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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):  April 20, 2005

 


 

 

TCF FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 


 

Delaware

 

001-10253

 

41-1591444

 

(State or other jurisdiction of

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

incorporation or organization)

 

 

 

 

 

 

 

 

 

 

 

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

 

(Address of principal executive offices)

 

 

 

 

 

 

 

(612) 661-6500

 

(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.

 

In accordance with General Instruction B.2 of Form 8-K, the following information, including Exhibit 99.1, shall not be deemed filed for the 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 shall be expressly set forth by specific reference in such a filing.

 

The registrant issued a press release dated April 20, 2005, announcing its results of operations for the quarter ended March 31, 2005, which is attached to this Form 8-K as Exhibit 99.1.

 

Item 9.01    Financial Statements and Exhibits.

 

(c)          Exhibits.

 

Exhibit No.

 

 

 

Description

 

 

 

 

99.1

 

Earnings Release of TCF Financial Corporation,

 

 

Dated April 20, 2005

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

   TCF FINANCIAL CORPORATION

 

 

 

 

 

/s/ William A. Cooper

 

William A. Cooper, Chairman of the Board,
Chief Executive Officer and Director

 

 

 

 

 

/s/ Neil W. Brown

 

Neil W. Brown, Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)

 

 

 

 

 

/s/ David M. Stautz

 

David M. Stautz, Senior Vice President,
Controller and Assistant Treasurer
(Principal Accounting Officer)

 

 

Dated:    April 20, 2005

 

2


(Back To Top)

Section 2: EX-99.1 (EX-99.1)

Exhibit 99.1

 

NEWS RELEASE

 

CONTACT:

 

Jason Korstange

 

 

(952) 745-2755

 

 

www.TCFExpress.com

 

 

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

 

TCF Reports First Quarter Earnings and EPS ($.47, up 7 percent)

 

 

 

FIRST QUARTER HIGHLIGHTS

                  Diluted earnings per share of 47 cents

                  Net income of $63.5 million

                  Return on average assets of 2.03 percent

                  Return on average common equity of 27.18 percent

                  Average Power AssetsÒ increased $1.2 billion, or 16 percent

                  Average Power LiabilitiesÒ increased $443.8 million, or 6 percent

                  Increased checking accounts by 23,755 to 1,558,907 accounts

 

 

EARNINGS SUMMARY

($ in thousands, except per-share data)

 

 

 

Three Months

 

 

 

Ended March 31,

 

 

 

2005

 

2004

 

Change

 

Net income

 

$

63,465

 

$

60,661

 

4.6  %

 

Diluted earnings per common share

 

.47

 

.44

 

6.8

 

 

 

 

 

 

 

 

 

Financial Ratios

 

 

 

 

 

 

 

Return on average assets

 

2.03  %

 

2.11  %

 

 

 

Return on average common equity

 

27.18

 

25.90

 

 

 

Net interest margin

 

4.56

 

4.52

 

 

 

 

-more-

 



 

2

 

WAYZATA, MN, April 20, 2005 – TCF Financial Corporation (TCF) (NYSE: TCB) today reported diluted earnings per share of 47 cents for the first quarter of 2005, up from 44 cents for the same period in 2004.  Net income for the first quarter of 2005 was $63.5 million, up from $60.7 million for the same period in 2004.  For the first quarter of 2005, return on average assets was 2.03 percent and return on average common equity was 27.18 percent, compared with 2.11 percent and 25.90 percent, respectively, for the first quarter of 2004.

 

Chairman’s Statement

 

“TCF’s first quarter earnings were solid despite a difficult interest rate and competitive environment,” said William A. Cooper, Chairman and CEO.  “While total retail banking fees were flat, TCF’s margin improved, we had some securities gains, exceptional credit quality, expenses were under control, and we had continued strong growth in both Power Assets and Power Liabilities.”

 

Total Revenue

 

 

 

Three Months

 

 

 

 

 

($ in thousands)

 

Ended March 31,

 

 

 

 

 

 

 

2005

 

2004

 

$ Change

 

% Change

 

Net interest income

 

$

129,053

 

$

118,493

 

$

10,560

 

8.9

%

Fees and other revenue:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

57,031

 

59,659

 

(2,628

)

(4.4

)

Card revenue

 

17,642

 

13,491

 

4,151

 

30.8

 

ATM revenue

 

9,732

 

9,997

 

(265

)

(2.7

)

Investments and insurance revenue

 

2,853

 

3,462

 

(609

)

(17.6

)

Total banking fees and other revenue

 

87,258

 

86,609

 

649

 

.7

 

Leasing and equipment finance

 

10,693

 

10,167

 

526

 

5.2

 

Mortgage banking (1)

 

1,142

 

3,455

 

(2,313

)

(66.9

)

Other

 

7,816

 

2,228

 

5,588

 

N.M.

 

Total fees and other revenue

 

106,909

 

102,459

 

4,450

 

4.3

 

Gains on sales of securities available for sale

 

5,239

 

12,717

 

(7,478

)

(58.8

)

Total non-interest income

 

112,148

 

115,176

 

(3,028

)

(2.6

)

Total revenue

 

$

241,201

 

$

233,669

 

$

7,532

 

3.2

 

Net interest margin

 

4.56

%

4.52

%

 

 

 

 

Fees and other revenue as a % of total revenue

 

44.32

 

43.85

 

 

 

 

 

Fees and other revenue as a % of average assets

 

3.42

 

3.56

 

 

 

 

 

 


N.M.  Not meaningful.

