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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 19, 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 October 19, 2005, announcing its results of operations for the quarter ended September 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 October 19, 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:    October 19, 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 Third Quarter Earnings and EPS ($.50, up 11 percent)
 
THIRD QUARTER HIGHLIGHTS
 

                  Diluted earnings per share of 50 cents

 

                  Net income of $65.5 million

 

                  Return on average assets of 2.07 percent

 

                  Return on average common equity of 27.41 percent

 

                  Average Power AssetsÒ increased $1.1 billion, or 14 percent

 

                  Average Power LiabilitiesÒ increased $773.2 million, or 10 percent

 

                  Increased checking accounts by 17,496 to 1,612,497 accounts

 

                  Opened eight new branches during the quarter; plan to open a total of 28 new branches in 2005

 

EARNINGS SUMMARY

($ in thousands, except per-share data)

 

 

 

Three Months
Ended September 30,

 

Nine Months
Ended September 30,

 

 

 

2005

 

2004

 

Change

 

2005

 

2004

 

Change

 

Net income

 

$

65,486

 

$

61,712

 

6.1

%

 

$

199,592

 

$

187,591

 

6.4

%

 

Diluted earnings per common share

 

.50

 

.45

 

11.1

 

 

1.50

 

1.36

 

10.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

2.07

%

2.06

%

 

 

2.11

%

2.12

%

 

 

Return on average common equity

 

27.41

 

25.96

 

 

 

28.32

 

26.56

 

 

 

Net interest margin

 

4.43

 

4.56

 

 

 

4.51

 

4.54

 

 

 

 

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2

 

WAYZATA, MN, October 19, 2005 – TCF Financial Corporation (TCF) (NYSE: TCB) today reported diluted earnings per share of 50 cents for the third quarter of 2005, compared with 45 cents for the same period of 2004.  Net income for the third quarter of 2005 was $65.5 million, compared with $61.7 million for the same period of 2004.  For the third quarter of 2005, return on average assets (“ROA”) was 2.07 percent and return on average common equity (“ROE”) was 27.41 percent, compared with 2.06 percent and 25.96 percent, respectively, for the third quarter of 2004.

 

Chairman’s Statement

 

“The current interest rate environment and changing customer behaviors have contributed to a challenging quarter for the banking industry.  TCF was not immune to these forces,” said William A. Cooper, Chairman and CEO.  “The flat yield curve has enabled consumers to refinance higher yielding variable-rate loans with lower cost fixed-rate loans.  This has limited TCF’s growth in interest income as funding costs have increased, thus compressing margins.  Credit quality, however, was strong and continued to improve with the exception of Delta Airlines, Inc. (“Delta”).  TCF charged off its investment in the leveraged lease due to Delta’s September 14, 2005 bankruptcy filing.  TCF remains focused on its long-term strategies of high-quality secured lending, product innovation and targeted new branch expansion,” said Cooper.

 

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3

 

Total Revenue

 

($ in thousands)

 

Three Months
Ended September 30,

 

 

 

 

 

 

 

2005

 

2004

 

$ Change

 

% Change

 

Net interest income

 

$

128,070

 

 

$

124,490

 

 

$

3,580

 

 

2.9

 

%

Fees and other revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

69,431

 

 

71,353

 

 

(1,922

)

 

(2.7

)

 

Card revenue

 

21,025

 

 

16,339

 

 

4,686

 

 

28.7

 

 

ATM revenue

 

10,646

 

 

11,474

 

 

(828

)

 

(7.2

)

 

Investments and insurance revenue

 

2,682

 

 

3,057

 

 

(375

)

 

(12.3

)

 

Total banking fees and other revenue

 

103,784

 

 

102,223

 

 

1,561

 

 

1.5

 

 

Leasing and equipment finance

 

10,197

 

 

6,864

 

 

3,333

 

 

48.6

 

 

Mortgage banking (1)

 

982

 

 

4,132

 

 

(3,150

)

 

(76.2

)

 

Other

 

7,743

 

 

2,584

 

 

5,159

 

 

199.7

 

 

Total fees and other revenue

 

122,706

 

 

115,803

 

