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Section 1: 8-K (8-K)

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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):
January 30, 2018
 
 391955846_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 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 January 30, 2018, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended December 31, 2017.
 
The earnings release is also available on the Investor Relations section of the Company’s website 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 fourth 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 are dated January 30, 2018 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 website 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 8.01 Other Events.

On January 30, 2018, the Company issued a press release announcing that it will redeem all of the issued and outstanding Series B non-cumulative perpetual preferred stock on March 1, 2018. The redemption will be funded using cash on hand. A copy of the Company’s press release containing such announcement is attached to this Form 8-K as Exhibit 99.3.
 
Item 9.01 Financial Statements and Exhibits.
 
(d)         Exhibits.
Exhibit No.
Description
99.1
99.2
99.3






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, 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:  January 30, 2018



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
391955846_deluxetcfcorplogorgba38.jpg
NEWS RELEASE
 
TCF Financial Corporation • 200 Lake Street East • Wayzata MN 55391
 
FOR IMMEDIATE RELEASE
Contact:
 
 
 
 
Mark Goldman
(952) 475-7050
news@tcfbank.com
(Media)
 
Jason Korstange
(952) 745-2755
investor@tcfbank.com
(Investors)
 
 
 
 
 
 
TCF REPORTS QUARTERLY NET INCOME OF $101.4 MILLION, OR 57 CENTS PER SHARE
AND ANNUAL NET INCOME OF $268.6 MILLION, OR $1.44 PER SHARE
 
TCF UTILIZES TAX BENEFITS TO GIVE BACK TO ITS TEAM MEMBERS AND COMMUNITIES,
INVEST IN ITS BUSINESS AND DRIVE SHAREHOLDER VALUE

2018 ANNOUNCEMENTS
Announced a 100 percent increase to the quarterly common stock dividend
Announced the redemption of the Series B non-cumulative perpetual preferred stock on March 1, 2018

2017 OBSERVATIONS
Revenue of $1.4 billion, up 4.5 percent from 2016
Net interest margin of 4.54 percent, up 20 basis points from 2016
Period-end loans and leases of $19.1 billion, up 7.1 percent from December 31, 2016
Non-accrual loans and leases of $118.6 million, down 34.6 percent from December 31, 2016
Average deposits of $17.6 billion, up 2.7 percent from 2016
Earnings per share of $1.44, up 29 cents from 2016

FOURTH QUARTER OBSERVATIONS
Revenue of $362.8 million, up 10.9 percent from the fourth quarter of 2016
Net interest income of $241.9 million, up 14.4 percent from the fourth quarter of 2016
Net interest margin of 4.57 percent, up 27 basis points from the fourth quarter of 2016
Net charge-offs as a percentage of average loans and leases of 0.38 percent, up 11 basis points from the fourth quarter of 2016
Average deposits of $18.1 billion, up 6.3 percent from the fourth quarter of 2016
Earnings per share of 57 cents, up 30 cents from the fourth quarter of 2016
Summary of Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 1
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
 
4Q
 
3Q
 
4Q
 
4Q17 vs
 
4Q17 vs
 
YTD
 
YTD
 
 
 
(Dollars in thousands, except per-share data)
2017
 
2017
 
2016
 
3Q17
 
4Q16
 
2017
 
2016
 
Change
 
Net income attributable to TCF
$
101,399

 
$
60,528

 
$
50,092

 
67.5
%
 
102.4
%
 
$
268,637

 
$
212,124

 
26.6
%
 
Net interest income
241,860

 
234,103

 
211,446

 
3.3

 
14.4

 
925,238

 
848,106

 
9.1

 
Diluted earnings per common share
0.57

 
0.29

 
0.27

 
96.6

 
111.1

 
1.44

 
1.15

 
25.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Ratios(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
1.82
%
 
1.15
%
 
0.99
%
 
67
 bps
 
83
 bps
 
1.26
%
 
1.05
%
 
21
 bps
 
Return on average common equity
16.95

 
8.44

 
8.40

 
851

 
855

 
10.80

 
9.13

 
167

 
Return on average tangible common equity(2)
32.87

 
9.57

 
9.43

 
2,330

 
2,344

 
15.73

 
10.29

 
544

 
Net interest margin
4.57

 
4.61

 
4.30

 
(4
)
 
27

 
4.54

 
4.34

 
20

 
Net charge-offs as a percentage of average loans and leases
0.38

 
0.18

 
0.27

 
20

 
11

 
0.24

 
0.26

 
(2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Annualized.
 
 
 
 
 
 
 
(2) See "Reconciliation of GAAP to Non-GAAP Financial Measures" table.
 
 
 
 
 
 
 




WAYZATA, Minn. (January 30, 2018) - TCF Financial Corporation ("TCF" or the "Company") (NYSE: TCF) today reported net income of $101.4 million for the fourth quarter of 2017, compared with $50.1 million for the fourth quarter of 2016 and $60.5 million for the third quarter of 2017. Diluted earnings per common share was 57 cents for the fourth quarter of 2017 (inclusive of 29 cents per share of items listed below), compared with 27 cents for the fourth quarter of 2016 and 29 cents for the third quarter of 2017 (inclusive of a one-time reduction in net income available to common stockholders of 4 cents per common share related to the redemption of the Series A non-cumulative perpetual preferred stock in the third quarter of 2017). Net income and diluted earnings per common share for the fourth quarter of 2017 were impacted by the following items:

Estimated net tax benefit of $130.7 million, or 77 cents per common share, as a result of the enactment of the Tax Cuts and Jobs Act ("Tax Reform") on December 22, 2017,
Pre-tax charge of $88.2 million, or 48 cents per common share, related to impairment of goodwill and other intangible assets, severance, other asset impairments and lease termination write-offs associated with the discontinuation of auto finance loan originations effective December 1, 2017 and
Pre-tax impact of $13.1 million, or 5 cents per common share, related to additional TCF Foundation contribution, one-time team member bonuses, planned closure of five branches and inventory finance program extension.

