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Section 1: 8-K (PRESS RELEASE FORM 8-K 07/19/2012)

 

 

 

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):

July 19, 2012

 

 

 

 

TCF FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

Delaware

(State or other jurisdiction of

incorporation)

001-10253

(Commission File Number)

41-1591444

(IRS Employer Identification No.)

 

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

(Address of principal executive offices, including Zip Code)

 

(952) 745-2760

 (Registrant’s telephone number, including area code)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

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

 

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

 

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

 

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

 

.

 


 

 

 

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 July 19, 2012, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended June 30, 2012.

 

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 July 19, 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 hereunto 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:    July 19, 2012

 

 

3

 

 


 
(Back To Top)

Section 2: EX-99.1 (PRESS RELEASE EXHIBIT 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 Net Income of $31.5 Million, or 20 Cents Per Share

 
SECOND QUARTER HIGHLIGHTS

-  Net interest margin of 4.86 percent, up 84 bps from June 30, 2011

-  Pre-tax pre-provision profit of $108.1 million, up 13.6% from June 30, 2011

-  Total delinquent loans declined $23.7 million from March 31, 2012

-  Total loans and leases of $15.2 billion, increase of 4.1 percent from $14.6 billion at June 30, 2011

-  Completed $172.5 million preferred stock offering

-  Issued $110 million of subordinated notes

-  Acquired $778 million of deposits from Prudential Bank & Trust, FSB

-  Announced common and preferred stock dividend payments, payable August 31, 2012 and September 4, 2012, respectively

 

Summary of Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1

($ in thousands, except per-share data)

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

 

 

2Q

 

1Q

 

 

2Q

2Q12 vs

 

 

2Q12 vs

 

YTD

 

 

YTD

Percent

 

2012 

 

2012 (3)

 

 

2011 

 

1Q12

 

 

2Q11

 

 

2012 

 

 

2011 

Change

Net income (loss)

$

 31,531 

 

$

 (282,894) 

 

$

 30,424 

 

N.M.

%

 

 3.6 

%

 

$

 (251,363) 

 

$

 60,696 

 

N.M.

%

Pre-tax pre-provision profit(1)

 

 108,118 

 

 

 70,578 

 

 

 95,201 

 

53.2 

 

 

13.6 

 

 

 

 178,696 

 

 

 190,508 

 

 (6.2) 

 

Diluted earnings (loss) per common share

 

 .20 

 

 

 (1.78) 

 

 

 .19 

 

N.M.

 

 

 5.3 

 

 

 

 (1.58) 

 

 

 .40 

 

N.M.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Ratios(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 .76 

%

 

 (5.96) 

%

 

 .68 

%

 

 

 

 

 

 

 

 (2.71) 

%

 

 .68 

%

 

 

Return on average common equity

 

 8.13 

 

 

 (63.38) 

 

 

 7.00 

 

 

 

 

 

 

 

 

 (29.84) 

 

 

 7.46 

 

 

 

Net interest margin

 

 4.86 

 

 

 4.14 

 

 

 4.02 

 

 

 

 

 

 

 

 

 4.49 

 

 

 4.04 

 

 

 

Net charge-offs as a percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   average loans and leases

 

 1.18 

 

 

 1.06 

 

 

 1.19 

 

 

 

 

 

 

 

 

 1.12 

 

 

 1.35 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Pre-tax pre-provision profit ("PTPP") is calculated as total revenues less non-interest expense.  First quarter and year-to-date 2012 PTPP

      excludes the net loss of $473.8 million related to the balance sheet repositioning completed in the first quarter of 2012. 

(2) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3) Includes a net, after-tax charge of $295.8 million, or $1.87 per share, related to repositioning certain investments and borrowings.

 


 

2

WAYZATA, MN, July 19, 2012 – TCF Financial Corporation (“TCF”) (NYSE: TCB) today reported net income for the second quarter of 2012 of $31.5 million, compared with net income of $30.4 million in the second quarter of 2011 and a net loss of $282.9 million for the first quarter of 2012. The net loss for the first quarter of 2012 included a net, after-tax charge of $295.8 million, or $1.87 per share, related to a balance sheet repositioning involving certain investments and borrowings. Diluted earnings per common share was 20 cents for the second quarter of 2012, compared with diluted earnings per common share of 19 cents in the second quarter of 2011 and diluted loss per common share of $1.78 in the first quarter of 2012.

