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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): October 18, 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 Identification No.)

incorporation or organization)

 

 

 

 

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

(Address of principal executive offices)

 

(612) 661-6500

(Registrant’s telephone number, including area code)

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

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 18, 2006, announcing its results of operations for the quarter ended September 30, 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 October 18, 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:  October 18, 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 Third Quarter Earnings and EPS ($.51)

 

 

THIRD QUARTER HIGHLIGHTS

                  Diluted earnings per share of 51 cents

                  Net income of $65.9 million

                  Return on average assets of 1.86 percent

                  Return on average common equity of 26.44 percent

                  Average Power AssetsÒ increased from the prior year by $1.3 billion, or 15 percent

                  Average Power LiabilitiesÒ increased from the prior year by $952.6 million, or 11.1 percent

                  Increased checking accounts during the quarter by 14,865 to 1,673,680

                  Opened five new branches during the quarter; 141 new branches since January 2001

 

 

EARNINGS SUMMARY

($ in thousands, except per-share data)

 

 

 

Three Months

 

Nine Months

 

 

 

Ended September 30,

 

Ended September 30,

 

 

 

2006

 

2005

 

Change

 

2006

 

2005

 

Change

 

Net income

 

$

65,927

 

$

65,486

 

.7

%

$

191,210

 

$

199,592

 

(4.2

)%

Diluted earnings per common share

 

.51

 

.50

 

2.0

 

1.48

 

1.50

 

(1.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Ratios (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

1.86

%

2.07

%

 

 

1.83

%

2.11

%

 

 

Return on average common equity

 

26.44

 

27.41

 

 

 

26.04

 

28.32

 

 

 

Net interest margin

 

4.11

 

4.43

 

 

 

4.19

 

4.51

 

 

 

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

 

.09

 

.85

 

 

 

.10

 

.31

 

 

 

 

(1)  Annualized.

 

 



 

2

 

WAYZATA, MN, October 18, 2006 — TCF Financial Corporation (“TCF”) (NYSE: TCB) today reported diluted earnings per share of 51 cents for the third quarter of 2006, compared with 50 cents for the same 2005 period.  Net income for the third quarter of 2006 was $65.9 million, up from $65.5 million for the third quarter of 2005.  The 2006 third quarter includes $1.3 million in pre-tax gains on sales of fixed assets for an after-tax impact of less than one cent per diluted share.  The 2005 third quarter included $4.9 million in pre-tax gains on sales of fixed assets and mortgage-backed securities for an after-tax impact of three cents per diluted share.

 

For the third quarter of 2006, return on average assets (“ROA”) was 1.86 percent and return on average common equity (“ROE”) was 26.44 percent, compared with 2.07 percent and 27.41 percent, respectively, for the third quarter of 2005.

 

Diluted earnings per share for the first nine months of 2006 was $1.48, compared with $1.50 for the same 2005 period.  The first nine months of 2006 includes $5.8 million in pre-tax gains on sales of fixed assets and mortgage servicing rights for an after-tax impact of three cents per diluted share.  The first nine months of 2005 included $20.7 million in pre-tax gains on sales of fixed assets and mortgage-backed securities and a $3.3 million pre-tax commercial loan recovery for a combined after-tax impact of 12 cents per diluted share.

 

Chief Executive Officer’s Statement

 

“TCF achieved positive results this quarter despite the continued challenging interest rate environment due to the inverted yield curve,” said Lynn A. Nagorske, Chief Executive Officer.  “Power Asset growth continued to be strong, and net loan and lease charge-offs and delinquencies remain at acceptable levels,” said Nagorske.

 

 

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3

 

Total Revenue

 

 

 

Three Months

 

 

 

 

 

($ in thousands)

 

Ended September 30,

 

Change

 

 

 

2006

 

2005

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

135,033

 

$

128,070

 

$

6,963

 

5.4

%

Fees and other revenue:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

70,777

 

70,315

 

462

 

.7

 

Card revenue

 

24,353

 

21,025

 

3,328

 

15.8

 

ATM revenue

 

9,880

 

10,646

 

(766

)

(7.2

)

Investments and insurance

 

3,226

 

2,682

 

544

 

20.3

 

Total banking fees and other revenue

 

108,236

 

104,668

 

3,568

 

3.4

 

Leasing and equipment finance

 

