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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):  October 21, 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 October 21, 2009, attached to this Form 8-K as Exhibit 99.1, announcing its results of operations for the quarter ended September 30, 2009.

 

Item 9.01     Financial Statements and Exhibits.

 

(d)         Exhibits.

 

Exhibit No.

 Description

 

 

99.1

Earnings Release of TCF Financial Corporation,

dated October 21, 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:    October 21, 2009

 

2

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

 

NEWS RELEASE

Exhibit 99.1

 

 

 

 

 

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 58th Consecutive Quarter of Net Income – Earns $17.5 Million
 
THIRD QUARTER HIGHLIGHTS

·                  Diluted earnings per common share was 14 cents

·                  Net income of $17.5 million

·                  Net interest margin of 3.92 percent

·                  Average loans and leases increased by $995 million, or 7.7 percent

·                  Average deposits increased by $1.6 billion, or 16.1 percent

·                  Announced quarterly cash dividend of five cents per common share, payable November 30, 2009

 

Earnings Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1  

($ in thousands, except per-share data)

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

 

 3Q
 2009

 

 2Q
 2009

 

 3Q
 2008

 

 

3Q09 vs
2Q09

 

3Q09 vs
3Q08

 

 

 YTD
 2009

 

YTD  
2008  

 

Percent
Change

 

Net income

 

$ 17,451

 

$ 23,543

 

$ 30,126

 

 

(25.9

)

 

(42.1)

 

 

$ 67,641

 

$ 101,254

 

(33.2)

 

Diluted earnings per common share

 

.14

 

.08

 

.24

 

 

75.0

 

 

(41.7)

 

 

.39

 

.81

 

(51.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Ratios (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

.39 

%

.53 

%

.73 

%

 

 

 

 

 

 

 

.52 

%

.83 

%

 

 

Return on average common equity (2)

 

6.03 

 

7.82 

 

11.11 

 

 

 

 

 

 

 

 

7.13 

 

12.29 

 

 

 

Net interest margin

 

3.92 

 

3.80 

 

3.97 

 

 

 

 

 

 

 

 

3.80 

 

3.94 

 

 

 

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

 

1.52 

 

1.43 

 

.82 

 

 

 

 

 

 

 

 

1.33 

 

.70 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 5.73% for the second quarter and year-to-date of 2009, respectively.

 

-more-


 

2

 

WAYZATA, MN, October 21, 2009 – TCF Financial Corporation (“TCF”) (NYSE: TCB) today reported third quarter 2009 diluted earnings per common share of 14 cents, compared with 24 cents in the third quarter of 2008 and 8 cents for the second quarter of 2009. Net income for the third quarter of 2009 was $17.5 million, compared with $30.1 million in the third quarter of 2008 and $23.5 million in the second quarter of 2009.

 

Diluted earnings per common share for the first nine months of 2009 was 39 cents, compared with 81 cents for the same 2008 period. Net income for the first nine months of 2009 was $67.6 million, compared with $101.3 million for the same 2008 period.

 

TCF declared a quarterly cash dividend of five cents per common share payable on November 30, 2009 to stockholders of record at the close of business on October 30, 2009.

 

Chairman’s Statement

 

“The third quarter continued to pose many challenges for TCF and other banks as the effects of high unemployment and the resulting increase in consumer defaults and softness in spending continue to pressure earnings,” said William A. Cooper, TCF Chairman and CEO.  “While credit losses continue to dampen our results, fee income and net interest margin remained strong.  In addition, our focus on growing low cost deposits and expanding our specialty finance businesses position TCF for improved earnings as the economy improves.”

 

-more-

 


 

3

 

Total Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2  

 

 

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 

 

($ in thousands)

 

 

3Q
2009

 

2Q
2009

 

3Q
2008

 

 

3Q09 vs
2Q09

 

3Q09 vs
3Q08

 

 

YTD
2009

 

YTD
2008

 

 

Percent Change

 

Net interest income

 

 

$ 161,489

 

$ 156,463

 

$ 152,165

 

 

   3.2%

 

   6.1%

 

 

$ 463,365

 

$ 446,556

 

 

3.8

%

Fees and other revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

 

77,433

 

77,536

 

71,783

 

 

  (.1)

 

7.9

 

 

212,033

 

203,291

 

 

4.3

 

Card revenue

 

 

26,393

 

26,604

 

26,240

 

 

  (.8)

 

  .6

 

 

77,957

 

77,839

 

 

.2

 

ATM revenue

 

 

7,861

 

7,973

 

8,720

 