 

(1)   TCF’s mortgage banking business no longer originates or sells loans.  See pages 10 and 11 for additional information.

 

-more-

 



 

3

 

Net Interest Income

 

TCF’s net interest income in the first quarter of 2005 was $129.1 million, up $10.6 million, or 9 percent, from the first quarter of 2004.  Net interest margin in the first quarter of 2005 was 4.56 percent, compared with 4.52 percent last year and 4.56 percent in the fourth quarter of 2004. The increase in net interest income from the first quarter of 2004 was primarily driven by increases in average Power Assets and Power Liabilities coupled with the favorable impact of increases in short-term interest rates, partially offset by decreased rates on fixed-rate assets and the flatter yield curve.

 

Interest Rate Risk

 

TCF’s one-year interest rate gap (the difference between interest-earning assets and interest-bearing liabilities repricing or maturing within the next 12 months), assuming no change in interest rates, was a positive $386.3 million, or 3 percent of total assets, at March 31, 2005, compared with a positive $585.3 million, or 4.7 percent of total assets at December 31, 2004.  The decrease in the one-year interest rate gap during the first quarter of 2005 was primarily due to increases in fixed-rate consumer loans and treasury assets.  The one-year interest rate gap is subject to a number of assumptions and is only one of a number of interest rate risk measurements and is best used as a general measure of the effect on net interest income of rising or falling interest rates.

 

Non-interest Income

 

Total non-interest income was $112.1 million for the first quarter of 2005, compared with $115.2 million for the first quarter of 2004.  Banking fees and other revenue increased $649 thousand, or .7 percent, over the first quarter of 2004.  “Changing customer trends regarding banking fees are presenting challenges for the banking industry and TCF,” said Cooper.  “TCF is continually monitoring these trends, reviewing its procedures and making adjustments. TCF continues to focus on growth in the number of checking accounts to increase future fee revenue.”

 

-more-

 



 

4

 

Card revenues totaled $17.6 million for the first quarter of 2005, up 31 percent over the same period in 2004.  The increase was attributable to a 20 percent increase in customer transaction volumes coupled with a 6 basis point increase in the average off-line interchange rate.

 

Leasing and equipment finance revenues were $10.7 million for the first quarter of 2005, up $526 thousand, or 5 percent, from the 2004 first quarter.  The increase is primarily the result of increases in operating lease revenues, and other transaction fees partially offset by a $1 million decrease in sales-type lease revenues.  Sales type revenues may fluctuate from quarter to quarter based on customer driven factors not within the control of TCF.

 

During the 2005 first quarter, TCF took advantage of market conditions and sold $466 million of mortgage-backed securities and realized gains of $5.2 million, compared with $854 million in sales and $12.7 million of gains for the first quarter of 2004.  Other revenue in the first quarter of 2005 includes a gain of $5.5 million on the sale of TCF’s main office facility in Ann Arbor, Michigan.  TCF is exploring options for relocation of this office.

 

New Branch Expansion

 

TCF opened one new traditional branch during the first quarter of 2005 and has now opened 258 new branches since January 1998, representing 60 percent of TCF’s 430 total branches.  TCF plans to open 20 new traditional branches, seven new supermarket branches, and two new campus branches during the remainder of 2005.

 

-more-

 



 

5

 

 

 

March 31,

 

March 31,

 

December 31,

 

(# of branches)

 

2005

 

2004

 

1997

 

 

 

 

 

 

 

 

 

Total Branches

 

 

 

 

 

 

 

Minnesota

 

101

 

99

 

75

 

Illinois

 

197

 

191

 

47

 

Wisconsin

 

34

 

34

 

28

 

Michigan

 

60

 

56

 

60

 

Colorado

 

32

 

20

 

7

 

Indiana

 

6

 

6

 

-

 

 

 

430

 

406

 

217

 

New Branches*

 

 

 

 

 

 

 

Traditional

 

59

 

42

 

 

 

Campus

 

2

 

2

 

 

 

Supermarket

 

197

 

188

 

 

 

Total

 

258

 

232

 

 

 

% of Total Branches

 

60

%

57

%

 

 

 


*  New branches opened since January 1, 1998.

 

Additional information regarding the results of TCF’s new branches opened since January 1, 1998 is summarized as follows:

 

 

 

At or For the Three Months Ended

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

($ in thousands)

 

2005

 

2004

 

Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

Number of checking accounts

 

598,254

 

521,448

 

76,806

 

14.7

%

Deposits:

 

 

 

 

 

 

 

 

 

Checking

 

$

929,989

 

$

715,530

 

$

214,459

 

30.0

 

Savings

 

491,658

 

418,604

 

73,054

 

17.5

 

Money market

 

53,411

 

67,246

 

(13,835

)

(20.6

)

Subtotal

 

1,475,058

 

1,201,380

 

273,678

 

22.8

 

Certificates of deposit

 

258,518

 

149,582

 

108,936

 

72.8

 

Total deposits

 

$

1,733,576

 

$

1,350,962

 

$

382,614

 

28.3

 

 

 

 

 

 

 

 

 

 

 

Total deposit fees and other revenue

 

$

35,965

 

$

32,176

 

$

3,789

 

11.8

 

 

-more-

 



 

6

 

Power Assets®

 

“Growth in consumer home equity and commercial real estate loans remained strong during the first quarter,” said Cooper.  TCF’s average consumer loan balances increased $786.9 million, or 21 percent, commercial real estate loan average balances increased $225.8 million, or 12 percent, and leasing and equipment finance average balances increased $195.3 million, or 16 percent, from the first quarter of 2004.

