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Section 1: 8-K (CURRENT REPORT OF MATERIAL EVENTS OR CORPORATE CHANGES)

 

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 19, 2006

 


 

 

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

incorporation or organization)

 

 

 

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 April 19, 2006, announcing its results of operations for the quarter ended March 31, 2006, 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 19, 2006

 

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/ Lynn A. Nagorske

 

Lynn A. Nagorske,
Chief Executive Officer and Director

 

 

 

 

 

/s/ Neil W. Brown

 

Neil W. Brown, 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 19, 2006

 

2


 

(Back To Top)

Section 2: EX-99.1 (EX-99)

 

 

 

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 First Quarter Earnings and EPS ($.45)

 

 

FIRST QUARTER HIGHLIGHTS

                  Diluted earnings per share of 45 cents

                  Net income of $58.2 million

                  Return on average assets of 1.71 percent

                  Return on average common equity of 23.82 percent

                  Average Power AssetsÒ increased $1.1 billion, or 13.1 percent

                  Average Power LiabilitiesÒ increased $1.1 billion, or 13.1 percent

                  Increased checking accounts by 25,922, or 6.5 percent (annualized), to 1,629,095

 

EARNINGS SUMMARY

($ in thousands, except per-share data)

 

 

Three Months

 

 

 

Ended March 31,

 

 

 

2006

 

2005

 

Change

 

Net income

 

$

58,222

 

$

63,465

 

(8.3)

%

Diluted earnings per common share

 

.45

 

.47

 

(4.3)

 

 

 

 

 

 

 

 

 

Financial Ratios (1)

 

 

 

 

 

 

 

 

Return on average assets

 

1.71

%

2.03

%

 

 

Return on average common equity

 

23.82

 

27.18

 

 

 

Net interest margin

 

4.25

 

4.56

 

 

 

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

 

.10

 

(.02)

 

 

 

 

(1) Annualized.

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2

WAYZATA, MN, April 19, 2006 — TCF Financial Corporation (“TCF”) (NYSE: TCB) today reported diluted earnings per share of 45 cents for the first quarter of 2006, compared with 47 cents for the same 2005 period.  Net income for the first quarter of 2006 was $58.2 million, compared with $63.5 million for the same 2005 period.  The 2005 first quarter included $10.9 million in gains on asset sales and a $3.3 million commercial business loan recovery for a combined after-tax impact of seven cents per diluted share.  The first quarter of 2006 includes $4.5 million in net gains on sales of assets, including a $1.6 million net gain on the sale of mortgage servicing rights for a combined after-tax impact of two cents per diluted share.

 

For the first quarter of 2006, return on average assets (“ROA”) was 1.71 percent and return on average common equity (“ROE”) was 23.82 percent, compared with 2.03 percent and 27.18 percent, respectively, for the first quarter of 2005.

 

Chief Executive Officer’s Statement

 

“We achieved strong growth in the first quarter in Power Assets and Power Liabilities and we also saw improvement in net checking account growth,” said Lynn A. Nagorske, Chief Executive Officer.  “Although our business fundamentals continued to show strong performance, the 2006 first quarter included lower gains on asset sales and the 2005 first quarter included a commercial business loan recovery which did not recur,” said Nagorske.

 

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3

 

Total Revenue

 

 

 

Three Months

 

 

 

 

 

($ in thousands)

 

Ended March 31,

 

Change

 

 

 

2006

 

2005

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

131,168

 

$

129,053

 

$

2,115

 

1.6

%

Fees and other revenue:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

61,555

 

57,938

 

3,617

 

6.2

 

Card revenue

 

21,262

 

17,642

 

3,620

 

20.5

 

ATM revenue

 

9,099

 

9,732

 

(633)

 

(6.5)

 

Investments and insurance

 

2,488

 

2,853

 

(365)

 

(12.8)

 

Total banking fees and other revenue

 

94,404

 

88,165

 

6,239

 

7.1

 

Leasing and equipment finance

 

11,915

 

10,693

 

1,222

 

11.4

 

Other

 

11,180

 

7,957

 

3,223

 

40.5

 

Total fees and other revenue

 

117,499

 

106,815

 

10,684

 

10.0

 

Gains on sales of securities

 

-   

 

5,239

 

(5,239)

 

(100.0)

 

Total non-interest income

 

117,499

 

112,054

 

5,445

 

4.9

 

Total revenue

 

$

248,667

 

$

241,107

 

$

7,560

 

3.1

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

4.25%

 

4.56%

 

 

 

 

 

Fees and other revenue as a % of:

 

 

 

 

 

 

 

 

 

Total revenue

 

47.25

 

44.30

 

 

 

 

 

Average assets (1)

 

3.45

 

3.42

 

 

 

 

 

 


(1) Annualized.

