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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):  October 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.

 

The following information, including Exhibit 99.1, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, except as may be expressly set forth by specific reference in such a filing.

 

TCF Financial Corporation (the “Company”) issued a press release dated October 20, 2011, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended September 30, 2011.

 

The earnings release is also available on the Investor Relations section of the Company’s web site at http://ir.tcfbank.com.  The Company’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 October 20, 2011

 

 

2


 

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 Managing Director, Corporate Development

(Principal Accounting Officer)

 

Dated:    October 20, 2011

 

 

3

(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 66th Consecutive Quarter of Net Income – Earns $31.7 Million

 

THIRD QUARTER HIGHLIGHTS

·                 Diluted earnings per common share of 20 cents

·                 Net income of $31.7 million

·                 Net interest margin of 3.96 percent

·                 Average deposits increased $113.3 million from the second quarter of 2011

·                 Non-performing assets declined $20.1 million from the second quarter of 2011

·                 Announced quarterly cash dividend of 5 cents per common share, payable November 30, 2011

 

 Earnings Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 ($ in thousands, except per-share data)

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

3Q
2011

 

2Q
2011

 

3Q
2010

 

3Q11 vs
2Q11

 

3Q11 vs
3Q10

 

YTD
2011

 

YTD
2010

 

Percent
Change

 

 Net income

 

$31,717

 

$29,837

 

$36,893

 

   6.3%

 

   (14.0)%

 

$91,240

 

$115,839

 

   (21.2)%

 

 Diluted earnings per common share

 

.20

 

.19

 

.26

 

5.3

 

(23.1)

 

.59

 

.84

 

(29.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Financial Ratios (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Return on average assets

 

.69

%

.67

%

.84

%

 

 

 

 

.68

%

.87

%

 

 

 Return on average common equity

 

7.00

 

6.86

 

9.95

 

 

 

 

 

7.20

 

11.11

 

 

 

 Net interest margin

 

3.96

 

4.02

 

4.14

 

 

 

 

 

4.01

 

4.18

 

 

 

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

 

1.48

 

1.19

 

1.58

 

 

 

 

 

1.39

 

1.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-more-

 


 

2

 

WAYZATA, MN, October 20, 2011 – TCF Financial Corporation (“TCF”) (NYSE: TCB) today reported net income for the third quarter of 2011 of $31.7 million, compared with $36.9 million in the third quarter of 2010 and $29.8 million in the second quarter of 2011.  Diluted earnings per common share was 20 cents for the third quarter of 2011, compared with 26 cents in the third quarter of 2010 and 19 cents in the second quarter of 2011.

 

Net income for the first nine months of 2011 was $91.2 million, compared with $115.8 million for the same 2010 period.  Diluted earnings per common share for the first nine months of 2011 was 59 cents, compared with 84 cents for the same 2010 period.

 

TCF declared a quarterly cash dividend of five cents per common share payable on November 30, 2011 to stockholders of record at the close of business on October 28, 2011.

 

Chairman’s Statement

 

“TCF’s 66th consecutive quarter of profitability showed an increase in revenue from the second quarter, a decrease in operating expenses and continued improvement in credit metrics as balances of both non-accrual loans and leases and real estate owned decreased in the quarter,” said William A. Cooper, TCF Chairman and Chief Executive Officer.  “Our continued hard work on the credit front is delivering results despite little to no help from the economy as unemployment rates remain elevated and job growth is stagnant.  Increased liquidity is negatively impacting TCF’s net interest margin as the balance sheet contracted slightly during the quarter.  But while these near-term challenges are considerable, the company is taking significant steps to improve its positioning.

 

“During the quarter, we announced a significant agreement with BRP, one of the world’s premier manufacturers of powersports equipment, which we anticipate will deliver significant loan balances in both the U.S. and Canada to our inventory finance business beginning in 2012.  We also announced the signing of a definitive agreement to acquire Gateway One Lending & Finance that will provide additional growth and diversity for our specialty finance business through a new consumer-oriented product – automobile lending.  We expect both of these actions will help to grow the loan and lease portfolio, improve its diversification by both geography and asset class and help TCF grow its revenue base going forward.

 

-more-

 


 

3

 

“Recently, we began making changes to our checking account lineup including the implementation of the Daily Overdraft Service product in all markets. We believe this product, which eliminates per-item NSF fees at TCF, has the best long-term potential for revenue growth and is straightforward and transparent to our customers.  We will continue to evaluate and implement additional revenue-producing and expense reduction strategies throughout the company to mitigate lost revenues resulting from increased legislative, regulatory and compliance burdens.”

 

 Total Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

3Q 
2011

 

2Q 
2011

 

3Q 
2010

 

3Q11 vs
2Q11

 

3Q11 vs
3Q10

 

YTD
2011

 

YTD
2010

 

Percent
Change

 

 Net interest income

 

$176,064

 

$176,150

 

$173,755

 

N.M.