 

 

 

Average Balances for the

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

 

($ in thousands)

 

2005

 

2004

 

Change

 

% Change

 

Loans and leases*:

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

 

 

 

 

 

 

 

 

Home equity:

 

 

 

 

 

 

 

 

 

First mortgage lien

 

$

2,951,676

 

$

2,498,137

 

$

453,539

 

18.2

%

Junior lien

 

1,505,217

 

1,166,662

 

338,555

 

29.0

 

Total consumer home equity

 

4,456,893

 

3,664,799

 

792,094

 

21.6

 

Other

 

36,046

 

41,262

 

(5,216

)

(12.6

)

Total consumer home equity and other

 

4,492,939

 

3,706,061

 

786,878

 

21.2

 

Commercial real estate

 

2,168,336

 

1,942,494

 

225,842

 

11.6

 

Commercial business

 

407,523

 

427,824

 

(20,301

)

(4.7

)

Leasing and equipment finance

 

1,389,541

 

1,194,235

 

195,306

 

16.4

 

Power Assets

 

$

8,458,339

 

$

7,270,614

 

$

1,187,725

 

16.3

 

 

*Excludes residential real estate loans and loans held for sale.

Power Liabilities®

 

“TCF’s new Premier Checking, Plus eChecking and Premier Savings products drove growth in Power Liabilities during the quarter,” said Cooper.  Average Power Liabilities totaled $8.1 billion for the first quarter of 2005, with an average interest rate of .8 percent. Average checking, savings and money market balances increased $431.3 million from the first quarter of 2004.  The total number of checking accounts was 1,558,907 at March 31, 2005, up from 1,472,615 accounts at March 31, 2004 and 1,535,152 accounts at December 31, 2004.  During the first quarter of 2005, TCF generated 131,677 new checking accounts as compared with 124,263 new checking accounts in the first quarter of 2004.

 

-more-

 



 

7

 

 

 

Average Balances for the

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

 

($ in thousands)

 

2005

 

2004

 

Change

 

% Change

 

Non-interest bearing deposits:

 

 

 

 

 

 

 

 

 

Retail

 

$

1,571,740

 

$

1,473,772

 

$

97,968

 

6.6

%

Small business

 

547,060

 

457,047

 

90,013

 

19.7

 

Commercial and custodial

 

313,635

 

324,857

 

(11,222

)

(3.5

)

Total non-interest bearing deposits

 

2,432,435

 

2,255,676

 

176,759

 

7.8

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

Premier checking

 

459,385

 

49,184

 

410,201

 

N.M.

 

Other checking

 

1,089,541

 

1,138,680

 

(49,139

)

(4.3

)

Subtotal

 

1,548,926

 

1,187,864

 

361,062

 

30.4

 

Premier savings

 

281,529

 

-

 

281,529

 

 

 

Other savings

 

1,606,560

 

1,809,138

 

(202,578

)

(11.2

)

Subtotal

 

1,888,089

 

1,809,138

 

78,951

 

4.4

 

Money market

 

647,197

 

832,695

 

(185,498

)

(22.3

)

Subtotal

 

4,084,212

 

3,829,697

 

254,515

 

6.6

 

Certificates of deposit

 

1,592,682

 

1,580,107

 

12,575

 

0.8

 

Total interest bearing deposits

 

5,676,894

 

5,409,804

 

267,090

 

4.9

 

Power Liabilities

 

$

8,109,329

 

$

7,665,480

 

$

443,849

 

5.8

 

 

 

 

 

 

 

 

 

 

 

Total checking, savings and money market balances

 

$

6,516,647

 

$

6,085,373

 

$

431,274

 

7.1

 

Number of checking accounts, period-end

 

1,558,907

 

1,472,615

 

86,292

 

5.9

 

Average rate on deposits

 

.80

%

.55

%

25

 bps

N/A

 

 


N.M. Not meaningful.

 

Borrowings

 

Borrowings totaled $3.0 billion at March 31, 2005, down $127.3 million from December 31, 2004.  Borrowings decreased from December 31, 2004 primarily due to growth in Power Liabilities exceeding growth in Power Assets by $203.2 million.  During the first quarter of 2005, TCF issued $50 million of subordinated notes due in 2015.  The notes bear interest at a fixed rate of 5.00 percent, for the first five years and will reprice quarterly thereafter at the three-month LIBOR rate plus 1.56 percent.  The notes qualify as Tier 2 or supplementary capital for regulatory purposes, subject to certain limitations.  TCF National Bank paid the proceeds from the offering to TCF Financial Corporation to be used for general corporate purposes, which may include repurchases in the open market of TCF common stock.  Also, TCF extended $200 million of FHLB advances until February 2007, at an average fixed rate of 3.60 percent.  The weighted average rate for borrowings was 3.46 percent for the first quarter at 2005, compared with 3.19 percent for the first quarter of 2004 and 3.22 percent for the fourth quarter of 2004.

