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Section 1: 8-K (8-K)

Document


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

 FORM 8-K
 
 CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):
October 22, 2018
 
 395421840_deluxetcfcorplogorgba61.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 October 22, 2018, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended September 30, 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 third 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 October 22, 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:  October 22, 2018



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
395421840_deluxetcfcorplogorgba62.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)
 
Timothy Sedabres
(952) 745-2766
investor@tcfbank.com
(Investors)
 
 
 
 
 
 
TCF REPORTS QUARTERLY NET INCOME OF $86.2 MILLION
AND DILUTED EARNINGS PER COMMON SHARE OF 51 CENTS

Third Quarter Observations

Revenue of $365.6 million, up 6.5% from the third quarter of 2017
Provision for credit losses of $2.3 million, which was impacted by a $6.6 million recovery on previous charge-offs related to the sale of consumer real estate non-accrual loans
Net interest margin of 4.66%, down 1 basis point from the second quarter of 2018, up 5 basis points from the third quarter of 2017
Efficiency ratio of 67.41%, down 105 basis points from the third quarter of 2017
Average interest-earning asset growth of 4.6% from the third quarter of 2017
Period-end loans and leases of $18.4 billion, down 3.0% from September 30, 2017; period-end loans and leases, excluding auto finance, up 2.5%(1) from September 30, 2017
Auto finance portfolio run-off of $328.1 million in the third quarter of 2018 and $924.5 million year-to-date
Return on average common equity ("ROACE") of 14.44%
Return on average tangible common equity ("ROATCE") of 15.76%(2)
Repurchased 0.9 million shares of common stock at a cost of $24.0 million

Summary of Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
At or For the Quarter Ended
 
Change From
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
Sep. 30,
(Dollars in thousands, except per share data)
2018
 
2018
 
2018
 
2017
 
2017
 
2018
2017
Net income attributable to TCF
$
86,196

 
$
58,749

 
$
73,761

 
$
101,399

 
$
60,528

 
46.7

%
42.4

%
Net interest income
249,121

 
250,799

 
243,199

 
241,860

 
234,103

 
(0.7
)
 
6.4

 
Basic earnings per common share
0.51

 
0.34

 
0.39

 
0.58

 
0.29

 
50.0

 
75.9

 
Diluted earnings per common share
0.51

 
0.34

 
0.39

 
0.57

 
0.29

 
50.0

 
75.9

 
Adjusted diluted earnings per common share(2)
0.51

 
0.49

 
0.39

 
0.57

 
0.29

 
4.1

 
75.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets(3)
1.55
%
 
1.08
%
 
1.33
%
 
1.82
%
 
1.15
%
 
47

bps
40

bps
ROACE(3)
14.44

 
9.72

 
11.23

 
16.95

 
8.44

 
472

 
600

 
Adjusted ROACE(2)(3)
14.44

 
14.11

 
11.23

 
16.95

 
8.44

 
33

 
600

 
ROATCE(2)(3)
15.76

 
10.65

 
12.26

 
32.87

 
9.57

 
511

 
619

 
Adjusted ROATCE(2)(3)
15.76

 
15.39

 
12.26

 
32.87

 
9.57

 
37

 
619

 
Net interest margin(3)
4.66

 
4.67

 
4.59

 
4.57

 
4.61

 
(1
)
 
5

 
Net charge-offs as a percentage of average loans and leases(3)
0.15

 
0.27

 
0.29

 
0.38

 
0.18

 
(12
)
 
(3
)
 
Non-performing assets as a percentage of total loans and leases and other real estate owned
0.59

 
0.54

 
0.74

 
0.72

 
0.77

 
5

 
(18
)
 
Efficiency ratio
67.41

 
74.55

 
69.21

 
95.88

 
68.46

 
(714
)
 
(105
)
 
Adjusted efficiency ratio(2)
67.41

 
65.78

 
69.21

 
95.88

 
68.46

 
163

 
(105
)
 
(1) Calculated by subtracting auto finance loans of $2.3 billion and $3.2 billion at September 30, 2018 and 2017, respectively, from total loans and leases of $18.4 billion and $19.0 billion at September 30, 2018 and 2017, respectively.
(2) See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables.
(3) Annualized




WAYZATA, Minn. (October 22, 2018) - TCF Financial Corporation ("TCF" or the "Company") (NYSE: TCF) today reported net income of $86.2 million for the third quarter of 2018, compared with $60.5 million for the third quarter of 2017 and $58.7 million for the second quarter of 2018. Diluted earnings per common share was 51 cents for the third quarter of 2018, compared with 29 cents for the third quarter of 2017 and 34 cents for the second quarter of 2018.

