Toggle SGML Header (+)


Section 1: 10-Q (10-Q)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 10-Q

 

x Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

For the quarterly period ended

March 31, 2009

 

or

 

o Transition Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Commission File No.

001-10253

 

 

TCF FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

 

41-1591444

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

200 Lake Street East, Mail Code EX0-03-A,

Wayzata, Minnesota 55391-1693

(Address and Zip Code of principal executive offices)

 

Registrant’s telephone number, including area code:  (952) 745-2760

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

 

Yes x

 

No o

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

 

Yes x

 

No o

 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer x

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

 

Yes o

 

No x

 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at
April 23, 2009

Common Stock, $.01 par value

 

128,104,279 shares

 

 
 

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES
 
INDEX
 

 

 

 

 

Pages

Part I.

 

Financial Information

 

 

 

 

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Statements of Financial Condition
at March 31, 2009 and December 31, 2008

 

3

 

 

 

 

 

 

 

Consolidated Statements of Income for the Three Months
Ended March 31, 2009 and 2008

 

4

 

 

 

 

 

 

 

Consolidated Statements of Stockholders’ Equity for the
Three Months Ended March 31, 2009 and 2008

 

5

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2009 and 2008

 

6

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements

 

7

 

 

 

 

 

 

 

Item 2. Management’s Discussion and Analysis of Consolidated Financial
Condition and Results of Operations for the Three Months
Ended March 31, 2009 and 2008

 

19  

 

 

 

 

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

37  

 

 

 

 

 

 

 

Item 4. Controls and Procedures

 

38  

 

 

 

 

 

 

 

Supplementary Information

 

40  

 

 

 

 

 

Part II.

 

Other Information

 

 

 

 

 

 

 

 

 

Items 1-6

 

41  

 

 

 

 

 

 

 

Signatures

 

43  

 

 

 

 

 

 

 

Index to Exhibits

 

44  

 

 

2

 


 

PART 1 - FINANCIAL INFORMATION

Item 1.  Financial Statements

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Condition

 

 

 

 

At

 

At

 

 

 

March 31,

 

December 31,

 

(Dollars in thousands, except per-share data)

 

2009

 

2008

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

1,024,741

 

$

342,380

 

Investments

 

166,879

 

155,725

 

Securities available for sale

 

2,098,628

 

1,966,104

 

Education loans held for sale

 

 

757

 

Loans and leases:

 

 

 

 

 

Consumer real estate and other

 

7,363,436

 

7,363,583

 

Commercial real estate

 

3,039,480

 

2,984,156

 

Commercial business

 

493,943

 

506,887

 

Leasing and equipment finance

 

2,798,134

 

2,486,082

 

Inventory finance

 

100,624

 

4,425

 

Total loans and leases

 

13,795,617

 

13,345,133

 

Allowance for loan and lease losses

 

(181,216

)

(172,442

)

Net loans and leases

 

13,614,401

 

13,172,691

 

Premises and equipment, net

 

448,047

 

447,826

 

Goodwill

 

152,599

 

152,599

 

Other assets

 

577,046

 

502,275

 

Total assets

 

$

18,082,341

 

$

16,740,357

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

Checking

 

$

4,101,540

 

$

3,969,768

 

Savings and money market

 

5,309,325

 

3,677,301

 

Certificates of deposit

 

2,236,338

 

2,596,283

 

Total deposits

 

11,647,203

 

10,243,352

 

Short-term borrowings

 

26,299

 

226,861

 

Long-term borrowings

 

4,311,568

 

4,433,913

 

Total borrowings

 

4,337,867

 

4,660,774

 

Accrued expenses and other liabilities

 

597,315

 

342,455

 

Total liabilities

 

16,582,385

 

15,246,581

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock, par value $.01 per share, 30,000,000
shares authorized; 361,172 issued and outstanding

 

349,007

 

348,437

 

Common stock, par value $.01 per share, 280,000,000 shares
authorized; 130,410,951 and 130,839,378 shares issued

 

1,304

 

1,308

 

Additional paid-in capital

 

315,025

 

330,474

 

Retained earnings, subject to certain restrictions

 

917,762

 

927,893

 

Accumulated other comprehensive income (loss)

 

4,391

 

(3,692

)

Treasury stock at cost, 2,573,813 and 3,413,855 shares, and other

 

(87,533

)

(110,644

)

Total stockholders’ equity

 

1,499,956

 

1,493,776

 

Total liabilities and stockholders’ equity

 

$

18,082,341

 