 

(1.4)

 

(9.9)

 

 

23,432

 

24,957

 

 

(6.1

)

Total banking fees

 

 

111,687

 

112,113

 

106,743

 

 

  (.4)

 

4.6

 

 

313,422

 

306,087

 

 

2.4

 

Leasing and equipment finance

 

 

15,173

 

16,881

 

13,006

 

 

(10.1)  

 

16.7  

 

 

44,705

 

39,190

 

 

14.1

 

Other

 

 

1,197

 

820

 

3,296

 

 

46.0  

 

(63.7)  

 

 

2,475

 

11,977

 

 

(79.3

)

Total fees and other revenue

 

 

128,057

 

129,814

 

123,045

 

 

(1.4)

 

4.1

 

 

360,602

 

357,254

 

 

.9

 

Gains on securities

 

 

-

 

10,556

 

498

 

 

N.M.   

 

N.M.   

 

 

22,104

 

7,899

 

 

179.8

 

Visa share redemption

 

 

-

 

-

 

-

 

 

-

 

-

 

 

-

 

8,308

 

 

N.M.

 

Total non-interest income

 

 

128,057

 

140,370

 

123,543

 

 

(8.8)

 

3.7

 

 

382,706

 

373,461

 

 

2.5

 

Total revenue

 

 

$ 289,546

 

$ 296,833

 

$ 275,708

 

 

(2.5)

 

5.0

 

 

$ 846,071

 

$ 820,017

 

 

3.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin(1)

 

 

3.92%

 

3.80%

 

3.97%

 

 

 

 

 

 

 

3.80%

 

3.94%

 

 

 

 

Fees and other revenue as a % of total revenue

 

 

44.23   

 

43.73   

 

44.63   

 

 

 

 

 

 

 

42.62   

 

43.57   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N.M. = Not Meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

 

·

The increase in net interest income from the third quarter of 2008 was primarily due to an increase in average loans and leases, partially offset by a decrease in net interest margin. The increase in net interest income from the second quarter of 2009 was primarily due to an increase in average loans and leases and an increase in net interest margin.

 

 

 

 

·

The decrease in net interest margin from the third quarter of 2008 was primarily due to declines in yields on interest-earning assets, resulting from lower market interest rates, the effect of higher balances of non-accrual loans and leases, loan modifications and investments in lower yielding agency debentures, partially offset by declines in rates paid on average deposits.

 

 

 

 

·

The increase in net interest margin from the second quarter of 2009 was primarily due to reductions in rates paid on deposits, partially offset by the effects of higher balances of non-accrual loans and leases, loan modifications and lower average yields on the leasing and equipment finance portfolio.

 

-more-

 


 

4

 

Non-interest Income

 

 

·

Banking fees and service charges were $77.4 million, up $5.7 million, or 7.9 percent, from the third quarter of 2008 and essentially flat with the second quarter of 2009. The increase from the third quarter of 2008 was primarily due to an increased number of checking accounts and related fee income.

 

 

 

 

·

Card revenues totaled $26.4 million for the third quarter of 2009, essentially flat with the third quarter of 2008 and the second quarter of 2009. Growth in active accounts was offset by fewer transactions and lower average transaction amounts.

 

 

 

 

·

Leasing and equipment finance revenues were $15.2 million for the third quarter of 2009, up $2.2 million, or 16.7 percent, from the third quarter of 2008 and down $1.7 million, or 10.1 percent, from the second quarter of 2009. The increase in leasing revenue from the third quarter of 2008 and decrease from the second quarter of 2009 was primarily due to sales-type lease revenue which varies from period to period based on customer-driven events.

 

 

 

 

·

Other non-interest income was $1.2 million for the third quarter of 2009, down $2.1 million, or 63.7 percent, from the third quarter of 2008, and up $377 thousand, or 46 percent, from the second quarter of 2009. The decrease in other non-interest income from the third quarter of 2008 was primarily due to TCF no longer selling investment and insurance products in the branches, partially offset by servicing fees generated by TCF Inventory Finance.

 

-more-


 

5

 

Loans and Leases

 

 Average Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3  

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

3Q

 

2Q

 

3Q

 

3Q09 vs

 

3Q09 vs

 

YTD

 

YTD

 

Percent

 

 

 

2009

 

2009

 

2008

 

2Q09

 

3Q08

 

2009

 

2008

 

Change

 

 Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Consumer real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 First mortgage lien

 

$  4,939,529

 

$  4,938,187

 

$  4,874,190

 

-

%

1.3

%

$  4,924,902

 

$  4,825,185

 

2.1

%

 Junior lien

 

2,329,096

 

2,355,913

 

2,434,392

 

(1.1

)

(4.3

)

2,361,140

 

2,407,350

 

(1.9

)

Total consumer real estate

 

7,268,625

 

7,294,100

 

7,308,582

 

(.3

)

(.5

)

7,286,042

 

7,232,535

 

.7

 

 Consumer other

 

35,015

 

36,255

 

45,939

 

(3.4

)

(23.8

)

36,920

 

45,481

 

(18.8

)

Total consumer

 

7,303,640

 

7,330,355

 

7,354,521

 

(.4

)

(.7

)

7,322,962

 

7,278,016

 

.6

 

 Commercial real estate

 

3,193,686

 

3,110,030

 

2,776,830

 

2.7

 

15.0

 

3,101,459

 

2,666,948

 

16.3

 

 Commercial business

 

477,041

 

483,493

 

544,826

 

(1.3

)

(12.4

)

486,680

 

539,348

 

(9.8

)

Total commercial

 

3,670,727

 

3,593,523

 

3,321,656

 

2.1

 

10.5

 

3,588,139

 

3,206,296

 

11.9

 

 Leasing and equipment finance

 

2,811,165

 

2,809,787

 

2,300,429

 

-

 

22.2

 

2,751,935

 

2,223,811

 

23.7

 

 Inventory finance

 

185,914

 

118,317

 

-

 

57.1

 

N.M.

 

111,479

 

-

 

N.M.

 

Total Loans and Leases

 

  $13,971,446

 

  $13,851,982

 

  $12,976,606

 

.9

 

7.7

 

  $13,774,515

 

  $12,708,123

 

8.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

·                  At September 30, 2009, 68 percent of the consumer real estate loan portfolio was secured by first liens.

 

·                  Average commercial loan balances increased $349.1 million, or 10.5 percent, from the third quarter of 2008 and increased $77.2 million, or 2.1 percent, from the second 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 $510.7 million, or 22.2 percent, from the third quarter of 2008 and were relatively flat when compared to the second quarter of 2009.  At the end of September 2009, TCF’s leasing subsidiary, Winthrop Resources Corporation, acquired Fidelity National Capital, Inc., with over $200 million in direct financing leases.  Additionally, this acquisition included $57.9 million in operating leases which are recorded as other assets.  Portfolio purchases and company acquisitions in the first and third quarters of 2009 contributed $198.2 million of the increase in average balances from the third quarter of 2008.

 

-more-

 


 

6

 

·                  Average inventory finance loans increased $67.6 million, or 57.1 percent, to $185.9 million from the second quarter of 2009.

 

·                  In the third quarter of 2009, TCF announced the creation of Red Iron Acceptance, LLC, a joint venture with The Toro Company, which will provide U.S. Toro distributors and dealers with floor plan and open account financing.  In October 2009, this joint venture purchased $72.7 million of inventory finance loans from The Toro Company.  Red Iron Acceptance, LLC is consolidated with the operating results of TCF.

 

Securities Available for Sale

 

 Average Securities Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 4  

 

 

 

 

 

 

 

 

Yield

 

 

 

 

 

Yield

 

 ($ in thousands)

 

3Q

 

2Q

 

3Q

 

 

 

 

 

YTD

 

YTD

 

YTD

 

YTD

 

 

 

2009

 

2009

 

2008

 

3Q09

 

3Q08

 

2009

 

2008

 

2009

 

2008

 

 U.S. Government sponsored entities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

$  1,432,670

 

$  1,656,767

 

$  2,157,047

 

4.80

%

 

5.29

%

 

$  1,695,377

 

$  2,146,185

 

4.97

%

 

5.30

%

 

Debentures

 

600,098

 

527,562

 

-

 

2.19

 

 

-

 

 

381,022

 

-

 

2.16

 

 

-

 

 

 Other securities

 

489

 

498

 

3,840

 

4.91

 

 

3.64

 

 

497

 

15,938

 

5.37

 

 

3.48

 

 

Total

 

  $  2,033,257

 

  $  2,184,827

 

  $  2,160,887

 

4.03

 

 

5.29

 

 

  $  2,076,896

 

  $  2,162,123

 

4.45

 

 

5.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  TCF purchased $5 million of mortgage-backed securities in the third quarter of 2009, compared with $204 million of purchases and $381 million of sales in the second quarter of 2009.