 

6,903

 

 

6.0

 

 

Gains on sales of securities available for sale

 

995

 

 

3,679

 

 

(2,684

)

 

(73.0

)

 

Total non-interest income

 

123,701

 

 

119,482

 

 

4,219

 

 

3.5

 

 

Total revenue

 

$

251,771

 

 

$

243,972

 

 

$

7,799

 

 

3.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (2)

 

4.43

 

%

4.56

 

%

 

 

 

 

 

 

Fees and other revenue as a % of total revenue

 

48.74

 

 

47.47

 

 

 

 

 

 

 

 

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

 

3.89

 

 

3.87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 (2)  Annualized.

 

Net Interest Income

 

TCF’s net interest income in the third quarter of 2005 was $128.1 million, up $3.6 million, or 3 percent, from the third quarter of 2004 and down $3.2 million, or 2 percent, from the second quarter of 2005.  Net interest margin in the third quarter of 2005 was 4.43 percent, compared with 4.56 percent last year and 4.53 percent in the second quarter of 2005. The increase in net interest income from the third quarter of 2004 was primarily driven by increases in average Power Assets and Power Liabilities, partially offset by higher funding costs and the effect of a flattening yield curve.  The decrease in net interest income from the second quarter of 2005 was primarily due to lower average balances of securities available for sale and residential real estate loans and higher funding costs as deposit rates increased and certain lower-cost long-term borrowings matured.  The decrease in the net interest margin from the third quarter of 2004 and the second quarter of 2005 is primarily due to the rates on interest-bearing liabilities increasing more than the yields on interest-earning assets, partially reflecting an increase in customer preference for fixed-rate consumer loans.

 

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4

 

Non-interest Income

 

Total non-interest income in the third quarter of 2005 was $123.7 million, up $4.2 million, or 4 percent, from the third quarter of 2004 primarily due to increases in card revenues, leasing and equipment finance revenues and other revenue, partially offset by declines in fees and service charges, gains on sales of securities and mortgage banking revenues.

 

Fees and service charges decreased $1.9 million, or 3 percent, from the third quarter of 2004, but increased $3.6 million, or 5 percent, from the second quarter of 2005.  “Deposit service charge trends showed improvement during the quarter due to increased customer transactions,” said Cooper.  “Fee income growth will, however, continue to be challenging for the banking industry and TCF.  TCF remains focused on checking account growth to increase future fee revenue.”

 

Card revenues totaled $21 million for the third quarter of 2005, up 29 percent over the same period in 2004.  The increase was primarily attributable to an increase in customer transaction volumes and related fees.

 

Leasing and equipment finance revenues were $10.2 million for the third quarter of 2005, up $3.3 million, or 49 percent, from the 2004 third quarter primarily due to higher operating lease and sales-type revenues.  Sales-type revenues may fluctuate from quarter to quarter based on customer driven factors not within the control of TCF.

 

Other revenue increased $5.2 million from $2.6 million in the third quarter of 2004, primarily due to a $3.4 million gain on the sale of a branch building.

 

During the 2005 third quarter, TCF took advantage of market conditions and sold $99.5 million of mortgage-backed securities and realized gains of $1 million, compared with $216.3 million in sales and $3.7 million of gains for the third quarter of 2004.

 

New Branch Expansion

 

“TCF’s continued focus on new branch expansion resulted in the opening of eight new branches during the quarter, including five traditional branches, two supermarket branches and one campus branch,” said Cooper.  TCF has now opened 140 new branches since January 2000. TCF plans to open 13 new branches in

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5

 

the fourth quarter of 2005, consisting of nine traditional branches, three supermarket branches and one campus branch, bringing the total number of new branches to be opened in 2005 to 28.

 

 

 

September 30,

 

September 30,

 

December 31,

 

(# of branches)

 

2005

 

2004

 

1999

 

 

 

 

 

 

 

 

 

Total Branches

 

 

 

 

 

 

 

Minnesota

 

104

 

101

 

82

 

Illinois

 

199

 

194

 

150

 

Wisconsin

 

34

 

34

 

31

 

Michigan

 

62

 

58

 

64

 

Colorado

 

37

 

26

 

10

 

Indiana

 

6

 

6

 

1

 

 

 

442

 

419

 

338

 

 

 

 

 

 

 

 

 

New Branches*

 

 

 

 

 

 

 

Traditional

 

62

 

45

 

 

 

Supermarket

 

76

 

68

 

 

 

Campus

 

2

 

-   

 

 

 

Total

 

140

 

113

 

 

 

% of Total Branches

 

32

%

27

%

 

 

 

 *  New branches opened since January 1, 2000.

 

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

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

($ in thousands)

 

2005

 

2004

 

Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

Number of checking accounts

 

256,452

 

194,686

 

61,766

 

31.7

%

Average deposits:

 

 

 

 

 

 

 

 

 

Checking

 

$

380,004

 

$

272,101

 

$

107,903

 

39.7

 

Savings

 

264,301

 

140,411

 

123,890

 

88.2

 

Money market

 

27,128

 

20,785

 

6,343

 

30.5

 

Subtotal

 

671,433

 

433,297

 

238,136

 

55.0

 

Certificates of deposit

 

224,278

 

55,191

 

169,087

 

N.M.

 

Total deposits

 

$

895,711

 

$

488,488

 

$

407,223

 

83.4

 

 

 

 

 

 

 

 

 

 

 

Total deposit fees and other revenue

 

$

18,508

 

$

14,010

 

$

4,498

 

32.1

 

 

 N.M. Not meaningful.

 

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6

 

Power Assets®

 

TCF’s Power Asset lending operations continue to generate strong growth. TCF’s average consumer loan balances increased $782.6 million, or 19 percent; average commercial real estate loan balances increased $207.8 million, or 10 percent; and leasing and equipment finance average balances increased $108.2 million, or 8 percent, from the third quarter of 2004.

 

 

 

Average Balances for the

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

 

 

 

($ in thousands)

 

2005

 

2004

 

Change

 

% Change

 

Loans and leases*:

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

 

 

 

 

 

 

 

 

Home equity:

 

 

 

 

 

 

 

 

 

First mortgage lien

 

$

3,194,663

 

 

$

2,712,447

 

 

$

482,216

 

 

17.8

 

%

Junior lien

 

1,653,033

 

 

1,348,053

 

 

304,980

 

 

22.6

 

 

Total consumer home equity

 

4,847,696

 

 

4,060,500

 

 

787,196

 

 

19.4

 

 

Other

 

34,469

 

 

39,069

 

 

(4,600

)

 

(11.8

)

 

Total consumer home equity and other

 

4,882,165

 

 

4,099,569

 

 

782,596

 

 

19.1

 

 

Commercial real estate

 

2,220,563

 

 

2,012,790

 

 

207,773

 

 

10.3

 

 

Commercial business

 

433,641

 

 

440,010

 

 

(6,369

)

 

(1.4

)

 

Leasing and equipment finance

 

1,428,653

 

 

1,320,495

 

 

108,158

 

 

8.2

 

 

Power Assets

 

$

8,965,022

 

 

$

7,872,864

 

 

$

1,092,158

 

 

13.9

 

 

 

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

 

Power Liabilities®

 

Average Power Liabilities totaled $8.6 billion for the third quarter of 2005, with an average interest rate of 1.23 percent.  Average Power Liabilities increased $773.2 million, or 10 percent, from the third quarter of 2004, primarily driven by increases in Premier Checking, Premier Savings and certificates of deposit, partially offset by declines in other interest-bearing checking and savings.  The total number of checking accounts was 1,612,497 at September 30, 2005, up 85,545 accounts, or 6 percent, from September 30, 2004 and up 77,345 accounts, or 7 percent (annualized) from December 31, 2004.

 

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7

 

 

 

Average Balances for the

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

 

 

 

($ in thousands)

 

2005

 

2004

 

Change

 

% Change

 

Non-interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$

1,539,893

 

 

$

1,512,434

 

 

$

27,459

 

 

1.8

 

%

Small business

 

600,374

 

 

525,466

 

 

74,908

 

 

14.3

 

 

Commercial and custodial

 

325,025

 

 

329,329

 

 

(4,304

)

 

(1.3

)

 

Total non-interest bearing deposits

 

2,465,292

 

 

2,367,229

 

 

98,063

 

 

4.1

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Premier checking

 

694,835

 

 

248,217

 

 

446,618

 

 

179.9

 

 

Other checking

 

1,004,507

 

 

1,140,098

 

 

(135,591

)

 

(11.9

)

 

Subtotal

 

1,699,342

 

 

1,388,315

 

 

311,027

 

 

22.4

 

 

Premier savings

 

436,690

 

 

109,681

 

 

327,009

 

 

N.M.

 

 

Other savings

 

1,549,451

 

 

1,717,789

 

 

(168,338

)

 

(9.8

)

 

Subtotal

 

1,986,141

 

 

1,827,470

 

 

158,671

 

 

8.7

 

 

Money market

 

632,293

 

 

738,769

 

 

(106,476

)

 

(14.4

)

 

Subtotal

 

4,317,776

 

 

3,954,554

 

 

363,222

 

 

9.2

 

 

Certificates of deposit

 

1,770,805

 

 

1,458,905

 

 

311,900

 

 

21.4

 

 

Total interest-bearing deposits

 

6,088,581

 

 

5,413,459

 

 

675,122

 

 

12.5

 

 

Power Liabilities

 

$

8,553,873

 

 

$

7,780,688

 

 

$

773,185

 

 

9.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average rate on deposits

 

1.23

 

%

.53

 

%

70

 

bps

N/A

 

 

Number of checking accounts, period-end

 

1,612,497

 

 

1,526,952

 

 

85,545

 

 

5.6

 

 

 

 N.M. Not meaningful.

 

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 $2.2 billion for the third quarter of 2005, a decrease of $379.6 million from the third 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 September 30, 2005, the unrealized pre-tax loss on TCF’s securities available for sale portfolio was $21.3 million.

 

 

 

Average Balances and Yields

 

 

 

 

 

 

 

for the Three Months Ended

 

Change from

 

 

 

September 30,

 

June 30,

 

September 30,

 

June 30,

 

September 30,

 

($ in thousands)

 

2005

 

2005

 

2004

 

2005

 

2004

 

Securities available for sale

 

$

1,393,742

 

$

1,646,986

 

1,545,768

 

$

 (253,244

)

 

$

 (152,026

)

 

Residential real estate loans

 

849,069

 

919,379

 

1,076,619

 

(70,310

)

 

(227,550

)

 

Total

 

$

2,242,811

 

$

2,566,365

 

$

2,622,387

 

$

 (323,554

)

 

$

 (379,576

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

5.36

%

5.37

%

5.46

%

(1

)

bps

(10

)

bps

 

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8

 

Non-interest Expense

 

Non-interest expense totaled $154 million for the 2005 third quarter, up $6.1 million, or 4 percent, from $147.9 million for the 2004 third quarter.  Compensation and employee benefits increased $2.4 million, or 3 percent, from the third quarter of 2004, primarily due to a $1.4 million increase for new branches opened during the past 12 months and a $2.8 million increase in incentives, partially offset by a $3.1 million decrease for mortgage banking.  Occupancy and equipment expenses increased $2.3 million, or 10 percent, from the third quarter of 2004, primarily related to costs associated with new branches opened during the past 12 months.  Deposit losses decreased $741 thousand from the third quarter of 2004, due to lower uncollectable overdraft losses, partially offset by increased fraud losses.  Other expenses increased $3 million, or 9 percent, from the third quarter of 2004, primarily driven by a $1.6 million increase in operating lease depreciation expense in the leasing businesses and a $660 thousand increase in card processing and issuance expenses related to the overall increase in card volumes. 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

September 30,

 

Change

 

($ in thousands)

 

2005

 

2004

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

$

80,402

 

$

78,010

 

$

 2,392

 

 

3.1

 

%

Occupancy and equipment

 

25,931

 

23,673

 

2,258

 

 

9.5

 

 

Advertising and promotions

 

6,578

 

7,377

 

(799

)

 

(10.8

)

 

Deposit account losses

 

6,680

 

7,421

 

(741

)

 

(10.0

)

 

Other

 

34,412

 

31,445

 

2,967

 

 

9.4

 

 

Total non-interest expense

 

$

154,003

 

$

147,926

 

$

 6,077

 

 

4.1

 

 

 

Credit Quality

 

At September 30, 2005, TCF’s allowance for loan and lease losses totaled $59 million, or .59 percent of loans and leases, compared with $79 million, or .87 percent, at September 30, 2004.  The provision for credit losses for the third quarter of 2005 was $3.4 million, compared with $2.6 million for the third quarter of 2004, or an increase of $750 thousand.  Delta declared bankruptcy on September 14, 2005, and TCF charged off its $18.8 million investment in the related leveraged lease.  TCF increased the specific allowance for loan and lease losses assigned to the leveraged lease from $13.9 million at June 30, 2005, to $18.8 million through changes in existing leasing and equipment finance allocated allowances and $1.3 million in additional

 

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9

 

provision.  In the 2005 third quarter, net loan and lease charge-offs were $20.8 million, or .85 percent (annualized) of average loans and leases, up from $3.7 million, or .17 percent (annualized), for the same period of 2004.  Net loan and lease charge-offs excluding the leveraged lease loss were $2 million, or .08 percent (annualized) for the third quarter of 2005.

 

At September 30, 2005, TCF’s over-30-day delinquency rate was .31 percent, down from .39 percent at September 30, 2004.  Non-accrual loans and leases were $21.7 million, or .22 percent of net loans and leases, at September 30, 2005, compared with $46.7 million, or .51 percent, at September 30, 2004.  Total non-performing assets were $38.5 million, or .30 percent of total assets, at September 30, 2005, down from $69.5 million, or .58 percent of total assets, at September 30, 2004.  The decrease in non-accrual loans and non-performing assets was primarily due to the charge-off of the leveraged lease and a decline in commercial real estate owned. 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

($ in thousands)

 

2005

 

2004

 

2005

 

2004

 

Allowance for loan and lease losses:

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$76,406

 

 

$80,025

 

 

$79,878

 

 

$76,619

 

 

Net (charge-offs) recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

(886

)

 

(1,133

)

 

(3,211

)

 

(2,426

)

 

Commercial real estate

 

(34

)

 

(526

)

 

(68

)

 

(478

)

 

Commercial business

 

(140

)

 

(30

)

 

2,330

 

 

(87

)

 

Leasing and equipment finance

 

(19,690

)

 

(1,999

)

 

(21,217

)

 

(3,271

)

 

Residential real estate

 

(34

)

 

(5

)

 

(81

)

 

(46

)

 

Total

 

(20,784

)

 

(3,693

)

 

(22,247

)

 

(6,308

)

 

Provision for credit losses

 

3,394

 

 

2,644

 

 

1,385

 

 

6,874

 

 

Acquired allowance

 

-   

 

 

-   

 

 

-   

 

 

1,791

 

 

Balance at end of period

 

$59,016

 

 

$78,976

 

 

$59,016

 

 

$78,976

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Indicators:

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

.59

 

%

.87

 

%

.59

 

%

.87

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

.85

 

%

.17

 

%

.31

 

%

.10

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized net charge-offs as a percentage of average loans and leases - excluding the
leveraged lease

 

.08

 

%

.17

 

%

.05

 

%

.10

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

.7

 

X

5.3

 

X

2.0

 

X

9.4

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

4.7

 

X

26.0

 

X

13.0

 

X

46.1

 

X

 

-more-

 



 

10

 

Mortgage Banking

 

At September 30, 2005, TCF’s mortgage servicing portfolio totaled $3.6 billion and the mortgage servicing rights asset totaled $37.4 million, or 1.05 percent of the related servicing portfolio, down from $4.7 billion and $51.5 million, respectively, at September 30, 2004. The following table summarizes the components of mortgage banking revenues. 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

($ in thousands)

 

2005

 

2004

 

Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

Servicing income

 

$

3,329

 

 

$

4,215

 

 

$

(886

)

 

(21.0

)%

 

Less mortgage servicing rights:

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

2,516

 

 

2,807

 

 

(291

)

 

(10.4

)

 

Recovery

 

-   

 

 

(1,000

)

 

1,000

 

 

100.0

 

 

Net servicing income

 

813

 

 

2,408

 

 

(1,595

)

 

(66.2

)

 

Gains on sales of loans *

 

-   

 

 

1,442

 

 

(1,442

)

 

(100.0

)

 

Other income

 

169

 

 

282

 

 

(113

)

 

(40.1

)

 

Total mortgage banking revenue

 

$

982

 

 

$

4,132

 

 

$

(3,150

)

 

(76.2

)

 

 

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

 

Income Taxes

 

TCF’s income tax expense was $28.9 million for the third quarter of 2005, or 30.61 percent of income before income tax expense, compared with $31.7 million, or 33.93 percent, for the comparable 2004 period.  The lower effective income tax rate in the third quarter of 2005, compared with the second quarter of 2005, is primarily due to a reduction in the expected 2005 annual effective income tax rate related to an increased effect of permanent differences as a percentage of pre-tax income and lower expected state income taxes.

 

Capital

 

During the third quarter of 2005, TCF repurchased 400,000 shares of its common stock at an average cost of $27.79 per share.  TCF has 6.7 million shares remaining in its stock repurchase program authorized by its Board of Directors.

 

-more-

 



 

11

 

 

 

At September 30,

 

At December 31,

 

($ in thousands, except per-share data)

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

$

967,069

 

 

 

$

958,418

 

 

 

Stockholders’ equity to total assets

 

7.59

%

 

 

7.77

%

 

 

Book value per common share

 

7.23

 

 

 

6.99

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital

 

$

1,008,858

 

10.66

%

$

958,900

 

10.88

%

Total risk-based capital “well-capitalized” requirement

 

$

946,220

 

10.00

%

$

881,481

 

10.00

%

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

 

$

62,638

 

.66

%

$

77,419

 

.88

%

 

Website Information

 

A live webcast of TCF’s conference call to discuss third quarter earnings will be hosted at TCF’s website, www.TCFExpress.com, on October 19, 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 442 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; imposition of vicarious liability on TCF as lessor in its leasing operations; denial of insurance coverage for claims made

 

-more-

 



 

12

 

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, including reductions in card revenues resulting from litigation brought by various merchants or merchant organizations against VISA, 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
September 30,

 

 

 

 

 

 

 

2005

 

2004

 

$ Change

 

% Change

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

 

 $

163,178

 

 

 $

133,295

 

 

 $

29,883

 

 

22.4

 

%

Securities available for sale

 

17,893

 

 

20,414

 

 

(2,521

)

 

(12.3

)

 

Loans held for sale

 

2,759

 

 

2,931

 

 

(172

)

 

(5.9

)

 

Investments

 

463

 

 

773

 

 

(310

)

 

(40.1

)

 

Total interest income

 

184,293

 

 

157,413

 

 

26,880

 

 

17.1

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

26,539

 

 

10,318

 

 

16,221

 

 

157.2

 

 

Borrowings

 

29,684

 

 

22,605

 

 

7,079

 

 

31.3

 

 

Total interest expense

 

56,223

 

 

32,923

 

 

23,300

 

 

70.8

 

 

Net interest income

 

128,070

 

 

124,490

 

 

3,580

 

 

2.9

 

 

Provision for credit losses

 

3,394

 

 

2,644

 

 

750

 

 

28.4

 

 

Net interest income after provision for credit losses

 

124,676

 

 

121,846

 

 

2,830

 

 

2.3

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

69,431

 

 

71,353

 

 

(1,922

)

 

(2.7

)

 

Card revenue

 

21,025

 

 

16,339

 

 

4,686

 

 

28.7

 

 

ATM revenue

 

10,646

 

 

11,474

 

 

(828

)

 

(7.2

)

 

Investments and insurance revenue

 

2,682

 

 

3,057

 

 

(375

)

 

(12.3

)

 

Subtotal

 

103,784

 

 

102,223

 

 

1,561

 

 

1.5

 

 

Leasing and equipment finance

 

10,197

 

 

6,864

 

 

3,333

 

 

48.6

 

 

Mortgage banking

 

982

 

 

4,132

 

 

(3,150

)

 

(76.2

)

 

Other

 

7,743

 

 

2,584

 

 

5,159

 

 

199.7

 

 

Fees and other revenue

 

122,706

 

 

115,803

 

 

6,903

 

 

6.0

 

 

Gains on sales of securities available for sale

 

995

 

 

3,679

 

 

(2,684

)

 

(73.0

)

 

Total non-interest income

 

123,701

 

 

119,482

 

 

4,219

 

 

3.5

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

80,402

 

 

78,010

 

 

2,392

 

 

3.1

 

 

Occupancy and equipment

 

25,931

 

 

23,673

 

 

2,258

 

 

9.5

 

 

Advertising and promotions

 

6,578

 

 

7,377

 

 

(799

)

 

(10.8

)

 

Deposit account losses

 

6,680

 

 

7,421

 

 

(741

)

 

(10.0

)

 

Other

 

34,412

 

 

31,445

 

 

2,967

 

 

9.4

 

 

Total non-interest expense

 

154,003

 

 

147,926

 

 

6,077

 

 

4.1

 

 

Income before income tax expense

 

94,374

 

 

93,402

 

 

972

 

 

1.0

 

 

Income tax expense

 

28,888

 

 

31,690

 

 

(2,802

)

 

(8.8

)

 

Net income

 

 $

65,486

 

 

 $

61,712

 

 

 $

3,774

 

 

6.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 $

.50

 

 

 $

.45

 

 

 $

.05

 

 

11.1

 

 

Diluted

 

 $

.50

 

 

 $

.45

 

 

 $

.05

 

 

11.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

 $

.2125

 

 

 $

.1875

 

 

 $

.025

 

 

13.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

131,702

 

 

136,184

 

 

(4,482

)

 

(3.3

)

 

Diluted

 

132,052

 

 

136,844

 

 

(4,792

)

 

(3.5

)

 

 

- more -



 

14

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

 

2005

 

2004

 

$ Change

 

% Change

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

 $

464,736

 

 

 $

386,709

 

 

 $

78,027

 

 

20.2

 

%

Securities available for sale

 

60,713

 

 

61,159

 

 

(446

)

 

(.7

)

 

Loans held for sale

 

7,579

 

 

9,112

 

 

(1,533

)

 

(16.8

)

 

Investments

 

2,609

 

 

2,441

 

 

168

 

 

6.9

 

 

Total interest income

 

535,637

 

 

459,421

 

 

76,216

 

 

16.6

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

63,123

 

 

30,331

 

 

32,792

 

 

108.1

 

 

Borrowings

 

84,106

 

 

63,688

 

 

20,418

 

 

32.1

 

 

Total interest expense

 

147,229

 

 

94,019

 

 

53,210

 

 

56.6

 

 

Net interest income

 

388,408

 

 

365,402

 

 

23,006

 

 

6.3

 

 

Provision for credit losses

 

1,385

 

 

6,874

 

 

(5,489

)

 

(79.9

)

 

Net interest income after provision for credit losses

 

387,023

 

 

358,528

 

 

28,495

 

 

7.9

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

192,286

 

 

204,128

 

 

(11,842

)

 

(5.8

)

 

Card revenue

 

58,384

 

 

45,854

 

 

12,530

 

 

27.3

 

 

ATM revenue

 

31,173

 

 

32,609

 

 

(1,436

)

 

(4.4

)

 

Investments and insurance revenue

 

8,326

 

 

9,949

 

 

(1,623

)

 

(16.3

)

 

Subtotal

 

290,169

 

 

292,540

 

 

(2,371

)

 

(.8

)

 

Leasing and equipment finance

 

31,982

 

 

29,276

 

 

2,706

 

 

9.2

 

 

Mortgage banking

 

2,340

 

 

13,082

 

 

(10,742

)

 

(82.1

)

 

Other

 

18,392

 

 

6,657

 

 

11,735

 

 

176.3

 

 

Fees and other revenue

 

342,883

 

 

341,555

 

 

1,328

 

 

.4

 

 

Gains on sales of securities available for sale

 

10,671

 

 

16,396

 

 

(5,725

)

 

(34.9

)

 

Total non-interest income

 

353,554

 

 

357,951

 

 

(4,397

)

 

(1.2

)

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

243,826

 

 

236,486

 

 

7,340

 

 

3.1

 

 

Occupancy and equipment

 

76,081

 

 

70,560

 

 

5,521

 

 

7.8

 

 

Advertising and promotions

 

19,603

 

 

19,785

 

 

(182

)

 

(.9

)

 

Deposit account losses

 

14,116

 

 

16,949

 

 

(2,833

)

 

(16.7

)

 

Other

 

98,735

 

 

88,758

 

 

9,977

 

 

11.2

 

 

Total non-interest expense

 

452,361

 

 

432,538

 

 

19,823

 

 

4.6

 

 

Income before income tax expense

 

288,216

 

 

283,941

 

 

4,275

 

 

1.5

 

 

Income tax expense

 

88,624

 

 

96,350

 

 

(7,726

)

 

(8.0

)

 

Net income

 

 $

199,592

 

 

 $

187,591

 

 

 $

12,001

 

 

6.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 $

1.50

 

 

 $

1.37

 

 

 $

.13

 

 

9.5

 

 

Diluted

 

 $

1.50

 

 

 $

1.36

 

 

 $

.14

 

 

10.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

 $

.6375

 

 

 $

.5625

 

 

 $

.075

 

 

13.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

132,692

 

 

137,223

 

 

(4,531

)

 

(3.3

)

 

Diluted

 

133,054

 

 

137,842

 

 

(4,788

)

 

(3.5

)

 

 

- 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

 

 

 

September 30,

 

December 31,

 

September 30,

 

December 31,

 

September 30,

 

 

 

2005

 

2004

 

2004

 

2004

 

2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 $

361,595

 

 

 $

359,798

 

 

 $

354,651

 

 

.5

 

%

2.0

 

%

Investments

 

79,583

 

 

103,226

 

 

92,177

 

 

(22.9

)

 

(13.7

)

 

Securities available for sale

 

1,318,787

 

 

1,619,941

 

 

1,330,708

 

 

(18.6

)

 

(.9

)

 

Loans held for sale

 

230,571

 

 

154,279

 

 

330,647

 

 

49.5

 

 

(30.3

)

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

5,035,661

 

 

4,418,588

 

 

4,222,025

 

 

14.0

 

 

19.3

 

 

Commercial real estate

 

2,241,069

 

 

2,154,396

 

 

2,031,031

 

 

4.0

 

 

10.3

 

 

Commercial business

 

438,028

 

 

424,135

 

 

444,632

 

 

3.3

 

 

(1.5

)

 

Leasing and equipment finance

 

1,424,317

 

 

1,375,372

 

 

1,328,116

 

 

3.6

 

 

7.2

 

 

Subtotal

 

9,139,075

 

 

8,372,491

 

 

8,025,804

 

 

9.2

 

 

13.9

 

 

Residential real estate

 

815,893

 

 

1,014,166

 

 

1,047,079

 

 

(19.6

)

 

(22.1

)

 

Total loans and leases

 

9,954,968

 

 

9,386,657

 

 

9,072,883

 

 

6.1

 

 

9.7

 

 

Allowance for loan and lease losses

 

(59,016

)

 

(79,878

)

 

(78,976

)

 

(26.1

)

 

(25.3

)

 

Net loans and leases

 

9,895,952

 

 

9,306,779

 

 

8,993,907

 

 

6.3

 

 

10.0

 

 

Premises and equipment

 

352,154

 

 

326,667

 

 

316,833

 

 

7.8

 

 

11.1

 

 

Goodwill

 

152,599

 

 

152,599

 

 

152,599

 

 

-   

 

 

-   

 

 

Mortgage servicing rights

 

37,420

 

 

46,442

 

 

51,474

 

 

(19.4

)

 

(27.3

)

 

Other assets

 

308,428