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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, 2012

 


 

 

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 January 24, 2012, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter and year ended December 31, 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 January 24, 2012

 

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/ Michael S. Jones

 

 

Michael S. Jones, 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:  January 24, 2012

 

3

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

 

NEWS RELEASE

 

Exhibit 99.1

 

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 21st Consecutive Year of Net Income – Earns $109.4 Million

 

2011 HIGHLIGHTS

·                 Diluted earnings per common share of 71 cents

·                 Net income of $109.4 million

·                 Net interest margin of 3.99 percent

·                 Average deposits increased $404.3 million, or 3.5 percent

·                 Non-performing assets declined $53.1 million, or 10.9 percent

·                 Increased total equity by $398.5 million, Tier 1 common capital increased 18.4 percent to 11.74 percent of risk-weighted assets

 

FOURTH QUARTER HIGHLIGHTS

·                 Diluted earnings per common share of 10 cents

·                 Net income of $16.4 million

·                 Net interest margin of 3.92 percent

·                 Non-performing assets declined $4.9 million from the third quarter of 2011

·                 Completed acquisition of Gateway One Lending & Finance, LLC

·                 Announced quarterly cash dividend of 5 cents per common share, payable February 29, 2012

 

 Earnings Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 ($ in thousands, except per-share data)

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

4Q
2011

 

3Q
2011

 

4Q
2010

 

4Q11 vs
3Q11

 

4Q11 vs
4Q10

 

YTD
2011

 

YTD
2010

 

Percent
Change

 

 Net income

 

$16,443

 

$32,255

 

$33,873

 

(49.0)%

 

(51.5)%

 

$109,394

 

$150,947

 

(27.5)%

 

 Diluted earnings per common share

 

.10

 

.20

 

.24

 

(50.0)   

 

(58.3)   

 

.71

 

1.08

 

(34.3)   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Financial Ratios (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Return on average assets

 

.37

%

.71

%

.75

%

 

 

 

 

.61

%

.85

%

 

 

 Return on average common equity

 

3.55

 

7.12

 

9.09

 

 

 

 

 

6.32

 

10.67

 

 

 

 Net interest margin

 

3.92

 

3.96

 

4.05

 

 

 

 

 

3.99

 

4.15

 

 

 

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

 

1.63

 

1.48

 

1.75

 

 

 

 

 

1.45

 

1.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-more-

 


 

2

 

WAYZATA, MN, January 24, 2012 – TCF Financial Corporation (“TCF”) (NYSE: TCB) today reported net income for the fourth quarter of 2011 of $16.4 million, compared with $33.9 million in the fourth quarter of 2010 and $32.3 million in the third quarter of 2011.  Diluted earnings per common share was 10 cents for the fourth quarter of 2011, compared with 24 cents in the fourth quarter of 2010 and 20 cents in the third quarter of 2011. As previously reported, TCF elected to change its method of accounting for defined benefit retirement plans in 2011. All prior periods have been retrospectively restated for this accounting change.

 

Net income for the year ended December 31, 2011 was $109.4 million, compared with $150.9 million for 2010.  Diluted earnings per common share for the year ended December 31, 2011 was 71 cents, compared with $1.08 for 2010.

 

TCF declared a quarterly cash dividend of five cents per common share payable on February 29, 2012 to stockholders of record at the close of business on January 27, 2012.

 

Chairman’s Statement

 

“TCF’s 21st consecutive year of profitability was impacted by the full effect of the Durbin Amendment, start-up costs related to specialty finance and a sluggish economy,” said William A. Cooper, Chairman and Chief Executive Officer. “Despite non-performing assets declining for a fifth consecutive quarter, credit quality remains a challenge in the current environment and is delaying TCF’s return to more normal levels of provision. While the fourth quarter was not as profitable for us as other quarters during this economic cycle, we are excited about the strategic changes that have begun at TCF.”

 

“As we begin the new year, we are encouraged by the potential for strong asset growth as we reposition TCF for the future. We will continue to implement various revenue-producing and expense reduction strategies throughout the company to mitigate the impact of the current regulatory changes as well as maintain our focus on working through potential problem loans to minimize credit costs. I am pleased with the new direction in which TCF is headed and optimistic about our ability to increase shareholder value in 2012.”

 

-more-

 


 

3

 

 Total Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

4Q
2011

 

3Q
2011

 

4Q
2010

 

4Q11 vs
3Q11

 

4Q11 vs
4Q10

 

YTD
2011

 

YTD
2010

 

Percent
Change

 

 Net interest income

 

$173,434

 

$176,064

 

$174,286

 

(1.5)

%

 

(.5)

%

 

$  699,688

 

$  699,202

 

.1%  

 

 Fees and other revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Fees and service charges

 

51,002

 

58,452

 

61,480

 

(12.7)

 

 

(17.0)

 

 

219,363

 

273,181

 

(19.7)

 

 

 Card revenue

 

13,643

 

27,701

 

27,625

 

(50.7)

 

 

(50.6)

 

 

96,147

 

111,067

 

(13.4)

 

 

 ATM revenue

 

6,608

 

7,523

 

6,985

 

(12.2)

 

 

(5.4)

 

 

27,927

 

29,836

 

(6.4)

 

 

Total banking fees

 

71,253

 

93,676

 

96,090

 

(23.9)

 

 

(25.8)

 

 

343,437

 

414,084

 

(17.1)

 

 

 Leasing and equipment
finance

 

18,492

 

21,646

 

23,402

 

(14.6)

 

 

(21.0)

 

 

89,167

 

89,194

 

N.M.

 

 

 Other

 

1,570

 

786

 

817

 

99.7 

 

 

92.2 

 

 

3,434

 

5,584

 

(38.5)

 

 

Total fees and other revenue

 

91,315

 

116,108

 

120,309

 

(21.4)

 

 

(24.1)

 

 

436,038

 

508,862

 

(14.3)

 

 

Subtotal

 

264,749

 

292,172

 

294,595

 

(9.4)

 

 

(10.1)

 

 

1,135,726

 

1,208,064

 

(6.0)

 

 

 Gains on securities, net

 

5,842

 

1,648

 

21,185

 

N.M.

 

 

(72.4)

 

 

7,263

 

29,123

 

(75.1)

 

 

 Gains on sales of loans

 

1,133

 

-

 

-

 

N.M.

 

 

N.M.

 

 

1,133

 

-

 

N.M.

 

 

Total revenue

 

$271,724

 

$293,820

 

$315,780

 

(7.5)

 

 

(14.0)

 

 

$1,144,122

 

$1,237,187

 

(7.5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net interest margin(1) 

 

3.92

%

3.96

%

4.05

%

 

 

 

 

 

 

3.99

%

4.15

%

 

 

 

 Fees and other revenue as
a % of total revenue

 

33.61

 

39.52

 

38.10

 

 

 

 

 

 

 

38.11

 

41.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

·    Net interest income for the fourth quarter of 2011 decreased $852 thousand, or .5 percent, compared with the fourth quarter of 2010 and $2.6 million, or 1.5 percent, compared with the third quarter of 2011. The decrease in net interest income from the fourth quarter of 2010 was primarily due to the following changes in loans and leases: reduced levels of higher yielding fixed-rate consumer real estate loans and decreases in leasing and equipment finance and commercial real estate portfolio balances and average yields, partially offset by reductions in the average deposit rates. The decrease in net interest income from the third quarter of 2011 was primarily due to the following changes in loans and leases: lower average balances in inventory finance, commercial real estate and consumer real estate loans.

 

·    Net interest margin in the fourth quarter of 2011 was 3.92 percent, compared with 4.05 percent in the fourth quarter of 2010 and 3.96 percent in the third quarter of 2011. The decrease in net interest margin from both periods was primarily due to increased asset liquidity and decreased levels of higher 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.

 

·    TCF maintained a high level of asset liquidity during the fourth quarter of 2011, which had an impact on net interest margin.  Interest-bearing deposits held at the Federal Reserve and unencumbered securities

 

-more-

 


 

4

 

were $1.4 billion at December 31, 2011, a decrease of $72 million from the third quarter of 2011 and an increase of $905 million from the fourth quarter of 2010.  Our strong liquidity position reduced net interest margin percentage for the fourth quarter of 2011 by 15 basis points, compared with the fourth quarter of 2010, and by 2 basis points from the third quarter of 2011.

 

Non-interest Income

 

·    Banking fees and service charges in the fourth quarter of 2011 were $51 million, down $10.5 million, or 17 percent, from the fourth quarter of 2010 and down $7.5 million, or 12.7 percent, from the third quarter of 2011. The decline in banking fees and revenues from the fourth quarter of 2010 was primarily due to changes in customer behavior and increased levels of checking account attrition, some of which is in connection with new fees and service charges introduced in the fourth quarter of 2011. The decline from the third quarter of 2011 was primarily due to changes in customer behavior, a lower number of checking accounts and seasonality of items processed.

 

·    Card revenues were $13.6 million in the fourth quarter of 2011, down $14 million, or 50.6 percent, from the fourth quarter of 2010 and down $14.1 million, or 50.7 percent, from the third quarter of 2011. Compared with the fourth quarter of 2010 and third quarter of 2011, the average interchange rate per transaction decreased slightly more than 50 percent due to new debit card interchange regulations which took effect on October 1, 2011.

 

·    Leasing and equipment finance revenues were $18.5 million in the fourth quarter of 2011, down $4.9 million, or 21 percent, from the fourth quarter of 2010 and down $3.2 million, or 14.6 percent, from the third quarter of 2011. Decreases from both the fourth quarter of 2010 and the third quarter of 2011 were attributable to lower levels of customer initiated lease activity.

 

·    Subsequent to the acquisition of Gateway One Lending & Finance (“Gateway One”) on November 30, 2011, TCF sold $37.4 million of auto loans and recognized $1.1 million in associated gains.

 

-more-

 


 

5

 

Loans and Leases

 

 Average Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

4Q
2011

 

 3Q
  2011

 

  4Q
  2010

 

4Q11 vs
3Q11

 

4Q11 vs
4Q10

 

YTD
2011

 

YTD
2010

 

Percent
Change

 

 Consumer real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First mortgage lien

 

$ 4,771,104

 

$ 4,808,881

 

$ 4,924,399

 

(.8)

%

 

(3.1)

%

 

$ 4,820,354

 

$ 4,934,257

 

(2.3)

%

 

Junior lien

 

2,161,947

 

2,176,940

 

 2,272,857

 

(.7)

 

 

(4.9)

 

 

 2,192,927

 

2,296,400

 

(4.5)

 

 

Total

 

6,933,051

 

6,985,821

 

7,197,256

 

(.8)

 

 

(3.7)

 

 

7,013,281

 

7,230,657

 

(3.0)

 

 

 Consumer other

 

19,386

 

18,183

 

 23,283

 

6.6 

 

 

(16.7)

 

 

 19,687

 

26,577

 

(25.9)

 

 

Total consumer

 

6,952,437

 

7,004,004

 

7,220,539

 

(.7)

 

 

(3.7)

 

 

7,032,968

 

7,257,234

 

(3.1)

 

 

 Commercial

 

3,476,660

 

3,564,198

 

3,650,906

 

(2.5)

 

 

(4.8)

 

 

3,565,085

 

3,687,024

 

(3.3)

 

 

 Leasing and
equipment finance

 

3,043,329

 

3,066,208

 

3,155,472

 

(.7)

 

 

(3.6)

 

 

3,074,207

 

3,056,006

 

.6 

 

 

 Inventory finance

 

766,885

 

826,198

 

803,157

 

(7.2)

 

 

(4.5)

 

 

 856,271

 

677,214

 

26.4)

 

 

Total

 

$14,239,311

 

$14,460,608

 

$14,830,074

 

(1.5)

 

 

(4.0)

 

 

$14,528,531

 

$14,677,478

 

(1.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·         Average consumer real estate loan balances decreased $264.2 million, or 3.7 percent, from the fourth quarter of 2010 and declined $52.8 million, or .8 percent, from the third quarter of 2011.  Decreases reflect a decline in production of new loans, as marketplace yields available for fixed-rate loans are not as attractive to TCF versus variable-rate loans at their current levels.

 

·         Average fixed-rate consumer real estate loans decreased $346.5 million from the fourth quarter of 2010 and $64.7 million from the third quarter of 2011, while average variable-rate consumer real estate loans increased $82.3 million from the fourth quarter of 2010 and $11.9 million from the third quarter of 2011. Variable-rate loans comprised 35 percent of total consumer real estate loans at December 31, 2011, up from 33 percent at December 31, 2010 and 34.5 percent at September 30, 2011.

 

·                 Average commercial loan balances in the fourth quarter of 2011 decreased $174.2 million, or 4.8 percent, from the fourth quarter of 2010 and decreased $87.5 million, or 2.5 percent, from the third quarter of 2011.  The decreases for both periods were primarily due to higher levels of payments in excess of new origination volume.

 

·         Average leasing and equipment finance loan and lease balances in the fourth quarter of 2011 decreased $112.1 million, or 3.6 percent, from the fourth quarter of 2010 and $22.9 million, or .7 percent, from the third quarter of 2011. The decrease from both periods was primarily due to runoff of acquired portfolios, partially offset by growth in core market segments. Leasing and equipment finance originations of $1.5 billion during 2011 represent an increase of $224.2 million, or 17.8 percent, compared with 2010.

 

-more-

 


 

6

 

·    Average inventory finance loans were $766.9 million in the fourth quarter of 2011, a decrease of $36.3 million, or 4.5 percent, from the fourth quarter of 2010 and $59.3 million, or 7.2 percent, from the third quarter of 2011.  The decrease from the fourth quarter of 2010 was primarily due to the termination of a lawn and garden program and the transitioning of an electronics and appliance program to a servicing-only program. The decrease from the third quarter of 2011 was primarily due to the termination of the lawn and garden program.

 

·    Gateway One provides strong growth potential due to the large auto lending marketplace (2nd largest consumer finance market in the U.S.). Auto loans, which are included in consumer other and loans and leases held for sale, are expected to grow throughout 2012 while Gateway One transitions from an originate-to-sell model to an originate-to-hold model. Gateway One increased its portfolio of managed loans, including loans held for investment, loans held for sale and loans sold and serviced, to $437.7 million at December 31, 2011 from $416.1 million at November 30, 2011.

 

·    TCF increased small business lending 2.5 percent since the fourth quarter of 2010 while small business lending across the U.S. declined 3.8 percent through the third quarter of 2011.

 

-more-


 

7

 

Credit Quality

 

GRAPHIC

 

 

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

 

-more-


 

8

 

Credit Quality Summary of Performing and Underperforming Loans and Leases

 

Table 5

 

 

 

 

 

 

 

 

 

60+ Days

 

 

 

 

 

 

 

($ in thousands)

 

Performing Loans and Leases

 

Delinquent and

 

Accruing

 

Non-accrual

 

Total Loans

 

December 31, 2011:

 

Non-classified

 

Classified(1)

 

Total

 

Accruing(2)

 

TDRs

 

Loans and Leases

 

and Leases

  

Consumer real estate and other

 

$

6,271,575

 

$

-

 

$

6,271,575

 

$

79,765

 

$

433,078

 

$

149,386

 

$

6,933,804

 

Commercial

 

2,987,876

 

234,501

 

3,222,377

 

1,148

 

98,448

 

127,519

 

3,449,492

 

Leasing and equipment finance

 

3,093,194

 

21,451

 

3,114,645

 

6,255

 

776

 

20,583

 

3,142,259

 

Inventory finance

 

616,677

 

7,040

 

623,717

 

160

 

-

 

823

 

624,700

 

Total loans and leases

 

$

12,969,322

 

$

262,992

 

$

13,232,314

 

$

87,328

 

$

532,302

 

$

298,311

 

$

14,150,255

 

Percent of total loans and leases

 

91.6%

 

1.9%

 

93.5%

 

.6%

 

3.8%

 

2.1%

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60+ Days

 

 

 

 

 

 

 

($ in thousands)

 

Performing Loans and Leases

 

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%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60+ Days

 

 

 

 

 

 

 

 

 

Performing Loans and Leases

 

Delinquent and

 

Accruing

 

Non-accrual

 

Total Loans

 

December 31 , 2010:

 

Non-classified

 

Classified(1)

 

Total

 

Accruing(2)

 

TDRs

 

Loans and Leases

 

and Leases

 

Consumer real estate and other

 

$

6,613,610

 

$

-

 

$

6,613,610

 

$

76,711

 

$

337,401

 

$

167,547

 

$

7,195,269

 

Commercial

 

3,091,911

 

354,185

 

3,446,096

 

9,021

 

48,838

 

142,248

 

3,646,203

 

Leasing and equipment finance

 

3,073,347

 

35,695

 

3,109,042

 

11,029

 

-

 

34,407

 

3,154,478

 

Inventory finance

 

785,245

 

5,710

 

790,955

 

344

 

-

 

1,055

 

792,354

 

Total loans and leases

 

$

13,564,113

 

$

395,590

 

$

13,959,703

 

$

97,105

 

$

386,239

 

$

345,257

 

$

14,788,304

 

Percent of total loans and leases

 

91.7%

 

2.7%

 

94.4%

 

.7%

 

2.6%

 

2.3%

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 December 31, 2011:

 

·                 The combined balance of performing classified loans and leases, over 60-day delinquent and accruing loans and leases, accruing troubled debt restructurings (“TDR”) and non-accrual loans and leases was $1.2 billion at December 31, 2011, a decrease of $11.7 million from September 30, 2011, down for the fourth consecutive quarter. This was primarily due to decreases in classified and non-accrual commercial real estate loans, partially offset by increases in accruing TDRs in both the commercial real estate and consumer real estate portfolios.

 

·                 Over 60-day delinquency rate was .85 percent, up from .80 percent at December 31, 2010 and up from .75 percent at September 30, 2011. The increase from the fourth quarter of 2010 and from the third quarter of 2011 was primarily due to increases in consumer real estate first mortgage delinquencies, partially offset by decreases in commercial real estate delinquencies.

 

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9

 

·                 Total non-accrual loans and leases and other real estate owned (non-performing assets) were $433.2 million at December 31, 2011, a decrease of $53.1 million, or 10.9 percent, from December 31, 2010 and a decrease of $4.9 million, or 1.1 percent, from September 30, 2011, the fifth consecutive quarter of declining non-performing assets.

 

·    Non-accrual loans and leases were $298.3 million at December 31, 2011, a decrease of $46.9 million, or 13.6 percent, from December 31, 2010 and a decrease of $9.4 million, or 3 percent, from September 30, 2011.  The decrease from December 31, 2010 was primarily due to a $28.6 million decrease in commercial and leasing and equipment finance non-accrual loans and leases as a result of fewer loans and leases entering non-accrual status and increased customer payments on commercial non-accrual loans in 2011, compared with 2010, and an $18.1 million decrease in consumer real estate non-accrual loans, as fewer loans were placed on non-accrual status and more loans returned to accrual status. The decrease from September 30, 2011 was primarily due to a $5.7 million decrease in commercial non-accrual loans as a result of increased customer payments received during the fourth quarter of 2011. TCF continues to experience improvements in non-accrual loan and lease balances as additions are down $72.1 million and loans returning to accrual status were up $29.3 million for the year ended December 31, 2011, compared with the prior year.

 

·    Other real estate owned was $134.9 million at December 31, 2011, a decrease of $6.2 million from December 31, 2010 and an increase of $4.5 million from September 30, 2011.  The decrease from December 31, 2010 was primarily due to valuation writedowns on commercial real estate properties combined with a decrease in consumer properties. The increase from September 30, 2011 was primarily due to increased transfers from non-accrual to other real estate owned in commercial real estate during the fourth quarter of 2011.

 

·    Consumer real estate TDRs include loans where a payment modification (but not a reduction of principal) has been granted to a residential real estate customer. Performing consumer real estate TDRs have a weighted average yield of 3.7 percent, carry a 13.5 percent reserve and 7 percent are over 60-days delinquent at December 31, 2011.

 

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10

 

·                 Commercial TDRs include loans where a payment or other modification (but not a reduction of principal) has been granted. Performing commercial TDRs have a weighted average yield of 5.6 percent. There are no commercial TDRs over 60-days delinquent at December 31, 2011.

 

Allowance for Loan and Lease Losses

 

Credit Quality Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

4Q

 

3Q

 

4Q

 

4Q11 vs

 

4Q11 vs

 

YTD

 

YTD

 

Percent

 

Allowance for Loan and Lease Losses

 

2011

 

2011

 

2010

 

3Q11

 

4Q10

 

2011

 

2010

 

Change

 

Balance at beginning of period

$

254,325

$

255,472

$

253,120

 

     (0.4) %

 

     0.5 %

$

265,819

$

244,471

 

8.7

 

Charge-offs

 

(62,973)

 

(57,761)

 

(69,913)

 

9.0

 

(9.9)

 

(230,295)

 

(237,063)

 

(2.9)

 

Recoveries

 

5,051

 

4,359

 

4,966

 

15.9  

 

1.7

 

19,313

 

21,974

 

(12.1)  

 

Net charge-offs

 

(57,922)

 

(53,402)

 

(64,947)

 

8.5

 

(10.8)  

 

(210,982)

 

(215,089)

 

(1.9)

 

Provision for credit losses

 

59,249

 

52,315

 

77,646

 

13.3  

 

(23.7)  

 

200,843

 

236,437

 

(15.1)  

 

Other

 

20

 

(60)

 

-    

 

N.M. 

 

N.M. 

 

(8)

 

-    

 

N.M. 

 

Balance at end of period

$

255,672

$

254,235

$

265,819

 

.5

 

(3.8)

$

255,672

$

265,819

 

(3.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs as a percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

average loans and leases (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer real estate and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First mortgage lien

 

1.94

%

2.29

%

1.88

%

       (35) bps

 

         6 bps

 

1.95

%

1.55

%

       40 bps

 

Junior lien

 

2.63

 

2.99

 

2.37

 

(36)

 

26

 

2.69

 

2.33

 

36

 

Total consumer real estate

 

2.15

 

2.51

 

2.04

 

(36)

 

11

 

2.18

 

1.80

 

38

 

Total consumer real estate and other

 

2.23

 

2.59

 

2.10

 

(36)

 

13

 

2.23

 

1.86

 

37

 

Commercial

 

1.79

 

.57

 

2.04

 

122  

 

(25)

 

1.15

 

1.31

 

(16)

 

Leasing and equipment finance

 

.46

 

.36

 

.99

 

10

 

(53)

 

.41

 

1.00

 

(59)

 

Inventory finance

 

.03

 

.13

 

.28

 

(10)

 

(25)

 

.10

 

.17

 

(7)

 

Total

 

1.63

 

1.48

 

1.75

 

15

 

(12)

 

1.45

 

1.47

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance as a percentage of period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

end loans and leases

 

1.81

%

1.77

%

1.80

%

 

 

 

 

1.81

%

1.80

%

 

 

Ratio of allowance to net charge-offs (1)

 

1.1

X

1.2

X

1.0

X

 

 

 

 

1.2

X

1.2

X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2011:

 

·                 Allowance for loan and lease losses was $255.7 million, or 1.81 percent of loans and leases, compared with $265.8 million, or 1.80 percent, at December 31, 2010 and $254.3 million, or 1.77 percent, at September 30, 2011.

 

For the quarter ended December 31, 2011:

 

·             Provision for credit losses was $59.2 million, down from $77.6 million in the fourth quarter of 2010 and up from $52.3 million recorded in the third quarter of 2011. The decrease from the fourth quarter of 2010 was primarily due to decreased net charge-offs and reserves in the commercial real estate and leasing and equipment finance portfolios. The increase from the third quarter of 2011 was primarily due to increased net charge-offs in the commercial portfolio.

 

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11

 

·             Net loan and lease charge-offs were $57.9 million, or 1.63 percent, annualized, of average loans and leases, down from $64.9 million, or 1.75 percent, annualized, in the fourth quarter of 2010 and up from $53.4 million, or 1.48 percent, annualized, in the third quarter of 2011. The decrease from the fourth quarter of 2010 was primarily due to decreases in net charge-offs in commercial real estate and leasing and equipment finance, partially offset by increases in net charge-offs in consumer real estate. The increase from the third quarter of 2011 was primarily due to increases in commercial real estate net charge-offs on apartments, retail services, hotels and motels and commercial business net charge-offs.

 

Deposits

 

Average Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 7

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

($ in thousands)

 

4Q
2011

 

3Q
2011

 

4Q
2010

 

4Q11 vs
3Q11

 

4Q11 vs
4Q10

 

YTD
2011

 

YTD
2010

 

Percent
Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$  4,449,640

 

$  4,475,567

 

$  4,358,771

 

     (.6)%

 

   2.1%

 

$  4,499,211

 

$  4,408,853

 

   2.0%

 

Savings

 

5,878,392

 

5,812,187

 

5,412,094

 

1.1

 

8.6

 

5,692,324

 

5,429,416

 

4.8

 

Money market

 

662,024

 

650,598

 

643,801

 

 

1.8

 

2.8

 

658,693

 

656,691

 

  .3

 

Subtotal

 

10,990,056

 

10,938,352

 

10,414,666

 

 

   .5

 

5.5

 

10,850,228

 

10,494,960

 

3.4

 

Certificates

 

1,112,735

 

1,114,934

 

1,040,348

 

 

  (.2)

 

7.0

 

1,103,231

 

1,054,179

 

4.7

 

Total deposits

 

$12,102,791

 

$12,053,286

 

$11,455,014

 

 

  .4

 

5.7

 

$11,953,459

 

$11,549,139

 

3.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total new checking accounts

 

94,321

 

119,616

 

71,225

 

(21.1)%

 

  32.4%

 

431,677

 

418,670

 

   3.1%

 

Average interest rate on deposits (1)

 

.32%

 

.39%

 

.46%

 

 

 

 

 

.38%

 

.53%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                 Total average deposits increased $647.8 million, or 5.7 percent, from the fourth quarter of 2010 primarily due to increases in savings account balances and checking account production as a result of various targeted marketing campaigns. Average savings balances increased $466.3 million, or 8.6 percent, from the fourth quarter of 2010.  Total new checking accounts increased 32.4 percent from the fourth quarter of 2010. Total average deposits increased $49.5 million, or .4 percent from the third quarter of 2011, primarily due to increases in average savings account balances, partially offset by seasonal decreases in checking account balances.

 

·                 The average interest cost of deposits in the fourth quarter of 2011 was .32 percent, down 14 basis points from the fourth quarter of 2010 and down 7 basis points from the third quarter of 2011.  The decrease from both periods was primarily due to pricing strategies on certain deposit products.  The weighted average interest rate on deposits was .29 percent at December 31, 2011.

 

 

 

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12

 

Non-interest Expense

 

 Non-interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

4Q

2011

 

3Q

2011

 

4Q

2010

 

4Q11 vs

3Q11

 

4Q11 vs

4Q10

 

YTD

2011

 

YTD

2010

 

Percent

Change

 

 Compensation and
employee benefits

 

$  82,595

 

$  87,758

 

$  82,843

 

(5.9)

%

 

(.3)

%

 

$348,792

 

$346,072

 

.8%    

 

 Occupancy and equipment

 

32,366

 

31,129

 

30,968

 

4.0 

 

 

4.5 

 

 

126,437

 

126,551

 

(.1)

 

 

 FDIC insurance

 

6,647

 

7,363

 

7,398

 

(9.7)

 

 

(10.2)

 

 

28,747

 

23,584

 

21.9 

 

 

 Deposit account premiums

 

6,482

 

7,045

 

1,688

 

(8.0)

 

 

N.M.

 

 

22,891

 

17,304

 

32.3 

 

 

 Advertising and marketing

 

2,250

 

1,145

 

3,154

 

96.5 

 

 

(28.7)

 

 

10,034

 

13,062

 

(23.2)

 

 

 Other

 

39,148

 

34,708

 

37,309

 

12.8 

 

 

4.9 

 

 

145,489

 

146,253

 

(.5)

 

 

 Core operating expenses

 

169,488

 

169,148

 

163,360

 

.2 

 

 

3.8 

 

 

682,390

 

672,826

 

1.4 

 

 

 Foreclosed real estate and
repossessed assets, net

 

11,323

 

12,430

 

12,781

 

(8.9)

 

 

(11.4)

 

 

49,238

 

40,385

 

21.9 

 

 

 Operating lease depreciation

 

6,811

 

7,409

 

8,289

 

(8.1)

 

 

(17.8)

 

 

30,007

 

37,106

 

(19.1)

 

 

 Other credit costs, net

 

(89

)

(139

)

1,542

 

36.0 

 

 

N.M.

 

 

2,816

 

6,018

 

(53.2)

 

 

 Total non-interest expense

 

$187,533

 

$188,848

 

$185,972

 

(.7)

 

 

.8 

 

 

$764,451

 

$756,335

 

1.1 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·    Compensation and employee benefits expense in the fourth quarter of 2011 was relatively flat with the fourth quarter of 2010 and decreased $5.2 million, or 5.9 percent, from the third quarter of 2011. Compensation and employee benefits expense increased $2.7 million, or .8 percent, in 2011 as compared with 2010. The slight change from the fourth quarter of 2010 was primarily due to compensation decreases in branch banking as a result of branch closures during 2011, offset by compensation related to increased headcount from the acquisition of Gateway One. The decrease from the third quarter of 2011 was primarily due to net gains recognized on the annual re-measurement of retirement benefit plan assets and liabilities during the fourth quarter of 2011. The increase for 2011 compared with 2010 was primarily due to an increase in commissions and incentives due to growth in the specialty finance business, which continued to expand its core business with new programs during 2011, the ramp up of expenses to deliver the onboarding of BRP that will begin funding early in 2012, and an increase in payroll taxes. These increases were partially offset by a decrease in employee medical costs and increased net gains recognized on retirement benefit plan assets and liabilities during the fourth quarter of 2011.

 

·    FDIC insurance expense decreased $751 thousand, or 10.2 percent, from the fourth quarter of 2010 and $716 thousand, or 9.7 percent, from the third quarter of 2011. FDIC insurance expense increased $5.2 million, or 21.9 percent, for the full year of 2011 from 2010. The decrease from the fourth quarter of 2010

 

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13

 

and the third quarter of 2011 was primarily due to a decrease in the FDIC insurance rate as a result of increased liquidity during the fourth quarter of 2011. The increase for 2011 compared with 2010 was 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.

 

·    Deposit account premiums increased $4.8 million from the fourth quarter of 2010 and decreased $563 thousand, or 8 percent, from the third quarter of 2011. Deposit account premiums increased $5.6 million, or 32.3 percent, for the full year of 2011 from 2010. The increase from the fourth quarter of 2010 and for 2011 compared with 2010 was primarily due to changes in the account premium programs, beginning in April 2011 that increased the premiums paid for each qualifying account.  The decrease from the third quarter of 2011 was primarily due to decreased production of checking accounts.

 

·    Advertising and marketing expense decreased $904 thousand, or 28.7 percent, from the fourth quarter of 2010 and increased $1.1 million, or 96.5 percent, from the third quarter of 2011. Advertising and marketing expense decreased $3 million, or 23.2 percent, for the full year of 2011 from 2010. The decrease from the fourth quarter of 2010 and for all of 2011 compared with 2010 was due to the discontinuation of the debit card rewards program in the third quarter of 2011 in response to new federal regulation regarding debit card interchange fees. The increase from the third quarter of 2011 was primarily due to the discontinuation of the debit card rewards program that was recognized in the third quarter of 2011.

 

·    Other non-interest expense increased $1.9 million, or 4.9 percent, from the fourth quarter of 2010 and $4.4 million, or 12.8 percent, from the third quarter of 2011. Other non-interest expense was flat for the full year of 2011 compared with 2010. The increase from the fourth quarter of 2010 was primarily due to an increase in card expenses related to our campus banking alliances. The increase from the third quarter of 2011 was primarily due to an increase in transaction costs related to the acquisition of Gateway One.

 

·    Foreclosed real estate and repossessed asset expense decreased $1.5 million, or 11.4 percent, from the fourth quarter of 2010 and decreased $1.1 million, or 8.9 percent, from the third quarter of 2011. Foreclosed real estate and repossessed asset expense increased $8.9 million, or 21.9 percent, for the full

 

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14

 

year of 2011 from 2010. The decrease from the fourth quarter of 2010 was primarily due to a decrease in the number of consumer real estate properties owned and the associated expenses. The decrease from the third quarter of 2011 was primarily due to reduced writedowns on commercial real estate properties owned. The increase for 2011 compared with 2010 was primarily due to increased valuation writedowns per property on commercial real estate properties.

 

Capital and Borrowing Capacity

 

 Capital Information

 

 

 

 

 

Table 9

 

 At period end

 

 

 

 

 

 

 

 ($ in thousands, except per-share data)

 

4Q

2011

 

 

4Q

2010

 

 

 Total equity

 

$  1,878,627

 

 

 

 

$  1,480,163

 

 

 

 

 Total equity to total assets

 

9.90

%

 

 

 

8.02

%

 

 

 

 Book value per common share

 

$         11.65

 

 

 

 

$         10.30

 

 

 

 

 Tangible realized common equity to tangible assets(1)

 

8.42

%

 

 

 

7.28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Risk-based capital

 

 

 

 

 

 

 

 

 

 

 

Tier 1

 

$  1,706,926

 

12.67

%

 

$  1,459,703

 

10.47

%

 

Total

 

1,994,875

 

14.80

 

 

1,792,683

 

12.86

 

 

Excess over stated “10% well-capitalized” requirement

 

647,342

 

4.80

 

 

399,020

 

2.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Tier 1 Leverage Capital

 

$  1,706,926

 

9.15

%

 

$  1,459,703

 

7.91

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 Tier 1 common capital(2)

 

$  1,581,432

 

11.74

%

 

$  1,336,203

 

9.59

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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

 

 

·    Total risk-based capital at December 31, 2011 of $2 billion, or 14.80 percent of risk-weighted assets, was $647.3 million in excess of the stated “10 percent well-capitalized” requirement.

 

·    The tier 1 leverage ratio and tier 1 common risk-based capital ratio decreased from 9.42 percent and 12.11 percent, respectively, at September 30, 2011 to 9.15 percent and 11.74 percent, respectively, at December 31, 2011 due mainly to the addition of goodwill and intangible assets acquired in the purchase of Gateway One.

 

·    On January 16, 2012, the Board of Directors of TCF declared a regular quarterly cash dividend of five cents per common share payable on February 29, 2012 to stockholders of record at the close of business on January 27, 2012.

 

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15

 

·    At December 31, 2011, TCF had $1.9 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 fourth quarter earnings will be hosted at TCF’s website, http://ir.tcfbank.com, on January 24, 2012 at 10:00 a.m. CT.  Additionally, the webcast will be 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 billion in total assets. TCF has 434 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, commercial inventory finance business in the U.S. and Canada, and indirect auto finance business in over 30 states. For more information about TCF, please visit www.tcfbank.com.

 

 

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16

 

Forward-Looking Information

 

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

 

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

 

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 U.S.), 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 quality 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; foreign currency exchange risks; counterparty risk, including the risk of defaults by our counterparties or diminished availability of counterparties who satisfy our credit quality requirements; decreases in demand for the types of equipment that TCF leases or finances; limitations on TCF’s ability to attract and retain manufacturers and dealers to expand the inventory finance business.

 

Legislative and Regulatory Requirements  New consumer protection and supervisory requirements and regulations, including those resulting from action by the CFPB and changes in the scope of 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 Durbin Amendment to the Dodd-Frank Act; 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; 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.

 

Earnings/Capital Risks and 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 and unfavorable conditions in the credit markets that restrict or limit various funding sources; costs associated with new regulatory requirements or interpretive

 

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17

 

guidance relating to liquidity; uncertainties relating to customer opt-in preferences with respect to NSF fees on point of sale and ATM transactions which may have an adverse impact on TCF’s fee revenue; uncertainties relating to future retail deposit account changes, including limitations on TCF’s ability to predict customer behavior and the impact on TCF’s fee revenues.

 

Competitive Conditions; Supermarket Branching Risk; Growth Risks  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; customers completing financial transactions without using a bank; the effect of any negative publicity; slower than anticipated growth in existing or acquired businesses; inability to successfully execute on TCF’s growth strategy through acquisitions or cross-selling opportunities; failure to expand or diversify our balance sheet through programs or new opportunities; failure to successfully attract and retain new customers.

 

Technological and Operational Matters  Technological or operational difficulties, loss or theft of information, counterparty failures and the possibility that deposit account losses (fraudulent checks, etc.) may increase; failure to keep pace with technological change.

 

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. and potential reductions in card revenues resulting from such litigation or other litigation against Visa.

 

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; ineffective internal controls; adverse state or Federal tax assessments or findings in tax audits; lack of or inadequate insurance coverage for claims against TCF; potential for claims and legal action related to TCF’s fiduciary responsibilities.

 


 

18

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

 

 

 

 

December 31,

 

Change

 

 

 

2011

 

2010

 

$

 

%

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

205,415

 

$

220,772

 

$

(15,357

)

(7.0

) %

Securities available for sale

 

22,559

 

18,072

 

4,487

 

24.8

 

Investments and other

 

2,333

 

1,900

 

433

 

22.8

 

Total interest income

 

230,307

 

240,744

 

(10,437

)

(4.3

)

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

9,791

 

13,370

 

(3,579

)

(26.8

)

Borrowings

 

47,082

 

53,088

 

(6,006

)

(11.3

)

Total interest expense

 

56,873

 

66,458

 

(9,585

)

(14.4

)

Net interest income

 

173,434

 

174,286

 

(852

)

(.5

)

Provision for credit losses

 

59,249

 

77,646

 

(18,397

)

(23.7

)

Net interest income after provision for
credit losses

 

114,185

 

96,640

 

17,545

 

18.2

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

51,002

 

61,480

 

(10,478

)

(17.0

)

Card revenue

 

13,643

 

27,625

 

(13,982

)

(50.6

)

ATM revenue

 

6,608

 

6,985

 

(377

)

(5.4

)

Subtotal

 

71,253

 

96,090

 

(24,837

)

(25.8

)

Leasing and equipment finance

 

18,492

 

23,402

 

(4,910

)

(21.0

)

Other

 

1,570

 

817

 

753

 

92.2

 

Fees and other revenue

 

91,315

 

120,309

 

(28,994

)

(24.1

)

Gains on securities, net

 

5,842

 

21,185

 

(15,343

)

(72.4

)

Gains on sales of auto loans

 

1,133

 

-

 

1,133

 

N.M.

 

Total non-interest income

 

98,290

 

141,494

 

(43,204

)

(30.5

)

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

82,595

 

82,843

 

(248

)

(.3

)

Occupancy and equipment

 

32,366

 

30,968

 

1,398

 

4.5

 

FDIC insurance

 

6,647

 

7,398

 

(751

)

(10.2

)

Deposit account premiums

 

6,482

 

1,688

 

4,794

 

N.M.

 

Advertising and marketing

 

2,250

 

3,154

 

(904

)

(28.7

)

Other

 

39,148

 

37,309

 

1,839

 

4.9

 

Subtotal

 

169,488

 

163,360

 

6,128

 

3.8

 

Foreclosed real estate and repossessed assets, net

 

11,323

 

12,781

 

(1,458

)

(11.4

)

Operating lease depreciation

 

6,811

 

8,289

 

(1,478

)

(17.8

)

Other credit costs, net

 

(89

)

1,542

 

(1,631

)

(105.8

)

Total non-interest expense

 

187,533

 

185,972

 

1,561

 

.8

 

Income before income tax expense

 

24,942

 

52,162

 

(27,220

)

(52.2

)

Income tax expense

 

7,424

 

17,391

 

(9,967

)

(57.3

)

Income after income tax expense

 

17,518

 

34,771

 

(17,253

)

(49.6

)

Income attributable to non-controlling interest

 

1,075

 

898

 

177

 

19.7

 

Net income available to common stockholders

 

$

16,443

 

$

33,873

 

$

(17,430

)

(51.5

)

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

.10

 

$

.24

 

$

(.14

)

(58.3

)

Diluted

 

.10

 

.24

 

(.14

)

(58.3

)

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

.05

 

$

.05

 

$

-

 

-

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

157,829

 

140,970

 

16,859

 

12.0

 

Diluted

 

158,152

 

141,216

 

16,936

 

12.0

 

 

 

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19

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Year Ended

 

 

 

 

 

 

 

December 31,

 

Change

 

 

 

2011

 

2010

 

$

 

%

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

844,796

 

$

883,923

 

$

(39,127

)

(4.4

) %

Securities available for sale

 

85,188

 

80,445

 

4,743

 

5.9

 

Investments and other

 

7,967

 

5,509

 

2,458

 

44.6

 

Total interest income

 

937,951

 

969,877

 

(31,926

)

(3.3

)

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

45,108

 

61,229