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Section 1: 8-K (8-K)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 


 

FORM 8-K

 


 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):

October 26, 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 October 26, 2012, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended September 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 7.01 Regulation FD Disclosure.

 

Information is being furnished herein in Exhibit 99.2 with respect to the slide presentation prepared for use with the press release.  This information includes selected financial and operational information through the third quarter of 2012 and does not represent a complete set of financial statements and related notes prepared in conformity with generally accepted accounting principles (“GAAP”).  Most, but not all, of the selected financial information furnished herein is derived from the Company’s consolidated financial statements and related notes prepared in accordance with GAAP and management’s discussion and analysis included in the Company’s reports on Forms 10-K and 10-Q.  The Company’s annual financial statements are subject to independent audit.  These materials are dated October 26, 2012 and TCF does not undertake to update the materials after that date.

 

The presentation is also available on the Investor Relations section of the Company’s web site at http://ir.tcfbank.com.  TCF Financial Corporation’s Annual Report to Shareholders and its reports on Forms 10-K, 10-Q and 8-K and other publicly available information should be consulted for other important information about the Company.

 

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

 

 

Item 9.01    Financial Statements and Exhibits.

 

 

(d)  Exhibits.

 

 

 

 

 

 

 

 

 

 

Exhibit No. 

 

Description

 

 

 

 

 

 

 

99.1

 

Earnings Release of TCF Financial Corporation,

 

 

 

 

  dated October 26, 2012

 

 

 

 

 

 

 

99.2

 

Slide presentation prepared for use with the Earnings

 

 

 

 

  Release, dated October 26, 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:    October 26, 2012

 

 

3

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

 

Exhibit 99.1

 

NEWS RELEASE

 

CONTACT:  Jason Korstange

(952) 745-2755

tcfbank.com

FOR IMMEDIATE RELEASE

 

 

 

 

 

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

 

TCF Reports Net Income of $9.3 Million, or 6 Cents Per Share

 

THIRD QUARTER HIGHLIGHTS

-

Net interest margin of 4.85 percent, up 89 bps from the third quarter of 2011

-

Pre-tax pre-provision profit of $115.8 million, up 10.3 percent from the third quarter of 2011

-

Over 60-day accruing delinquent loans improved by $10.4 million from the second quarter of 2012

-

Provision for credit losses of $96.3 million includes $31.5 million related to regulatory guidance

-

Total loans and leases of $15.2 billion, increase of 6.1 percent from September 30, 2011

-

Announced common and preferred stock dividend payments, payable November 30, 2012 and December 3, 2012, respectively

 

Summary of Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1 

($ in thousands, except per-share data)

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

 

 

 

3Q

 

2Q

 

 

3Q

3Q12 vs

 

 

3Q12 vs

 

YTD

 

 

YTD

Percent

 

 

2012 

 

2012 

 

 

2011 

 

2Q12

 

 

3Q11

 

 

   2012 (3)

 

 

2011 

Change

Net income (loss)

 

$

 9,322 

 

$

 31,531 

 

$

 32,255 

 

(70.4)

%

 

 (71.1)

%

 

$

 (242,041)

 

$

 92,951 

 

N.M.

Net interest income

 

 

 200,559 

 

 

 198,224 

 

 

 176,064 

 

 1.2 

 

 

 13.9 

 

 

 

 578,956 

 

 

 526,254 

 

10.0 

 

Pre-tax pre-provision profit(1)

 

 

 115,809 

 

 

 108,117 

 

 

 104,972 

 

7.1 

 

 

10.3 

 

 

 

 371,471 

 

 

 295,480 

 

 25.72 

 

Diluted earnings (loss) per common share

 

 

 .06 

 

 

 .20 

 

 

 .20 

 

 (70.0)

 

 

 (70.0)

 

 

 

 (1.52)

 

 

 .60 

 

N.M.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Ratios(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

 .30 

%

 

 .76 

%

 

 .71 

%

 

 

 

 

 

 

 

 (1.73)

%

 

 .69 

%

 

 

Return on average common equity

 

 

 2.36 

 

 

 8.13 

 

 

 7.12 

 

 

 

 

 

 

 

 

 (19.50)

 

 

 7.33 

 

 

 

Net interest margin

 

 

 4.85 

 

 

 4.86 

 

 

 3.96 

 

 

 

 

 

 

 

 

 4.61 

 

 

 4.01 

 

 

 

Net charge-offs as a percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   average loans and leases

 

 

 2.74 

 

 

 1.18 

 

 

 1.48 

 

 

 

 

 

 

 

 

 1.67 

 

 

 1.39 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Pre-tax pre-provision profit (“PTPP”) is calculated as total revenues less non-interest expense.  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, October 26, 2012 – TCF Financial Corporation (“TCF”) (NYSE: TCB) today reported net income for the third quarter of 2012 of $9.3 million, compared with net income of $32.3 million in the third quarter of 2011 and net income of $31.5 million for the second quarter of 2012. Net income for the third quarter of 2012 included a net after-tax charge of $20.6 million, or 13 cents per common share, related to the implementation of clarifying regulatory guidance requiring loans subject to a borrower’s discharge from personal liability following Chapter 7 bankruptcy, to be reported as non-accrual loans, and written down to the estimated collateral value, regardless of delinquency status.  Of these loans, 93 percent were less than 60 days past due on their payments as of September 30, 2012. Diluted earnings per common share was 6 cents for the third quarter of 2012, compared with diluted earnings per common share of 20 cents in both the third quarter of 2011 and the second quarter of 2012.