"TCF generated positive momentum throughout 2017 that positions us well for continued success in 2018," said Craig R. Dahl, chairman and chief executive officer. "During the year, we successfully improved core earnings trends, reduced our risk profile and executed on our key initiatives. Our success in these areas, combined with the benefits from the recent Tax Reform, enabled us to give back to our team members and communities, invest in our business and drive shareholder value.

"During the fourth quarter, we discontinued auto finance loan originations and began deploying capital into other areas that we believe will provide a better return for our shareholders. We expect this initiative to result in a meaningful earnings improvement in 2018. As part of this decision, we announced a new share repurchase program and began repurchasing shares in the fourth quarter.

"Enactment of Tax Reform in the fourth quarter not only will reduce TCF’s effective tax rate moving forward, but it also created a significant net tax benefit in the quarter. As a result, we were pleased to provide one-time bonuses to eligible team members and make a significant donation to the TCF Foundation that will increase the grants we provide to nonprofit organizations in the communities we serve. Our strong capital position and earnings outlook have also allowed us to announce a 100 percent increase to our quarterly common stock dividend and the redemption of our Series B non-cumulative perpetual preferred stock on March 1, 2018.

"These actions, along with the execution of our business strategy in 2017, put us in a position of strength as we enter 2018. With a continued focus on our four strategic pillars and enhanced capital and earnings positions, we are poised to deliver improved returns for our shareholders."


2




Revenue

Total Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 2
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
(Dollars in thousands)
4Q
 
3Q
 
4Q
 
4Q17 vs
 
4Q17 vs
 
YTD
 
YTD
 
 
 
 
2017
 
2017
 
2016
 
3Q17
 
4Q16
 
2017
 
2016
 
Change
 
Total interest income
$
270,628

 
$
257,605

 
$
231,658

 
5.1
 %
 
16.8
 %
 
$
1,019,057

 
$
930,730

 
9.5
 %
 
Total interest expense
28,768

 
23,502

 
20,212

 
22.4

 
42.3

 
93,819

 
82,624

 
13.5

 
Net interest income
241,860

 
234,103

 
211,446

 
3.3

 
14.4

 
925,238

 
848,106

 
9.1

 
Non-interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fees and service charges
33,267

 
34,605

 
35,132

 
(3.9
)
 
(5.3
)
 
131,887

 
137,664

 
(4.2
)
 
Card revenue
14,251

 
14,177

 
13,689

 
0.5

 
4.1

 
55,732

 
54,882

 
1.5

 
ATM revenue
4,654

 
5,234

 
4,806

 
(11.1
)
 
(3.2
)
 
19,624

 
20,445

 
(4.0
)
 
Subtotal
52,172

 
54,016

 
53,627

 
(3.4
)
 
(2.7
)
 
207,243

 
212,991

 
(2.7
)
 
Gains on sales of auto loans, net
2,216

 

 
1,145

 
N.M.

 
93.5

 
5,460

 
34,832

 
(84.3
)
 
Gains on sales of consumer real estate loans, net
11,407

 
8,049

 
16,676

 
41.7

 
(31.6
)
 
37,327

 
50,427

 
(26.0
)
 
Servicing fee income
9,000

 
9,966

 
11,404

 
(9.7
)
 
(21.1
)
 
41,347

 
40,182

 
2.9

 
Subtotal
22,623

 
18,015

 
29,225

 
25.6

 
(22.6
)
 
84,134

 
125,441

 
(32.9
)
 
Leasing and equipment finance
42,831

 
34,080

 
31,316

 
25.7

 
36.8

 
145,039

 
119,166

 
21.7

 
Other
3,218

 
2,930

 
1,365

 
9.8

 
135.8

 
11,646

 
8,883

 
31.1

 
Fees and other revenue
120,844

 
109,041

 
115,533

 
10.8

 
4.6

 
448,062

 
466,481

 
(3.9
)
 
Gains (losses) on securities, net
48

 
189

 
135

 
(74.6
)
 
(64.4
)
 
237

 
(581
)
 
N.M.

 
Total non-interest income
120,892

 
109,230

 
115,668

 
10.7

 
4.5

 
448,299

 
465,900

 
(3.8
)
 
Total revenue
$
362,752

 
$
343,333

 
$
327,114

 
5.7

 
10.9

 
$
1,373,537

 
$
1,314,006

 
4.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin(1)
4.57
%
 
4.61
%
 
4.30
%
 
(4) bps

 
27
 bps
 
4.54
%
 
4.34
%
 
20
 bps
 
Total non-interest income as a percentage of total revenue
33.3

 
31.8

 
35.4

 
150

 
(210
)
 
32.6

 
35.5

 
(290
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
N.M. Not Meaningful.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Annualized.
 
 
 
 
 
 
 
 
 

Net Interest Income

Net interest income for the fourth quarter of 2017 increased $30.4 million, or 14.4 percent, from the fourth quarter of 2016 primarily due to an increase in interest income on loans and leases, partially offset by an increase in total interest expense and a decrease in interest income on loans held for sale. Total interest income increased $39.0 million, or 16.8 percent, from the fourth quarter of 2016 primarily due to higher average balances and increased average yields on leasing and equipment finance loans and leases and increased average yields and higher average balances of commercial loans. The increase was also due to increased average yields on auto finance and consumer real estate loans and higher average balances of inventory finance loans. Total interest expense increased $8.6 million, or 42.3 percent, from the fourth quarter of 2016 primarily due to increased average rates and higher average balances of certificates of deposit, as well as higher average balances of long-term borrowings.


3




Net interest income for the fourth quarter of 2017 increased $7.8 million, or 3.3 percent, from the third quarter of 2017 primarily due to an increase in interest income on loans and leases, partially offset by an increase in total interest expense. Total interest income increased $13.0 million, or 5.1 percent, from the third quarter of 2017 primarily due to higher average balances and increased average yields on leasing and equipment finance loans and leases, higher average balances of consumer real estate loans and increased average yields on commercial loans. Total interest expense increased $5.3 million, or 22.4 percent, from the third quarter of 2017 primarily due to increased average rates and higher average balances of certificates of deposit, higher average balances of long-term borrowings and increased average rates on savings accounts.

Net interest margin was 4.57 percent for the fourth quarter of 2017, up 27 basis points from the fourth quarter of 2016 and down 4 basis points from the third quarter of 2017. The increase from the fourth quarter of 2016 was due to overall margin expansion on loans and leases, primarily impacted by interest rate increases, partially offset by higher average rates on higher average balances of certificates of deposit. The decrease from the third quarter of 2017 was primarily due to increased rates on higher average balances of certificates of deposits, as well as decreased average yields on inventory finance loans. These decreases were partially offset by higher average balances and increased average yields on leasing and equipment finance loans and leases.

Non-interest Income

TCF sold $126.1 million and $516.0 million of auto loans during the fourth quarters of 2017 and 2016, respectively, resulting in net gains in each respective period. TCF sold no auto loans during the third quarter of 2017. The decrease from the fourth quarter of 2016 was due to the strategic shift in auto finance.

TCF sold $359.7 million, $520.8 million and $291.0 million of consumer real estate loans during the fourth quarters of 2017 and 2016 and the third quarter of 2017, respectively, resulting in net gains in each respective period.

Servicing fee income was $9.0 million on $4.7 billion of average loans and leases serviced for others for the fourth quarter of 2017, compared with $11.4 million on $5.5 billion for the fourth quarter of 2016 and $10.0 million on $5.0 billion for the third quarter of 2017. The decreases from both periods were primarily due to run-off in the auto finance serviced for others portfolio.

Leasing and equipment finance non-interest income for the fourth quarter of 2017 increased $11.5 million, or 36.8 percent, from the fourth quarter of 2016 and increased $8.8 million, or 25.7 percent, from the third quarter of 2017. The increase from the fourth quarter of 2016 was primarily due to an increase in operating lease revenue, mainly driven by the acquisition of Equipment Financing & Leasing Corporation ("EFLC") in the second quarter of 2017. The increase from the third quarter of 2017 was primarily due to an increase in operating lease revenue driven by increased originations in the fourth quarter of 2017, as well as an increase in sales-type lease revenue due to customer-driven events.

4




Loans and Leases

Period-End and Average Loans and Leases
 
 
 
 
 
 
Table 3
 
 
 
 
 
 
 
Percent Change
 
 
 
 
 
 
 
 
4Q
 
3Q
 
4Q
 
4Q17 vs
 
4Q17 vs
 
YTD
 
YTD
 
Percent
 
(Dollars in thousands)
2017
 
2017
 
2016
 
3Q17
 
4Q16
 
2017
 
2016
 
Change
 
Period-End:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First mortgage lien
$
1,959,387

 
$
1,953,199

 
$
2,292,596

 
0.3
 %
 
(14.5
)%
 
 
 
 
 
 
 
Junior lien
2,860,309

 
2,977,613

 
2,791,756

 
(3.9
)
 
2.5

 
 
 
 
 
 
 
Total consumer real estate
4,819,696

 
4,930,812

 
5,084,352

 
(2.3
)
 
(5.2
)
 
 
 
 
 
 
 
Commercial
3,561,193

 
3,489,680

 
3,286,478

 
2.0

 
8.4

 
 
 
 
 
 
 
Leasing and equipment finance
4,761,661

 
4,730,931

 
4,336,310

 
0.6

 
9.8

 
 
 
 
 
 
 
Inventory finance
2,739,754

 
2,576,077

 
2,470,175

 
6.4

 
10.9

 
 
 
 
 
 
 
Auto finance
3,199,639

 
3,240,413

 
2,647,741

 
(1.3
)
 
20.8

 
 
 
 
 
 
 
Other
22,517

 
20,439

 
18,771

 
10.2

 
20.0

 
 
 
 
 
 
 
Total
$
19,104,460

 
$
18,988,352

 
$
17,843,827

 
0.6

 
7.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First mortgage lien
$
1,959,067

