Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document


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):
August 4, 2017
 
 389781547_deluxetcfcorplogorgba37.jpg
 
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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

¨ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





Item 7.01 Regulation FD Disclosure.
 
Information is being furnished herein in Exhibit 99.1 with respect to the slide presentation to investors and others that may be made by executive officers of TCF Financial Corporation (the "Company"). This information includes selected financial and operational information through the second quarter of 2017 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 replace and supersede investor presentation materials previously furnished as an exhibit to Current Reports on Forms 8-K. These materials are dated August 4, 2017 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 99.1, 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            Investor Presentation of TCF Financial Corporation, dated August 4, 2017






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/ Craig R. Dahl
 
Craig R. Dahl,
Chairman of the Board, President and Chief Executive Officer
(Principal Executive Officer)
 
 
 
 
 
/s/ Brian W. Maass
 
Brian W. Maass,
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:  August 4, 2017



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

tcffinancial63017form8ke
2017 Second Quarter Investor Presentation Exhibit 99.1


 
Cautionary Statements for Purposes of the Safe Harbor Provisions of the Securities Litigation Reform Act Any statements contained in this presentation regarding the outlook for the Company's businesses and their respective markets, such as projections of future performance, targets, 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, 2016 under the heading "Risk Factors", 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. Legislative and Regulatory Requirements. New consumer protection and supervisory requirements and regulations, including those resulting from action by the Consumer Financial Protection Bureau ("CFPB") 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, or new restrictions on loan and lease products; changes affecting customer account charges and fee income, including changes to interchange rates; (continued) 2


 
Cautionary Statements for Purposes of the Safe Harbor Provisions of the Securities Litigation Reform Act (cont.) regulatory actions or changes in customer opt-in preferences with respect to overdrafts, which may have an adverse impact on TCF; governmental regulations or judicial actions affecting the security interests of creditors; deficiencies in TCF's compliance programs, including under the Bank Secrecy Act in past or future periods, which may result in regulatory enforcement action including monetary penalties; increased health care costs including those resulting from 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 including those 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 either of the primary supermarket chains in which TCF maintains supermarket branches; costs related to closing underperforming branches; inability to timely close underperforming branches due to long-term lease obligations; slower than anticipated growth in existing or acquired businesses; inability to successfully execute on TCF's growth strategy through acquisitions or expanding existing business relationships; failure to expand or diversify TCF's balance sheet through new or expanded programs or opportunities; 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, such as by failing to develop and maintain technology necessary to satisfy customer demands, costs and possible disruptions related to upgrading systems; the failure to attract and retain key employees. Litigation Risks. Results of litigation or government enforcement actions such as TCF's pending litigation with the CFPB and related matters, including class action litigation or enforcement actions concerning TCF's lending or deposit activities, including account opening/origination, servicing practices, fees or charges, employment practices, or checking account overdraft program "opt in" requirements; possible increases in indemnification obligations for certain litigation against Visa U.S.A. 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. 3


 
Who We Are – A Unique Regional Bank LENDING • Well-diversified portfolio by asset class, geography, industry, loan and lease size and collateral type • Expertise in diverse lending businesses • Proven loan and lease origination platform allows for optimization of growth and revenue FUNDING • Loan and lease growth funded primarily by low cost, core deposit base • High concentration of retail deposits that provide a competitive pricing advantage as rates have increased • Convenience banking model based on branch locations, hours of operation, ATMs and digital channels 4 PROFITABILITY • Strong growth in net interest income and net interest margin primarily due to our asset sensitive balance sheet and continued pricing discipline as interest rates have increased • Earnings predictability with reduced gains on sales revenue replaced with more consistent interest income • Stable credit quality performance due to execution of our diversification philosophy


 
Diversification – Focus on national versus footprint lending increases quality and diversification of portfolio Profitable Growth – Strong origination and loan sale capabilities drive loan growth and revenue diversification with a continued high net interest margin Operating Leverage – Focus on improving operating leverage following recent build-out of key functions Core Funding – Maintain sufficient funding sources to support loan and lease growth Strategic Pillars 1 2 3 4 Execution under a strong enterprise risk management and credit culture 5