 

-more-

 



 

8

 

Residential Real Estate Loans and Securities Available for Sale

 

Average balances of residential real estate loans and securities available for sale (consisting primarily of mortgage-backed securities) totaled $2.6 billion for the first quarter of 2005, a decrease of $64.6 million from the first quarter of 2004.  The residential real estate loans are all first mortgage loans originated by TCF’s mortgage banking operations.  TCF no longer originates any new loans in its mortgage banking business so this portfolio will continue to decline from normal amortization and pre-payments.  At March 31, 2005, the unrealized pre-tax loss on TCF’s securities available for sale portfolio was $23.1 million.

 

 

 

Average Balances and Yields

 

 

 

 

 

 

 

for the Three Months Ended

 

Change from

 

 

 

March 31,

 

December 31,

 

March 31,

 

December 31,

 

March 31,

 

($ in thousands)

 

2005

 

2004

 

2004

 

2004

 

2004

 

Securities available for sale

 

$

1,663,412

 

$

1,534,776

 

$

1,519,374

 

$

128,636

 

$

144,038

 

Residential real estate loans

 

984,764

 

1,027,302

 

1,193,435

 

(42,538)

 

(208,671)

 

Total

 

$

2,648,176

 

$

2,562,078

 

$

2,712,809

 

$

86,098

 

$

(64,633)

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

5.37%

 

5.32%

 

5.54%

 

 

 

 

 

 

Non-interest Expense

 

Non-interest expense totaled $148.1 million for the 2005 first quarter, up $7.4 million, or 5 percent, from $140.7 million for the 2004 first quarter.  Compensation and employee benefits increased $2.6 million, or 3 percent, from the first quarter of 2004, primarily driven by a $4.9 million increase in the banking segment of which  $1.7 million related to new branches opened during the past 12 months, partially offset by a $2.3 million decrease for mortgage banking.  Occupancy and equipment expenses increased $1.9 million, or 8 percent, from the first quarter of 2004, primarily related to costs associated with new branch expansion.  Deposit losses decreased $517 thousand from the first quarter of 2004, primarily due to increased customer restitution from improved collection and customer retention activities.  Other expenses increased $3.1 million, or 11 percent, from the first quarter of 2004, primarily driven by a $1.2 million increase in card processing expenses related to the overall increase in card revenues, and a $1.1 million increase in operating lease depreciation expense in the leasing businesses. 

 

-more-

 



 

9

 

 

 

Three Months Ended

 

 

 

 

 

 

 

March 31,

 

Change

 

($ in thousands)

 

2005

 

2004

 

$

 

%

 

Compensation and employee benefits

 

$

81,451

 

$

78,879

 

$

2,572

 

3.3

%

Occupancy and equipment

 

25,379

 

23,490

 

1,889

 

8.0

 

Advertising and promotions

 

6,247

 

5,910

 

337

 

5.7

 

Deposit losses

 

3,661

 

4,178

 

(517)

 

(12.4

)

Other

 

31,373

 

28,249

 

3,124

 

11.1

 

Total non-interest expense

 

$

148,111

 

$

140,706

 

$

7,405

 

5.3

 

 

Credit Quality

 

At March 31, 2005, TCF’s allowance for loan and lease losses totaled $76.9 million, or .80 percent of loans and leases, compared with $79.1 million, or .92 percent, at March 31, 2004.  The provision for credit losses for the first quarter of 2005 was a net credit of $3.4 million, compared with provision expense of $1.2 million for the first quarter of 2004.  Net loan and lease recoveries were $441 thousand, or .02 percent (annualized) of average loans and leases, in the first quarter of 2005, compared with net charge-offs of $516 thousand, or .02 percent (annualized), for the same 2004 period. The provision for credit losses for the first quarter reflects improved credit quality including $3.3 million related to one commercial business loan recovery, a $1.2 million reduction in consumer home equity and other loan reserve requirements due to improving credit quality and a $1.5 million reduction in specific loan reserves due to improvements in individual circumstances, partially offset by $2.6 million in additional reserve requirements for portfolio growth and other changes.  At March 31, 2005, TCF’s over-30-day delinquency rate was .34 percent, down from .37 percent at December 31, 2004. Total non-performing assets were $63.4 million, or .50 percent of total assets, at March 31, 2005, down slightly from $64.1 million, or .52 percent, at December 31, 2004, with decreases in non-accrual loans and leases, partially offset by a $1.3 million increase in other real estate owned.  Included in the non-accrual loans and leases and non-performing assets at March 31, 2005, is TCF’s $18.8 million investment in a leveraged lease with Delta Airlines, Inc. (“Delta”).

 

-more-

 



 

10

 

Although Delta is current on its payments related to this transaction, if Delta declares bankruptcy, it would likely result in the charge-off of TCF’s $18.8 million investment in the leveraged lease and the current payment of previously deferred income tax obligations.