 

   1.3%

 

$526,254

 

$524,916

 

.3

%

 

 Fees and other revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Fees and service charges

 

58,452

 

56,396

 

67,684

 

3.6

 

(13.6)  

 

168,361

 

211,701

 

(20.5

)

 

 Card revenue

 

27,701

 

28,219

 

27,779

 

(1.8)

 

  (.3)

 

82,504

 

83,442

 

(1.1

)

 

 ATM revenue

 

7,523

 

7,091

 

7,985

 

6.1

 

(5.8)

 

21,319

 

22,851

 

(6.7

)

 

Total banking fees

 

93,676

 

91,706

 

103,448

 

2.1

 

(9.4)

 

272,184

 

317,994

 

(14.4

)

 

 Leasing and equipment
finance

 

21,646

 

22,279

 

24,912

 

(2.8)

 

(13.1)  

 

70,675

 

65,792

 

7.4

 

 

 Other

 

786

 

384

 

1,077

 

104.7    

 

(27.0)  

 

1,864

 

4,767

 

(60.9

)

 

Total fees and other revenue

 

116,108

 

114,369

 

129,437

 

1.5

 

(10.3)  

 

344,723

 

388,553

 

(11.3

)

 

Subtotal

 

292,172

 

290,519

 

303,192

 

  .6

 

(3.6)

 

870,977

 

913,469

 

(4.7

)

 

 Gains (losses) on securities

 

1,648

 

(227

)

8,505

 

N.M.

 

(80.6)  

 

1,421

 

7,938

 

(82.1

)

 

Total revenue

 

$293,820

 

$290,292

 

$311,697

 

1.2

 

(5.7)

 

$872,398

 

$921,407

 

(5.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net interest margin(1) 

 

3.96

%

4.02

%

4.14

%

 

 

 

 

4.01

%

4.18

%

 

 

 

 Fees and other revenue as
a % of total revenue

 

39.52

 

39.40

 

41.53

 

 

 

 

 

39.51

 

42.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

·                  Net interest income for the third quarter of 2011 increased $2.3 million, or 1.3 percent compared with the third quarter of 2010 and was flat with the second quarter of 2011. The increase in net interest income from the third quarter of 2010 was primarily due to reductions in deposit rates, reduced interest expense on long-term borrowings and additional interest earned due to loan growth in inventory finance, partially offset by reduced interest income on consumer real estate loans, as lower yielding variable-rate loans replaced higher yielding fixed-rate loans.

 

·                  Net interest margin in the third quarter of 2011 was 3.96 percent compared with 4.14 percent in the third quarter of 2010 and 4.02 percent in the second quarter of 2011. The decrease in net interest margin from

 

-more-

 


 

4

 

both periods was primarily due to increased asset liquidity and growth in lower yielding loans and leases as a result of the lower interest rate environment. These changes were partially offset by a lower average cost of deposits and borrowings.

 

·                  As a result of higher regulatory liquidity expectations across the industry and lower customer demand for credit, TCF continued to increase its asset liquidity during the third quarter of 2011.  Interest-bearing deposits held at the Federal Reserve and unencumbered securities were $1.5 billion at September 30, 2011, an increase of $625 million from the second quarter of 2011 and $1.3 billion from the third quarter of 2010.  The increased asset liquidity position, which includes maintaining interest-bearing cash in anticipation of the future redemption of the trust preferred securities, negatively impacted net interest margin for the third quarter of 2011 by 21 basis points compared to the third quarter of 2010 and by 4 basis points from the second quarter of 2011.

 

Non-interest Income

 

·                  Banking fees and service charges in the third quarter of 2011 were $58.5 million, down $9.2 million, or 13.6 percent, from the third quarter of 2010 and up $2.1 million, or 3.6 percent, from the second quarter of 2011.  The decrease in banking fees and services charges from the third quarter of 2010 was primarily due to the impact of a full quarter of decreased activity-based fee revenue as a result of a change in overdraft fee regulations in August 2010 and lower monthly maintenance fees as more customers qualified for fee waivers. The increase in banking fees and service charges from the second quarter of 2011 was primarily due to increased transaction activity.

 

·                  Card revenues were $27.7 million in the third quarter of 2011, flat with the third quarter of 2010 and down $518 thousand, or 1.8 percent, from the second quarter of 2011. Compared with the third quarter of 2010, a decrease in average interchange rates in the third quarter of 2011 was mostly offset by an increase in the average size and volume of transactions. The decrease in card revenue from the second quarter of 2011 was primarily due to lower sales volumes and lower average interchanges fees per transaction.

 

·                  On June 29, 2011, the Federal Reserve issued its final debit card interchange rules, establishing a debit card interchange fee cap. These rules became effective October 1, 2011, and apply to issuers that,

 

-more-

 


 

5

 

together with their affiliates, have assets of $10 billion or more. These regulations are estimated to reduce TCF’s card interchange revenue by approximately $15 million in the fourth quarter of 2011.  TCF expects to start seeing the results of various mitigation efforts beginning in the first quarter of 2012.

 

·                  Leasing and equipment finance revenues were $21.6 million in the third quarter of 2011, down $3.3 million, or 13.1 percent, from the third quarter of 2010 and down $633 thousand, or 2.8 percent, from the second quarter of 2011. Decreases from both the third quarter of 2010 and second quarter of 2011 were attributable to lower levels of customer initiated lease activity.

 

·                  Non-interest income related to gains on sales of securities is down $6.9 million from the third quarter of 2011, and down $6.5 million for the nine months ended September 30, 2011, compared with the same 2010 periods.