 
Consumer real estate & other (first mortgage lien) Consumer real estate (junior lien) Auto finance Leasing & equipment finance Commercial Inventory finance Securities & other Corporate Profile Savings 28% Money market 12% Checking 35% Certificates of deposit 25% • $22.1 billion national bank holding company headquartered in Minnesota • 46th largest publicly-traded U.S. based bank holding company by asset size1 • 321 bank branches in seven states • Approximately 143,400 small business banking relationships: • 66,200 checking accounts • 77,200 lending relationships • Average loan and lease portfolio makes up 84% of average total assets • Common equity ratio of 10.26% • Book value per common share of $13.20 • Return on average common equity of 8.82%2 ($ millions) 1 Source: SNL Financial (March 31, 2017) 2 YTD annualized 3 Annualized and presented on a fully tax equivalent basis ($ millions) At June 30, 2017 2Q17 Yield of 4.94%3 2Q17 Rate of 0.33%3 $4,824 $6,147 $2,129 $4,419 $2,089 $3,489 $4,334 $3,243 $2,702 $2,509 $1,982 A WELL-DIVERSIFIED EARNING ASSET PORTFOLIO… …FUNDED BY A LOW COST DEPOSIT BASE 10% 10% 13% 16% 21% 17% 13% 6


 
Well Positioned vs. Peers 1 Annualized 2 All U.S. publicly-traded banks and thrifts, excluding TCF, with total assets between $10 and $50 billion (source: SNL Financial) 3 Excluding non-recurring items for revenue 4 Presented on a fully tax-equivalent basis 5 Peer Group yield includes loans and leases held for sale, while TCF yield excludes loans and leases held for sale 6 Estimated based on consolidated bank level deposit data 5 TCF 2Q171 Peer Group 1Q17 Average1,2,3 TCF BUSINESS MODEL ATTRIBUTES Revenue as a % of average assets 6.29% 4.17% • Exceptional revenue generation capabilities through diverse revenue streams • Emphasis on generating profitable growth Yield on loans and leases4,5 5.15% 4.40% • Asset sensitivity and continued pricing discipline resulting in strong yield performance Average loans and leases as a % of average assets 84% 68% • Unique mix of loan and lease businesses provides ample and flexible origination capabilities • Organic loan and lease growth opportunities can be achieved while maintaining discipline on price, structure and credit quality Insured deposits as a % of total deposits6 93% 62% • Relative value of retail deposits increasing as short-term rates rise • Preferred deposit composition primarily made up of retail deposits which have the highest liquidity value Net charge-offs (%) 0.28% 0.18% • Total levels of net charge-offs remain in the low end of the expected range • Stable credit quality driven by execution of diversification model 7


 
Investments and other 1% Consumer real estate & other (first mortgage lien) 11% Consumer real estate (junior lien) 16% Auto finance 16%Leasing &equipment finance 19% Commercial 15% Inventory finance 17% Loans and leases held for sale 1% Securities 4% Other 3% Fees and service charges 29% ATM revenue 4% Card revenue 12% Leasing & equipment finance 35% Gains on sales of loans, net 8% Servicing fee income 9% NIM up 17 bps YoY 350 300 250 200 150 100 50 0 5.25% 5.00% 4.75% 4.50% 4.25% 4.00% 2Q16 3Q16 4Q16 1Q17 2Q17 $118 $331 $120 $332 $116 $327 $104 $326 $115 $342 4.35% 4.34% 4.30% 4.46% 4.52% Net Interest Margin1 2Q17 vs. 2Q16 revenue and net interest margin impacted by the following 2Q17 items: • Higher net interest income driven by the non- auto finance portfolios through a combination of higher variable- and adjustable-rate yields and loan and lease growth • Reduction in gains on sales of auto finance loans largely offset by higher levels of leasing and equipment finance non-interest income 1 Annualized 2 Includes gains on sales of consumer real estate loans and auto finance loans. Gains on sales of auto finance loans, net, was less than 1% of non-interest income. Revenue Summary REVENUE DIVERSIFICATION $249 million Non-interest Income Interest Income ($ millions) $213 $212 $211 $222 $227 Non-interest Income Net Interest Income $115 million Strategic Pillars Diversification 1 Profitable Growth 2 8 2