 

 

 

Three Months Ended

 

 

 

March 31,

 

($ in thousands)

 

2005

 

2004

 

Allowance for loan and lease losses:

 

 

 

 

 

Balance at beginning of period

 

$

79,878

 

$

76,619

 

Net (charge-offs) recoveries:

 

 

 

 

 

Consumer home equity and other

 

(1,308)

 

(574)

 

Commercial real estate

 

(37)

 

33

 

Commercial business

 

2,436

 

(73)

 

Leasing and equipment finance

 

(614)

 

106

 

Residential real estate

 

(36)

 

(8)

 

Total

 

441

 

(516)

 

Provision for credit losses

 

(3,436)

 

1,160

 

Acquired allowance

 

-

 

1,791

 

Balance at end of period

 

$

76,883

 

$

79,054

 

 

 

 

 

 

 

Key Indicators:

 

 

 

 

 

Allowance for loans and leases as a percentage of total loans and leases

 

.80%

 

.92%

 

Annualized net (recoveries) charge-offs as a percentage of average loans and leases

 

(.02)%

 

.02%

 

Period-end allowance as a multiple of annualized net charge-offs

 

N.M.

 

38.3X

 

Income before income taxes and provision for loan losses as a multiple of net charge-offs

 

N.M.

 

180.2X

 

 


N.M.  Not meaningful.

 

Mortgage Banking

 

At March 31, 2005, TCF’s mortgage servicing portfolio totaled $4.3 billion and the mortgage servicing rights asset totaled $43.5 million, or 1 percent of the related servicing portfolio, down from $5 billion and $50.7 million, respectively, at March 31, 2004.  The following table summarizes the components of mortgage banking revenues.

 

-more-

 



 

11

 

 

 

Three Months Ended

 

 

 

 

 

 

 

March 31,

 

Change

 

($ in thousands)

 

2005

 

2004

 

$

 

%

 

Servicing income

 

$

3,894

 

$

4,625

 

$

(731

)

(15.8

)%

Less mortgage servicing rights:

 

 

 

 

 

 

 

 

 

Amortization

 

2,941

 

3,676

 

(735

)

(20.0

)

Net servicing income

 

953

 

949

 

4

 

0.4

 

Gains on sales of loans (1)

 

-

 

2,136

 

(2,136

)

(100.0

)

Other income

 

189

 

370

 

(181

)

(48.9

)

Total mortgage banking revenue

 

$

1,142

 

$

3,455

 

$

(2,313

)

(66.9

)

 


(1)      TCF’s mortgage banking business no longer originates or sells loans.

 

Income Taxes

 

TCF’s income tax expense was $33.1 million for the first quarter of 2005, or 34.25 percent of income before income tax expense, compared with $31.1 million, or 33.92 percent, for the comparable 2004 period.  The higher effective income tax rate in the first quarter of 2005 compared with the first quarter of 2004 is primarily due to higher state and local income taxes.

 

Capital

 

TCF repurchased 1.8 million shares of its common stock during the first quarter of 2005 at an average cost of $28.10 per share.  TCF has 1.7 million shares remaining in its stock repurchase program authorized by its Board of Directors.  Since 1997, TCF has repurchased 56 million shares of its stock, at an average cost of $17.92 per share.

 

 

 

At March 31,

 

At December 31,

 

($ in thousands, except per-share data)

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

$

926,343

 

 

 

$

958,418

 

 

 

Stockholders’ equity to total assets

 

7.28  %

 

 

 

7.77  %

 

 

 

Book value per common share

 

$

6.85

 

 

 

$

6.99

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital

 

$

987,455

 

10.90  %

 

$

958,900

 

10.88  %

 

Total risk-based capital “well-capitalized” requirement

 

$

905,771

 

10.00  %

 

$

881,481

 

10.00  %

 

Excess risk-based capital over “well-capitalized” requirement

 

$

81,684

 

.90  %

 

$

77,419

 

.88  %

 

 

-more-

 



 

12

 

Website Information

 

A live webcast of TCF’s conference call to discuss first quarter earnings will be hosted at TCF’s website, www.TCFExpress.com, on April 20, 2005 at 10:00 a.m., CDT.  Additionally, the webcast is available for replay at TCF’s website after the conference call.  The website also includes free access to company news releases, TCF’s annual report, quarterly reports, investor presentations and SEC filings.

 

 

TCF is a Wayzata, Minnesota-based national financial holding company with $12.7 billion in assets.  TCF has 430 banking offices in Minnesota, Illinois, Michigan, Wisconsin, Colorado and Indiana.  Other TCF affiliates provide leasing and equipment finance, securities brokerage, and investments and insurance sales.

 

 

Forward-looking Information

 

This earnings release and other reports issued by the Company, including reports filed with the SEC, may contain “forward-looking” statements that deal with future results, plans or performance.  In addition, TCF’s management may make such statements orally to the media, or to securities analysts, investors or others.  Forward-looking statements deal with matters that do not relate strictly to historical facts.  TCF’s future results may differ materially from historical performance and forward-looking statements about TCF’s expected financial results or other plans are subject to a number of risks and uncertainties.  These include but are not limited to possible legislative changes and adverse economic, business and competitive developments such as shrinking interest margins; deposit outflows; ability to increase the number of checking accounts and the possibility that deposit account losses (fraudulent checks, etc.) may increase; 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; changes in accounting standards or interpretations of existing standards, or monetary, fiscal or tax policies of the federal or state governments; adverse findings in tax audits; changes in credit and other risks posed by TCF’s loan, lease and investment portfolios, including declines in commercial or residential real estate values or a bankruptcy filing by Delta Airlines, the lessee under a leveraged lease in which TCF holds an equity interest; imposition of vicarious liability on TCF as lessor in its leasing operations; denial of insurance coverage for claims made by TCF; technological, computer-related or operational difficulties; adverse changes in securities markets; the risk that TCF could be unable to effectively manage the volatility of its mortgage servicing portfolio, which could adversely affect earnings; and results of litigation or other significant uncertainties.  Investors should consult TCF’s Annual Report to Shareholders and reports on Forms 10-K, 10-Q and 8-K for additional important information about the Company.