 

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

 

-more-

 


 

7

 

Deposits

 

 Average Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 5  

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

3Q

 

2Q

 

3Q

 

3Q09 vs

 

3Q09 vs

 

YTD

 

YTD

 

Percent

 

 

 

2009

 

2009

 

2008

 

2Q09

 

3Q08

 

2009

 

2008

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Non-interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$  1,380,591

 

$  1,446,215

 

$  1,409,855

 

(4.5

)%

(2.1

)%

$  1,418,244

 

$  1,429,752

 

(.8

)%

Small business

 

591,451

 

571,676

 

597,894

 

3.5

 

(1.1

)

575,558

 

580,248

 

(.8

)

Commercial

 

277,135

 

260,079

 

253,900

 

6.6

 

9.2

 

255,066

 

231,184

 

10.3

 

Subtotal

 

2,249,177

 

2,277,970

 

2,261,649

 

(1.3

)

(.6

)

2,248,868

 

2,241,184

 

.3

 

 Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

1,800,583

 

1,792,493

 

1,837,540

 

.5

 

(2.0

)

1,780,380

 

1,855,963

 

(4.1

)

Savings

 

5,071,509

 

4,823,897

 

2,791,559

 

5.1

 

81.7

 

4,569,882

 

2,800,120

 

63.2

 

Money market

 

723,098

 

690,201

 

629,905

 

4.8

 

14.8

 

686,830

 

609,629

 

12.7

 

Subtotal

 

7,595,190

 

7,306,591

 

5,259,004

 

3.9

 

44.4

 

7,037,092

 

5,265,712

 

33.6

 

Certificates

 

1,757,884

 

2,087,490

 

2,469,327

 

(15.8

)

(28.8

)

2,100,342

 

2,480,262

 

(15.3

)

Subtotal

 

9,353,074

 

9,394,081

 

7,728,331

 

(.4

)

21.0

 

9,137,434

 

7,745,974

 

18.0

 

Total deposits

 

  $11,602,251

 

  $11,672,051

 

  $  9,989,980

 

(.6

)

16.1

 

  $11,386,302

 

  $  9,987,158

 

14.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Average interest rate on deposits

 

.94%

 

1.15%

 

1.34%

 

 

 

 

 

1.19%

 

1.60%

 

 

 

 

·                  Total average deposits increased $1.6 billion from the third quarter of 2008 and remained relatively flat compared to the second quarter of 2009.  The increase from the third 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 resulting from reduced interest rates. Average deposit balances remained relatively flat from the second quarter of 2009 primarily due to increases in savings deposits offset by a decrease in certificates of deposit.

 

·                  The average rate paid on deposits was .94 percent in the third quarter of 2009, down 40 basis points from the third quarter of 2008 and down 21 basis points from the second quarter of 2009 due to reductions in interest rates paid on certain deposit products and mix changes due to management’s strategy to reduce balances of certificates of deposit. The weighted average interest rate on total deposits was .90 percent at September 30, 2009.

 

·                  The number of new checking accounts opened in the third quarter of 2009 increased 12.6 percent compared with the third quarter of 2008 and increased 8.9 percent from the second quarter of 2009.

 

-more-

 


 

8

 

Non-interest Expense

 

 Non-interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6  

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

3Q
2009

 

2Q
2009

 

3Q
2008

 

3Q09 vs
2Q09

 

3Q09 vs
3Q08

 

YTD
2009

 

YTD
2008

 

Percent
Change

 

 Compensation and employee benefits

 

$    90,680

 

$    90,752

 

$    84,895

 

(.1

)%

6.8

%

$  267,622

 

$  257,880

 

3.8

%

 Occupancy and equipment

 

31,619

 

31,527

 

31,832

 

.3

 

(.7

)

95,193

 

95,450

 

(.3

)

 Deposit account premiums

 

7,472

 

7,287

 

7,292

 

2.5

 

2.5

 

21,335

 

11,229

 

90.0

 

 Advertising and marketing

 

4,766

 

4,134

 

5,017

 

15.3

 

(5.0

)

13,345

 

14,507

 

(8.0

)

 Operating lease depreciation

 

3,734

 

3,860

 

4,215

 

(3.3

)

(11.4

)

11,618

 

13,189

 

(11.9

)

 FDIC premiums and assessments

 

5,085

 

13,303

 

426

 

(61.8

)

N.M.

 

22,183

 

1,284

 

N.M.

 

 Foreclosed real estate and repossessed assets

 

8,038

 

6,125

 

4,883

 

31.2

 

64.6

 

18,454

 

12,390

 

48.9

 

 Other

 

38,873

 

39,558

 

39,028

 

(1.7

)

(.4

)

111,271

 

108,664

 

2.4

 

Total non-interest expense

 

  $  190,267

 

  $  196,546

 

  $  177,588

 

(3.2

)

7.1

 

  $  561,021

 

  $  514,593

 

9.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·                  Compensation and benefits expenses increased $5.8 million, or 6.8 percent, from the third quarter of 2008 and were relatively flat compared to the second quarter of 2009. The increase from the third 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.

 

·                  FDIC premiums and assessments were up $4.7 million from the third quarter of 2008 and down $8.2 million from the second quarter of 2009. The increase from the third quarter of 2008 was primarily due to higher insurance rates and deposit growth. The decrease from the second quarter of 2009 was primarily attributable to a FDIC special assessment of $8.2 million in June of 2009.

 

·                  Foreclosed real estate and repossessed asset expenses increased $3.2 million from the third quarter of 2008 and increased $1.9 million from the second quarter of 2009. The increases from both periods were primarily due to increased numbers of foreclosed commercial and consumer real estate properties, adjustments to property valuations and losses on sales of properties.

-more-

 


 

9

 

Credit Quality

 

Credit Quality Summary

 

 

 

 

 

 

 

 

 

Table 7  

 

 

 

 

 

 

 

 

Percent Change

 

 

 

 

 

 

 

 ($ in thousands)

 

3Q
2009

 

2Q
2009

 

3Q
2008

 

3Q09 vs
2Q09

 

3Q09 vs
3Q08

 

YTD
2009

 

YTD
2008

 

%
Chg

 

 Allowance for Loan and Lease Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance at beginning of period

 

$ 193,445

 

$ 181,216

 

$ 133,637

 

6.7

%

44.8

%  

$ 172,442

 

$   80,942

 

113.0

%

Charge-offs

 

(57,214

)

(53,462

)

(29,976

)

7.0

 

90.9

 

(149,557

)

(77,700

)

92.5

 

Recoveries

 

3,957

 

3,800

 

3,212

 

4.1

 

23.2

 

11,700

 

10,741

 

8.9

 

Net charge-offs

 

(53,257

)

(49,662

)

(26,764

)

7.2

 

99.0

 

(137,857

)

(66,959

)

105.9

 

Provision for credit losses

 

75,544

 

61,891

 

52,105

 

22.1

 

45.0

 

181,147

 

144,995

 

24.9

 

 Balance at end of period

 

$ 215,732

 

$ 193,445

 

$ 158,978

 

11.5

 

35.7

 

$ 215,732

 

$ 158,978

 

35.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Allowance as a percentage of period end loans and leases

 

1.51

 %

1.39

 %

1.21

 %

 

 

 

 

1.51

 %

1.21

 %

 

 

 Ratio of allowance to net charge-offs(1)

 

1.0

 X

1.0

 X

1.5

 X

 

 

 

 

1.2

 X

1.8

 X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Credit Loss Reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Allowance for loan and lease losses

 

$ 215,732

 

$ 193,445

 

$ 158,978

 

11.5

 

35.7

 

 

 

 

 

 

 

 Reserves netted against portfolio asset balances

 

12,951

 

13,828

 

-

 

(6.3

)

N.M.

 

 

 

 

 

 

 

 Reserves for unfunded commitments

 

2,871

 

2,655

 

1,678

 

8.1

 

71.1

 

 

 

 

 

 

 

Total credit loss reserves

 

$ 231,554

 

$ 209,928

 

$ 160,656

 

10.3

 

44.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1.61

 %

1.50

 %

1.23

 %

 

 

 

 

 

 

 

 

 

 

 Ratio of total credit loss reserves to net charge-offs(1) (2)

 

1.0

 X

1.0

 X

1.5

 X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Non-accrual loans and leases

 

$ 268,834

 

$ 239,917

 

$ 145,890

 

12.1

 

84.3

 

 

 

 

 

 

 

 Real estate owned

 

94,167

 

96,862

 

54,179

 

(2.8

)

73.8

 

 

 

 

 

 

 

Total non-performing assets

 

$ 363,001

 

$ 336,779

 

$ 200,069

 

7.8

 

81.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2.57

 %

2.45

 %

1.55

 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Accruing consumer troubled debt restructurings

 

$ 159,881

 

$   51,483

 

$   23,844

 

N.M.

 

N.M.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 N.M. = Not Meaningful

 

 

 

 

 

 

 

 

 

 

 

 (1) Annualized

 

 

 

 

 

 

 

 

 

 

 

 (2) Includes $1.9 million in write-offs related to credit reserves netted against portfolio asset balances in the third quarter of 2009

 

 

At September 30, 2009, TCF’s:

 

·                  Allowance for loan and lease losses was $215.7 million, or 1.51 percent of loans and leases, up from $193.4 million, or 1.39 percent of loans and leases at June 30, 2009.

 

·                  Over-60-day delinquency rate was .81 percent, up from .72 percent at June 30, 2009, primarily due to increases in consumer real estate.

 

·                  Non-accrual loans and leases increased $28.9 million, or 12.1 percent, from June 30, 2009 primarily due to increases in consumer and commercial real estate non-accrual loans.

 

-more-

 


 

10

 

·                  TCF completed $215.2 million and $590.7 million of consumer real estate loan modifications in the third quarter and first nine months of 2009, respectively. Of these modifications, $112.3 million in the third quarter and $144.7 million in the first nine months were considered troubled debt restructurings which continue to accrue interest.

 

·                  TCF has several programs designed to help consumer real estate customers avoid home foreclosures by extending payment dates or reducing interest rates.  Loan modification programs for consumer real estate borrowers implemented in the third quarter of 2009 have resulted in a significant increase in restructured loans.  Primarily these loans are classified as troubled debt restructurings and generally accrue interest although at lower rates than the original loan.  TCF expects the balance of consumer real estate troubled debt restructurings to increase into 2010.

 

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

 

·                  Provision for credit losses was $75.5 million, up from $52.1 million in the third quarter of 2008 and up from $61.9 million in the second quarter of 2009. The increase from the third quarter of 2008 was primarily due to increased consumer real estate, commercial and leasing net charge-offs and reserves for certain commercial loans and restructured consumer real estate loans.  The increase from the second quarter of 2009 was primarily due to increased leasing and equipment finance and consumer real estate net charge-offs and reserves for restructured consumer real estate loans, partially offset by decreased commercial real estate net charge-offs.

 

·                  Net loan and lease charge-offs were $53.3 million, or 1.52 percent annualized, of average loans and leases, up from $49.7 million, or 1.43 percent annualized, of average loans and leases, from the second quarter of 2009 primarily due to increases in consumer real estate and leasing and equipment finance net charge-offs, partially offset by decreased commercial real estate net charge-offs.

 

-more-

 


 

11

 

Income Taxes

 

·                  Income tax expense was 27.4 percent of pre-tax income for the third quarter of 2009, compared with 34.5 percent for the comparable 2008 period and 38.7 percent for the second quarter of 2009. The third quarter of 2009 income tax expense included a $3 million decrease in income tax expense related to favorable developments in uncertain tax positions, partially offset by a slight increase in the effective income tax rate. Excluding the decrease in income tax expense related to favorable developments in uncertain tax positions and first six months impact of the increase in the effective income tax rate, the effective income tax rate for the third quarter of 2009 was 38.8 percent.

 

-more-

 


 

12

 

Capital and Liquidity

 

Capital Information

 

 

 

Table 8

 

At period end

 

 

 

 

 

($ in thousands, except per-share data)

 

3Q

 

4Q

 

 

 

2009

 

2008

 

Total TCF stockholders’ equity

 

$1,176,235

 

 

 

$1,493,776

 

 

 

Total equity

 

$1,179,839

 

 

 

$1,493,776

 

 

 

Total equity to total assets

 

6.65

 %

 

 

8.92

 %

 

 

Book value per common share

 

$         9.14

 

 

 

$         8.99

 

 

 

Tangible realized common equity to tangible assets(1)

 

5.81

 %

 

 

6.01

 %

 

 

 

 

 

 

 

 

 

 

 

 

Risk-based capital

 

 

 

 

 

 

 

 

 

Tier 1

 

$1,142,351

 

      8.57 %

 

$1,461,973

 

    11.79 %

 

Total

 

1,491,365

 

11.19

 

1,817,225

 

14.65

 

Total stated “well-capitalized” requirement

 

1,332,440

 

10.00

 

1,240,147

 

10.00

 

Excess over stated “well-capitalized” requirement

 

158,925

 

  1.19

 

577,078

 

  4.65

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

·

TCF’s total risk-based capital at September 30, 2009 of $1.5 billion, or 11.19 percent of risk-weighted assets, was $158.9 million in excess of the stated “well-capitalized” requirement.

 

 

 

 

·

On October 19, 2009, the Board of Directors of TCF declared a regular quarterly cash dividend of five cents per common share payable on November 30, 2009 to stockholders of record at the close of business on October 30, 2009.

 

 

 

 

·

At September 30, 2009, TCF had $58.9 million on deposit with the Federal Reserve, which is included in cash and due from banks, compared with $147.9 million at June 30, 2009.

 

 

 

 

·

At September 30, 2009, TCF had $2.1 billion in unused, secured borrowing capacity at the FHLB of Des Moines and $818 million in unused, secured borrowing capacity at the Federal Reserve Discount Window. Also, TCF had $1.2 billion of active, unsecured federal funds purchased lines which are not contractually committed.

 

-more-


 

13

 

Website Information

 

A live webcast of TCF’s conference call to discuss third quarter earnings will be hosted at TCF’s website, www.tcfbank.com, on October 21, 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 $17.7 billion in total assets. TCF has 443 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-


 

14

 

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 which could include the creation of a new consumer protection agency and limits on Federal preemption for state laws that could be applied to national banks;  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 regulatory or 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 state or Federal tax assessments or findings in tax audits; adverse 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 class action litigation concerning TCF’s lending or deposit activities or fees or charges, 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.

 

-more-

 


 

15

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

 

 

 

 

September 30,

 

Change

 

 

 

2009

 

2008

 

$

 

%

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

  $

217,307

 

  $

210,651

 

  $

6,656

 

3.2

%

Securities available for sale

 

20,474

 

28,577

 

(8,103)

 

(28.4)

 

Education loans held for sale

 

-

 

123

 

(123)

 

N.M.

 

Investments and other

 

1,217

 

1,644

 

(427)

 

(26.0)

 

Total interest income

 

238,998

 

240,995

 

(1,997)

 

(.8)

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

27,512

 

33,730

 

(6,218)

 

(18.4)

 

Borrowings

 

49,997

 

55,100

 

(5,103)

 

(9.3)

 

Total interest expense

 

77,509

 

88,830

 

(11,321)

 

(12.7)

 

Net interest income

 

161,489

 

152,165

 

9,324

 

6.1

 

Provision for credit losses

 

75,544

 

52,105

 

23,439

 

45.0

 

Net interest income after provision for
credit losses

 

85,945

 

100,060

 

(14,115)

 

(14.1)

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

77,433

 

71,783

 

5,650

 

7.9

 

Card revenue

 

26,393

 

26,240

 

153

 

.6

 

ATM revenue

 

7,861

 

8,720

 

(859)

 

(9.9)

 

Subtotal

 

111,687

 

106,743

 

4,944

 

4.6

 

Leasing and equipment finance

 

15,173

 

13,006

 

2,167

 

16.7

 

Other

 

1,197

 

3,296

 

(2,099)

 

(63.7)

 

Fees and other revenue

 

128,057

 

123,045

 

5,012

 

4.1

 

Gains on securities

 

-

 

498

 

(498)

 

N.M.

 

Total non-interest income

 

128,057

 

123,543

 

4,514

 

3.7

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

90,680

 

84,895

 

5,785

 

6.8

 

Occupancy and equipment

 

31,619

 

31,832

 

(213)

 

(.7)

 

Deposit account premiums

 

7,472

 

7,292

 

180

 

2.5

 

Advertising and promotions

 

4,766

 

5,017

 

(251)

 

(5.0)

 

FDIC premiums and assessments

 

5,085

 

426

 

4,659

 

N.M.

 

Foreclosed real estate and repossessed assets

 

8,038

 

4,883

 

3,155

 

64.6

 

Operating lease depreciation

 

3,734

 

4,215

 

(481)

 

(11.4)

 

Other

 

38,873

 

39,028

 

(155)

 

(.4)

 

Total non-interest expense

 

190,267

 

177,588

 

12,679

 

7.1

 

Pretax income

 

23,735

 

46,015

 

(22,280)

 

(48.4)

 

Income tax expense

 

6,491

 

15,889

 

(9,398)

 

(59.1)

 

Income after income tax expense

 

17,244

 

30,126

 

(12,882)

 

(42.8)

 

Income (loss) attributable to non-controlling interest

 

(207)

 

-

 

(207)

 

N.M.

 

Net income

 

17,451

 

30,126

 

(12,675)

 

(42.1)

 

Preferred stock dividends

 

-

 

-

 

-

 

-

 

Net income available to common stockholders

 

  $

17,451

 

  $

30,126

 

  $

(12,675)

 

(42.1)

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

  $

.14

 

  $

.24

 

  $

(.10)

 

(41.7)

 

Diluted

 

.14

 

.24

 

(.10)

 

(41.7)

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

  $

.05

 

  $

.25

 

  $

(.20)

 

(80.0)

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

126,811

 

124,978

 

1,833

 

1.5

 

Diluted

 

126,833

 

124,986

 

1,847

 

1.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N.M. Not meaningful

 

 

 

 

 

 

 

 

 

 

-more-

 


 

16

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

September 30,

 

Change

 

 

 

2009

 

2008

 

$

 

%

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

  $

642,084

 

  $

630,835

 

  $

11,249

 

1.8

%

Securities available for sale

 

69,392

 

85,714

 

(16,322)

 

(19.0)

 

Education loans held for sale

 

-

 

5,331

 

(5,331)

 

N.M.

 

Investments and other

 

3,210

 

4,713

 

(1,503)

 

(31.9)

 

Total interest income

 

714,686

 

726,593

 

(11,907)

 

(1.6)

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

100,941

 

119,412

 

(18,471)

 

(15.5)

 

Borrowings

 

150,380

 

160,625

 

(10,245)

 

(6.4)

 

Total interest expense

 

251,321

 

280,037

 

(28,716)

 

(10.3)

 

Net interest income

 

463,365

 

446,556

 

16,809

 

3.8

 

Provision for credit losses

 

181,147

 

144,995

 

36,152

 

24.9

 

Net interest income after provision for
credit losses

 

282,218

 

301,561

 

(19,343)

 

(6.4)

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

212,033

 

203,291

 

8,742

 

4.3

 

Card revenue

 

77,957

 

77,839

 

118

 

.2

 

ATM revenue

 

23,432

 

24,957

 

(1,525)

 

(6.1)

 

Subtotal

 

313,422

 

306,087

 

7,335

 

2.4

 

Leasing and equipment finance

 

44,705

 

39,190

 

5,515

 

14.1

 

Other

 

2,475

 

20,285

 

(17,810)

 

(87.8)

 

Fees and other revenue

 

360,602

 

365,562

 

(4,960)

 

(1.4)

 

Gains on securities

 

22,104

 

7,899

 

14,205

 

179.8

 

Total non-interest income

 

382,706

 

373,461

 

9,245

 

2.5

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

267,622

 

257,880

 

9,742

 

3.8

 

Occupancy and equipment

 

95,193

 

95,450

 

(257)

 

(.3)

 

Deposit account premiums

 

21,335

 

11,229

 

10,106

 

90.0

 

Advertising and promotions

 

13,345

 

14,507

 

(1,162)

 

(8.0)

 

FDIC premiums and assessments

 

22,183

 

1,284

 

20,899

 

N.M.

 

Foreclosed real estate and repossessed assets

 

18,454

 

12,390

 

6,064

 

48.9

 

Operating lease depreciation

 

11,618

 

13,189

 

(1,571)

 

(11.9)

 

Other

 

111,271

 

108,664

 

2,607

 

2.4

 

Total non-interest expense

 

561,021

 

514,593

 

46,428

 

9.0

 

Pretax income

 

103,903

 

160,429

 

(56,526)

 

(35.2)

 

Income tax expense

 

36,469

 

59,175

 

(22,706)

 

(38.4)

 

Income after income tax expense

 

67,434

 

101,254

 

(33,820)

 

(33.4)

 

Income (loss) attributable to non-controlling interest

 

(207)

 

-

 

(207)

 

N.M.

 

Net income

 

67,641

 

101,254

 

(33,613)

 

(33.2)

 

Preferred stock dividends

 

18,403

 

-

 

18,403

 

N.M.

 

Net income available to common stockholders

 

  $

49,238

 

  $

101,254

 

  $

(52,016)

 

(51.4)

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

  $

.39

 

  $

.81

 

  $

(.42)

 

(51.9)

 

Diluted

 

.39

 

.81

 

(.42)

 

(51.9)

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

  $

.35

 

  $

.75

 

  $

(.40)

 

(53.3)

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

126,403

 

124,807

 

1,596

 

1.3

 

Diluted

 

126,403

 

124,825

 

1,578

 

1.3

 

 

 

 

 

 

 

 

 

 

 

N.M. Not meaningful.

 

 

 

 

 

 

 

 

 

 

-more-

 


 

17

 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands, except per-share data)

(Unaudited)

 

 

 

At

 

At

 

At

 

% Change from

 

 

 

September 30,

 

December 31,

 

September 30,

 

December 31,

 

September 30,

 

 

 

2009

 

2008

 

2008

 

2008

 

2008