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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):
April 22, 2019
 
 397596871_deluxetcfcorplogorgba67.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 22, 2019, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended March 31, 2019.
 
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 2019 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 22, 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:  April 22, 2019



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
397596871_deluxetcfcorplogorgba68.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 $70.5 MILLION, OR $0.42 PER SHARE
Adjusted diluted earnings per common share of $0.46,(1)  
excluding 4 cents per share after-tax impact of merger-related expenses
 
First Quarter Observations
Diluted earnings per common share of 42 cents, up 7.7% from the first quarter of 2018; adjusted diluted earnings per common share of 46 cents(1), up 17.9% from the first quarter of 2018
Revenue of $357.9 million, up 0.7% from the first quarter of 2018
Net interest income growth of 3.2% from the first quarter of 2018
Non-interest expense up 2.9% from the first quarter of 2018; non-interest expense (excluding merger-related expenses of $9.5 million), down 1.0%(2) from the first quarter of 2018
Reported efficiency ratio of 70.70%, up 149 basis points from the first quarter of 2018; adjusted efficiency ratio of 68.06%(1), down 115 basis points from the first quarter of 2018
Average interest-earning asset growth of 3.6% from the first quarter of 2018
Period-end loans and leases of $19.4 billion, flat from March 31, 2018; period-end loans and leases excluding auto finance up 6.9%(3) from March 31, 2018
Net charge-off rate of 0.39%; net charge-off rate excluding auto finance net charge-offs of 0.20%(1) 
Non-performing assets of $121.6 million, down 15.3% from March 31, 2018
Return on average common equity ("ROACE") of 11.40%; return on average tangible common equity ("ROATCE") of 12.42%(1); adjusted ROATCE of 13.72%(1)  
Summary of Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
At or For the Quarter Ended
 
Change From
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
Mar. 31,
(Dollars in thousands, except per share data)
2019
 
2018
 
2018
 
2018
 
2018
 
2018
2018
Net income attributable to TCF
$
70,494

 
$
85,652

 
$
86,196

 
$
58,749

 
$
73,761

 
(17.7
)
%
(4.4
)
%
Net interest income
250,907

 
248,888

 
249,121

 
250,799

 
243,199

 
0.8

 
3.2

 
Basic earnings per common share
0.42

 
0.51

 
0.51

 
0.34

 
0.39

 
(17.6
)
 
7.7

 
Diluted earnings per common share
0.42

 
0.51

 
0.51

 
0.34

 
0.39

 
(17.6
)
 
7.7

 
Adjusted diluted earnings per common share(1)
0.46

 
0.51

 
0.51

 
0.49

 
0.39

 
(9.8
)
 
17.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets(4)
1.22
%
 
1.52
%
 
1.55
%
 
1.08
%
 
1.33
%
 
(30
)
bps
(11
)
bps
ROACE(4)
11.40

 
14.30

 
14.44

 
9.72

 
11.23

 
(290
)
 
17

 
Adjusted ROACE(1)(4)
12.61

 
14.30

 
14.44

 
14.11

 
11.23

 
(169
)
 
138

 
ROATCE(1)(4)
12.42

 
15.59

 
15.76

 
10.65

 
12.26

 
(317
)
 
16

 
Adjusted ROATCE(1)(4)
13.72

 
15.59

 
15.76

 
15.39

 
12.26

 
(187
)
 
146

 
Net interest margin(4)
4.56

 
4.60

 
4.66

 
4.67

 
4.59

 
(4
)
 
(3
)
 
Net charge-offs as a percentage of average loans and leases(4)
0.39

 
0.46

 
0.15

 
0.27

 
0.29

 
(7
)
 
10

 
Non-performing assets as a percentage of total loans and leases and other real estate owned
0.63

 
0.65

 
0.59

 
0.54

 
0.74

 
(2
)
 
(11
)
 
Efficiency ratio
70.70

 
66.30

 
67.41

 
74.55

 
69.21

 
440

 
149

 
Adjusted efficiency ratio(1)
68.06

 
66.30

 
67.41

 
65.78

 
69.21

 
176

 
(115
)
 
(1)
See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables.
(2)
Calculated by subtracting merger-related expenses of $9.5 million from non-interest expense of $253.1 million for the first quarter of 2019, compared to non-interest expense of $246.0 million for the first quarter of 2018.
(3)
Calculated by subtracting auto finance loans of $1.7 billion and $2.8 billion at March 31, 2019 and 2018, respectively, from total loans and leases of $19.4 billion at March 31, 2019 and 2018.
(4)
Annualized