 

TCF reported a net loss of $242 million for the first nine months of 2012, compared with net income of $93 million for the same period in 2011. The net loss for the first nine months of 2012 included a net, after-tax charge of $295.8 million, or $1.87 per common share, related to a balance sheet repositioning involving certain investments and borrowings as well as the after-tax charge of $20.6 million, or 13 cents per common share, related to the implementation of clarifying bankruptcy-related regulatory guidance.  Diluted loss per common share for the first nine months of 2012 was $1.52, compared with diluted earnings per common share of 60 cents for the same period in 2011.

 

TCF declared a quarterly cash dividend of 5 cents per common share payable on November 30, 2012 to stockholders of record at the close of business on November 15, 2012. TCF also declared a dividend on its 7.50 percent Series A Non-cumulative Perpetual Preferred Stock payable on December 3, 2012, to stockholders of record at the close of business on November 15, 2012.

 

Chairman’s Statement

 

“TCF’s third quarter results were impacted by incremental charge-offs reported in accordance with regulatory guidance and by increased provision in the commercial portfolio as we aggressively addressed credit issues in the area,” said William A. Cooper, Chairman and Chief Executive Officer.  “While these credit-related items were notable in the third quarter, there has been much accomplished throughout the bank in the first nine months of 2012, a building and investing year for TCF.

 

-more-

 


 

3

 

“We continue to experience the benefits of the first quarter repositioning of our balance sheet with increased net interest margin, reduction of mark-to-market risk on securities and a pre-tax pre-provision profit that is one of the strongest in the industry.  In addition, our national lending businesses continue to contribute to the bottom line with Gateway One, our new auto finance business, being integrated into TCF and originating high quality loans into the portfolio and our inventory finance business completing the integration of our BRP relationship; increasing outstanding balances in a challenging growth market.”

 

Another encouraging sign was our success in bringing back Free Checking. Upon review of the first full quarter impact, we saw the results we expected with increased checking account production, decreased attrition and overall net checking account growth.

 

“While the third quarter results were not what we anticipated due to the impact of the adoption of the clarifying regulatory guidance, we believe we are on the right track as we work through the remainder of 2012 and move forward with our strategy into 2013.”

 

-more-

 


 

4

 

Revenue

 

 Total Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2 

 

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

 

 

3Q

 

 

2Q

 

 

3Q

 

3Q12 vs

 

3Q12 vs

 

 

YTD

 

 

YTD

 

Percent

 

 ($ in thousands)

 

2012 

 

 

2012 

 

 

2011 

 

2Q12

 

3Q11

 

 

2012 

 

 

2011 

 

Change

 

 Net interest income

$

 200,559 

 

$

 198,224 

 

$

 176,064 

 

 1.2 

%

 13.9 

%

$

 578,956 

 

$

 526,254 

 

 10.0 

 Fees and other revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Fees and service charges

 

 43,745 

 

 

 48,090 

 

 

 58,452 

 

 (9.0)

 

 (25.2)

 

 

 133,691 

 

 

 168,361 

 

 (20.6)

 

 Card revenue

 

 12,927 

 

 

 13,530 

 

 

 27,701 

 

 (4.5)

 

 (53.3)

 

 

 39,664 

 

 

 82,504 

 

 (51.9)

 

 ATM revenue

 

 6,122 

 

 

 6,276 

 

 

 7,523 

 

 (2.5)

 

 (18.6)

 

 

 18,597 

 

 

 21,319 

 

 (12.8)

 

Total banking fees

 

 62,794 

 

 

 67,896 

 

 

 93,676 

 

 (7.5)

 

 (33.0)

 

 

 191,952 

 

 

 272,184 

 

 (29.5)

 

 Leasing and equipment finance

 

 20,498 

 

 

 23,207 

 

 

 21,646 

 

 (11.7)

 

 (5.3)

 

 

 66,572 

 

 

 70,675 

 

 (5.8)

 

 Gains on sales of auto loans

 

 7,486 

 

 

 5,496 

 

 

 - 

 

 36.2 

 

N.M.

 

 

 15,232 

 

 

 - 

 

N.M.

 

 Gain on sale of consumer real estate loans

 

 4,559 

 

 

 - 

 

 

 - 

 

N.M.

 

N.M.

 

 

 4,559 

 

 

 - 

 

N.M.

 

 Other

 

 3,688 

 

 

 3,168 

 

 

 786 

 

 16.4 

 

N.M.

 

 

 9,211 

 

 

 1,864 

 

N.M.

 

Total fees and other revenue

 

 99,025 

 

 

 99,767 

 

 

 116,108 

 

 (.7)

 

 (14.7)

 

 

 287,526 

 

 

 344,723 

 

 (16.6)

 

Subtotal

 

 299,584 

 

 

 297,991 

 

 

 292,172 

 

 .5 

 

 2.5 

 

 

 866,482 

 

 

 870,977 

 

 (.5)

 

 Gains on securities, net

 

 13,033 

 

 

 13,116 

 

 

 1,648 

 

 (.6)

 

N.M.

 

 

 102,760 

 

 

 1,421 

 

N.M.

 

Total revenue

$

 312,617 

 

$

 311,107 

 

$

 293,820 

 

 .5 

 

 6.4 

 

$

 969,242 

 

$

 872,398 

 

 11.1 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net interest margin(1)

 

 4.85 

%

 

 4.86 

%

 

 3.96 

%

 

 

 

 

 

 4.61 

%

 

 4.01 

%

 

 

 Fees and other revenue as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a % of total revenue

 

 31.68 

 

 

 32.07 

 

 

 39.52 

 

 

 

 

 

 

 29.67 

 

 

 39.51 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

·                 Net interest income for the third quarter of 2012 increased $24.5 million, or 13.9 percent, compared with the third quarter of 2011.  The increase was 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 $16 million reduction of interest income on lower levels of mortgage-backed securities and by higher average balances of inventory and auto finance loans. 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 higher yielding loans prepay or refinance and are replaced with lower yielding loans in the current rate environment.

 

·                 Net interest income for the third quarter of 2012 increased $2.3 million, or 1.2 percent, compared with the second quarter of 2012. The increase in net interest income from the second quarter of 2012 was primarily due to a higher average balance of auto finance loans.  This was partially offset by a

 

-more-

 


 

5

 

seasonally lower average balance of inventory finance loans.  Additionally, interest expense decreased due to the redemption of $115 million of Trust Preferred securities, partially offset by both the issuance of $110 million of subordinated debt and slightly higher deposit expenses due to product mix, primarily in certificates of deposit.

 

·                 Net interest margin in the third quarter of 2012 was 4.85 percent, compared with 3.96 percent in the third quarter of 2011 and 4.86 percent in the second quarter of 2012.  The increase from the third quarter of 2011 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 92 basis points.

 

·                 At September 30, 2012, interest-bearing deposits held at the Federal Reserve and unencumbered securities were $1.3 billion, a decrease of $189 million from the third quarter of 2011 and $156 million from the second quarter of 2012.

 

Non-interest Income

 

·                 Banking fees and service charges in the third quarter of 2012 were $43.7 million, down $14.7 million, or  25.2 percent, from the third quarter of 2011, and down $4.3 million, or 9 percent, from the second quarter of 2012. The decrease in banking fees and revenues from the third quarter of 2011 was primarily due to lower transaction volume related to a lower account base driven by our deposit product fee structure changes. The decrease from the second quarter of 2012 was primarily due to the decrease in monthly maintenance fee revenue resulting from the reintroduction of free checking products.

 

·                 Card revenues were $12.9 million in the third quarter of 2012, a decrease of $14.8 million, or 53.3 percent, from the third quarter of 2011 and down $603 thousand, or 4.5 percent, from the second quarter of 2012. The decrease from the prior year is due to debit card interchange regulations which took effect on October 1, 2011. The decrease in card revenue from the second quarter of 2012 was primarily due to a decrease in transaction volume.

 

·                 TCF sold $161.1 million of auto loans and recognized $7.5 million in associated gains during the third

 

-more-

 


 

6

 

quarter of 2012, compared with the sale of $144.1 million of auto loans and recognition of $5.5 million in associated gains during the second quarter of 2012.

 

·                 TCF sold $136.7 million of consumer real estate loans and $164.7 million of mortgage-backed securities and recognized $4.6 million and $13.2 million in associated gains, respectively, during the third quarter of 2012.

 

Loans and Leases

 

 Period-End and Average Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

Table 3 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

($ in thousands)

 

3Q
2012 

 

2Q
2012 

 

3Q
2011 

 

3Q12 vs
2Q12

 

3Q12 vs
3Q11

 

 

YTD
2012 

 

YTD
2011 

 

Percent
Change

 

 Period-End:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Consumer real estate

 

$

6,648,036 

 

$

6,811,784 

 

$

6,970,821 

 

(2.4)

%

 (4.6)

%

 

 

 

 

 

 

 

 Commercial

 

3,511,234 

 

3,523,070 

 

3,495,797 

 

(.3)

 

 .4 

 

 

 

 

 

 

 

 

 Leasing and equipment finance

 

3,157,977 

 

3,151,105 

 

3,011,795 

 

.2 

 

 4.9 

 

 

 

 

 

 

 

 

 Inventory finance

 

1,466,269 

 

1,457,263 

 

828,214 

 

.6 

 

 77.0 

 

 

 

 

 

 

 

 

 Auto finance

 

407,091 

 

262,188 

 

 

55.3 

 

N.M.

 

 

 

 

 

 

 

 

 Other

 

27,610 

 

29,094 

 

33,088 

 

(5.1)

 

 (16.6)

 

 

 

 

 

 

 

 

Total

 

$

15,218,217 

 

$

15,234,504 

 

$

14,339,715 

 

(.1)

 

 6.1 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Average:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Consumer real estate

 

$

6,729,254 

 

$

6,793,415 

 

$

6,985,821 

 

(.9)

 

 (3.7)

 

 

$

6,789,026 

 

$

7,040,318 

 

 (3.6)

 % 

 Commercial

 

3,538,111 

 

3,492,049 

 

3,564,198 

 

1.3 

 

 (.7)

 

 

 3,496,114 

 

 3,594,884 

 

 (2.7)

 

 Leasing and equipment finance

 

3,164,592 

 

3,145,914 

 

3,066,208 

 

.6 

 

 3.2 

 

 

 3,146,345 

 

 3,084,613 

 

 2.0 

 

 Inventory finance

 

1,440,298 

 

1,571,004 

 

826,198 

 

(8.3)

 

 74.3 

 

 

 1,392,828 

 

 889,709 

 

 56.5 

 

 Auto finance

 

367,271 

 

223,893 

 

 

64.0 

 

N.M.