 

-more-

 



 

13

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2005

 

2004

 

$ Change

 

% Change

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

146,544

 

$

125,273

 

$

21,271

 

17.0

%

Securities available for sale

 

21,495

 

20,332

 

1,163

 

5.7

 

Loans held for sale

 

2,254

 

2,841

 

(587

)

(20.7

)

Investments

 

1,052

 

773

 

279

 

36.1

 

Total interest income

 

171,345

 

149,219

 

22,126

 

14.8

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

15,938

 

10,539

 

5,399

 

51.2

 

Borrowings

 

26,354

 

20,187

 

6,167

 

30.5

 

Total interest expense

 

42,292

 

30,726

 

11,566

 

37.6

 

Net interest income

 

129,053

 

118,493

 

10,560

 

8.9

 

Provision for credit losses

 

(3,436

)

1,160

 

(4,596

)

N.M.

 

Net interest income after provision for credit losses

 

132,489

 

117,333

 

15,156

 

12.9

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

57,031

 

59,659

 

(2,628

)

(4.4

)

Card revenue

 

17,642

 

13,491

 

4,151

 

30.8

 

ATM revenue

 

9,732

 

9,997

 

(265

)

(2.7

)

Investments and insurance revenue

 

2,853

 

3,462

 

(609

)

(17.6

)

Subtotal

 

87,258

 

86,609

 

649

 

.7

 

Leasing and equipment finance

 

10,693

 

10,167

 

526

 

5.2

 

Mortgage banking

 

1,142

 

3,455

 

(2,313

)

(66.9

)

Other

 

7,816

 

2,228

 

5,588

 

N.M.

 

Fees and other revenue

 

106,909

 

102,459

 

4,450

 

4.3

 

Gains on sales of securities available for sale

 

5,239

 

12,717

 

(7,478

)

(58.8

)

Total non-interest income

 

112,148

 

115,176

 

(3,028

)

(2.6

)

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

81,451

 

78,879

 

2,572

 

3.3

 

Occupancy and equipment

 

25,379

 

23,490

 

1,889

 

8.0

 

Advertising and promotions

 

6,247

 

5,910

 

337

 

5.7

 

Deposit losses

 

3,661

 

4,178

 

(517

)

(12.4

)

Other

 

31,373

 

28,249

 

3,124

 

11.1

 

Total non-interest expense

 

148,111

 

140,706

 

7,405

 

5.3

 

Income before income tax expense

 

96,526

 

91,803

 

4,723

 

5.1

 

Income tax expense

 

33,061

 

31,142

 

1,919

 

6.2

 

Net income

 

$

63,465

 

$

60,661

 

$

2,804

 

4.6

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

.47

 

$

.44

 

$

.03

 

6.8

 

Diluted

 

$

.47

 

$

.44

 

$

.03

 

6.8

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

.2125

 

$

.1875

 

$

.025

 

13.3

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

133,990

 

137,982

 

(3,992

)

(2.9

)

Diluted

 

134,392

 

138,554

 

(4,162

)

(3.0

)

 

N.M.  Not meaningful.

 

- more -

 



 

14

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

At

 

At

 

At

 

% Change from

 

 

 

March 31,

 

December 31,

 

March 31,

 

December 31,

 

March 31,

 

 

 

2005

 

2004

 

2004

 

2004

 

2004

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

323,996

 

$

359,798

 

$

368,409

 

 

(10.0

)%

(12.1

)%

Investments

 

105,404

 

103,226

 

411,934

 

2.1

 

(74.4

)

Securities available for sale

 

1,785,520

 

1,619,941

 

1,269,293

 

10.2

 

40.7

 

Loans held for sale

 

215,991

 

154,279

 

377,926

 

40.0

 

(42.8

)

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

4,601,418

 

4,418,588

 

3,821,648

 

4.1

 

20.4

 

Commercial real estate

 

2,193,513

 

2,154,396

 

1,963,815

 

1.8

 

11.7

 

Commercial business

 

409,219

 

424,135

 

428,588

 

(3.5

)

(4.5

)

Leasing and equipment finance

 

1,397,959

 

1,375,372

 

1,256,377

 

1.6

 

11.3

 

Subtotal

 

8,602,109

 

8,372,491

 

7,470,428

 

2.7

 

15.1

 

Residential real estate

 

950,469

 

1,014,166

 

1,152,357

 

(6.3

)

(17.5

)

Total loans and leases

 

9,552,578

 

9,386,657

 

8,622,785

 

1.8

 

10.8

 

Allowance for loan and lease losses

 

(76,883

)

(79,878

)

(79,054

)

3.7

 

2.7

 

Net loans and leases

 

9,475,695

 

9,306,779

 