13,372

 

10,197

 

3,175

 

31.1

 

Other

 

7,904

 

7,752

 

152

 

2.0

 

Total fees and other revenue

 

129,512

 

122,617

 

6,895

 

5.6

 

Gains on sales of securities

 

 

995

 

(995

)

(100.0

)

Total non-interest income

 

129,512

 

123,612

 

5,900

 

4.8

 

Total revenue

 

$

264,545

 

$

251,682

 

$

12,863

 

5.1

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

4.11

%

4.43

%

 

 

 

 

Fees and other revenue as a % of:

 

 

 

 

 

 

 

 

 

Total revenue

 

48.96

 

48.72

 

 

 

 

 

Average assets (1)

 

3.65

 

3.88

 

 

 

 

 

 

(1) Annualized.

 

 

Net Interest Income

 

TCF’s net interest income in the third quarter of 2006 was $135 million, up $7 million, or 5.4 percent, from the third quarter of 2005 and was essentially flat with the second quarter of 2006.  Net interest margin in the third quarter of 2006 was 4.11 percent, compared with 4.43 percent for the third quarter of 2005 and 4.22 percent for the second quarter of 2006.  The increase in net interest income from the third quarter of 2005 was primarily attributable to a $1.6 billion, or 13.7 percent, increase in average interest-earning assets, partially offset by the 32 basis point reduction in net interest margin.  The decrease in net interest margin from the third quarter of 2005 and the second quarter of 2006 was primarily due to the continued customer preference for lower-yielding fixed-rate loans and higher-cost market-rate deposits due to the flat or inverted yield curve and higher borrowing costs.

 

 

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4

 

Non-interest Income

 

Total non-interest income was $129.5 million for the third quarter of 2006, up $5.9 million, or 4.8 percent, from the same period of 2005.

 

Banking fees and service charges were $70.8 million for the third quarter of 2006, up $462 thousand, or .7 percent, from the third quarter of 2005, primarily due to the growth in checking accounts, partially offset by lower customer check volumes.

 

Card revenues totaled $24.4 million for the third quarter of 2006, up 15.8 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 and also included $1.4 million of Visa interchange revenue holdbacks from previous periods.

 

For the third quarter of 2006, ATM revenue was $9.9 million, compared with $10.6 million for the same 2005 period.  The decline in ATM revenue was primarily attributable to continued declines in fees charged to TCF customers for use of non-TCF ATM machines due to expansion of TCF’s ATM network and growth in TCF’s fee free checking products, partially offset by the increased number of TCF customers.

 

Leasing and equipment finance revenues were $13.4 million for the third quarter of 2006, up $3.2 million, or 31.1 percent, from the 2005 third quarter, primarily due to higher operating lease revenues, up $1.8 million from the third quarter of 2005, and higher sales-type lease revenues.  Sales-type lease revenues may fluctuate from quarter to quarter based on customer driven factors not within the control of TCF.

 

Other revenue of $7.9 million in the third quarter of 2006 was essentially flat from the third quarter of 2005 and included a $3.4 million increase in gains on sales of education loans, partially offset by a $1.9 million decrease in gains on sales of fixed assets and an $893 thousand decrease in mortgage banking revenue due to the sale of mortgage servicing rights in the first quarter of 2006.  Due to recent legislative changes to student loan programs, TCF has accelerated the timing of certain education loan sales.  As a result, TCF sold $104.2 million in education loans in the third quarter of 2006 ahead of past practice.

 

During the 2005 third quarter, TCF sold $99.5 million of mortgage-backed securities and realized gains of $995 thousand.  No such sales or gains occurred in the third quarter of 2006.

 

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5

 

New Branch Expansion

 

TCF opened five new branches during the third quarter of 2006 and closed one branch.  TCF has now opened 141 new branches since January 2001, representing 31 percent of TCF’s 459 total branches.  TCF plans to open eight new branches in the fourth quarter of 2006, consisting of seven traditional branches and one campus branch.  TCF also plans to close 12 supermarket branches in the fourth quarter of 2006 in Illinois and Michigan.  Eight of these branches will be closed due to the sale of the supermarkets to multiple companies.