 
$
2,016,049

 
$
2,306,421

 
(2.8
)%
 
(15.1
)%
 
$
2,081,568

 
$
2,424,013

 
(14.1
)%
 
Junior lien
3,013,356

 
2,821,051

 
2,779,725

 
6.8

 
8.4

 
2,814,276

 
2,810,116

 
0.1

 
Total consumer real estate
4,972,423

 
4,837,100

 
5,086,146

 
2.8

 
(2.2
)
 
4,895,844

 
5,234,129

 
(6.5
)
 
Commercial
3,536,725

 
3,473,425

 
3,147,517

 
1.8

 
12.4

 
3,433,276

 
3,126,881

 
9.8

 
Leasing and equipment finance
4,713,015

 
4,316,434

 
4,252,543

 
9.2

 
10.8

 
4,399,138

 
4,106,718

 
7.1

 
Inventory finance
2,688,387

 
2,479,416

 
2,389,980

 
8.4

 
12.5

 
2,646,500

 
2,414,684

 
9.6

 
Auto finance
3,267,855

 
3,280,612

 
2,647,088

 
(0.4
)
 
23.5

 
3,105,326

 
2,693,041

 
15.3

 
Other
13,007

 
11,567

 
9,307

 
12.4

 
39.8

 
11,149

 
9,538

 
16.9

 
Total
$
19,191,412

 
$
18,398,554

 
$
17,532,581

 
4.3

 
9.5

 
$
18,491,233

 
$
17,584,991

 
5.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Period-end loans and leases were $19.1 billion at December 31, 2017, an increase of $1.3 billion, or 7.1 percent, from December 31, 2016 and consistent with loans and leases at September 30, 2017. Average loans and leases were $19.2 billion for the fourth quarter of 2017, an increase of $1.7 billion, or 9.5 percent, from the fourth quarter of 2016 and an increase of $0.8 billion, or 4.3 percent, from the third quarter of 2017.

The increases from December 31, 2016 for period-end loans and leases and average loans and leases were primarily due to increases in the auto finance and leasing and equipment finance portfolios, as well as increases in the commercial and inventory finance portfolios, partially offset by a decrease in the consumer real estate portfolio. The increases in the auto finance portfolio were primarily due to the reclassification of loans from held for sale to held for investment during the second quarter of 2017, partially offset by the discontinuation of auto finance loan originations effective December 1, 2017. The increases in the leasing and equipment finance portfolio were primarily attributable to a loan and lease portfolio purchase of $445.5 million on September 29, 2017. The decreases in the consumer real estate portfolio were primarily due to decreases in the first mortgage lien portfolio due to run-off and the non-accrual loan sales in the first and third quarters of 2017 totaling $71.2 million.

5





The increase from the third quarter of 2017 for average loans and leases was primarily due to increases in the leasing and equipment finance, inventory finance and consumer real estate loan portfolios. The increase in the leasing and equipment finance portfolio is primarily due to the loan and lease portfolio purchase on September 29, 2017. The increase in the inventory finance portfolio is primarily due to seasonality and the expansion of the number of active dealers. The increase in the consumer real estate portfolio is primarily due to an increase in the junior lien portfolio attributable to the purchase of a loan portfolio of $175.4 million on September 27, 2017.

Loan and lease originations were $3.9 billion for the fourth quarter of 2017, a decrease of $0.4 billion, or 8.7 percent, from the fourth quarter of 2016 and consistent with the third quarter of 2017. The decrease from the fourth quarter of 2016 was primarily due to decreased originations in auto finance and consumer real estate, partially offset by higher inventory finance and commercial originations.

Credit Quality

Credit Trends
 
 
 
 
 
 
 
Table 4
 
 
 
 
 
 
 
Change
 
 
4Q
3Q
2Q
1Q
4Q
 
4Q17 vs
4Q17 vs
 
(Dollars in thousands)
2017
2017
2017
2017
2016
 
3Q17
4Q16
 
Over 60-day delinquencies as a percentage of period-end loans and leases(1)
0.12
%
0.13
%
0.11
%
0.09
%
0.12
%
 
(1) bps

 bps

 
Net charge-offs as a percentage of average loans and leases(2), (3), (4)
0.38

0.18

0.28

0.11

0.27

 
20

11

 
Non-accrual loans and leases and other real estate owned
$
136,807

$
146,024

$
158,000

$
170,940

$
228,242

 
(6.3
)%
(40.1
)%
 
Provision for credit losses
22,259

14,545

19,446

12,193

19,888

 
53.0

11.9

 
 
 
(1) Excludes non-accrual loans and leases.
 
(2) Annualized.
 
(3) Excluding the $4.6 million recovery from the consumer real estate non-accrual loan sale, net charge-offs as a percentage of average loans and leases was 0.28% for 3Q 2017.
 
(4) Excluding the $8.7 million recovery from the consumer real estate non-accrual loan sale, net charge-offs as a percentage of average loans and leases was 0.31% for 1Q 2017.
 

The over 60-day delinquency rate, excluding non-accrual loans and leases, was 0.12 percent at December 31, 2017, consistent with the rate at December 31, 2016 and down 1 basis point from the September 30, 2017 rate. Delinquencies improved in the consumer real estate portfolio from December 31, 2016, however this improvement was offset by higher delinquencies in the auto finance and leasing and equipment finance portfolios. The decrease from September 30, 2017 was primarily due to improved delinquencies in the consumer real estate portfolio, partially offset by higher delinquencies in the auto finance portfolio.


6




The net charge-off rate was 0.38 percent for the fourth quarter of 2017, up 11 basis points from the fourth quarter of 2016 and up 20 basis points from the third quarter of 2017. The increase from the fourth quarter of 2016 was primarily due to increased net charge-offs in the leasing and equipment finance and auto finance portfolios, partially offset by decreased net charge-offs in the consumer real estate portfolio. The increase from the third quarter of 2017 was primarily due to a $4.6 million recovery of previous charge-offs related to the consumer real estate non-accrual loans that were sold in the third quarter of 2017 and increased net charge-offs in the leasing and equipment finance and auto finance portfolios.

Non-accrual loans and leases and other real estate owned were $136.8 million at December 31, 2017, a decrease of $91.4 million, or 40.1 percent, from December 31, 2016 and a decrease of $9.2 million, or 6.3 percent, from September 30, 2017. Non-accrual loans and leases were $118.6 million at December 31, 2017, a decrease of $62.9 million, or 34.6 percent, from December 31, 2016 and a decrease of $1.0 million, or 0.9 percent, from September 30, 2017. The decrease from December 31, 2016 was primarily due to the consumer real estate non-accrual loan sales in the first and third quarters of 2017, totaling $71.2 million, partially offset by an increase in non-accrual loans and leases in the leasing and equipment finance portfolio. The decrease from September 30, 2017 was primarily due to a decrease in non-accrual loans in the commercial portfolio, partially offset by an increase in non-accrual loans in the consumer real estate portfolio. Other real estate owned was $18.2 million at December 31, 2017, a decrease of $28.6 million, or 61.1 percent, from December 31, 2016 and a decrease of $8.2 million, or 31.0 percent, from September 30, 2017. The decrease from December 31, 2016 was primarily due to sales of consumer real estate properties outpacing additions and sales of commercial real estate properties. The decrease from September 30, 2017 was primarily due to sales of commercial real estate properties and sales of consumer real estate properties outpacing additions.

Provision for credit losses was $22.3 million for the fourth quarter of 2017, an increase of $2.4 million, or 11.9 percent, from the fourth quarter of 2016 and an increase of $7.7 million, or 53.0 percent, from the third quarter of 2017. The increase from the fourth quarter of 2016 was primarily due to increased net charge-offs in the leasing and equipment finance portfolio. The increase from the third quarter of 2017 was primarily due to increased reserve requirements and increased net charge-offs in the consumer real estate portfolio mainly driven by the recovery of $4.6 million in the third quarter of 2017 on previous charge-offs related to the consumer real estate non-accrual loans that were sold.

7




Deposits

Average Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 5
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
 
4Q
 
3Q
 
4Q
 
4Q17 vs
 
4Q17 vs
 
YTD
 
YTD
 
 
 
(Dollars in thousands)
2017
 
2017
 
2016
 
3Q17
 
4Q16
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Checking
$
6,098,522

 
$
6,046,372

 
$
5,759,806

 
0.9
 %
 
5.9
 %
 
$
6,018,415

 
$
5,688,690

 
5.8
 %
 
Savings
5,154,216

 
4,859,973

 
4,681,662

 
6.1

 
10.1

 
4,903,505

 
4,689,543

 
4.6

 
Money market
1,854,442

 
2,106,814

 
2,429,239

 
(12.0
)
 
(23.7
)
 
2,140,553

 
2,488,977

 
(14.0
)
 
Certificates of deposit
5,032,085

 
4,636,007

 
4,198,190

 
8.5

 
19.9

 
4,495,062

 
4,229,247

 
6.3

 
Total average deposits
$
18,139,265

 
$
17,649,166

 
$
17,068,897

 
2.8

 
6.3

 
$
17,557,535

 
$
17,096,457

 
2.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average interest rate on deposits(1)
0.46
%
 
0.38
%
 
0.35
%
 
8
 bps
 
11
 bps
 
0.38
%
 
0.36
%
 
2
  bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Annualized.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Total average deposits for the fourth quarter of 2017 increased $1.1 billion, or 6.3 percent, from the fourth quarter of 2016 and increased $490.1 million, or 2.8 percent, from the third quarter of 2017. The increases from both periods were primarily due to growth in average certificates of deposit, savings balances and checking balances, partially offset by a decrease in money market balances.

The average interest rate on deposits for the fourth quarter of 2017 was 0.46 percent, up 11 basis points from the fourth quarter of 2016 and up 8 basis points from the third quarter of 2017. The increases from both periods were primarily due to increased average interest rates resulting from promotions for certificates of deposit and savings accounts. The increase from the fourth quarter of 2016 was partially offset by decreased average interest rates on money market balances.