 

Net Interest Income

 

TCF’s net interest income in the first quarter of 2006 was $131.2 million, up $2.1 million, or 1.6 percent, from the first quarter of 2005 and up $1.9 million, or 1.5 percent, from the fourth quarter of 2005.  Net interest margin in the first quarter of 2006 was 4.25 percent, compared with 4.56 percent for the first quarter of 2005 and 4.31 percent for the fourth quarter of 2005.  The increase in net interest income from the first quarter of 2005 was primarily driven by increases in average Power Assets and Power Liabilities, partially offset by higher funding costs and the effects of a flattening yield curve.

 

The increase in net interest income from the fourth quarter of 2005 was primarily due to a $513 million, or 4.3 percent, increase in average interest-earning assets and the net benefit of the increases in short-term interest rates, partially offset by two fewer days in the first quarter of 2006 and the six basis point reduction in net interest margin.  This decrease in net interest margin was primarily due to the continued customer preference for lower-yielding fixed-rate consumer loans, the impact of the stock repurchase program and the impact of the mortgage-backed securities purchased in the fourth quarter of 2005 and the

 

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4

first quarter of 2006, partially offset by the net favorable impact of the repricing of variable-rate assets and liabilities.

 

Non-interest Income

 

Total non-interest income was $117.5 million for the first quarter of 2006, up $5.4 million, or 4.9 percent, from the same period of 2005.

 

Banking fees and service charges increased 6.2 percent from the first quarter of 2005.  Card revenues totaled $21.3 million for the first quarter of 2006, up 20.5 percent over the same period in 2005.  The increase in card revenues was primarily attributable to an increase in active accounts and customer transaction volumes.

 

Leasing and equipment finance revenues were $11.9 million for the first quarter of 2006, up $1.2 million, or 11.4 percent, from the 2005 first quarter, primarily due to higher operating lease revenues.

 

Other revenue increased $3.2 million to $11.2 million from the first quarter of 2005.  During the first quarter of 2006, TCF sold its entire remaining third-party mortgage servicing rights for a gain of $2.3 million ($1.6 million net of related expenses).  The increase in other revenue also includes a $2.3 million increase in gains on the sales of education loans, partially offset by a $2.8 million decrease in gains on sales of branch and office buildings.

 

During the 2005 first quarter, TCF sold $466 million of mortgage-backed securities and realized gains of $5.2 million.  No such sales or gains occurred in the first quarter of 2006.

 

New Branch Expansion

 

TCF opened one new supermarket branch during the first quarter of 2006 and closed two traditional branches.  TCF has now opened 130 new branches since January 2001, representing 29 percent of TCF’s 452 total branches.  TCF plans to open a total of 25 new branches in 2006, consisting of 16 traditional branches, seven supermarket branches and two campus branches.

 

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5

 

 

March 31,

 

December 31,

 

December 31,

 

(# of branches)

 

2006

 

2005

 

2000

 

 

 

 

 

 

 

 

 

Total Branches

 

 

 

 

 

 

 

Minnesota

 

105

 

105

 

84

 

Illinois

 

202

 

202

 

167

 

Wisconsin

 

35

 

35

 

32

 

Michigan

 

62

 

63

 

56

 

Colorado

 

42

 

42

 

12

 

Indiana

 

6

 

6

 

1

 

 

 

452

 

453

 

352

 

 

 

 

 

 

 

 

 

New Branches*

 

 

 

 

 

 

 

Traditional

 

68

 

68

 

 

 

Supermarket

 

59

 

58

 

 

 

Campus

 

3

 

3

 

 

 

Total

 

130

 

129

 

 

 

% of Total Branches

 

29%

 

28%

 

 

 

 


* New branches opened since January 1, 2001.