WAYZATA, Minn. (April 22, 2019) - TCF Financial Corporation ("TCF" or the "Company") (NYSE: TCF) today reported net income of $70.5 million for the first quarter of 2019, compared with $73.8 million for the first quarter of 2018 and $85.7 million for the fourth quarter of 2018. Diluted earnings per common share was 42 cents for the first quarter of 2019 (inclusive of a 4 cents per common share after-tax impact of merger-related expenses), compared with 39 cents for the first quarter of 2018 and 51 cents for the fourth quarter of 2018. Adjusted diluted earnings per common share was 46 cents for the first quarter of 2019, an increase of 17.9% from the first quarter of 2018 (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

"Our strong first quarter performance was highlighted by higher return on capital compared to a year ago and disciplined expense management," said Craig R. Dahl, chairman and chief executive officer. "Our results were supported by loan and lease growth excluding the run-off of our auto finance portfolio, and growth in core checking and savings deposit balances, while we controlled expense growth excluding merger-related expenses. We continue to see a positive business outlook for the year, with strong organic growth prospects across many of our businesses and we are well underway in integration planning work to prepare for our proposed merger of equals with Chemical Financial Corporation."

Net Interest Income and Net Interest Margin
Net interest income was $250.9 million for the first quarter of 2019, an increase of $7.7 million, or 3.2%, from the first quarter of 2018 and an increase of $2.0 million, or 0.8%, from the fourth quarter of 2018. Net interest margin was 4.56% for the first quarter of 2019, down 3 basis points from the first quarter of 2018 and down 4 basis points from the fourth quarter of 2018. The increase in net interest income from the first quarter of 2018 was primarily due to increased average yields and higher average balances in the variable- and adjustable-rate loan portfolios, higher average balances of fixed-rate consumer real estate loans and debt securities available for sale, partially offset by increased cost of funds and lower average balances of auto finance loans. The increase in net interest income from the fourth quarter of 2018 was primarily due to seasonally higher average balances of inventory finance loans and higher average balances of fixed-rate consumer real estate loans, partially offset by increased cost of funds and lower average balances of auto finance loans. The decreases in net interest margin from both periods were primarily due to higher average rates on deposits, partially offset by higher average yields on the variable- and adjustable-rate loan portfolios. The decreases were also driven by the reinvestment of the auto finance portfolio run-off into available for sale mortgage-backed debt securities and fixed-rate consumer real estate loans.

Non-interest Income
Non-interest income was $107.0 million for the first quarter of 2019, a decrease of $5.2 million, or 4.6%, from the first quarter of 2018 and a decrease of $21.1 million, or 16.5%, from the fourth quarter of 2018. The decrease from the first quarter of 2018 was primarily due to a decrease in servicing fee income driven by continued run-off in the auto finance serviced for others portfolio and a decrease in gains on sales of loans. The decrease from the fourth quarter of 2018 was primarily due to a decrease in leasing and equipment finance non-interest income driven by customer-driven activity and a decrease in fees and service charges.


2




Non-interest Expense
Non-interest expense was $253.1 million for the first quarter of 2019, an increase of $7.1 million, or 2.9%, from the first quarter of 2018 and an increase of $3.1 million, or 1.2%, from the fourth quarter of 2018. The increases in non-interest expense from both periods were primarily due to merger-related expenses of $9.5 million for the proposed merger with Chemical Financial Corporation. Non-interest expense excluding merger-related expenses was $243.6 million for the first quarter of 2019, a decrease of $2.4 million, or 1.0%, from the first quarter of 2018 and a decrease of $6.3 million, or 2.5%, from the fourth quarter of 2018 (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables). The decreases in non-interest expense excluding merger-related expenses from both periods were primarily due to decreases in compensation and employee benefits expense. The decrease in compensation and employee benefits expense from the fourth quarter of 2018 was primarily due to a large medical claim of $6.8 million recorded in the fourth quarter of 2018.

