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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):  July 20, 2005

 


 

 

TCF FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 


 

Delaware

 

001-10253

 

41-1591444

(State or other jurisdiction of
incorporation or organization)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

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:

 

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

 

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

 

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

 

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

 

 

 



 

Item 2.02  Results of Operations and Financial Condition.

 

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 July 20, 2005, announcing its results of operations for the quarter ended June 30, 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 July 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:    July 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

 

 

 

 

 

 

FOR IMMEDIATE RELEASE

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

 

TCF Reports Record Second Quarter Earnings and EPS ($.53, up 13 percent)

 

SECOND QUARTER HIGHLIGHTS

 

                    Record diluted earnings per share of 53 cents

                    Record net income of $70.6 million

                    Return on average assets of 2.22 percent

                    Record return on average common equity of 30.23 percent

                    Average Power AssetsÒ increased $1.1 billion, or 15 percent

                    Average Power LiabilitiesÒ increased $571.9 million, or 7 percent

                    Increased checking accounts by 36,094 to 1,595,001 accounts

                    Opened six new branches during the quarter; 132 new branches since January 2000

 

EARNINGS SUMMARY

($ in thousands, except per-share data)

 

 

 

Three Months

 

Six Months

 

 

 

Ended June 30,

 

Ended June 30,

 

 

 

2005

 

2004

 

Change

 

2005

 

2004

 

Change

 

Net income

 

$

70,641

 

$

65,218

 

8.3

 %

$

134,106

 

$

125,879

 

6.5

 %

Diluted earnings per common share

 

.53

 

.47

 

12.8

 

1.00

 

.91

 

9.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

2.22

%

2.20

%

 

 

2.13

%

2.15

%

 

 

Return on average common equity

 

30.23

 

27.68

 

 

 

28.74

 

26.82

 

 

 

Net interest margin

 

4.53

 

4.53

 

 

 

4.54

 

4.52

 

 

 

 

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2

 

WAYZATA, MN, July 20, 2005 — TCF Financial Corporation (TCF) (NYSE: TCB) today reported record diluted earnings per share of 53 cents for the second quarter of 2005, compared with 47 cents for the same period of 2004.  Net income for the second quarter of 2005 was a record $70.6 million, compared with $65.2 million for the same period of 2004.  For the second quarter of 2005, return on average assets (“ROA”) was 2.22 percent and return on average common equity (“ROE”) was a record 30.23 percent, compared with 2.20 percent and 27.68 percent, respectively, for the second quarter of 2004.

 

Chairman’s Statement

 

“TCF’s earnings in the second quarter are the result of our long-term strategy of growing high quality Power AssetsÒ and Power LiabilitiesÒ through new branch and product expansion,” said William A. Cooper, Chairman and CEO.  “During the second quarter, Power Asset and Power Liability growth remained strong and net checking account growth has significantly improved from recent quarters.  Our commitment to new branch and product expansion was evident with the opening of six new branches and the introduction of our new TCF Miles Plus Business Check CardSM,” said Cooper.

 

Total Revenue

 

 

 

Three Months

 

 

 

 

 

($ in thousands)

 

Ended June 30,

 

 

 

 

 

 

 

2005

 

2004

 

$ Change

 

% Change

 

Net interest income

 

$

131,285 

 

$

122,419 

 

$

8,866

 

 

7.2

  %

Fees and other revenue:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

65,824

 

73,116

 

(7,292

)

 

(10.0

)

Card revenue

 

19,717

 

16,024

 

3,693

 

23.0

 

ATM revenue

 

10,795

 

11,138

 

(343

)

 

(3.1

)

Investments and insurance revenue

 

2,791

 

3,430

 

(639

)

 

(18.6

)

Total banking fees and other revenue

 

99,127

 

103,708

 

(4,581

)

 

(4.4

)

Leasing and equipment finance

 

11,092

 

12,245

 

(1,153

)

 

(9.4

)

Mortgage banking (1)

 

216

 

5,495

 

(5,279

)

 

(96.1

)

Other

 

2,833

 

1,845

 

988

 

 

53.6

 

Total fees and other revenue

 

113,268

 

123,293

 

(10,025

)

 

(8.1

)

Gains on sales of securities available for sale

 

4,437

 

-   

 

4,437

 

 

100.0

 

Total non-interest income

 

$

117,705

 

$

123,293

 

$

(5,588

)

 

(4.5

)

Total revenue

 

$

248,990

 

$

245,712

 

$

3,278

 

 

1.3

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

4.53

%

4.53

%

 

 

 

 

Fees and other revenue as a % of total revenue

 

45.49

 

50.18

 

 

 

 

 

Fees and other revenue as a % of average assets (2)

 

3.57

 

4.16

 

 

 

 

 

 


(1)        Beginning in 2005, TCF’s mortgage banking business no longer originates or sells loans. See page 10 for additional information.