"Our strong third quarter financial results were highlighted by positive year-over-year operating leverage and improving returns on capital," said Craig R. Dahl, chairman and chief executive officer. "We produced strong revenue growth with disciplined expense management while continuing to lower the risk profile of the Company. Credit trends remained stable, the auto finance portfolio run-off performed as expected and our mix of interest-earning assets improved as we continued to shift toward increasingly more capital efficient assets. Our commitment to increasing return on capital has shown through in our results and we remain focused on delivering value for shareholders."

Net Interest Income and Net Interest Margin
Net interest income was $249.1 million for the third quarter of 2018, an increase of $15.0 million, or 6.4%, from the third quarter of 2017 and a decrease of $1.7 million, or 0.7%, from the second quarter of 2018. Net interest margin was 4.66% for the third quarter of 2018, up 5 basis points from the third quarter of 2017 and down 1 basis point from the second quarter of 2018. The increases in net interest income and net interest margin from the third quarter of 2017 were primarily due to increased average yields and higher average loan balances in the variable- and adjustable-rate loan portfolios, partially offset by increased cost of funds.

Non-interest Income
Non-interest income was $116.4 million for the third quarter of 2018, an increase of $7.2 million, or 6.6%, from the third quarter of 2017 and an increase of $2.3 million, or 2.1%, from the second quarter of 2018. The increases from both periods were primarily due to increased leasing and equipment finance non-interest income, partially offset by decreased servicing fee income due to the continued run-off in the auto finance serviced for others portfolio.

Non-interest Expense
Non-interest expense was $246.4 million for the third quarter of 2018, an increase of $11.4 million, or 4.8%, from the third quarter of 2017 and a decrease of $25.6 million, or 9.4%, from the second quarter of 2018. The increase from the third quarter of 2017 was primarily due to an increase in compensation and employee benefits expense. The second quarter of 2018 included $32.0 million of expenses related to the settlement with the Bureau of Consumer Financial Protection and the Office of the Comptroller of the Currency.

Income Tax Expense
The Company's effective income tax rate was 24.0% for the third quarter of 2018, compared with 32.7% for the third quarter of 2017 and 20.9% for the second quarter of 2018. The effective income tax rate was primarily impacted by the change in the corporate statutory tax rate as a result of the Tax Cuts and Jobs Act.


2




Credit Quality
Provision for credit losses The provision for credit losses was $2.3 million for the third quarter of 2018, a decrease of $12.3 million, or 84.4%, from the third quarter of 2017 and a decrease of $12.0 million, or 84.1%, from the second quarter of 2018. The decreases from both periods were primarily due to run-off in and maturation of the auto finance portfolio, as well as the recovery of $6.6 million on previous charge-offs related to the sale of consumer real estate non-accrual loans.

Net charge-off rate The annualized net charge-off rate was 0.15% for the third quarter of 2018, down 3 basis points from the third quarter of 2017 and down 12 basis points from the second quarter of 2018. The decreases from both periods were primarily due to the recovery of $6.6 million on previous charge-offs related to the sale of consumer real estate non-accrual loans, partially offset by the increased auto finance net charge-off rate resulting from a lower average loan balance due to the continued run-off of the portfolio. The annualized net charge-off rate excluding auto finance net charge-offs of $9.5 million and the recovery of $6.6 million on previous charge-offs related to the sale of consumer real estate non-accrual loans was 0.10%.

Over 60-day delinquency rate The over 60-day delinquency rate, excluding non-accrual loans and leases, was 0.12% at September 30, 2018, down 1 basis point from the September 30, 2017 rate and up 1 basis point from the June 30, 2018 rate.

Non-performing assets Non-performing assets, consisting of non-accrual loans and leases and other real estate owned, were $109.4 million at September 30, 2018, a decrease of $36.6 million, or 25.1%, from September 30, 2017 and an increase of $8.3 million, or 8.2%, from June 30, 2018. The decrease from September 30, 2017 was primarily due to the $34.7 million sale of consumer real estate non-accrual loans in the third quarter of 2018.

Balance Sheet
Average debt securities held to maturity and debt securities available for sale The total average debt securities portfolio was $2.5 billion for the third quarter of 2018, an increase of $773.2 million, or 44.7%, from the third quarter of 2017 and an increase of $256.6 million, or 11.4%, from the second quarter of 2018.

Average loans and leases Average loans and leases were $18.4 billion for the third quarter of 2018, an increase of $17.0 million, or 0.1%, from the third quarter of 2017 and a decrease of $678.1 million, or 3.6%, from the second quarter of 2018. The decrease from the second quarter of 2018 was primarily due to the seasonal decrease in the inventory finance portfolio and the continued run-off of the auto finance portfolio. Average loans and leases, excluding auto finance were $16.0 billion, an increase of $861.7 million, or 5.7%, from the third quarter of 2017 and a decrease of $418.0 million, or 2.5%, from the second quarter of 2018.


3




Average deposits Average deposits were $18.3 billion for the third quarter of 2018, an increase of $637.2 million, or 3.6%, from the third quarter of 2017 and a decrease of $77.9 million, or 0.4%, from the second quarter of 2018.

Capital TCF continues to maintain strong capital ratios, with a common equity Tier 1 capital ratio of 11.04%. TCF repurchased $24.0 million of common stock during the quarter and had the authority to repurchase an additional $141.0 million in aggregate value of shares as of September 30, 2018 pursuant to its share repurchase program.

Webcast Information
A live webcast of TCF's conference call to discuss the third quarter earnings will be hosted at TCF's website,     http://ir.tcfbank.com, on October 22, 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 September 30, 2018, TCF had $22.9 billion in total assets and 315 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.



4




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" 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.
 
Use of Non-GAAP Financial Measures
Management uses the adjusted diluted earnings per common share, adjusted ROACE, ROATCE, adjusted ROATCE, adjusted efficiency ratio, tangible common equity ratio and tangible book value per common share internally to measure performance and believes that these financial measures not recognized under generally accepted accounting principles in the United States ("GAAP") (i.e. non-GAAP) provide meaningful information to investors that will permit them to assess the Company's capital and ability to withstand unexpected market or economic conditions and to assess the performance of the Company in relation to other banking institutions on the same basis as that applied by management, analysts and banking regulators.
These non-GAAP financial measures are not defined by GAAP and other entities may calculate them differently than TCF does. Non-GAAP financial measures have inherent limitations and are not required to be uniformly applied. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes selected items does not represent the amount that effectively accrues directly to stockholders.


5




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change From
(Dollars in thousands)
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30, 2018
Sep. 30, 2017
2018
 
2018
 
2018
 
2017
 
2017
 
$
 
%
$
 
%
ASSETS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
569,968

 
$
581,876

 
$
588,893

 
$
621,782

 
$
711,734

 
$
(11,908
)
 
(2.0
)%
$
(141,766
)
 
(19.9
)%
Investments
80,672

 
95,661

 
91,661

 
82,644

 
87,690

 
(14,989
)
 
(15.7
)
(7,018
)
 
(8.0
)
Debt securities held to maturity
152,881

 
155,962

 
158,099

 
161,576

 
165,315

 
(3,081
)
 
(2.0
)
(12,434
)
 
(7.5
)
Debt securities available for sale
2,379,546

 
2,249,784

 
1,954,246

 
1,709,018

 
1,598,163

 
129,762

 
5.8

781,383

 
48.9

Loans and leases held for sale
114,198

 
291,871

 
50,706

 
134,862

 
254,903

 
(177,673
)
 
(60.9
)
(140,705
)
 
(55.2
)
Loans and leases:
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 

 
 

First mortgage lien
1,960,756

 
1,800,885

 
1,878,441

 
1,959,387

 
1,953,199

 
159,871

 
8.9

7,557

 
0.4

Junior lien
2,940,701

 
2,830,029

 
2,843,221

 
2,860,309

 
2,977,613

 
110,672

 
3.9

(36,912
)
 
(1.2
)
Total consumer real estate
4,901,457


4,630,914

 
4,721,662

 
4,819,696

 
4,930,812

 
270,543

 
5.8

(29,355
)
 
(0.6
)
Commercial
3,741,164

 
3,706,401

 
3,678,181

 
3,561,193

 
3,489,680

 
34,763

 
0.9

251,484

 
7.2

Leasing and equipment finance
4,601,887

 
4,648,049

 
4,666,239

 
4,761,661

 
4,730,931

 
(46,162
)
 
(1.0
)
(129,044
)
 
(2.7
)
Inventory finance
2,880,404

 
3,005,165

 
3,457,855

 
2,739,754

 
2,576,077

 
(124,761
)
 
(4.2
)
304,327

 
11.8

Auto finance
2,275,134

 
2,603,260

 
2,839,363

 
3,199,639

 
3,240,413

 
(328,126
)
 
(12.6
)
(965,279
)
 
(29.8
)
Other
21,107

 
20,957

 
19,854

 
22,517

 
20,439

 
150

 
0.7

668

 
3.3

Total loans and leases
18,421,153

 
18,614,746

 
19,383,154

 
19,104,460

 
18,988,352

 
(193,593
)
 
(1.0
)
(567,199
)
 
(3.0
)
Allowance for loan and lease losses
(160,621
)
 
(165,619
)
 
(167,703
)
 
(171,041
)
 
(168,244
)
 
4,998

 
3.0

7,623

 
4.5

Net loans and leases
18,260,532

 
18,449,127

 
19,215,451

 
18,933,419

 
18,820,108

 
(188,595
)
 
(1.0
)
(559,576
)
 
(3.0
)
Premises and equipment, net
429,648

 
430,956

 
427,497

 
421,549

 
425,112

 
(1,308
)
 
(0.3
)
4,536

 
1.1

Goodwill, net
154,757

 
154,757

 
154,757

 
154,757

 
227,798

 

 

(73,041
)
 
(32.1
)
Other assets
762,583

 
774,468

 
743,742

 
782,552

 
714,215

 
(11,885
)
 
(1.5
)
48,368

 
6.8

Total assets
$
22,904,785

 
$
23,184,462

 
$
23,385,052

 
$
23,002,159

 
$
23,005,038

 
$
(279,677
)
 
(1.2
)
$
(100,253
)
 
(0.4
)
LIABILITIES AND EQUITY:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Checking
$
6,382,667

 
$
6,408,174

 
$
6,541,409

 
$
6,300,127

 
$
6,197,608

 
$
(25,507
)
 
(0.4
)%
$
185,059

 
3.0
 %
Savings
5,737,144

 
5,570,979

 
5,551,155

 
5,287,606

 
4,972,529

 
166,165

 
3.0

764,615

 
15.4

Money market
1,504,952

 
1,562,008

 
1,609,472

 
1,764,998

 
1,965,291

 
(57,056
)
 
(3.7
)
(460,339
)
 
(23.4
)
Certificates of deposit
4,871,748

 
4,822,112

 
4,995,636

 
4,982,271

 
4,972,058

 
49,636

 
1.0

(100,310
)
 
(2.0
)
Total deposits
18,496,511

 
18,363,273

 
18,697,672

 
18,335,002

 
18,107,486

 
133,238

 
0.7

389,025

 
2.1

Short-term borrowings
2,324

 
761

 
775

 

 

 
1,563

 
N.M.

2,324

 
N.M.

Long-term borrowings
1,168,400

 
1,554,569

 
1,457,976

 
1,249,449

 
1,382,588

 
(386,169
)
 
(24.8
)
(214,188
)
 
(15.5
)
Total borrowings
1,170,724

 
1,555,330

 
1,458,751

 
1,249,449

 
1,382,588

 
(384,606
)
 
(24.7
)
(211,864
)
 
(15.3
)
Accrued expenses and other liabilities
709,538

 
761,281

 
677,679

 
737,124

 
918,450

 
(51,743
)
 
(6.8
)
(208,912
)
 
(22.7
)
Total liabilities
20,376,773

 
20,679,884

 
20,834,102

 
20,321,575

 
20,408,524

 
(303,111
)
 
(1.5
)
(31,751
)
 
(0.2
)
Equity:
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Preferred stock
169,302

 
169,302

 
169,302

 
265,821

 
265,967

 

 

(96,665
)
 
(36.3
)
Common stock
1,736

 
1,735

 
1,725

 
1,722

 
1,719

 
1

 
0.1

17

 
1.0

Additional paid-in capital
882,321

 
877,364

 
878,096

 
877,217

 
864,632

 
4,957

 
0.6

17,689

 
2.0

Retained earnings, subject to certain restrictions
1,708,410

 
1,649,449

 
1,618,041

 
1,577,311

 
1,488,966

 
58,961

 
3.6

219,444

 
14.7

Accumulated other comprehensive income (loss)
(65,259
)
 
(52,811
)
 
(46,851
)
 
(18,517
)
 
(13,809
)
 
(12,448
)
 
(23.6
)
(51,450
)
 
N.M.

Treasury stock at cost and other
(189,652
)
 
(164,107
)
 
(97,800
)
 
(40,797
)
 
(30,867
)
 
(25,545
)
 
(15.6
)
(158,785
)
 
N.M.

Total TCF Financial Corporation stockholders' equity
2,506,858

 
2,480,932

 
2,522,513

 
2,662,757

 
2,576,608

 
25,926

 
1.0

(69,750
)
 
(2.7
)
Non-controlling interest in subsidiaries
21,154

 
23,646

 
28,437

 
17,827

 
19,906

 
(2,492
)
 
(10.5
)
1,248

 
6.3

Total equity
2,528,012

 
2,504,578

 
2,550,950

 
2,680,584

 
2,596,514

 
23,434

 
0.9

(68,502
)
 
(2.6
)
Total liabilities and equity
$
22,904,785

 
$
23,184,462

 
$
23,385,052

 
$
23,002,159

 
$
23,005,038

 
$
(279,677
)
 
(1.2
)
$
(100,253
)
 
(0.4
)
N.M. Not Meaningful

6




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Change From
(Dollars in thousands)
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30, 2018
 
Sep. 30, 2017
2018
 
2018
 
2018
 
2017
 
2017
 
$
 
%
 
$
 
%
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and leases
$
264,678

 
$
269,280

 
$
260,375

 
$
256,633

 
$
243,973

 
$
(4,602
)
 
(1.7
)%
 
$
20,705

 
8.5
 %
Debt securities available for sale
14,838

 
12,516

 
10,123

 
8,760

 
8,486

 
2,322

 
18.6

 
6,352

 
74.9

Debt securities held to maturity
988

 
998

 
1,019

 
1,048

 
1,073

 
(10
)
 
(1.0
)
 
(85
)
 
(7.9
)
Loans held for sale and other
6,678

 
3,529

 
3,745

 
4,187

 
4,073

 
3,149

 
89.2

 
2,605

 
64.0

Total interest income
287,182

 
286,323

 
275,262

 
270,628

 
257,605

 
859

 
0.3

 
29,577

 
11.5

Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
Deposits
27,335

 
23,953

 
22,510

 
20,846

 
17,015

 
3,382

 
14.1

 
10,320

 
60.7

Borrowings
10,726

 
11,571

 
9,553

 
7,922

 
6,487

 
(845
)
 
(7.3
)
 
4,239

 
65.3

Total interest expense
38,061

 
35,524

 
32,063

 
28,768

 
23,502

 
2,537

 
7.1

 
14,559

 
61.9

Net interest income
249,121

 
250,799

 
243,199

 
241,860

 
234,103

 
(1,678
)
 
(0.7
)
 
15,018

 
6.4

Provision for credit losses
2,270

 
14,236

 
11,368

 
22,259

 
14,545

 
(11,966
)
 
(84.1
)
 
(12,275
)
 
(84.4
)
Net interest income after provision for credit losses
246,851

 
236,563

 
231,831

 
219,601

 
219,558

 
10,288

 
4.3

 
27,293

 
12.4

Non-interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fees and service charges
32,574

 
32,670

 
30,751

 
33,267

 
34,605

 
(96
)
 
(0.3
)
 
(2,031
)
 
(5.9
)
Card revenue
15,065

 
14,962

 
13,759

 
14,251

 
14,177

 
103

 
0.7

 
888

 
6.3

ATM revenue
5,053

 
4,933

 
4,650

 
4,654

 
5,234

 
120

 
2.4

 
(181
)
 
(3.5
)
Subtotal
52,692

 
52,565

 
49,160

 
52,172

 
54,016

 
127

 
0.2

 
(1,324
)
 
(2.5
)
Gains on sales of auto loans, net

 

 

 
2,216

 

 

 

 

 

Gains on sales of consumer real estate loans, net
8,764

 
7,192

 
9,123

 
11,407

 
8,049

 
1,572

 
21.9

 
715

 
8.9

Servicing fee income
6,032

 
7,484

 
8,295

 
9,000

 
9,966

 
(1,452
)
 
(19.4
)
 
(3,934
)
 
(39.5
)
Subtotal
14,796

 
14,676

 
17,418

 
22,623

 
18,015

 
120

 
0.8

 
(3,219
)
 
(17.9
)
Leasing and equipment finance
45,045

 
42,904

 
41,847

 
42,831

 
34,080

 
2,141

 
5.0

 
10,965

 
32.2

Other
3,818

 
3,934

 
3,716

 
3,218

 
2,930

 
(116
)
 
(2.9
)
 
888

 
30.3

Fees and other revenue
116,351

 
114,079

 
112,141

 
120,844

 
109,041

 
2,272

 
2.0

 
7,310

 
6.7

Gains (losses) on debt securities, net
94

 
24

 
63

 
48

 
189

 
70

 
N.M.

 
(95
)
 
(50.3
)
Total non-interest income
116,445

 
114,103

 
112,204

 
120,892

 
109,230

 
2,342

 
2.1

 
7,215

 
6.6

Non-interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
123,127

 
120,575

 
123,840

 
127,630

 
114,954

 
2,552

 
2.1

 
8,173

 
7.1

Occupancy and equipment
42,337

 
40,711

 
40,514

 
39,578

 
38,766

 
1,626

 
4.0

 
3,571

 
9.2

Other
57,989

 
89,084

 
58,819

 
159,019

 
61,581

 
(31,095
)
 
(34.9
)
 
(3,592
)
 
(5.8
)
Subtotal
223,453

 
250,370

 
223,173

 
326,227

 
215,301

 
(26,917
)
 
(10.8
)
 
8,152

 
3.8

Operating lease depreciation
19,525

 
17,945

 
17,274

 
16,497

 
15,696

 
1,580

 
8.8

 
3,829

 
24.4

Foreclosed real estate and repossessed assets, net
3,881

 
3,857

 
4,916

 
4,739

 
3,829

 
24

 
0.6

 
52

 
1.4

Other credit costs, net
(436
)
 
(133
)
 
617

 
343

 
209

 
(303
)
 
N.M.

 
(645
)
 
N.M.

Total non-interest expense
246,423

 
272,039

 
245,980

 
347,806

 
235,035

 
(25,616
)
 
(9.4
)
 
11,388

 
4.8

Income (loss) before income tax expense (benefit)
116,873

 
78,627

 
98,055

 
(7,313
)
 
93,753

 
38,246

 
48.6

 
23,120

 
24.7

Income tax expense (benefit)
28,034

 
16,418

 
21,631

 
(110,965
)
 
30,704

 
11,616

 
70.8

 
(2,670
)
 
(8.7
)
Income after income tax expense (benefit)
88,839

 
62,209

 
76,424

 
103,652

 
63,049

 
26,630

 
42.8

 
25,790

 
40.9

Income attributable to non-controlling interest
2,643

 
3,460

 
2,663

 
2,253

 
2,521

 
(817
)
 
(23.6
)
 
122

 
4.8

Net income attributable to TCF Financial Corporation
86,196

 
58,749

 
73,761

 
101,399

 
60,528

 
27,447

 
46.7

 
25,668

 
42.4

Preferred stock dividends
2,494

 
2,494

 
4,106

 
3,746

 
6,464

 

 

 
(3,970
)
 
(61.4
)
Impact of preferred stock redemption or notice to redeem preferred stock

 

 
3,481

 

 
5,779

 

 

 
(5,779
)
 
(100.0
)
Net income available to common stockholders
$
83,702

 
$
56,255

 
$
66,174

 
$
97,653

 
$
48,285

 
$
27,447

 
48.8

 
$
35,417

 
73.3

N.M. Not Meaningful

7




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
 
Consolidated Statements of Income (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30,
 
Change
(Dollars in thousands, except per share data)

2018
 
2017
 
$
 
%
 
Interest income:
 
 
 
 
 
 
 
 
Loans and leases
$
794,333

 
$
697,613

 
$
96,720


13.9

%
Debt securities available for sale
37,477

 
24,518

 
12,959


52.9

 
Debt securities held to maturity
3,005

 
3,388

 
(383
)

(11.3
)
 
Loans held for sale and other
13,952

 
22,910

 
(8,958
)
 
(39.1
)
 
Total interest income
848,767

 
748,429

 
100,338

 
13.4

 
Interest expense:
 
 
 
 

 


 
Deposits
73,798

 
45,166

 
28,632

 
63.4

 
Borrowings
31,850

 
19,885

 
11,965

 
60.2

 
Total interest expense
105,648

 
65,051

 
40,597

 
62.4

 
Net interest income
743,119

 
683,378

 
59,741

 
8.7

 
Provision for credit losses
27,874

 
46,184

 
(18,310
)
 
(39.6
)
 
Net interest income after provision for credit losses
715,245

 
637,194

 
78,051

 
12.2

 
Non-interest income:
 
 
 
 

 


 
Fees and service charges
95,995

 
98,620

 
(2,625
)
 
(2.7
)
 
Card revenue
43,786

 
41,481

 
2,305

 
5.6

 
ATM revenue
14,636

 
14,970

 
(334
)
 
(2.2
)
 
Subtotal
154,417

 
155,071

 
(654
)
 
(0.4
)
 
Gains on sales of auto loans, net

 
3,244

 
(3,244
)
 
(100.0
)
 
Gains on sales of consumer real estate loans, net
25,079

 
25,920

 
(841
)
 
(3.2
)
 
Servicing fee income
21,811

 
32,347

 
(10,536
)
 
(32.6
)
 
Subtotal
46,890

 
61,511

 
(14,621
)
 
(23.8
)
 
Leasing and equipment finance
129,796

 
102,208

 
27,588

 
27.0

 
Other
11,468

 
8,428

 
3,040

 
36.1

 
Fees and other revenue
342,571

 
327,218

 
15,353

 
4.7

 
Gains (losses) on debt securities, net
181

 
189

 
(8
)
 
(4.2
)
 
Total non-interest income
342,752

 
327,407

 
15,345

 
4.7

 
Non-interest expense:
 
 
 
 

 


 
Compensation and employee benefits
367,542

 
354,882

 
12,660

 
3.6

 
Occupancy and equipment
123,562

 
117,331

 
6,231

 
5.3

 
Other
205,892

 
187,160

 
18,732

 
10.0

 
Subtotal
696,996

 
659,373

 
37,623

 
5.7

 
Operating lease depreciation
54,744

 
39,404

 
15,340

 
38.9

 
Foreclosed real estate and repossessed assets, net
12,654

 
13,017

 
(363
)
 
(2.8
)
 
Other credit costs, net
48

 
334

 
(286
)
 
(85.6
)
 
Total non-interest expense
764,442

 
712,128

 
52,314

 
7.3

 
Income before income tax expense
293,555

 
252,473

 
41,082

 
16.3

 
Income tax expense
66,083

 
77,341

 
(11,258
)
 
(14.6
)
 
Income after income tax expense
227,472

 
175,132

 
52,340

 
29.9

 
Income attributable to non-controlling interest
8,766

 
7,894

 
872

 
11.0

 
Net income attributable to TCF Financial Corporation
218,706

 
167,238

 
51,468

 
30.8

 
Preferred stock dividends
9,094

 
16,158

 
(7,064
)
 
(43.7
)
 
Impact of preferred stock redemption or notice to redeem preferred stock
3,481

 
5,779

 
(2,298
)
 
(39.8
)
 
Net income available to common stockholders
$
206,131

 
$
145,301

 
$
60,830

 
41.9

 
 
 
 
 
 

 


 
Earnings per common share:
 
 
 
 

 


 
Basic
$
1.24

 
$
0.86

 
$
0.38

 
44.2

%
Diluted
1.23

 
0.86

 
0.37

 
43.0

 
 
 
 
 
 

 


 
Dividends declared per common share
$
0.45

 
$
0.225

 
$
0.225

 
100.0

%


8




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended September 30,
 
2018
 
2017
 
Average
 
 
 
Yields and
 
Average
 
 
 
Yields and
(Dollars in thousands)
Balance
 
Interest(1)
 
Rates(1)(2)
 
Balance
 
Interest(1)
 
Rates(1)(2)
ASSETS:
 
 
 
 
 
 
 
 
 
 
 
Investments and other
$
306,257

 
$
3,089

 
4.01
%
 
$
279,839

 
$
2,679

 
3.80
%
Debt securities held to maturity
153,652

 
988

 
2.57

 
166,883

 
1,073

 
2.57

Debt securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
Taxable
1,525,665

 
10,511

 
2.76

 
825,192

 
4,619

 
2.24

Tax-exempt(3)
823,854

 
5,478

 
2.66

 
737,859

 
5,949

 
3.22

Loans and leases held for sale
216,669

 
3,589

 
6.57

 
96,143

 
1,394

 
5.75

Loans and leases:(4)
 
 
 
 
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate
1,694,661

 
23,316

 
5.46

 
1,872,607

 
26,490

 
5.61

Variable- and adjustable-rate
3,002,225

 
49,719

 
6.57

 
2,964,493

 
44,160

 
5.91

Total consumer real estate
4,696,886

 
73,035

 
6.17

 
4,837,100

 
70,650

 
5.80

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate
856,324

 
9,830

 
4.55

 
980,262

 
11,411

 
4.62

Variable- and adjustable-rate
2,921,471

 
40,134

 
5.45

 
2,493,163

 
29,915

 
4.76

Total commercial
3,777,795

 
49,964

 
5.25

 
3,473,425

 
41,326

 
4.72

Leasing and equipment finance
4,624,968

 
57,844

 
5.00

 
4,316,434

 
48,874

 
4.53

Inventory finance
2,866,460

 
51,714

 
7.16

 
2,479,416

 
41,922

 
6.71

Auto finance
2,435,868

 
32,940

 
5.36

 
3,280,612

 
42,785

 
5.17

Other
13,547

 
144

 
4.25

 
11,567

 
146

 
5.03

Total loans and leases
18,415,524

 
265,641

 
5.73

 
18,398,554

 
245,703

 
5.31

Total interest-earning assets
21,441,621

 
289,296

 
5.36

 
20,504,470

 
261,417

 
5.07

Other assets(5)
1,462,783

 
 
 
 
 
1,434,957

 
 
 
 
Total assets
$
22,904,404

 
 
 
 
 
$
21,939,427

 
 
 
 
LIABILITIES AND EQUITY:
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
$
3,874,421

 
 
 
 
 
$
3,521,044

 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Checking
2,427,288

 
234

 
0.04

 
2,539,211

 
99

 
0.02

Savings
5,620,161

 
4,994

 
0.35

 
4,846,090

 
932

 
0.08

Money market
1,496,223

 
2,941

 
0.78

 
2,106,814

 
2,478

 
0.47

Certificates of deposit
4,868,286

 
19,166

 
1.56

 
4,636,007

 
13,506

 
1.16

Total interest-bearing deposits
14,411,958

 
27,335

 
0.75

 
14,128,122

 
17,015

 
0.48

Total deposits
18,286,379

 
27,335

 
0.59

 
17,649,166

 
17,015

 
0.38

Borrowings:
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
3,357

 
21

 
2.46

 
6,448

 
21

 
1.33

Long-term borrowings
1,351,585

 
10,705

 
3.15

 
983,004

 
6,466

 
2.62

Total borrowings
1,354,942

 
10,726

 
3.15

 
989,452

 
6,487

 
2.62

Total interest-bearing liabilities
15,766,900

 
38,061

 
0.96

 
15,117,574

 
23,502

 
0.62

Total deposits and borrowings
19,641,321

 
38,061

 
0.77

 
18,638,618

 
23,502

 
0.50

Accrued expenses and other liabilities
751,100

 
 
 
 
 
723,792

 
 
 
 
Total liabilities
20,392,421

 
 
 
 
 
19,362,410

 
 
 
 
Total TCF Financial Corp. stockholders' equity
2,488,435

 
 
 
 
 
2,554,667

 
 
 
 
Non-controlling interest in subsidiaries
23,548

 
 
 
 
 
22,350

 
 
 
 
Total equity
2,511,983

 
 
 
 
 
2,577,017

 
 
 
 
Total liabilities and equity
$
22,904,404

 
 
 
 
 
$
21,939,427

 
 
 
 
Net interest income and margin
 
 
$
251,235

 
4.66

 
 
 
$
237,915

 
4.61

(1)
Interest and yields are presented on a fully tax-equivalent basis.
(2)
Annualized
(3)
The yield on tax-exempt debt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 21% and 35% for the quarters ended September 30, 2018 and 2017, respectively.
(4)
Average balances of loans and leases include non-accrual loans and leases and are presented net of unearned income.
(5)
Includes leased equipment and related initial direct costs under operating leases of $290.9 million and $249.0 million for the quarters ended September 30, 2018 and 2017, respectively.


9




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30,
 
2018
 
2017
 
Average
 
 
 
Yields and
 
Average
 
 
 
Yields and
(Dollars in thousands)