 

 

 

September 30,

 

September 30,

 

December 31,

 

(# of branches)

 

2006

 

2005

 

2000

 

 

 

 

 

 

 

 

 

Total Branches

 

 

 

 

 

 

 

Minnesota

 

107

 

104

 

84

 

Illinois

 

203

 

199

 

167

 

Michigan

 

63

 

62

 

56

 

Colorado

 

44

 

37

 

12

 

Wisconsin

 

36

 

34

 

32

 

Indiana

 

6

 

6

 

1

 

 

 

459

 

442

 

352

 

 

 

 

 

 

 

 

 

New Branches*

 

 

 

 

 

 

 

Traditional

 

72

 

59

 

 

 

Supermarket

 

63

 

55

 

 

 

Campus

 

6

 

2

 

 

 

Total

 

141

 

116

 

 

 

% of Total Branches

 

31

%

26

%

 

 

 

* 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

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

($ in thousands)

 

2006

 

2005

 

Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

Number of checking accounts

 

268,694

 

204,358

 

64,336

 

 

31.5

%

 

Average deposits:

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

415,653

 

$

311,203

 

$

104,450

 

 

33.6

 

 

Savings

 

318,460

 

223,268

 

95,192

 

 

42.6

 

 

Money market

 

36,187

 

21,521

 

14,666

 

 

68.1

 

 

Subtotal

 

770,300

 

555,992

 

214,308

 

 

38.5

 

 

Certificates of deposit

 

496,540

 

199,447

 

297,093

 

 

149.0

 

 

Total deposits

 

$

1,266,840

 

$

755,439

 

$

511,401

 

 

67.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total fees and other revenue
(quarter ended)

 

$

19,110

 

$

15,028

 

$

4,082

 

 

27.2

 

 

 

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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 $768 million, or 15.7 percent; average commercial loan balances increased $300.4 million, or 11.3 percent; and leasing and equipment finance balances increased $278.4 million, or 19.5 percent, from the third quarter of 2005.

 

 

 

Average Balances for the

 

 

 

 

 

Three Months Ended September 30,

 

Change

 

($ in thousands)

 

2006

 

2005

 

$

 

%

 

Loans and leases*:

 

 

 

 

 

 

 

 

 

Consumer home equity and other:

 

 

 

 

 

 

 

 

 

Home equity:

 

 

 

 

 

 

 

 

 

First mortgage lien

 

$

3,606,754

 

$

3,194,664

 

$

412,090

 

 

12.9

%

 

Junior lien

 

2,006,413

 

1,653,032

 

353,381

 

 

21.4

 

 

Total consumer home equity

 

5,613,167

 

4,847,696

 

765,471

 

 

15.8

 

 

Other

 

36,978

 

34,469

 

2,509

 

 

7.3

 

 

Total consumer home equity and other

 

5,650,145

 

4,882,165

 

767,980

 

 

15.7

 

 

Commercial real estate

 

2,409,237

 

2,220,563

 

188,674

 

 

8.5

 

 

Commercial business

 

545,363

 

433,641

 

111,722

 

 

25.8

 

 

Total commercial loans

 

2,954,600

 

2,654,204

 

300,396

 

 

11.3

 

 

Leasing and equipment finance

 

1,707,045

 

1,428,653

 

278,392

 

 

19.5

 

 

Power Assets

 

$

10,311,790

 

$

8,965,022

 

$

1,346,768

 

 

15.0

 

 

 

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

 

Power Liabilities®

 

Average Power Liabilities totaled $9.5 billion for the third quarter of 2006, with an average interest rate of 2.22 percent, an increase of $952.6 million, or 11.1 percent, from the third quarter of 2005.  The growth in average Power Liabilities was 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.  Average custodial balances decreased $101.8 million from the third quarter of 2005 due to the sale of mortgage servicing rights in the first quarter of 2006.  Average Power Liabilities increased $82.8 million, or 3.5 percent (annualized), from the second quarter of 2006.  Growth during the third quarter of 2006 was slower than recent quarters, primarily driven by declines in non-interest bearing checking and other savings, coupled with slower growth in Premier Checking and Premier Savings.  The total number of checking

 

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7

 

accounts was 1,673,680 at September 30, 2006, up 70,507 accounts, or 5.9 percent (annualized) from December 31, 2005.