8,543,731

 

1.8

 

10.9

 

Premises and equipment

 

328,081

 

326,667

 

290,478

 

.4

 

12.9

 

Goodwill

 

152,599

 

152,599

 

152,599

 

-

 

-

 

Mortgage servicing rights

 

43,501

 

46,442

 

50,726

 

(6.3

)

(14.2

)

Other assets

 

302,421

 

270,836

 

259,223

 

11.7

 

16.7

 

 

 

$

12,733,208

 

$

12,340,567

 

$

11,724,319

 

 

3.2

 

8.6

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

4,020,601

 

$

3,905,987

 

$

3,527,674

 

 

2.9

 

14.0

 

Savings

 

2,063,415

 

1,927,872

 

1,979,170

 

7.0

 

4.3

 

Money market

 

625,511

 

659,686

 

821,913

 

(5.2

)

(23.9

)

Subtotal

 

6,709,527

 

6,493,545

 

6,328,757

 

3.3

 

6.0

 

Certificates of deposit

 

1,685,486

 

1,468,650

 

1,540,371

 

14.8

 

9.4

 

Total deposits

 

8,395,013

 

7,962,195

 

7,869,128

 

5.4

 

6.7

 

Short-term borrowings

 

878,390

 

1,056,111

 

469,663

 

(16.8

)

87.0

 

Long-term borrowings

 

2,098,878

 

2,048,492

 

2,037,424

 

2.5

 

3.0

 

Total borrowings

 

2,977,268

 

3,104,603

 

2,507,087

 

(4.1

)

18.8

 

Accrued expenses and other liabilities

 

434,584

 

315,351

 

382,154

 

37.8

 

13.7

 

Total liabilities

 

11,806,865

 

11,382,149

 

10,758,369

 

3.7

 

9.7

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $.01 per share, 280,000,000 shares authorized; 184,477,297; 184,939,094 and 185,008,164 shares issued

 

1,845

 

1,849

 

925

 

(.2

)

99.5

 

Additional paid-in capital

 

497,736

 

518,741

 

516,902

 

(4.0

)

(3.7

)

Retained earnings, subject to certain restrictions

 

1,420,258

 

1,385,760

 

1,269,229

 

2.5

 

11.9

 

Accumulated other comprehensive (loss) income

 

(14,756

)

(1,415

)

12,827

 

N.M.

 

N.M.

 

Treasury stock at cost, 49,208,234; 47,752,934 and 43,992,140 shares, and other

 

(978,740

)

(946,517

)

(833,933

)

3.4

 

17.4

 

Total stockholders’ equity

 

926,343

 

958,418

 

965,950

 

(3.3

)

(4.1

)

 

 

$

12,733,208

 

$

12,340,567

 

$

11,724,319

 

 

3.2

 

8.6

 

 

N.M.  Not meaningful.

 

- more -

 



 

15

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CREDIT QUALITY DATA

(Dollars in thousands)

(Unaudited)

 

Allowance for loan and lease losses:

 

 

 

At or For the Three Months Ended March 31, 2005

 

At or For the Year Ended December 31, 2004

 

 

 

 

 

Allowance

 

 

 

 

 

 

 

Allowance

 

 

 

 

 

 

 

 

 

as a % of

 

Net Charge-offs (Recoveries) (1)

 

 

 

as a % of

 

Net Charge-offs

 

 

 

Allowance

 

Portfolio

 

$

 

%

 

Allowance

 

Portfolio

 

$

 

%

 

Consumer home equity and other

 

$

7,716

 

.17

%

$

1,308

 

.12

%

$

9,939

 

.22

%

$

3,232

 

.08

%

Commercial real estate

 

20,857

 

.95

 

37

 

.01

 

20,742

 

.96

 

476

 

.02

 

Commercial business

 

6,769

 

1.65

 

(2,436

)

(2.39

)

7,696

 

1.81

 

153

 

.04

 

Leasing and equipment finance

 

24,703

 

1.77

 

614

 

.18

 

24,566

 

1.79

 

5,545

 

.43

 

Unallocated

 

16,139

 

n/a

 

-

 

-

 

16,139

 

n/a

 

-

 

n/a

 

Subtotal

 

76,184

 

.89

 

(477

)

(.02

)

79,082

 

.94

 

9,406

 

.12

 

Residential real estate

 

699

 

.07

 

36

 

.01

 

796

 

.08

 

73

 

.01

 

Total

 

$

76,883

 

.80

 

$

(441

)

(.02

)

$

79,878

 

.85

 

$

9,479

 

.11

 

 

Non-performing assets:

 

 

 

At

 

At

 

At

 

Change from

 

 

 

March 31,

 

December 31,

 

March 31,

 

December 31,

 

March 31,

 

 

 

2005

 

2004

 

2004

 

2004

 

2004

 

Non-accrual loans and leases:

 

 

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

$

10,772

 

$

12,187

 

$

14,428

 

$

(1,415

)

$

(3,656

)

Commercial real estate

 

927

 

1,093

 

3,120

 

(166

)

(2,193

)

Commercial business

 

2,940

 

4,533

 

3,102

 

(1,593

)

(162

)

Leasing and equipment finance

 

27,706

 

25,678

 

11,863

 

2,028

 

15,843

 

Residential real estate

 

2,586

 

3,387

 