(2)        Annualized.

 

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3

 

Net Interest Income

 

TCF’s net interest income in the second quarter of 2005 was $131.3 million, up $8.9 million, or 7 percent, from the second quarter of 2004 and up $2.2 million, or 2 percent, from the first quarter of 2005.  Net interest margin in the second quarter of 2005 was 4.53 percent, flat with the second quarter last year and down slightly from 4.56 percent in the first quarter of 2005. The increase in net interest income from the second quarter of 2004 was primarily driven by increases in average Power Assets and Power Liabilities, partially offset by relatively more expensive funding costs due to the mix in funding sources supporting the net growth in assets and the effect of a flattening yield curve.

 

 

Non-interest Income

 

Total non-interest income in the second quarter of 2005 was $117.7 million, down $5.6 million, or 5 percent, from the second quarter of 2004 primarily due to declines in fees and service charges, mortgage banking, and leasing and equipment finance revenues, partially offset by higher card revenues and gains on sales of securities.

 

Fees and service charges decreased $7.3 million, or 10 percent, from the second quarter of 2004.  “Banking fee growth, primarily deposit fees, have been a challenge for the banking industry and TCF,” said Cooper.  “TCF continues to monitor these trends, review its procedures and make adjustments. TCF is focusing on growth in the number of checking accounts to increase future fee revenue.  Fees and service charges were up $8.8 million or 15.4 percent from the first quarter of 2005.”

 

Card revenues totaled $19.7 million for the second quarter of 2005, up 23 percent over the same period in 2004.  The increase was primarily attributable to a 20 percent increase in customer transaction volumes.

 

Leasing and equipment finance revenues were $11.1 million for the second quarter of 2005, down $1.2 million, or 9 percent, from the 2004 second quarter primarily due to lower sales-type lease revenues, partially offset by higher operating lease and other revenues.  Sales type revenues may fluctuate from quarter to quarter based on customer driven factors not within the control of TCF.

 

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4

 

During the second quarter of 2005, TCF took advantage of market conditions and sold $441.5 million of mortgage-backed securities and realized gains of $4.4 million.  There were no sales in the second quarter of 2004.  For the six months ended June 30, 2005, TCF sold $907.5 million of mortgage-backed securities and realized gains of $9.7 million, compared to sales of $854 million and realized gains of $12.7 million for the comparable 2004 period.

 

 

New Branch Expansion

 

TCF opened six new branches during the second quarter of 2005, comprised of three traditional branches, two supermarket branches and one campus branch. TCF has now opened 132 new branches since January 2000. TCF plans to open 21 new branches in the remainder of 2005, consisting of 14 traditional branches, five supermarket branches and two campus branches, bringing the total number of new branch openings in 2005 to 28.

 

(# of branches)

 

June 30,

2005

 

June 30,

2004

 

December 31,

1999

 

 

 

 

 

 

 

 

 

Total Branches

 

 

 

 

 

 

 

Minnesota

 

102

 

100

 

82

 

Illinois

 

197

 

192

 

150

 

Wisconsin

 

34

 

34

 

31

 

Michigan

 

61

 

57

 

64

 

Colorado

 

35

 

22

 

10

 

Indiana

 

6

 

 

6

 

 

1

 

 

 

 

435

 

 

411

 

 

338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Branches*

 

 

 

 

 

 

 

Traditional

 

57

 

40

 

 

 

Supermarket

 

74

 

64

 

 

 

Campus

 

1

 

 

-   

 

 

 

 

 Total

 

132

 

 

104

 

 

 

 

% of Total Branches

 

30%

 

25%

 

 

 

 

 

 

 

 

 

 

 

 

* New branches opened since January 1, 2000.

 

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5

 

Additional information regarding the results of TCF’s new branches opened since January 1, 2000 is summarized as follows:

 

 

 

At or For the Three Months Ended

 

 

 

 

 

 

 

June 30,

 

 

 

 

 

($ in thousands)

 

2005

 

2004

 

Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

Number of checking accounts

 

238,850

 

177,530

 

61,320

 

34.5

%

Average deposits:

 

 

 

 

 

 

 

 

 

Checking

 

$

359,063

 

$

237,866

 

$

121,197

 

51.0

 

Savings

 

234,850

 

137,657

 

97,193

 

70.6

 

Money market

 

24,537

 

21,902

 

2,635

 

12.0

 

   Subtotal

 

618,450

 

397,425

 

221,025

 

55.6

 

Certificates of deposit

 

186,870

 

54,389

 

132,481

 

N.M.

