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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):
January 28, 2019
 
 396501448_deluxetcfcorplogorgba63.jpg
 
TCF FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation)
001-10253
(Commission File Number)
41-1591444
(IRS Employer Identification No.)
 
200 Lake Street East, Mail Code EX0-03-A, Wayzata, Minnesota 55391-1693
(Address of principal executive offices, including Zip Code)
 
(952) 745-2760
(Registrant’s telephone number, including area code)
  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

¨ Emerging growth company

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





Item 2.02 Results of Operations and Financial Condition.
 
The following information, including Exhibit 99.1, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, except as may be expressly set forth by specific reference in such a filing.
 
TCF Financial Corporation (the "Company") issued a press release dated January 28, 2019, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended December 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 fourth 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 January 28, 2019 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:  January 28, 2019



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
396501448_deluxetcfcorplogorgba64.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 $85.7 MILLION, OR $0.51 PER SHARE
AND ANNUAL NET INCOME OF $304.4 MILLION, OR $1.74 PER SHARE

Fourth Quarter Observations
Revenue of $377.0 million, up 3.9% from the fourth quarter of 2017
Improved efficiency ratio of 66.30%
Average interest-earning asset growth of 1.4% from the fourth quarter of 2017
Period-end loans and leases of $19.1 billion, down 0.2% from December 31, 2017; period-end loans and leases excluding auto finance up 7.5%(1) from December 31, 2017
Net charge-off rate of 0.46%, up 8 basis points from the fourth quarter of 2017; net charge-off rate excluding auto finance net charge-offs of 0.28%(2), up 10 basis points from the fourth quarter of 2017
Return on average common equity ("ROACE") of 14.30%; return on average tangible common equity ("ROATCE") of 15.59%(2)
 
2018 Observations
Revenue of $1.5 billion, up 6.5% from 2017; net interest income of $992.0 million, up 7.2% from 2017
Reported efficiency ratio of 69.34%; adjusted efficiency ratio of 67.15%(2)
Net charge-off rate of 0.29%, up 5 basis points from 2017; net charge-off rate excluding auto finance net charge-offs and recoveries on consumer real estate loan sales of 0.14%(2), down 1 basis point from 2017
ROACE of 12.42%; reported ROATCE of 13.56%(2); adjusted ROATCE of 14.74%(2) 
Summary of Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
At or For the Quarter Ended
 
Change From
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
Dec. 31,
(Dollars in thousands, except per share data)
2018
 
2018
 
2018
 
2018
 
2017
 
2018
2017
Net income attributable to TCF
$
85,652

 
$
86,196

 
$
58,749

 
$
73,761

 
$
101,399

 
(0.6
)
%
(15.5
)
%
Net interest income
248,888

 
249,121

 
250,799

 
243,199

 
241,860

 
(0.1
)
 
2.9

 
Basic earnings per common share
0.51

 
0.51

 
0.34

 
0.39

 
0.58

 

 
(12.1
)
 
Diluted earnings per common share
0.51

 
0.51

 
0.34

 
0.39

 
0.57

 

 
(10.5
)
 
Adjusted diluted earnings per common share(2)
0.51

 
0.51

 
0.49

 
0.39

 
0.57

 

 
(10.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets(3)
1.52
%
 
1.55
%
 
1.08
%
 
1.33
%
 
1.82
%
 
(3
)
bps
(30
)
bps
ROACE(3)
14.30

 
14.44

 
9.72

 
11.23

 
16.95

 
(14
)
 
(265
)
 
Adjusted ROACE(2)(3)
14.30

 
14.44

 
14.11

 
11.23

 
16.95

 
(14
)
 
(265
)
 
ROATCE(2)(3)
15.59

 
15.76

 
10.65

 
12.26

 
32.87

 
(17
)
 
(1,728
)
 
Adjusted ROATCE(2)(3)
15.59

 
15.76

 
15.39

 
12.26

 
32.87

 
(17
)
 
(1,728
)
 
Net interest margin(3)
4.60

 
4.66

 
4.67

 
4.59

 
4.57

 
(6
)
 
3

 
Net charge-offs as a percentage of average loans and leases(3)
0.46

 
0.15

 
0.27

 
0.29

 
0.38

 
31

 
8

 
Non-performing assets as a percentage of total loans and leases and other real estate owned
0.65

 
0.59

 
0.54

 
0.74

 
0.72

 
6

 
(7
)
 
