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Section 1: 8-K (8-K)

 

 

 

 

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):  July 22, 2009

 


 

 

TCF FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 


 

Delaware

 

001-10253

 

41-1591444

(State or other jurisdiction of

 

(Commission File Number)

 

(IRS Employer Identification No.)

incorporation or organization)

 

 

 

 

 

200 Lake Street East, Mail Code EX0-03-A, Wayzata, Minnesota 55391-1693

(Address of principal executive offices)

 

(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:

 

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 


 

Item 2.02  Results of Operations and Financial Condition.

 

In accordance with General Instruction B.2 of Form 8-K, 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.

 

The registrant issued a press release dated July 22, 2009, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended June 30, 2009.

 

Item 9.01    Financial Statements and Exhibits.

 

(d)         Exhibits.

 

Exhibit No.

Description

 

 

99.1

Earnings Release of TCF Financial Corporation,
dated July 22, 2009

 

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/ William A. Cooper

 

 

William A. Cooper,

Chairman and Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

 

 

 

 

/s/ Thomas F. Jasper

 

 

Thomas F. Jasper, Executive Vice President and

Chief Financial Officer

(Principal Financial Officer)

 

 

 

 

 

 

 

 

/s/ David M. Stautz

 

 

David M. Stautz, Senior Vice President,

Controller and Assistant Treasurer

(Principal Accounting Officer)

 

Dated:    July 22, 2009

 

2

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

Exhibit 99.1

 

NEWS RELEASE

 

 

CONTACT:

Jason Korstange

 

 

(952) 745-2755

 

 

 

 

 

www.tcfbank.com

 

 

 

 

FOR IMMEDIATE RELEASE

 

 

 

TCF FINANCIAL CORPORATION 200 Lake Street East, Wayzata, MN 55391-1693

 

TCF Reports 57th Consecutive Quarter of Net Income — Earns $23.5 Million
 
SECOND QUARTER HIGHLIGHTS

·                 Redeemed $361.2 million of senior perpetual preferred stock from the U.S. Treasury and recorded a $12 million non-cash deemed preferred stock dividend

·                 Diluted earnings per common share was 18 cents, excluding the non-cash deemed preferred stock dividend

·                 Net income of $23.5 million

·                 Net interest margin of 3.80 percent

·                 Recorded a FDIC special assessment of $8.4 million, or 4 cents per common share

·                 Average loans and leases increased by $1.1 billion, or 8.7 percent

·                 Average deposits increased by $1.5 billion, or 15.2 percent

·                 Capital ratios exceed stated well capitalized requirements

·                 Announced regular quarterly cash dividend of 5 cents per common share, payable August 31, 2009

 

 

 

 Earnings Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1 

($ in thousands, except per-share data)

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

2Q
2009

 

1Q
2009

 

2Q
2008

 

2Q09 vs 1Q09

 

2Q09 vs 2Q08

 

YTD
2009

 

YTD
2008

 

Percent Change

 

 Net income

 

$

23,543

 

$

26,647

 

$

23,702

 

(11.6

)%

(.7

)%

$

50,190

 

$

71,128

 

(29.4

)%

 Preferred stock dividends

 

1,193

 

5,185

 

 

(77.0

)

N.M.

 

6,378

 

 

N.M.

 

   Subtotal

 

22,350

 

21,462

 

23,702

 

4.1

 

(5.7

)

43,812

 

71,128

 

(38.4

)

 Non-cash deemed preferred stock dividend

 

12,025

 

 

 

N.M.

 

N.M.

 

12,025

 

 

N.M.

 

 Net income available to common stockholders

 

$

10,325

 

$

21,462

 

$

23,702

 

(51.9

)

(56.4

)

$

31,787

 

$

71,128

 

(55.3

)

 Diluted earnings per common share

 

$

.08

 

$

.17

 

$

.19

 

(52.9

)

(57.9

)

$

.25

 

$

.57

 

(56.1

)

 Diluted earnings per common share excluding non-cash deemed preferred stock dividend

 

.18

 

.17

 

.19

 

5.9

 

(5.3

)

.35

 

.57

 

(38.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Financial Ratios (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Return on average assets

 

.53

%

.62

%

.58

%

 

 

 

 

.58

%

.88

%

 

 

 Return on average common
equity
(2)

 

7.82

 

7.58

 

8.57

 

 

 

 

 

7.70

 

12.85

 

 

 

 Net interest margin

 

3.80

 

3.66

 

4.00

 

 

 

 

 

3.73

 

3.92

 

 

 

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

 

1.43

 

1.04

 

.84

 

 

 

 

 

1.24

 

.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized

 

 

 

 

 

 

 

 

 

 

 

N.M. = Not meaningful  

 (2) Excludes non-cash deemed preferred stock dividend of $12,025 in the second quarter and year-to-date of 2009.  Including this amount, the return on average common equity was 3.61% and 5.59% for the second quarter and year-to-date 2009, respectively.

 

-more-

 


 

2

 

WAYZATA, MN, July 22, 2009 – TCF Financial Corporation (“TCF”) (NYSE: TCB) today reported second quarter 2009 diluted earnings per common share of 8 cents, compared with 19 cents in the second quarter of 2008 and 17 cents for the first quarter of 2009. In April, TCF redeemed $361.2 million of senior perpetual preferred stock from the U.S. Treasury and recorded a related $12 million non-cash deemed preferred stock dividend. Diluted earnings per share in the second quarter of 2009 was 18 cents excluding the non-cash deemed preferred stock dividend.  Net income for the second quarter of 2009 was $23.5 million, compared with $23.7 million in the second quarter of 2008 and $26.6 million in the first quarter of 2009.

 

Diluted earnings per share for the first six months of 2009 was 25 cents, compared with 57 cents for the same 2008 period. Diluted earnings per share for the first six months of 2009 was 35 cents excluding the non-cash deemed preferred stock dividend. Net income for the first six months of 2009 was $50.2 million, compared with $71.1 million for the same 2008 period.

 

TCF declared a quarterly cash dividend of 5 cents per common share payable on August 31, 2009 to stockholders of record at the close of business on July 31, 2009.

 

Chairman’s Statement

 

“TCF reported its 57th consecutive profitable quarter and announced a regular quarterly dividend of 5 cents per common share – our 85th consecutive quarter paying a dividend,” said William A. Cooper, TCF Chairman and CEO. “At the heart of our core business, we saw continued positive momentum in revenues with increasing margin and fee income along with strong growth in deposit accounts and balances as well as loans and leases.  Although provision for loan and lease losses remain at higher levels during this credit cycle, our philosophy of conservative banking and secured lending positions TCF to quickly benefit as the economy improves.”

 

-more-

 


 

3

 

 Total Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 ($ in thousands)

 

2Q

 

1Q

 

 

  2Q

 

  2Q09 vs

 

 

2Q09 vs

 

 

YTD

 

YTD

 

Percent 

 

 

 

2009

 

2009

 

 

2008

 

  1Q09

 

 

2Q08

 

 

2009

 

2008

 

Change 

 

 Net interest income

 

$156,463

 

$145,413

 

  $151,562

 

7.6

%

 

 

3.2

%

 

$301,876

 

$294,391 

 

2.5

%

 Fees and other revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Fees and service charges

 

77,536

 

57,064

 

 

  67,961

 

35.9

 

 

 

14.1

 

 

 

134,600

 

131,508 

 

2.4 

 

 Card revenue

 

26,604

 

24,960

 

 

  26,828

 

6.6

 

 

 

(.8

)

 

 

51,564

 

51,599 

 

(.1)

 

 ATM revenue

 

7,973

 

7,598

 

 

    8,267

 

4.9

 

 

 

(3.6

)

 

 

15,571

 

16,237 

 

(4.1)

 

 Total banking fees

 

112,113

 

89,622

 

 

103,056

 

25.1

 

 

 

8.8

 

 

 

201,735

 

199,344 

 

1.2 

 

 Leasing and equipment finance

 

16,881

 

12,651

 

 

  14,050

 

33.4

 

 

 

20.1

 

 

 

29,532

 

26,184 

 

12.8 

 

 Other

 

820

 

458

 

 

    4,398

 

79.0

 

 

 

(81.4

)

 

 

1,278

 

8,681 

 

(85.3)

 

 Total fees and other revenue

 

129,814

 

102,731

 

 

121,504

 

26.4

 

 

 

6.8

 

 

 

232,545

 

234,209 

 

(.7)

 

 Gains on securities

 

10,556

 

11,548

 

 

    1,115

 

(8.6

)

 

 

N.M.

 

 

 

22,104

 

7,401 

 

198.7 

 

 Visa share redemption

 

-      

 

-      

 

 

      -

 

     -

 

 

 

   - 

 

 

 

-      

 

8,308 

 

(100.0)

 

 Total non-interest income

 

140,370

 

114,279

 

 

 122,619

 

22.8

 

 

 

14.5

 

 

 

254,649

 

249,918 

 

1.9 

 

 Total revenue

 

$296,833

 

$259,692

 

 

  $274,181

 

14.3

 

 

 

8.3

 

 

 

$556,525

 

$544,309 

 

2.2 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net interest margin (1)

 

3.80

%

3.66

%

 

        4.00%

 

 

 

 

 

 

 

3.73

%

3.92%

 

 

 Fees and other revenue as a % of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total revenue

 

43.73

 

39.56

 

 

    44.32

 

 

 

 

 

 

 

 

41.79

 

 

43.03

 

 

 

 Average assets (1)

 

2.94

 

2.40

 

 

      2.97

 

 

 

 

 

 

 

 

2.67

 

 

2.88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not Meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

·                  Net interest margin in the second quarter of 2009 was 3.80 percent, compared with 4.00 percent in the second quarter of 2008 and 3.66 percent in the first quarter of 2009.  The decrease in net interest margin from the second quarter of 2008 was primarily due to lower average yields in the securities available for sale portfolio due to sales and purchase activity, investing excess liquidity on a short-term basis, the issuance of trust preferred stock in the third quarter of 2008 and lower yields on loans and leases, partially offset by lower deposit rates.  The increase in net interest margin from the first quarter of 2009 was primarily due to a reduction in rates paid on deposits, partially offset by lower average yields on securities available for sale.

 

·                  At June 30, 2009, TCF had $147.9 million on deposit with the Federal Reserve which is included in cash and due from banks compared with $742.9 million at March 31, 2009.  TCF has $600.1 million in short-term Fannie Mae and Freddie Mac debentures at June 30, 2009.

-more-

 


 

4

Non-interest Income

 

·                  Banking fees and service charges were $77.5 million, up $9.6 million, or 14.1 percent, from the second quarter of 2008 and up $20.5 million, or 35.9 percent, from the first quarter of 2009 primarily due to an increased number of checking accounts and related fee income.

 

·                  Card revenues totaled $26.6 million for the second quarter of 2009, essentially flat with the second quarter of 2008 and up $1.6 million, or 6.6 percent, from the first quarter of 2009. The growth in card revenue from the first quarter of 2009 was primarily due to a higher number of active accounts, as a result of increases in the number of checking accounts and seasonal increases in the average number of transactions per account.

 

·                  Leasing and equipment finance revenues were $16.9 million for the second quarter of 2009, up $2.8 million, or 20.1 percent, from the second quarter of 2008 and up $4.2 million, or 33.4 percent, from the first quarter of 2009. The increase in leasing revenue from the second quarter of 2008 and first quarter of 2009 was primarily due to higher sales-type lease revenue which varies from period to period based on customer-driven events.

 

·                  Other non-interest income was $820 thousand, down $3.6 million from the second quarter of 2008, primarily due to TCF no longer selling investment and insurance products in the branches.

 

-more-

 


 

5

Loans and Leases

 

 Average Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

Table 3

 

 

 

 

 

 

 

 

 

Percentage Change

 

 

 

 

 

 

 

 ($ in thousands)

 

2Q
2009

 

1Q
2009

 

2Q
2008

 

2Q09 vs
1Q09

 

2Q09 vs
2Q08

 

YTD
2009

 

YTD
2008

 

Percent
Change

 

 Loans and leases:

   

 

   

 

   

 

   

 

 

 

 

 

   

 

   

 

 

 Consumer real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 First mortgage lien

 

$  4,938,187

 

$  4,896,521

 

$  4,862,990

 

.9

%

1.5

%

$  4,917,468

 

$  4,800,415 

 

2.4

%

 Junior lien

 

2,355,913

 

2,399,178

 

2,420,963

 

(1.8

)

(2.7

)

2,377,427

 

2,393,678 

 

(.7

)

 Total consumer real estate

 

7,294,100

 

7,295,699

 

7,283,953

 

-

 

.1

 

7,294,895

 

7,194,093 

 

1.4

 

 Consumer other

 

36,255

 

39,539

 

46,492

 

(8.3

)

(22.0

)

37,887

 

45,251 

 

(16.3

)

 Total consumer

 

7,330,355

 

7,335,238

 

7,330,445

 

(.1

)

-

 

7,332,782

 

7,239,344 

 

1.3

 

 Commercial real estate

 

3,110,030

 

2,998,516

 

2,656,392

 

3.7

 

17.1

 

3,054,581

 

2,611,403 

 

17.0

 

 Commercial business

 

483,493

 

499,756

 

529,470

 

(3.3

)

(8.7

)

491,580

 

536,579 

 

(8.4

)

 Total commercial

 

3,593,523

 

3,498,272

 

3,185,862

 

2.7

 

12.8

 

3,546,161

 

3,147,982 

 

12.6

 

 Leasing and equipment finance

 

2,809,787

 

2,632,893

 

2,229,467

 

6.7

 

26.0

 

2,721,829

 

2,185,081 

 

24.6

 

 Inventory finance

 

118,317

 

28,475

 

-

 

N.M.

 

N.M.

 

73,644

 

 

N.M.

 

Total Loans and Leases

 

$13,851,982

 

$13,494,878

 

$12,745,774

 

2.6

 

8.7

 

$13,674,416

 

$12,572,407 

 

8.8

 

 

 

 N.M. = Not meaningful

 

 

·                  Average consumer real estate loan balances were relatively flat from the second quarter of 2008 and the first quarter of 2009 reflecting less consumer demand for home equity financing and very competitive pricing from government sponsored and supported programs.

 

·                  At June 30, 2009, 67.7 percent of the consumer real estate loan portfolio was secured by first liens.

 

·                  Average commercial loan balances increased $407.7 million, or 12.8 percent, from the second quarter of 2008 and $95.3 million, or 2.7 percent, from the first quarter of 2009 as a reduction in competitive alternatives has increased the opportunity to attract high quality customers.

 

·                  Average leasing and equipment finance balances increased $580.3 million, or 26 percent, from the second quarter of 2008 and $176.9 million, or 6.7 percent, from the first quarter of 2009.  The $277.4 million portfolio purchase in the first quarter of 2009 contributed $134.1 million of the increase in average balances from the first quarter of 2009.

 

·                  Average inventory finance loans increased $89.8 million, to $118.3 million, for the second quarter of 2009 from the first quarter of 2009.  During the second quarter of 2009, TCF Inventory Finance generated $44.7 million of loans in the lawn and garden industry which TCF entered in the second quarter of 2009.

 

-more-


 

6

 

Securities Available for Sale

 

 Average Securities Available for Sale

 

 

 

 

 

 

 

 

 

 

 

Table 4  

 

 

 

 

 

 

 

 

Yield

 

 

 

 

 

Yield

 

 ($ in thousands)

 

2Q

 

1Q

 

2Q

 

 

 

 

 

YTD

 

YTD

 

YTD

 

YTD

 

 

 

2009

 

2009

 

2008

 

2Q09

 

2Q08

 

2009

 

2008

 

2009

 

2008

 

 U.S. Government sponsored enterprise and federal agencies mortgage-backed securities

 

$1,656,767

 

$2,002,962

 

$2,180,572

 

4.91

%

 

5.29

%

 

$1,828,908

 

$2,140,695

 

5.03

%

5.30

%

 U.S. Government sponsored enterprise debentures

 

527,562

 

8,908

 

-

 

2.17

 

 

-

 

 

269,668

 

-

 

2.15

 

-

 

 Other securities

 

498

 

506

 

4,008

 

5.63

 

 

3.89

 

 

502

 

22,053

 

5.60

 

3.46

 

Total

 

$2,184,827

 

$2,012,376

 

$2,184,580

 

4.25

 

 

5.28

 

 

$2,099,078

 

$2,162,748

 

4.66

 

5.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  TCF purchased $204 million and sold $381 million of mortgage-backed securities in the second quarter of 2009, compared with $502.9 million of purchases and $564.2 million of sales in the first quarter of 2009.

 

·                  TCF purchased $600.1 million of Fannie Mae and Freddie Mac debentures with maturities of three years or less in late March and April of 2009, resulting in a reduction in lower yielding interest-bearing deposits at the Federal Reserve.

 

-more-

 


 

7

 

Deposits

 

 Average Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 5  

 

 

 

 

 

 

 

 

Percentage Change

 

 

 

 

 

 

 

 ($ in thousands)

 

 

2Q
2009

 

1Q
2009

 

2Q
2008

 

2Q09vs
1Q09

 

2Q09vs
2Q08

 

YTD
2009

 

YTD
2008

 

Percent
Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Non-interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$  1,446,215

 

$  1,428,453

 

$  1,464,237

 

1.2

%

 

(1.2

)%

 

$  1,437,383

 

$  1,439,809

 

(.2

)%

Small business

 

571,676

 

563,236

 

577,510

 

1.5

 

 

(1.0

)

 

567,479

 

571,329

 

(.7

)

Commercial

 

260,079

 

227,470

 

238,779

 

14.3

 

 

8.9

 

 

243,856

 

219,701

 

11.0

 

Subtotal

 

2,277,970

 

2,219,159

 

2,280,526

 

2.7

 

 

(.1

)

 

2,248,718

 

2,230,839

 

.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

1,792,493

 

1,747,480

 

1,883,948

 

2.6

 

 

(4.9

)

 

1,770,111

 

1,865,277

 

(5.1

)

Savings and money market

 

5,514,098

 

4,446,622

 

3,493,213

 

24.0

 

 

57.9

 

 

4,983,309

 

3,403,827

 

46.4

 

Subtotal

 

7,306,591

 

6,194,102

 

5,377,161

 

18.0

 

 

35.9

 

 

6,753,420

 

5,269,104

 

28.2

 

Certificates

 

2,087,490

 

2,463,405

 

2,471,216

 

(15.3

)

 

(15.5

)

 

2,274,409

 

2,485,789

 

(8.5

)

Subtotal

 

9,394,081

 

8,657,507

 

7,848,377

 

8.5

 

 

19.7

 

 

9,027,829

 

7,754,893

 

16.4

 

Total deposits

 

  $11,672,051

 

  $10,876,666

 

  $10,128,903

 

7.3

 

 

15.2

 

 

  $11,276,547

 

  $  9,985,732

 

12.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Average rate on deposits

 

1.15% 

 

1.49% 

 

1.47%  

 

 

 

 

 

1.31% 

 

1.73% 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  Total average deposits increased $1.5 billion from the second quarter of 2008 and $795.4 million from the first quarter of 2009.  The increase from the second quarter of 2008 was primarily due to strong growth in savings deposits due to several initiatives involving products, pricing and marketing efforts, partially offset by declines in certificates of deposits as a result of lower pricing.

 

·                  The average rate paid on deposits was 1.15 percent in the second quarter of 2009, down 32 basis points from the second quarter of 2008 and down 34 basis points from the first quarter of 2009 due to reductions in interest rates paid on certain deposit products. The weighted average interest rate on total deposits was 1.07 percent at June 30, 2009.

 

·                  The number of new checking accounts opened in the second quarter of 2009 increased 27.4 percent, compared with the second quarter of 2008 and increased 1.4 percent from the first quarter of 2009.

 

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8

 

Non-interest Expense

 

 Non-interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6  

 

 

 

 

 

 

 

 

Percentage Change

 

 

 

 

 

 

 

 ($ in thousands)

 

 

2Q
2009

 

1Q
2009

 

2Q
2008

 

2Q09vs
1Q09

 

2Q09vs
2Q08

 

YTD
2009

 

YTD
2008

 

Percent
Change

 

 Compensation and employee benefits

 

$  90,752

 

$  86,190

 

$  84,267

 

5.3

%

 

7.7

%

 

$176,942

 

$172,985

 

2.3

%

 Occupancy and equipment

 

31,527

 

32,047

 

31,205

 

(1.6

)

 

1.0

 

 

63,574

 

63,618

 

(.1

)

 Deposit account premiums

 

7,287

 

6,576

 

2,441

 

10.8

 

 

198.5

 

 

13,863

 

3,937

 

N.M.

 

 Advertising and promotions

 

4,134

 

4,445

 

4,689

 

(7.0

)

 

(11.8

)

 

8,579

 

9,490

 

(9.6

)

 Operating lease depreciation

 

3,860

 

4,024

 

4,460

 

(4.1

)

 

(13.5

)

 

7,884

 

8,974

 

(12.1

)

 FDIC insurance premiums

 

13,303

 

3,795

 

437

 

N.M.

 

 

N.M.

 

 

17,098

 

858

 

N.M.

 

 Foreclosed real estate and repossessed assets

 

6,125

 

4,291

 

4,892

 

42.7

 

 

25.2

 

 

10,416

 

7,507

 

38.8

 

 Other

 

39,558

 

32,840

 

36,338

 

20.5

 

 

8.9

 

 

72,398

 

69,636

 

4.0

 

Total non-interest expense

 

  $196,546

 

  $174,208

 

  $168,729

 

12.8

 

 

16.5

 

 

  $370,754

 

  $337,005

 

10.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  Compensation and benefits expenses increased $6.5 million, or 7.7 percent, from the second quarter of 2008 and $4.6 million, or 5.3 percent, from the first quarter of 2009. The increase from the second quarter of 2008 was primarily due to increases in leasing and equipment finance and inventory finance compensation costs as a result of expansion and growth and increased employee medical plan expenses, which were partially offset by headcount reductions in banking.

 

·                  Deposit account premiums were $7.3 million for the 2009 second quarter, up $4.8 million from the second quarter of 2008 and up $711 thousand from the first quarter of 2009 due to successful marketing campaigns resulting in increased checking account production.

 

·                  FDIC insurance premiums were up $12.9 million from the second quarter of 2008 and up $9.5 million from the first quarter of 2009 primarily attributable to a special FDIC assessment of $8.4 million recorded in the second quarter of 2009 and due to higher insurance premium rates as a result of TCF’s larger deposit base.

 

·                  Foreclosed real estate and repossessed asset expenses increased $1.2 million from the second quarter of 2008 and $1.8 million from the first quarter of 2009 primarily due to increased levels of commercial and consumer real estate owned.

 

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9

 

·                  Other expenses increased $3.2 million from the second quarter of 2008 and $6.7 million from the first quarter of 2009 primarily due to increased credit insurance expense on certain consumer loans and increased reserves for expected losses on unfunded commitments.  These increases were partially offset by decreased severance and separation costs.

 

-more-

 


 

10

 

Credit Quality

 

 Credit Quality Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 7  

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

 

2Q
2009

 

1Q
2009

 

2Q
2008

 

2Q09vs
1Q09

 

2Q09vs
2Q08

 

YTD
2009

 

YTD
2008

 

%
Chg

 

 Allowance for Loan and Lease Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance at beginning of period

 

$

181,216

 

$

172,442

 

$

97,390

 

5.1

%

86.1

%  

$

172,442

 

$

80,942

 

113.0

%

Charge-offs

 

(53,462

)

(38,881

)

(29,902

)

37.5

 

78.8

 

(92,343

)

(47,724

)

93.5

 

Recoveries

 

3,800

 

3,943

 

3,254

 

(3.6

)

16.8

 

7,743

 

7,529

 

2.8

 

Net charge-offs

 

(49,662

)

(34,938

)

(26,648

)

42.1

 

86.4

 

(84,600

)

(40,195

)

110.5

 

Provision for credit losses

 

61,891

 

43,712

 

62,895

 

41.6

 

(1.6

)

105,603

 

92,890

 

13.7

 

 Balance at end of period

 

$

193,445

 

$

181,216

 

$

133,637

 

6.7

 

44.8

 

$

193,445

 

$

133,637

 

44.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Allowance as a percentage of period end loans and leases

 

1.39

%

1.31

%

1.03

%

 

 

 

 

1.39

%

1.03

%

 

 

 Ratio of allowance to net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

charge-offs(1)

 

1.0

X

1.3

X

1.3

X

 

 

 

 

1.1

X

1.7

X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Credit Loss Reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Allowance for loan and lease losses

 

$

193,445

 

$

181,216

 

$

133,637

 

6.7

 

44.8

 

 

 

 

 

 

 

 Reserves for unfunded commitments

 

2,655

 

1,730

 

1,227

 

53.5

 

116.4

 

 

 

 

 

 

 

 Reserves netted against portfolio asset balances

 

13,828

 

15,102

 

-

 

(8.4

)

100.0

 

 

 

 

 

 

 

Total credit loss reserves

 

$

209,928

 

$

198,048

 

$

134,864

 

6.0

 

55.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total credit loss reserves as a percentage of period end loans and leases

 

1.50

%

1.43

%

1.04

%

 

 

 

 

 

 

 

 

 

 

 Ratio of total credit loss reserves to net charge-offs(1) (3)

 

1.0

X

1.4

X

1.3

X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net Charge-offs as a Percentage of Average Loans and Leases(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First mortgage lien

 

.96

%

.86

%

.56

%

 

 

 

 

.91

%

.46

%

 

 

Junior lien

 

1.90

 

1.98

 

1.19

 

 

 

 

 

1.94

 

1.02

 

 

 

Total consumer real estate

 

1.26

 

1.22

 

.77

 

 

 

 

 

1.24

 

.64

 

 

 

Total consumer

 

1.35

 

1.29

 

.85

 

 

 

 

 

1.32

 

.72

 

 

 

Commercial real estate

 

2.51

 

.49

 

.86

 

 

 

 

 

1.52

 

.47

 

 

 

Commercial business

 

(.05

)

2.39

 

1.74

 

 

 

 

 

1.19

 

1.08

 

 

 

Leasing and equipment finance

 

.79

 

.71

 

.55

 

 

 

 

 

.75

 

.47

 

 

 

Inventory finance

 

-

 

-

 

-

 

 

 

 

 

-

 

-

 

 

 

Total

 

1.43

 

1.04

 

.84

 

 

 

 

 

1.24

 

.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Other Credit Quality Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquencies(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30+days

 

$

178,165

 

$

178,475

 

$

120,823

 

(.2

)

47.5

 

 

 

 

 

 

 

60+days

 

98,982

 

82,270

 

70,614

 

20.3

 

40.2

 

 

 

 

 

 

 

90+days

 

48,477

 

38,344

 

28,180

 

26.4

 

72.0

 

 

 

 

 

 

 

Delinquencies as a percentage of loan and lease portfolio(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30+days

 

1.30

%

1.31

%

.94

%

 

 

 

 

 

 

 

 

 

 

60+days

 

.72

 

.60

 

.55

 

 

 

 

 

 

 

 

 

 

 

90+days

 

.35

 

.28

 

.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans and leases

 

$

239,917

 

$

205,916

 

$

105,247

 

16.5

 

128.0

 

 

 

 

 

 

 

Real estate owned

 

96,862

 

70,748

 

55,112

 

36.9

 

75.8

 

 

 

 

 

 

 

Total non-performing assets

 

$

336,779

 

$

276,664

 

$

160,359

 

21.7

 

110.0

 

 

 

 

 

 

 

Non-performing assets as a percentage of net loans and leases

 

2.45

%

2.03

%

1.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized

 

 

 

 

 

 

 

 

 

 

 

 

 

 (2) Excludes non-accrual loans and leases

 

 (3) Includes $1.4 million in write-offs related to credit reserves netted against portfolio asset balances in the second quarter of 2009

 

 

 

 

-more-

 


 

11

 

At June 30, 2009, TCF’s:

 

·                  Allowance for loan and lease losses was $193.4 million, or 1.39 percent of loans and leases, up from $181.2 million, or 1.31 percent of loans and leases at March 31, 2009.

 

·                  Over-60-day delinquency rates were .72 percent, up from .60 percent at March 31, 2009 primarily due to increases in consumer real estate and leasing and equipment finance delinquencies.

 

·                  Non-accrual loans and leases increased $34 million, or 16.5 percent, from March 31, 2009 primarily due to increases for commercial real estate and leasing and equipment finance.  TCF may experience an increase in future quarters in non-accrual consumer real estate loans as a result of delays in the foreclosure process resulting from new laws or government policies in certain locations.

 

·                  Real estate owned increased $26.1 million, or 36.9 percent, from March 31, 2009 primarily due to increases in consumer real estate owned in Minnesota and Illinois.

 

For the quarter ended June 30, 2009, TCF’s:

 

·                  Provision for credit losses was $61.9 million, down from $62.9 million in the second quarter of 2008 and up from $43.7 million in the first quarter of 2009. The composition of the provision for credit losses in the second quarter of 2009 was driven by increased net charge-offs in the consumer real estate, commercial and leasing portfolios versus the composition in the second quarter of 2008 being largely driven by significant reserve rate increases in the consumer real estate portfolio.  The increase from the first quarter of 2009 was primarily due to increased charge-offs of commercial loans.

 

·                  Net loan and lease charge-offs were $49.7 million, or 1.43 percent annualized, of average loans and leases, up from $34.9 million, or 1.04 percent annualized, of average loans and leases, from the first quarter of 2009 primarily due to increases in commercial real estate net charge-offs, primarily in Michigan.

 

-more-

 


 

12

 

Income Taxes

 

·                  Income tax expense was 38.7 percent of pre-tax income for the second quarter of 2009, compared with 44.3 percent for the comparable 2008 period and 36.2 percent for the first quarter of 2009. The second quarter of 2008 income tax expense included a $2.2 million year-to-date increase in income tax expense and a $2.8 million increase in deferred income taxes related to changes in state income taxes, primarily in Minnesota.

 

-more-

 


 

13

 

Capital

 

 Capital Information

 

 

 

 

 

 

 

Table 8    

 At period end

 

 

 

 

 

 

 

 

 

 ($ in thousands, except per-share data)

 

 

2Q
2009

 

4Q
2008

 

 Total stockholders’ equity

 

    $1,142,535

 

 

 

    $1,493,776

 

 

 

 Total stockholders’ equity to total assets

 

6.54

%

 

 

8.92

%

 

 

 Book value per common share

 

$         8.90

 

 

 

$         8.99

 

 

 

 Tangible realized common equity to assets(1)

 

5.75

%

 

 

5.95

%

 

 

 

 

 

 

 

 

 

 

 

 

 Risk-based capital

 

 

 

 

 

 

 

 

 

Tier 1

 

$1,122,511

 

  8.71%

 

$1,461,973

 

11.79%

 

Total

 

1,465,881

 

11.37

 

1,817,225

 

14.65

 

Total stated “well-capitalized” requirement

 

1,288,974

 

10.00

 

1,240,147

 

10.00

 

Excess over stated “well-capitalized” requirement

 

176,907

 

  1.37

 

577,078

 

  4.65

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes the impact of preferred stock, goodwill and accumulated other comprehensive income (loss) (see Table 9 “Reconciliation of GAAP to Non-GAAP Measures”)

 

 

 

 

·                  TCF’s total risk-based capital at June 30, 2009 of $1.5 billion, or 11.37 percent of risk-weighted assets, is $176.9 million in excess of the stated “well-capitalized” requirement.

 

·                  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. Since receiving the Capital Purchase Program funds on November 14, 2008, TCF paid the U.S. Department of the Treasury $7.9 million in cash dividends. Upon redemption, the difference of $12 million between the preferred stock redemption amount and the recorded amount was charged to retained earnings as a non-cash deemed preferred stock dividend. This deemed preferred stock dividend had no impact on total stockholders’ equity, but reduced earnings per diluted common share by 10 cents. Additionally, TCF recorded preferred stock dividends of $1.2 million, or 1 cent per common share, and $5.2 million, or 4 cents per common share, in the second and first quarters of 2009, respectively. The warrant issued to the U.S. Treasury under the Capital Purchase Program has not been repurchased and TCF has requested the U.S. Treasury to liquidate it, as required by law.

 

·                  On July 21, 2009, the Board of Directors of TCF declared a regular quarterly cash dividend of 5 cents per common share payable on August 31, 2009 to stockholders of record at the close of business on July 31, 2009.

 

-more-

 


 

14

 

 Reconciliation of GAAP to Non-GAAP Measures(1)

 

 

 

 

 

Table 9    

 At period end

 

 

 

 

 

 

 

 

 ($ in thousands)

 

 

2Q
2009

 

 

 

4Q
2008

 

 

 Computation of stockholders’ equity to total assets:

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

    $    1,142,535

 

 

 

 

    $    1,493,776

 

 

 

Total assets

 

17,475,721

 

 

 

 

16,740,357

 

 

 

 Stockholders’ equity to total assets

 

6.54

%

 

 

 

8.92

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 Computation of tangible realized common equity to total assets:

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

$    1,142,535

 

 

 

 

$    1,493,776

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

-

 

 

 

 

348,437

 

 

 

Goodwill

 

152,599

 

 

 

 

152,599

 

 

 

Add:

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

15,296

 

 

 

 

3,692

 

 

 

Tangible realized common equity

 

$    1,005,232

 

 

 

 

$       996,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$  17,475,721

 

 

 

 

$  16,740,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Tangible realized common equity to total assets

 

5.75

%

 

 

 

5.95

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) In contrast to GAAP-basis measures, tangible realized common equity excludes the effect of preferred stock, goodwill and accumulated other comprehensive income (loss). Management reviews tangible realized common equity as an ongoing measure and has included this information because of current interest by the industry. The methodology of calculating tangible realized common equity may vary between companies.

 

 

 

 

Website Information

 

A live webcast of TCF’s conference call to discuss second quarter earnings will be hosted at TCF’s website, www.tcfbank.com, on July 22, 2009 at 10:00 a.m., CDT. Additionally, the webcast is available for replay at TCF’s website after the conference call. The website also includes free access to company news releases, TCF’s annual report, quarterly reports, investor presentations and SEC filings.

 

 

TCF is a Wayzata, Minnesota-based national financial holding company with $17.5 billion in total assets. TCF has 444 banking offices in Minnesota, Illinois, Michigan, Colorado, Wisconsin, Indiana, Arizona and South Dakota, providing retail and commercial banking services. TCF also conducts commercial leasing and equipment finance business in all 50 states and commercial inventory finance business in the U.S. and Canada. For more information about TCF, please visit www.tcfbank.com.

 

 

 

-more-

 


 

15

 

Forward-looking Information

 

This earnings release and other reports issued by the Company, including reports filed with the SEC, may contain “forward-looking” statements that deal with future results, plans or performance. In addition, TCF’s management may make such statements orally to the media, or to securities analysts, investors or others. Forward-looking statements deal with matters that do not relate strictly to historical facts. TCF’s future results may differ materially from historical performance and forward-looking statements about TCF’s expected financial results or other plans and are subject to a number of risks and uncertainties. These include, but are not limited to, continued or deepening deterioration in general economic and banking industry conditions; continued increases in unemployment in TCF’s primary banking markets; limitations on TCF’s ability to pay dividends or to increase dividends in the future because of financial performance deterioration, regulatory restrictions or limitations; increased deposit insurance premiums, special assessments or other costs related to deteriorating conditions in the banking industry and the economic impact on banks of the Emergency Economic Stabilization Act, as amended (“EESA”) or other related legislative and regulatory developments; the impact of the Obama Administration’s financial regulatory reform proposals including possible additional capital, consumer protection and supervisory requirements; the imposition of requirements with an adverse financial impact relating to TCF’s lending, loan collection and other business activities as a result of the EESA, or other legislative or regulatory developments such as mortgage foreclosure moratorium laws; possible legislative changes, including restrictions on deposit fees and reduction of interchange revenue from debit card transactions and adverse economic, business and competitive developments such as shrinking interest margins, deposit outflows, an inability to increase the number of deposit accounts and the possibility that deposit account losses (fraudulent checks, etc.) may increase; impact of legislative, regulatory or other changes affecting customer account charges and fee income; legislative changes to bankruptcy laws which would result in the loss of all or part of TCF’s security interest due to collateral value declines (so-called “cramdown” provisions); reduced demand for financial services and loan and lease products; adverse developments affecting TCF’s supermarket banking relationships or any of the supermarket chains in which TCF maintains supermarket branches; changes in accounting standards or interpretations of existing standards; monetary, fiscal or tax policies of the federal or state governments, including adoption of state legislation that would increase state taxes; adverse findings in tax audits or regulatory examinations and resulting enforcement actions, including those provided for under the Bank Secrecy Act; changes in credit and other risks posed by TCF’s loan, lease, investment, and securities available for sale portfolios, including continuing declines in commercial or residential real estate values or changes in allowance for loan and lease losses methodology dictated by new market conditions or regulatory requirements; lack of or inadequate insurance coverage for claims against TCF; technological, computer related or operational difficulties or loss or theft of information; adverse changes in securities markets directly or indirectly affecting TCF’s ability to sell assets or to fund its operations; results of litigation, including potential class action litigation concerning TCF’s lending or deposit activities or employment practices and possible increases in indemnification obligations for certain litigation against Visa U.S.A. (“covered litigation”) and potential reductions in card revenues resulting from covered litigation or other litigation against Visa; heightened regulatory practices, requirements or expectations, including, but not limited to, requirements related to the Bank Secrecy Act and anti-money laundering compliance activity; or other significant uncertainties. Investors should consult TCF’s Annual Report on Form 10-K, and Forms 10-Q and 8-K for additional important information about the Company.

 

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16

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

 

 

June 30,

 

Change

 

 

 

2009

 

2008

 

$

 

%

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

215,400

 

$

208,407

 

$

6,993

 

3.4

%

Securities available for sale

 

23,217

 

28,858

 

(5,641)

 

(19.5)

 

Education loans held for sale

 

-

 

1,756

 

(1,756)

 

(100.0)

 

Investments and other

 

1,137

 

1,427

 

(290)

 

(20.3)

 

Total interest income

 

239,754

 

240,448

 

(694)

 

(.3)

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

33,345

 

36,954

 

(3,609)

 

(9.8)

 

Borrowings

 

49,946

 

51,932

 

(1,986)

 

(3.8)

 

Total interest expense

 

83,291

 

88,886

 

(5,595)

 

(6.3)

 

Net interest income

 

156,463

 

151,562

 

4,901

 

3.2

 

Provision for credit losses

 

61,891

 

62,895

 

(1,004)

 

(1.6)

 

Net interest income after provision for credit losses

 

94,572

 

88,667

 

5,905

 

6.7

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

77,536

 

67,961

 

9,575

 

14.1

 

Card revenue

 

26,604

 

26,828

 

(224)

 

(.8)

 

ATM revenue

 

7,973

 

8,267

 

(294)

 

(3.6)

 

Subtotal

 

112,113

 

103,056

 

9,057

 

8.8

 

Leasing and equipment finance

 

16,881

 

14,050

 

2,831

 

20.1

 

Other

 

820

 

4,398

 

(3,578)

 

(81.4)

 

Fees and other revenue

 

129,814

 

121,504

 

8,310

 

6.8

 

Gains on securities

 

10,556

 

1,115

 

9,441

 

N.M.

 

Total non-interest income

 

140,370

 

122,619

 

17,751

 

14.5

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

90,752

 

84,267

 

6,485

 

7.7

 

Occupancy and equipment

 

31,527

 

31,205

 

322

 

1.0

 

Deposit account premiums

 

7,287

 

2,441

 

4,846

 

198.5

 

Advertising and promotions

 

4,134

 

4,689

 

(555)

 

(11.8)

 

Operating lease depreciation

 

3,860

 

4,460

 

(600)

 

(13.5)

 

FDIC insurance premiums

 

13,303

 

437

 

12,866

 

N.M.

 

Foreclosed real estate and repossessed assets

 

6,125

 

4,892

 

1,233

 

25.2

 

Other

 

39,558

 

36,338

 

3,220

 

8.9

 

Total non-interest expense

 

196,546

 

168,729

 

27,817

 

16.5

 

Income before income tax expense

 

38,396

 

42,557

 

(4,161)

 

(9.8)

 

Income tax expense

 

14,853

 

18,855

 

(4,002)

 

(21.2)

 

Net income

 

23,543

 

23,702

 

(159)

 

(.7)

 

Preferred stock dividends

 

13,218

 

-

 

13,218

 

N.M.

 

Net income available to common stockholders

 

$

10,325

 

$

23,702

 

$

(13,377)

 

(56.4)

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

.08

 

$

.19

 

$

(.11)

 

(57.9)

 

Diluted

 

.08

 

.19

 

(.11)

 

(57.9)

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

.05

 

$

.25

 

$

(.20)

 

(80.0)

 

 

 

 

 

 

 

 

 

 

 

Average common and common equivalent shares outstanding (in thousands):