8




Non-interest Expense

Non-interest Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 6
 
 
 
 
 
 
 
 Change
 
 
 
 
 
 
 
 
4Q
 
3Q
 
4Q
 
4Q17 vs
 
4Q17 vs
 
YTD
 
YTD
 
 
 
(Dollars in thousands)
2017
 
2017
 
2016
 
3Q17
 
4Q16
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
$
127,713

 
$
115,127

 
$
115,001

 
10.9
%
 
11.1
%
 
$
483,235

 
$
474,722

 
1.8
%
 
Occupancy and equipment
39,578

 
38,766

 
38,150

 
2.1

 
3.7

 
156,909

 
149,980

 
4.6

 
Other
158,936

 
61,408

 
59,235

 
158.8

 
168.3

 
345,456

 
231,420

 
49.3

 
Subtotal
326,227

 
215,301

 
212,386

 
51.5

 
53.6

 
985,600

 
856,122

 
15.1

 
Operating lease depreciation
16,497

 
15,696

 
10,906

 
5.1

 
51.3

 
55,901

 
40,359

 
38.5

 
Foreclosed real estate and repossessed assets, net
4,739

 
3,829

 
1,889

 
23.8

 
150.9

 
17,756

 
13,187

 
34.6

 
Other credit costs, net
343

 
209

 
178

 
64.1

 
92.7

 
677

 
219

 
N.M.

 
Total non-interest expense
$
347,806

 
$
235,035

 
$
225,359

 
48.0

 
54.3

 
$
1,059,934

 
$
909,887

 
16.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Efficiency ratio
95.88
%
 
68.46
%
 
68.89
%
 
2,742
 bps
 
2,699
 bps
 
77.17
%
 
69.25
%
 
792
 bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
N.M. Not Meaningful.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Non-interest expense for the fourth quarter of 2017 increased $122.4 million, or 54.3 percent, from the fourth quarter of 2016 and increased $112.8 million, or 48.0 percent, from the third quarter of 2017. The increases from both periods were primarily due to increases in other non-interest expense and compensation and employee benefits. The increase from the fourth quarter of 2016 was also due to increases in operating lease depreciation and foreclosed real estate and repossessed assets expense.

Compensation and employee benefits expense increased $12.7 million, or 11.1 percent, from the fourth quarter of 2016 and increased $12.6 million, or 10.9 percent, from the third quarter of 2017. The increases from both periods were primarily due to higher incentive compensation and one-time employee bonuses, partially offset by reduced headcount in auto finance.

Other non-interest expense increased $99.7 million, or 168.3 percent, from the fourth quarter of 2016 and increased $97.5 million, or 158.8 percent, from the third quarter of 2017. The increases from both periods were primarily due to charges related to the discontinuation of auto finance loan originations, including goodwill and other intangible assets impairment charges of $73.4 million and severance, asset impairment and lease termination write-offs expenses of $14.8 million, as well as the donation to TCF Foundation of $5.0 million.

Operating lease depreciation increased $5.6 million, or 51.3 percent, from the fourth quarter of 2016 primarily due to an increase in leasing and equipment finance operating lease revenue related to the acquisition of EFLC.


9




Net expenses related to foreclosed real estate and repossessed assets increased $2.9 million, or 150.9 percent, from the fourth quarter of 2016 primarily due to lower gains on sales of commercial properties and higher repossessed assets expense attributable to auto finance, partially offset by lower operating expenses primarily due to maintaining fewer consumer real estate properties.

Income Tax Expense (Benefit)

The Company’s income tax benefit for the fourth quarter of 2017 was $111.0 million, compared with income tax expense of $29.8 million for the fourth quarter of 2016 and $30.7 million for the third quarter of 2017. The income tax benefit for the fourth quarter of 2017 was impacted by an estimated net tax benefit of $130.7 million primarily resulting from the re-measurement of the Company's estimated net deferred tax liability as a result of the enactment of Tax Reform.

Capital

Capital Information
 
 
Table 7
 
At Dec. 31,
 
At Dec. 31,
 
(Dollars in thousands, except per-share data)
2017
 
2016
 
Total equity
$
2,680,584

 
$
2,444,645

 
Book value per common share
13.96

 
12.66

 
Tangible book value per common share(1)
12.92

 
11.33

 
Common equity to assets
10.42
%
 
10.09
%
 
Tangible common equity to tangible assets(1)
9.72

 
9.13

 
Capital accumulation rate(2)
13.81

 
8.59

 
 
 
 
 
 
 
At Dec. 31,
 
At Dec. 31,
 
Regulatory Capital:
2017(3)
 
2016
 
Common equity Tier 1 capital
$
2,242,410

 
$
1,970,323

 
Tier 1 capital
2,522,178

 
2,248,221

 
Total capital
2,889,323

 
2,635,925

 
 
 
 
 
 
Regulatory Capital Ratios:
 
 
 
 
Common equity Tier 1 capital ratio
10.79
%
 
10.24
%
 
Tier 1 risk-based capital ratio
12.14

 
11.68

 
Total risk-based capital ratio
13.90

 
13.69

 
Tier 1 leverage ratio
11.12

 
10.73

 
 
 
 
 
 
(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 4Q 2017 are preliminary pending completion and filing of the Company's regulatory reports.
 

TCF maintained strong capital ratios as the Company accumulated capital through earnings as well as the impact of Tax Reform.


10




TCF repurchased 446,464 shares of its common stock during the fourth quarter of 2017 at an average cost of $20.51 per share under its share repurchase program.  TCF has the ability to purchase an additional $140.8 million in aggregate value of shares of TCF's common stock in its stock repurchase program authorized by its Board of Directors on November 27, 2017.

Effective October 16, 2017, TCF redeemed all outstanding shares of its Series A non-cumulative perpetual preferred stock and related depositary shares for $172.5 million using cash on hand and the net proceeds from the offering on September 14, 2017 of its Series C non-cumulative perpetual preferred stock and related depositary shares.

On January 30, 2018, TCF's Board of Directors declared a regular quarterly cash dividend of 15 cents per common share, an increase of 100.0 percent, payable on March 1, 2018, to stockholders of record at the close of business on February 15, 2018. TCF also declared dividends on the 6.45% Series B and 5.70% Series C non-cumulative perpetual preferred stock, both payable on March 1, 2018, to stockholders of record at the close of business on February 15, 2018.

On January 30, 2018, TCF's Board of Directors approved the redemption of all outstanding shares of TCF's 6.45% Series B non-cumulative perpetual preferred stock on March 1, 2018.


Webcast Information
A live webcast of TCF's conference call to discuss the fourth quarter earnings will be hosted at TCF's website,     http://ir.tcfbank.com, on January 30, 2018 at 9:00 a.m. CST. 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 December 31, 2017, TCF had $23.0 billion in total assets and 320 bank branches in Illinois, Minnesota, Michigan, Colorado, Wisconsin, Arizona and South Dakota providing retail and commercial banking services. TCF, through its subsidiaries, also conducts commercial leasing and equipment 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.



11




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, 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; the effects of man-made and natural disasters, including fires, floods, tornadoes, hurricanes, acts of terrorism, civil disturbances and environmental damage, which may negatively affect our operations and/or our customers.
 

12




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, restrictions on arbitration, or new restrictions on loan and lease 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; 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 carry out its share repurchase program, pay dividends or 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 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 the impact of the Tax Cuts and Jobs Act tax reform legislation and adoption of federal or state legislation that would increase federal or 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.



13




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Quarter Ended December 31,
 
Change
 
2017
 
2016
 
$
 
%
Interest income:
 
 
 
 
 
 
 
Loans and leases
$
256,633

 
$
210,848

 
$
45,785

 
21.7
 %
Securities available for sale
8,760

 
7,553

 
1,207

 
16.0

Securities held to maturity
1,048

 
1,165

 
(117
)
 
(10.0
)
Loans held for sale and other
4,187

 
12,092

 
(7,905
)
 
(65.4
)
Total interest income
270,628

 
231,658

 
38,970

 
16.8

Interest expense:
 
 
 
 

 


Deposits
20,846

 
15,053

 
5,793

 
38.5

Borrowings
7,922

 
5,159

 
2,763

 
53.6

Total interest expense
28,768

 
20,212

 
8,556

 
42.3

Net interest income
241,860

 
211,446

 
30,414

 
14.4

Provision for credit losses
22,259

 
19,888

 
2,371

 
11.9

Net interest income after provision for credit losses
219,601

 
191,558

 
28,043

 
14.6

Non-interest income:
 
 
 
 

 


Fees and service charges
33,267

 
35,132

 
(1,865
)
 
(5.3
)
Card revenue
14,251

 
13,689

 
562

 
4.1

ATM revenue
4,654

 
4,806

 
(152
)
 
(3.2
)
Subtotal
52,172

 
53,627

 
(1,455
)
 
(2.7
)
Gains on sales of auto loans, net
2,216

 
1,145

 
1,071

 
93.5

Gains on sales of consumer real estate loans, net
11,407

 
16,676

 
(5,269
)
 
(31.6
)
Servicing fee income
9,000

 
11,404

 
(2,404
)
 
(21.1
)
Subtotal
22,623

 
29,225

 
(6,602
)
 
(22.6
)
Leasing and equipment finance
42,831

 
31,316

 
11,515

 
36.8

Other
3,218

 
1,365

 
1,853

 
135.8

Fees and other revenue
120,844

 
115,533

 
5,311

 
4.6

Gains (losses) on securities, net
48

 
135

 
(87
)
 
(64.4
)
Total non-interest income
120,892

 
115,668

 
5,224

 
4.5

Non-interest expense:
 
 
 
 

 


Compensation and employee benefits
127,713

 
115,001

 
12,712

 
11.1

Occupancy and equipment
39,578

 
38,150

 
1,428

 
3.7

Other
158,936

 
59,235

 
99,701

 
168.3

Subtotal
326,227

 
212,386

 
113,841

 
53.6

Operating lease depreciation
16,497

 
10,906

 
5,591

 
51.3

Foreclosed real estate and repossessed assets, net
4,739

 
1,889

 
2,850

 
150.9

Other credit costs, net
343

 
178

 
165

 
92.7

Total non-interest expense
347,806

 
225,359

 
122,447

 
54.3

Income (loss) before income tax expense (benefit)
(7,313
)
 
81,867

 
(89,180
)
 
N.M.

Income tax expense (benefit)
(110,965
)
 
29,762

 
(140,727
)
 
N.M.

Income after income tax expense (benefit)
103,652

 
52,105

 
51,547

 
98.9

Income attributable to non-controlling interest
2,253

 
2,013

 
240

 
11.9

Net income attributable to TCF Financial Corporation
101,399

 
50,092

 
51,307

 
102.4

Preferred stock dividends
3,746

 
4,847

 
(1,101
)
 
(22.7
)
Net income available to common stockholders
$
97,653

 
$
45,245

 
$
52,408

 
115.8

 
 
 
 
 


 


Earnings per common share:
 
 
 
 


 


Basic
$
0.58

 
$
0.27

 
$
0.31

 
114.8
 %
Diluted
0.57

 
0.27

 
0.30

 
111.1

 
 
 
 
 


 


Dividends declared per common share
$
0.075

 
$
0.075

 
$

 
 %
 
 
 
 
 
 
 
 
Average common and common equivalent shares
 
 
 
 
 
 
 
outstanding (in thousands):
 
 
 
 
 
 
 
Basic
169,233

 
167,412

 
1,821

 
1.1
 %
Diluted
170,069

 
168,049

 
2,020

 
1.2

 
 
 
 
 
 
 
 
N.M. Not Meaningful.

14




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
Change
 
2017
 
2016
 
$
 
%
Interest income:
 
 
 
 
 
 
 
Loans and leases
$
954,246

 
$
850,546

 
$
103,700


12.2
 %
Securities available for sale
33,278

 
26,573

 
6,705


25.2

Securities held to maturity
4,436

 
4,649

 
(213
)

(4.6
)
Loans held for sale and other
27,097

 
48,962

 
(21,865
)
 
(44.7
)
Total interest income
1,019,057

 
930,730

 
88,327

 
9.5

Interest expense:
 
 
 
 

 


Deposits
66,012

 
61,788

 
4,224

 
6.8

Borrowings
27,807

 
20,836

 
6,971

 
33.5

Total interest expense
93,819

 
82,624

 
11,195

 
13.5

Net interest income
925,238

 
848,106

 
77,132

 
9.1

Provision for credit losses
68,443

 
65,874

 
2,569

 
3.9

Net interest income after provision for credit losses
856,795

 
782,232

 
74,563

 
9.5

Non-interest income:
 
 
 
 

 


Fees and service charges
131,887

 
137,664

 
(5,777
)
 
(4.2
)
Card revenue
55,732

 
54,882

 
850

 
1.5

ATM revenue
19,624

 
20,445

 
(821
)
 
(4.0
)
Subtotal
207,243

 
212,991

 
(5,748
)
 
(2.7
)
Gains on sales of auto loans, net
5,460

 
34,832

 
(29,372
)
 
(84.3
)
Gains on sales of consumer real estate loans, net
37,327

 
50,427

 
(13,100
)
 
(26.0
)
Servicing fee income
41,347

 
40,182

 
1,165

 
2.9

Subtotal
84,134

 
125,441

 
(41,307
)
 
(32.9
)
Leasing and equipment finance
145,039

 
119,166

 
25,873

 
21.7

Other
11,646

 
8,883

 
2,763

 
31.1

Fees and other revenue
448,062

 
466,481

 
(18,419
)
 
(3.9
)
Gains (losses) on securities, net
237

 
(581
)
 
818

 
N.M.

Total non-interest income
448,299

 
465,900

 
(17,601
)
 
(3.8
)
Non-interest expense:
 
 
 
 

 


Compensation and employee benefits
483,235

 
474,722

 
8,513

 
1.8

Occupancy and equipment
156,909

 
149,980

 
6,929

 
4.6

Other
345,456

 
231,420

 
114,036

 
49.3

Subtotal
985,600

 
856,122

 
129,478

 
15.1

Operating lease depreciation
55,901

 
40,359

 
15,542

 
38.5

Foreclosed real estate and repossessed assets, net
17,756

 
13,187

 
4,569

 
34.6

Other credit costs, net
677

 
219

 
458

 
N.M.

Total non-interest expense
1,059,934

 
909,887

 
150,047

 
16.5

Income before income tax expense (benefit)
245,160

 
338,245

 
(93,085
)
 
(27.5
)
Income tax expense (benefit)
(33,624
)
 
116,528

 
(150,152
)
 
N.M.

Income after income tax expense (benefit)
278,784

 
221,717

 
57,067

 
25.7

Income attributable to non-controlling interest
10,147

 
9,593

 
554

 
5.8

Net income attributable to TCF Financial Corporation
268,637

 
212,124

 
56,513

 
26.6

Preferred stock dividends
19,904

 
19,388

 
516

 
2.7

Impact of preferred stock redemption
5,779

 

 
5,779

 
N.M.

Net income available to common stockholders
$
242,954

 
$
192,736

 
$
50,218

 
26.1

 
 
 
 
 

 


Earnings per common share:
 
 
 
 

 


Basic
$
1.44

 
$
1.15

 
$
0.29

 
25.2
 %
Diluted
1.44

 
1.15

 
0.29

 
25.2

 
 
 
 
 

 


Dividends declared per common share
$
0.30

 
$
0.30

 
$

 
 %
 
 
 
 
 
 
 
 
Average common and common equivalent shares
 
 
 
 
 
 
 
outstanding (in thousands):
 
 
 
 
 
 
 
Basic
168,680

 
167,220

 
1,460

 
0.9
 %
Diluted
169,089

 
167,807

 
1,282

 
0.8

 
 
 
 
 
 
 
 
N.M. Not Meaningful.

15




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per-share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
At Dec. 31,
 
At Dec. 31,
 
Change
 
2017
 
2016
 
$
 
%
ASSETS:
 
 
 
 
 
 
 
Cash and due from banks
$
621,782

 
$
609,603

 
$
12,179

 
2.0
 %
Investments
82,644

 
74,714

 
7,930

 
10.6

Securities held to maturity
161,576

 
181,314

 
(19,738
)
 
(10.9
)
Securities available for sale
1,709,018

 
1,423,435

 
285,583

 
20.1

Loans and leases held for sale
134,862

 
268,832

 
(133,970
)
 
(49.8
)
Loans and leases: