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Section 1: 8-K (8-K)

TCF Financial 6.30.15 Form 8-K (Earnings Release)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

 FORM 8-K
 
 CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):
July 23, 2015
 
 
 
TCF FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware
(State or other jurisdiction of
incorporation)
001-10253
(Commission File Number)
41-1591444
(IRS Employer Identification No.)
 
200 Lake Street East, Mail Code EX0-03-A, Wayzata, Minnesota 55391-1693
(Address of principal executive offices, including Zip Code)
 
(952) 745-2760
(Registrant’s telephone number, including area code)
 

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
[ ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02 Results of Operations and Financial Condition.
 
The following information, including Exhibit 99.1, shall not be deemed filed for 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 may be expressly set forth by specific reference in such a filing.
 
TCF Financial Corporation (the "Company") issued a press release dated July 23, 2015, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended June 30, 2015.
 
The earnings release is also available on the Investor Relations section of the Company’s web site at http://ir.tcfbank.com. The Company’s Annual Report to Shareholders and its reports on Forms 10-K, 10-Q and 8-K and other publicly available information should be consulted for other important information about the Company.
 
Item 7.01 Regulation FD Disclosure.
 
Information is being furnished herein in Exhibit 99.2 with respect to the slide presentation prepared for use with the press release. This information includes selected financial and operational information through the second quarter of 2015 and does not represent a complete set of financial statements and related notes prepared in conformity with generally accepted accounting principles ("GAAP"). Most, but not all, of the selected financial information furnished herein is derived from the Company’s consolidated financial statements and related notes prepared in accordance with GAAP and management’s discussion and analysis of financial condition and results of operations included in the Company’s reports on Forms 10-K and 10-Q. The Company’s annual financial statements are subject to independent audit. These materials are dated July 23, 2015 and TCF does not undertake to update the materials after that date.
 
The presentation is also available on the Investor Relations section of the Company’s web site at http://ir.tcfbank.com. The Company’s Annual Report to Shareholders and its reports on Forms 10-K, 10-Q and 8-K and other publicly available information should be consulted for other important information about the Company.
 
Information contained herein, including Exhibit 99.2, shall not be deemed filed for the purposes 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.
 
Item 9.01 Financial Statements and Exhibits.
 
(d)         Exhibits.

Exhibit No.        Description

99.1            Earnings Release of TCF Financial Corporation, dated July 23, 2015

99.2            Slide presentation prepared for use with the Earnings Release, dated July 23, 2015






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 and Chief Executive Officer
(Principal Executive Officer)
 
 
 
 
 
/s/ Michael S. Jones
 
Michael S. Jones,
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
 
 
 
 
 
/s/ Susan D. Bode
 
Susan D. Bode,
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
 
Dated:  July 23, 2015



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

TCF Financial 6.30.15 Form 8-K Exhibit 99.1

Exhibit 99.1

NEWS RELEASE

TCF Financial Corporation 200 Lake Street East Wayzata MN 55391

FOR IMMEDIATE RELEASE
                                
Contact:
Mark Goldman        (952) 475-7050        [email protected]         (Media)
Jason Korstange    (952) 745-2755        [email protected]        (Investors)

TCF REPORTS QUARTERLY NET INCOME OF $52.3 MILLION,
OR 29 CENTS PER SHARE

SECOND QUARTER HIGHLIGHTS
- Revenue of $319.5 million, up 3.0 percent from the second quarter of 2014
- Loan and lease originations of $3.9 billion, up 14.5 percent from the second quarter of 2014
-
Average deposits of $15.9 billion, up 7.3 percent from the second quarter of 2014
- Non-accrual loans and leases of $205.7 million, down 21.0 percent from the second quarter of 2014
- Earnings per share of 29 cents, flat to the second quarter of 2014, up 38.1 percent from the first quarter of 2015

Summary of Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 1

 
 
 
 
 
 
 
Percent Change
 
 
 
 
 
 
(Dollars in thousands, except per-share data)
2Q
 
1Q
 
2Q
 
2Q15 vs
 
2Q15 vs
 
YTD
 
YTD
 
Percent
 
2015
 
2015
 
2014
 
1Q15
 
2Q14
 
2015
 
2014
 
Change
Net income attributable to TCF
$
52,255

 
$
39,801

 
$
53,125

 
31.3
%
 
(1.6
)%
 
$
92,056

 
$
97,882

 
(6.0
)%
Net interest income
206,029

 
203,420

 
206,101

 
1.3

 

 
409,449

 
407,375

 
0.5

Diluted earnings per common share
0.29

 
0.21

 
0.29

 
38.1

 

 
0.50

 
0.54

 
(7.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Ratios(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax pre-provision return
on average assets(2)
1.94
%
 
1.58
%
 
2.05
%
 
 
 
 
 
1.76
%
 
1.96
%
 
 
Return on average assets
1.10

 
0.85

 
1.17

 
 
 
 
 
0.98

 
1.09

 
 
Return on average common equity
9.93

 
7.47

 
10.99

 
 
 
 
 
8.71

 
10.18

 
 
Return on average tangible
common equity(3)
11.34

 
8.58

 
12.72

 
 
 
 
 
9.98

 
11.82

 
 
Net interest margin
4.44

 
4.50

 
4.65

 
 
 
 
 
4.47

 
4.66

 
 
Net charge-offs as a percentage of
average loans and leases
0.41

 
0.28

 
0.45

 
 
 
 
 
0.34

 
0.44

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Annualized.
 
 
 
 
 
 
(2) Pre-tax pre-provision profit is calculated as total revenues less non-interest expense.
 
 
 
 
 
 
(3) See "Reconciliation of GAAP to Non-GAAP Financial Measures" table.
 
 
 
 
 
 




WAYZATA, Minn. (July 23, 2015) - TCF Financial Corporation ("TCF" or the "Company") (NYSE: TCB) today reported net income of $52.3 million for the second quarter of 2015, compared with net income of $53.1 million for the second quarter of 2014, and net income of $39.8 million for the first quarter of 2015. Diluted earnings per common share was 29 cents for the second quarter of 2015, compared with 29 cents for the second quarter of 2014, and 21 cents for the first quarter of 2015.

TCF reported net income of $92.1 million for the first six months of 2015, compared with net income of $97.9 million for the same period in 2014. Diluted earnings per common share was 50 cents for the first six months of 2015, compared with 54 cents for the same period in 2014.

Chairman's Statement
"TCF's second quarter was highlighted by increased fee revenue, reduced expenses and continued strong loan and lease originations,” said William A. Cooper, chairman and chief executive officer. "Banking fees experienced a seasonal rebound while our second auto loan securitization helped gains on sales of loans return to a more normalized level. Expenses declined from the prior quarter as we focus on improving operating leverage moving forward.

"Meanwhile, our continued strong originations, along with loan sale and securitization capabilities, are driving growth and diversification of both the balance sheet and revenue base. With credit issues largely behind us, an asset sensitive balance sheet and opportunities on the horizon, there is much to look forward to at TCF."


2




Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 2
 
 
 
 
 
 
 
 
Percent Change
 
 
 
 
 
 
(Dollars in thousands)
2Q
 
1Q
 
2Q
 
2Q15 vs
 
2Q15 vs
 
YTD
 
YTD
 
Percent
 
2015
 
2015
 
2014
 
1Q15
 
2Q14
 
2015
 
2014
 
Change
Net interest income
$
206,029

 
$
203,420

 
$
206,101

 
1.3
 %
 
 %
 
$
409,449

 
$
407,375

 
0.5
 %
Fees and other revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fees and service charges
36,295

 
33,972

 
38,035

 
6.8

 
(4.6
)
 
70,267

 
74,654

 
(5.9
)
Card revenue
13,902

 
12,901

 
13,249

 
7.8

 
4.9

 
26,803

 
25,499

 
5.1

ATM revenue
5,540

 
5,122

 
5,794

 
8.2

 
(4.4
)
 
10,662

 
11,113

 
(4.1
)
Total banking fees
55,737

 
51,995

 
57,078

 
7.2

 
(2.3
)
 
107,732

 
111,266

 
(3.2
)
Gains on sales of auto loans, net
10,756

 
6,265

 
7,270

 
71.7

 
48.0

 
17,021

 
15,740

 
8.1

Gains on sales of consumer real
estate loans, net
11,954

 
8,763

 
8,151

 
36.4

 
46.7

 
20,717

 
19,857

 
4.3

Servicing fee income
7,216

 
7,342

 
4,892

 
(1.7
)
 
47.5

 
14,558

 
9,199

 
58.3

Subtotal
29,926

 
22,370

 
20,313

 
33.8

 
47.3

 
52,296

 
44,796

 
16.7

Leasing and equipment finance
26,385

 
22,224

 
23,069

 
18.7

 
14.4

 
48,609

 
45,049

 
7.9

Other
1,460

 
4,127

 
2,789

 
(64.6
)
 
(47.7
)
 
5,587

 
5,171

 
8.0

Total fees and other revenue
113,508

 
100,716

 
103,249

 
12.7

 
9.9

 
214,224

 
206,282

 
3.9

Gains (losses) on securities, net
(59
)
 
(78
)
 
767

 
24.4

 
N.M.

 
(137
)
 
1,141

 
N.M.

Total non-interest income
113,449

 
100,638

 
104,016

 
12.7

 
9.1

 
214,087

 
207,423

 
3.2

Total revenue
$
319,478

 
$
304,058

 
$
310,117

 
5.1

 
3.0

 
$
623,536

 
$
614,798

 
1.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin(1)
4.44
%
 
4.50
%
 
4.65
%
 
 
 
 
 
4.47
%
 
4.66
%
 
 
Total non-interest income as a percentage of total revenue
35.5

 
33.1

 
33.5

 
 
 
 
 
34.3

 
33.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
N.M. Not Meaningful.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Annualized.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Net Interest Income
Net interest income for the second quarter of 2015 remained consistent compared with the second quarter of 2014 and increased $2.6 million, or 1.3 percent, compared with the first quarter of 2015. The increase from the first quarter of 2015 was primarily due to higher average loan and lease balances in the auto finance and inventory finance portfolios, partially offset by lower first mortgage consumer real estate loan balances due to run-off.

Net interest margin in the second quarter of 2015 was 4.44 percent, compared with 4.65 percent in the second quarter of 2014 and 4.50 percent in the first quarter of 2015. The decreases from both periods were primarily due to margin compression resulting from the competitive low interest rate environment. The decrease from the second quarter of 2014 was further driven by a higher total deposit rate.


3




Non-interest Income
Fees and service charges in the second quarter of 2015 were $36.3 million, down $1.7 million, or 4.6 percent, from the second quarter of 2014 and up $2.3 million, or 6.8 percent, from the first quarter of 2015. The decrease from the second quarter of 2014 was primarily due to consumer behavior changes, as well as higher average checking account balances per customer. The increase from the first quarter of 2015 was primarily due to seasonality resulting in an increase in transaction activity and lower average checking account balances per customer.