 

Loans and Leases

 

 Average Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

3Q
 2011

 

2Q
 2011

 

3Q
 2010

 

3Q11 vs
2Q11

 

3Q11 vs
3Q10

 

YTD
2011

 

YTD
2010

 

Percent
Change

 

 Consumer real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First mortgage lien

 

$  4,808,881

 

$  4,838,896

 

$  4,935,583

 

       (.6) %

 

     (2.6) %

 

$  4,836,953

 

$  4,937,578

 

      (2.0) %

 

Junior lien

 

2,176,940

 

2,195,552

 

2,297,433

 

  (.8)

 

(5.2)

 

2,203,365

 

2,304,335

 

  (4.4)

 

Total

 

6,985,821

 

7,034,448

 

7,233,016

 

  (.7)

 

(3.4)

 

7,040,318

 

7,241,913

 

  (2.8)

 

 Consumer other

 

18,183

 

19,463

 

25,130

 

(6.6)

 

(27.6)  

 

19,788

 

27,687

 

(28.5)

 

Total consumer

 

7,004,004

 

7,053,911

 

7,258,146

 

  (.7)

 

(3.5)

 

7,060,106

 

7,269,600

 

  (2.9)

 

 Commercial

 

3,564,198

 

3,597,644

 

3,673,848

 

  (.9)

 

(3.0)

 

3,594,884

 

3,699,195

 

  (2.8)

 

 Leasing and
equipment finance

 

3,066,208

 

3,068,550

 

3,002,714

 

  (.1)

 

2.1

 

3,084,613

 

3,022,487

 

  2.1

 

 Inventory finance

 

826,198

 

978,505

 

655,485

 

(15.6)  

 

26.0  

 

889,709

 

634,182

 

40.3

 

Total

 

$14,460,608

 

$14,698,610

 

$14,590,193

 

(1.6)

 

  (.9)

 

$14,629,312

 

$14,625,464

 

N.M.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  Average consumer real estate loan balances decreased $247.2 million, or 3.4 percent, from the third quarter of 2010 and declined $48.6 million from the second quarter of 2011.  Decreases reflect a decline in production of new loans along with a more competitive environment for those borrowers who meet TCF’s underwriting criteria.

 

·                  Variable-rate consumer real estate loans increased $179.9 million from September 30, 2010 and $13.7 million from June 30, 2011, while fixed-rate consumer real estate loans decreased $427.1 million from September 30, 2010 and $62.3 million from June 30, 2011. Variable-rate loans comprised 34.5 percent of

 

-more-

 


 

6

 

total consumer real estate loans at September 30, 2011, up from 31.6 percent at September 30, 2010 and 34.1 percent at June 30, 2011.

 

·                  Average commercial loan balances in the third quarter of 2011 decreased $109.7 million, or 3 percent, from the third quarter of 2010 and decreased $33.4 million, or .9 percent, from the second quarter of 2011.  The decreases for both periods were primarily due to higher levels of repayments.

 

·                  Average leasing and equipment finance loan and lease balances in the third quarter of 2011 increased $63.5 million, or 2.1 percent, from the third quarter of 2010 and were flat with the second quarter of 2011. The increase from the third quarter of 2010 was primarily due to a growth in the middle market segment, partially offset by runoff of portfolios acquired during 2008, 2009 and 2010. Leasing and equipment finance originations of $1 billion during the first nine months of 2011 represent an increase of $119.6 million, or 13.5 percent, compared to the first nine months of 2010.

 

·                  Average inventory finance loans were $826.2 million in the third quarter of 2011, an increase of $170.7 million, or 26 percent, from the third quarter of 2010. Average inventory finance loans decreased $152.3 million, or 15.6 percent, from the second quarter of 2011.  The increase from the third quarter of 2010 was primarily due to TCF’s entrance into the powersports industry late in the third quarter of 2010.  The decrease from the second quarter of 2011 was primarily due to a seasonal decline in receivables in the lawn and garden programs and the transitioning of an electronics and appliance program to a servicing only program, partially offset by growth in powersports and other programs.

 

-more-

 


 

7

 

Credit Quality

 

 

·                  Overall favorable trends in non-performing assets continue and over 60-day delinquencies and charge-offs remain below peak levels in 2010.

 

-more-

 


 

8

 

 Credit Quality Summary of Performing and Underperforming Loans and Leases

 

Table 5 

 ($ in thousands)

 

Performing Loans and Leases

 

60+ Days
Delinquent and

 

Accruing

 

Non-accrual

 

Total Loans

 

 September 30, 2011:

 

Non-classified

 

Classified(1)

 

Total

 

Accruing(2)

 

TDRs

 

Loans and Leases

 

and Leases

 

 Consumer real estate and other

 

  $

6,405,059

 

  $

-

 

  $

6,405,059

 

  $

71,179

 

  $

378,773

 

  $

148,898

 

  $

7,003,909

 

 Commercial

 

2,969,048

 

304,613

 

3,273,661

 

1,266

 

87,610

 

133,260

 

3,495,797

 

 Leasing and equipment finance

 

2,953,215

 

28,574

 

2,981,789

 

4,709

 

860

 

24,437

 

3,011,795

 

 Inventory finance

 

819,727

 

7,102

 

826,829

 

308

 

-

 

1,077

 

828,214

 

Total loans and leases

 

  $

13,147,049

 

  $

340,289

 

  $

13,487,338

 

  $

77,462

 

  $

467,243

 

  $

307,672

 

  $

14,339,715

 

 Percent of total loans and leases

 

91.7%

 

2.4%

 

94.1%

 

.5%

 

3.3%

 

2.1%

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing Loans and Leases

 

60+ Days
Delinquent and

 

Accruing

 

Non-accrual

 

Total Loans

 

 June 30, 2011:

 

Non-classified

 

Classified(1)

 

Total

 

Accruing(2)