$

16,740,357

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

3


 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

(In thousands, except per-share data)

 

2009

 

2008

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

Loans and leases

 

$

209,377

 

$

211,777

 

Securities available for sale

 

25,701

 

28,279

 

Education loans held for sale

 

 

3,452

 

Investments and other

 

856

 

1,642

 

Total interest income

 

235,934

 

245,150

 

Interest expense:

 

 

 

 

 

Deposits

 

40,084

 

48,728

 

Borrowings

 

50,437

 

53,593

 

Total interest expense

 

90,521

 

102,321

 

Net interest income

 

145,413

 

142,829

 

Provision for credit losses

 

43,712

 

29,995

 

Net interest income after provision for credit losses

 

101,701

 

112,834

 

Non-interest income:

 

 

 

 

 

Fees and service charges

 

57,064

 

63,547

 

Card revenue

 

24,960

 

24,771

 

ATM revenue

 

7,598

 

7,970

 

Subtotal

 

89,622

 

96,288

 

Leasing and equipment finance

 

12,651

 

12,134

 

Other

 

458

 

4,283

 

Fees and other revenue

 

102,731

 

112,705

 

Gains on securities

 

11,548

 

6,286

 

Visa share redemption

 

 

8,308

 

Total non-interest income

 

114,279

 

127,299

 

Non-interest expense:

 

 

 

 

 

Compensation and employee benefits

 

86,190

 

88,718

 

Occupancy and equipment

 

32,047

 

32,413

 

Deposit account premiums

 

6,576

 

1,496

 

Advertising and promotions

 

4,445

 

4,801

 

FDIC insurance premiums

 

3,795

 

421

 

Other

 

37,131

 

35,913

 

Subtotal

 

170,184

 

163,762

 

Operating lease depreciation

 

4,024

 

4,514

 

Total non-interest expense

 

174,208

 

168,276

 

Income before income tax expense

 

41,772

 

71,857

 

Income tax expense

 

15,125

 

24,431

 

Net income

 

26,647

 

47,426

 

Preferred stock dividends

 

5,185

 

 

Net income available to common stockholders

 

$

21,462

 

$

47,426

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

Basic

 

$

.17

 

$

.38

 

Diluted

 

$

.17

 

$

.38

 

 

 

 

 

 

 

Dividends declared per common share

 

$

.25

 

$

.25

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

4


 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(Unaudited)

 

 

 

Number of
Common

 

Preferred

 

Common

 

Additional
Paid-in

 

Retained

 

Accumulated
Other
Comprehensive

 

Treasury
Stock

 

 

 

(Dollars in thousands)

 

Shares Issued

 

Stock

 

Stock

 

Capital

 

Earnings

 

(Loss) Income

 

and Other

 

Total

 

Balance, December 31, 2007

 

131,468,699

 

$

 

$

1,315

 

$

354,563

 

$

926,875

 

$

(18,055

)

$

(165,686

)

$

1,099,012

 

Pension and postretirement measurement
date change

 

 

 

 

 

65

 

 

 

65

 

Subtotal

 

131,468,699

 

 

1,315

 

354,563

 

926,940

 

(18,055

)

(165,686

)

1,099,077

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

47,426

 

 

 

47,426

 

Other comprehensive income

 

 

 

 

 

 

15,055

 

 

15,055

 

Comprehensive income

 

 

 

 

 

47,426

 

15,055

 

 

62,481

 

Dividends on common stock

 

 

 

 

 

(31,554

)

 

 

(31,554

)

Issuance of 101,000 common shares

 

 

 

 

(2,617

)

 

 

2,617

 

 

Cancellation of common shares

 

(12,500

)

 

 

(138

)

125

 

 

 

(13

)

Cancellation of common shares for
tax withholding

 

(390,523

)

 

(4

)

(6,200

)

 

 

 

(6,204

)

Amortization of stock compensation

 

 

 

 

2,093

 

 

 

 

2,093

 

Exercise of stock options,
13,000 shares

 

 

 

 

(173

)

 

 

335

 

162

 

Stock compensation tax benefits

 

 

 

 

3,828

 

 

 

 

3,828

 

Change in shares held in trust for
deferred compensation plans, at cost

 

 

 

 

(1,964

)

 

 

1,964

 

 

Balance, March 31, 2008

 

131,065,676

 

$

 

$

1,311

 

$

349,392

 

$

942,937

 

$

(3,000

)

$

(160,770

)

$

1,129,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2008

 

130,839,378

 

$

348,437

 

$

1,308

 

$

330,474

 

$

927,893

 

$

(3,692

)

$

(110,644

)

$

1,493,776

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

26,647

 

 

 

26,647

 

Other comprehensive income

 

 

 

 

 

 

8,083

 

 

8,083

 

Comprehensive income

 

 

 

 

 

26,647

 

8,083

 

 

34,730

 

Dividends on preferred stock

 

 

570

 

 

 

(5,185

)

 

 

(4,615

)

Dividends on common stock

 

 

 

 

 

(31,715

)

 

 

(31,715

)

Issuance of 309,000 common shares

 

 

 

 

(8,002

)

 

 

8,002

 

 

Treasury shares sold to TCF employee
benefit plans, 517,242 shares

 

 

 

 

(6,772

)

 

 

13,395

 

6,623

 

Cancellation of common shares

 

(421,450

)

 

(4

)

(76

)

122

 

 

 

42

 

Cancellation of common shares for
tax withholding

 

(6,977

)

 

 

(93

)

 

 

 

(93

)

Amortization of stock compensation

 

 

 

 

2,088

 

 

 

 

2,088

 

Exercise of stock options, 13,800 shares

 

 

 

 

(195

)

 

 

357

 

162

 

Stock compensation tax expense

 

 

 

 

(1,042

)

 

 

 

(1,042

)

Change in shares held in trust for
deferred compensation plans, at cost

 

 

 

 

(1,357

)

 

 

1,357

 

 

Balance, March 31, 2009

 

130,410,951

 

$

349,007

 

$

1,304

 

$

315,025

 

$

917,762

 

$

4,391

 

$

(87,533

)

$

1,499,956

 

See accompanying notes to consolidated financial statements.

 

5


 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

(In thousands)

 

2009

 

2008

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

26,647

 

$

47,426

 

Adjustments to reconcile net income to net cash
provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

15,701

 

16,146

 

Provision for credit losses

 

43,712

 

29,995

 

Proceeds from sales of education loans held for sale

 

708

 

24,491

 

Principal collected on education loans held for sale

 

23

 

894

 

Originations of education loans held for sale

 

(221

)

(92,779

)

Net increase (decrease) in other assets and accrued expenses and other liabilities

 

3,320

 

(9,318

)

Gains on sales of assets, net

 

(11,548

)

(6,286

)

Other, net

 

2,485

 

2,451

 

Total adjustments

 

54,180

 

(34,406

)

Net cash provided by operating activities

 

80,827

 

13,020

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Principal collected on loans and leases

 

685,512

 

785,330

 

Originations and purchases of loans

 

(753,302

)

(892,846

)

Purchases of equipment for lease financing

 

(181,798

)

(197,323

)

Purchase of leasing and equipment finance portfolio

 

(277,404

)

 

Proceeds from sales of securities available for sale

 

522,359

 

1,082,452

 

Proceeds from maturities of and principal collected on securities available for sale

 

106,835

 

60,619

 

Purchases of securities available for sale

 

(552,676

)

(1,225,885

)

Purchases of Federal Home Loan Bank stock

 

 

(32,262

)

Proceeds from redemptions of Federal Home Loan Bank stock

 

 

36,724

 

Proceeds from sales of real estate owned

 

14,522

 

8,169

 

Purchases of premises and equipment

 

(10,092

)

(10,763

)

Proceeds from sales of premises and equipment

 

328

 

250

 

Other, net

 

(4,819

)

4,683

 

Net cash used by investing activities

 

(450,535

)

(380,852

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Net increase in deposits

 

1,403,851

 

780,520

 

Net decrease in short-term borrowings

 

(200,561

)

(417,628

)

Proceeds from long-term borrowings

 

7,410

 

5,040

 

Payments on long-term borrowings

 

(131,110

)

(2,206

)

Dividends paid on common stock

 

(31,715

)

(31,554

)

Dividends paid on preferred stock

 

(4,615

)

 

Stock compensation tax (expense) benefit

 

(1,042

)

3,828

 

Treasury shares sold to TCF employee benefit plans

 

6,623

 

 

Other, net

 

3,228

 

2,829

 

Net cash provided by financing activities

 

1,052,069

 

340,829

 

Net increase (decrease) in cash and due from banks

 

682,361

 

(27,003

)

Cash and due from banks at beginning of period

 

342,380

 

358,188

 

Cash and due from banks at end of period

 

$

1,024,741

 

$

331,185

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

Cash paid for:

 

 

 

 

 

Interest on deposits and borrowings

 

$

92,057

 

$

98,637

 

Income taxes

 

$

1,386

 

$

9,967

 

Transfer of loans and leases to other assets

 

$

39,564

 

$

16,910

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

6


 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

(Unaudited)

 

(1)                      Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all the information and notes necessary for complete financial statements in conformity with generally accepted accounting principles.  The information in this Quarterly Report on Form 10-Q is written with the presumption that the users of the interim financial statements have read or have access to the most recent Annual Report on Form 10-K of TCF Financial Corporation (“TCF” or the “Company”), which contains the latest audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2008 and for the year then ended.  All significant intercompany accounts and transactions have been eliminated in consolidation.  Certain reclassifications have been made to prior period financial statements to conform to the current period presentation.  For Consolidated Statements of Cash Flow purposes, cash and cash equivalents include cash and due from banks.

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.  These estimates are based on information available to management at the time the estimates are made.  Actual results could differ from those estimates.  In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal recurring items, considered necessary for fair presentation.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year.

 

(2)                      Investments

 

The carrying values of investments consist of the following.

 

 

 

At

 

At

 

 

 

March 31,

 

December 31,

 

(In thousands)

 

2009

 

2008

 

Federal Home Loan Bank stock, at cost:

 

 

 

 

 

Des Moines

 

$

120,263

 

$

120,263

 

Chicago

 

4,617

 

4,617

 

Subtotal

 

124,880

 

124,880

 

Federal Reserve Bank stock, at cost

 

33,643

 

22,706

 

Other

 

8,356

 

8,139

 

Total investments

 

$

166,879

 

$

155,725

 

 

The investments in Federal Home Loan Bank (“FHLB”) stock are required investments related to TCF’s current and previous borrowings from these banks.  FHLBs obtain their funding primarily through issuance of consolidated obligations of the Federal Home Loan Bank system.  The U.S. Government does not guarantee these obligations, and each of the 12 FHLBs are generally jointly and severally liable for repayment of each other’s debt.  Therefore, TCF’s investments in these banks could be adversely impacted by the financial operations of the FHLBs and actions of the Federal Housing Finance Agency.

 

7


 

(3)                      Securities Available for Sale

 

Securities available for sale consist of the following.

 

 

 

At March 31, 2009

 

At December 31, 2008

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

(Dollars in thousands)

 

Cost

 

Gains

 

Losses

 

Value

 

Cost

 

Gains

 

Losses

 

Value

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government sponsored
enterprises and federal agencies

 

$

1,749,334

 

$

48,269

 

$

 

$

1,797,603

 

$

1,928,245

 

$

37,310

 

$

 

$

1,965,555

 

U.S. Government sponsored
enterprises debentures

 

300,006

 

482

 

 

300,488

 

 

 

 

 

Other securities

 

537

 

 

 

537

 

549

 

 

 

549

 

Total

 

$

2,049,877

 

$

48,751

 

$

 

$

2,098,628

 

$

1,928,794

 

$

37,310

 

$

 

$

1,966,104

 

Weighted-average yield

 

4.54

%

 

 

 

 

 

 

5.17

%

 

 

 

 

 

 

 

TCF purchased $600.1 million of short-term Fannie Mae and Freddie Mac debentures in late March and April of 2009.  These debentures have a one-time issuer call feature with call dates ranging from one to two years from the issue date.

 

At March 31, 2009 and December 31, 2008, TCF had $1.8 billion of mortgaged-backed securities and U.S. Government sponsored enterprises debentures pledged as collateral to secure certain deposits and borrowings.

 

At March 31, 2009 and December 31, 2008, TCF had no securities in an unrealized loss position within the available for sale portfolio.

 

8


 

(4)                      Loans and Leases

 

The following table sets forth information about loans and leases, excluding education loans held for sale.

 

 

 

At

 

At

 

 

 

 

 

 

March 31,

 

December 31,

 

 

Percentage

 

(Dollars in thousands)

 

2009

 

2008

 

 

Change

 

Consumer real estate and other:

 

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

First mortgage liens

 

$

4,932,795

 

$

4,881,662

 

 

1.0%

 

Junior liens

 

2,374,999

 

2,420,116

 

 

(1.9)

 

Total consumer real estate

 

7,307,794

 

7,301,778

 

 

0.1

 

Other

 

55,642

 

61,805

 

 

(10.0)  

 

Total consumer real estate and other

 

7,363,436

 

7,363,583

 

 

 

Commercial:

 

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

Permanent

 

2,747,230

 

2,693,085

 

 

2.0

 