TCF sold $436.4 million, $220.2 million and $203.5 million of auto loans during the second quarters of 2015 and 2014, and the first quarter of 2015, respectively, resulting in net gains in each respective period. The auto loans sold for the second quarter of 2015 related to the execution of the Company's second auto loan securitization.

TCF sold $364.9 million, $224.2 million and $264.3 million of consumer real estate loans during the second quarters of 2015 and 2014, and the first quarter of 2015, respectively, resulting in net gains in each respective period. The majority of the consumer real estate loans sold are junior lien loans. Included in consumer real estate loans sold was $74.5 million and $61.8 million of first mortgage loans related to the correspondent lending program for the second quarter of 2015 and the first quarter of 2015, respectively, resulting in net gains in each respective period.

Servicing fee income was $7.2 million on $3.7 billion of average loans and leases serviced for others during the second quarter of 2015 compared with $4.9 million on $2.5 billion for the second quarter of 2014 and $7.3 million on $3.5 billion for the first quarter of 2015. The increase from the second quarter of 2014 was primarily due to the cumulative effect of an increase in the portfolio of auto and consumer real estate loans sold with servicing retained by TCF.


4




Loans and Leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period-End and Average Loans and Leases
 
 
 
 
 
 
Table 3
 
 
 
 
 
 
 
Percent Change
 
 
 
 
 
 
(Dollars in thousands)
2Q
 
1Q
 
2Q
 
2Q15 vs
 
2Q15 vs
 
YTD
 
YTD
 
Percent
 
2015
 
2015
 
2014
 
1Q15
 
2Q14
 
2015
 
2014
 
Change
Period-End:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First mortgage lien
$
2,865,911

 
$
3,011,166

 
$
3,542,324

 
(4.8
)%
 
(19.1
)%
 
 
 
 
 
 
Junior lien
2,678,118

 
2,597,895

 
2,480,763

 
3.1

 
8.0

 
 
 
 
 
 
Total consumer real estate
5,544,029

 
5,609,061

 
6,023,087

 
(1.2
)
 
(8.0
)
 
 
 
 
 
 
Commercial
3,112,344

 
3,205,599

 
3,093,161

 
(2.9
)
 
0.6

 
 
 
 
 
 
Leasing and equipment finance
3,791,215

 
3,729,386

 
3,526,264

 
1.7

 
7.5

 
 
 
 
 
 
Inventory finance
2,106,087

 
2,336,518

 
1,880,667

 
(9.9
)
 
12.0

 
 
 
 
 
 
Auto finance
2,301,714

 
2,156,139

 
1,502,860

 
6.8

 
53.2

 
 
 
 
 
 
Other
21,852

 
20,448

 
24,486

 
6.9

 
(10.8
)
 
 
 
 
 
 
Total
$
16,877,241

 
$
17,057,151

 
$
16,050,525

 
(1.1
)
 
5.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First mortgage lien
$
2,936,793

 
$
3,076,802

 
$
3,606,635

 
(4.6
)%
 
(18.6
)%
 
$
3,006,411

 
$
3,662,985

 
(17.9
)%
Junior lien
2,650,894

 
2,614,538

 
2,498,151

 
1.4

 
6.1

 
2,632,816

 
2,552,698

 
3.1

Total consumer real estate
5,587,687

 
5,691,340

 
6,104,786

 
(1.8
)
 
(8.5
)
 
5,639,227

 
6,215,683

 
(9.3
)
Commercial
3,148,272

 
3,154,008

 
3,131,320

 
(0.2
)
 
0.5

 
3,151,124

 
3,126,718

 
0.8

Leasing and equipment finance
3,751,776

 
3,729,481

 
3,500,647

 
0.6

 
7.2

 
3,740,691

 
3,467,851

 
7.9

Inventory finance
2,292,481

 
2,108,871

 
2,061,437

 
8.7

 
11.2

 
2,201,183

 
1,968,431

 
11.8

Auto finance
2,211,014

 
2,021,144

 
1,518,194

 
9.4

 
45.6

 
2,116,604

 
1,423,240

 
48.7

Other
10,734

 
11,616

 
12,040

 
(7.6
)
 
(10.8
)
 
11,173

 
12,654

 
(11.7
)
Total
$
17,001,964

 
$
16,716,460

 
$
16,328,424

 
1.7

 
4.1

 
$
16,860,002

 
$
16,214,577

 
4.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Period-end loans and leases were $16.9 billion at June 30, 2015, an increase of $0.8 billion, or 5.2 percent, compared with June 30, 2014 and a decrease of $0.2 billion, or 1.1 percent, compared with March 31, 2015. Average loans and leases were $17.0 billion for the second quarter of 2015, an increase of $0.7 billion, or 4.1 percent, compared with the second quarter of 2014 and an increase of $0.3 billion, or 1.7 percent, compared with the first quarter of 2015.

The increases from the second quarter of 2014 for period-end loans and leases and average loans and leases were primarily due to the continued growth of the auto finance portfolio as TCF expands the number of active dealers in its network, as well as increases in the leasing and equipment finance and inventory finance portfolios. These increases were partially offset by a decrease in the consumer real estate portfolio as a result of the troubled debt restructuring ("TDR") loan sale that occurred in the fourth quarter of 2014, run-off in the first mortgage consumer real estate portfolio and increased loan sales in the auto finance and consumer real estate portfolios.


5




The decrease from the first quarter of 2015 for period-end loans and leases was primarily due to seasonality in the inventory finance portfolio and a decrease in the commercial portfolio, partially offset by the growth in the auto finance portfolio. The increase from the first quarter of 2015 for average loans and leases was due to the growth in the auto finance portfolio and further driven by peak seasonality balances in the inventory finance portfolio during the first two months of the second quarter of 2015, partially offset by a decrease in the first mortgage consumer real estate portfolio due to run-off.

Loan and lease originations were $3.9 billion for the second quarter of 2015, an increase of $0.5 billion, or 14.5 percent, compared with the second quarter of 2014 and an increase of $0.4 billion, or 10.7 percent, compared with the first quarter of 2015. The increase in originations from the second quarter of 2014 was primarily due to an increase in consumer real estate junior lien originations and growth in the lawn and garden segment of inventory finance. The increase from the first quarter of 2015 was primarily due to an increase in consumer real estate junior lien and leasing and equipment finance originations.

Credit Quality
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit Trends
 
 
 
 
 
 
 
Table 4

 
 
 
 
 
 
 
Percent Change
(Dollars in thousands)
2Q
1Q
4Q
3Q
2Q
 
2Q15 vs
2Q15 vs
 
2015
2015
2014
2014
2014
 
1Q15
2Q14
Over 60-day delinquencies as a percentage of portfolio(1)
0.10
%
0.14
%
0.14
%
0.17
%
0.18
%
 
(4) bps

(8) bps

Net charge-offs as a percentage of portfolio(2)
0.41

0.28

0.40

0.66

0.45

 
13

(4
)
Non-accrual loans and leases and other real estate owned
$
263,717

$
284,541

$
282,384

$
342,725

$
325,374

 
(7.3)%

(18.9)%

Provision for credit losses
12,528

12,791

55,597

15,739

9,909

 
(2.1
)
26.4

 
(1) Excludes acquired portfolios and non-accrual loans and leases.
(2) Annualized.

The over 60-day delinquency rate, excluding acquired portfolios and non-accrual loans and leases, was 0.10 percent at June 30, 2015, down from 0.18 percent at June 30, 2014, and down from 0.14 percent at March 31, 2015. The decreases from both periods were primarily a result of the stabilization of the consumer real estate portfolio as economic conditions improved in our markets.

The net charge-off rate was 0.41 percent for the second quarter of 2015, down from 0.45 percent for the second quarter of 2014, and up from 0.28 percent for the first quarter of 2015. The decrease from the second quarter of 2014 was primarily due to improved credit quality in the commercial and consumer real estate portfolios. The increase from the first quarter of 2015 was driven by increased charge-offs of loans in the consumer real estate first mortgage lien portfolio and net recoveries in the commercial portfolio during the first quarter of 2015.


6




Non-accrual loans and leases and other real estate owned totaled $263.7 million at June 30, 2015, a decrease of $61.7 million, or 18.9 percent, from June 30, 2014, and a decrease of $20.8 million, or 7.3 percent, from March 31, 2015. The decrease from June 30, 2014 was primarily due to the TDR loan sale that occurred in the fourth quarter of 2014, which included $40.1 million of non-accrual loans, as well as improving credit quality trends and continued efforts to actively work out problem loans in the commercial portfolio. The decrease from March 31, 2015 was driven by improved credit quality in the commercial portfolio.

Provision for credit losses was $12.5 million for the second quarter of 2015, an increase of $2.6 million, or 26.4 percent, from the second quarter of 2014, and a decrease of $0.3 million, or 2.1 percent, from the first quarter of 2015. The increase from the second quarter of 2014 was driven by growth in the auto finance and consumer real estate junior lien portfolios.

Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 5

 
 
 
 
 
 
 
Percent Change
 
 
 
 
 
 
(Dollars in thousands)
2Q
 
1Q
 
2Q
 
2Q15 vs
 
2Q15 vs
 
YTD
 
YTD
 
Percent
 
2015
 
2015
 
2014
 
1Q15
 
2Q14
 
2015
 
2014
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Checking
$
5,428,419

 
$
5,300,699

 
$
5,098,650

 
2.4
 %
 
6.5
 %
 
$
5,364,911

 
$
5,057,612

 
6.1
 %
Savings
5,048,053

 
5,161,697

 
5,908,219

 
(2.2
)
 
(14.6
)
 
5,104,561

 
6,024,936

 
(15.3
)
Money market
2,261,567

 
2,149,340

 
1,019,543

 
5.2

 
121.8

 
2,205,764

 
919,981

 
139.8

Subtotal
12,738,039

 
12,611,736

 
12,026,412

 
1.0

 
5.9

 
12,675,236

 
12,002,529

 
5.6

Certificates of deposit
3,116,718

 
3,041,790

 
2,742,832

 
2.5

 
13.6

 
3,079,461

 
2,643,639

 
16.5

Total average deposits
$
15,854,757

 
$
15,653,526

 
$
14,769,244

 
1.3

 
7.3

 
$
15,754,697

 
$
14,646,168

 
7.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average interest rate on deposits(1)
0.28
%
 
0.29
%
 
0.24
%
 
 
 
 
 
0.28
%
 
0.23
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Annualized.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Total average deposits for the second quarter of 2015 increased $1.1 billion, or 7.3 percent, from the second quarter of 2014 and increased $0.2 billion, or 1.3 percent, from the first quarter of 2015. The increases from both periods were primarily due to special campaigns for money market accounts and certificates of deposit.

The average interest rate on deposits for the second quarter of 2015 was 0.28 percent, up 4 basis points from the second quarter of 2014 and down 1 basis point from the first quarter of 2015. The increase from the second quarter of 2014 was primarily due to increased average interest rates resulting from promotions for money market accounts and certificates of deposit. The decrease from the first quarter of 2015 was primarily due to a reduction in average interest rates on various money market, savings, and checking accounts, partially offset by certificates of deposit promotions.


7




Non-interest Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 6

 
 
 
 
 
 
 
 Percent Change
 
 
 
 
 
 
(Dollars in thousands)
2Q
 
1Q
 
2Q
 
2Q15 vs
 
2Q15 vs
 
YTD
 
YTD
 
Percent
 
2015
 
2015
 
2014
 
1Q15
 
2Q14
 
2015
 
2014
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
$
116,159

 
$
115,815

 
$
109,664

 
0.3
 %
 
5.9
 %
 
$
231,974

 
$
224,753

 
3.2
 %
Occupancy and equipment
36,152

 
36,827

 
34,316

 
(1.8
)
 
5.4

 
72,979

 
69,155

 
5.5

FDIC insurance
4,864

 
5,393

 
7,625

 
(9.8
)
 
(36.2
)
 
10,257

 
15,188

 
(32.5
)
Operating lease depreciation
8,582

 
7,734

 
6,613

 
11.0

 
29.8

 
16,316

 
12,840

 
27.1

Advertising and marketing
5,150

 
6,523

 
6,245

 
(21.0
)
 
(17.5
)
 
11,673

 
12,141

 
(3.9
)
Other
45,887

 
48,133

 
42,618

 
(4.7
)
 
7.7

 
94,020

 
83,953

 
12.0

Subtotal
216,794

 
220,425

 
207,081

 
(1.6
)
 
4.7

 
437,219

 
418,030

 
4.6

Foreclosed real estate and repossessed assets, net
6,377

 
6,196

 
5,743

 
2.9

 
11.0

 
12,573

 
11,811

 
6.5

Other credit costs, net
(62
)
 
146

 
371

 
N.M.

 
N.M.

 
84

 
490

 
(82.9
)
Total non-interest expense
$
223,109

 
$
226,767

 
$
213,195

 
(1.6
)
 
4.7

 
$
449,876

 
$
430,331

 
4.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
N.M. Not Meaningful.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Compensation and employee benefits expense increased $6.5 million, or 5.9 percent, from the second quarter of 2014 and remained consistent with the first quarter of 2015. The increase from the second quarter of 2014 was primarily due to the increased staff levels to support the growth of auto finance.

FDIC insurance expense decreased $2.8 million, or 36.2 percent, from the second quarter of 2014 and decreased $0.5 million, or 9.8 percent from the first quarter of 2015. The decrease from the second quarter of 2014 was due to a lower assessment rate primarily as a result of the TDR loan sale in the fourth quarter of 2014 and improved credit metrics.



8




Capital
 
 
 
 
 
 
 
Capital Information
 
 
Table 7

 
 
 
 
(Dollars in thousands, except per-share data)
2Q 2015
 
4Q 2014
Total equity
$
2,222,022

 
$
2,135,364

Book value per common share
11.47

 
11.10

Tangible book value per common share(1)
10.11

 
9.72

Tangible common equity to tangible assets(1)
8.72
%
 
8.50
%
Capital accumulation rate(2)
10.90

 
10.36

 
 
 
 
 
2Q 2015(3)
 
4Q 2014
Regulatory Capital:
Under Basel III
 
Under Basel I
Common equity Tier 1 capital
$
1,732,437

 
N.A.

Tier 1 capital
2,013,347

 
$
1,919,887

Total capital
2,407,268

 
2,209,999

 
 
 
 
Regulatory Capital Ratios:
 
 
 
Common equity Tier 1 capital ratio
9.97
%
 
N.A.

Tier 1 risk-based capital ratio
11.59

 
11.76
%
Total risk-based capital ratio
13.86

 
13.54

Tier 1 leverage ratio
10.22

 
10.07

 
 
 
 
N.A. Not Applicable.
 
 
 
(1) See "Reconciliation of GAAP to Non-GAAP Financial Measures" table.
(2) Calculated as the change in annualized year-to-date common equity Tier 1 capital as a percentage of prior year end common equity Tier 1 capital.
(3) The regulatory capital ratios for 2Q 2015 are preliminary pending completion and filing of the Company's regulatory reports.

Maintained strong capital ratios as the Company accumulates capital through earnings. The decrease in the Tier 1 risk-based capital ratio from the fourth quarter of 2014 was primarily the result of strong asset growth.

On July 20, 2015, TCF's Board of Directors declared a regular quarterly cash dividend of 5 cents per common share, payable on September 1, 2015, to stockholders of record at the close of business on August 14, 2015. TCF also declared dividends on the 7.50% Series A and 6.45% Series B Non-Cumulative Perpetual Preferred Stock, both payable on September 1, 2015, to stockholders of record at the close of business on August 14, 2015.


9




Webcast Information
A live webcast of TCF's conference call to discuss the second quarter earnings will be hosted at TCF's website, http://ir.tcfbank.com, on July 23, 2015 at 9:00 a.m. CDT. A slide presentation for the call will be available on the website prior to the call. Additionally, the webcast will be available for replay on TCF's website after the conference call. The website also includes free access to company news releases, TCF's annual report, investor presentations and SEC filings.

TCF is a Wayzata, Minnesota-based national bank holding company. As of June 30, 2015, TCF had $19.8 billion in total assets and 376 branches in Illinois, Minnesota, Michigan, Colorado, Wisconsin, Arizona, South Dakota and Indiana, providing retail and commercial banking services. TCF, through its subsidiaries, also conducts commercial leasing, equipment finance, and auto finance business in all 50 states and commercial inventory finance business in all 50 states and Canada. For more information about TCF, please visit http://ir.tcfbank.com.



10




Cautionary Statements for Purposes of the Safe Harbor Provisions of the Securities Litigation Reform Act
Any statements contained in this earnings release regarding the outlook for the Company's businesses and their respective markets, such as projections of future performance, guidance, statements of the Company's plans and objectives, forecasts of market trends and other matters, are forward-looking statements based on the Company's assumptions and beliefs. Such statements may be identified by such words or phrases as "will likely result," "are expected to," "will continue," "outlook," "will benefit," "is anticipated," "estimate," "project," "management believes" or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such statements and no assurance can be given that the results in any forward-looking statement will be achieved. For these statements, TCF claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.
 
Certain factors could cause the Company's future results to differ materially from those expressed or implied in any forward-looking statements contained herein. These factors include the factors discussed in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2014, the factors discussed below and any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statements. Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive.
 
Adverse Economic or Business Conditions; Competitive Conditions; Credit and Other Risks.  Deterioration in general economic and banking industry conditions, including those arising from government shutdowns, defaults, anticipated defaults or rating agency downgrades of sovereign debt (including debt of the U.S.), or increases in unemployment; adverse economic, business and competitive developments such as shrinking interest margins, reduced demand for financial services and loan and lease products, deposit outflows, increased deposit costs due to competition for deposit growth and evolving payment system developments, deposit account attrition or an inability to increase the number of deposit accounts; customers completing financial transactions without using a bank; adverse changes in credit quality and other risks posed by TCF's loan, lease, investment, securities held to maturity and securities available for sale portfolios, including declines in commercial or residential real estate values, changes in the allowance for loan and lease losses dictated by new market conditions or regulatory requirements, or the inability of home equity line borrowers to make increased payments caused by increased interest rates or amortization of principal; deviations from estimates of prepayment rates and fluctuations in interest rates that result in decreases in the value of assets such as interest-only strips that arise in connection with TCF's loan sales activity; interest rate risks resulting from fluctuations in prevailing interest rates or other factors that result in a mismatch between yields earned on TCF's interest-earning assets and the rates paid on its deposits and borrowings; foreign currency exchange risks; counterparty risk, including the risk of defaults by our counterparties or diminished availability of counterparties who satisfy our credit quality requirements; decreases in demand for the types of equipment that TCF leases or finances; the effect of any negative publicity.
 

11




Legislative and Regulatory Requirements.  New consumer protection and supervisory requirements and regulations, including those resulting from action by the Consumer Financial Protection Bureau and changes in the scope of Federal preemption of state laws that could be applied to national banks and their subsidiaries; the imposition of requirements that adversely impact TCF's deposit, lending, loan collection and other business activities such as mortgage foreclosure moratorium laws, further regulation of financial institution campus banking programs, use by municipalities of eminent domain on property securing troubled residential mortgage loans, or imposition of underwriting or other limitations that impact the ability to offer certain variable-rate products; changes affecting customer account charges and fee income, including changes to interchange rates; regulatory actions or changes in customer opt-in preferences with respect to overdrafts, which may have an adverse impact on TCF's fee revenue; changes to bankruptcy laws which would result in the loss of all or part of TCF's security interest due to collateral value declines; deficiencies in TCF's compliance under the Bank Secrecy Act in past or future periods, which may result in regulatory enforcement action including monetary penalties; increased health care costs resulting from Federal health care reform; regulatory criticism and resulting enforcement actions or other adverse consequences such as increased capital requirements, higher deposit insurance assessments or monetary damages or penalties; heightened regulatory practices, requirements or expectations, including, but not limited to, requirements related to enterprise risk management, the Bank Secrecy Act and anti-money laundering compliance activity.
 
Earnings/Capital Risks and Constraints, Liquidity Risks.  Limitations on TCF's ability to pay dividends or to increase dividends because of financial performance deterioration, regulatory restrictions or limitations; increased deposit insurance premiums, special assessments or other costs related to adverse conditions in the banking industry; the impact on banks of regulatory reform, including additional capital, leverage, liquidity and risk management requirements or changes in the composition of qualifying regulatory capital; adverse changes in securities markets directly or indirectly affecting TCF's ability to sell assets or to fund its operations; diminished unsecured borrowing capacity resulting from TCF credit rating downgrades or unfavorable conditions in the credit markets that restrict or limit various funding sources; costs associated with new regulatory requirements or interpretive guidance relating to liquidity; uncertainties relating to future retail deposit account changes, including limitations on TCF's ability to predict customer behavior and the impact on TCF's fee revenues.
 
Branching Risk; Growth Risks.  Adverse developments affecting TCF's supermarket banking relationships or any of the supermarket chains in which TCF maintains supermarket branches; costs related to closing underperforming branches; slower than anticipated growth in existing or acquired businesses; inability to successfully execute on TCF's growth strategy through acquisitions or cross-selling opportunities; failure to expand or diversify TCF's balance sheet through new or expanded programs or opportunities; failure to successfully attract and retain new customers, including the failure to attract and retain manufacturers and dealers to expand the inventory finance business; failure to effectuate, and risks of claims related to, sales and securitizations of loans; risks related to new product additions and addition of distribution channels (or entry into new markets) for existing products.
 
Technological and Operational Matters.  Technological or operational difficulties, loss or theft of information, cyber-attacks and other security breaches, counterparty failures and the possibility that deposit account losses (fraudulent checks, etc.) may increase; failure to keep pace with technological change, including the failure to develop and maintain technology necessary to satisfy customer demands. Ability to attract and retain employees given competitive conditions and the impact of consolidating facilities.
 
Litigation Risks.  Results of litigation or government enforcement actions, including class action litigation or enforcement actions concerning TCF's lending or deposit activities, including account servicing processes or fees or charges, or employment practices; and possible increases in indemnification obligations for certain litigation against Visa U.S.A. and potential reductions in card revenues resulting from such litigation or other litigation against Visa.
 
Accounting, Audit, Tax and Insurance Matters.  Changes in accounting standards or interpretations of existing standards; federal or state monetary, fiscal or tax policies, including adoption of state legislation that would increase state taxes; ineffective internal controls; adverse federal, state or foreign tax assessments or findings in tax audits; lack of or inadequate insurance coverage for claims against TCF; potential for claims and legal action related to TCF's fiduciary responsibilities.


12




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Change
 
2015
 
2014
 
$
 
%
Interest income:
 
 
 
 
 
 
 
Loans and leases
$
207,164

 
$
206,788

 
$
376

 
0.2
 %
Securities available for sale
3,543

 
2,805

 
738

 
26.3

Securities held to maturity
1,384

 
1,443

 
(59
)
 
(4.1
)
Investments and other
10,990

 
9,055

 
1,935

 
21.4

Total interest income
223,081

 
220,091

 
2,990

 
1.4

Interest expense:
 
 
 
 
 
 
 
Deposits
11,080

 
8,877

 
2,203

 
24.8

Borrowings
5,972

 
5,113

 
859

 
16.8

Total interest expense
17,052

 
13,990

 
3,062

 
21.9

Net interest income
206,029

 
206,101

 
(72
)
 

Provision for credit losses
12,528

 
9,909

 
2,619

 
26.4

Net interest income after provision for credit losses
193,501

 
196,192

 
(2,691
)
 
(1.4
)
Non-interest income:
 
 
 
 
 
 
 
Fees and service charges
36,295

 
38,035

 
(1,740
)
 
(4.6
)
Card revenue
13,902

 
13,249

 
653

 
4.9

ATM revenue
5,540

 
5,794

 
(254
)
 
(4.4
)
Subtotal
55,737

 
57,078

 
(1,341
)
 
(2.3
)
Gains on sales of auto loans, net
10,756

 
7,270

 
3,486

 
48.0

Gains on sales of consumer real estate loans, net
11,954

 
8,151

 
3,803

 
46.7

Servicing fee income
7,216

 
4,892

 
2,324

 
47.5

Subtotal
29,926

 
20,313

 
9,613

 
47.3

Leasing and equipment finance
26,385

 
23,069

 
3,316

 
14.4

Other
1,460

 
2,789

 
(1,329
)
 
(47.7
)
Fees and other revenue
113,508

 
103,249

 
10,259

 
9.9

Gains (losses) on securities, net
(59
)
 
767

 
(826
)
 
N.M.

Total non-interest income
113,449

 
104,016

 
9,433

 
9.1

Non-interest expense:
 
 
 
 
 
 
 
Compensation and employee benefits
116,159

 
109,664

 
6,495

 
5.9

Occupancy and equipment
36,152

 
34,316

 
1,836

 
5.4

FDIC insurance
4,864

 
7,625

 
(2,761
)
 
(36.2
)
Operating lease depreciation
8,582

 
6,613

 
1,969

 
29.8

Advertising and marketing
5,150

 
6,245

 
(1,095
)
 
(17.5
)
Other
45,887

 
42,618

 
3,269

 
7.7

Subtotal
216,794

 
207,081

 
9,713

 
4.7

Foreclosed real estate and repossessed assets, net
6,377

 
5,743

 
634

 
11.0

Other credit costs, net
(62
)
 
371

 
(433
)
 
N.M.

Total non-interest expense
223,109

 
213,195

 
9,914

 
4.7

Income before income tax expense
83,841

 
87,013

 
(3,172
)
 
(3.6
)
Income tax expense
28,902

 
31,385

 
(2,483
)
 
(7.9
)
Income after income tax expense
54,939

 
55,628

 
(689
)
 
(1.2
)
Income attributable to non-controlling interest
2,684

 
2,503

 
181

 
7.2

Net income attributable to TCF Financial Corporation
52,255

 
53,125

 
(870
)
 
(1.6
)
Preferred stock dividends
4,847

 
4,847

 

 

Net income available to common stockholders
$
47,408

 
$
48,278

 
$
(870
)
 
(1.8
)
 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
Basic
$
0.29

 
$
0.30

 
$
(0.01
)
 
(3.3
)%
Diluted
0.29

 
0.29

 

 

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.05

 
$
0.05

 
$

 
 %
 
 
 
 
 
 
 
 
Average common and common equivalent shares
 
 
 
 
 
 
 
outstanding (in thousands):
 
 
 
 
 
 
 
Basic
165,589

 
163,253

 
2,336

 
1.4
 %
Diluted
166,118

 
163,714

 
2,404

 
1.5

 
 
 
 
 
 
 
 
N.M. Not Meaningful.
 
 
 
 
 
 
 



13




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
Change
 
2015
 
2014
 
$
 
%
Interest income:
 
 
 
 
 
 
 
Loans and leases
$
413,140

 
$
409,325

 
$
3,815

 
0.9
 %
Securities available for sale
6,623

 
5,968

 
655

 
11.0

Securities held to maturity
2,789

 
2,407

 
382

 
15.9

Investments and other
20,323

 
17,018

 
3,305

 
19.4

Total interest income
442,875

 
434,718

 
8,157

 
1.9

Interest expense:
 
 
 
 
 
 
 
Deposits
22,152

 
16,914

 
5,238

 
31.0

Borrowings
11,274

 
10,429

 
845

 
8.1

Total interest expense
33,426

 
27,343

 
6,083

 
22.2

Net interest income
409,449

 
407,375

 
2,074

 
0.5

Provision for credit losses
25,319

 
24,401

 
918

 
3.8

Net interest income after provision for credit losses
384,130

 
382,974

 
1,156

 
0.3

Non-interest income:
 
 
 
 
 
 
 
Fees and service charges
70,267

 
74,654

 
(4,387
)
 
(5.9
)
Card revenue
26,803

 
25,499

 
1,304

 
5.1

ATM revenue
10,662

 
11,113

 
(451
)
 
(4.1
)
Subtotal
107,732

 
111,266

 
(3,534
)
 
(3.2
)
Gains on sales of auto loans, net
17,021

 
15,740

 
1,281

 
8.1

Gains on sales of consumer real estate loans, net
20,717

 
19,857

 
860

 
4.3

Servicing fee income
14,558

 
9,199

 
5,359

 
58.3

Subtotal
52,296

 
44,796

 
7,500

 
16.7

Leasing and equipment finance
48,609

 
45,049

 
3,560

 
7.9

Other
5,587

 
5,171

 
416

 
8.0

Fees and other revenue
214,224

 
206,282

 
7,942

 
3.9

Gains (losses) on securities, net
(137
)
 
1,141

 
(1,278
)
 
N.M.

Total non-interest income
214,087

 
207,423

 
6,664

 
3.2

Non-interest expense:
 
 
 
 
 
 
 
Compensation and employee benefits
231,974

 
224,753

 
7,221

 
3.2

Occupancy and equipment
72,979

 
69,155

 
3,824

 
5.5

FDIC insurance
10,257

 
15,188

 
(4,931
)
 
(32.5
)
Operating lease depreciation
16,316

 
12,840

 
3,476

 
27.1

Advertising and marketing
11,673

 
12,141

 
(468
)
 
(3.9
)
Other
94,020

 
83,953

 
10,067

 
12.0

Subtotal
437,219

 
418,030

 
19,189

 
4.6

Foreclosed real estate and repossessed assets, net
12,573

 
11,811

 
762

 
6.5

Other credit costs, net
84

 
490

 
(406
)
 
(82.9
)
Total non-interest expense
449,876

 
430,331

 
19,545

 
4.5

Income before income tax expense
148,341

 
160,066

 
(11,725
)
 
(7.3
)
Income tax expense
51,730

 
57,964

 
(6,234
)
 
(10.8
)
Income after income tax expense
96,611

 
102,102

 
(5,491
)
 
(5.4
)
Income attributable to non-controlling interest
4,555

 
4,220

 
335

 
7.9

Net income attributable to TCF Financial Corporation
92,056

 
97,882

 
(5,826
)
 
(6.0
)
Preferred stock dividends
9,694

 
9,694

 

 

Net income available to common stockholders
$
82,362

 
$
88,188

 
$
(5,826
)
 
(6.6
)
 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
Basic
$
0.50

 
$
0.54

 
$
(0.04
)
 
(7.4
)%
Diluted
0.50

 
0.54

 
(0.04
)
 
(7.4
)
 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.10

 
$
0.10

 
$

 
 %
 
 
 
 
 
 
 
 
Average common and common equivalent shares
 
 
 
 
 
 
 
outstanding (in thousands):
 
 
 
 
 
 
 
Basic
165,219

 
163,011

 
2,208

 
1.4
 %
Diluted
165,744

 
163,491

 
2,253

 
1.4

 
 
 
 
 
 
 
 
N.M. Not Meaningful.
 
 
 
 
 
 
 


14




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Change
 
2015
 
2014
 
$
 
%
Net income attributable to TCF Financial Corporation
$
52,255

 
$
53,125

 
$
(870
)
 
(1.6
)%
Other comprehensive income (loss):
 
 
 
 
 
 
 
Securities available for sale:
 
 
 
 
 
 
 
Unrealized gains (losses) arising during the period
(11,140
)
 
8,648

 
(19,788
)
 
N.M.

Reclassification of net (gains) losses to net income
286

 
(452
)
 
738

 
N.M.

Net investment hedges:
 
 
 
 
 
 
 
Unrealized gains (losses) arising during the period
(674
)
 
(1,382
)
 
708

 
51.2

Foreign currency translation adjustment:
 
 
 
 
 
 
 
Unrealized gains (losses) arising during the period
617

 
1,399

 
(782
)
 
(55.9
)
Recognized postretirement prior service cost:
 
 
 
 
 
 
 
Reclassification of net (gains) losses to net income
(11
)
 
(11
)
 

 

Income tax (expense) benefit
4,358

 
(2,561
)
 
6,919

 
N.M.

Total other comprehensive income (loss)
(6,564
)
 
5,641

 
(12,205
)
 
N.M.

Comprehensive income
$
45,691

 
$
58,766

 
$
(13,075
)
 
(22.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
Change
 
2015
 
2014
 
$
 
%
Net income attributable to TCF Financial Corporation
$
92,056

 
$
97,882

 
$
(5,826