 

 

 

Average Balances for the

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

 

 

 

($ in thousands)

 

2006

 

2005

 

Change

 

% Change

 

Non-interest bearing deposits:

 

 

 

 

 

 

 

 

 

Retail

 

$

1,484,651

 

$

1,539,893

 

$

(55,242

)

 

(3.6

)

 

Small business

 

615,119

 

600,374

 

14,745

 

 

2.5

 

 

Commercial and custodial

 

209,365

 

325,025

 

(115,660

)

 

(35.6

)

 

Total non-interest bearing deposits

 

2,309,135

 

2,465,292

 

(156,157

)

 

(6.3

)

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

Premier checking

 

1,021,560

 

694,835

 

326,725

 

 

47.0

 

 

Other checking

 

840,966

 

1,004,507

 

(163,541

)

 

(16.3

)

 

Subtotal

 

1,862,526

 

1,699,342

 

163,184

 

 

9.6

 

 

Premier savings

 

942,760

 

436,690

 

506,070

 

 

115.9

 

 

Other savings

 

1,350,659

 

1,549,451

 

(198,792

)

 

(12.8

)

 

Subtotal

 

2,293,419

 

1,986,141

 

307,278

 

 

15.5

 

 

Money market

 

609,997

 

632,293

 

(22,296

)

 

(3.5

)

 

Subtotal

 

4,765,942

 

4,317,776

 

448,166

 

 

10.4

 

 

Certificates of deposit

 

2,431,364

 

1,770,805

 

660,559

 

 

37.3

 

 

Total interest-bearing deposits

 

7,197,306

 

6,088,581

 

1,108,725

 

 

18.2

 

 

Power Liabilities

 

$

9,506,441

 

$

8,553,873

 

$

952,568

 

 

11.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average rate on deposits

 

2.22

%

1.23

%

99

bps

 

N/A

 

 

 

N/A Not Applicable.

 

 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 third quarter of 2006, an increase of $263.6 million from the third quarter of 2005.  The increase was primarily due to mortgage-backed securities purchases of $245.5 million in the first quarter of 2006.  At September 30, 2006, the unrealized pre-tax loss on TCF’s securities available for sale portfolio was $39.9 million. 

 

 

 

Average Balances for the

 

 

 

 

 

Three Months Ended September 30,

 

Change

 

($ in thousands)

 

2006

 

2005

 

$

 

%

 

Securities available for sale

 

$

1,829,917

 

$

1,393,742

 

$

436,175

 

31.3

%

 

Residential real estate loans

 

676,454

 

849,069

 

(172,615

)

(20.3

)

 

Total

 

$

2,506,371

 

$

2,242,811

 

$

263,560

 

11.8

 

 

 

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8

 

Non-interest Expense

 

Non-interest expense totaled $164.8 million for the third quarter of 2006, up $10.8 million, or 7 percent, from $153.9 million for the third quarter of 2005, primarily due to branch expansion totaling  $5.6 million and a $1.8 million increase in operating lease depreciation.

 

Compensation and employee benefits increased $4.4 million, or 5.5 percent, from the third quarter of 2005, primarily driven by a $2.3 million increase attributable to branch expansion.

 

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

 

Advertising and promotions expenses increased $1.6 million, or 25 percent, from the third quarter of 2005, primarily due to increased promotional expenses for new customers and increased advertising.

 

Operating lease depreciation increased $1.8 million from the third quarter of 2005, primarily driven by a $39.2 million increase in average operating lease balances in TCF’s leasing and equipment finance subsidiaries. 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

September 30,

 

Change

 

($ in thousands)

 

2006

 

2005

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

$

84,795

 

$

80,402

 

$

4,393

 

5.5

%

 

Occupancy and equipment

 

28,664

 

25,931

 

2,733

 

10.5

 

 

Advertising and promotions

 

8,220

 

6,578

 

1,642

 

25.0

 

 

Deposit account losses

 

6,633

 

6,591

 

42

 

.6

 

 

Operating lease depreciation

 

3,779

 

2,008

 

1,771

 

88.2

 

 

Other

 

32,669

 

32,403

 

266

 

.8

 

 

Total non-interest expense

 

$

164,760

 

$

153,913

 

$

10,847

 

7.0

 

 

 

Credit Quality

 

At September 30, 2006, TCF’s allowance for loan and lease losses totaled $59.7 million, or .54 percent of loans and leases, compared with $60.4 million, or .59 percent, at December 31, 2005.  The provision for credit losses for the third quarter of 2006 was $2.9 million, down $477 thousand from the third quarter of 2005.  Net loan and lease charge-offs in the third quarter of 2006 were $2.5 million, or .09 percent

 

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9

 

(annualized) of average loans and leases, compared with net charge-offs of $20.8 million, or .85 percent (annualized) for the same 2005 period.  In the third quarter of 2005, TCF charged off its $18.8 million investment in a leveraged lease.  Net loan and lease charge-offs excluding the leveraged lease loss were $2 million, or .08 percent (annualized) of average loans and leases for the third quarter of 2005.