Efficiency ratio
66.30

 
67.41

 
74.55

 
69.21

 
95.88

 
(111
)
 
(2,958
)
 
Adjusted efficiency ratio(2)
66.30

 
67.41

 
65.78

 
69.21

 
95.88

 
(111
)
 
(2,958
)
 
(1) Calculated by subtracting auto finance loans of $2.0 billion and $3.2 billion at December 31, 2018 and 2017, respectively, from total loans and leases of $19.1 billion at December 31, 2018 and 2017.
(2) See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables.
(3) Annualized




WAYZATA, Minn. (January 28, 2019) - TCF Financial Corporation ("TCF" or the "Company") (NYSE: TCF) today reported net income of $85.7 million for the fourth quarter of 2018, compared with $101.4 million for the fourth quarter of 2017 and $86.2 million for the third quarter of 2018. Diluted earnings per common share was 51 cents for the fourth quarter of 2018, compared with 57 cents for the fourth quarter of 2017 and 51 cents for the third quarter of 2018.

"Our strong results in the fourth quarter capped off a successful year in which we remixed the balance sheet while we reduced our risk profile, improved efficiencies and enhanced return on capital, all of which drove record net income for the Company in 2018," said Craig R. Dahl, chairman and chief executive officer. "By continuing to build customer relationships, we drove growth in our core, retail deposit base and in our loan and lease portfolio excluding auto finance. Our improved capital efficiency, coupled with strong financial performance, allowed us to return over 100 percent of earnings to shareholders in the form of dividends and share repurchases throughout the year. Based on the execution of our business strategies and the investments we are making across the organization, I believe we are well-positioned to continue providing an exceptional customer experience while enhancing shareholder value."

Net Interest Income and Net Interest Margin
Net interest income was $248.9 million for the fourth quarter of 2018, an increase of $7.0 million, or 2.9%, from the fourth quarter of 2017 and a decrease of $0.2 million, or 0.1%, from the third quarter of 2018. Net interest margin was 4.60% for the fourth quarter of 2018, up 3 basis points from the fourth quarter of 2017 and down 6 basis points from the third quarter of 2018. The increases in net interest income and net interest margin from the fourth quarter of 2017 were primarily due to increased average yields and higher average loan balances in the variable- and adjustable-rate loan portfolios and higher average balances of debt securities available for sale, partially offset by increased cost of funds and decreased interest income on auto finance loans. The decrease in net interest margin from the third quarter of 2018 was primarily due to increased cost of funds, partially offset by increased average yields on variable- and adjustable-rate consumer real estate and commercial loans.

Non-interest Income
Non-interest income was $128.1 million for the fourth quarter of 2018, an increase of $7.2 million, or 6.0%, from the fourth quarter of 2017 and an increase of $11.7 million, or 10.0%, from the third quarter of 2018. The increases from both periods were primarily due to increased leasing and equipment finance non-interest income and increased fees and service charges. The increase from the fourth quarter of 2017 was partially offset by decreased gains on sales of loans and decreased servicing fee income.

Non-interest Expense
Non-interest expense was $250.0 million for the fourth quarter of 2018, a decrease of $97.8 million, or 28.1%, from the fourth quarter of 2017 and an increase of $3.5 million, or 1.4%, from the third quarter of 2018. The decrease from the fourth quarter of 2017 was primarily due to charges related to the discontinuation of auto finance loan originations in the fourth quarter of 2017. The increase from the third quarter of 2018 was primarily due to an increase in compensation and employee benefits expense impacted by a large medical claim of $6.8 million.

2




Income Tax Expense (Benefit)
Income tax expense was $20.0 million for the fourth quarter of 2018, compared with income tax benefit of $111.0 million for the fourth quarter of 2017 and income tax expense of $28.0 million for the third quarter of 2018. The Company's effective income tax rate was 18.5% for the fourth quarter of 2018, compared with 24.0% for the third quarter of 2018. The lower effective income tax rates in 2018 were primarily impacted by the change in the corporate statutory tax rate as a result of the Tax Cuts and Jobs Act. The lower effective income tax rate from the third quarter of 2018 was also impacted by a change in the state statutory tax rates. The income tax benefit for the fourth quarter of 2017 was impacted by the re-measurement of the Company's estimated net deferred tax liability as a result of the Tax Cuts and Jobs Act.

Credit Quality
Provision for credit losses The provision for credit losses was $18.9 million for the fourth quarter of 2018, a decrease of $3.4 million, or 15.1%, from the fourth quarter of 2017 and an increase of $16.6 million from the third quarter of 2018. The increase from the third quarter of 2018 was primarily due to the recovery of $6.6 million on previous charge-offs related to the consumer real estate non-accrual loan sale in third quarter of 2018 and an increase in the provision for credit losses attributable to the inventory finance and commercial portfolios.

Net charge-off rate The annualized net charge-off rate was 0.46% for the fourth quarter of 2018, up 8 basis points from the fourth quarter of 2017 and up 31 basis points from the third quarter of 2018. The increase from the fourth quarter of 2017 was primarily due to increased net charge-offs in the commercial and inventory finance portfolios, partially offset by decreased net-charge-offs in the leasing and equipment finance and auto finance portfolios. The increase from the third quarter of 2018 was primarily due to the recovery of $6.6 million on previous charge-offs related to the consumer real estate non-accrual loan sale in the third quarter of 2018. The increase from the third quarter of 2018 was also impacted by increased net charge-offs in the inventory finance portfolio and charge-offs related to one commercial customer. The annualized net charge-off rate excluding auto finance charge-offs and recoveries on previous charge-offs related to sales of consumer real estate non-accrual loans was 0.28% for the fourth quarter of 2018, up 10 basis points from the fourth quarter of 2017 and up 18 basis points from the third quarter of 2018 (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

Over 60-day delinquency rate The over 60-day delinquency rate, excluding non-accrual loans and leases, was 0.15% at December 31, 2018, up 3 basis points from both the December 31, 2017 and September 30, 2018 rates. The increase from both periods was primarily due to higher over 60-day delinquency rates for the auto finance and leasing and equipment finance portfolios.


3




Non-performing assets Non-performing assets, consisting of non-accrual loans and leases and other real estate owned, were $123.3 million at December 31, 2018, a decrease of $13.5 million, or 9.9%, from December 31, 2017 and an increase of $13.9 million, or 12.8%, from September 30, 2018. The decrease from December 31, 2017 was primarily due to the $34.7 million sale of consumer real estate non-accrual loans in the third quarter of 2018, partially offset by increases in commercial and inventory finance non-accrual loans. The increase from September 30, 2018 was primarily due to increases in inventory finance, commercial and consumer real estate non-accrual loans.

Balance Sheet
Average debt securities held to maturity and debt securities available for sale The total average debt securities portfolio was $2.7 billion for the fourth quarter of 2018, an increase of $944.3 million, or 53.2%, from the fourth quarter of 2017 and an increase of $215.3 million, or 8.6%, from the third quarter of 2018. The increases from both periods were primarily due to purchases of available for sale mortgage-backed debt securities.

Average loans and leases Average loans and leases were $18.6 billion for the fourth quarter of 2018, a decrease of $636.8 million, or 3.3%, from the fourth quarter of 2017 and an increase of $139.1 million, or 0.8%, from the third quarter of 2018. Average loans and leases excluding auto finance were $16.4 billion for the fourth quarter of 2018, an increase of $509.1 million, or 3.2%, from the fourth quarter of 2017 and an increase of $453.0 million, or 2.8%, from the third quarter of 2018.

Average deposits Average deposits were $18.5 billion for the fourth quarter of 2018, an increase of $327.6 million, or 1.8%, from the fourth quarter of 2017 and an increase of $180.5 million, or 1.0%, from the third quarter of 2018. The increases from both periods were primarily due to increases in savings accounts.

Capital TCF continues to maintain strong capital ratios, with a common equity Tier 1 capital ratio of 10.82%. TCF repurchased $63.0 million of common stock during the quarter and had the authority to repurchase an additional $78.1 million in aggregate value of shares as of December 31, 2018 pursuant to its share repurchase program.


TCF is a Wayzata, Minnesota-based national bank holding company. As of December 31, 2018, TCF had $23.7 billion in total assets and 314 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, net charge-off rate excluding auto finance and recoveries from non-accrual loan sales, 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. TCF adjusts certain results to exclude auto finance because TCF no longer originates auto finance loans, and therefore management believes it is useful to investors in understanding TCF's business and operating results.
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)
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30, 2018
Dec. 31, 2017
2018
 
2018
 
2018
 
2018
 
2017
 
$
 
%
$
 
%
ASSETS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
587,057

 
$
569,968

 
$
581,876

 
$
588,893

 
$
621,782

 
$
17,089

 
3.0
 %
$
(34,725
)
 
(5.6
)%
Investments
91,654

 
80,672

 
95,661

 
91,661

 
82,644

 
10,982

 
13.6

9,010

 
10.9

Debt securities held to maturity
148,852

 
152,881

 
155,962

 
158,099

 
161,576

 
(4,029
)
 
(2.6
)
(12,724
)
 
(7.9
)
Debt securities available for sale
2,470,065

 
2,379,546

 
2,249,784

 
1,954,246

 
1,709,018

 
90,519

 
3.8

761,047

 
44.5

Loans and leases held for sale
90,664

 
114,198

 
291,871

 
50,706

 
134,862

 
(23,534
)
 
(20.6
)
(44,198
)
 
(32.8
)
Loans and leases:
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 

 
 

First mortgage lien
2,444,380

 
1,960,756

 
1,800,885

 
1,878,441

 
1,959,387

 
483,624

 
24.7

484,993

 
24.8

Junior lien
2,965,960

 
2,940,701

 
2,830,029

 
2,843,221

 
2,860,309

 
25,259

 
0.9

105,651

 
3.7

Total consumer real estate
5,410,340


4,901,457

 
4,630,914

 
4,721,662

 
4,819,696

 
508,883

 
10.4

590,644

 
12.3

Commercial
3,851,303

 
3,741,164

 
3,706,401

 
3,678,181

 
3,561,193

 
110,139

 
2.9

290,110

 
8.1

Leasing and equipment finance
4,699,740

 
4,601,887

 
4,648,049

 
4,666,239

 
4,761,661

 
97,853

 
2.1

(61,921
)
 
(1.3
)
Inventory finance
3,107,356

 
2,880,404

 
3,005,165

 
3,457,855

 
2,739,754

 
226,952

 
7.9

367,602

 
13.4

Auto finance
1,982,277

 
2,275,134

 
2,603,260

 
2,839,363

 
3,199,639

 
(292,857
)
 
(12.9
)
(1,217,362
)
 
(38.0
)
Other
21,295

 
21,107

 
20,957

 
19,854

 
22,517

 
188

 
0.9

(1,222
)
 
(5.4
)
Total loans and leases
19,072,311

 
18,421,153

 
18,614,746

 
19,383,154

 
19,104,460

 
651,158

 
3.5

(32,149
)
 
(0.2
)
Allowance for loan and lease losses
(157,446
)
 
(160,621
)
 
(165,619
)
 
(167,703
)
 
(171,041
)
 
3,175

 
2.0

13,595

 
7.9

Net loans and leases
18,914,865

 
18,260,532

 
18,449,127

 
19,215,451

 
18,933,419

 
654,333

 
3.6

(18,554
)
 
(0.1
)
Premises and equipment, net
427,534

 
429,648

 
430,956

 
427,497

 
421,549

 
(2,114
)
 
(0.5
)
5,985

 
1.4

Goodwill, net
154,757

 
154,757

 
154,757

 
154,757

 
154,757

 

 


 

Other assets
814,164

 
762,583

 
774,468

 
743,742

 
782,552

 
51,581

 
6.8

31,612

 
4.0

Total assets
$
23,699,612

 
$
22,904,785

 
$
23,184,462

 
$
23,385,052

 
$
23,002,159

 
$
794,827

 
3.5

$
697,453

 
3.0

LIABILITIES AND EQUITY:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Checking
$
6,381,327

 
$
6,382,667

 
$
6,408,174

 
$
6,541,409

 
$
6,300,127

 
$
(1,340
)
 
 %
$
81,200

 
1.3
 %
Savings
6,122,257

 
5,737,144

 
5,570,979

 
5,551,155

 
5,287,606

 
385,113

 
6.7

834,651

 
15.8

Money market
1,609,422

 
1,504,952

 
1,562,008

 
1,609,472

 
1,764,998

 
104,470

 
6.9

(155,576
)
 
(8.8
)
Certificates of deposit
4,790,680

 
4,871,748

 
4,822,112

 
4,995,636

 
4,982,271

 
(81,068
)
 
(1.7
)
(191,591
)
 
(3.8
)
Total deposits
18,903,686

 
18,496,511

 
18,363,273

 
18,697,672

 
18,335,002

 
407,175

 
2.2

568,684

 
3.1

Short-term borrowings

 
2,324

 
761

 
775

 

 
(2,324
)
 
(100.0
)

 

Long-term borrowings
1,449,472

 
1,168,400

 
1,554,569

 
1,457,976

 
1,249,449

 
281,072

 
24.1

200,023

 
16.0

Total borrowings
1,449,472

 
1,170,724

 
1,555,330

 
1,458,751

 
1,249,449

 
278,748

 
23.8

200,023

 
16.0

Accrued expenses and other liabilities
790,194

 
709,538

 
761,281

 
677,679

 
737,124

 
80,656

 
11.4

53,070

 
7.2

Total liabilities
21,143,352

 
20,376,773

 
20,679,884

 
20,834,102

 
20,321,575

 
766,579

 
3.8

821,777

 
4.0

Equity:
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Preferred stock
169,302

 
169,302

 
169,302

 
169,302

 
265,821

 

 

(96,519
)
 
(36.3
)
Common stock
1,736

 
1,736

 
1,735

 
1,725

 
1,722

 

 

14

 
0.8

Additional paid-in capital
885,089

 
882,321

 
877,364

 
878,096

 
877,217

 
2,768

 
0.3

7,872

 
0.9

Retained earnings, subject to certain restrictions
1,766,994

 
1,708,410

 
1,649,449

 
1,618,041

 
1,577,311

 
58,584

 
3.4

189,683

 
12.0

Accumulated other comprehensive income (loss)
(33,138
)
 
(65,259
)
 
(52,811
)
 
(46,851
)
 
(18,517
)
 
32,121

 
49.2

(14,621
)
 
(79.0
)
Treasury stock at cost and other
(252,182
)
 
(189,652
)
 
(164,107
)
 
(97,800
)
 
(40,797
)
 
(62,530
)
 
(33.0
)
(211,385
)
 
N.M.

Total TCF Financial Corporation stockholders' equity
2,537,801

 
2,506,858

 
2,480,932

 
2,522,513

 
2,662,757

 
30,943

 
1.2

(124,956
)
 
(4.7
)
Non-controlling interest in subsidiaries
18,459

 
21,154

 
23,646

 
28,437

 
17,827

 
(2,695
)
 
(12.7
)
632

 
3.5

Total equity
2,556,260

 
2,528,012

 
2,504,578

 
2,550,950

 
2,680,584

 
28,248

 
1.1

(124,324
)
 
(4.6
)
Total liabilities and equity
$
23,699,612

 
$
22,904,785

 
$
23,184,462

 
$
23,385,052

 
$
23,002,159

 
$
794,827

 
3.5

$
697,453

 
3.0

N.M. Not Meaningful

6




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Change From
(Dollars in thousands)
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30, 2018
 
Dec. 31, 2017
2018
 
2018
 
2018
 
2018
 
2017
 
$
 
%
 
$
 
%
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and leases
$
270,804

 
$
264,678

 
$
269,280

 
$
260,375

 
$
256,633

 
$
6,126

 
2.3
 %
 
$
14,171

 
5.5
 %
Debt securities available for sale
17,097

 
14,838

 
12,516

 
10,123

 
8,760

 
2,259

 
15.2

 
8,337

 
95.2

Debt securities held to maturity
965

 
988

 
998

 
1,019

 
1,048

 
(23
)
 
(2.3
)
 
(83
)
 
(7.9
)
Loans held for sale and other
4,631

 
6,678

 
3,529

 
3,745

 
4,187

 
(2,047
)
 
(30.7
)
 
444

 
10.6

Total interest income
293,497

 
287,182

 
286,323

 
275,262

 
270,628

 
6,315

 
2.2

 
22,869

 
8.5

Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
Deposits
33,315

 
27,335

 
23,953

 
22,510

 
20,846

 
5,980

 
21.9

 
12,469

 
59.8

Borrowings
11,294

 
10,726

 
11,571

 
9,553

 
7,922

 
568

 
5.3

 
3,372

 
42.6

Total interest expense
44,609

 
38,061

 
35,524

 
32,063

 
28,768

 
6,548

 
17.2

 
15,841

 
55.1

Net interest income
248,888

 
249,121

 
250,799

 
243,199

 
241,860

 
(233
)
 
(0.1
)
 
7,028

 
2.9

Provision for credit losses
18,894

 
2,270

 
14,236

 
11,368

 
22,259

 
16,624

 
N.M.

 
(3,365
)
 
(15.1
)
Net interest income after provision for credit losses
229,994

 
246,851

 
236,563

 
231,831

 
219,601

 
(16,857
)
 
(6.8
)
 
10,393

 
4.7

Non-interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leasing and equipment finance
55,311

 
45,045

 
42,904

 
41,847

 
42,831

 
10,266

 
22.8

 
12,480

 
29.1

Fees and service charges
36,206

 
32,574

 
32,670

 
30,751

 
33,267

 
3,632

 
11.1

 
2,939

 
8.8

Card revenue
15,078

 
15,065

 
14,962

 
13,759

 
14,251

 
13

 
0.1

 
827

 
5.8

ATM revenue
5,054

 
5,053

 
4,933

 
4,650

 
4,654

 
1

 

 
400

 
8.6

Gains on sales of loans, net
8,419

 
8,764

 
7,192

 
9,123

 
13,623

 
(345
)
 
(3.9
)
 
(5,204
)
 
(38.2
)
Servicing fee income
5,523

 
6,032

 
7,484

 
8,295

 
9,000

 
(509
)
 
(8.4
)
 
(3,477
)
 
(38.6
)
Gains (losses) on debt securities, net
167

 
94

 
24

 
63

 
48

 
73

 
77.7

 
119

 
N.M.

Other
2,375

 
3,818

 
3,934

 
3,716

 
3,218

 
(1,443
)
 
(37.8
)
 
(843
)
 
(26.2
)
Total non-interest income
128,133

 
116,445

 
114,103

 
112,204

 
120,892

 
11,688

 
10.0

 
7,241

 
6.0

Non-interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
129,521

 
123,127

 
120,575

 
123,840

 
127,630

 
6,394

 
5.2

 
1,891

 
1.5

Occupancy and equipment
42,250

 
42,337

 
40,711

 
40,514

 
39,578

 
(87
)
 
(0.2
)
 
2,672

 
6.8

Operating lease depreciation
19,085

 
19,525

 
17,945

 
17,274

 
16,497

 
(440
)
 
(2.3
)
 
2,588

 
15.7

Foreclosed real estate and repossessed assets, net
4,396

 
3,881

 
3,857

 
4,916

 
4,739

 
515

 
13.3

 
(343
)
 
(7.2
)
Other
54,706

 
57,553

 
88,951

 
59,436

 
159,362

 
(2,847
)
 
(4.9
)
 
(104,656
)
 
(65.7
)
Total non-interest expense
249,958

 
246,423

 
272,039

 
245,980

 
347,806

 
3,535

 
1.4

 
(97,848
)
 
(28.1
)
Income (loss) before income tax expense (benefit)
108,169

 
116,873

 
78,627

 
98,055

 
(7,313
)
 
(8,704
)
 
(7.4
)
 
115,482

 
N.M.

Income tax expense (benefit)
20,013

 
28,034

 
16,418

 
21,631

 
(110,965
)
 
(8,021
)
 
(28.6
)
 
130,978

 
N.M.

Income after income tax expense (benefit)
88,156

 
88,839

 
62,209

 
76,424

 
103,652

 
(683
)
 
(0.8
)
 
(15,496
)
 
(15.0
)
Income attributable to non-controlling interest
2,504

 
2,643

 
3,460

 
2,663

 
2,253

 
(139
)
 
(5.3
)
 
251

 
11.1

Net income attributable to TCF Financial Corporation
85,652

 
86,196

 
58,749

 
73,761

 
101,399

 
(544
)
 
(0.6
)
 
(15,747
)
 
(15.5
)
Preferred stock dividends
2,494

 
2,494

 
2,494

 
4,106

 
3,746

 

 

 
(1,252
)
 
(33.4
)
Impact of preferred stock redemption

 

 

 
3,481

 

 

 

 

 

Net income available to common stockholders
$
83,158

 
$
83,702

 
$
56,255

 
$
66,174

 
$
97,653

 
$
(544
)
 
(0.6
)
 
$
(14,495
)
 
(14.8
)
N.M. Not Meaningful

7




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
 
Consolidated Statements of Income (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
Change
(Dollars in thousands, except per share data)
2018
 
2017
 
$
 
%
 
Interest income:
 
 
 
 
 
 
 
 
Loans and leases
$
1,065,137

 
$
954,246

 
$
110,891


11.6

%
Debt securities available for sale
54,574

 
33,278

 
21,296


64.0

 
Debt securities held to maturity
3,970

 
4,436

 
(466
)

(10.5
)
 
Loans held for sale and other
18,583

 
27,097

 
(8,514
)
 
(31.4
)
 
Total interest income
1,142,264

 
1,019,057

 
123,207

 
12.1

 
Interest expense:
 
 
 
 

 


 
Deposits
107,113

 
66,012

 
41,101

 
62.3

 
Borrowings
43,144

 
27,807

 
15,337

 
55.2

 
Total interest expense
150,257

 
93,819

 
56,438

 
60.2

 
Net interest income
992,007

 
925,238

 
66,769

 
7.2

 
Provision for credit losses
46,768

 
68,443

 
(21,675
)
 
(31.7
)
 
Net interest income after provision for credit losses
945,239

 
856,795

 
88,444

 
10.3

 
Non-interest income:
 
 
 
 

 


 
Leasing and equipment finance
185,107

 
145,039

 
40,068

 
27.6

 
Fees and service charges
132,201

 
131,887

 
314

 
0.2

 
Card revenue
58,864

 
55,732

 
3,132

 
5.6

 
ATM revenue
19,690

 
19,624

 
66

 
0.3

 
Gains on sales of loans, net
33,498

 
42,787

 
(9,289
)
 
(21.7
)
 
Servicing fee income
27,334

 
41,347

 
(14,013
)
 
(33.9
)
 
Gains (losses) on debt securities, net
348

 
237

 
111

 
46.8

 
Other
13,843

 
11,646

 
2,197

 
18.9

 
Total non-interest income
470,885

 
448,299

 
22,586

 
5.0

 
Non-interest expense:
 
 
 
 

 


 
Compensation and employee benefits
497,063

 
482,512

 
14,551

 
3.0

 
Occupancy and equipment
165,812

 
156,909

 
8,903

 
5.7

 
Operating lease depreciation
73,829

 
55,901

 
17,928

 
32.1

 
Foreclosed real estate and repossessed assets, net
17,050

 
17,756

 
(706
)
 
(4.0
)
 
Other
260,646

 
346,856

 
(86,210
)
 
(24.9
)
 
Total non-interest expense
1,014,400

 
1,059,934

 
(45,534
)
 
(4.3
)
 
Income before income tax expense (benefit)
401,724

 
245,160

 
156,564

 
63.9

 
Income tax expense (benefit)
86,096

 
(33,624
)
 
119,720

 
N.M.

 
Income after income tax expense (benefit)
315,628

 
278,784

 
36,844

 
13.2

 
Income attributable to non-controlling interest
11,270

 
10,147

 
1,123

 
11.1

 
Net income attributable to TCF Financial Corporation
304,358

 
268,637

 
35,721

 
13.3

 
Preferred stock dividends
11,588

 
19,904

 
(8,316
)
 
(41.8
)
 
Impact of preferred stock redemption
3,481

 
5,779

 
(2,298
)
 
(39.8
)
 
Net income available to common stockholders
$
289,289

 
$
242,954

 
$
46,335

 
19.1

 
 
 
 
 
 

 


 
Earnings per common share:
 
 
 
 

 


 
Basic
$
1.75

 
$
1.44

 
$
0.31

 
21.5

%
Diluted
1.74

 
1.44

 
0.30

 
20.8

 
 
 
 
 
 

 


 
Dividends declared per common share
$
0.60

 
$
0.30

 
$
0.30

 
100.0

%
N.M. Not Meaningful

8




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended December 31,
 
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
$
330,359

 
$
3,242

 
3.90
%
 
$
303,958

 
$
2,349

 
3.07
%
Debt securities held to maturity
150,016

 
965

 
2.58

 
163,080

 
1,048

 
2.57

Debt securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
Taxable
1,779,654

 
12,949

 
2.91

 
831,113

 
4,675

 
2.25

Tax-exempt(3)
788,806

 
5,250

 
2.66

 
779,964

 
6,284

 
3.22

Loans and leases held for sale
86,169

 
1,389

 
6.40

 
113,501

 
1,838

 
6.43

Loans and leases:(4)
 
 
 
 
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate
1,962,804

 
26,309

 
5.33

 
1,821,240

 
25,729

 
5.61

Variable- and adjustable-rate
3,067,216

 
52,360

 
6.77

 
3,151,183

 
47,290

 
5.95

Total consumer real estate
5,030,020

 
78,669

 
6.21

 
4,972,423

 
73,019

 
5.83

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate
815,626

 
9,275

 
4.51

 
963,703

 
13,337

 
5.49

Variable- and adjustable-rate
2,932,739

 
41,730

 
5.65

 
2,573,022

 
30,382

 
4.68

Total commercial
3,748,365

 
51,005

 
5.40

 
3,536,725

 
43,719

 
4.90

Leasing and equipment finance
4,616,715

 
58,931

 
5.11

 
4,713,015

 
57,722

 
4.90

Inventory finance
3,024,961

 
54,215

 
7.11

 
2,688,387

 
40,753

 
6.01

Auto finance
2,121,969

 
28,835

 
5.39

 
3,267,855

 
43,109

 
5.23

Other
12,599

 
145

 
4.55

 
13,007

 
157

 
4.75

Total loans and leases
18,554,629

 
271,800

 
5.82

 
19,191,412

 
258,479

 
5.35

Total interest-earning assets
21,689,633

 
295,595

 
5.42

 
21,383,028

 
274,673

 
5.11

Other assets(5)
1,464,620

 
 
 
 
 
1,437,126

 
 
 
 
Total assets
$
23,154,253

 
 
 
 
 
$
22,820,154

 
 
 
 
LIABILITIES AND EQUITY:
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
$
3,873,023

 
 
 
 
 
$
3,570,846

 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Checking
2,403,370

 
248

 
0.04

 
2,541,475

 
114

 
0.02

Savings
5,922,724

 
8,114

 
0.54

 
5,140,417

 
2,284

 
0.18

Money market
1,449,531

 
3,612

 
0.99

 
1,854,442

 
2,242

 
0.48

Certificates of deposit
4,818,211

 
21,341

 
1.76

 
5,032,085

 
16,206

 
1.28

Total interest-bearing deposits
14,593,836

 
33,315

 
0.91

 
14,568,419

 
20,846

 
0.57

Total deposits
18,466,859

 
33,315

 
0.72

 
18,139,265

 
20,846

 
0.46

Borrowings:
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
2,738

 
19

 
2.76

 
3,759

 
17

 
1.75

Long-term borrowings
1,344,228

 
11,275

 
3.34

 
1,295,268

 
7,905

 
2.43

Total borrowings
1,346,966

 
11,294

 
3.34

 
1,299,027

 
7,922

 
2.43

Total interest-bearing liabilities
15,940,802

 
44,609

 
1.11

 
15,867,446

 
28,768

 
0.72

Total deposits and borrowings
19,813,825

 
44,609

 
0.89

 
19,438,292

 
28,768

 
0.59

Accrued expenses and other liabilities
822,558

 
 
 
 
 
790,850

 
 
 
 
Total liabilities
20,636,383

 
 
 
 
 
20,229,142

 
 
 
 
Total TCF Financial Corp. stockholders' equity
2,495,952

 
 
 
 
 
2,570,613

 
 
 
 
Non-controlling interest in subsidiaries
21,918

 
 
 
 
 
20,399

 
 
 
 
Total equity
2,517,870

 
 
 
 
 
2,591,012

 
 
 
 
Total liabilities and equity
$
23,154,253

 
 
 
 
 
$
22,820,154

 
 
 
 
Net interest income and margin
 
 
$
250,986

 
4.60

 
 
 
$
245,905

 
4.57

(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 December 31, 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 $292.0 million and $267.8 million for the quarters ended December 31, 2018 and 2017, respectively.


9




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
2018
 
2017
 
Average
 
 
 
Yields and
 
Average
 
 
 
Yields and
(Dollars in thousands)
Balance
 
Interest(1)
 
Rates(1)
 
Balance
 
Interest(1)
 
Rates(1)
ASSETS:
 
 
 
 
 
 
 
 
 
 
 
Investments and other
$
319,472

 
$
11,964

 
3.74
%
 
$
282,507

 
$
10,491

 
3.71
%
Debt securities held to maturity
154,619

 
3,970

 
2.57

 
170,006

 
4,436

 
2.61

Debt securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
Taxable
1,390,016

 
37,436

 
2.69

 
823,526

 
18,382

 
2.23

Tax-exempt(2)
815,540

 
21,694

 
2.66

 
712,530

 
22,916

 
3.22

Loans and leases held for sale
103,240

 
6,619

 
6.41

 
208,678

 
16,606

 
7.96

Loans and leases:(3)
 
 
 
 
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate
1,790,069

 
97,850

 
5.47

 
1,934,395

 
109,185

 
5.64

Variable- and adjustable-rate
3,027,030

 
196,291

 
6.48

 
2,961,449

 
171,671

 
5.80

Total consumer real estate
4,817,099

 
294,141

 
6.11

 
4,895,844

 
280,856

 
5.74

Commercial: