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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):
April 23, 2018
 
 393129051_deluxetcfcorplogorgba51.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 April 23, 2018, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended March 31, 2018.
 
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 first quarter of 2018 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 April 23, 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 9.01 Financial Statements and Exhibits.
 
(d)         Exhibits.
Exhibit No.
Description
99.1
99.2






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:  April 23, 2018



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
393129051_deluxetcfcorplogorgba53.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 $73.8 MILLION
AND DILUTED EARNINGS PER SHARE OF 39 CENTS

FIRST QUARTER OBSERVATIONS

Revenue of $355.4 million, up 9.1 percent from the first quarter of 2017
Net interest income of $243.2 million, up 9.5 percent from the first quarter of 2017
Net interest margin of 4.59 percent, up 13 basis points from the first quarter of 2017
Period-end loans and leases of $19.4 billion, up 7.8 percent from March 31, 2017
Net charge-offs as a percentage of average loans and leases of 0.29 percent, up 18 basis points from the first quarter of 2017
Non-accrual loans and leases of $126.4 million, down 9.0 percent from March 31, 2017
Average deposits of $18.3 billion, up 7.0 percent from the first quarter of 2017
Efficiency ratio of 69.21 percent, improved 572 basis points from the first quarter of 2017
Earnings per share of 39 cents, up 14 cents from the first quarter of 2017. Impact of 2 cents per share related to the redemption of the 6.45% Series B non-cumulative perpetual preferred stock.

Summary of Financial Results
 
 
 
 
 
 
 
 
Table 1
 
 
 
 
 
 
 
Change
 
 
1Q
 
4Q
 
1Q
 
1Q18 vs
 
1Q18 vs
 
(Dollars in thousands, except per-share data)
2018
 
2017
 
2017
 
4Q17
 
1Q17
 
Net income attributable to TCF
$
73,761

 
$
101,399

 
$
46,278

 
(27.3
)%
 
59.4
%
 
Net interest income
243,199

 
241,860

 
222,114

 
0.6

 
9.5

 
Diluted earnings per common share
0.39

 
0.57

 
0.25

 
(31.6
)
 
56.0

 
 
 
 
 
 
 
 
 
 
 
 
Financial Ratios(1)
 
 
 
 
 
 
 
 
 
 
Return on average assets
1.33
%
 
1.82
%
 
0.90
%
 
(49
)bps
 
43
 bps
 
Return on average common equity
11.23

 
16.95

 
7.64

 
(572
)
 
359

 
Return on average tangible common equity(2)
12.26

 
32.87

 
8.55

 
(2,061
)
 
371

 
Net interest margin
4.59

 
4.57

 
4.46

 
2

 
13

 
Net charge-offs as a percentage of average loans and leases
0.29

 
0.38

 
0.11

 
(9
)
 
18

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




WAYZATA, Minn. (April 23, 2018) - TCF Financial Corporation ("TCF" or the "Company") (NYSE: TCF) today reported net income of $73.8 million for the first quarter of 2018, compared with $46.3 million for the first quarter of 2017 and $101.4 million for the fourth quarter of 2017. Diluted earnings per common share was 39 cents for the first quarter of 2018 (inclusive of a one-time reduction in net income available to common stockholders of 2 cents per common share related to the redemption of the 6.45% Series B non-cumulative perpetual preferred stock in the first quarter of 2018), compared with 25 cents for the first quarter of 2017 and 57 cents for the fourth quarter of 2017 (inclusive of a 29 cents per common share impact from the estimated net tax benefit related to tax reform, goodwill and other intangible assets impairment, severance, other asset impairments, lease termination write-offs associated with the discontinuation of auto finance loan originations and additional TCF Foundation contribution, one-time team member bonuses, planned closure of five branches and inventory finance program extension).

“We delivered a strong start to our year in the first quarter with a continued focus on our four strategic pillars, which drove profitable growth and improved financial performance,” said Craig R. Dahl, chairman and chief executive officer. “We are seeing the continued benefits of an asset sensitive balance sheet as our earning asset yields expanded in the quarter, especially in our variable- and adjustable-rate portfolios. Our efficiency ratio improved on a year-over-year basis and we project further improvement throughout 2018. In addition, the run-off of our auto finance portfolio progressed as expected in the first full quarter following our discontinuation of originations, while our overall credit quality remained strong. Finally, we successfully executed various capital initiatives including the redemption of our Series B preferred stock and additional share repurchases.

“As we look to build on our first quarter momentum for the balance of the year, we are focused on driving shareholder value through strong execution of our strategy. We are taking steps to reduce the risk profile of our balance sheet to further lower our credit, operational and liquidity risks. We also maintain a positive outlook for our diversified lending businesses, including consumer real estate, commercial, leasing and equipment finance and inventory finance businesses from a growth, profitability and credit quality perspective. As a result, I believe we are well-positioned to improve our return on average tangible common equity in 2018 while utilizing capital more efficiently and reducing our overall risk profile.”


2




Revenue

Total Revenue
 
 
 
 
 
 
 
 
Table 2
 
 
 
 
 
 
 
Change
 
1Q
 
4Q
 
1Q
 
1Q18 vs
 
1Q18 vs
 
(Dollars in thousands)
2018
 
2017
 
2017
 
4Q17
 
1Q17
 
Total interest income
$
275,262

 
$
270,628

 
$
242,307

 
1.7

%
13.6

%
Total interest expense
32,063

 
28,768

 
20,193

 
11.5

 
58.8

 
Net interest income
243,199

 
241,860

 
222,114

 
0.6

 
9.5

 
Non-interest income:
 
 
 
 
 
 
 
 
 
 
Fees and service charges
30,751

 
33,267

 
31,282

 
(7.6
)
 
(1.7
)
 
Card revenue
13,759

 
14,251

 
13,150

 
(3.5
)
 
4.6

 
ATM revenue
4,650

 
4,654

 
4,675

 
(0.1
)
 
(0.5
)
 
Subtotal
49,160

 
52,172

 
49,107

 
(5.8
)
 
0.1

 
Gains on sales of auto loans, net

 
2,216

 
2,864

 
(100.0
)
 
(100.0
)
 
Gains on sales of consumer real estate loans, net
9,123

 
11,407

 
8,891

 
(20.0
)
 
2.6

 
Servicing fee income
8,295

 
9,000

 
11,651

 
(7.8
)
 
(28.8
)
 
Subtotal
17,418

 
22,623

 
23,406

 
(23.0
)
 
(25.6
)
 
Leasing and equipment finance
41,847

 
42,831

 
28,298

 
(2.3
)
 
47.9

 
Other
3,716

 
3,218

 
2,703

 
15.5

 
37.5

 
Fees and other revenue
112,141

 
120,844

 
103,514

 
(7.2
)
 
8.3

 
Gains (losses) on securities, net
63

 
48

 

 
31.3

 
N.M.

 
Total non-interest income
112,204

 
120,892

 
103,514

 
(7.2
)
 
8.4

 
Total revenue
$
355,403

 
$
362,752

 
$
325,628

 
(2.0
)
 
9.1

 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin(1)
4.59
%
 
4.57
%
 
4.46
%
 
2

bps
13

bps
Total non-interest income as a percentage of total revenue
31.6

 
33.3

 
31.8

 
(170
)
 
(20
)
 
 
 
 
 
 
 
 
 
 
 
 
N.M. Not Meaningful.
 
 
 
 
 
 
 
 
 
 
(1) Annualized.
 
 
 
 
 
 
 
 
 
 

Net Interest Income

Net interest income for the first quarter of 2018 increased $21.1 million, or 9.5 percent, from the first quarter of 2017 and $1.3 million, or 0.6 percent, from the fourth quarter of 2017. The increase from the first quarter of 2017 was primarily due to increased interest income on loans and leases held for investment, partially offset by an increase in total interest expense and a decrease in interest income on loans held for sale. Total interest income increased $33.0 million, or 13.6 percent, from the first quarter of 2017 primarily due to higher average balances and increased average yields on inventory finance loans and leasing and equipment finance loans and leases, as well as increased average yields and higher average balances of commercial loans. Total interest expense increased $11.9 million, or 58.8 percent, from the first quarter of 2017 primarily due to increased average rates and higher average balances of certificates of deposit and increased average rates on long-term borrowings and savings accounts, partially offset by lower average balances of money market accounts.


3




The increase in net interest income from the fourth quarter of 2017 was primarily due to increased interest income on loans and leases held for investment, partially offset by an increase in total interest expense. Total interest income increased $4.6 million, or 1.7 percent, from the fourth quarter of 2017 primarily due to higher average balances and increased average yields on inventory finance loans, partially offset by lower average balances of auto finance and consumer real estate loans. Total interest expense increased $3.3 million, or 11.5 percent, from the fourth quarter of 2017 primarily due to increased average rates and higher average balances of long-term borrowings and increased average rates on certificates of deposit and savings accounts.

Net interest margin was 4.59 percent for the first quarter of 2018, up 13 basis points from the first quarter of 2017 and up 2 basis points from the fourth quarter of 2017. The increase from the first quarter of 2017 was primarily due to increased average yields on the variable- and adjustable-rate loan portfolios as a result of interest rate increases, partially offset by increased average rates and higher average balances of certificates of deposit and increased average rates on long-term borrowings and savings accounts. The increase from the fourth quarter of 2017 was primarily due to increased average yields on seasonally higher average balances of inventory finance loans, partially offset by lower average balances of auto finance loans, increased average rates on higher average balances of long-term borrowings and increased average rates on certificates of deposit and savings accounts.

Non-interest Income

TCF sold $266.3 million, $379.4 million and $359.7 million of consumer real estate loans during the first quarter of 2018 and 2017 and the fourth quarter of 2017, respectively, resulting in net gains in each respective period.

Servicing fee income was $8.3 million on $4.5 billion of average loans and leases serviced for others for the first quarter of 2018, compared with $11.7 million on $5.6 billion for the first quarter of 2017 and $9.0 million on $4.7 billion for the fourth quarter of 2017. The decreases from both periods were primarily due to run-off in the auto finance serviced for others portfolio. Servicing fee income on auto finance loans serviced for others comprised $6.4 million of total servicing fee income for the first quarter of 2018, compared with $9.8 million and $7.1 million for the first quarter of 2017 and the fourth quarter of 2017, respectively. Servicing fee income on consumer real estate loans serviced for others comprised $1.5 million of total servicing fee income for the first quarter of 2018 and 2017 and the fourth quarter of 2017.

Leasing and equipment finance non-interest income for the first quarter of 2018 increased $13.5 million, or 47.9 percent, from the first quarter of 2017 and was consistent with the fourth quarter of 2017. The increase from the first quarter of 2017 was primarily due to an increase in operating lease revenue, mainly driven by the acquisition of a leasing company in the second quarter of 2017 and an increase in sales-type lease revenue.

4




Loans and Leases

Period-End and Average Loans and Leases
Table 3
 
 
 
 
 
 
 
Percent Change
 
 
1Q
 
4Q
 
1Q
 
1Q18 vs
 
1Q18 vs
 
(Dollars in thousands)
2018
 
2017
 
2017
 
4Q17
 
1Q17
 
Period-End:
 
 
 
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
First mortgage lien
$
1,878,441

 
$
1,959,387

 
$
2,166,691

 
(4.1
)%
 
(13.3
)%
 
Junior lien
2,843,221

 
2,860,309

 
2,494,696

 
(0.6
)
 
14.0

 
Total consumer real estate
4,721,662

 
4,819,696

 
4,661,387

 
(2.0
)
 
1.3

 
Commercial
3,678,181

 
3,561,193

 
3,376,050

 
3.3

 
8.9

 
Leasing and equipment finance
4,666,239

 
4,761,661

 
4,276,008

 
(2.0
)
 
9.1

 
Inventory finance
3,457,855

 
2,739,754

 
2,864,248

 
26.2

 
20.7

 
Auto finance
2,839,363

 
3,199,639

 
2,780,416

 
(11.3
)
 
2.1

 
Other
19,854

 
22,517

 
16,785

 
(11.8
)
 
18.3

 
Total
$
19,383,154

 
$
19,104,460

 
$
17,974,894

 
1.5

 
7.8

 
 
 
 
 
 
 
 
 
 
 
 
Average:
 
 
 
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
First mortgage lien
$
1,918,677

 
$
1,959,067

 
$
2,237,801

 
(2.1
)%
 
(14.3
)%
 
Junior lien
2,879,995

 
3,013,356

 
2,791,200

 
(4.4
)
 
3.2

 
Total consumer real estate
4,798,672

 
4,972,423

 
5,029,001

 
(3.5
)
 
(4.6
)
 
Commercial
3,601,020

 
3,536,725

 
3,302,891

 
1.8

 
9.0

 
Leasing and equipment finance
4,690,868

 
4,713,015

 
4,285,944

 
(0.5
)
 
9.4

 
Inventory finance
3,128,290

 
2,688,387

 
2,696,787

 
16.4

 
16.0

 
Auto finance
3,020,187

 
3,267,855

 
2,714,862

 
(7.6
)
 
11.2

 
Other
14,446

 
13,007

 
9,740

 
11.1

 
48.3

 
Total
$
19,253,483

 
$
19,191,412

 
$
18,039,225

 
0.3

 
6.7

 
 
 
 
 
 
 
 
 
 
 
 

Period-end loans and leases were $19.4 billion at March 31, 2018, an increase of $1.4 billion, or 7.8 percent, from March 31, 2017 and $278.7 million, or 1.5 percent, from December 31, 2017. Average loans and leases were $19.3 billion for the first quarter of 2018, an increase of $1.2 billion, or 6.7 percent, from the first quarter of 2017 and consistent with the fourth quarter of 2017.


5




The increase from March 31, 2017 for period-end loans and leases was primarily due to increases in the inventory finance, leasing and equipment finance and commercial portfolios. The increase from the first quarter of 2017 for average loans and leases was primarily due to increases in the inventory finance, leasing and equipment finance, auto finance and commercial portfolios, partially offset by a decrease in the consumer real estate portfolio. The increases in the inventory finance portfolio were primarily due to strong originations and expansion of the number of active dealers. The increases in the leasing and equipment finance portfolio were primarily due to a loan and lease portfolio purchase of $445.5 million on September 29, 2017. The increase in the average auto finance portfolio was primarily attributable 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 commercial portfolio were primarily due to strong originations. The decrease in the average consumer real estate portfolio was primarily due to a decrease in the first mortgage lien portfolio due to run-off and lower originations.

The increase from December 31, 2017 for period-end loans and leases was primarily due to increases in the inventory finance and commercial portfolios, partially offset by decreases in the auto finance, consumer real estate and leasing and equipment finance portfolios. The increase in the inventory finance portfolio was primarily due to a seasonally higher balance in the lawn and garden marketing segment and strong originations. The increase in the commercial portfolio was primarily due to lower pay-offs. The decrease in the auto finance portfolio was primarily attributable to the discontinuation of auto finance loan originations and run-off in the portfolio. The decrease in the consumer real estate portfolio was primarily due to a decrease in the first mortgage lien portfolio due to run-off and lower originations. The decrease in the leasing and equipment finance portfolio was primarily due to lower originations.

Loan and lease originations were $3.8 billion for the first quarter of 2018, a decrease of $196.6 million, or 4.9 percent, from the first quarter of 2017 and $116.8 million, or 3.0 percent, from the fourth quarter of 2017. The decrease from the first quarter of 2017 was primarily due to discontinuing auto finance originations and decreased consumer real estate originations, partially offset by higher inventory finance and commercial originations. The decrease from the fourth quarter of 2017 was primarily due to discontinuing auto finance originations and decreased leasing and equipment finance, commercial and consumer real estate originations, partially offset by higher inventory finance originations.


6




Credit Quality

Credit Trends
 
 
 
 
 
 
 
 
Table 4
 
 
 
 
 
 
 
Change
 
 
1Q
4Q
3Q
2Q
1Q
 
1Q18 vs
 
1Q18 vs
 
 
(Dollars in thousands)
2018
2017
2017
2017
2017
 
4Q17
 
1Q17
 
 
Over 60-day delinquencies as a percentage of period-end loans and leases(1)
0.10
%
0.12
%
0.13
%
0.11
%
0.09
%
 
(2)

bps
1

bps
 
Net charge-offs as a percentage of average loans and leases(2), (3), (4)
0.29

0.38

0.18

0.28

0.11

 
(9
)
 
18

 
 
Non-accrual loans and leases and other real estate owned
$
143,607

$
136,807

$
146,024

$
158,000

$
170,940

 
5.0

%
(16.0
)
%
 
Provision for credit losses
11,368

22,259

14,545

19,446

12,193

 
(48.9
)
 
(6.8
)
 
 
 
 
(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 0.10 percent at March 31, 2018, up 1 basis point from the March 31, 2017 rate and down 2 basis points from the December 31, 2017 rate. The increase from March 31, 2017 was primarily due to higher delinquencies in the auto finance portfolio, partially offset by improved delinquencies in the first mortgage lien consumer real estate portfolio. The decrease from December 31, 2017 was primarily due to improved delinquencies in the auto finance and leasing and equipment finance portfolios.

The net charge-off rate was 0.29 percent for the first quarter of 2018, up 18 basis points from the first quarter of 2017 and down 9 basis points from the fourth quarter of 2017. The increase from the first quarter of 2017 was primarily due to the recovery of $8.7 million in the first quarter of 2017 on previous charge-offs related to the consumer real estate non-accrual loans that were sold and increased net charge-offs in the auto finance portfolio, partially offset by decreased net charge-offs in the commercial portfolio. Excluding the $8.7 million recovery from the consumer real estate non-accrual loan sale, the net charge-off rate was 0.31 percent for the first quarter of 2017. The decrease from the fourth quarter of 2017 was primarily due to decreased net charge-offs in the leasing and equipment finance portfolio.


7




Non-accrual loans and leases and other real estate owned were $143.6 million at March 31, 2018, a decrease of $27.3 million, or 16.0 percent, from March 31, 2017 and an increase of $6.8 million, or 5.0 percent, from December 31, 2017. Non-accrual loans and leases were $126.4 million at March 31, 2018, a decrease of $12.6 million, or 9.0 percent, from March 31, 2017 and an increase of $7.8 million, or 6.6 percent, from December 31, 2017. The decrease from March 31, 2017 was primarily due to the $21.8 million consumer real estate non-accrual loan sale in the third quarter of 2017, partially offset by an increase in non-accrual loans and leases in the leasing and equipment finance portfolio. The increase from December 31, 2017 was primarily due to increases in non-accrual loans and leases in the commercial and leasing and equipment finance portfolios. Other real estate owned was $17.2 million at March 31, 2018, a decrease of $14.8 million, or 46.2 percent, from March 31, 2017 and $1.0 million, or 5.7 percent, from December 31, 2017. The decreases from both periods were primarily due to sales of consumer real estate properties outpacing additions. The decrease from March 31, 2017 was also due to sales of commercial real estate properties.

Provision for credit losses was $11.4 million for the first quarter of 2018, a decrease of $0.8 million, or 6.8 percent, from the first quarter of 2017 and $10.9 million, or 48.9 percent, from the fourth quarter of 2017. The decrease from the first quarter of 2017 was primarily due to run-off in the auto finance portfolio and decreased net charge-offs in the commercial portfolio, partially offset by increased net charge-offs in the consumer real estate portfolio mainly driven by the recovery of $8.7 million in the first quarter of 2017 on previous charge-offs related to the consumer real estate non-accrual loans that were sold. The decrease from the fourth quarter of 2017 was primarily due to run-off in the auto finance portfolio, decreased net charge-offs in the leasing and equipment finance portfolio and a decreased reserve rate for the inventory finance portfolio, partially offset by seasonal growth in the inventory finance portfolio.

8




Deposits

Average Deposits
 
 
 
 
 
 
 
 
Table 5
 
 
 
 
 
 
 
Change
 
 
1Q
 
4Q
 
1Q
 
1Q18 vs
 
1Q18 vs
 
(Dollars in thousands)
2018
 
2017
 
2017
 
4Q17
 
1Q17
 
Checking
$
6,192,310

 
$
6,098,522

 
$
5,914,203

 
1.5
 %
 
4.7
 %
 
Savings
5,410,652

 
5,154,216

 
4,773,788

 
5.0

 
13.3

 
Money market
1,698,064

 
1,854,442

 
2,385,353

 
(8.4
)
 
(28.8
)
 
Certificates of deposit
4,998,133

 
5,032,085

 
4,033,143

 
(0.7
)
 
23.9

 
Total average deposits
$
18,299,159

 
$
18,139,265

 
$
17,106,487

 
0.9

 
7.0

 
 
 
 
 
 
 
 
 
 
 
 
Average interest rate on deposits(1)
0.50
%
 
0.46
%
 
0.33
%
 
4
 bps
 
17
 bps
 
 
 
 
 
 
 
 
 
 
 
 
(1) Annualized.
 
 
 
 
 
 
 
 
 
 

Total average deposits for the first quarter of 2018 increased $1.2 billion, or 7.0 percent, from the first quarter of 2017 and $159.9 million, or 0.9 percent, from the fourth quarter of 2017. The increase from the first quarter of 2017 was primarily due to higher average balances of certificates of deposit, savings accounts and checking accounts, partially offset by lower average balances of money market accounts. The increase from the fourth quarter of 2017 was primarily due to higher average balances of savings accounts and checking accounts, partially offset by lower average balances of money market accounts and certificates of deposit.

The average interest rate on deposits for the first quarter of 2018 was 0.50 percent, up 17 basis points from the first quarter of 2017 and 4 basis points from the fourth quarter of 2017. The increases from both periods were primarily due to increased average rates on certificates of deposit and savings accounts as a result of interest rate increases.


9




Non-interest Expense

Non-interest Expense
 
 
 
 
 
 
 
 
Table 6
 
 
 
 
 
 
 
 Change
 
 
1Q
 
4Q
 
1Q
 
1Q18 vs
 
1Q18 vs
 
(Dollars in thousands)
2018
 
2017
 
2017
 
4Q17
 
1Q17
 
Compensation and employee benefits
$
123,840

 
$
127,630

 
$
124,298

 
(3.0
)%
 
(0.4
)%
 
Occupancy and equipment
40,514

 
39,578

 
39,600

 
2.4

 
2.3

 
Other
58,819

 
159,019

 
64,216

 
(63.0
)
 
(8.4
)
 
Subtotal
223,173

 
326,227

 
228,114

 
(31.6
)
 
(2.2
)
 
Operating lease depreciation
17,274

 
16,497

 
11,242

 
4.7

 
53.7

 
Foreclosed real estate and repossessed assets, net
4,916

 
4,739

 
4,549

 
3.7

 
8.1

 
Other credit costs, net
617

 
343

 
101

 
79.9

 
N.M.

 
Total non-interest expense
$
245,980

 
$
347,806

 
$
244,006

 
(29.3
)
 
0.8

 
 
 
 
 
 
 
 
 
 
 
 
Efficiency ratio
69.21
%
 
95.88
%
 
74.93
%
 
(2,667
)bps
 
(572
)bps
 
 
 
 
 
 
 
 
 
 
 
 
N.M. Not Meaningful.
 
 
 
 
 
 
 
 
 
 

Non-interest expense for the first quarter of 2018 increased $2.0 million, or 0.8 percent, from the first quarter of 2017 and decreased $101.8 million, or 29.3 percent, from the fourth quarter of 2017. The increase from the first quarter of 2017 was primarily due to an increase in operating lease depreciation, partially offset by a decrease in other non-interest expense. The decrease from the fourth quarter of 2017 was primarily due to decreases in other non-interest expense and compensation and employee benefits expense.

Compensation and employee benefits expense for the first quarter of 2018 was consistent with the first quarter of 2017 and decreased $3.8 million, or 3.0 percent, from the fourth quarter of 2017. The decrease from the fourth quarter of 2017 was primarily due to one-time team member bonuses recorded in the fourth quarter of 2017 and lower headcount in the auto finance business.

Other non-interest expense decreased $5.4 million, or 8.4 percent, from the first quarter of 2017 and $100.2 million, or 63.0 percent, from the fourth quarter of 2017. The decrease from the first quarter of 2017 was primarily due to decreases in severance expense, loan and lease processing expense and professional fees, partially offset by increases in advertising and marketing expense and outside processing expense. The decrease from the fourth quarter of 2017 was primarily due to fourth quarter 2017 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 of $14.8 million, as well as the donation to TCF Foundation of $5.0 million.

Operating lease depreciation increased $6.0 million, or 53.7 percent, from the first quarter of 2017 and was consistent with the fourth quarter of 2017. The increase from the first quarter of 2017 was primarily due to an increase in leasing and equipment finance operating lease revenue related to the acquisition of a leasing company in the second quarter of 2017.


10




Income Tax Expense

The Company's effective income tax rate was 22.1% for the first quarter of 2018, compared with 30.0% for the first quarter of 2017. The effective tax rates for the first quarter of 2018 and 2017 were impacted by $1.2 million and $2.0 million, respectively, of tax benefits related to stock compensation.

Capital

Capital Information
 
 
Table 7
 
At Mar. 31,
 
At Dec. 31,
 
(Dollars in thousands, except per-share data)
2018
 
2017
 
Total equity
$
2,550,950

 
$
2,680,584

 
Book value per common share
13.89

 
13.96

 
Tangible book value per common share(1)
12.84

 
12.92

 
Common equity to assets
10.06
%
 
10.42
%
 
Tangible common equity to tangible assets(1)
9.37

 
9.72

 
 
 
 
 
 
 
At Mar. 31,
 
At Dec. 31,
 
Regulatory Capital:
2018(2)
 
2017
 
Common equity Tier 1 capital
$
2,222,390

 
$
2,242,410

 
Tier 1 capital
2,414,838

 
2,522,178

 
Total capital
2,786,637

 
2,889,323

 
 
 
 
 
 
Regulatory Capital Ratios:
 
 
 
 
Common equity Tier 1 capital ratio
10.57
%
 
10.79
%
 
Tier 1 risk-based capital ratio
11.49

 
12.14

 
Total risk-based capital ratio
13.26

 
13.90

 
Tier 1 leverage ratio
10.52

 
11.12

 
 
 
 
 
 
(1) See "Reconciliation of GAAP to Non-GAAP Financial Measures" table.
 
(2) The regulatory capital ratios for 1Q 2018 are preliminary pending completion and filing of the Company's regulatory reports.
 

TCF continues to maintain strong capital ratios after the preferred stock redemption and common stock repurchases.

TCF repurchased 2,567,171 shares of its common stock during the first quarter of 2018 for approximately $57.6 million, at an average cost of $22.45 per share, under its share repurchase program.  TCF has the authority to purchase an additional $83.2 million in aggregate value of shares of TCF's common stock pursuant to its stock repurchase program.

On March 1, 2018, TCF redeemed all outstanding shares of its 6.45% Series B non-cumulative perpetual preferred stock for $100.0 million.


11




On April 19, 2018, TCF's Board of Directors declared a regular quarterly cash dividend of 15 cents per common share payable on June 1, 2018, to stockholders of record at the close of business on May 15, 2018. TCF also declared dividends on the 5.70% Series C non-cumulative perpetual preferred stock, payable on June 1, 2018, to stockholders of record at the close of business on May 15, 2018.

Webcast Information
A live webcast of TCF's conference call to discuss the first quarter earnings will be hosted at TCF's website,     http://ir.tcfbank.com, on April 23, 2018 at 9:00 a.m. CDT. A slide presentation for the call will be available on the website prior to the call. Additionally, the webcast will be available for replay on TCF's website after the conference call. The website also includes free access to company news releases, TCF's annual report, investor presentations and SEC filings.

TCF is a Wayzata, Minnesota-based national bank holding company. As of March 31, 2018, TCF had $23.4 billion in total assets and 318 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.



12




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, 2017 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, debt securities held to maturity and debt 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.
 

13




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, 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 (from fraudulent checks, stolen debit card information, etc.) may increase; failure to keep pace with technological change, such as by failing to develop and maintain technology necessary to satisfy customer demands and prevent cyber-attacks, costs and possible disruptions related to upgrading systems or cyber-attacks; 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.



14




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Quarter Ended March 31,
 
Change
 
2018
 
2017
 
$
 
%
Interest income:
 
 
 
 
 
 
 
Loans and leases
$
260,375

 
$
219,548

 
$
40,827

 
18.6
 %
Debt securities available for sale
10,123

 
7,980

 
2,143

 
26.9

Debt securities held to maturity
1,019

 
1,280

 
(261
)
 
(20.4
)
Loans held for sale and other
3,745

 
13,499

 
(9,754
)
 
(72.3
)
Total interest income
275,262

 
242,307

 
32,955

 
13.6

Interest expense:
 
 
 
 

 


Deposits
22,510

 
13,715

 
8,795

 
64.1

Borrowings
9,553

 
6,478

 
3,075

 
47.5

Total interest expense
32,063

 
20,193

 
11,870

 
58.8

Net interest income
243,199

 
222,114

 
21,085

 
9.5

Provision for credit losses
11,368

 
12,193

 
(825
)
 
(6.8
)
Net interest income after provision for credit losses
231,831

 
209,921

 
21,910

 
10.4

Non-interest income:
 
 
 
 

 


Fees and service charges
30,751

 
31,282

 
(531
)
 
(1.7
)
Card revenue
13,759

 
13,150

 
609

 
4.6

ATM revenue
4,650

 
4,675

 
(25
)
 
(0.5
)
Subtotal
49,160

 
49,107

 
53

 
0.1

Gains on sales of auto loans, net

 
2,864

 
(2,864
)
 
(100.0
)
Gains on sales of consumer real estate loans, net
9,123

 
8,891

 
232

 
2.6

Servicing fee income
8,295

 
11,651

 
(3,356
)
 
(28.8
)
Subtotal
17,418

 
23,406

 
(5,988
)
 
(25.6
)
Leasing and equipment finance
41,847

 
28,298

 
13,549

 
47.9

Other
3,716

 
2,703

 
1,013

 
37.5

Fees and other revenue
112,141

 
103,514

 
8,627

 
8.3

Gains (losses) on debt securities, net
63

 

 
63

 
N.M.

Total non-interest income
112,204

 
103,514

 
8,690

 
8.4

Non-interest expense:
 
 
 
 

 


Compensation and employee benefits
123,840

 
124,298

 
(458
)
 
(0.4
)
Occupancy and equipment
40,514

 
39,600

 
914

 
2.3

Other
58,819

 
64,216

 
(5,397
)
 
(8.4
)
Subtotal
223,173

 
228,114

 
(4,941
)
 
(2.2
)
Operating lease depreciation
17,274

 
11,242

 
6,032

 
53.7

Foreclosed real estate and repossessed assets, net
4,916

 
4,549

 
367

 
8.1

Other credit costs, net
617

 
101

 
516

 
N.M.

Total non-interest expense
245,980

 
244,006

 
1,974

 
0.8

Income before income tax expense
98,055

 
69,429

 
28,626

 
41.2

Income tax expense
21,631

 
20,843

 
788

 
3.8

Income after income tax expense
76,424

 
48,586

 
27,838

 
57.3

Income attributable to non-controlling interest
2,663

 
2,308

 
355

 
15.4

Net income attributable to TCF Financial Corporation
73,761

 
46,278

 
27,483

 
59.4

Preferred stock dividends
4,106

 
4,847

 
(741
)
 
(15.3
)
Impact of preferred stock redemption
3,481

 

 
3,481

 
N.M.

Net income available to common stockholders
$
66,174

 
$
41,431

 
$
24,743

 
59.7

 
 
 
 
 


 


Earnings per common share:
 
 
 
 


 


Basic
$
0.39

 
$
0.25

 
$
0.14

 
56.0
 %
Diluted
0.39

 
0.25

 
0.14

 
56.0

 
 
 
 
 


 


Dividends declared per common share
$
0.15

 
$
0.075

 
$
0.075

 
100.0
 %
 
 
 
 
 
 
 
 
Average common and common equivalent shares
 
 
 
 
 
 
 
outstanding (in thousands):
 
 
 
 
 
 
 
Basic
168,507

 
167,903

 
604

 
0.4
 %
Diluted
169,997

 
168,530

 
1,467

 
0.9

 
 
 
 
 
 
 
 
N.M. Not Meaningful.

15




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
Quarter Ended March 31,
 
Change
 
2018
 
2017
 
$
 
%
Net income attributable to TCF Financial Corporation
$
73,761

 
$
46,278

 
$
27,483

 
59.4
 %
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Net unrealized gains (losses) on debt securities available for sale and interest-only strips
(27,819
)
 
2,769

 
(30,588
)
 
N.M.

Net unrealized gains (losses) on net investment hedges
1,604

 
(313
)
 
1,917

 
N.M.

Foreign currency translation adjustment
(2,110
)
 
581

 
(2,691
)
 
N.M.

Recognized postretirement prior service cost
(9
)
 
(7
)
 
(2
)
 
(28.6
)
Total other comprehensive income (loss), net of tax
(28,334
)
 
3,030

 
(31,364
)
 
N.M.

Comprehensive income
$
45,427

 
$
49,308

 
$
(3,881
)
 
(7.9
)
 
 
 
 
 
 
 
 
N.M. Not Meaningful.
 
 
 
 
 
 
 



16




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
At Mar. 31,
 
At Dec. 31,
 
Change
 
2018
 
2017
 
$
 
%
ASSETS:
 
 
 
 
 
 
 
Cash and due from banks
$
588,893

 
$
621,782

 
$
(32,889
)
 
(5.3
)%
Investments
91,661

 
82,644

 
9,017

 
10.9

Debt securities held to maturity
158,099

 
161,576

 
(3,477
)
 
(2.2
)
Debt securities available for sale
1,954,246

 
1,709,018

 
245,228

 
14.3

Loans and leases held for sale
50,706

 
134,862

 
(84,156
)
 
(62.4
)
Loans and leases:
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
First mortgage lien
1,878,441

 
1,959,387

 
(80,946
)
 
(4.1
)
Junior lien
2,843,221

 
2,860,309

 
(17,088
)
 
(0.6
)
Total consumer real estate
4,721,662

 
4,819,696

 
(98,034
)
 
(2.0
)
Commercial
3,678,181

 
3,561,193

 
116,988

 
3.3

Leasing and equipment finance
4,666,239

 
4,761,661

 
(95,422
)
 
(2.0
)
Inventory finance
3,457,855

 
2,739,754

 
718,101

 
26.2

Auto finance
2,839,363

 
3,199,639

 
(360,276
)
 
(11.3
)
Other
19,854

 
22,517

 
(2,663
)
 
(11.8
)
Total loans and leases
19,383,154

 
19,104,460

 
278,694

 
1.5

Allowance for loan and lease losses
(167,703
)
 
(171,041
)
 
3,338

 
2.0

Net loans and leases
19,215,451

 
18,933,419

 
282,032

 
1.5

Premises and equipment, net
427,497

 
421,549

 
5,948

 
1.4

Goodwill, net
154,757

 
154,757

 

 

Other assets
743,742

 
782,552

 
(38,810
)
 
(5.0
)
Total assets
$
23,385,052

 
$
23,002,159

 
$
382,893

 
1.7

 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY:
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
Checking
$
6,541,409

 
$
6,300,127

 
$
241,282

 
3.8
 %
Savings
5,551,155

 
5,287,606

 
263,549

 
5.0

Money market
1,609,472

 
1,764,998

 
(155,526
)
 
(8.8
)
Certificates of deposit
4,995,636

 
4,982,271

 
13,365

 
0.3

Total deposits
18,697,672

 
18,335,002

 
362,670

 
2.0

Short-term borrowings
775

 

 
775

 
N.M.

Long-term borrowings
1,457,976

 
1,249,449

 
208,527

 
16.7

Total borrowings
1,458,751

 
1,249,449

 
209,302

 
16.8

Accrued expenses and other liabilities
677,679

 
737,124

 
(59,445
)
 
(8.1
)
Total liabilities
20,834,102

 
20,321,575

 
512,527

 
2.5

Equity:
 
 
 
 
 
 
 
Preferred stock, par value $0.01 per share, 30,000,000 shares authorized;
 
 
 
 
 
 
 
7,000 and 4,007,000 shares issued, respectively
169,302

 
265,821

 
(96,519
)
 
(36.3
)
Common stock, par value $0.01 per share, 280,000,000 shares authorized;
 
 
 
 
 
 
 
172,472,035 and 172,158,449 shares issued, respectively
1,725

 
1,722

 
3

 
0.2

Additional paid-in capital
878,096

 
877,217

 
879

 
0.1

Retained earnings, subject to certain restrictions
1,618,041

 
1,577,311

 
40,730

 
2.6

Accumulated other comprehensive income (loss)
(46,851
)
 
(18,517
)
 
(28,334
)
 
(153.0
)
Treasury stock at cost, 3,056,201 and 489,030 shares, respectively and other
(97,800
)
 
(40,797
)
 
(57,003
)
 
(139.7
)
Total TCF Financial Corporation stockholders' equity
2,522,513

 
2,662,757

 
(140,244
)
 
(5.3
)
Non-controlling interest in subsidiaries
28,437

 
17,827

 
10,610

 
59.5

Total equity
2,550,950

 
2,680,584

 
(129,634
)
 
(4.8
)
Total liabilities and equity
$
23,385,052

 
$
23,002,159

 
$
382,893

 
1.7

 
 
 
 
 
 
 
 
N.M. Not Meaningful.

17




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA
(Dollars in thousands)
(Unaudited)
 
Over 60-Day Delinquencies as a Percentage of Portfolio(1)
 
 
 
 
 
 
 
 
 
 
 
Change from
 
 
At Mar. 31,
 
At Dec. 31,
 
At Sep. 30,
 
At Jun. 30,
 
At Mar. 31,
 
Dec. 31,
 
Mar. 31,
 
 
2018
 
2017
 
2017
 
2017
 
2017
 
2017
 
2017
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First mortgage lien
0.23
%
 
0.25
%
 
0.32
%
 
0.31
%
 
0.28
%
 
(2
)
bps
(5
)
bps
Junior lien
0.06

 
0.04

 
0.05

 
0.05

 
0.05

 
2

 
1

 
Total consumer real estate
0.13

 
0.13

 
0.15

 
0.16

 
0.15

 

 
(2
)
 
Commercial

 

 

 

 

 

 

 
Leasing and equipment finance
0.11

 
0.14

 
0.15

 
0.14

 
0.12

 
(3
)
 
(1
)
 
Inventory finance

 
0.01

 
0.01

 
0.01

 

 
(1
)
 

 
Auto finance
0.24

 
0.28

 
0.25

 
0.20

 
0.13

 
(4
)
 
11

 
Other
0.24

 
0.04

 
0.07

 
0.30

 
0.05

 
20

 
19

 
Subtotal
0.09

 
0.11

 
0.12

 
0.11

 
0.09

 
(2
)
 

 
Portfolios acquired with deteriorated credit quality
12.95

 
13.18

 
9.42

 

 

 
(23
)
 
1,295

 
Total delinquencies
0.10

 
0.12

 
0.13

 
0.11

 
0.09

 
(2
)
 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Excludes non-accrual loans and leases.

Net Charge-Offs as a Percentage of Average Loans and Leases
 
 
 
 
 
 
Quarter Ended(1)
 
Change from
 
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Mar. 31,
 
 
2018
 
2017
 
2017
 
2017
 
2017
 
2017
 
2017
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First mortgage lien
0.16
%
 
0.18
 %
 
(0.16
)%
 
0.15
%
 
(0.18
)%
 
(2
)
bps
34

bps
Junior lien
0.05

 
(0.03
)
 
(0.38
)
 
0.05

 
(0.89
)
 
8

 
94

 
Total consumer real estate
0.09

 
0.05

 
(0.29
)
 
0.09

 
(0.58
)
 
4

 
67

 
Commercial

 
(0.04
)
 
(0.02
)
 
0.29

 
0.32

 
4

 
(32
)
 
Leasing and equipment finance
0.11

 
0.41

 
0.10

 
0.14

 
0.13

 
(30
)
 
(2
)
 
Inventory finance
0.05

 
0.15

 
0.08

 
0.09

 
0.01

 
(10
)
 
4

 
Auto finance
1.41

 
1.36

 
1.13

 
0.83

 
1.12

 
5

 
29

 
Other
 N.M.

 
 N.M.

 
 N.M.

 
 N.M.

 
 N.M.

 
N.M.

 
N.M.

 
Total
0.29

 
0.38

 
0.18

 
0.28

 
0.11

 
(9
)
 
18

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

Non-Accrual Loans and Leases Rollforward
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Change from
 
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Mar. 31,
 
 
2018
 
2017
 
2017
 
2017
 
2017
 
2017
 
2017
 
Balance, beginning of period
$
118,582

 
$
119,619

 
$
129,273

 
$
138,981

 
$
181,445

 
$
(1,037
)
 
$
(62,863
)
 
Additions
34,462

 
32,384

 
39,094

 
23,667

 
34,661

 
2,078

 
(199
)
 
Charge-offs
(3,891
)
 
(7,636
)
 
(3,916
)
 
(6,819
)
 
(6,412
)
 
3,745

 
2,521

 
Transfers to other assets
(8,457
)
 
(9,551
)
 
(7,308
)
 
(10,870
)
 
(8,786
)
 
1,094

 
329

 
Return to accrual status
(4,335
)
 
(2,187
)
 
(3,559
)
 
(3,077
)
 
(2,591
)
 
(2,148
)
 
(1,744
)
 
Payments received
(10,608
)
 
(14,412
)
 
(7,993
)
 
(11,647
)
 
(10,732
)
 
3,804

 
124

 
Sales

 

 
(25,924
)
 
(892
)
 
(49,916
)
 

 
49,916

 
Other, net
675

 
365

 
(48
)
 
(70
)
 
1,312

 
310

 
(637
)
 
Balance, end of period
$
126,428

 
$
118,582

 
$
119,619

 
$
129,273

 
$
138,981

 
$
7,846

 
$
(12,553
)
 


18




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)
 
Other Real Estate Owned Rollforward