 
3,000 2,250 1,500 750 0 6/16 9/16 12/16 3/17 6/17 $2,813 $2,732 $2,648 $2,780 $3,243 $151 $2,964 $154 $2,886 $254 $2,902 $372 $3,152 $3,265 Loans Held for Sale Loans Held for Investment8.00% 6.00% 4.00% 2.00% 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 4.17% 4.14% 4.19% 4.06% 4.04% 4.15% 5.01% NET CHARGE-OFF RATIO2 1 Annualized and presented on a fully tax-equivalent basis 2 Annualized 3 Excludes non-accrual loans 4 Includes loans held for sale of $22 million ($ millions) Auto Finance Strategy Progressing as Planned 0.30% 0.20% 0.10% 0.00% 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 0.14% 0.09% 0.13% 0.20% 0.23% 0.13% 0.20% 1.20% 0.80% 0.40% 0.00% 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 0.75% 0.81% 0.69% 0.86% 1.09% 1.12% 0.83% 9 60+ DAY DELINQUENCIES3 Originations $904 $881 $860 $863 $525 HELD FOR INVESTMENT LOAN YIELD1 AUTO FINANCE BALANCES • Reclassified approximately $345 million of auto loans from held for sale to held for investment in the second quarter • Year-over-year auto finance originations down $379 million, or 42.0% 4


 
• Compensation and employee benefits expense decreased year-over-year primarily due to reduced headcount in auto finance • Other non-interest expense increased year-over-year primarily due to higher professional fees related to strategic investments in technology capabilities, as well as advertising and marketing expenses • Efficiency ratio down 50 bps year-over-year 1 Includes Occupancy & Equipment, Other Non-interest Expense, Foreclosed Real Estate & Repossessed Assets and Other Credit Costs Non-interest Expense 250 200 150 100 50 0 2Q16 3Q16 4Q16 1Q17 2Q17 $118 $117 $115 $124 $116 $99 $102 $99 $109 $105 $10 $227 $10 $229 $11 $225 $11 $244 $12 $233 Compensation & Employee Benefits Foreclosed Real Estate and Other Credit Cost Compensation & Employee Benefits 350 300 250 200 150 100 50 0 $ (M ill io ns ) 6/14 9/14 12/14 3/15 6/15 ($ millions) Operating Lease Depreciation Other 1 Compensation & Employee Benefits Efficiency Ratio: 68.69% 69.00% 68.89% 74.93% 68.19% Strategic Pillars Profitable Growth 2 Operating Leverage 3 10


 
43% 20% 37% 2Q17 AVERAGE EARNING ASSETS 2Q17 AVERAGE DEPOSITS $17.3 billion 2017 2016 4.60% 4.55% 4.50% 4.45% 4.40% 4.35% 4.30% 4.25% 1Q 2Q 3Q 4Q 4.46% 4.52% 4.37% 4.35% 4.34% 4.30% 40% 42% 18% Positive Impact of Rising Interest Rates • 82% of assets are variable- and adjustable-rate or short/ medium duration fixed-rate • 63% of deposits are low or no interest cost with an average cost of one basis point for 2Q17 • Net interest margin increase of 17 basis points year-over- year impacted by balance sheet asset sensitivity Variable- and Adjustable-rate1 Fixed-rate - Short/Medium Duration2 Fixed-rate - Long Duration3 Low Interest Cost No Interest Cost Other Strategic Pillars Diversification 1 Profitable Growth 2 $20.4 billion 1 Includes Inventory Finance, Commercial, Consumer Real Estate and Investments 2 Includes Commercial, Leasing and Auto Finance 3 Includes Securities and Consumer Real Estate NET INTEREST MARGIN FY16: 4.34% YTD 2Q17: 4.49% 11


 
18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2Q16 3Q16 4Q16 1Q17 2Q17 $17,284 $17,148 $17,069 $17,106 $17,323 • Relative value of retail deposits increasing as short-term interest rates rise • 90% of average deposit balances are consumer • Average checking balances increased 5.0% year-over-year • Average interest rate on deposits decreased year-over-year • 86% of period-end certificates of deposit are less than $250,000 0.37% 0.37% 0.35% 0.33% 0.33% Average interest cost: Deposit Generation Average Balances ($ millions) Certificates of Deposit Money Market Savings Checking Strategic Pillars Profitable Growth 2 Core Funding 4 25% 15% 27% 33% 25% 15% 27% 33% 25% 14% 27% 34% 24% 14% 28% 34% 24% 13% 28% 35% 12


 
PROVISION FOR CREDIT LOSSES 30 20 10 0 2Q16 3Q16 4Q16 1Q17 2Q17 $13 $14 $20 $12 $19 1 Excludes non-accrual loans and leases 2 Annualized 3 Excluding the $8.7 million recovery from the consumer real estate non-accrual loan sale, net charge-offs were $14 million and the net charge-off ratio was 0.31% ($ millions) Credit Quality Trends 0.15% 0.12% 0.09% 0.06% 0.03% 0.00% 6/16 9/16 12/16 3/17 6/17 0.12% 0.12% 0.12% 0.09% 0.11% 400 300 200 100 0 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 6/16 9/16 12/16 3/17 6/17 $232 $228 $171 $158 1.33% 1.28% 1.28% 0.95% 0.86% ($ millions) 60+ DAY DELINQUENCIES1 NET CHARGE-OFFSNON-PERFORMING ASSETS Other Real Estate Owned Non-accrual Loans & Leases NPAs/Loans & Leases and Other Real Estate Owned Strategic Pillar Diversification 1 $224 15 12 9 6 3 0 1.50% 1.20% 0.90% 0.60% 0.30% 0.00% 2Q16 3Q16 4Q16 1Q17 2Q17 $10 $11 $12 $5 $13 0.23% 0.26% 0.27% 0.11% 0.28% 3 Net Charge-offs Net Charge-off Ratio2 13 ($ millions)


 
Quarter Ended1 Change from Quarter Ended Jun. 30, 2016 Sep. 30, 2016 Dec. 31, 2016 Mar. 31, 2017 Jun. 30, 2017 Jun. 30, 2016 Consumer: Consumer Real Estate: First Mortgage Lien 0.35% 0.34% 0.26% (0.18)% 0.15% (20) bps Junior Lien 0.05 0.04 0.08 (0.89) 0.05 — Total Consumer Real Estate 0.19 0.17 0.17 (0.58) 0.09 (10) Auto Finance 0.69 0.86 1.09 1.12 0.83 14 Consumer 3 0.39 0.47 0.53 0.05 0.42 3 Wholesale: Commercial 0.08 (0.01) 0.01 0.32 0.29 21 Leasing & Equipment Finance 0.11 0.18 0.10 0.13 0.14 3 Inventory Finance 0.09 0.10 0.07 0.01 0.09 — Wholesale 0.10 0.10 0.06 0.16 0.18 8 Total 3 0.23 0.26 0.27 0.11 0.28 5 1 Annualized 2 Excluding the $8.7 million recovery from the consumer real estate non-accrual loan sale, consumer net charge-off ratio was 0.49% and total net charge-off ratio was 0.31% 3 Includes Other Net Charge-off Ratio Strategic Pillar Diversification 1 14 2 Total levels of net charge-offs remain in the low end of the expected range


 
6/16 9/16 12/16 3/17 6/17 $17,472 $17,384 $17,844 $17,975 $18,367 14% 18% 24% 15% 16% 13% 13% 18% 24% 16% 15% 14% 16% 19% 24% 15% 14% 12% • Year-over-year loan and lease growth in wholesale businesses: • Commercial up 12.7% • Inventory Finance up 7.5% • Leasing & Equipment Finance up 5.2% • Auto Finance up approximately 4% year-over-year, excluding the reclassification of loans from held for sale to held for investment in the second quarter of approximately $345 million • Strong loan and lease diversification by asset class, geography, rate, average loan and lease size, estimated weighted average life and collateral type • Proven loan and lease origination platform allows for optimization of growth and revenue 56% Wholesale 44% Consumer Loan and Lease Portfolio ($ millions) 13% 18% 24% 16% 15% 14% Inventory Finance Leasing & Equipment Finance Commercial Auto Finance Consumer Real Estate - Junior Lien Consumer Real Estate & Other - First Mortgage Lien $17,385 14% 19% 23% 18% 15% 11% Strategic Pillar Diversification 1 Loan and lease growth of 5.1% YoY 15