 

At September 30, 2006, TCF’s over-30-day delinquency rate was .45 percent, up slightly from .43 percent at December 31, 2005.  Non-accrual loans and leases were $27.3 million, or .25 percent of net loans and leases, at September 30, 2006, compared with $29.6 million, or .29 percent, at December 31, 2005.  Total non-performing assets were $55.1 million, or .39 percent of total assets, at September 30, 2006, up from $47.4 million, or .35 percent, at December 31, 2005, primarily due to an increase in commercial real estate.

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

($ in thousands)

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan and lease losses:

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

59,246

 

$

76,406

 

$

60,396

 

$

79,878

 

Net (charge-offs) recoveries:

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

(1,584

)

(886

)

(4,342

)

(3,211

)

Commercial real estate

 

(148

)

(34

)

(217

)

(68

)

Commercial business

 

23

 

(140

)

(302

)

2,330

 

Leasing and equipment finance

 

(745

)

(19,690

)

(3,280

)

(21,217

)

Residential real estate

 

(38

)

(34

)

(105

)

(81

)

Total

 

(2,492

)

(20,784

)

(8,246

)

(22,247

)

Provision for credit losses

 

2,917

 

3,394

 

7,521

 

1,385

 

Balance at end of period

 

$

59,671

 

$

59,016

 

$

59,671

 

$

59,016

 

 

 

Income Taxes

 

TCF’s income tax expense was $30.9 million for the third quarter of 2006, or 31.94 percent of income before income tax expense, up from $28.9 million, or 30.61 percent, for the comparable 2005 period.  The third quarter of 2006 includes a reduction of income tax expense of $1.2 million related to favorable developments in uncertain tax positions including the closing of certain previous years’ tax returns and developments in income tax audits.  The third quarter of 2005 included a reduction in the effective income

 

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10

 

tax rate related to the increased effect of permanent differences as a percentage of pre-tax income and lower expected state income taxes.

 

 

Capital

 

During the third quarter of 2006, TCF repurchased 500 thousand shares of its common stock at an average cost of $27.10 per share.  TCF has 3.3 million shares remaining in its stock repurchase program authorized by its Board of Directors.

 

 

 

At September 30,

 

At September 30,

 

($ in thousands, except per-share data)

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

$

1,031,189

 

 

 

$

967,069

 

 

 

Stockholders’ equity to total assets

 

7.21

%

 

 

7.59

%

 

 

Book value per common share

 

$

7.88

 

 

 

$

7.23

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 risk-based capital

 

$

902,588

 

8.69

%

$

824,690

 

8.72

%

Total risk-based capital

 

1,162,634

 

11.20

 

1,008,858

 

10.66

 

Total risk-based capital “well-capitalized” requirement

 

1,038,216

 

10.00

 

946,220

 

10.00

 

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

 

124,418

 

1.20

 

62,638

 

.66

 

 

 

 

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 18, 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 $14.3 billion in assets.  TCF has 459 banking offices in Minnesota, Illinois, Michigan, Colorado, Wisconsin and Indiana.  Other TCF affiliates provide leasing and equipment finance, and investments and insurance sales.

 

 

 

 

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11

 

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.

 

 

 

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12

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

2006

 

2005

 

$ Change

 

% Change

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

199,469

 

$

163,178

 

$

36,291

 

22.2

%

 

Securities available for sale

 

24,481

 

17,893

 

6,588

 

36.8

 

 

Education loans held for sale

 

3,438

 

2,759

 

679

 

24.6

 

 

Investments

 

862

 

463

 

399

 

86.2

 

 

Total interest income

 

228,250

 

184,293

 

43,957

 

23.9

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

53,234

 

26,539

 

26,695

 

100.6

 

 

Borrowings

 

39,983

 

29,684

 

10,299

 

34.7

 

 

Total interest expense

 

93,217

 

56,223

 

36,994

 

65.8

 

 

Net interest income

 

135,033

 

128,070

 

6,963

 

5.4

 

 

Provision for credit losses

 

2,917

 

3,394

 

(477

)

(14.1

)

 

Net interest income after provision for credit losses

 

132,116

 

124,676

 

7,440

 

6.0

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

70,777

 

70,315

 

462

 

.7

 

 

Card revenue

 

24,353

 

21,025

 

3,328

 

15.8

 

 

ATM revenue

 

9,880

 

10,646

 

(766

)

(7.2

)

 

Investments and insurance revenue

 

3,226

 

2,682

 

544

 

20.3

 

 

Subtotal

 

108,236

 

104,668

 

3,568

 

3.4

 

 

Leasing and equipment finance

 

13,372

 

10,197

 

3,175

 

31.1

 

 

Other

 

7,904

 

7,752

 

152

 

2.0

 

 

Fees and other revenue

 

129,512

 

122,617

 

6,895

 

5.6

 

 

Gains on sales of securities available for sale

 

 

995

 

(995

)

(100.0

)

 

Total non-interest income

 

129,512

 

123,612

 

5,900

 

4.8

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

84,795

 

80,402

 

4,393

 

5.5

 

 

Occupancy and equipment

 

28,664

 

25,931

 

2,733

 

10.5

 

 

Advertising and promotions

 

8,220

 

6,578

 

1,642

 

25.0

 

 

Deposit account losses

 

6,633

 

6,591

 

42

 

.6

 

 

Operating lease depreciation

 

3,779

 

2,008

 

1,771

 

88.2

 

 

Other

 

32,669

 

32,403

 

266

 

.8

 

 

Total non-interest expense

 

164,760

 

153,913

 

10,847

 

7.0

 

 

Income before income tax expense

 

96,868

 

94,375

 

2,493

 

2.6

 

 

Income tax expense

 

30,941

 

28,889

 

2,052

 

7.1

 

 

Net income

 

$

65,927

 

$

65,486

 

$

441

 

.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

.51

 

$

.50

 

$

.01

 

2.0

 

 

Diluted

 

$

.51

 

$

.50

 

$

.01

 

2.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

.23

 

$

.2125

 

$

.0175

 

8.2

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Basic

 

128,408

 

131,702

 

(3,294

)

(2.5

)

 

Diluted

 

128,605

 

132,052

 

(3,447

)

(2.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

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13

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

2006

 

2005

 

$ Change

 

% Change

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

565,440

 

$

464,736

 

$

100,704

 

21.7

%

 

Securities available for sale

 

73,336

 

60,713

 

12,623

 

20.8

 

 

Education loans held for sale

 

11,990

 

7,579

 

4,411

 

58.2

 

 

Investments

 

2,331

 

2,609

 

(278

)

(10.7

)

 

Total interest income

 

653,097

 

535,637

 

117,460

 

21.9

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

139,328

 

63,123

 

76,205

 

120.7

 

 

Borrowings

 

112,126

 

84,106

 

28,020

 

33.3

 

 

Total interest expense

 

251,454

 

147,229

 

104,225

 

70.8

 

 

Net interest income

 

401,643

 

388,408

 

13,235

 

3.4

 

 

Provision for credit losses

 

7,521

 

1,385

 

6,136

 

N.M.

 

 

Net interest income after provision for credit losses

 

394,122

 

387,023

 

7,099

 

1.8

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

203,431

 

195,008

 

8,423

 

4.3

 

 

Card revenue

 

68,599

 

58,384

 

10,215

 

17.5

 

 

ATM revenue

 

28,741

 

31,173

 

(2,432

)

(7.8

)

 

Investments and insurance revenue

 

8,608

 

8,326

 

282

 

3.4

 

 

Subtotal

 

309,379

 

292,891

 

16,488

 

5.6

 

 

Leasing and equipment finance

 

37,839

 

31,982

 

5,857

 

18.3

 

 

Other

 

23,415

 

17,760

 

5,655

 

31.8

 

 

Fees and other revenue

 

370,633

 

342,633

 

28,000

 

8.2

 

 

Gains on sales of securities available for sale

 

 

10,671

 

(10,671

)

(100.0

)

 

Total non-interest income

 

370,633

 

353,304

 

17,329

 

4.9

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

256,046

 

243,826

 

12,220

 

5.0

 

 

Occupancy and equipment

 

84,713

 

76,081

 

8,632

 

11.3

 

 

Advertising and promotions

 

20,691

 

19,603

 

1,088

 

5.6

 

 

Deposit account losses

 

16,319

 

13,866

 

2,453

 

17.7

 

 

Operating lease depreciation

 

10,347

 

5,171

 

5,176

 

100.1

 

 

Other

 

98,614

 

93,563

 

5,051

 

5.4

 

 

Total non-interest expense

 

486,730

 

452,110

 

34,620

 

7.7

 

 

Income before income tax expense

 

278,025

 

288,217

 

(10,192

)

(3.5

)

 

Income tax expense

 

86,815

 

88,625

 

(1,810

)

(2.0

)

 

Net income

 

$

191,210

 

$

199,592

 

$

(8,382

)

(4.2

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.48

 

$

1.50

 

$

(.02

)

(1.3

)

 

Diluted

 

$

1.48

 

$

1.50

 

$

(.02

)

(1.3

)

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

.69

 

$

.6375

 

$

.0525

 

8.2

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Basic

 

129,279

 

132,692

 

(3,413

)

(2.6

)

 

Diluted

 

129,465

 

133,054

 

(3,589

)

(2.7

)

 

 

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)

 

 

 

At

 

At

 

At

 

% Change from

 

 

 

September 30,

 

December 31,

 

September 30,

 

December 31,

 

September 30,

 

 

 

2006

 

2005

 

2005

 

2005

 

2005

 

 

 

(Unaudited)

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

323,505

 

$

374,701

 

$

361,595

 

(13.7

)%

 

(10.5

)%

 

Investments

 

82,801

 

79,943

 

79,583

 

3.6

 

 

4.0

 

 

Securities available for sale

 

1,770,427

 

1,648,615

 

1,318,787

 

7.4

 

 

34.2

 

 

Education loans held for sale

 

140,240

 

229,820

 

230,571

 

(39.0

)

 

(39.2

)

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

5,780,953

 

5,187,584

 

5,035,661

 

11.4

 

 

14.8

 

 

Commercial real estate

 

2,414,058

 

2,297,500

 

2,241,069

 

5.1

 

 

7.7

 

 

Commercial business

 

546,517

 

435,233

 

438,028

 

25.6

 

 

24.8

 

 

Leasing and equipment finance

 

1,736,801

 

1,503,794

 

1,424,317

 

15.5

 

 

21.9

 

 

Subtotal

 

10,478,329

 

9,424,111

 

9,139,075

 

11.2

 

 

14.7

 

 

Residential real estate

 

659,476

 

770,441

 

815,893

 

(14.4

)

 

(19.2

)

 

Total loans and leases

 

11,137,805

 

10,194,552

 

9,954,968

 

9.3

 

 

11.9

 

 

Allowance for loan and lease losses

 

(59,671

)

(60,396

)

(59,016

)

1.2

 

 

(1.1

)

 

Net loans and leases

 

11,078,134

 

10,134,156

 

9,895,952

 

9.3

 

 

11.9

 

 

Premises and equipment

 

393,283

 

365,146

 

352,154

 

7.7

 

 

11.7

 

 

Goodwill

 

152,599

 

152,599

 

152,599

 

 

 

 

 

Other assets

 

356,122

 

380,380

 

345,848

 

(6.4

)

 

3.0

 

 

 

 

$

14,297,111

 

$

13,365,360

 

$

12,737,089

 

7.0

 

 

12.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

4,299,646

 

$

4,279,853

 

$

4,218,993

 

.5

 

 

1.9

 

 

Savings

 

2,314,740

 

2,238,204

 

2,140,483

 

3.4

 

 

8.1

 

 

Money market

 

592,134

 

677,017

 

632,367

 

(12.5

)

 

(6.4

)

 

Subtotal

 

7,206,520

 

7,195,074

 

6,991,843

 

.2

 

 

3.1

 

 

Certificates of deposit

 

2,454,469

 

1,915,620

 

1,866,425

 

28.1

 

 

31.5

 

 

Total deposits

 