 

 

 226,092 

 

 - 

 

N.M.

 

 Other

 

16,280 

 

17,647 

 

18,183 

 

(7.7)

 

 (10.5)

 

 

 17,166 

 

 19,788 

 

 (13.3)

 

Total

 

$

15,255,806 

 

$

15,243,922 

 

$

14,460,608 

 

.1 

 

 5.5 

 

 

$

15,067,571 

 

$

14,629,312 

 

 3.0 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                 Loans and leases were $15.2 billion at September 30, 2012, an increase of $878.5 million, or 6.1 percent, compared with September 30, 2011, and nearly flat compared with June 30, 2012.  The increase from 2011 was due to new programs in inventory finance, the addition of auto finance and growth in equipment finance and commercial banking, partially offset by the third quarter 2012 sale and net run off of consumer real estate loans.

 

·                 Auto finance loans are expected to continue growing as Gateway One Lending and Finance, LLC (“Gateway One”) expands its number and geographic coverage of active dealers in its network by expanding its sales force. Gateway One increased its portfolio of managed loans, which includes portfolio loans, loans held for sale, and loans sold and serviced for others, by 31.3 percent to $1 billion

 

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7

 

at September 30, 2012 from $780.3 million at June 30, 2012. Gateway One expanded its active dealers to 6,087 at September 30, 2012 from 5,420 at June 30, 2012.

 

·    Originations were $2.4 billion for the third quarter of 2012, an increase of $1.2 billion, or 92 percent, compared with the third quarter of 2011.  This increase was primarily due to growth in our national lending businesses (leasing and equipment finance, inventory finance and auto finance) and includes the high velocity of fundings and repayments with dealers in the inventory finance business. Originations decreased $188 million, or 7.2 percent, compared with the second quarter of 2012, due to slower seasonal transactions in the inventory finance portfolio, partially offset by growth in auto finance.

 

·                 Average loans and leases were $15.3 billion at September 30, 2012, an increase of $795 million, or  5.5 percent, compared with September 30, 2011, and an increase of $11.9 million, or  .1 percent, compared with June 30, 2012. The increase from June 30, 2012 was primarily due to growth in the auto finance portfolio, partially offset by a decrease in the average inventory finance portfolio due to lower seasonal levels of transactions. The increase from September 30, 2011 was primarily due to growth in the inventory finance portfolio due to the funding of dealers of BRP products, as well as the addition of the auto finance portfolio in the fourth quarter of 2011.

 

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8

 

Credit Quality

 


Credit Trends

 


Table 4

 

(In millions)

 

(At or for the Quarter Ended)

 

(1) Includes non-accrual loans and leases and other real estate owned.

(2) Excludes acquired portfolios and non-accrual loans and leases.

(3) Excludes the impact of implementation of clarifying bankruptcy-related regulatory guidance.

 

 

·    Over 60-day delinquencies improved slightly from June 30, 2012 and net charge-offs increased primarily due to $43.9 million in charge-offs related to the implementation of clarifying bankruptcy-related regulatory guidance in the third quarter of 2012, as well as more aggressive commercial loan workouts.  Non-performing assets increased from the second quarter due to the implementation of clarifying bankruptcy-related regulatory guidance in the third quarter of 2012 which caused an increase in consumer real estate non-accrual loans of $103.2 million, partially offset by decreases in other real estate owned and non-accrual loans in leasing and equipment finance.

 

·    The over 60-day delinquency rate was .67 percent, down from .73 percent at June 30, 2012 and down from .75 percent at September 30, 2011. The decrease from the third quarter of 2011 and second quarter

 

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9

 

of 2012 was primarily due to improvements in commercial and leasing and equipment finance delinquencies.

 

·    Non-accrual loans and leases were $421.8 million at September 30, 2012, an increase of $97.4 million, or 30 percent, from June 30, 2012 and an increase of $114.1 million, or 37.1 percent, from September 30, 2011. The increase from June 30, 2012 was primarily due to $103.2 million of additional consumer non-accrual loans resulting from the implementation of clarifying bankruptcy-related regulatory guidance in the third quarter of 2012. Of these loans, 93 percent were less than 60 days past due on their payments as of September 30, 2012.  These increases were partially offset by decreases in leasing and equipment finance non-accrual loans. The increase from September 30, 2011 was primarily due to the implementation of clarifying bankruptcy-related regulatory guidance as well as increased commercial real estate non-accrual loans. Of the commercial and leasing non-accrual loans and leases, which totaled $185.2 million at September 30, 2012, 75.6 percent were less than 60 days past due.

 

·    Other real estate owned was $120.4 million at September 30, 2012, a decrease of $5.5 million from June 30, 2012 and a decrease of $10 million from September 30, 2011. The decrease from September 30, 2011 was primarily due to a decrease in the number of consumer properties owned.

 

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10

 

Allowance for Loan and Lease Losses

 

 Credit Quality Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6 

 ($ in thousands)

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 Allowance for Loan and Lease Losses

 

 

3Q
2012

 

2Q
2012

 

3Q
2011

 

3Q12 vs
2Q12

 

3Q12 vs
3Q11

 

YTD
3Q12

 

YTD
3Q11

 

Percent
Change

 

 Balance at beginning of period

 

$

274,161

 

$

265,293

 

$

255,472

 

3.3

 %

7.3

 %

$

255,672

 

$

265,819

 

(3.8

)%

 Charge-offs

 

(108,714

)

(49,833

)

(57,761

)

118.2

 

88.2

 

(203,223

)

(167,323

)

21.5

 

 Recoveries

 

4,260

 

4,974

 

4,359

 

(14.4

)

(2.3

)

14,976

 

14,263

 

5.0

 

 Net charge-offs

 

(104,454

)

(44,859

)

(53,402

)

132.8

 

95.6

 

(188,247

)

(153,060

)

23.0

 

 Provision for credit losses

 

96,275

 

54,106

 

52,315

 

77.9

 

84.0

 

198,923

 

141,594

 

40.5

 

 Other

 

(1,141

)

(379

)

(60

)

N.M

.

N.M

.

(1,507

)

(28

)

N.M

.

 Balance at end of period

 

$

264,841

 

$

274,161

 

$

254,325

 

(3.4

)

4.1

 

$

264,841

 

$

254,325

 

4.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net charge-offs as a percentage of
average loans and leases
(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Consumer real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 First mortgage lien

 

3.60

 %

1.58

 %

2.29

 %

202

bps

131

bps

2.26

 

1.96

 

30

bps

 Junior lien

 

6.12

 

3.07

 

2.99

 

305

 

313

 

4.10

 

2.70

 

140

 

 Total consumer real estate

 

4.44

 

2.05

 

2.51

 

239

 

193

 

2.85

 

2.19

 

66

 

 Commercial

 

2.32

 

.97

 

.57

 

135

 

175

 

1.16

 

.95

 

21

 

 Leasing and equipment finance

 

.95

 

.15

 

.36

 

80

 

59

 

.37

 

.39

 

(2

)

 Inventory finance

 

.12

 

.06

 

.13

 

6

 

(1

)

.13

 

.12

 

1

 

 Auto finance

 

.30

 

.14

 

-

 

16

 

30

 

.21

 

-

 

21

 

 Other

 

N.M

.

N.M

.

N.M

.

N.M

.

N.M

.

N.M

.

N.M

.

N.M

.

 Total

 

2.74

 

1.18

 

1.48

 

156

 

126

 

1.67

 

1.39

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Allowance as a percentage of period
end loans and leases

 

1.74

 %

1.80

 %

1.77

 %

 

 

 

 

1.74

 %

1.77

 %

 

 

 Ratio of allowance to net charge-offs(1)

 

.60

 X

1.50

 X

1.20

 X

 

 

 

 

1.10

 X

1.20

 X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                 Allowance for loan and lease losses was $264.8 million, or 1.7 percent of loans and leases, a decrease of $9.4 million, compared with $274.2 million, or 1.8 percent of loans and leases, at June 30, 2012 and an increase of $10.5 million, compared with $254.3 million, or 1.8 percent of loans and leases, at September 30, 2011.

 

·                 Provision for credit losses was $96.3 million, an increase of $42.2 million from the second quarter of 2012 and an increase of $44 million from the third quarter of 2011. The increase from both periods was primarily due to an additional provision recorded for consumer real estate loans of $31.5 million related to the implementation of clarifying bankruptcy-related regulatory guidance and increased provision in the commercial portfolio as we aggressively addressed credit issues in this area in the third quarter of 2012.

 

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11

 

·                 Net loan and lease charge-offs were $104.5 million, or 2.74 percent, annualized, of average loans and leases, up $59.6 million, or 1.2 percent, annualized, of average loans and leases, from the second quarter of 2012 and up $51.1 million, or 1.5 percent, annualized, of average loans and leases, from the third quarter of 2011.  Excluding the additional net charge-offs of $43.9 million related to the implementation of bankruptcy-related regulatory guidance, net loan and lease charge-offs were $61 million up $16 million from the second quarter of 2012.  The increase in net charge-offs from the second quarter of 2012 and third quarter of 2011, excluding the additional net charge-offs due to the bankruptcy-related regulatory guidance, was primarily due to increased net charge-offs on a small population of commercial loans, which was driven by a more aggressive workout approach and the charge off of one large lease exposure.

 

Deposits

 

 Average Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 7 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

3Q
2012

 

2Q
2012

 

3Q
2011

 

3Q12 vs
2Q12

 

3Q12 vs
3Q11

 

YTD
2012

 

YTD
2011

 

Percent
Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Checking

 

$

4,582,088

 

$

4,636,700

 

$

4,475,566

 

(1.2

)%

2.4

 %

$

4,594,572

 

$

4,515,916

 

1.7

 %

 Savings

 

6,173,524

 

6,053,264

 

5,812,187

 

2.0

 

6.2

 

6,044,442

 

5,629,620

 

7.4

 

 Money market

 

848,899

 

748,016

 

650,598

 

13.5

 

30.5

 

753,486

 

657,570

 

14.6

 

    Subtotal

 

11,604,511

 

11,437,980

 

10,938,351

 

1.5

 

6.1

 

11,392,500

 

10,803,106

 

5.5

 

 Certificates

 

1,953,208

 

1,608,654

 

1,114,935

 

21.4

 

75.2

 

1,567,258

 

1,100,029

 

42.5

 

       Total average deposits

 

$

13,557,719

 

$

13,046,634

 

$

12,053,286

 

3.9

 

12.5

 

$

12,959,758

 

$

11,903,135

 

8.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Average interest rate on deposits(1)

 

.32%

 

.31%

 

.39%

 

 

 

 

 

.31%

 

.40%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  Total average deposits increased $1.5 billion, or 12.5 percent, from the third quarter of 2011 and increased $511.1 million, or 3.9 percent, from the second quarter of 2012. The increase from the third quarter of 2011 was primarily due to the assumption of $778 million of deposits from Prudential Bank & Trust, FSB (“PB&T”) in June 2012 and the reintroduction of free checking and special programs for certificates of deposits. The increase from the second quarter of 2012 is primarily due to increased certificates of deposit due to special promotions on these products in the third quarter of 2012, as well as

 

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12

 

the full quarter average of the PB&T deposits.

 

·                 The average interest cost of deposits in the third quarter of 2012 was .32 percent, down 7 basis points from the third quarter of 2011 and up 1 basis point from the second quarter of 2012. The decrease in the average interest cost of deposits from the third 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.

 

Non-interest Expense

 

 Non-interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

3Q
2012

 

2Q
2012

 

3Q
2011

 

3Q12 vs
2Q12

 

3Q12 vs
3Q11

 

YTD
2012

 

YTD
2011

 

Percent
Change

 

 Compensation and
employee benefits

 

$

98,409

 

$

97,787

 

$

87,758

 

.6

 %

12.1

 %

$

292,163

 

$

266,197

 

9.8

 %

 Occupancy and equipment

 

33,006

 

32,731

 

31,129

 

.8

 

6.0

 

97,983

 

94,071

 

4.2

 

 FDIC insurance

 

6,899

 

8,469

 

7,363

 

(18.5

)

(6.3

)

21,754

 

22,100

 

(1.6

)

 Advertising and marketing

 

4,248

 

5,404

 

1,145

 

(21.4

)

N.M

.

12,269

 

7,784

 

57.6

 

 Deposit account premiums

 

485

 

1,690

 

7,045

 

(71.3

)

(93.1

)

8,146

 

16,409

 

(50.4

)

 Operating lease depreciation

 

6,325

 

6,417

 

7,409

 

(1.4

)

(14.6

)

19,473

 

23,196

 

(16.1

)

 Other

 

36,173

 

36,956

 

34,708

 

(2.1

)

4.2

 

110,425

 

106,341

 

3.8

 

 Core operating expenses

 

185,545

 

189,454

 

176,557

 

(2.1

)

5.1

 

562,213

 

536,098

 

4.9

 

 Loss on termination of debt

 

-

 

-

 

-

 

-

 

-

 

550,735

 

-

 

N.M

.

 Foreclosed real estate and repossessed assets, net

 

10,670

 

12,059

 

12,430

 

(11.5

)

(14.2

)

33,776

 

37,915

 

(10.9

)

 Other credit costs, net

 

593

 

1,476

 

(139

)

(59.8

)

N.M

.

1,781

 

2,905

 

(38.7

)

 Total non-interest expense

 

$

196,808

 

$

202,989

 

$

188,848

 

(3.0

)

4.2

 

$

1,148,505

 

$

576,918

 

99.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·         Compensation and employee benefits expense increased $10.7 million, or 12.1 percent, from the third quarter of 2011 and increased $622 thousand, or .6 percent, from the second quarter of 2012. The increase from the third quarter of 2011 was primarily due to Gateway One, acquired in November 2011, as well as increased staffing levels to support the increased assets of the BRP program in Inventory Finance. The increase from the second quarter of 2012 was primarily due to higher salary expense in the auto finance business as it ramps up capacity to originate and service higher loan volumes.

 

·         The combined expense associated with Advertising, marketing and deposit account premiums decreased $3.5 million from the third quarter of 2011 and decreased $2.4 million compared with the second quarter of 2012.

 

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13

 

The decreases are attributable to TCF’s shift in strategy for acquiring high quality accounts through the re-introduction of a free checking product, versus the utilization of high dollar premiums.

 

·    Foreclosed real estate and repossessed asset expense decreased $1.8 million, or 14.2 percent, from the third quarter of 2011 and decreased $1.4 million, or  11.5 percent, from the second quarter of 2012. The decrease from the third quarter of 2011 was primarily due to fewer consumer real estate properties owned. The decrease from the second quarter of 2012 was primarily due to decreased write-downs on commercial real estate properties owned.

 

Capital and Borrowing Capacity

 

 Capital Information

 

 

 

Table 9 

 At period end

 

 

 

 

 

 ($ in thousands, except per-share data)

 

 

3Q
2012

 

 

4Q
2011

 

 Total equity

 

$

1,764,669

 

 

 

$

1,878,627

 

 

 

 Total equity to total assets

 

9.87

 %

 

 

9.90

 %

 

 

 Book value per common share

 

$

9.71

 

 

 

$

11.65

 

 

 

 Tangible realized common equity to tangible assets(1)

 

7.55

 %

 

 

8.42

 %

 

 

 

 

 

 

 

 

 

 

 

 

 Risk-based capital

 

 

 

 

 

 

 

 

 

 Tier 1

 

$

1,515,050

 

10.40

 %

$

1,706,926

 

12.67

 %

 Total(2)

 

1,887,488

 

12.96

 

1,994,875

 

14.80

 

 

 

 

 

 

 

 

 

 

 

 Tier 1 leverage capital

 

$

1,515,050

 

8.66

 %

$

1,706,926

 

9.15

 %

 

 

 

 

 

 

 

 

 

 

 Tier 1 common capital(3)

 

$

1,335,124

 

9.17

 %

$

1,581,432

 

11.74

 %

 

 

 

 

 

 

 

 

 

 

 

 

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

 

(2) The Company’s capital ratios continue to be in excess of “Well-capitalized” regulatory benchmarks.

 

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

 

 

 

 

·         On July 30, 2012, TCF redeemed all of its $115 million Trust Preferred securities.

 

·         TCF’s Tier 1 common capital ratio decreased to 9.17 percent from 9.26 percent at June 30, 2012.

 

·         On October 25, 2012, the Board of Directors of TCF declared a regular quarterly cash dividend of 5 cents per common share payable on November 30, 2012, to stockholders of record at the close of business on November 15, 2012. TCF also declared a dividend on the 7.50 percent Series A Non-cumulative Perpetual Preferred Stock payable on December 3, 2012, to stockholders of record at the close of business on November 15, 2012.

 

·         At September 30, 2012, TCF had $2.4 billion in unused, secured borrowing capacity at the FHLB of Des Moines, $531 million in unused, secured borrowing capacity at the Federal Reserve Discount Window and $571 million in unused borrowing capacity under existing federal funds lines.

 

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14

 

Webcast Information

 

A live webcast of TCF’s conference call to discuss third quarter earnings will be hosted at TCF’s website, http://ir.tcfbank.com, on October 26, 2012 at 8:00 a.m. CT.  A slide presentation for the call will be available on the website prior to the call. 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, investor presentations and SEC filings.

 

 

 

TCF is a Wayzata, Minnesota-based national bank holding company with $17.9 billion in total assets at September 30, 2012. TCF has nearly 430 branches in Minnesota, Illinois, Michigan, Colorado, Wisconsin, Indiana, Arizona and South Dakota, providing retail and commercial banking services. TCF, through its subsidiaries, 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 40 states. For more information about TCF, please visit http://ir.tcfbank.com.


 

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15

 

Cautionary Statements for Purposes of the Safe Harbor Provisions of the Securities Litigation Reform Act

 

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 for the year ended December 31, 2011 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.

 

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; impact of legislative, regulatory or other changes affecting customer account charges and fee income or expense; 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 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 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

 

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16

 

conditions in the credit markets that restrict or limit various funding sources; costs associated with new regulatory requirements or interpretive guidance relating to liquidity; uncertainties relating to customer opt-in preferences with respect to overdraft fees on point of sale and ATM transactions or the success of TCF’s reintroduction of the Free Checking product 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 including the announcement on July 11, 2012 by SuperValu that it is exploring strategic alternatives; 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; product additions and addition of distribution channels (or entry into new markets) for existing products, limitations on TCF’s ability to attract and retain manufacturers and dealers to expand the inventory finance business or dealers in connection with its expansion of the automobile finance business.

 

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, deposit or leasing activities including account servicing processes or fees or charges, or employment practices, and possible increases in financial 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.

 

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17

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Change

 

 

 

2012

 

2011

 

$

 

%

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

210,140

 

$

210,885

 

$

(745

)

(.4

)

Securities available for sale

 

5,607

 

22,561

 

(16,954

)

(75.1

)

Investments and other

 

4,105

 

1,997

 

2,108

 

105.6

 

Total interest income

 

219,852

 

235,443

 

(15,591

)

(6.6

)

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

10,757

 

11,883

 

(1,126

)

(9.5

)

Borrowings

 

8,536

 

47,496

 

(38,960

)

(82.0

)

Total interest expense

 

19,293

 

59,379

 

(40,086

)

(67.5

)

Net interest income

 

200,559

 

176,064

 

24,495

 

13.9

 

Provision for credit losses

 

96,275

 

52,315

 

43,960

 

84.0

 

Net interest income after provision for
credit losses

 

104,284

 

123,749

 

(19,465

)

(15.7

)

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

43,745

 

58,452

 

(14,707

)

(25.2

)

Card revenue

 

12,927

 

27,701

 

(14,774

)

(53.3

)

ATM revenue

 

6,122

 

7,523

 

(1,401

)

(18.6

)

Subtotal

 

62,794

 

93,676

 

(30,882

)

(33.0

)

Leasing and equipment finance

 

20,498

 

21,646

 

(1,148

)

(5.3

)

Gain on sales of auto loans

 

7,486

 

-

 

7,486

 

N.M

.

Gain on sale of consumer real estate loans

 

4,559

 

-

 

4,559

 

N.M

.

Other

 

3,688

 

786

 

2,902

 

N.M

.

Fees and other revenue

 

99,025

 

116,108

 

(17,083

)

(14.7

)

Gains on securities, net

 

13,033

 

1,648

 

11,385

 

N.M

.

Total non-interest income

 

112,058

 

117,756

 

(5,698

)

(4.8

)

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

98,409

 

87,758

 

10,651

 

12.1

 

Occupancy and equipment

 

33,006

 

31,129

 

1,877

 

6.0

 

FDIC insurance

 

6,899

 

7,363

 

(464

)

(6.3

)

Advertising and marketing

 

4,248

 

1,145

 

3,103

 

N.M

.

Deposit account premiums

 

485

 

7,045

 

(6,560

)

(93.1

)

Operating lease depreciation

 

6,325

 

7,409

 

(1,084

)

(14.6

)

Other

 

36,173

 

34,708

 

1,465

 

4.2

 

Subtotal

 

185,545

 

176,557

 

8,988

 

5.1

 

Foreclosed real estate and repossessed assets, net

 

10,670

 

12,430

 

(1,760

)

(14.2

)

Other credit costs, net

 

593

 

(139

)

732

 

N.M

.

Total non-interest expense

 

196,808

 

188,848

 

7,960

 

4.2

 

Income before income tax expense

 

19,534

 

52,657

 

(33,123

)

(62.9

)

Income tax expense

 

6,304

 

19,159

 

(12,855

)

(67.1

)

Income after income tax expense

 

13,230

 

33,498

 

(20,268

)

(60.5

)

Income attributable to non-controlling interest

 

1,536

 

1,243

 

293

 

23.6

 

Preferred Stock Dividends

 

2,372

 

-

 

2,372

 

N.M

.

Net income available to common stockholders

 

9,322

 

32,255

 

(22,933

)

(71.1

)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Reclassification adjustment for securities gains
included in net income

 

(12,912

)

(1,915

)

(10,997

)

N.M

.

Unrealized holding gains arising during the
period on securities available for sale

 

16,283

 

116,958

 

(100,675

)

(86.1

)

Foreign currency hedge

 

(630

)

1,319

 

(1,949

)

(147.8

)

Foreign currency translation adjustment

 

640

 

(1,410

)

2,050

 

(145.4

)

Recognized postretirement prior service cost
and transition obligation

 

(6

)

1

 

(7

)

N.M

.

Income tax expense

 

(1,011

)

(42,643

)

41,632

 

97.6

 

Total other comprehensive income

 

2,364

 

72,310

 

(69,946

)

(96.7

)

Comprehensive income

 

$

11,686

 

$

104,565

 

$

(92,879

)

(88.8

)

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

.06

 

$

.20

 

$

(.14

)

(70.0

)

Diluted

 

.06

 

.20

 

(.14

)

(70.0

)

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

.05

 

$

.05

 

$

-

 

-

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

159,533

 

157,419

 

2,114

 

1.3

 

Diluted

 

160,016

 

157,621

 

2,395

 

1.5

 

N.M. Not meaningful.

 

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18

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

Change

 

 

 

2012

 

2011

 

$

 

%

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

624,890

 

$

639,381

 

$

(14,491

)

(2.3

)%

Securities available for sale

 

30,535

 

62,629

 

(32,094

)

(51.2

)

Investments and other

 

10,171

 

5,634

 

4,537

 

80.5

 

Total interest income

 

665,596

 

707,644

 

(42,048

)

(5.9

)

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

30,015

 

35,317

 

(5,302

)

(15.0

)

Borrowings

 

56,625

 

146,073

 

(89,448

)

(61.2

)

Total interest expense

 

86,640

 

181,390

 

(94,750

)

(52.2

)

Net interest income

 

578,956

 

526,254

 

52,702

 

10.0

 

Provision for credit losses

 

198,923

 

141,594

 

57,329

 

40.5

 

Net interest income after provision for credit losses

 

380,033

 

384,660

 

(4,627

)

(1.2

)

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

133,691

 

168,361

 

(34,670

)

(20.6

)

Card revenue

 

39,664

 

82,504

 

(42,840

)

(51.9

)

ATM revenue

 

18,597

 

21,319

 

(2,722

)

(12.8

)

Subtotal

 

191,952

 

272,184

 

(80,232

)

(29.5

)

Leasing and equipment finance

 

66,572

 

70,675

 

(4,103

)

(5.8

)

Gain on sale of auto loans

 

15,232

 

-

 

15,232

 

N.M

.

Gain on sale of consumer real estate loans

 

4,559

 

-

 

4,559

 

N.M

.

Other

 

9,211

 

1,864

 

7,347

 

N.M

.

Fees and other revenue

 

287,526

 

344,723

 

(57,197

)

(16.6

)

Gains on securities, net

 

102,760

 

1,421

 

101,339

 

N.M

.

Total non-interest income

 

390,286

 

346,144

 

44,142

 

12.8

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

292,163

 

266,197

 

25,966

 

9.8

 

Occupancy and equipment

 

97,983

 

94,071

 

3,912

 

4.2

 

FDIC insurance

 

21,754

 

22,100

 

(346

)

(1.6

)

Advertising and marketing

 

12,269

 

7,784

 

4,485

 

57.6

 

Deposit account premiums

 

8,146

 

16,409

 

(8,263

)

(50.4

)

Operating lease depreciation

 

19,473