 

TCF reported a net loss of $251.4 million for the first six months of 2012, compared with net income of $60.7 million for the same period in 2011. Diluted loss per common share for the first six months of 2012 was $1.58, compared with earnings per common share of 40 cents for the same period in 2011.

 

TCF declared a dividend on its 7.50 percent Series A Non-cumulative Perpetual Preferred Stock payable on September 4, 2012 to stockholders of record at the close of business on August 15, 2012. TCF also declared a quarterly cash dividend of 5 cents per common share payable on August 31, 2012 to stockholders of record at the close of business on August 15, 2012.

Chairman’s Statement   

“We began the year by saying 2012 would be a ‘building and investing’ year for TCF, and at the half-way point, it has been just that,” said William A. Cooper, Chairman and Chief Executive Officer.  “TCF has been proactive in preparing for the future through actions such as a balance sheet repositioning and disciplined asset growth in national lending businesses.  TCF listened to what consumers want in a checking product and reintroduced TCF Free Checking to its customers during the quarter.  TCF also bolstered its capital position during the quarter through preferred stock and subordinated debt offerings, while announcing the redemption of its trust preferred securities. 

“The second quarter highlighted TCF’s earnings potential through a significant increase in net interest margin due to the full quarter impact of the balance sheet repositioning, as well as a change in trends in banking

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fees partially due to our deposit product fee structures.  Meanwhile, credit quality remains a challenge as we continue to work through problem credits.  We are seeing some encouraging trends in consumer real estate delinquencies, a leading indicator of consumer credit for TCF, which have decreased for a second consecutive quarter. 

“I am excited about the evolution that has taken place at TCF over the past year and the return to our roots with TCF Free Checking.  Today, we are in a much better position for success than we were a year ago.  As we continue to build on our recent investments, I am confident in our ability to improve future stockholder value.”

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2

 

 

 

 

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2Q

 

 

1Q

 

 

2Q

 

2Q12 vs

 

2Q12 vs

 

 

 

YTD

 

 

YTD

 

Percent

 

($ in thousands)

 

2012 

 

 

2012 

 

 

2011 

 

1Q12

 

2Q11

 

 

 

2012 

 

 

2011 

 

Change

 

Net interest income

$

 198,224 

 

$

 180,173 

 

$

 176,150 

 

 10.0 

%

 12.5 

%

 

$

 378,397 

 

$

 350,190 

 

 8.1 

%

Fees and other revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

 48,090 

 

 

 41,856 

 

 

 56,396 

 

 14.9 

 

 (14.7) 

 

 

 

 89,946 

 

 

 109,909 

 

 (18.2) 

 

Card revenue

 

 13,530 

 

 

 13,207 

 

 

 28,219 

 

 2.4 

 

 (52.1) 

 

 

 

 26,737 

 

 

 54,803 

 

 (51.2) 

 

ATM revenue

 

 6,276 

 

 

 6,199 

 

 

 7,091 

 

 1.2 

 

 (11.5) 

 

 

 

 12,475 

 

 

 13,796 

 

 (9.6) 

 

 

Total banking fees

 

 67,896 

 

 

 61,262 

 

 

 91,706 

 

 10.8 

 

 (26.0) 

 

 

 

 129,158 

 

 

 178,508 

 

 (27.6) 

 

Leasing and equipment finance

 

 23,207 

 

 

 22,867 

 

 

 22,279 

 

 1.5 

 

 4.2 

 

 

 

 46,074 

 

 

 49,029 

 

 (6.0) 

 

Gains on sales of auto loans

 

 5,496 

 

 

 2,250 

 

 

 - 

 

 144.3 

 

N.M.

 

 

 

 7,746 

 

 

 - 

 

N.M.

 

Other

 

 3,168 

 

 

 2,355 

 

 

 384 

 

 34.5 

 

N.M.

 

 

 

 5,523 

 

 

 1,078 

 

N.M.