Credit Quality
Provision for credit losses The provision for credit losses was $10.1 million for the first quarter of 2019, a decrease of $1.2 million, or 11.0%, from the first quarter of 2018 and a decrease of $8.8 million, or 46.4%, from the fourth quarter of 2018. The decreases from both periods were primarily due to decreases in the provision for credit losses attributable to the commercial portfolio. The decrease from the first quarter of 2018 was partially offset by an increase in the provision for credit losses attributable to the inventory finance portfolio.

Net charge-off rate The annualized net charge-off rate was 0.39% for the first quarter of 2019, up 10 basis points from the first quarter of 2018 and down 7 basis points from the fourth quarter of 2018. The increase from the first quarter of 2018 was primarily due to increased net charge-offs in the commercial, inventory finance and leasing and equipment finance portfolios, partially offset by decreased net charge-offs in the consumer real estate portfolio. The decrease from the fourth quarter of 2018 was primarily due to decreased net charge-offs in the inventory finance and commercial portfolios. The annualized net charge-off rate excluding auto finance net charge-offs was 0.20% for the first quarter of 2019, up 11 basis points from the first quarter of 2018 and down 8 basis points from the fourth 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 0.12% at March 31, 2019, up 2 basis points from the March 31, 2018 rate and down 3 basis points from the December 31, 2018 rate. The increase from March 31, 2018 was primarily due to higher delinquencies in the leasing and equipment finance portfolio. The decrease from December 31, 2018 was primarily due to lower delinquencies in the auto finance portfolio.


3




Non-performing assets Non-performing assets, consisting of non-accrual loans and leases and other real estate owned, were $121.6 million at March 31, 2019, a decrease of $22.0 million, or 15.3%, from March 31, 2018 and a decrease of $1.7 million, or 1.4%, from December 31, 2018. The decrease from March 31, 2018 was primarily due to a decrease in consumer real estate non-accrual loans. The decrease from December 31, 2018 was primarily due to decreases in commercial and inventory finance non-accrual loans, partially offset by increases in consumer real estate and leasing and equipment finance non-accrual loans and leases.

Balance Sheet
Average debt securities held to maturity and debt securities available for sale The total average debt securities portfolio was $2.8 billion for the first quarter of 2019, an increase of $823.1 million, or 41.9%, from the first quarter of 2018 and an increase of $67.3 million, or 2.5%, from the fourth quarter of 2018. The increases from both periods were primarily due to purchases of available for sale mortgage-backed debt securities, partially offset by sales of available for sale obligations of states and political subdivisions debt securities.

Average loans and leases Average loans and leases were $19.2 billion for the first quarter of 2019, a decrease of $67.2 million, or 0.3%, from the first quarter of 2018 and an increase of $631.6 million, or 3.4%, from the fourth quarter of 2018. The decrease from the first quarter of 2018 was primarily due to run-off of the auto finance portfolio, partially offset by increases in the consumer real estate, inventory finance and commercial loan portfolios. The increase from the fourth quarter of 2018 was primarily due to increases in the inventory finance and consumer real estate loan portfolios, partially offset by run-off of the auto finance portfolio. Average loans and leases excluding auto finance were $17.3 billion for the first quarter of 2019, an increase of $1.1 billion, or 6.8%, from the first quarter of 2018 and an increase of $912.5 million, or 5.6%, from the fourth quarter of 2018 (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

Average deposits Average deposits were $18.7 billion for the first quarter of 2019, an increase of $445.1 million, or 2.4%, from the first quarter of 2018 and an increase of $277.4 million, or 1.5%, from the fourth quarter of 2018. The increases from both periods were primarily due to increases in savings account balances, partially offset by decreases in certificates of deposit balances.

Capital TCF continues to maintain strong capital ratios, with a common equity Tier 1 capital ratio of 10.79%. TCF did not repurchase any shares of its common stock during the quarter and had the authority to repurchase $78.1 million in aggregate value of shares at March 31, 2019, pursuant to its share repurchase program.


TCF is a Wayzata, Minnesota-based national bank holding company. As of March 31, 2019, TCF had $24.4 billion in total assets and 312 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, including 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, 2018 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, net charge-off rate excluding auto finance, tangible book value per common share and tangible common equity to tangible assets 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 merger-related expenses as management believes it is useful to investors in understanding TCF's business and operating results. In addition, 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)
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31, 2018
Mar. 31, 2018
2019
 
2018
 
2018
 
2018
 
2018
 
$
 
%
$
 
%
ASSETS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
463,822

 
$
587,057

 
$
569,968

 
$
581,876

 
$
588,893

 
$
(123,235
)
 
(21.0
)%
$
(125,071
)
 
(21.2
)%
Investments
103,644

 
91,654

 
80,672

 
95,661

 
91,661

 
11,990

 
13.1

11,983

 
13.1

Debt securities held to maturity
148,024

 
148,852

 
152,881

 
155,962

 
158,099

 
(828
)
 
(0.6
)
(10,075
)
 
(6.4
)
Debt securities available for sale
2,945,342

 
2,470,065

 
2,379,546

 
2,249,784

 
1,954,246

 
475,277

 
19.2

991,096

 
50.7

Loans and leases held for sale
64,468

 
90,664

 
114,198

 
291,871

 
50,706

 
(26,196
)
 
(28.9
)
13,762

 
27.1

Loans and leases:
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 

 
 

First mortgage lien
2,480,750

 
2,444,380

 
1,960,756

 
1,800,885

 
1,878,441

 
36,370

 
1.5

602,309

 
32.1

Junior lien
2,872,807

 
2,965,960

 
2,940,701

 
2,830,029

 
2,843,221

 
(93,153
)
 
(3.1
)
29,586

 
1.0

Total consumer real estate
5,353,557


5,410,340

 
4,901,457

 
4,630,914

 
4,721,662

 
(56,783
)
 
(1.0
)
631,895

 
13.4

Commercial
3,884,106

 
3,851,303

 
3,741,164

 
3,706,401

 
3,678,181

 
32,803

 
0.9

205,925

 
5.6

Leasing and equipment finance
4,674,309

 
4,699,740

 
4,601,887

 
4,648,049

 
4,666,239

 
(25,431
)
 
(0.5
)
8,070

 
0.2

Inventory finance
3,749,146

 
3,107,356

 
2,880,404

 
3,005,165

 
3,457,855

 
641,790

 
20.7

291,291

 
8.4

Auto finance
1,704,614

 
1,982,277

 
2,275,134

 
2,603,260

 
2,839,363

 
(277,663
)
 
(14.0
)
(1,134,749
)
 
(40.0
)
Other
17,943

 
21,295

 
21,107

 
20,957

 
19,854

 
(3,352
)
 
(15.7
)
(1,911
)
 
(9.6
)
Total loans and leases
19,383,675

 
19,072,311

 
18,421,153

 
18,614,746

 
19,383,154

 
311,364

 
1.6

521

 

Allowance for loan and lease losses
(147,972
)
 
(157,446
)
 
(160,621
)
 
(165,619
)
 
(167,703
)
 
9,474

 
6.0

19,731

 
11.8

Net loans and leases
19,235,703

 
18,914,865

 
18,260,532

 
18,449,127

 
19,215,451

 
320,838

 
1.7

20,252

 
0.1

Premises and equipment, net
429,711

 
427,534

 
429,648

 
430,956

 
427,497

 
2,177

 
0.5

2,214

 
0.5

Goodwill, net
154,757

 
154,757

 
154,757

 
154,757

 
154,757

 

 


 

Other assets
873,244

 
814,164

 
762,583

 
774,468

 
743,742

 
59,080

 
7.3

129,502

 
17.4

Total assets
$
24,418,715

 
$
23,699,612

 
$
22,904,785

 
$
23,184,462

 
$
23,385,052

 
$
719,103

 
3.0

$
1,033,663

 
4.4

LIABILITIES AND EQUITY:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Checking
$
6,621,261

 
$
6,381,327

 
$
6,382,667

 
$
6,408,174

 
$
6,541,409

 
$
239,934

 
3.8
 %
$
79,852

 
1.2
 %
Savings
6,442,544

 
6,122,257

 
5,737,144

 
5,570,979

 
5,551,155

 
320,287

 
5.2

891,389

 
16.1

Money market
1,468,308

 
1,609,422

 
1,504,952

 
1,562,008

 
1,609,472

 
(141,114
)
 
(8.8
)
(141,164
)
 
(8.8
)
Certificates of deposit
4,491,998

 
4,790,680

 
4,871,748

 
4,822,112

 
4,995,636

 
(298,682
)
 
(6.2
)
(503,638
)
 
(10.1
)
Total deposits
19,024,111

 
18,903,686

 
18,496,511

 
18,363,273

 
18,697,672

 
120,425

 
0.6

326,439

 
1.7

Borrowings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
355,992

 

 
2,324

 
761

 
775

 
355,992

 
N.M.

355,217

 
N.M.

Long-term borrowings
1,411,426

 
1,449,472

 
1,168,400

 
1,554,569

 
1,457,976

 
(38,046
)
 
(2.6
)
(46,550
)
 
(3.2
)
Total borrowings
1,767,418

 
1,449,472

 
1,170,724

 
1,555,330

 
1,458,751

 
317,946

 
21.9

308,667

 
21.2

Accrued expenses and other liabilities
981,341

 
790,194

 
709,538

 
761,281

 
677,679

 
191,147

 
24.2

303,662

 
44.8

Total liabilities
21,772,870

 
21,143,352

 
20,376,773

 
20,679,884

 
20,834,102

 
629,518

 
3.0

938,768

 
4.5

Equity:
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Preferred stock
169,302

 
169,302

 
169,302

 
169,302

 
169,302

 

 


 

Common stock
1,733

 
1,736

 
1,736

 
1,735

 
1,725

 
(3
)
 
(0.2
)
8

 
0.5

Additional paid-in capital
875,797

 
885,089

 
882,321

 
877,364

 
878,096

 
(9,292
)
 
(1.0
)
(2,299
)
 
(0.3
)
Retained earnings, subject to certain restrictions
1,810,701

 
1,766,994

 
1,708,410

 
1,649,449

 
1,618,041

 
43,707

 
2.5

192,660

 
11.9

Accumulated other comprehensive income (loss)
5,481

 
(33,138
)
 
(65,259
)
 
(52,811
)
 
(46,851
)
 
38,619

 
N.M.

52,332

 
N.M.

Treasury stock at cost and other
(246,621
)
 
(252,182
)
 
(189,652
)
 
(164,107
)
 
(97,800
)
 
5,561

 
2.2

(148,821
)
 
(152.2
)
Total TCF Financial Corporation stockholders' equity
2,616,393

 
2,537,801

 
2,506,858

 
2,480,932

 
2,522,513

 
78,592

 
3.1

93,880

 
3.7

Non-controlling interest in subsidiaries
29,452

 
18,459

 
21,154

 
23,646

 
28,437

 
10,993

 
59.6

1,015

 
3.6

Total equity
2,645,845

 
2,556,260

 
2,528,012

 
2,504,578

 
2,550,950

 
89,585

 
3.5

94,895

 
3.7

Total liabilities and equity
$
24,418,715

 
$
23,699,612

 
$
22,904,785

 
$
23,184,462

 
$
23,385,052

 
$
719,103

 
3.0

$
1,033,663

 
4.4

N.M. Not Meaningful

6




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Change From
(Dollars in thousands)
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31, 2018
 
Mar. 31, 2018
2019
 
2018
 
2018
 
2018
 
2018
 
$
 
%
 
$
 
%
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and leases
$
279,594

 
$
270,804

 
$
264,678

 
$
269,280

 
$
260,375

 
$
8,790

 
3.2
 %
 
$
19,219

 
7.4
 %
Debt securities available for sale
18,815

 
17,097

 
14,838

 
12,516

 
10,123

 
1,718

 
10.0

 
8,692

 
85.9

Debt securities held to maturity
535

 
965

 
988

 
998

 
1,019

 
(430
)
 
(44.6
)
 
(484
)
 
(47.5
)
Loans held for sale and other
4,301

 
4,631

 
6,678

 
3,529

 
3,745

 
(330
)
 
(7.1
)
 
556

 
14.8

Total interest income
303,245

 
293,497

 
287,182

 
286,323

 
275,262

 
9,748

 
3.3

 
27,983

 
10.2

Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
Deposits
37,480

 
33,315

 
27,335

 
23,953

 
22,510

 
4,165

 
12.5

 
14,970

 
66.5

Borrowings
14,858

 
11,294

 
10,726

 
11,571

 
9,553

 
3,564

 
31.6

 
5,305

 
55.5

Total interest expense
52,338

 
44,609

 
38,061

 
35,524

 
32,063

 
7,729

 
17.3

 
20,275

 
63.2

Net interest income
250,907

 
248,888

 
249,121

 
250,799

 
243,199

 
2,019

 
0.8

 
7,708

 
3.2

Provision for credit losses
10,122

 
18,894

 
2,270

 
14,236

 
11,368

 
(8,772
)
 
(46.4
)
 
(1,246
)
 
(11.0
)
Net interest income after provision for credit losses
240,785

 
229,994

 
246,851

 
236,563

 
231,831

 
10,791

 
4.7

 
8,954

 
3.9

Non-interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leasing and equipment finance
41,139

 
55,311

 
45,045

 
42,904

 
41,847

 
(14,172
)
 
(25.6
)
 
(708
)
 
(1.7
)
Fees and service charges
31,324

 
36,206

 
32,574

 
32,670

 
30,751

 
(4,882
)
 
(13.5
)
 
573

 
1.9

Card revenue
14,243

 
15,078

 
15,065

 
14,962

 
13,759

 
(835
)
 
(5.5
)
 
484

 
3.5

ATM revenue
4,440

 
5,054

 
5,053

 
4,933

 
4,650

 
(614
)
 
(12.1
)
 
(210
)
 
(4.5
)
Gains on sales of loans, net
7,972

 
8,419

 
8,764

 
7,192

 
9,123

 
(447
)
 
(5.3
)
 
(1,151
)
 
(12.6
)
Servicing fee income
5,110

 
5,523

 
6,032

 
7,484

 
8,295

 
(413
)
 
(7.5
)
 
(3,185
)
 
(38.4
)
Gains (losses) on debt securities, net
451

 
167

 
94

 
24

 
63

 
284

 
170.1

 
388

 
N.M.

Other
2,347

 
2,375

 
3,818

 
3,934

 
3,716

 
(28
)
 
(1.2
)
 
(1,369
)
 
(36.8
)
Total non-interest income
107,026

 
128,133

 
116,445

 
114,103

 
112,204

 
(21,107
)
 
(16.5
)
 
(5,178
)
 
(4.6
)
Non-interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
121,557

 
129,521

 
123,127

 
120,575

 
123,840

 
(7,964
)
 
(6.1
)
 
(2,283
)
 
(1.8
)
Occupancy and equipment
41,737

 
42,250

 
42,337

 
40,711

 
40,514

 
(513
)
 
(1.2
)
 
1,223

 
3.0

Lease financing equipment depreciation
19,256

 
19,085

 
19,525

 
17,945

 
17,274

 
171

 
0.9

 
1,982

 
11.5

Foreclosed real estate and repossessed assets, net
4,630

 
4,396

 
3,881

 
3,857

 
4,916

 
234

 
5.3

 
(286
)
 
(5.8
)
Merger-related expenses
9,458

 

 

 

 

 
9,458

 
N.M.

 
9,458

 
N.M.

Other
56,437

 
54,706

 
57,553

 
88,951

 
59,436

 
1,731

 
3.2

 
(2,999
)
 
(5.0
)
Total non-interest expense
253,075

 
249,958

 
246,423

 
272,039

 
245,980

 
3,117

 
1.2

 
7,095

 
2.9

Income before income tax expense
94,736

 
108,169

 
116,873

 
78,627

 
98,055

 
(13,433
)
 
(12.4
)
 
(3,319
)
 
(3.4
)
Income tax expense
21,287

 
20,013

 
28,034

 
16,418

 
21,631

 
1,274

 
6.4

 
(344
)
 
(1.6
)
Income after income tax expense
73,449

 
88,156

 
88,839

 
62,209

 
76,424

 
(14,707
)
 
(16.7
)
 
(2,975
)
 
(3.9
)
Income attributable to non-controlling interest
2,955

 
2,504

 
2,643

 
3,460

 
2,663

 
451

 
18.0

 
292

 
11.0

Net income attributable to TCF Financial Corporation
70,494

 
85,652

 
86,196

 
58,749

 
73,761

 
(15,158
)
 
(17.7
)
 
(3,267
)
 
(4.4
)
Preferred stock dividends
2,493

 
2,494

 
2,494

 
2,494

 
4,106

 
(1
)
 

 
(1,613
)
 
(39.3
)
Impact of preferred stock redemption

 

 

 

 
3,481

 

 

 
(3,481
)
 
(100.0
)
Net income available to common stockholders
$
68,001

 
$
83,158

 
$
83,702

 
$
56,255

 
$
66,174

 
$
(15,157
)
 
(18.2
)
 
$
1,827

 
2.8

N.M. Not Meaningful

7




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended March 31,
 
2019
 
2018
 
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
$
366,691

 
$
3,481

 
3.82
%
 
$
332,319

 
$
2,776

 
3.38
%
Debt securities held to maturity
147,556

 
535

 
1.45

 
159,139

 
1,019

 
2.56

Debt securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
Taxable
2,121,196

 
16,131

 
3.04

 
981,843

 
5,813

 
2.37

Tax-exempt(3)
516,995

 
3,397

 
2.63

 
821,642

 
5,456

 
2.66

Loans and leases held for sale
55,204

 
820

 
6.01

 
63,095

 
969

 
6.22

Loans and leases:(4)
 
 
 
 
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate
2,352,758

 
29,887

 
5.12

 
1,786,636

 
24,613

 
5.58

Variable- and adjustable-rate
3,041,252

 
51,687

 
6.89

 
3,012,036

 
45,881

 
6.18

Total consumer real estate
5,394,010

 
81,574

 
6.12

 
4,798,672

 
70,494

 
5.96

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate
817,250

 
9,064

 
4.50

 
931,275

 
10,597

 
4.61

Variable- and adjustable-rate
3,012,206

 
43,532

 
5.86

 
2,669,745

 
33,160

 
5.04

Total commercial
3,829,456

 
52,596

 
5.57

 
3,601,020

 
43,757

 
4.93

Leasing and equipment finance
4,655,705

 
59,221

 
5.09

 
4,690,868

 
56,407

 
4.81

Inventory finance
3,454,283

 
62,865

 
7.38

 
3,128,290

 
51,195

 
6.64

Auto finance
1,841,130

 
24,215

 
5.33

 
3,020,187

 
39,285

 
5.28

Other
11,682

 
133

 
4.61

 
14,446

 
147

 
4.16

Total loans and leases
19,186,266

 
280,604

 
5.91

 
19,253,483

 
261,285

 
5.49

Total interest-earning assets
22,393,908

 
304,968

 
5.50

 
21,611,521

 
277,318

 
5.19

Other assets
1,713,033

 
 
 
 
 
1,453,742

 
 
 
 
Total assets
$
24,106,941

 
 
 
 
 
$
23,065,263

 
 
 
 
LIABILITIES AND EQUITY:
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
$
3,919,746

 
 
 
 
 
$
3,745,745

 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Checking
2,457,767

 
387

 
0.06

 
2,461,548

 
113

 
0.02

Savings
6,253,992

 
10,670

 
0.69

 
5,395,669

 
3,165

 
0.24

Money market
1,490,631

 
4,453

 
1.21

 
1,698,064

 
2,409

 
0.58

Certificates of deposit
4,622,120

 
21,970

 
1.93

 
4,998,133

 
16,823

 
1.36

Total interest-bearing deposits
14,824,510

 
37,480

 
1.02

 
14,553,414

 
22,510

 
0.63

Total deposits
18,744,256

 
37,480

 
0.81

 
18,299,159

 
22,510

 
0.50

Borrowings:
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
293,499

 
1,957

 
2.67

 
3,952

 
19

 
1.99

Long-term borrowings
1,500,832

 
12,901

 
3.44

 
1,423,075

 
9,534

 
2.70

Total borrowings
1,794,331

 
14,858

 
3.31

 
1,427,027

 
9,553

 
2.70

Total interest-bearing liabilities
16,618,841

 
52,338

 
1.27

 
15,980,441

 
32,063

 
0.81

Total deposits and borrowings
20,538,587

 
52,338

 
1.03

 
19,726,186

 
32,063

 
0.66

Accrued expenses and other liabilities
989,104

 
 
 
 
 
758,157

 
 
 
 
Total liabilities
21,527,691

 
 
 
 
 
20,484,343

 
 
 
 
Total TCF Financial Corporation stockholders' equity
2,554,729

 
 
 
 
 
2,557,729

 
 
 
 
Non-controlling interest in subsidiaries
24,521

 
 
 
 
 
23,191

 
 
 
 
Total equity
2,579,250

 
 
 
 
 
2,580,920

 
 
 
 
Total liabilities and equity
$
24,106,941

 
 
 
 
 
$
23,065,263

 
 
 
 
Net interest income and margin
 
 
$
252,630

 
4.56

 
 
 
$
245,255

 
4.59

(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%.
(4)
Average balances of loans and leases include non-accrual loans and leases and are presented net of unearned income.


8




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Quarterly Average Balance Sheets (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Change From
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31, 2018
 
Mar. 31, 2018
(Dollars in thousands)
2019
 
2018
 
2018
 
2018
 
2018
 
$
 
%
 
$
 
%
ASSETS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments and other
$
366,691

 
$
330,359

 
$
306,257

 
$
309,120

 
$
332,319

 
$
36,332

 
11.0
 %
 
$
34,372

 
10.3
 %
Debt securities held to maturity
147,556

 
150,016

 
153,652

 
155,779

 
159,139

 
(2,460
)
 
(1.6
)
 
(11,583
)
 
(7.3
)
Debt securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
2,121,196

 
1,779,654

 
1,525,665

 
1,262,642

 
981,843

 
341,542

 
19.2

 
1,139,353

 
116.0

Tax-exempt
516,995

 
788,806

 
823,854

 
828,131

 
821,642

 
(271,811
)
 
(34.5
)
 
(304,647
)
 
(37.1
)
Loans and leases held for sale
55,204

 
86,169

 
216,669

 
45,525

 
63,095

 
(30,965
)
 
(35.9
)
 
(7,891
)
 
(12.5
)
Loans and leases:(1)
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
Consumer real estate:
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
Fixed-rate
2,352,758

 
1,962,804

 
1,694,661

 
1,715,289

 
1,786,636

 
389,954

 
19.9

 
566,122

 
31.7

Variable- and adjustable-rate
3,041,252

 
3,067,216

 
3,002,225

 
3,026,310

 
3,012,036

 
(25,964
)
 
(0.8
)
 
29,216

 
1.0

Total consumer real estate
5,394,010

 
5,030,020

 
4,696,886

 
4,741,599

 
4,798,672

 
363,990

 
7.2

 
595,338

 
12.4

Commercial:
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
Fixed-rate
817,250

 
815,626

 
856,324

 
900,462

 
931,275

 
1,624

 
0.2

 
(114,025
)
 
(12.2
)
Variable- and adjustable-rate
3,012,206

 
2,932,739

 
2,921,471

 
2,802,059

 
2,669,745

 
79,467

 
2.7

 
342,461

 
12.8

Total commercial
3,829,456

 
3,748,365

 
3,777,795

 
3,702,521

 
3,601,020

 
81,091

 
2.2

 
228,436

 
6.3

Leasing and equipment finance
4,655,705

 
4,616,715

 
4,624,968

 
4,639,703

 
4,690,868

 
38,990

 
0.8

 
(35,163
)
 
(0.7
)
Inventory finance
3,454,283

 
3,024,961

 
2,866,460

 
3,299,996

 
3,128,290

 
429,322

 
14.2

 
325,993

 
10.4

Auto finance
1,841,130

 
2,121,969

 
2,435,868

 
2,695,943

 
3,020,187

 
(280,839
)
 
(13.2
)
 
(1,179,057
)
 
(39.0
)
Other
11,682

 
12,599

 
13,547

 
13,845

 
14,446

 
(917
)
 
(7.3
)
 
(2,764
)
 
(19.1
)
Total loans and leases
19,186,266

 
18,554,629

 
18,415,524

 
19,093,607

 
19,253,483

 
631,637

 
3.4

 
(67,217
)
 
(0.3
)
Total interest-earning assets
22,393,908

 
21,689,633

 
21,441,621

 
21,694,804

 
21,611,521

 
704,275

 
3.2

 
782,387

 
3.6

Other assets
1,713,033

 
1,464,620

 
1,462,783

 
1,430,621

 
1,453,742

 
248,413

 
17.0

 
259,291

 
17.8

Total assets
$
24,106,941

 
$
23,154,253

 
$
22,904,404

 
$
23,125,425

 
$
23,065,263

 
$
952,688

 
4.1

 
$
1,041,678

 
4.5

LIABILITIES AND EQUITY:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
$
3,919,746

 
$
3,873,023

 
$
3,874,421

 
$
3,879,048

 
$
3,745,745

 
$
46,723

 
1.2
 %
 
$
174,001

 
4.6
 %
Interest-bearing deposits:
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
Checking
2,457,767

 
2,403,370

 
2,427,288

 
2,460,709

 
2,461,548

 
54,397

 
2.3

 
(3,781
)
 
(0.2
)
Savings
6,253,992

 
5,922,724