 

   Total deposits

 

$

805,320

 

$

451,814

 

$

353,506

 

78.2

 

 

 

 

 

 

 

 

 

 

 

Total deposit fees and other revenue

 

$

17,219

 

$

13,414

 

$

3,805

 

28.4

 

 

N.M. Not meaningful.

 

Power Assets®

 

                                                TCF’s Power Asset lending operations continue to generate strong growth. TCF’s average consumer loan balances increased $772.4 million, or 20 percent; average commercial real estate loan balances increased $214.5 million, or 11 percent; and leasing and equipment finance average balances increased $126.5 million, or 10 percent, from the second quarter of 2004.

 

 

 

Average Balances for the

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

 

 

 

($ in thousands)

 

2005

 

2004

 

Change

 

% Change

 

Loans and leases*:

 

 

 

 

 

 

 

 

 

  Consumer home equity and other

 

 

 

 

 

 

 

 

 

 Home equity:

 

 

 

 

 

 

 

 

 

First mortgage lien

 

$

3,079,471

 

$

2,619,201

 

$

460,270

 

17.6

%

Junior lien

 

1,563,102

 

1,246,063

 

317,039

 

 

25.4

 

  Total consumer home equity

 

4,642,573

 

3,865,264

 

777,309

 

20.1

 

 Other

 

34,012

 

38,930

 

(4,918

)

 

(12.6

)

  Total consumer home equity and other

 

4,676,585

 

3,904,194

 

772,391

 

19.8

 

  Commercial real estate

 

2,200,008

 

1,985,498

 

214,510

 

10.8

 

  Commercial business

 

432,923

 

428,602

 

4,321

 

1.0

 

  Leasing and equipment finance

 

1,412,520

 

1,285,989

 

126,531

 

 

9.8

 

  Power Assets

 

$

8,722,036

 

$

7,604,283

 

$

1,117,753

 

 

14.7

 

 

 

 

 

 

 

 

 

 

 

*Excludes residential real estate loans, loans held for sale and operating leases.

 

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6

 

Power Liabilities®

 

“Growth in Power Liabilities continues to be driven by TCF’s new Premier Checking, Premier Savings and Plus eChecking products, along with strong growth in certificates of deposit,” said Cooper.  Average Power Liabilities totaled $8.4 billion for the second quarter of 2005, with an average interest rate of .98 percent. Average Power Liabilities increased $571.9 million, or 7 percent, from the second quarter of 2004.  The total number of checking accounts was 1,595,001 at June 30, 2005, up 92,145 accounts, or 6 percent, from June 30, 2004 and up 59,849 accounts, or 8 percent (annualized) from December 31, 2004.

 

 

 

 

Average Balances for the

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

 

 

 

($ in thousands)

 

2005

 

2004

 

Change

 

% Change

 

Non-interest bearing deposits:

 

 

 

 

 

 

 

 

 

Retail

 

$

1,589,015

 

$

1,538,051

 

$

50,964

 

3.3

 %

Small business

 

571,701

 

492,305

 

79,396

 

16.1

 

Commercial and custodial

 

311,463

 

383,630

 

(72,167

)

 

(18.8

)

Total non-interest bearing deposits

 

2,472,179

 

2,413,986

 

58,193

 

2.4

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

Premier checking

 

580,093

 

151,801

 

428,292

 

N.M.

 

Other checking

 

1,075,421

 

1,175,623

 

(100,202

)

 

(8.5

)

Subtotal

 

1,655,514

 

1,327,424

 

328,090

 

24.7

 

Premier savings

 

345,567

 

31,949

 

313,618

 

N.M.

 

Other savings

 

1,603,720

 

1,806,267

 

(202,547

)

 

(11.2

)

Subtotal

 

1,949,287

 

1,838,216

 

111,071

 

6.0

 

Money market

 

633,762

 

799,485

 

(165,723

)

 

(20.7

)

Subtotal

 

4,238,563

 

3,965,125

 

273,438

 

6.9

 

Certificates of deposit

 

1,707,919

 

1,467,654

 

240,265

 

 

16.4

 

Total interest-bearing deposits

 

5,946,482

 

5,432,779

 

513,703

 

 

9.5

 

Power Liabilities

 

$

8,418,661

 

$

7,846,765

 

$

571,896

 

 

7.3

 

 

 

 

 

 

 

 

 

 

 

Total checking, savings and money
market balances

 

$

6,710,742

 

$

6,379,111

 

$

331,631

 

5.2

 

Number of checking accounts, period-end

 

1,595,001

 

1,502,856

 

92,145

 

6.1

 

Average rate on deposits

 

.98

%

.49

%

49

  bps

N/A

 

 

N.M. Not meaningful.

 

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7

 

Borrowings

 

Average total borrowings were $3 billion for the second quarter of 2005, down $94.5 million from the first quarter of 2005.  This decrease was primarily due to the increase in average Power Liabilities of $309.3 million exceeding the growth in average interest-earning assets of $183 million. The weighted average rate for borrowings was 3.76 percent for the second quarter of 2005, compared with 3.13 percent for the second quarter of 2004 and 3.46 percent for the first quarter of 2005.

 

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 second quarter of 2005, a decrease of $103.4 million from the second quarter of 2004. The residential real estate loans consist of 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 prepayments.  At June 30, 2005, the unrealized pre-tax gain on TCF’s securities available for sale portfolio was $2.5 million.

 

 

 

Average Balances and Yields
for the Three Months Ended

 

Change from

 

 

 

 

June 30,

 

March 31,

 

June 30,

 

March 31,

 

June 30,

 

($ in thousands)

 

2005

 

2005

 

2004

 

2005

 

2004

 

Securities available for sale

 

$

1,646,986

 

$

1,663,412

 

1,546,694

 

$

(16,426

)

$

100,292

 

Residential real estate loans

 

919,379

 

984,764

 

1,123,062

 

(65,385

)

 

(203,683

)

 

Total

 

$

2,566,365

 

$

2,648,176

 

$

2,669,756

 

$

(81,811

)

 

$

(103,391

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

5.37

%

5.37

%

5.47

%

-  

 bps

(10

)

 bps

 

 

Non-interest Expense

 

Non-interest expense totaled $150.2 million for the 2005 second quarter, up $6.3 million, or 4 percent, from $143.9 million for the 2004 second quarter. Compensation and employee benefits increased $2.4 million, or 3 percent, from the second quarter of 2004, of which $1.7 million related to new branches opened during the past 12 months offset by a $3.2 million decrease for mortgage banking.  Occupancy and equipment

 

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8

 

expenses increased $1.4 million, or 6 percent, from the second quarter of 2004, primarily related to costs associated with new branches opened during the past 12 months.  Deposit losses decreased $1.6 million from the second quarter of 2004, due to lower incidents and increased customer restitution from improved collection and customer retention activities.  Other expenses increased $3.9 million, or 13 percent, from the second quarter of 2004, primarily driven by a $1.8 million increase in foreclosed real estate expenses due to recoveries on property sales in 2004, a $1.3 million increase in operating lease depreciation expense in the leasing businesses and a $944 thousand increase in card processing and issuance expenses related to the overall increase in card revenues. 

 

 

 

Three Months Ended
June 30,

 

Change

 

($ in thousands)

 

2005

 

2004

 

$

 

%

 

Compensation and employee benefits

 

$

81,973

 

$

79,597

 

$

2,376

 

3.0

%

Occupancy and equipment

 

24,771

 

23,397

 

1,374

 

5.9

 

Advertising and promotions

 

6,778

 

6,498

 

280

 

4.3

 

Deposit losses

 

3,775

 

5,350

 

(1,575

)

(29.4

)

Other

 

32,950

 

29,064

 

3,886

 

 

13.4

 

Total non-interest expense

 

$

150,247

 

$

143,906

 

$

6,341

 

 

4.4

 

 

 

Credit Quality

 

At June 30, 2005, TCF’s allowance for loan and lease losses totaled $76.4 million, or .78 percent of loans and leases, compared with $80 million, or .90 percent, at June 30, 2004.  The provision for credit losses for the second quarter of 2005 was $1.4 million, compared with $3.1 million for the second quarter of 2004 or a decrease of $1.7 million primarily due to improvements in commercial loan credit quality.  Net loan and lease charge-offs were $1.9 million, or .08 percent (annualized) of average loans and leases, in the 2005 second quarter, down from $2.1 million, or .10 percent (annualized), for the same period of 2004. “Our emphasis on secured lending has contributed to TCF’s continued solid credit quality,” said Cooper, “and our credit quality continues to rank among the best in the industry.” At June 30, 2005, TCF’s over-30-day delinquency rate was .­­33 percent, down from .44 percent at June 30, 2004. Non-accrual loans and leases were

 

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9

 

$41.7 million, or .43 percent of net loans and leases, at June 30, 2005, compared with $36.8 million, or .41 percent, at June 30, 2004.  Total non-performing assets were $59 million at June 30, 2005, up from $56.6 million at June 30, 2004, while the percentage of total non-performing assets to total assets remained the same at .47 percent.  The increase in non-accrual loans and leases was primarily due to placing the Delta Airlines, Inc. (“Delta”) leveraged lease on non-accrual status in the third quarter of 2004, partially offset by lower commercial real estate non-accrual loans.  Although Delta is current on its payments related to this transaction, if Delta declares bankruptcy, it could result in the charge-off of all or part of TCF’s $18.8 million gross investment in the leveraged lease and the current payment of previously deferred income tax obligations.

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

($ in thousands)

 

2005

 

2004

 

2005

 

2004

 

Allowance for loan and lease losses:

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

76,883

 

$

79,054

 

$

79,878

 

$

76,619

 

Net (charge-offs) recoveries:

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

(1,016

)

(719

)

(2,325

)

(1,293

)

Commercial real estate

 

3

 

15

 

(34

)

48

 

Commercial business

 

31

 

16

 

2,468

 

(57

)

Leasing and equipment finance

 

(911

)

(1,378

)

(1,525

)

(1,272

)

Residential real estate

 

(11

)

 

(33

)

 

(47

)

 

(41

)

 

  Total

 

(1,904

)

(2,099

)

(1,463

)

(2,615

)

Provision for credit losses

 

1,427

 

3,070

 

(2,009

)

4,230

 

Acquired allowance

 

-   

 

 

-   

 

 

-   

 

 

1,791

 

 

Balance at end of period

 

$

76,406

 

 

$

80,025

 

 

$

76,406

 

 

$

80,025

 

 

 

 

 

 

 

 

 

 

 

 

Key Indicators:

 

 

 

 

 

 

 

 

 

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

 

.78

  %

.90

  %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

.08

  %

.10

  %

.03

  %

.06

  %

 

 

 

 

 

 

 

 

 

 

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

 

10.0

  X

9.5

  X

26.1

  X

15.3

  X

 

 

 

 

 

 

 

 

 

 

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

 

51.9

  X

48.5

  X

131.1

  X

74.5

  X

 

-more-

 



 

10

 

Mortgage Banking

 

                At June 30, 2005, TCF’s mortgage servicing portfolio totaled $3.8 billion and the mortgage servicing rights asset totaled $39.9 million, or 1.05 percent of the related servicing portfolio, down from $4.8 billion and $51.3 million, respectively, at June 30, 2004. During the second quarter of 2005, TCF recorded a $1 million impairment charge to the mortgage servicing rights asset.  The following table summarizes the components of mortgage banking revenues.

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

June 30,

 

 

 

 

 

($ in thousands)

 

2005

 

2004

 

Change

 

% Change

 

Servicing income

 

$

3,604

 

$

4,339

 

$

(735

)

(16.9

)%

Less mortgage servicing rights:

 

 

 

 

 

 

 

 

 

Amortization

 

2,564

 

3,242

 

(678

)

(20.9

)

Impairment

 

1,000

 

-   

 

1,000

 

 

100.0

 

Net servicing income

 

40

 

1,097

 

(1,057

)

(96.4

)

Gains on sales of loans *

 

-   

 

3,873

 

(3,873

)

(100.0

)

Other income

 

176

 

525

 

(349

)

 

(66.5

)

Total mortgage banking revenue

 

$

216

 

$

5,495

 

$

(5,279

)

 

(96.1

)

 

* Beginning in 2005, TCF’s mortgage banking business no longer originates or sells loans.

 

 

 

Income Taxes

 

                TCF’s income tax expense was $26.7 million for the second quarter of 2005, or 27.41 percent of income before income tax expense, compared with $33.5 million, or 33.95 percent, for the comparable 2004 period.  The lower effective income tax rate in the second quarter of 2005 compared with the second quarter of  2004 is primarily due to a $5.2 million adjustment related to the clarification of existing tax legislation as well as a slight reduction in the expected 2005 annual effective income tax rate.