 

 

Additional information regarding the results of TCF’s new branches opened since January 1, 2001 is summarized as follows:

 

 

 

At or For the Three Months Ended

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

($ in thousands)

 

2006

 

2005

 

Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

Number of checking accounts

 

232,864

 

171,694

 

61,170

 

35.6

%

Average deposits:

 

 

 

 

 

 

 

 

 

Checking

 

$

337,414

 

$

261,110

 

$

76,304

 

29.2

 

Savings

 

285,871

 

151,824

 

134,047

 

88.3

 

Money market

 

31,221

 

15,504

 

15,717

 

101.4

 

Subtotal

 

654,506

 

428,438

 

226,068

 

52.8

 

Certificates of deposit

 

339,172

 

107,625

 

231,547

 

N.M.

 

Total deposits

 

$

993,678

 

$

536,063

 

$

457,615

 

85.4

 

 

 

 

 

 

 

 

 

 

 

Total fees and other revenue

 

 

 

 

 

 

 

 

 

(quarter ended)

 

$

15,378

 

$

10,902

 

$

4,476

 

41.1

 

 


N.M. Not Meaningful.

 

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6

Power Assets®

 

Average Power Assets increased $1.1 billion, or 13.1 percent, in the first quarter of 2006.  TCF’s leasing businesses reported $250.6 million of originations and continued to grow the backlog of pending transactions, now at $294.1 million.

 

 

 

Average Balances for the

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Change

 

($ in thousands)

 

2006

 

2005

 

$

 

%

 

Loans and leases*:

 

 

 

 

 

 

 

 

 

Consumer home equity and other:

 

 

 

 

 

 

 

 

 

Home equity:

 

 

 

 

 

 

 

 

 

First mortgage lien

 

$

3,409,051

 

$

2,951,677

 

$

457,374

 

15.5

%

Junior lien

 

1,806,666

 

1,505,216

 

301,450

 

20.0

 

Total consumer home equity

 

5,215,717

 

4,456,893

 

758,824

 

17.0

 

Other

 

34,833

 

36,046

 

(1,213)

 

(3.4)

 

Total consumer home equity and other

 

5,250,550

 

4,492,939

 

757,611

 

16.9

 

Commercial real estate

 

2,329,579

 

2,168,336

 

161,243

 

7.4

 

Commercial business

 

449,364

 

407,523

 

41,841

 

10.3

 

Leasing and equipment finance

 

1,533,034

 

1,389,541

 

143,493

 

10.3

 

Power Assets

 

$

9,562,527

 

$

8,458,339

 

$

1,104,188

 

13.1

 

 


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

 

Power Liabilities®

 

Average Power Liabilities totaled $9.2 billion for the first quarter of 2006, with an average interest rate of 1.76 percent, as compared with .80 percent in the same 2005 period.  Average Power Liabilities increased $1.1 billion, or 13.1 percent, from the first quarter of 2005, primarily driven by increases in Premier Checking, Premier Savings and certificates of deposit, partially offset by declines in other lower-cost interest-bearing checking and savings.  The total number of checking accounts was 1,629,095 at March 31, 2006, up 70,188 accounts, or 4.5 percent, from March 31, 2005 and up 25,922 accounts, or 6.5 percent (annualized) from December 31, 2005.

 

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7

 

 

 

Average Balances for the

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

 

($ in thousands)

 

2006

 

2005

 

Change

 

% Change

 

Non-interest bearing deposits:

 

 

 

 

 

 

 

 

 

Retail

 

$

1,554,008

 

$

1,571,741

 

$

(17,733)

 

(1.1)

%

Small business

 

590,240

 

547,060

 

43,180

 

7.9

 

Commercial and custodial

 

282,408

 

313,634

 

(31,226)

 

(10.0)

 

Total non-interest bearing deposits

 

2,426,656

 

2,432,435

 

(5,779)

 

(0.2)

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

Premier checking

 

938,055

 

459,385

 

478,670

 

104.2

 

Other checking

 

909,960

 

1,089,541

 

(179,581)

 

(16.5)

 

Subtotal

 

1,848,015

 

1,548,926

 

299,089

 

19.3

 

Premier savings

 

780,046

 

281,529

 

498,517

 

177.1

 

Other savings

 

1,440,818

 

1,606,560

 

(165,742)

 

(10.3)

 

Subtotal

 

2,220,864

 

1,888,089

 

332,775

 

17.6

 

Money market

 

669,602

 

647,197

 

22,405

 

3.5

 

Subtotal

 

4,738,481

 

4,084,212

 

654,269

 

16.0

 

Certificates of deposit

 

2,005,639

 

1,592,682

 

412,957

 

25.9

 

Total interest-bearing deposits

 

6,744,120

 

5,676,894

 

1,067,226

 

18.8

 

Power Liabilities

 

$

9,170,776

 

$

8,109,329

 

$

1,061,447

 

13.1

 

 

 

 

 

 

 

 

 

 

 

Number of checking accounts, period-end

 

1,629,095

 

1,558,907

 

70,188

 

4.5

 

 

Securities Available for Sale and Residential Real Estate Loans

 

Average balances of securities available for sale (consisting primarily of mortgage-backed securities) and residential real estate loans totaled $2.5 billion for the first quarter of 2006, a decrease of $114.8 million from the first quarter of 2005.  TCF purchased $245.5 million of mortgage-backed securities in the first quarter of 2006, compared with $703.6 million in the first quarter of 2005.  At March 31, 2006, the unrealized pre-tax loss on TCF’s securities available for sale portfolio was $58.9 million.

 

 

 

Average Balances for the

 

 

 

 

 

Three Months Ended March 31,

 

Change

 

($ in thousands)

 

2006

 

2005

 

$

 

%

 

Securities available for sale

 

$

1,781,586

 

$

1,663,412

 

$

118,174

 

7.1

%

Residential real estate loans

 

751,782

 

984,764

 

(232,982)

 

(23.7)

 

Total

 

$

2,533,368

 

$

2,648,176

 

$

(114,808)

 

(4.3)

 

 

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8

Non-interest Expense

 

Non-interest expense totaled $159.9 million for the first quarter of 2006, up $11.9 million, or 8 percent, from $148 million for the first quarter of 2005, primarily due to a $5 million increase related to branch expansion, a $1.7 million increase in operating lease depreciation and $700 thousand in expenses related to the sale of mortgage servicing rights.

 

Compensation and employee benefits increased $4.7 million, or 5.8 percent, from the first quarter of 2005, primarily driven by a $3.2 million increase in the banking segment of which $2.2 million was attributed to branch expansion.

 

Occupancy and equipment expenses increased $2.7 million, or 10.5 percent, from the first quarter of 2005, primarily due to $1.4 million associated with branch expansion.

 

Operating lease depreciation increased $1.7 million from the first quarter of 2005, primarily driven by a $41.4 million increase in average operating lease balances in TCF’s leasing and equipment finance subsidiaries.

 

Other expenses increased $2.9 million, or 9.8 percent, from the first quarter of 2005, primarily driven by a $976 thousand increase related to branch expansion, an $803 thousand increase in card processing and issuance expenses related to the increase in card transactions and $700 thousand in one-time expenses related to the sale of TCF’s mortgage servicing portfolio. 

 

 

 

Three Months Ended

 

 

 

 

 

March 31,

 

Change

 

($ in thousands)

 

2006

 

2005

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

$

86,168

 

$

81,451

 

$

4,717

 

5.8

%

Occupancy and equipment

 

28,051

 

25,379

 

2,672

 

10.5

 

Advertising and promotions

 

5,716

 

6,247

 

(531)

 

(8.5)

 

Deposit account losses

 

4,013

 

3,567

 

446

 

12.5

 

Operating lease depreciation

 

3,163

 

1,492

 

1,671

 

112.0

 

Other

 

32,813

 

29,881

 

2,932

 

9.8

 

Total non-interest expense

 

$

159,924

 

$

148,017

 

$

11,907

 

8.0

 

 

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9

Credit Quality

 

At March 31, 2006, TCF’s allowance for loan and lease losses totaled $59.4 million, or .56 percent of loans and leases, compared with $60.4 million, or .59 percent, at December 31, 2005.  The provision for credit losses for 2006 was $1.5 million, up $4.9­ million from the first quarter of 2005, primarily due to a $3.3 million commercial business loan recovery recorded in the first quarter of 2005.  Net loan and lease charge-offs in the first quarter of 2006 were $2.5 million, or .10 percent (annualized) of average loans and leases, compared with net loan and lease recoveries of $441 thousand, or .02 percent (annualized) for the same 2005 period.

 

At March 31, 2006, TCF’s over-30-day delinquency rate was .35 percent, down from .43 percent at December 31, 2005.  Non-accrual loans and leases were $30.8 million, or .29 percent of net loans and leases, at March 31, 2006, compared with $29.6 million, or .29 percent, at December 31, 2005.  Total non-performing assets were $51.5 million, or .37 percent of total assets, at March 31, 2006, up from $47.4 million, or .35 percent, at December 31, 2005.  The increase in non-accrual loans and leases from December 31, 2005 was primarily due to commercial real estate loans, partially offset by a decrease in consumer home equity loans.