Construction and development

 

292,250

 

291,071

 

 

0.4

 

Total commercial real estate

 

3,039,480

 

2,984,156

 

 

1.9

 

Commercial business

 

493,943

 

506,887

 

 

(2.6)

 

Total commercial

 

3,533,423

 

3,491,043

 

 

1.2

 

Leasing and equipment finance (1):

 

 

 

 

 

 

 

 

Equipment finance loans

 

855,562

 

789,869

 

 

8.3

 

Lease financings:

 

 

 

 

 

 

 

 

Direct financing leases

 

2,106,890

 

1,813,254

 

 

16.2  

 

Sales-type leases

 

21,494

 

22,095

 

 

(2.7)

 

Lease residuals

 

58,008

 

52,906

 

 

9.6

 

Unearned income and deferred lease costs

 

(243,820

)

(192,042

)

 

(27.0)  

 

Total lease financings

 

1,942,572

 

1,696,213

 

 

14.5  

 

Total leasing and equipment finance

 

2,798,134

 

2,486,082

 

 

12.6  

 

Inventory finance

 

100,624

 

4,425

 

 

N.M.    

 

Total loans and leases

 

$

13,795,617

 

$

13,345,133

 

 

3.4

 

(1)          Operating leases of $57.2 million at March 31, 2009 and $58.8 million at December 31, 2008 are included in Other assets on the Consolidated Statements of Financial Condition.

N.M. Not Meaningful

 

9


 

(5)                      Long-term Borrowings

 

The following table sets forth information about long-term borrowings.

 

 

 

 

 

At March 31, 2009

 

 

At December 31, 2008

 

 

 

Stated

 

 

 

 

Weighted-

Average

 

 

 

 

 

Weighted-

Average

 

(Dollars in thousands)

 

Maturity

 

Amount

 

 

Rate

 

 

Amount

 

 

Rate

 

Federal Home Loan Bank advances and
securities sold under repurchase agreements

 

2009

 

$

 

 

  —%

 

 

$

117,000

 

 

5.26%

 

 

 

2010

 

100,000

 

 

6.02

 

 

100,000

 

 

6.02

 

 

 

2011

 

300,000

 

 

4.64

 

 

300,000

 

 

4.64

 

 

 

2015

 

900,000

 

 

4.18

 

 

900,000

 

 

4.18

 

 

 

2016

 

1,100,000

 

 

4.49

 

 

1,100,000

 

 

4.49

 

 

 

2017

 

1,250,000

 

 

4.60

 

 

1,250,000

 

 

4.60

 

 

 

2018

 

300,000

 

 

3.51

 

 

300,000

 

 

3.51

 

Sub-total

 

 

 

3,950,000

 

 

4.43

 

 

4,067,000

 

 

4.45

 

Subordinated bank notes

 

2014

 

70,988

 

 

5.27

 

 

74,917

 

 

5.27

 

 

 

2015

 

49,834

 

 

5.37

 

 

49,790

 

 

5.37

 

 

 

2016

 

74,473

 

 

5.63

 

 

74,457

 

 

5.63

 

Sub-total

 

 

 

195,295

 

 

5.43

 

 

199,164

 

 

5.43

 

Junior subordinated notes (trust preferred)

 

2068

 

110,440

 

 

11.20  

 

 

110,440

 

 

11.20  

 

Discounted lease rentals

 

2009

 

19,279

 

 

6.31

 

 

25,104

 

 

6.38

 

 

 

2010

 

18,987

 

 

6.27

 

 

17,077

 

 

6.29

 

 

 

2011

 

10,595

 

 

6.38

 

 

8,976

 

 

6.34

 

 

 

2012

 

4,974

 

 

6.49

 

 

4,059

 

 

6.47

 

 

 

2013

 

1,030

 

 

6.92

 

 

1,118

 

 

6.94

 

 

 

2014

 

9

 

 

7.73

 

 

9

 

 

7.73

 

Sub-total

 

 

 

54,874

 

 

6.34

 

 

56,343

 

 

6.36

 

Other borrowings

 

2009

 

959

 

 

5.00

 

 

966

 

 

5.00

 

Total long-term borrowings

 

 

 

$

4,311,568

 

 

4.67

 

 

$

4,433,913

 

 

4.69

 

 

Included in FHLB advances and repurchase agreements at March 31, 2009 are $600 million of fixed-rate FHLB advances and repurchase agreements, which are callable quarterly by counterparties at par until maturity.  In addition, TCF has $2 billion of FHLB advances and $700 million of repurchase agreements which contain one-time call provisions for various years from 2009 through 2011.