 

-more-

 



 

11

 

Capital

 

During the second quarter of 2005, TCF’s Board of Directors authorized another program for the repurchase of up to five percent of the Company’s outstanding common stock, or 6.7 million shares.  This program is in addition to the existing program for repurchasing shares announced in July 2003.  During the second quarter of 2005, TCF repurchased 1,250,000 shares of its common stock at an average cost of $25.44 per share.  TCF has 7.1 million shares remaining in its stock repurchase program authorized by its Board of Directors.  Since 1997, TCF has repurchased 57.3 million shares of its stock, at an average cost of $18.08 per share.

 

 

 

 

At June 30,

 

 

 

At December 31,

 

 

($ in thousands, except per-share data)

 

 

2005

 

 

 

2004

 

 

 

 

 

 

 

 

Stockholders’ equity

 

$

954,557

 

 

 

$

958,418

 

 

 

Stockholders’ equity to total assets

 

7.57

%

 

 

7.77

%

 

 

Book value per common share

 

$

7.12

 

 

 

$

6.99

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital

 

$

998,270

 

10.80

%

$

958,900

 

10.88

%

Total risk-based capital “well-capitalized” requirement

 

$

923,968

 

10.00

%

$

881,481

 

10.00

%

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

 

$

74,302

 

.80

%

$

77,419

 

.88

%

 

 

 

Website Information

 

                A live webcast of TCF’s conference call to discuss second quarter earnings will be hosted at TCF’s website, www.TCFExpress.com, on July 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 $12.6 billion in assets.  TCF has 435 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.


 

-more-

 



 

12

 

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

 

 

 

 

 

 

 

 

 

June 30,

 

 

 

 

 

 

 

 

2005

 

2004

 

$ Change

 

% Change

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

155,014

 

$

128,141

 

$

26,873

 

21.0

 %

Securities available for sale

 

21,325

 

20,413

 

912

 

4.5

 

Loans held for sale

 

2,566

 

3,340

 

(774

)

(23.2

)

Investments

 

1,094

 

895

 

199

 

 

22.2

 

Total interest income

 

179,999

 

152,789

 

27,210

 

 

17.8

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

20,646

 

9,474

 

11,172

 

117.9

 

Borrowings

 

28,068

 

20,896

 

7,172

 

 

34.3

 

Total interest expense

 

48,714

 

30,370

 

18,344

 

 

60.4

 

Net interest income

 

131,285

 

122,419

 

8,866

 

7.2

 

Provision for credit losses

 

1,427

 

3,070

 

(1,643

)

 

(53.5

)

Net interest income after provision for
credit losses  

 

129,858

 

119,349

 

10,509

 

 

8.8

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

65,824

 

73,116

 

(7,292

)

(10.0

)

Card revenue

 

19,717

 

16,024

 

3,693

 

23.0

 

ATM revenue

 

10,795

 

11,138

 

(343

)

(3.1

)

Investments and insurance revenue

 

2,791

 

3,430

 

(639

)

 

(18.6

)

Subtotal

 

99,127

 

103,708

 

(4,581

)

(4.4

)

Leasing and equipment finance

 

11,092

 

12,245

 

(1,153

)

(9.4

)

Mortgage banking

 

216

 

5,495

 

(5,279

)

(96.1

)

Other

 

2,833

 

1,845

 

988

 

 

53.6

 

Fees and other revenue

 

113,268

 

123,293

 

(10,025

)

(8.1

)

Gains on sales of securities available for sale

 

4,437

 

-

 

4,437

 

 

100.0

 

Total non-interest income

 

117,705

 

123,293

 

(5,588

)

 

(4.5

)

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

81,973

 

79,597

 

2,376

 

3.0

 

Occupancy and equipment

 

24,771

 

23,397

 

1,374

 

5.9

 

Advertising and promotions

 

6,778

 

6,498

 

280

 

4.3

 

Deposit losses

 

3,775

 

5,350

 

(1,575

)

(29.4

)

Other

 

32,950

 

29,064

 

3,886

 

 

13.4

 

Total non-interest expense

 

150,247

 

143,906

 

6,341

 

 

4.4

 

Income before income tax expense

 

97,316

 

98,736

 

(1,420

)

(1.4

)

Income tax expense

 

26,675

 

33,518

 

(6,843

)

 

(20.4

)

Net income

 

$

70,641

 

$

65,218

 

$

5,423

 

 

8.3

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

.53

 

$

.47

 

$

.06

 

 

12.8

 

Diluted

 

$

.53

 

$

.47

 

$

.06

 

 

12.8

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

.2125

 

$

.1875

 

$

.025

 

 

13.3

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

132,410

 

137,503

 

(5,093

)

 

(3.7

)

Diluted

 

132,742

 

138,127

 

(5,385

)

 

(3.9

)

 

 

 

 

- more -

 



 

14

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

 

Six Months Ended

 

 

 

 

 

 

 

 

 

June 30,

 

 

 

 

 

 

 

 

2005

 

2004

 

$ Change

 

% Change

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

301,558

 

$

253,414

 

$

48,144

 

19.0

 %

Securities available for sale

 

42,820

 

40,745

 

2,075

 

5.1

 

Loans held for sale

 

4,820

 

6,181

 

(1,361

)

(22.0

)

Investments

 

2,146

 

1,668

 

478

 

 

28.7

 

Total interest income

 

351,344

 

302,008

 

49,336

 

 

16.3

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

36,584

 

20,013

 

16,571

 

82.8

 

Borrowings

 

54,422

 

41,083

 

13,339

 

 

32.5

 

Total interest expense

 

91,006

 

61,096

 

29,910

 

 

49.0

 

Net interest income

 

260,338

 

240,912

 

19,426

 

8.1

 

Provision for credit losses

 

(2,009)

 

4,230

 

(6,239

)

 

N.M.

 

Net interest income after provision for
credit losses

 

262,347

 

236,682

 

25,665

 

 

10.8

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

122,855

 

132,775

 

(9,920

)

(7.5

)

Card revenue

 

37,359

 

29,515

 

7,844

 

26.6

 

ATM revenue

 

20,527

 

21,135

 

(608

)

(2.9

)

Investments and insurance revenue

 

5,644

 

6,892

 

(1,248

)

 

(18.1

)

Subtotal

 

186,385

 

190,317

 

(3,932

)

(2.1

)

Leasing and equipment finance

 

21,785

 

22,412

 

(627

)

(2.8

)

Mortgage banking

 

1,358

 

8,950

 

(7,592

)

(84.8

)

Other

 

10,649

 

4,073

 

6,576

 

 

161.5

 

Fees and other revenue

 

220,177

 

225,752

 

(5,575

)

(2.5

)

Gains on sales of securities available for sale

 

9,676

 

12,717

 

(3,041

)

 

(23.9

)

Total non-interest income

 

229,853

 

238,469

 

(8,616

)

 

(3.6

)

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

163,424

 

158,476

 

4,948

 

3.1

 

Occupancy and equipment

 

50,150

 

46,887

 

3,263

 

7.0

 

Advertising and promotions

 

13,025

 

12,408

 

617

 

5.0

 

Deposit losses

 

7,436

 

9,528

 

(2,092

)

(22.0

)

Other

 

64,323

 

57,313

 

7,010

 

 

12.2

 

Total non-interest expense

 

298,358

 

284,612

 

13,746

 

 

4.8

 

Income before income tax expense

 

193,842

 

190,539

 

3,303

 

1.7

 

Income tax expense

 

59,736

 

64,660

 

(4,924

)

 

(7.6

)

Net income

 

$

134,106

 

$

125,879

 

$

8,227

 

 

6.5

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

1.01

 

$

.91

 

$

.10

 

 

11.0

 

Diluted

 

$

1.00

 

$

.91

 

$

.09

 

 

9.9

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

.425

 

$

.375

 

$

.05

 

 

13.3

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

133,196

 

137,743

 

(4,547

)

 

(3.3

)

Diluted

 

133,563

 

138,341

 

(4,778

)

 

(3.5

)

 

N.M. Not meaningful.

 

- more -

 



 

15

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

At

 

At

 

At

 

% Change from

 

 

 

June 30,

 

December 31,

 

June 30,

 

December 31,

 

June 30,

 

 

 

2005

 

2004

 

2004

 

2004

 

2004

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

361,158

 

$

359,798

 

$

357,227

 

.4

%

1.1

 %

Investments

 

104,127

 

103,226

 

94,567

 

.9

 

10.1

 

Securities available for sale

 

1,406,575

 

1,619,941

 

1,588,372

 

(13.2

)

(11.4

)

Loans held for sale

 

213,227

 

154,279

 

359,387

 

38.2

 

(40.7

)

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

4,808,003

 

4,418,588

 

4,024,994

 

8.8

 

19.5

 

Commercial real estate

 

2,202,752

 

2,154,396

 

1,997,449

 

2.2

 

10.3

 

Commercial business

 

447,958

 

424,135

 

445,314

 

5.6

 

.6

 

Leasing and equipment finance

 

1,419,868

 

 

1,375,372

 

 

1,309,164

 

 

3.2

 

8.5

 

Subtotal

 

8,878,581

 

8,372,491

 

7,776,921

 

6.0

 

14.2

 

Residential real estate

 

884,141

 

 

1,014,166

 

 

1,091,678

 

 

(12.8

)

(19.0

)

Total loans and leases

 

9,762,722

 

9,386,657

 

8,868,599

 

4.0

 

10.1

 

Allowance for loan and lease losses

 

(76,406

)

 

(79,878

)

 

(80,025

)

 

(4.3

(4.5

Net loans and leases

 

9,686,316

 

9,306,779

 

8,788,574

 

4.1

 

10.2

 

Premises and equipment

 

339,619

 

326,667

 

305,052

 

4.0

 

11.3

 

Goodwill

 

152,599

 

152,599

 

152,599

 

-   

 

-   

 

Mortgage servicing rights

 

39,936

 

46,442

 

51,290

 

(14.0

)

(22.1

)

Other assets

 

303,659

 

 

270,836

 

 

245,795

 

 

12.1

 

23.5

 

 

 

$

12,607,216

 

 

$

12,340,567

 

 

$

11,942,863

 

 

2.2

 

5.6

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

4,019,685

 

$

3,905,987

 

$

3,607,692

 

2.9

 

11.4

 

Savings

 

2,046,068

 

1,927,872

 

1,945,675

 

6.1

 

5.2

 

Money market

 

629,731

 

 

659,686

 

 

768,394

 

 

(4.5

)

(18.0

)

Subtotal

 

6,695,484

 

6,493,545

 

6,321,761

 

3.1

 

5.9

 

Certificates of deposit

 

1,728,842

 

 

1,468,650

 

 

1,439,896

 

 

17.7

 

20.1

 

Total deposits

 

8,424,326

 

 

7,962,195

 

 

7,761,657

 

 

5.8

 

8.5

 

Short-term borrowings

 

1,045,582

 

1,056,111

 

869,576

 

(1.0

)

20.2

 

Long-term borrowings

 

1,899,047

 

 

2,048,492

 

 

2,065,870

 

 

(7.3

)

(8.1

)

Total borrowings

 

2,944,629

 

3,104,603

 

2,935,446

 

(5.2

)

.3

 

Accrued expenses and other liabilities

 

283,704

 

 

315,351

 

 

306,608

 

 

(10.0

)

(7.5

)

Total liabilities

 

11,652,659

 

 

11,382,149

 

 

11,003,711

 

 

2.4

 

5.9

 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $.01 per share, 280,000,000 shares authorized; 184,425,478; 184,939,094 and 184,991,948 shares issued

 

1,844

 

1,849

 

925

 

(.3

)

99.4

 

Additional paid-in capital

 

496,910

 

518,741

 

517,538

 

(4.2

)

(4.0

)

Retained earnings, subject to certain restrictions

 

1,462,393

 

1,385,760

 

1,308,265

 

5.5

 

11.8

 

Accumulated other comprehensive income (loss)

 

1,601

 

(1,415

)

(14,663

)

N.M.

 

N.M.

 

Treasury stock at cost, 50,301,984; 47,752,934 and 45,416,640 shares, and other

 

(1,008,191

)

 

(946,517

)

 

(872,913

)

 

6.5

 

15.5

 

Total stockholders' equity

 

954,557

 

 

958,418

 

 

939,152

 

 

(.4

)

1.6

 

 

 

$

12,607,216

 

 

$

12,340,567

 

 

$

11,942,863

 

 

2.2

 

5.6

 

 

N.M. Not meaningful.

 

- more -

 



 

16

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CREDIT QUALITY DATA

(Dollars in thousands)

(Unaudited)

 

Allowance for loan and lease losses:

 

 

 

At or For the Six Months Ended June 30, 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

 

$

15,783

 

.33

%

$

2,325

 

.10

$

9,939

 

.22

%

$

3,232

 

.08

%

Commercial real estate

 

20,448

 

.93

 

34

 

-   

 

20,742

 

.96

 

476

 

.02

 

Commercial business

 

7,100

 

1.58

 

(2,468

)

(1.17

)

7,696

 

1.81

 

153

 

.04

 

Leasing and equipment finance

 

32,435

 

2.28

 

1,525

 

.22

 

24,566

 

1.79

 

5,545

 

.43

 

Unallocated (2)

 

-   

 

-   

 

-