 

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10

 

 

 

Three Months Ended

 

 

 

March 31,

 

($ in thousands)

 

2006

 

2005

 

Allowance for loan and lease losses:

 

 

 

 

 

Balance at beginning of period

 

$

60,396

 

$

79,878

 

Net (charge-offs) recoveries:

 

 

 

 

 

Consumer home equity and other

 

(1,439)

 

(1,308)

 

Commercial real estate

 

(69)

 

(37)

 

Commercial business

 

(154)

 

2,436

 

Leasing and equipment finance

 

(831)

 

(614)

 

Residential real estate

 

(32)

 

(36)

 

Total

 

(2,525)

 

441

 

Provision for credit losses

 

1,507

 

(3,436)

 

Balance at end of period

 

$

59,378

 

$

76,883

 

 

 

 

 

 

 

Key Indicators:

 

 

 

 

 

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

 

.56

%

.80

%

 

 

 

 

 

 

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

 

.10

%

(.02)

%

 

 

 

 

 

 

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

 

5.9

X

N.M.

 

 

 

 

 

 

 

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

 

35.2

X

N.M.

 


N.M. Not Meaningful.

 

Income Taxes

 

TCF’s income tax expense was $29 million for the first quarter of 2006, or 33.26 percent of income before income tax expense, down from $33.1 million, or 34.25 percent, for the comparable 2005 period.  The lower effective income tax rate in the first quarter of 2006 compared with the first quarter of 2005 is primarily due to lower estimated state and local income taxes.

 

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11

Capital

 

During the first quarter of 2006, TCF Bank issued $75 million of subordinated notes due in 2016.  The notes bear interest at a fixed rate of 5.50 percent until maturity.  The notes qualify as Tier 2 or supplementary capital for regulatory purposes, subject to certain limitations.  Also, during the first quarter of 2006, TCF repurchased 2.4 million shares of its common stock at an average cost of $25.27 per share.  TCF has 4.3 million shares remaining in its stock repurchase program authorized by its Board of Directors.

 

 

 

At March 31,

 

At March 31,

 

($ in thousands, except per-share data)

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

$

968,300

 

 

 

$

926,343

 

 

 

Stockholders’ equity to total assets

 

7.00

%

 

 

7.28

%

 

 

Book value per common share

 

$

7.35

 

 

 

$

6.85

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital

 

$

1,110,762

 

10.91

%

$

987,455

 

10.90

%

Total risk-based capital “well-capitalized” requirement

 

1,017,778

 

10.00

 

905,771

 

10.00

 

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

 

92,984

 

.91

 

81,684

 

.90

 

 

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 19, 2006 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 $13.8 billion in assets.  TCF has 452 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.


 

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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 and 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; an inability 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; monetary, fiscal or tax policies of the federal or state governments; adverse findings in tax audits or regulatory examinations; 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 by TCF; technological, computer-related or operational difficulties or loss or theft of information; adverse changes in securities markets; 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 on Form 10-K, and Forms 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,

 

 

 

 

 

 

 

2006

 

2005

 

$ Change

 

% Change

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

176,983

 

$

146,544

 

$

30,439

 

20.8

%

Securities available for sale

 

23,699

 

21,495

 

2,204

 

10.3

 

Education loans held for sale

 

4,347

 

2,254

 

2,093

 

92.9

 

Investments

 

677

 

1,052

 

(375

)

(35.6

)

Total interest income

 

205,706

 

171,345

 

34,361

 

20.1

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

39,847

 

15,938

 

23,909

 

150.0

 

Borrowings

 

34,691

 

26,354

 

8,337

 

31.6

 

Total interest expense

 

74,538

 

42,292

 

32,246

 

76.2

 

Net interest income

 

131,168

 

129,053

 

2,115

 

1.6

 

Provision for credit losses

 

1,507

 

(3,436

)

4,943

 

N.M.