 

TDRs

 

Loans and Leases

 

and Leases

 

 Consumer real estate and other

 

  $

6,472,696

 

  $

-

 

  $

6,472,696

 

  $

67,819

 

  $

364,297

 

  $

150,938

 

  $

7,055,750

 

 Commercial

 

3,068,726

 

353,500

 

3,422,226

 

899

 

50,863

 

140,407

 

3,614,395

 

 Leasing and equipment finance

 

2,987,135

 

32,566

 

3,019,701

 

5,436

 

1,059

 

29,682

 

3,055,878

 

 Inventory finance

 

900,630

 

4,509

 

905,139

 

149

 

-

 

634

 

905,922

 

Total loans and leases

 

  $

13,429,187

 

  $

390,575

 

  $

13,819,762

 

  $

74,303

 

  $

416,219

 

  $

321,661

 

  $

14,631,945

 

 Percent of total loans and leases

 

91.8%

 

2.7%

 

94.5%

 

.5%

 

2.8%

 

2.2%

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 (2) Excludes accruing TDRs that are 60+ days delinquent.

 

 

 

 

At September 30, 2011:

 

·                  The combined balance of performing classified loans and leases, over 60-day delinquent and accruing loans and leases, accruing trouble debt restructurings (“TDR”) and non-accrual loans and leases decreased $10.1 million from the second quarter of 2011, down for the third consecutive quarter. This was primarily due to an increase in payments received on commercial and leasing and equipment finance non-accrual loans and leases and movement of non-accrual loans to other real estate owned.

 

·                  On July 1, 2011, TCF adopted a new accounting standard for determining if a loan modification is a TDR in response to new accounting guidance. The adoption of this standard increased accruing TDRs by $45.5 million and reserves on impaired loans by $2.2 million related to loans that were modified in 2011 but were not TDRs under standards in place at that time. The June 30, 2011 balances of TDRs have been revised from previously reported amounts to conform to the new standard. At September 30, 2011, the over 60-day delinquency rate on accruing consumer real estate TDRs was 6.8 percent, essentially flat with the second quarter of 2011.

 

·                  Over 60-day delinquency rate was .75 percent, down from .78 percent at September 30, 2010 and up from .73 percent at June 30, 2011. The decrease from the third quarter of 2010 was primarily due to decreases

 

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9

 

                    in consumer real estate delinquencies and specialty finance delinquencies. The increase from the second quarter of 2011 was primarily due to an increase in consumer real estate delinquencies, partially offset by lower commercial real estate delinquencies.

 

·                  Total non-accrual loans and leases and other real estate owned (non-performing assets) were $438.1 million at September 30, 2011, a decrease of $67.9 million, or 13.4 percent, from September 30, 2010 and a decrease of $20.1 million, or 4.4 percent, from June 30, 2011, the fourth consecutive quarter of declining non-performing assets.  Non-accrual loans and leases decreased $62.1 million, or 16.8 percent, from September 30, 2010.  This change resulted from a $44.6 million decrease in commercial and leasing and equipment finance non-accrual loans and leases due to fewer additions and increased charge-offs and payments, and a $17.7 million decrease in consumer real estate non-accrual loans, as fewer loans were placed on non-accrual and more loans returned to accrual status, partially offset by a slight increase in inventory finance. TCF continues to see improvements in non-accrual loans and leases as additions are down $105.8 million and loans returning to accrual status were up $27.4 million for the nine months ended September 30, 2011, compared with the prior year period.

 

·                  Other real estate owned was $130.4 million at September 30, 2011, a decrease of $6.1 million from June 30, 2011.  This decrease was primarily due to a decrease in consumer properties, as sales of consumer real estate properties exceeded additions during the quarter.

 

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10

 

Allowance for Loan and Lease Losses

 

 Credit Quality Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

3Q
2011

 

2Q
2011

 

3Q
2010

 

3Q11 vs
2Q11

 

3Q11 vs
3Q10

 

YTD
2011

 

YTD
2010

 

Percent
Change

 

 Allowance for Loan and Lease Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance at beginning of period

 

 $

255,472

 

 $

255,308

 

 $

251,643

 

.1

%

1.5

%

 $

265,819

 

 $

244,471

 

8.7

 %

Charge-offs

 

(57,761)

 

(48,457)

 

(62,945)

 

19.2

 

(8.2)

 

(167,323)

 

(167,150)

 

.1

 

Recoveries

 

4,359

 

4,612

 

5,135

 

(5.5)

 

(15.1)

 

14,263

 

17,008

 

(16.1

)

Net charge-offs

 

(53,402)

 

(43,845)

 

(57,810)

 

21.8

 

(7.6)

 

(153,060)

 

(150,142)

 

1.9

 

Provision for credit losses

 

52,315

 

44,005

 

59,287

 

18.9

 

(11.8)

 

141,594

 

158,791

 

(10.8

)

Other

 

(60)

 

4

 

-

 

N.M.

 

N.M.

 

(28)

 

-

 

N.M

.

 Balance at end of period

 

 $

254,325

 

 $

255,472

 

 $

253,120

 

(.4)

 

.5

 

 $

254,325

 

 $

253,120

 

.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net charge-offs as a percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 average loans and leases(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Consumer real estate and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First mortgage lien

 

2.29

%

1.78

%

1.63

%

51

bps

66

bps

1.96

%

1.44

%

52

 bps 

Junior lien

 

2.99

 

2.75

 

2.50

 

24

 

49

 

2.70

 

2.32

 

38

 

Total consumer real estate

 

2.51

 

2.09

 

1.91

 

42

 

60

 

2.19

 

1.72

 

47

 

 Total consumer real estate and other

 

2.59

 

2.12

 

2.00

 

47

 

59

 

2.22

 

1.78

 

44

 

 Commercial

 

.57

 

.30

 

1.40

 

27

 

(83)

 

.95

 

1.07

 

(12

)

 Leasing and equipment finance

 

.36

 

.45

 

1.16

 

(9)

 

(80)

 

.39

 

1.01

 

(62

)

 Inventory finance

 

.13

 

.13

 

.05

 

-

 

8

 

.12

 

.12

 

-

 

Total

 

1.48

 

1.19

 

1.58

 

29

 

(10)

 

1.39

 

1.37

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Allowance as a percentage of period end loans and leases

 

1.77

%

1.75

%

1.70

%

 

 

 

 

1.77

%

1.70

%

 

 

 Ratio of allowance to net charge-offs(1)

 

1.2

X

1.5

X

1.1

X

 

 

 

 

1.2

X

1.3

X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2011:

 

·                  Allowance for loan and lease losses was $254.3 million, or 1.77 percent of loans and leases, compared with $253.1 million, or 1.70 percent, at September 30, 2010 and $255.5 million, or 1.75 percent, at June 30, 2011.

 

For the quarter ended September 30, 2011:

 

·              Provision for credit losses was $52.3 million, down from $59.3 million in the third quarter of 2010 and up from $44 million recorded in the second quarter of 2011. The decrease from the third quarter of 2010 was primarily due to decreased net charge-offs in the commercial and leasing and equipment finance portfolios as customer performance improved. The increase from the second quarter of 2011 was primarily due to increased consumer net charge-offs.

 

·              Net loan and lease charge-offs were $53.4 million, or 1.48 percent, annualized, of average loans and leases, down from $57.8 million, or 1.58 percent, annualized, in the third quarter of 2010 and up from $43.8 million, or 1.19 percent, annualized, in the second quarter of 2011. The decrease from the third

 

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11

 

quarter of 2010 was primarily due to decreases in charge-offs in commercial and leasing and equipment finance, partially offset by increases in charge-offs in consumer real estate. The increase from the second quarter of 2011 was primarily due to increases in consumer real estate net charge-offs, partially due to a change in TCF’s consumer real estate charge-off policy, which was modified to require  more frequent valuations after loans are moved to non-accrual status until clear title is received.  While the initial impact of this policy change accelerated the timing of charge-offs on non-accrual consumer real estate loans by $2.2 million, in the third quarter of 2011, it had no impact on TCF’s provision or net income, since these losses were previously provided for in the allowance for loan and lease losses.

 

Deposits

 

 Average Deposits

 

 

 

 

 

 

 

 

 

 

 

 

Table 7

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

3Q
2011

 

2Q
2011

 

3Q
2010

 

3Q11 vs
2Q11

 

3Q11 vs
3Q10

 

YTD
2011

 

YTD
2010

 

Percent
Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Checking

 

$

4,475,567

 

$

4,570,543

 

$

4,341,803

 

   (2.1)%

 

   3.1%

 

$

4,515,916

 

$

4,425,754

 

2.0

%

 

 Savings

 

5,812,187

 

5,628,249

 

5,446,852

 

3.3

 

6.7

 

5,629,620

 

5,435,254

 

3.6

 

 

 Money market

 

650,598

 

648,862

 

654,030

 

  .3

 

  (.5)

 

657,570

 

661,035

 

(.5

)

 

Subtotal

 

10,938,352

 

10,847,654

 

10,442,685

 

  .8

 

4.7

 

10,803,106

 

10,522,043

 

2.7

 

 

 Certificates

 

1,114,934

 

1,092,368

 

1,006,685

 

2.1

 

10.8  

 

1,100,029

 

1,058,840

 

3.9

 

 

Total deposits

 

$

12,053,286

 

$

11,940,022

 

$

11,449,370

 

  .9

 

5.3

 

$

11,903,135

 

$

11,580,883

 

2.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total new checking
accounts

 

119,616

 

120,281

 

100,366

 

     (.6)%

 

 19.2%

 

337,356

 

347,445

 

(2.9

)%

 

 Average interest rate
on deposits
(1)

 

.39%

 

.38%

 

.48%

 

 

 

 

 

.40%

 

.55%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  Total average deposits increased $603.9 million, or 5.3 percent, from the third quarter of 2010 primarily due to various targeted marketing campaigns, as well as increases in checking account production and savings account balances. Average savings balances increased $365.3 million, or 6.7 percent, from the third quarter of 2010.  Total new checking accounts increased 19.2 percent from the third quarter of 2010. Total average deposits increased $113.3 million, or .9 percent from the second quarter of 2011, primarily due to increases in average savings account balances, partially offset by decreases in checking account balances.

 

·                  The average interest cost of deposits in the third quarter of 2011 was .39 percent, down 9 basis points

 

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12

 

from the third quarter of 2010 and up 1 basis point from the second quarter of 2011.  Declines in the average interest cost of deposits from the third quarter of 2010 were primarily due to pricing strategies on certain deposit products, mix changes and lower market interest rates.  The slight increase from the second quarter of 2011 was primarily due to deposit mix changes.  The weighted average interest rate on deposits was .35 percent at September 30, 2011.

 

Non-interest Expense

 

 Non-interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8

 

 

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

 ($ in thousands)

 

 

3Q
2011

 

2Q
2011

 

3Q
2010

 

 

3Q11 vs
2Q11

 

3Q11 vs
3Q10

 

 

YTD
2011

 

YTD
2010

 

 

Percent
Change

 

 Compensation and
employee benefits

 

 

$  88,599

 

$  89,997

 

$  90,282

 

 

    (1.6) %

 

    (1.9) %

 

 

$268,869

 

$265,490

 

 

1.3

%

 

 Occupancy and equipment

 

 

31,129

 

30,783

 

32,091

 

 

1.1

 

(3.0)

 

 

94,071

 

95,583

 

 

(1.6

)

 

 FDIC insurance

 

 

7,363

 

7,542

 

5,486

 

 

(2.4)

 

34.2  

 

 

22,100

 

16,186

 

 

36.5

 

 

 Deposit account premiums

 

 

7,045

 

6,166

 

3,340

 

 

14.3  

 

110.9    

 

 

16,409

 

15,616

 

 

5.1

 

 

 Advertising and marketing

 

 

1,145

 

3,479

 

3,354

 

 

(67.1)  

 

(65.9)  

 

 

7,784

 

9,908

 

 

(21.4

)

 

 Other

 

 

34,708

 

37,067

 

39,481

 

 

(6.4)

 

(12.1)  

 

 

106,341

 

108,944

 

 

(2.4

)

 

Core operating expenses

 

 

169,989

 

175,034

 

174,034

 

 

(2.9)

 

(2.3)

 

 

515,574

 

511,727

 

 

.8

 

 

 Foreclosed real estate and repossessed assets, net

 

 

12,430

 

12,617

 

9,588

 

 

(1.5)

 

29.6  

 

 

37,915

 

27,604

 

 

37.4

 

 

 Operating lease depreciation

 

 

7,409

 

7,859

 

8,965

 

 

(5.7)

 

(17.4)  

 

 

23,196

 

28,817

 

 

(19.5

)

 

 Other credit costs, net

 

 

(139

)

496

 

(834

)

 

N.M.

 

83.3  

 

 

2,905

 

4,476

 

 

(35.1

)

 

Total non-interest expense

 

 

$189,689

 

$196,006

 

$191,753

 

 

(3.2)

 

(1.1)

 

 

$579,590

 

$572,624

 

 

1.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  Compensation and employee benefits expense in the third quarter of 2011 decreased $1.7 million, or 1.9 percent, from the third quarter of 2010 and $1.4 million, or 1.6 percent, from the second quarter of 2011. The decrease from the third quarter of 2010 was primarily due to decreases in employee medical costs. The decrease from the second quarter of 2011 was primarily due to lower production related incentives in Retail Banking and decreased employee medical costs, partially offset by increased salary expense primarily due to headcount growth in Specialty Finance.

 

·                  FDIC insurance expense increased $1.9 million, or 34.2 percent, from the third quarter of 2010 primarily due to changes in the FDIC insurance rate calculations for banks over $10 billion in total assets, which were implemented on April 1, 2011. TCF expects 2011 FDIC insurance expense to be approximately $7 million higher than 2010.

 

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13

 

·                  Deposit account premiums increased $3.7 million, or 110.9 percent, from the third quarter of 2010 and increased $879 thousand, or 14.3 percent, from the second quarter of 2011. The increase from the third quarter of 2010 was primarily due to changes in the account premium programs beginning in April 2011, which increased the premiums paid for each qualified account.  The increase from the second quarter of 2011 was primarily due to increased production of checking accounts that qualified for premiums.

 

·                  Advertising and marketing expense decreased $2.2 million, or 65.9 percent, from the third quarter of 2010 and decreased $2.3 million, or 67.1 percent, from the second quarter of 2011. The decrease from both periods was due to the discontinuation of the debit card rewards program in the third quarter of 2011 as a result of new federal regulation regarding debit card interchange fees.

 

·                  Foreclosed real estate and repossessed asset expense increased $2.8 million, or 29.6 percent, from the third quarter of 2010 and was essentially flat with the second quarter of 2011. The increase from the third quarter of 2010 was primarily due to valuation writedowns on commercial real estate properties in Illinois.

 

Capital and Borrowing Capacity

 

Capital Information

 

 

 

 

 

Table 9

 

At period end

($ in thousands, except per-share data)

 

3Q

 

 

4Q

 

 

 

 

2011

 

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

$  1,872,083

 

 

 

 

$  1,480,163

 

 

 

 

Total equity to total assets

 

9.81

%

 

 

 

8.02

%

 

 

 

Book value per common share

 

$         11.63

 

 

 

 

$         10.30

 

 

 

 

Tangible realized common equity to tangible assets(1)

 

8.75

%

 

 

 

7.37

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk-based capital

 

 

 

 

 

 

 

 

 

 

 

Tier 1

 

$  1,787,140

 

13.15

%

 

$  1,475,525

 

10.59

%

 

Total

 

2,076,447

 

15.28

 

 

1,808,412

 

12.98

 

 

Excess over stated “10% well-capitalized” requirement

 

717,769

 

5.28

 

 

415,502

 

2.98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 Leverage Capital

 

$  1,787,140

 

9.50

%

 

$  1,475,525

 

8.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 common capital(2)

 

$  1,659,867

 

12.22

%

 

$  1,352,025

 

9.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(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). 

 

 

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14

 

·                  Total risk-based capital at September 30, 2011 of $2.1 billion, or 15.28 percent of risk-weighted assets, was $717.8 million in excess of the stated “10 percent well-capitalized” requirement.

 

·                  On October 17, 2011, the Board of Directors of TCF declared a regular quarterly cash dividend of five cents per common share payable on November 30, 2011 to stockholders of record at the close of business on October 28, 2011.

 

·                  At September 30, 2011, TCF had $1.7 billion in unused, secured borrowing capacity at the FHLB of Des Moines and $518 million in unused, secured borrowing capacity at the Federal Reserve Discount Window.

 

Website Information

 

A live webcast of TCF’s conference call to discuss third quarter earnings will be hosted at TCF’s website, http://ir.tcfbank.com, on October 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 $19.1 billion in total assets. TCF has 436 branches 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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15

 

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 and Other Risks.  Deterioration in general economic and banking industry conditions, including defaults, anticipated defaults or rating agency downgrades of sovereign debt (including debt of the United States), or continued high rates of or 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 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; and 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 Act 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 Dodd-Frank Act, or additional capital, leverage, liquidity and risk management requirements or changes in the composition of qualifying regulatory capital (including those resulting from U.S. implementation of Basel III requirements); 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 or unfavorable conditions in the credit markets that restrict or limit various funding sources; possible regulatory and other changes to the Federal Home Loan Bank System that may affect TCF’s borrowing capacity; costs associated with new regulatory requirements or interpretive guidance relating to liquidity.

 

Legislative and Regulatory Requirements.  New consumer protection and supervisory actions, including those taken by the Consumer Financial Protection Bureau and limits on Federal preemption of 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 Dodd-Frank 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 Dodd-Frank Act, which limits debit card interchange fees; 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); deficiencies in TCF’s compliance under the Bank Secrecy Act in past or future periods, which may result in regulatory enforcement action including monetary penalties; increased health care costs resulting from 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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16

 

Other Risks Relating to Fee Income. Restrictions on charging overdraft fees on point-of-sale and ATM transactions unless customers opt-in, including customer opt-in preferences which may have an adverse impact on TCF’s fee revenue; and uncertainties relating to future retail deposit account changes such as charging a daily negative balance fee in lieu of per item overdraft fees or other significant changes, including limitations on TCF’s ability to predict customer behavior and the impact on TCF’s fee revenues.

 

Litigation Risks.  Results of litigation, including but not limited to class action litigation concerning TCF’s lending or deposit activities including account servicing processes or fees or charges; claims regarding employment practices; business method patent litigation 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.

 

Acquisition of Gateway One Lending & Finance, LLC. Delays in closing the transaction; slower than anticipated growth of the business acquired;  difficulties in integrating the acquired business or its systems or retaining key employees; lower than anticipated yields on loans originated; greater than anticipated competition in the acquired business;  and higher than expected delinquencies and charge-offs.

 

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. TCF assumes no obligation to update forward-looking information contained in this release as a result of new information or future events or developments.

 

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17

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

 

 

September 30,

 

Change

 

 

 

2011

 

2010

 

$

 

%

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

  $

210,885

 

  $

219,974

 

  $

(9,089)

 

(4.1)

  %

Securities available for sale

 

22,561

 

19,901

 

2,660

 

13.4

 

Investments and other

 

1,997

 

1,232

 

765

 

62.1

 

Total interest income

 

235,443

 

241,107

 

(5,664)

 

(2.3)

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

11,883

 

13,974

 

(2,091)

 

(15.0)

 

Borrowings

 

47,496

 

53,378

 

(5,882)

 

(11.0)

 

Total interest expense

 

59,379

 

67,352

 

(7,973)

 

(11.8)

 

Net interest income

 

176,064

 

173,755

 

2,309

 

1.3

 

Provision for credit losses

 

52,315

 

59,287

 

(6,972)

 

(11.8)

 

Net interest income after provision for
credit losses

 

123,749

 

114,468

 

9,281

 

8.1

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

58,452

 

67,684

 

(9,232)

 

(13.6)

 

Card revenue

 

27,701

 

27,779

 

(78)

 

(.3)

 

ATM revenue

 

7,523

 

7,985

 

(462)

 

(5.8)

 

Subtotal

 

93,676

 

103,448

 

(9,772)

 

(9.4)

 

Leasing and equipment finance

 

21,646

 

24,912

 

(3,266)

 

(13.1)

 

Other

 

786

 

1,077

 

(291)

 

(27.0)

 

Fees and other revenue

 

116,108

 

129,437

 

(13,329)

 

(10.3)

 

Gains on securities

 

1,648

 

8,505

 

(6,857)

 

(80.6)

 

Total non-interest income

 

117,756

 

137,942

 

(20,186)

 

(14.6)

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

88,599

 

90,282

 

(1,683)

 

(1.9)

 

Occupancy and equipment

 

31,129

 

32,091

 

(962)

 

(3.0)

 

FDIC insurance

 

7,363

 

5,486

 

1,877

 

34.2

 

Deposit account premiums

 

7,045

 

3,340

 

3,705

 

110.9

 

Advertising and marketing

 

1,145

 

3,354

 

(2,209)

 

(65.9)

 

Other

 

34,708

 

39,481

 

(4,773)

 

(12.1)

 

Subtotal

 

169,989

 

174,034

 

(4,045)

 

(2.3)

 

Foreclosed real estate and repossessed assets, net

 

12,430

 

9,588

 

2,842

 

29.6

 

Operating lease depreciation

 

7,409

 

8,965

 

(1,556)

 

(17.4)

 

Other credit costs, net

 

(139)

 

(834)

 

695

 

(83.3)

 

Total non-interest expense

 

189,689

 

191,753

 

(2,064)

 

(1.1)

 

Income before income tax expense

 

51,816

 

60,657

 

(8,841)

 

(14.6)

 

Income tax expense

 

18,856

 

22,852

 

(3,996)

 

(17.5)

 

Income after income tax expense

 

32,960

 

37,805

 

(4,845)

 

(12.8)

 

Income attributable to non-controlling interest

 

1,243

 

912

 

331

 

36.3

 

Net income available to common stockholders

 

  $

31,717

 

  $

36,893

 

  $

(5,176)

 

(14.0)

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

  $

.20

 

  $

.26

 

  $

(.06)

 

(23.1)

 

Diluted

 

.20

 

.26

 

(.06)

 

(23.1)

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

  $

.05

 

  $

.05

 

  $

-

 

-

 

 

 

 

 

 

 

 

 

 

 

Average common and common equivalent
shares outstanding (in thousands):

 

 

 

 

 

 

 

 

 

Basic

 

157,419

 

140,684

 

16,735

 

11.9

 

Diluted

 

157,621

 

140,922

 

16,699

 

11.8

 

 

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18

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

 

 

September 30,

 

Change

 

 

 

2011

 

2010

 

$

 

%

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

  $

639,381

 

  $

663,151

 

  $

(23,770)

 

(3.6)

  %

Securities available for sale

 

62,629

 

62,373

 

256

 

.4

 

Investments and other

 

5,634

 

3,609

 

2,025

 

56.1

 

Total interest income

 

707,644

 

729,133

 

(21,489)

 

(2.9)

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

35,317

 

47,859

 

(12,542)

 

(26.2)

 

Borrowings

 

146,073

 

156,358

 

(10,285)

 

(6.6)

 

Total interest expense

 

181,390

 

204,217

 

(22,827)

 

(11.2)

 

Net interest income

 

526,254

 

524,916

 

1,338

 

.3

 

Provision for credit losses

 

141,594

 

158,791

 

(17,197)

 

(10.8)

 

Net interest income after provision for
credit losses

 

384,660

 

366,125

 

18,535

 

5.1

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

168,361

 

211,701

 

(43,340)

 

(20.5)

 

Card revenue

 

82,504

 

83,442

 

(938)

 

(1.1)

 

ATM revenue

 

21,319

 

22,851

 

(1,532)

 

(6.7)

 

Subtotal

 

272,184

 

317,994

 

(45,810)

 

(14.4)

 

Leasing and equipment finance

 

70,675

 

65,792

 

4,883

 

7.4

 

Other

 

1,864

 

4,767

 

(2,903)

 

(60.9)

 

Fees and other revenue

 

344,723

 

388,553

 

(43,830)

 

(11.3)

 

Gains on securities

 

1,421

 

7,938

 

(6,517)

 

(82.1)

 

Total non-interest income

 

346,144

 

396,491

 

(50,347)

 

(12.7)

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

268,869

 

265,490

 

3,379

 

1.3

 

Occupancy and equipment

 

94,071

 

95,583

 

(1,512)

 

(1.6)

 

FDIC insurance

 

22,100

 

16,186

 

5,914

 

36.5

 

Deposit account premiums

 

16,409

 

15,616

 

793

 

5.1

 

Advertising and marketing

 

7,784

 

9,908

 

(2,124)

 

(21.4)

 

Other

 

106,341

 

108,944

 

(2,603)

 

(2.4)

 

Subtotal

 

515,574

 

511,727

 

3,847

 

.8

 

Foreclosed real estate and repossessed assets, net

 

37,915

 

27,604

 

10,311

 

37.4

 

Operating lease depreciation

 

23,196

 

28,817

 

(5,621)

 

(19.5)

 

Other credit costs, net

 

2,905

 

4,476

 

(1,571)

 

(35.1)

 

Total non-interest expense

 

579,590

 

572,624

 

6,966

 

1.2

 

Income before income tax expense

 

151,214

 

189,992

 

(38,778)

 

(20.4)

 

Income tax expense

 

56,056

 

71,754

 

(15,698)

 

(21.9)

 

Income after income tax expense

 

95,158

 

118,238

 

(23,080)

 

(19.5)

 

Income attributable to non-controlling interest

 

3,918

 

2,399

 

1,519

 

63.3

 

Net income available to common stockholders

 

  $

91,240

 

  $

115,839

 

  $

(24,599)

 

(21.2)

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

  $

.59

 

  $

.84

 

  $

(.25)

 

(29.8)

 

Diluted

 

.59

 

.84

 

(.25)

 

(29.8)

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

  $

.15

 

  $

.15

 

  $

-

 

-

 

 

 

 

 

 

 

 

 

 

 

Average common and common equivalent
shares outstanding (in thousands):

 

 

 

 

 

 

 

 

 

Basic

 

153,007

 

137,824

 

15,183

 

11.0

 

Diluted

 

153,302

 

138,004

 

15,298

 

11.1

 

 

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19

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

At

 

At

 

At

 

% Change From

 

 

 

September 30,

 

December 31,

 

September 30,

 

December 31,

 

September 30,

 

 

 

2011

 

2010

 

2010