 
2Q16 3Q16 4Q16 1Q17 2Q17 Consumer Real Estate: First Mortgage Lien 5.34% 5.35% 5.22% 5.33% 5.35% Junior Lien 5.64 5.60 5.64 5.82 6.01 Commercial 4.30 4.22 4.25 4.43 4.50 Leasing & Equipment Finance 4.45 4.48 4.43 4.48 4.48 Inventory Finance 5.74 6.07 5.80 5.93 6.22 Auto Finance 4.19 4.06 4.04 4.15 5.01 Total Loans and Leases 4.88 4.88 4.82 4.95 5.15 Peer Group2 Average 4.40 4.38 4.40 4.40 N.A. BALANCE SHEET ASSET SENSITIVITY, CONTINUED PRICING DISCIPLINE AND AUTO FINANCE SHIFT RESULTING IN STRONG YIELD PERFORMANCE 1 Annualized and presented on a fully tax-equivalent basis 2 All U.S. publicly-traded banks and thrifts, excluding TCF, with total assets between $10 and $50 billion as of March 31, 2017 that have reported loan and lease yields for the past four quarters, includes loans held for sale (source: SNL Financial) N.A. Not Available Loan and Lease Yields1 Strategic Pillars Diversification 1 Profitable Growth 2 16


 
6,000 4,000 2,000 0 12/13 12/14 12/15 12/16 6/17 $1,319 $2,044 $2,794 $2,902 $3,265 $1,104 $2,423 $1,785 $3,829 $2,187 $4,981 $3,079 $5,981 $2,459 $5,724 Auto Finance At June 30, 2017 • Transitioned from business with a reliance on gains on sales revenue to an 'originate-to-hold' model • Reclassified approximately $345 million of auto finance loans from held for sale to held for investment • More than 6,500 active dealer relationships • Experienced management team Auto Finance $3.2 billion (18% of total loans and leases) • 5.01% quarterly average yield1 • Over 60-days delinquency rate of 0.20%2 • Net charge-off (%): 2015 2016 YTD 2Q173 0.68% 0.86% 0.96% • Average held for investment portfolio FICO score of 716 at origination ($ millions) Used Auto 79% New Auto 21% YTD Originations $1,947 $2,796 $3,156 $3,560 $1,388 # of employees 623 797 966 993 769 Serviced for Others Portfolio Portfolio Loans and HFS 1 Annualized and presented on a fully tax-equivalent basis 2 Excludes non-accrual loans 3 YTD Annualized 17


 
First Mortgage Liens 43% Junior Liens 57% 8,000 6,000 4,000 2,000 0 12/13 12/14 12/15 12/16 6/17 $3,766 $3,143 $2,636 $2,299 $2,076 $2,573 $2,543 $2,839 $2,798 $2,846 $625 $6,964 $1,401 $7,087 $1,816 $7,291 $2,316 $7,413 $2,455 $7,377 • 40% fixed-rate, 60% variable- and adjustable-rate • Average FICO score of the consumer real estate portfolio: at origination – 736; updated 2Q17 – 735 • Sold $273.4 million of consumer real estate loans in 2Q17 resulting in a gain of $8.9 million1 • Loan servicing fees of $1.7 million in 2Q17 • $455.3 million in junior lien HELOCs with interest-only revolving draws and no defined amortization period, 17% mature prior to 2021 Consumer Real Estate $4.8 billion (Junior liens and First mortgage liens are 15% and 11% of total loans and leases, respectively) ($ millions) Consumer Real Estate At June 30, 2017 Total Portfolio Loans and HFS $6,339 $5,686 $5,475 $5,097 $4,922 YTD Originations $1,676 $1,770 $2,437 $2,588 $1,137 First Mortgage Liens (Portfolio Loans and HFS) Junior Liens (Portfolio Loans and HFS) Serviced for Others Portfolio • Quarterly average yields:2 5.65% fixed-rate, 5.76% variable- and adjustable-rate • Variable- and adjustable-rate yields up 44 bps from 2Q16 • Over 60-days delinquency rate of 0.16%3 • Net charge-off (%): 2015 2016 YTD 2Q174, 5 0.47% 0.22% (0.25)% 1 Excludes subsequent adjustments and valuation adjustments while held for sale 2 Annualized and presented on a fully tax-equivalent basis 3 Excludes non-accrual loans 4 YTD annualized 5 Excluding the $8.7 million recovery from the consumer real estate non-accrual loan sale in the first quarter of 2017, the net charge-off ratio was 0.10%. 18


 
Multi-Family Housing 26% Health Care Facilities 10% Office Buildings 10% Industrial Buildings 11% Business 22% Other 21% 3,500 3,000 2,500 2,000 12/13 12/14 12/15 12/16 6/17 $3,165 $3,205 $3,225 $3,398 ($ millions) • 28% fixed-rate, 72% variable- and adjustable- rate • CRE location mix: 75% located in TCF banking markets, 25% outside (following strong, proven sponsors) • Continue to look for strategic expansion opportunities that fit TCF's profile Commercial $3.5 billion (19% of total loans and leases) Commercial At June 30, 2017 YTD Originations $1,558 $1,596 $1,875 $1,883 $882 Portfolio Loans Serviced for Others $3,204 $3,607 1 Annualized and presented on a fully tax-equivalent basis 2 Excludes non-accrual loans 3 YTD Annualized • Quarterly average yields:1 4.62% fixed rate, 4.45% variable- and adjustable-rate • Variable- and adjustable-rate yields up 45 bps from 2Q16 • No loans over 60 days delinquent2 • Net charge-off (%): 2015 2016 YTD 2Q173 0.05% 0.01% 0.31% • Loans with classified risk ratings have remained low at 1.5% in 2Q17 19


 
Leasing & Equipment Finance $4.3 billion (23% of total loans and leases) Leasing & Equipment Finance At June 30, 2017 5,000 4,000 3,000 2,000 1,000 0 12/13 12/14 12/15 12/16 6/17 $3,678 $3,994 $4,290 $4,636 $4,739 Specialty Vehicles 30% Manufacturing 7% Medical 8% Construction 11% Golf Cart & Turf 10% Technology & Data Processing 7% Furniture & Fixtures 9% Other 18% Portfolio Loans and Leases ($ millions) 1 Includes operating leases 2 Source: The Monitor, 2016 Monitor Bank 50 3 Source: The Monitor, 2016 Monitor 100 • 15th largest bank-affiliated leasing company2 and 30th largest equipment finance/leasing company3 in the U.S. • Uninstalled backlog of $508.8 million, up from $453.6 million at December 31, 2016 • Focus on financing business-essential equipment • Experienced management team • 4.48% quarterly average yield4 • Over 60-days delinquency rate of 0.14%5 • Net charge-off (%): 2015 2016 YTD 2Q176 0.13% 0.13% 0.14% • 2Q17 fee revenue of $40.0 million, 35% of TCF total fees and other revenue 4 Annualized and presented on a fully tax-equivalent basis 5 Excludes non-accrual loans and leases 6 YTD Annualized 1 Serviced for Others YTD Originations1 $1,730 $1,874 $1,969 $2,137 $943 $3,679 20


 
($ millions) 1 Annualized and presented on a fully tax-equivalent basis 2 Excludes non-accrual loans 3 YTD Annualized 3,000 2,500 2,000 1,500 1,000 500 0 6/13 6/14 6/15 6/16 6/17 $1,764 $1,927 $2,149 $2,370 $2,542 Powersports 41% Lawn & Garden 28% Other 31% • Quarterly average yield of 6.22%1, up 48 bps from 2Q16 • Over 60-day delinquency rate of 0.01% 2 • Net charge-off (%): 2015 2016 YTD 2Q173 0.07% 0.07% 0.05% • Credit risk spread across more than 10,700 active dealers • High yielding, high return business with a high barrier to entry and strong credit performance • Operates in the U.S. and Canada • 100% variable-rate receivables • High loan yields driven by the high operating costs of the business, not increased credit risk • Experienced management team Inventory Finance $2.5 billion (14% of total loans and leases) YTD Originations $2,702 $2,845 $3,023 $3,464 $3,711 Serviced for Others Portfolio Loans Inventory Finance At June 30, 2017 21


 
4Q16 2Q17 Common equity Tier 1 capital ratio1 10.24% 10.24% Tier 1 risk-based capital ratio1 11.68% 11.66% Total risk-based capital ratio1 13.69% 13.49% Tier 1 leverage ratio1 10.73% 10.76% Common equity ratio 10.09% 10.26% Tangible common equity ratio2 9.13% 9.24% Book value per common share $ 12.66 $ 13.20 Tangible book value per common share2 $ 11.33 $ 11.74 Return on average common equity3 8.40% 9.96% Return on average tangible common equity3, 4 9.43% 11.15% • Maintained strong capital ratios with earnings accumulation • Common stock dividend of 7.5 cents per share declared on July 19, 2017 • Generating profitable growth is a capital priority Capital and Return 1 The regulatory capital ratios for 2Q17 are preliminary pending completion and filing of the Company’s regulatory reports 2 See “Reconciliation of GAAP to Non-GAAP Financial Measures – Tangible Common Equity Ratio and Tangible Book Value Per Common Share” slide 3 Annualized 4 See “Reconciliation of GAAP to Non-GAAP Financial Measures – Return on Average Tangible Common Equity” slide 22


 
Strategic Pillar Summary STRATEGIC PILLARS 2017 OUTLOOK DIVERSIFICATION • Continue stable credit quality driven by diversification philosophy • Origination opportunities in multiple asset classes provide flexibility to adjust asset composition based on market conditions PROFITABLE GROWTH • Increase earnings predictability with reduction in gains on sales replaced with more consistent interest income driven by continued pricing discipline • Balance sheet composition provides a competitive advantage in the current rising rate environment OPERATING LEVERAGE • Expense growth related to strategic investments in technology capabilities, including enhancing digital channels and other efficiency initiatives • Remain focused on revenue growth exceeding expense growth CORE FUNDING • Retail deposits provide a competitive pricing advantage in a rising rate environment • Investments in the retail bank help drive core deposit growth 1 2 3 4 23


 
Appendix


 
TCF MAINTAINS A WELL-DIVERSIFIED LOAN AND LEASE PORTFOLIO Business Unit Consumer Commercial Leasing & Equipment Finance Inventory Finance Auto Finance Type / Segment Consumer real estate Multi-family housing Business Specialty vehicles Construction Powersports Lawn & Garden On balance sheet portfolio: Health care facilities Golf cart & Turf Other 79% used Industrial buildings Furniture & Fixtures 21% new Office buildings Medical Other Technology & Data processing Manufacturing Other Geography Local1 National Local1 National National Canada National Rate Variable- and adjustable-rate Fixed-rate Variable- and adjustable-rate Fixed-rate Fixed-rate Variable-rate Fixed-rate Average Loan & Lease Size First Mortgage Liens: $3.2 million $75,000 $233,000 $15,000$99,000 Junior Liens: $47,000 Estimated Weighted Average Life2 52 months 23 months 21 months 4 months 20 months Collateral Real estate Real estate Other non-real estate assets Equipment Inventory Vehicle Loan and Lease Diversification 1 TCF’s branch footprint (IL, MN, MI, CO, WI, AZ, SD) 2 As of June 30, 2017; estimated weighted average life represents how many months it is expected to take to collect half of the outstanding principal 25


 
Loan and Lease Geographic Diversification At June 30, 2017 ($ thousands) Consumer Real Estate Commercial Leasing & Equipment Finance Inventory Finance Auto Finance Other Total California $ 891,369 $ 171,486 $ 597,320 $ 108,767 $ 509,781 $ 4 $ 2,278,727 Minnesota 1,096,594 723,266 107,770 84,241 52,921 5,598 2,070,390 Illinois 1,063,123 433,804 181,761 68,122 119,732 4,614 1,871,156 Michigan 439,978 520,841 128,755 104,142 56,352 4,103 1,254,171 Texas — 81,052 394,687 165,844 296,918 6 938,507 Florida 131,758 140,428 227,104 132,940 183,332 37 815,599 Wisconsin 204,207 408,953 61,946 85,166 29,088 801 790,161 Colorado 222,170 268,044 80,885 31,589 52,267 3,742 658,697 New York 34,190 25,464 250,026 91,732 172,319 52 573,783 Ohio 7,676 79,701 153,467 100,730 99,741 — 441,315 Pennsylvania 38,428 23,373 152,014 76,455 120,005 69 410,344 Georgia 54,641 56,941 116,630 60,641 113,067 1 401,921 Canada — — 1,225 383,318 — — 384,543 North Carolina 7,270 9,782 160,211 78,083 119,503 2 374,851 Arizona 99,310 24,540 132,634 20,416 94,225 317 371,442 New Jersey 45,570 11,371 160,251 27,471 101,522 2 346,187 Washington 111,584 9,887 68,705 38,707 36,333 7 265,223 Indiana 18,017 56,256 83,293 58,999 44,687 3 261,255 Massachusetts 39,243 17,995 116,484 17,651 69,113 — 260,486 Tennessee 3,945 56,458 76,759 50,706 68,675 — 256,543 Virginia 22,282 2,288 90,983 39,421 88,132 9 243,115 Oregon 79,482 52,134 45,197 35,265 24,895 2 236,975 Other 161,140 314,661 945,628 649,079 790,536 90 2,861,134 Total $ 4,771,977 $ 3,488,725 $ 4,333,735 $ 2,509,485 $ 3,243,144 $ 19,459 $ 18,366,525 26


 
Reconciliation of GAAP to Non-GAAP Financial Measures – Tangible Common Equity Ratio and Tangible Book Value Per Common Share1 At At Dec. 31, 2016 Jun. 30, 2017 Total equity $ 2,444,645 $ 2,549,831 Less: Non-controlling interest in subsidiaries 17,162 22,766 Total TCF Financial Corporation stockholders' equity 2,427,483 2,527,065 Less: Preferred stock 263,240 263,240 Total common stockholders' equity (a) 2,164,243 2,263,825 Less: Goodwill 225,640 227,072 Other intangibles 1,738 22,682 Tangible common equity (b) $ 1,936,865 $ 2,014,071 Total assets (c) $ 21,441,326 $ 22,054,651 Less: Goodwill 225,640 227,072 Other intangibles 1,738 22,682 Tangible assets (d) $ 21,213,948 $ 21,804,897 Common stock shares outstanding (e) 170,991,940 171,489,921 Common equity ratio (a) / (c) 10.09% 10.26% Tangible common equity ratio (b) / (d) 9.13% 9.24% Book value per common share (a) / (e) $ 12.66 $ 13.20 Tangible book value per common share (b) / (e) $ 11.33 $ 11.74 1 When evaluating capital adequacy and utilization, management considers financial measures such as the tangible common equity ratio and tangible book value per common share. These measures are non-GAAP financial measures and are viewed by management as useful indicators of capital levels available to withstand unexpected market or economic conditions, and also provide investors, regulators and other users with information to be viewed in relation to other banking institutions. ($ thousands, except per share data) 27


 
Reconciliation of GAAP to Non-GAAP Financial Measures – Return on Average Tangible Common Equity1 QTD QTD Dec. 31, 2016 Jun. 30, 2017 Net income available to common stockholders (a) $ 45,245 $ 55,585 Plus: Other intangibles amortization 290 238 Less: Income tax expense attributable to other intangibles amortization 103 83 Adjusted net income available to common stockholders (b) $ 45,432 $ 55,740 Average balances: Total equity $ 2,436,136 $ 2,520,870 Less: Non-controlling interest in subsidiaries 18,914 26,188 Total TCF Financial Corporation stockholders' equity 2,417,222 2,494,682 Less: Preferred stock 263,240 263,240 Average total common stockholders' equity (c) 2,153,982 2,231,442 Less: Goodwill 225,640 225,876 Other intangibles 1,872 5,045 Average tangible common equity (d) $ 1,926,470 $ 2,000,521 Return on average common equity2 (a) / (c) 8.40% 9.96% Return on average tangible common equity2 (b) / (d) 9.43% 11.15% ($ thousands) 1 When evaluating capital adequacy and utilization, management considers financial measures such as return on average tangible common equity. This measure is a non-GAAP financial measure and is viewed by management as a useful indicator of capital levels available to withstand unexpected market or economic conditions, and also provide investors, regulators and other users with information to be viewed in relation to other banking institutions. 2 Annualized 28


 
(Back To Top)