 

The probability that the advances and repurchase agreements will be called by the counterparties depends primarily on the level of related interest rates during the call period. If FHLB advances are called, replacement funding will be available from the FHLB at the then-prevailing market rate of interest for the term selected by TCF, subject to standard terms and conditions.

 

The next call year and stated maturity year for the callable FHLB advances and repurchase agreements outstanding at March 31, 2009 were as follows.

 

(Dollars in thousands)

Year

 

Next Call

 

Weighted-

Average Rate

 

Stated Maturity

 

Weighted-

Average Rate

 

 

 

 

 

 

 

 

 

 

 

2009

 

$

1,400,000

 

4.52

%

$

 

%

2010

 

1,450,000

 

4.56

 

100,000

 

6.02

 

2011

 

400,000

 

3.84

 

200,000

 

4.85

 

2015

 

 

 

500,000

 

4.15

 

2016

 

 

 

900,000

 

4.48

 

2017

 

 

 

1,250,000

 

4.60

 

2018

 

 

 

 

300,000

 

 

3.51

 

Total

 

$

3,250,000

 

4.45

 

$

3,250,000

 

4.45

 

 

10


 

(6)                      Stockholders’ Equity

 

Treasury stock and other consists of the following.

 

 

 

At

 

At

 

 

 

March 31,

 

December 31,

 

(In thousands)

 

2009

 

2008

 

Treasury stock, at cost

 

$

(66,650

)

$

(88,404

)

Shares held in trust for deferred
compensation plans, at cost

 

(20,883

)

(22,240

)

Total

 

$

(87,533

)

$

(110,644

)

 

On April 22, 2009, TCF redeemed all of the 361,172 outstanding shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, $.01 Par Value, for a total redemption price of $361.2 million plus a final pro rata dividend of $3.4 million. Since receiving these funds on November 14, 2008, TCF paid the U.S. Treasury $7.9 million in dividends.  TCF has the right to repurchase the common stock warrant issued to the U.S. Treasury under its Capital Purchase Program subject to mutual agreement on price.  Otherwise, the U.S. Treasury is required by law to liquidate the warrant.

 

TCF continues to be well-capitalized based on the capital requirements determined by the Federal Reserve Board and the Office of the Comptroller of the Currency.  See Note 9 of Notes to Consolidated Financial Statements for additional information on TCF’s capital position and requirements.

 

(7)                      Fair Value Measurement

 

TCF determines fair value in accordance with Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements.  SFAS 157 defines fair value and establishes a consistent framework for measuring fair value under generally accepted accounting principles and expands disclosure requirements for fair value measurements.  Fair values represent the estimated price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

 

11


 

The table below presents the balances of assets measured at fair value on a recurring basis.

 

 

 

Readily Available

 

Observable Market

 

Company Determined

 

Total at

 

(In thousands)

 

Market Prices (1)

 

Prices (2)

 

Market Prices (3)

 

Fair Value

 

At March 31, 2009:

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government sponsored
enterprises and federal agencies

 

$

 

$

1,797,603

 

$

 

$

1,797,603

 

Other securities

 

 

 

537

 

537

 

U.S. Government sponsored enterprises
debentures

 

 

300,488

 

 

300,488

 

Assets held in trust for deferred
compensation plans (4)

 

5,124

 

 

 

5,124

 

Total assets

 

$

5,124

 

$

2,098,091

 

$

537

 

$

2,103,752

 

At December 31, 2008:

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

U.S. Government sponsored
enterprises and federal agencies

 

$

 

$

1,965,555

 

$

 

$

1,965,555

 

Other securities

 

 

 

549

 

549

 

Assets held in trust for deferred
compensation plans (4)

 

5,516

 

 

 

5,516

 

Total assets

 

$

5,516

 

$

1,965,555

 

$

549

 

$

1,971,620

 

(1)          Considered Level 1 under SFAS 157.

(2)          Considered Level 2 under SFAS 157.

(3)          Considered Level 3 under SFAS 157 and is based on valuation models that use assumptions that are not observable in an active market.

(4)          An equal and corresponding liability is recorded in other liabilities for TCF’s obligation to the participants in these plans.

 

The change in the balance sheet carrying values associated with company determined market priced assets measured at fair value on a recurring basis during the three months ended March 31, 2009 and 2008 was not significant.

 

Effective January 1, 2009, TCF adopted FASB Staff Position 157-2, Effective Date of SFAS No. 157, which requires TCF to apply the provisions of SFAS 157 to non-financial assets and liabilities measured on a nonrecurring basis.

 

The following is a description of valuation methodologies used for assets measured on a nonrecurring basis.

 

Long-lived assets held for sale Long-lived assets held for sale include real estate owned and repossessed and returned equipment. The fair value of real estate owned is based on independent full appraisals, real estate broker’s price opinions, and automated valuation methods, less estimated selling costs.  Certain properties require assumptions that are not observable in an active market in the determination of fair value.  The fair value of repossessed and returned equipment is based on available pricing guides, auction results and third-party price opinions, less estimated selling costs.  Assets that are acquired through foreclosure, repossession or return are initially recorded at the lower of the loan or lease carrying amount or fair value less estimated selling costs at the time of transfer to real estate owned or repossessed and returned equipment.  Long-lived assets held for sale with a carrying amount of $63.9 million were written down $6.3 million, which is included in other non-interest expense, to their fair value of $57.6 million during the three months ended March 31, 2009.

 

12

 


 

The table below presents the balances of assets measured at fair value on a nonrecurring basis at March 31, 2009.

 

 

 

Readily Available

 

Observable Market

 

Company Determined

 

Total at Fair

 

(In thousands)

 

Market Prices (1)

 

Prices (2)

 

Market Prices (3)

 

Value

 

Other assets (4):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate owned

 

$

 

$

35,265

 

$

10,026

 

$

45,291

 

Repossessed and returned equipment

 

 

12,319

 

 

12,319

 

Total other assets

 

$

 

$

47,584

 

$

10,026

 

$

57,610

 

(1)          Considered Level 1 under SFAS 157.

(2)          Considered Level 2 under SFAS 157.

(3)          Considered Level 3 under SFAS 157 and is based on valuation models that use assumptions that are not observable in an active market.

(4)          Amounts do not include assets held at cost at March 31, 2009.

 

(8)                      Stock Compensation

 

The following table reflects TCF’s restricted stock transactions under the TCF Financial Incentive Stock Program since December 31, 2008.

 

 

 

 

 

 

Restricted Stock

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

Shares

 

 

Grant Date Fair Value

 

 

 

 

Outstanding at December 31, 2008

 

1,887,517

 

 

 

 

$

21.00

 

 

 

 

 

 

Granted

 

309,000

 

 

 

 

8.41

 

 

 

 

 

 

Forfeited

 

(421,450

)

 

 

 

26.11

 

 

 

 

 

 

Vested

 

(218,000

)

 

 

 

28.34

 

 

 

 

 

 

Outstanding at March 31, 2009

 

1,557,067

 

 

 

 

$

15.18

 

 

 

 

 

 

 

The following table reflects TCF’s stock option transactions under the TCF Financial Incentive Stock Program since December 31, 2008.

 

 

 

Stock Options

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

Weighted-Average

 

 

Remaining Contractual

 

 

 

Shares

 

 

Exercise Price

 

 

Term In Years

 

Outstanding at December 31, 2008

 

2,373,419

 

 

 

 

$

14.44

 

 

 

 

8.78

 

Granted

 

 

 

 

 

 

 

 

 

 

Exercised

 

(13,800

)

 

 

 

11.78

 

 

 

 

 

Forfeited

 

(46,000

)

 

 

 

15.06

 

 

 

 

 

Outstanding at March 31, 2009

 

2,313,619

 

 

 

 

$

14.44

 

 

 

 

8.61

 

Exercisable at March 31, 2009

 

105,000

 

 

 

 

$

14.48

 

 

 

 

0.16

 

 

Unrecognized stock compensation for restricted stock and stock options was $19.6 million with a weighted-average remaining amortization period of 2.2 years at March 31, 2009.

 

The following table summarizes information about stock options outstanding at March 31, 2009.

 

 

 

Stock Options Outstanding

 

Stock Options Exercisable

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

 

 

Weighted-Average

 

Remaining Contractual

 

 

 

Weighted-Average

 

Exercise price range

 

Shares

 

Exercise Price

 

Life in Years

 

Shares

 

Exercise Price

 

$14.30-$14.52

 

   105,000

 

$        14.48

 

0.16

 

105,000

 

$        14.48

 

$12.85-$15.75

 

2,208,619

 

$        14.44

 

9.01

 

        —

 

$             —

 

 

13


 

Additional valuation and related assumption information for TCF’s stock option plans is presented below.

 

 

 

 

Expected volatility

 

28.5

%

Weighted-average volatility

 

28.5

%

Expected dividend yield

 

3.5

%

Expected term (in years)

 

6.25-6.75

 

Risk-free interest rate

 

2.58-2.91

%

 

(9)                      Regulatory Capital Requirements

 

The following table sets forth TCF’s and TCF National Bank’s regulatory tier 1 leverage, tier 1 risk-based and total risk-based capital levels, and applicable percentages of adjusted assets, together with the stated minimum and well-capitalized capital ratio requirements.

 

 

 

 

 

Minimum

 

Well-Capitalized

 

 

 

Actual

 

Capital Requirement

 

Capital Requirement

 

(Dollars in thousands)

 

Amount

 

Ratio

 

Amount

 

Ratio

 

Amount

 

Ratio

 

As of March 31, 2009:

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage capital

 

 

 

 

 

 

 

 

 

 

 

 

 

TCF

 

$

1,460,157

 

8.59

%

$

509,973

 

3.00

%

N.A.

 

N.A.

 

TCF National Bank

 

1,362,486

 

8.07

 

506,725

 

3.00

 

$

844,542

 

5.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 risk-based capital

 

 

 

 

 

 

 

 

 

 

 

 

 

TCF

 

1,460,157

 

11.20

 

521,589

 

4.00

 

782,383

 

6.00

 

TCF National Bank

 

1,362,486

 

10.51

 

518,503

 

4.00

 

777,755

 

6.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital

 

 

 

 

 

 

 

 

 

 

 

 

 

TCF

 

1,819,420

 

13.95

 

1,043,178

 

8.00

 

1,303,972

 

10.00

 

TCF National Bank

 

1,720,792

 

13.28

 

1,037,006

 

8.00

 

1,296,258

 

10.00

 

As of December 31, 2008:

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage capital

 

 

 

 

 

 

 

 

 

 

 

 

 

TCF

 

$

1,461,973

 

8.97

%

$

488,950

 

3.00

%

N.A.

 

N.A.

 

TCF National Bank

 

1,364,053

 

8.41

 

486,552

 

3.00

 

$

810,920

 

5.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 risk-based capital

 

 

 

 

 

 

 

 

 

 

 

 

 

TCF

 

1,461,973

 

11.79

 

496,059

 

4.00

 

744,088

 

6.00

 

TCF National Bank

 

1,364,053

 

11.06

 

493,388

 

4.00

 

740,082

 

6.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital

 

 

 

 

 

 

 

 

 

 

 

 

 

TCF

 

1,817,225

 

14.65

 

992,117

 

8.00

 

1,240,147

 

10.00

 

TCF National Bank

 

1,718,476

 

13.93

 

986,776

 

8.00

 

1,233,470

 

10.00

 

N.A. Not Applicable.

 

The minimum and well capitalized capital requirements are determined by the Federal Reserve Board for TCF and by the Office of the Comptroller of the Currency for TCF National Bank pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991.  At March 31, 2009, TCF, TCF National Bank and TCF National Bank Arizona exceeded their stated regulatory capital requirements and are considered “well-capitalized”.

 

At March 31, 2009, TCF’s tier 1 and total risk-based capital ratios, adjusted for the redemption of the Fixed-Rate Cumulative Perpetual Preferred Stock, were 8.43 percent and 11.18 percent, respectively.  At March 31, 2009, TCF National Bank’s tier 1 and total risk-based capital ratios, adjusted for the redemption of the Fixed-Rate Cumulative Perpetual Preferred Stock, were 7.72 percent and 10.49 percent, respectively. See Note 6 of Notes to Consolidated Financial Statements for additional information on TCF’s stockholders’ equity.

 

14


 

(10)                Employee Benefit Plans

 

The following tables set forth the net periodic benefit cost included in compensation and employee benefits expense for TCF’s Pension Plan and Postretirement Plan for the three months ended March 31, 2009 and 2008.

 

 

 

Pension Plan

 

Postretirement Plan

 

 

 

Three Months Ended March 31,

 

Three Months Ended March 31,

 

(In thousands)

 

2009

 

2008

 

2009

 

2008

 

Service cost

 

$

 

$

 

$

2

 

$

3

 

Interest cost

 

729

 

734

 

123

 

134

 

Expected return on plan assets

 

(1,282

)

(1,265

)

 

 

Amortization of transition obligation

 

 

 

1

 

1

 

Recognized actuarial loss

 

316

 

215

 

63

 

78

 

Settlement expense

 

882

 

178

 

 

 

Net periodic benefit cost (income)

 

$