4,473

 

(801

)

(1,887

)

Total non-accrual loans and leases

 

44,931

 

46,878

 

36,986

 

(1,947

)

7,945

 

Other real estate owned:

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

12,890

 

11,726

 

18,960

 

1,164

 

(6,070

)

Commercial real estate

 

5,568

 

5,465

 

11,549

 

103

 

(5,981

)

Total other real estate owned

 

18,458

 

17,191

 

30,509

 

1,267

 

(12,051

)

Total non-performing assets

 

$

63,389

 

$

64,069

 

$

67,495

 

$

(680

)

$

(4,106

)

 

Over 30-day delinquency data (2):

 

 

 

At March 31,

 

At December 31,

 

At March 31,

 

 

 

2005

 

2004

 

2004

 

 

 

Principal

 

% of

 

Principal

 

% of

 

Principal

 

% of

 

 

 

Balances

 

Portfolio

 

Balances

 

Portfolio

 

Balances

 

Portfolio

 

Consumer home equity and other

 

$

15,045

 

.33

%

$

15,436

 

.35

%

$

14,262

 

.37

%

Commercial real estate

 

349

 

.02

 

32

 

-

 

319

 

.02

 

Commercial business

 

1,072

 

.26

 

404

 

.10

 

128

 

.03

 

Leasing and equipment finance

 

6,962

 

.51

 

8,997

 

.67

 

12,716

 

1.02

 

Residential real estate

 

9,114

 

.96

 

9,516

 

.94

 

6,499

 

.57

 

Total

 

$

32,542

 

.34

 

$

34,385

 

.37

 

$

33,924

 

.40

 

 

Potential Problem Loans and Leases (3):

 

 

 

At

 

At

 

At

 

Change from

 

 

 

March 31,

 

December 31,

 

March 31,

 

December 31,

 

March 31,

 

 

 

2005

 

2004

 

2004

 

2004

 

2004

 

Commercial real estate

 

$

37,114

 

$

34,138

 

$

30,316

 

$

2,976

 

$

6,798

 

Commercial business

 

18,307

 

18,112

 

13,072

 

195

 

5,235

 

Leasing and equipment finance

 

12,200

 

18,816

 

15,043

 

(6,616

)

(2,843

)

 

 

$

67,621

 

$

71,066

 

$

58,431

 

$

(3,445

)

$

9,190

 

 

(1)    Annualized.

(2)    Excludes non-accrual loans and leases.

(3)    Consists of loans and leases primarily classified for regulatory purposes as substandard and reflect the distinct possibility, but not probability, that they will become non-performing or that TCF will not be able to collect all amounts due according to the contractual terms of the loan or lease agreement.

 

- more -

 



 

16

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2005

 

2004

 

 

 

Average

 

 

 

Yields and

 

Average

 

 

 

Yields and

 

 

 

Balance

 

Interest

 

Rates (1)

 

Balance

 

Interest

 

Rates (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

$

106,006

 

$

1,052

 

4.01

%

$

141,770

 

$

773

 

2.19

%

Securities available for sale

 

1,663,412

 

21,495

 

5.17

 

1,519,374

 

20,332

 

5.35

 

Loans held for sale

 

207,430

 

2,254

 

4.41

 

359,238

 

2,841

 

3.18

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer home equity - variable rate

 

2,701,729

 

42,725

 

6.41

 

2,214,972

 

29,993

 

5.45

 

Consumer home equity - fixed rate

 

1,755,164

 

29,144

 

6.73

 

1,449,827

 

25,489

 

7.07

 

Consumer - other

 

36,046

 

785

 

8.83

 

41,262

 

824

 

8.03

 

Total consumer home equity and other

 

4,492,939

 

72,654

 

6.56

 

3,706,061

 

56,306

 

6.11

 

Commercial real estate - variable rate

 

641,018

 

8,169

 

5.17

 

576,091

 

5,725

 

4.00

 

Commercial real estate - fixed and adjustable rate

 

1,527,318

 

22,767

 

6.05

 

1,366,403

 

20,798

 

6.12

 

Total commercial real estate

 

2,168,336

 

30,936

 

5.79

 

1,942,494

 

26,523

 

5.49

 

Commercial business - variable rate

 

332,555

 

4,117

 

5.02

 

332,685

 

3,048

 

3.68

 

Commercial business - fixed and adjustable rate

 

74,968

 

1,044

 

5.65

 

95,139

 

1,293

 

5.47

 

Total commercial business

 

407,523

 

5,161

 

5.14

 

427,824

 

4,341

 

4.08

 

Leasing and equipment finance

 

1,389,541

 

23,791

 

6.85

 

1,194,235

 

20,868

 

6.99

 

Subtotal

 

8,458,339

 

132,542

 

6.34

 

7,270,614

 

108,038

 

5.97

 

Residential real estate

 

984,764

 

14,002

 

5.70

 

1,193,435

 

17,235

 

5.78

 

Total loans and leases

 

9,443,103

 

146,544

 

6.27

 

8,464,049

 

125,273

 

5.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest-earning assets

 

11,419,951

 

171,345

 

6.06

 

10,484,431

 

149,219

 

5.71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other assets

 

1,074,025

 

 

 

 

 

1,041,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

12,493,976

 

 

 

 

 

$

11,525,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY