial - Visa; 3Q10; ranked by sales volume

13th largest bank affiliated leasing company - The Monitor; 2010 Monitor 100

 

Slide: Diversified Revenue Base

KBW Regional Banking Index net interest margin data - KBW & SNL Financial LC; 9/30/10

 

Slide: Card Revenue

11th largest issuer of Visa Classic - Visa; 3Q10; ranked by sales volume

12th largest issuer of Visa Commercial - Visa; 3Q10; ranked by sales volume

 

Slide: Durbin Amendment Lawsuit

99% of all banks and 48% of branches are exempt - SNL Financial, LC; 9/30/2010

 

Slide: Leasing and Equipment Finance

13th largest bank-affiliated leasing company - The Monitor; 2010 Monitor Bank 40

29th largest equipment finance/leasing company - The Monitor; 2010 Monitor 100

 

Slide: Classified Wholesale Loans & Leases

Classified wholesale loans and leases excludes non-accrual loans and leases, over 90-day delinquent loans and leases, real estate owned, and repossessed assets and includes commercial loans and leases primarily classified for regulatory purposes as substandard and reflect the distinct possibility, but not probability, that they will become non-performing or that TCF will not be able to collect all amounts due according to the contractual terms of the loan or lease agreement

 

Slide: Net Charge-offs vs. Other Banks

Net charge-off data - SNL Financial LC; 12/31/10

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