 

 

Total fees and other revenue

 

 99,767 

 

 

 88,734 

 

 

 114,369 

 

 12.4 

 

 (12.8) 

 

 

 

 188,501 

 

 

 228,615 

 

 (17.5) 

 

 

 

Subtotal

 

 297,991 

 

 

 268,907 

 

 

 290,519 

 

 10.8 

 

 2.6 

 

 

 

 566,898 

 

 

 578,805 

 

 (2.1) 

 

Gains (losses) on securities, net

 

 13,116 

 

 

 76,611 

 

 

 (227) 

 

 (82.9) 

 

N.M.

 

 

 

 89,727 

 

 

 (227) 

 

N.M.

 

 

 

Total revenue

$

 311,107 

 

$

 345,518 

 

$

 290,292 

 

 (10.0) 

 

 7.2 

 

 

$

 656,625 

 

$

 578,578 

 

 13.5 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin(1)

 

 4.86 

%

 

 4.14 

%

 

 4.02 

%

 

 

 

 

 

 

 4.49 

%

 

 4.04 

%

 

 

Fees and other revenue as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a % of total revenue

 

 32.07 

 

 

 25.68 

 

 

 39.40 

 

 

 

 

 

 

 

 28.71 

 

 

 39.51 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

·         Net interest income for the second quarter of 2012 increased $22.1 million, or 12.5 percent, compared with the second quarter of 2011.  The increase was primarily due to the balance sheet repositioning completed in the first quarter of 2012, which resulted in a $37.9 million reduction to the cost of borrowings, partially offset by a $13.9 million reduction of interest income on mortgage-backed

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4

securities.  Additionally, average balances of inventory finance loans and auto finance loans were higher, and the average cost of deposits was lower, during the second quarter of 2012 compared to the same period in 2011. Offsetting the increase in net interest income were lower yields on leasing and equipment finance loans and leases and consumer and commercial real estate loans as the portfolio rebalances to the current rate environment. Net interest income for the second quarter of 2012 increased $18.1 million, or 10 percent, compared with the first quarter of 2012. The increase in net interest income from the first quarter of 2012 was primarily due to the full quarter impact of the balance sheet repositioning, which resulted in a $28.6 million reduction to the cost of borrowings, partially offset by a $12.4 million reduction of interest income on mortgage-backed securities.  Also offsetting the increase was reduced interest income on loans and leases, driven by lower yields on consumer and commercial loans, offset by higher average balances of inventory finance and auto finance loans. 

·         Net interest margin in the second quarter of 2012 was 4.86 percent, compared with 4.02 percent in the second quarter of 2011. This increase was primarily due to lower average cost of borrowings due to the effects of the balance sheet repositioning, which increased net interest margin by 92 basis points, as well as decreased rates on various deposit products and a positive mix shift to the higher yielding business lines including inventory finance and auto finance.  These increases were partially offset by a decrease in yields in the consumer, commercial, and leasing and equipment finance portfolios as a result of the lower interest rate environment. Net interest margin increased by 72 basis points from 4.14 percent in the first quarter of 2012.  This increase was primarily due to a lower average cost of borrowings due to the effects of the balance sheet repositioning, which increased net interest margin by 69 basis points, and growth in the inventory finance and auto finance portfolios.  These increases were partially offset by decreased levels of higher yielding loans in the consumer portfolio as a result of the lower interest rate environment and increased balances in higher rate deposit accounts.

·         At June 30, 2012, interest-bearing deposits held at the Federal Reserve and unencumbered securities were $1.1 billion, an increase of $395 million from the second quarter of 2011 and $46 million from the

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first quarter of 2012.

 

Non-interest Income

·         Banking fees and service charges in the second quarter of 2012 were $48.1 million, down $8.3 million, or 14.7 percent, from the second quarter of 2011 and up $6.2 million, or 14.9 percent, from the first quarter of 2012. The decrease in banking fees and revenues from the second quarter of 2011 was primarily due to checking account program changes that resulted in a reduced number of accounts. The increase from the first quarter of 2012 was primarily due to seasonality of checking account transactions and our deposit product fee structure changes.

·         Card revenues were $13.5 million in the second quarter of 2012, a decrease of $14.7 million, or 52.1 percent, from the second quarter of 2011 and up $323 thousand, or 2.4 percent, from the first quarter of 2012. The decrease from the prior year is due to new debit card interchange regulations which took effect on October 1, 2011. The increase in card revenue from the first quarter of 2012 was primarily due to seasonal increases in transaction volume offset by a lower number of active checking accounts.

·         TCF sold $144.1 million of auto loans and recognized $5.5 million in associated gains during the second quarter of 2012, compared with the sale of $72 million of auto loans and recognition of $2.3 million in associated gains during the first quarter of 2012.

·         During the second quarter of 2012, TCF recognized a $13.1 million gain on sales of securities on the sale of its Visa® Class B stock.

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Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-End and Average Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3

 

 

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

($ in thousands)

 

2Q

 

1Q

 

2Q

 

2Q12 vs

 

2Q12 vs

 

 

YTD

 

YTD

 

Percent

 

 

 

2012 

 

2012 

 

2011 

 

1Q12

 

2Q11

 

 

2012 

 

2011 

 

Change

 

Period-End:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer real estate

$

 6,811,784 

$

 6,815,909 

$

 7,018,240 

 

 (.1) 

%

 (2.9) 

%

 

 

 

 

 

 

 

Commercial

 

 3,523,070 

 

 3,467,089 

 

 3,614,395 

 

 1.6 

 

 (2.5) 

 

 

 

 

 

 

 

 

Leasing and equipment finance

 

 3,151,105 

 

 3,118,755 

 

 3,055,878 

 

 1.0 

 

 3.1 

 

 

 

 

 

 

 

 

Inventory finance

 

 1,457,263 

 

 1,637,958 

 

 905,922 

 

 (11.0) 

 

 60.9 

 

 

 

 

 

 

 

 

Auto finance

 

 262,188 

 

 139,047 

 

 - 

 

 88.6 

 

N.M.

 

 

 

 

 

 

 

 

Other

 

 29,094 

 

 29,178 

 

 37,510 

 

 (.3) 

 

 (22.4) 

 

 

 

 

 

 

 

 

 

Total

$

 15,234,504 

$

 15,207,936 

$

 14,631,945 

 

 .2 

 

 4.1 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer real estate

$

 6,793,415 

$

 6,845,063 

$

 7,034,448 

 

 (.8) 

 

 (3.4) 

 

$

 6,819,239 

$

 7,068,018 

 

 (3.5) 

%

Commercial

 

 3,492,049 

 

 3,457,720 

 

 3,597,644 

 

 1.0 

 

 (2.9) 

 

 

 3,474,885 

 

 3,610,481 

 

 (3.8) 

 

Leasing and equipment finance

 

 3,145,914 

 

 3,128,329 

 

 3,068,550 

 

 .6 

 

 2.5 

 

 

 3,137,122 

 

 3,093,969 

 

 1.4 

 

Inventory finance

 

 1,571,004 

 

 1,145,183 

 

 978,505 

 

 37.2 

 

 60.6 

 

 

 1,353,469 

 

 925,913 

 

 46.2 

 

Auto finance

 

 223,893 

 

 85,562 

 

 - 

 

 161.7 

 

N.M.

 

 

 154,728 

 

 - 

 

N.M.

 

Other

 

 17,647 

 

 17,582 

 

 19,463 

 

 .4 

 

 (9.3) 

 

 

 17,612 

 

 20,603 

 

 (14.5) 

 

 

Total

$

 15,243,922 

$

 14,679,439 

$

 14,698,610 

 

 3.8 

 

 3.7 

 

$

 14,957,055 

$

 14,718,984 

 

 1.6 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·         Loans and leases were $15.2 billion at June 30, 2012, an increase of $602.6 million, or 4.1 percent, compared with June 30, 2011, and flat compared with March 31, 2012.  The increase from June 30, 2011 was primarily due to growth in the inventory finance and auto finance portfolios, partially offset by lower balances in consumer real estate and commercial loans.  The increase in the inventory finance portfolio from the second quarter of 2011 was primarily due to the funding of dealers of Bombardier Recreational Products Inc. (“BRP”), which began on February 1, 2012. Increases in auto finance and commercial loans from the first quarter of 2012 were offset by decreases in inventory finance loans as a result of payments related to seasonal sales in the powersports and lawn and garden segments. Auto finance loans are expected to continue growing throughout 2012 as Gateway One Lending and Finance, LLC (“Gateway One”) expands its sales force, number of active dealers and number of states in its network. Gateway One increased its portfolio of managed loans, which includes loans, loans held for sale, and loans sold and serviced for others, by 40.4 percent to $780.3 million at June 30, 2012 from $555.8 million at March 31, 2012. Gateway One expanded its active dealers to 5,420 at June 30, 2012 from 4,452 at March 31, 2012.

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7

·         Average loans and leases were $15.2 billion at June 30, 2012, an increase of $545.3 million, or 3.7 percent, compared with June 30, 2011, and an increase of $564.5 million, or 3.8 percent, compared with March 31, 2012. The increases from June 30, 2011 and from March 31, 2012 were primarily due to growth in the inventory finance and auto finance portfolios, partially offset by a decrease in the consumer real estate portfolio.  The decreases in the average consumer real estate portfolios reflect a decline in production of new fixed-rate first mortgage loans as market rates available for such loans are not as attractive to TCF.  The increase in average inventory finance portfolios from both the second quarter of 2011 and the first quarter of 2012 was primarily due to the funding of dealers of BRP products.

Credit Quality

·         Over 60-day delinquencies decreased from March 31, 2012 and net charge-offs remained under peak 2010 levels, down $15.9 million year-to-date compared with the same 2011 period.  Non-performing assets increased from the first quarter due to increased non-accrual loans, primarily in commercial real estate.

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8

 

Credit Quality Summary of Performing and Underperforming Loans and Leases

 

 

     Table 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

 

 

 

 

 

 

 

60+ Days

 

Non-accrual

 

 

 

 

Performing Loans and Leases(1)

Delinquent and

Loans and

 

Total Loans

 

June 30, 2012

Non-classified

Classified(2)

 

Total

 

 Accruing 

 

Leases

 

and Leases

 

Consumer real estate

$

 6,547,940 

$

 22,485 

 

$

 6,570,425 

$

 100,681 

$

 140,678 

$

 6,811,784 

 

Commercial

 

 3,070,917 

 

 296,322 

 

 

 3,367,239 

 

 5,616 

 

 150,215 

 

 3,523,070 

 

Leasing and equipment finance

 

 3,103,094 

 

 15,687 

 

 

 3,118,781 

 

 2,895 

 

 29,429 

 

 3,151,105 

 

Inventory finance

 

 1,446,730 

 

 8,427 

 

 

 1,455,157 

 

 206 

 

 1,900 

 

 1,457,263 

 

Auto finance

 

 262,046 

 

 - 

 

 

 262,046 

 

 142 

 

 - 

 

 262,188 

 

Other

 

 26,856 

 

 - 

 

 

 26,856 

 

 34 

 

 2,204 

 

 29,094 

 

Total loans and leases

$

 14,457,583 

$

 342,921 

 

$

 14,800,504 

$

 109,574 

$

 324,426 

$

 15,234,504 

 

Percent of total loans and leases

 

 94.9 

%

 2.3 

%

 

 97.2 

%

 .7 

%

 2.1 

%

 100.0 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60+ Days

 

Non-accrual

 

 

 

 

Performing Loans and Leases(1)

Delinquent and

Loans and

 

Total Loans

 

March 31, 2012

 

Non-classified

 

Classified(2)

 

 

Total

 

Accruing

 

Leases

 

and Leases

 

Consumer real estate

$

 6,542,851 

$

 20,099 

 

$

 6,562,950 

$

 103,655 

$

 149,304 

$

 6,815,909 

 

Commercial

 

 3,013,883 

 

 314,104 

 

 

 3,327,987 

 

 3,425 

 

 135,677 

 

 3,467,089 

 

Leasing and equipment finance

 

 3,071,833 

 

 19,956 

 

 

 3,091,789 

 

 6,951 

 

 20,015 

 

 3,118,755 

 

Inventory finance

 

 1,630,126 

 

 6,538 

 

 

 1,636,664 

 

 185 

 

 1,109 

 

 1,637,958 

 

Auto finance

 

 138,879 

 

 - 

 

 

 138,879 

 

 168 

 

 - 

 

 139,047 

 

Other

 

 26,288 

 

 - 

 

 

 26,288 

 

 52 

 

 2,838 

 

 29,178 

 

Total loans and leases

$

 14,423,860 

$

 360,697 

 

$

 14,784,557 

$

 114,436 

$

 308,943 

$

 15,207,936 

 

Percent of total loans and leases

 

 94.8 

%

 2.4 

%

 

 97.2 

%

 .8 

%

 2.0 

%

 100.0 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60+ Days

 

Non-accrual

 

 

 

 

Performing Loans and Leases(1)

Delinquent and

Loans and

 

Total Loans

 

December 31, 2011

 

Non-classified

 

Classified(2)

 

 

Total

 

Accruing

 

Leases

 

and Leases

 

Consumer real estate

$

 6,614,679 

$

 21,606 

 

$

 6,636,285 

$

 109,635 

$

 149,371 

$

 6,895,291 

 

Commercial

 

 2,990,515 

 

 330,310 

 

 

 3,320,825 

 

 1,148 

 

 127,519 

 

 3,449,492 

 

Leasing and equipment finance

 

 3,093,194 

 

 22,227 

 

 

 3,115,421 

 

 6,255 

 

 20,583 

 

 3,142,259 

 

Inventory finance

 

 616,677 

 

 7,040 

 

 

 623,717 

 

 160 

 

 823 

 

 624,700 

 

Auto finance

 

 3,231 

 

 - 

 

 

 3,231 

 

 397 

 

 - 

 

 3,628 

 

Other

 

 34,829 

 

 - 

 

 

 34,829 

 

 41 

 

 15 

 

 34,885 

 

Total loans and leases

$

 13,353,125 

$

 381,183 

 

$

 13,734,308 

$

 117,636 

$

 298,311 

$

 14,150,255 

 

Percent of total loans and leases

 

 94.4 

%

 2.7 

%

 

 97.1 

%

 .8 

%

 2.1 

%

 100.0 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes all loans and leases, including TDRs, that are not 60+ days delinquent or on non-accrual status.

 

 

 

(2) Excludes classified loans and leases that are 60+ days delinquent.  Classified loans and leases are those for which management has concerns regarding the borrower's ability to meet the existing terms and conditions, but may never become non-performing or result in a loss.

 

 

 

 

 

 

·         Performing loans and leases includes all loans and leases, including TDRs, that are not over 60-days delinquent or on non-accrual status.  Performing loans and leases comprised 97.2 percent of total loans and leases at June 30, 2012, flat compared with March 31, 2012.

·         The over 60-day delinquency rate was .73 percent, down from .77 percent at March 31, 2012 and unchanged from June 30, 2011. The decrease from the first quarter of 2012 was primarily due to decreases in leasing and equipment finance and consumer real estate delinquencies.

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9

·         Non-accrual loans and leases were $324.4 million at June 30, 2012, an increase of $15.5 million, or 5 percent, from March 31, 2012 and an increase of $2.7 million, or less than 1 percent, from June 30, 2011. The increase from March 31, 2012 was primarily due to a $15.8 million increase in commercial real estate non-accrual loans and one large non-accrual lease, partially offset by an $8.6 million decrease in consumer real estate non-accrual loans. The slight increase from June 30, 2011 was primarily due to increased commercial real estate non-accrual loans, partially offset by decreases in consumer real estate and commercial business non-accrual loans.  Of the $324.4 million of non-accrual loans and leases at June 30, 2012, 39 percent were less than 60 days past due.

·         Other real estate owned was $125.9 million at June 30, 2012, a decrease of $1.3 million from March 31, 2012 and a decrease of $10.6 million from June 30, 2011. The decrease from June 30, 2011 was primarily due to a decrease in the number of consumer properties owned.

·         Consumer real estate TDRs include loans where a payment modification (but generally not a reduction of principal) has been granted to a residential real estate customer. Based on clarifying guidance from the Securities and Exchange Commission, beginning in the second quarter of 2012, TCF now classifies trial modifications as TDRs at the beginning of the trial period. Previously, these loans were not classified as TDRs until performance was demonstrated at a reduced payment amount during a short trial period, resulting in a one-time $13.4 million increase of TDRs during the second quarter of 2012. Accruing consumer real estate TDRs totaled $465.6 million at June 30, 2012, and averaged 17 months since modification. These loans had a weighted average yield of 4 percent, and are reserved at an average rate of 14.1 percent. Of the accruing consumer real estate TDRs, 8.13 percent were over 60-days delinquent at June 30, 2012.  Included in the $465.6 million of accruing consumer real estate TDRs at June 30, 2012 are $336.4 million, or 72% of the total, of “non-classified” loans, meaning the loans were current and have not been delinquent for at least six months.

·         Commercial TDRs include loans where a payment or other modification (but generally not a reduction of principal) has been granted. Accruing commercial TDRs had a weighted average yield of 5.3 percent.

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10

Allowance for Loan and Lease Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6

($ in thousands)

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

 

 

 

2Q

 

1Q

 

2Q

 

2Q12 vs

 

2Q12 vs

 

 

YTD

 

YTD

 

Percent

 

Allowance for Loan and Lease Losses

2012 

 

2012 

 

2011 

 

1Q12

 

2Q11

 

 

2012 

 

2011 

 

Change

 

Balance at beginning of period

$

 265,293 

$

 255,672 

$

 255,308 

 

 3.8 

%

 3.9 

%

$

 255,672 

$

 265,819 

 

 (3.8) 

%

 

Charge-offs

 

 (49,833) 

 

 (44,675) 

 

 (48,457) 

 

 11.6 

 

 2.8 

 

 

 (94,509) 

 

 (109,561) 

 

 (13.7) 

 

 

Recoveries

 

 4,974 

 

 5,742 

 

 4,612 

 

 (13.4) 

 

 7.8 

 

 

 10,716 

 

 9,904 

 

 8.2 

 

 

 

Net charge-offs

 

 (44,859) 

 

 (38,933) 

 

 (43,845) 

 

 15.2 

 

 2.3 

 

 

 (83,793) 

 

 (99,657) 

 

 (15.9) 

 

 

Provision for credit losses

 

 54,106 

 

 48,542 

 

 44,005 

 

 11.5 

 

 23.0 

 

 

 102,648 

 

 89,279 

 

 15.0 

 

 

Other

 

 (379) 

 

 12 

 

 4 

 

N.M.

 

NM

 

 

 (366) 

 

 31 

 

N.M.

 

Balance at end of period

$

 274,161 

$

 265,293 

$

 255,472 

 

 3.3 

 

 7.3 

 

$

 274,161 

$

 255,472 

 

 7.3 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs as a percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

average loans and leases(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First mortgage lien

 

1.58 

%

1.66 

%

1.78 

%

 (8) 

bps

 (20) 

bps

 

1.62 

 

1.80 

 

 (18) 

bps

 

 

Junior lien

 

3.07 

 

3.03 

 

2.75 

 

 4 

 

 32 

 

 

3.05 

 

2.56 

 

 49 

 

 

Total consumer real estate

 

2.05 

 

2.09 

 

2.09 

 

 (4) 

 

 (4) 

 

 

2.07 

 

2.04 

 

 3 

 

Commercial

 

.97 

 

.18 

 

.30 

 

 79 

 

 67 

 

 

.57 

 

1.13 

 

 (56) 

 

Leasing and equipment finance

 

.15 

 

.02 

 

.45 

 

 13 

 

 (30) 

 

 

.08 

 

.41 

 

 (33) 

 

Inventory finance

 

.06 

 

.22 

 

.13 

 

 (16) 

 

 (7) 

 

 

.13 

 

.12 

 

 1 

 

Auto finance

 

.14 

 

.01 

 

 

 13 

 

 14 

 

 

.11 

 

 

 11 

 

Other

 

N.M

 

N.M

 

N.M

 

N.M

 

N.M

 

 

N.M

 

N.M

 

N.M

 

 

Total

 

1.18 

 

1.06 

 

1.19 

 

 12 

 

 (1) 

 

 

1.12 

 

1.35 

 

 (23) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance as a percentage of period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

end loans and leases

 

1.80 

%

1.74 

%

1.75 

%

 

 

 

 

 

1.80 

%

1.75 

%

 

 

Ratio of allowance to net charge-offs(1)

 

1.50 

X

1.70 

X

1.50 

X

 

 

 

 

 

1.60 

X

1.30 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·         Allowance for loan and lease losses was $274.2 million, or 1.80 percent of loans and leases,  an increase of $8.9 million, compared with $265.3 million, or 1.74 percent, at March 31, 2012 and an increase of $18.7 million, compared with $255.5 million, or 1.75 percent, at June 30, 2011.

·       Provision for credit losses was $54.1 million, an increase of $5.6 million from $48.5 million recorded in the first quarter of 2012 and an increase of $10.1 million from $44 million in the second quarter of 2011. The increase from both periods was primarily due to increased provision expense on commercial loans and a $4 million reserve loss on one large lease exposure. The increase from the first quarter of 2012 was partially offset by decreased provision expense in inventory finance due to the first quarter on-boarding of the BRP program and lower seasonal loan balances.

·       Net loan and lease charge-offs were $44.9 million, or 1.18 percent, annualized, of average loans and leases, up $6 million from $38.9 million, or 1.06 percent, annualized, in the first quarter of 2012 and up

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11

$1.1 million from $43.8 million, or 1.19 percent, annualized, in the second quarter of 2011. The increase in net charge-offs from the first quarter of 2012 was primarily due to increased net charge-offs on commercial real estate loans. The increase in net charge-offs from the second quarter of 2011 was primarily due to increased net charge-offs on commercial real estate loans, partially offset by decreased net charge-offs on leasing and equipment finance loans and leases.

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 7

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

 

($ in thousands)

2Q

 

1Q

 

2Q

2Q12 vs

 

2Q12 vs

 

 

YTD

 

YTD

Percent

 

 

2012 

 

2012 

 

2011 

1Q12

 

2Q11

 

 

2012 

 

2011 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

$

 4,636,701 

 

$

 4,565,065 

 

$

 4,570,543 

 1.6 

%

 1.4 

%

 

$

 4,600,882 

 

$

 4,536,427 

 1.4 

%

 

Savings

 

 6,053,264 

 

 

 5,905,118 

 

 

 5,628,249 

 2.5 

 

 7.6 

 

 

 

 5,979,191 

 

 

 5,536,823 

 8.0 

 

 

Money market

 

 748,016 

 

 

 662,493 

 

 

 648,862 

 12.9 

 

 15.3 

 

 

 

 705,255 

 

 

 661,114 

 6.7 

 

 

   Subtotal

 

 11,437,981 

 

 

 11,132,676 

 

 

 10,847,654 

 2.7 

 

 5.4 

 

 

 

 11,285,328 

 

 

 10,734,364 

 5.1 

 

 

Certificates

 

 1,608,653 

 

 

 1,135,673 

 

 

 1,092,368 

 41.6 

 

 47.3 

 

 

 

 1,372,164 

 

 

 1,092,452 

 25.6 

 

 

      Total deposits

$

 13,046,634 

 

$

 12,268,349 

 

$

 11,940,022 

 6.3 

 

 9.3 

 

 

$

 12,657,492 

 

$

 11,826,816 

 7.0 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest rate on deposits(1)

 

 .31% 

 

 

 .30% 

 

 

 .38% 

 

 

 

 

 

 

 .31% 

 

 

 .40% 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·         Total average deposits increased $1.1 billion, or 9.3 percent, from the second quarter of 2011 and increased $778.3 million, or 6.3 percent, from the first quarter of 2012, primarily due to the assumption of $778 million of deposits from Prudential Bank & Trust, FSB (“PB&T”).  The deposits consist primarily of IRA accounts with certificates of deposit, savings accounts and brokerage sweep accounts gathered by PB&T through its relationship with Prudential Retirement.

·         The average interest cost of deposits in the second quarter of 2012 was .31 percent, down 7 basis points from the second quarter of 2011 and basically flat from the first quarter of 2012. The decrease in the average interest cost of deposits from the second quarter of 2011 was primarily due to pricing strategies on certain deposit products, partially offset by higher average interest costs on the PB&T deposits assumed in June 2012.

-more-

 


 

12

 

Non-interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest Expense