 

Net interest income after provision for credit losses

 

129,661

 

132,489

 

(2,828

)

(2.1

)

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

61,555

 

57,938

 

3,617

 

6.2

 

Card revenue

 

21,262

 

17,642

 

3,620

 

20.5

 

ATM revenue

 

9,099

 

9,732

 

(633

)

(6.5

)

Investments and insurance revenue

 

2,488

 

2,853

 

(365

)

(12.8

)

Subtotal

 

94,404

 

88,165

 

6,239

 

7.1

 

Leasing and equipment finance

 

11,915

 

10,693

 

1,222

 

11.4

 

Other

 

11,180

 

7,957

 

3,223

 

40.5

 

Fees and other revenue

 

117,499

 

106,815

 

10,684

 

10.0

 

Gains on sales of securities available for sale

 

 

5,239

 

(5,239

)

(100.0

)

Total non-interest income

 

117,499

 

112,054

 

5,445

 

4.9

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

86,168

 

81,451

 

4,717

 

5.8

 

Occupancy and equipment

 

28,051

 

25,379

 

2,672

 

10.5

 

Advertising and promotions

 

5,716

 

6,247

 

(531

)

(8.5

)

Deposit account losses

 

4,013

 

3,567

 

446

 

12.5

 

Other

 

35,976

 

31,373

 

4,603

 

14.7

 

Total non-interest expense

 

159,924

 

148,017

 

11,907

 

8.0

 

Income before income tax expense

 

87,236

 

96,526

 

(9,290

)

(9.6

)

Income tax expense

 

29,014

 

33,061

 

(4,047

)

(12.2

)

Net income

 

$

58,222

 

$

63,465

 

$

(5,243

)

(8.3

)

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

.45

 

$

.47

 

$

(.02

)

(4.3

)

Diluted

 

$

.45

 

$

.47

 

$

(.02

)

(4.3

)

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

.23

 

$

.2125

 

$

.0175

 

8.2

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

130,282

 

133,990

 

(3,708

)

(2.8

)

Diluted

 

130,447

 

134,392

 

(3,945

)

(2.9

)

 

N.M. Not Meaningful.

 

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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,

 

 

 

2006

 

2005

 

2005

 

2005

 

2005

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

330,891

 

$

374,701

 

$

323,996

 

(11.7

)%

2.1

%

Investments

 

72,082

 

79,943

 

105,404

 

(9.8

)

(31.6

)

Securities available for sale

 

1,816,135

 

1,648,615

 

1,785,520

 

10.2

 

1.7

 

Education loans held for sale

 

234,324

 

229,820

 

215,991

 

2.0

 

8.5

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

5,369,300

 

5,187,584

 

4,601,418

 

3.5

 

16.7

 

Commercial real estate

 

2,394,722

 

2,297,500

 

2,193,513

 

4.2

 

9.2

 

Commercial business

 

470,117

 

435,233

 

409,219

 

8.0

 

14.9

 

Leasing and equipment finance

 

1,575,483

 

1,503,794

 

1,397,959

 

4.8

 

12.7

 

Subtotal

 

9,809,622

 

9,424,111

 

8,602,109

 

4.1

 

14.0

 

Residential real estate

 

732,912

 

770,441

 

950,469

 

(4.9

)

(22.9

)

Total loans and leases

 

10,542,534

 

10,194,552

 

9,552,578

 

3.4

 

10.4

 

Allowance for loan and lease losses

 

(59,378

)

(60,396

)

(76,883

)

1.7

 

22.8

 

Net loans and leases

 

10,483,156

 

10,134,156

 

9,475,695

 

3.4

 

10.6

 

Premises and equipment

 

375,679

 

365,146

 

328,081

 

2.9

 

14.5

 

Goodwill

 

152,599

 

152,599

 

152,599

 

 

 

Other assets

 

367,457

 

380,380

 

345,922

 

(3.4

)

6.2

 

 

 

$

13,832,323

 

$

13,365,360

 

$

12,733,208

 

3.5

 

8.6

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

4,448,688

 

$

4,279,853

 

$

4,020,601

 

3.9

 

10.6

 

Savings

 

2,360,246

 

2,238,204

 

2,063,415

 

5.5

 

14.4

 

Money market

 

637,212

 

677,017

 

625,511

 

(5.9

)

1.9

 

Subtotal

 

7,446,146

 

7,195,074

 

6,709,527

 

3.5

 

11.0

 

Certificates of deposit

 

2,128,723

 

1,915,620

 

1,685,486

 

11.1

 

26.3

 

Total deposits

 

9,574,869

 

9,110,694

 

8,395,013

 

5.1

 

14.1

 

Short-term borrowings

 

346,528

 

472,126

 

878,390

 

(26.6

)

(60.5

)

Long-term borrowings

 

2,688,131

 

2,511,010

 

2,098,878

 

7.1

 

28.1

 

Total borrowings

 

3,034,659

 

2,983,136

 

2,977,268

 

1.7

 

1.9

 

Accrued expenses and other liabilities

 

254,495

 

273,058

 

434,584

 

(6.8

)

(41.4

)

Total liabilities

 

12,864,023

 

12,366,888

 

11,806,865

 

4.0

 

9.0

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $.01 per share, 280,000,000 shares authorized; 184,220,375; 184,386,193 and 184,477,297 shares issued

 

1,842

 

1,844

 

1,845

 

(.1

)

(.2

)

Additional paid-in capital

 

468,968

 

497,270

 

497,736

 

(5.7

)

(5.8

)

Retained earnings, subject to certain restrictions

 

1,564,207

 

1,536,611

 

1,420,258

 

1.8

 

10.1

 

Accumulated other comprehensive loss

 

(38,121

)

(21,215

)

(14,756

)

(79.7

)

(158.3

)

Treasury stock at cost, 52,397,230; 50,609,970 and 49,208,234 shares, and other

 

(1,028,596

)

(1,016,038

)

(978,740

)

(1.2

)

(5.1

)

Total stockholders’ equity

 

968,300

 

998,472

 

926,343

 

(3.0

)

4.5

 

 

 

$

13,832,323

 

$

13,365,360

 

$

12,733,208

 

3.5

 

8.6

 

 

-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, 2006

 

At or For the Year Ended December 31, 2005

 

 

 

 

 

Allowance

 

 

 

 

 

 

 

Allowance

 

Net Charge-offs

 

 

 

 

 

as a % of

 

Net Charge-offs (1)

 

 

 

as a % of

 

(Recoveries)

 

 

 

Allowance

 

Portfolio

 

$

 

%

 

Allowance

 

Portfolio

 

$

 

%

 

Consumer home equity and other

 

$

16,828

 

.31

%

$

1,439

 

.11

%

$

16,643

 

.32

%

$

5,210

 

.11

%

Commercial real estate

 

22,146

 

.92

 

69

 

.01

 

21,222

 

.92

 

(8

)

 

Commercial business

 

6,587

 

1.40

 

154

 

.14

 

6,602

 

1.52

 

(2,173

)

(.51

)

Leasing and equipment finance

 

13,264

 

.84

 

831

 

.22

 

15,313

 

1.02

 

21,384

 

1.50

 

Residential real estate

 

553

 

.08

 

32

 

.02

 

616

 

.08

 

91

 

.01

 

Total

 

$

59,378

 

.56

 

$

2,525

 

.10

 

$

60,396

 

.59

 

$

24,504

 

.25

 

 

Non-performing assets:

 

 

At

 

At

 

At

 

Change from

 

 

 

March 31,

 

December 31,

 

March 31,

 

December 31,

 

March 31,

 

 

 

2006

 

2005

 

2005

 

2005

 

2005

 

Non-accrual loans and leases:

 

 

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

$

12,631

 

$

18,410

 

$

10,772

 

$

(5,779

)

$

1,859

 

Commercial real estate

 

7,010

 

188

 

927

 

6,822

 

6,083

 

Commercial business

 

2,105

 

2,207

 

2,940

 

(102

)

(835

)

Leasing and equipment finance

 

7,798

 

6,434

 

27,706

 

1,364

 

(19,908

)

Residential real estate

 

1,221

 

2,409

 

2,586

 

(1,188

)

(1,365

)

Total non-accrual loans and leases

 

30,765

 

29,648

 

44,931

 

1,117

 

(14,166

)

Other real estate owned:

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

17,779

 

14,877

 

12,890

 

2,902

 

4,889

 

Commercial real estate

 

2,957

 

2,834

 

5,568

 

123

 

(2,611

)

Total other real estate owned

 

20,736

 

17,711

 

18,458

 

3,025

 

2,278

 

Total non-performing assets

 

$

51,501

 

$

47,359

 

$

63,389

 

$

4,142

 

$

(11,888

)

 

Over 30-day delinquency data (2):

 

 

At March 31,

 

At December 31,

 

At March 31,

 

 

 

2006

 

2005

 

2005

 

 

 

Principal

 

% of

 

Principal

 

% of

 

Principal

 

% of

 

 

 

Balances

 

Portfolio

 

Balances

 

Portfolio

 

Balances

 

Portfolio

 

Consumer home equity and other

 

$

20,087

 

.37

%

$

18,556

 

.36

%

$

15,045

 

.33

%

Commercial real estate

 

3,011

 

.13

 

10,038

 

.44

 

349

 

.02

 

Commercial business

 

124

 

.03

 

819

 

.19

 

1,072

 

.26

 

Leasing and equipment finance

 

6,059

 

.39

 

6,182

 

.41

 

6,962

 

.51

 

Residential real estate

 

7,669

 

1.05

 

8,009

 

1.04

 

9,114

 

.96

 

Total

 

$

36,950

 

.35

 

$

43,604

 

.43

 

$

32,542

 

.34

 

 

Potential Problem Loans and Leases (3):

 

 

At

 

At

 

At

 

Change from

 

 

 

 

March 31,

 

December 31,

 

March 31,

 

December 31,

 

March 31,

 

 

 

 

2006

 

2005

 

2005

 

2005

 

2005

 

 

Commercial real estate

 

$

48,360

 

$

35,341

 

$

37,114

 

$

13,019

 

$

11,246

 

 

Commercial business

 

10,026

 

11,793

 

18,307

 

(1,767

)

(8,281

)

 

Leasing and equipment finance

 

8,348

 

7,648

 

12,200

 

700

 

(3,852

)

 

 

 

$

66,734

 

$

54,782

 

$

67,621

 

$

11,952

 

$

(887

)

 

(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,

 

 

 

2006

 

2005

 

 

 

Average

 

 

 

Yields and

 

Average

 

 

 

Yields and

 

 

 

Balance

 

Interest

 

Rates (1)

 

Balance

 

Interest

 

Rates (1)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

$

70,655

 

$

677

 

3.86

%

$

106,006

 

$

1,052

 

4.01

%

Securities available for sale

 

1,781,586

 

23,699

 

5.32

 

1,663,412

 

21,495

 

5.17

 

Education loans held for sale

 

281,185

 

4,347

 

6.27

 

207,430

 

2,254

 

4.41

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer home equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed- and adjustable-rate

 

3,350,168

 

55,522

 

6.72

 

1,755,164

 

29,144

 

6.73

 

Variable-rate

 

1,865,549

 

37,724

 

8.20

 

2,701,729

 

42,725

 

6.41

 

Consumer - other

 

34,833

 

793

 

9.23

 

36,046

 

785

 

8.83

 

Total consumer home equity and other

 

5,250,550

 

94,039

 

7.26

 

4,492,939

 

72,654

 

6.56

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed- and adjustable-rate

 

1,569,078

 

23,926

 

6.18

 

1,327,160

 

20,067

 

6.13

 

Variable-rate

 

760,501

 

13,468

 

7.18

 

841,176

 

10,869

 

5.24

 

Total commercial real estate

 

2,329,579

 

37,394

 

6.51

 

2,168,336

 

30,936

 

5.79

 

Commercial business:

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed- and adjustable-rate

 

115,745

 

1,749

 

6.13

 

74,968

 

1,044

 

5.65

 

Variable-rate

 

333,619

 

5,635

 

6.85

 

332,555

 

4,117

 

5.02

 

Total commercial business

 

449,364

 

7,384

 

6.66

 

407,523

 

5,161

 

5.14

 

Leasing and equipment finance

 

1,533,034

 

27,286

 

7.12

 

1,389,541

 

23,791

 

6.85

 

Subtotal

 

9,562,527

 

166,103

 

7.03

 

8,458,339

 

132,542

 

6.34

 

Residential real estate

 

751,782

 

10,880

 

5.80

 

984,764

 

14,002

 

5.70

 

Total loans and leases

 

10,314,309

 

176,983

 

6.94

 

9,443,103

 

146,544

 

6.27

 

Total interest-earning assets

 

12,447,735

 

205,706

 

6.68

 

11,419,951

 

171,345

 

6.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other assets

 

1,162,959

 

 

 

 

 

1,074,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

13,610,694

 

 

 

 

 

$

12,493,976

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$

1,554,008

 

 

 

 

 

$

1,571,741

 

 

 

 

 

Small business

 

590,240

 

 

 

 

 

547,060

 

 

 

 

 

Commercial and custodial

 

282,408

 

 

 

 

 

313,634

 

 

 

 

 

Total non-interest bearing deposits

 

2,426,656

 

 

 

 

 

2,432,435

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Premier checking

 

938,055

 

7,031

 

3.04

 

459,385

 

2,105

 

1.86

 

Other checking

 

909,960

 

556

 

.25

 

1,089,541

 

363

 

.14

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