9,660,989

 

9,110,694

 

8,858,268

 

6.0

 

 

9.1

 

 

Short-term borrowings

 

376,397

 

472,126

 

1,084,933

 

(20.3

)

 

(65.3

)

 

Long-term borrowings

 

2,976,133

 

2,511,010

 

1,547,690

 

18.5

 

 

92.3

 

 

Total borrowings

 

3,352,530

 

2,983,136

 

2,632,623

 

12.4

 

 

27.3

 

 

Accrued expenses and other liabilities

 

252,403

 

273,058

 

279,129

 

(7.6

)

 

(9.6

)

 

Total liabilities

 

13,265,922

 

12,366,888

 

11,770,020

 

7.3

 

 

12.7

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $.01 per share, 280,000,000 shares authorized; 184,180,118; 184,386,193 and 184,395,593 shares issued

 

1,842

 

1,844

 

1,844

 

(.1

)

 

(.1

)

 

Additional paid-in capital

 

469,642

 

476,884

 

475,347

 

(1.5

)

 

(1.2

)

 

Retained earnings, subject to certain restrictions

 

1,636,805

 

1,536,611

 

1,499,427

 

6.5

 

 

9.2

 

 

Accumulated other comprehensive loss

 

(25,857

)

(21,215

)

(13,596

)

(21.9

)

 

(90.2

)

 

Treasury stock at cost, 53,269,813; 50,609,970 and 50,645,520 shares, and other

 

(1,051,243

)

(995,652

)

(995,953

)

(5.6

)

 

(5.6

)

 

Total stockholders’ equity

 

1,031,189

 

998,472

 

967,069

 

3.3

 

 

6.6

 

 

 

 

$

14,297,111

 

$

13,365,360

 

$

12,737,089

 

7.0

 

 

12.2

 

 

 

 

 

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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 September 30, 2006

 

At or For the Year Ended December 31, 2005

 

 

 

 

 

Allowance as a % of

 

Net Charge-offs (Recoveries) (1)

 

 

 

Allowance as a % of

 

Net Charge-offs (Recoveries)

 

 

 

Allowance

 

Portfolio

 

$

 

%

 

Allowance

 

Portfolio

 

$

 

%

 

Consumer home equity and other

 

$

18,032

 

.31

%

 

$

1,584

 

.11

%

 

$

16,643

 

.32

%

 

$

5,210

 

.11

%

 

Commercial real estate

 

22,019

 

.91

 

 

148

 

.02

 

 

21,222

 

.92

 

 

(8

)

 

 

Commercial business

 

7,046

 

1.29

 

 

(23

)

(.02

)

 

6,602

 

1.52

 

 

(2,173

)

(.51

)

 

Leasing and equipment finance

 

12,021

 

.69

 

 

745

 

.17

 

 

15,313

 

1.02

 

 

21,384

 

1.50

 

 

Residential real estate

 

553

 

.08

 

 

38

 

.02

 

 

616

 

.08

 

 

91

 

.01

 

 

Total

 

$

 59,671

 

.54

 

 

$

 2,492

 

.09

 

 

$

 60,396

 

.59

 

 

$

 24,504

 

.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets:

 

At

 

At

 

At

 

Change from

 

 

 

September 30,

 

December 31,

 

September 30,

 

December 31,

 

September 30,

 

 

 

2006

 

2005

 

2005

 

2005

 

2005

 

Non-accrual loans and leases:

 

 

 

 

 

 

 

 

 

 

 

Consumer home equity and other

 

$

12,363

 

$

18,410

 

$

9,849

 

$

(6,047

)

$

2,514

 

Commercial real estate

 

5,226

 

188

 

188

 

5,038

 

5,038

 

Commercial business

 

1,337

 

2,207

 

2,328

 

(870

)

(991

)

Leasing and equipment finance

 

6,133

 

6,434

 

6,808

 

(301

)

(675

)

Residential real estate

 

2,209

 

2,409

 

2,515

 

(200

)

(306

)

Total non-accrual loans and leases

 

27,268

 

29,648

 

21,688

 

(2,380

)

5,580

 

Other real estate owned:

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

20,712

 

14,877

 

13,919

 

5,835

 

6,793

 

Commercial real estate

 

7,156

 

2,834

 

2,886

 

4,322

 

4,270