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

September 30, 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

 

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

incorporation or organization)

 

 

 

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  o                                                   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.

 

 

 

Outstanding at

Class

 

October 23, 2009

Common Stock, $.01 par value

 

128,802,189 shares

 

 

 


 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES
 
INDEX
 

Part I.

 

Financial Information

 

Pages

 

 

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Statements of Financial Condition
at September 30, 2009 and December 31, 2008

 

3

 

 

 

 

 

 

 

Consolidated Statements of Income for the Three and Nine Months
Ended September 30, 2009 and 2008

 

4

 

 

 

 

 

 

 

Consolidated Statements of Equity for the
Nine Months Ended September 30, 2009 and 2008

 

5

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 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 and Nine Months
Ended September 30, 2009 and 2008

 

21

 

 

 

 

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

43

 

 

 

 

 

 

 

Item 4. Controls and Procedures

 

44

 

 

 

 

 

 

 

Supplementary Information

 

45

 

 

 

 

 

Part II.

 

Other Information

 

 

 

 

 

 

 

 

 

Items 1-6

 

46

 

 

 

 

 

 

 

Signatures

 

48

 

 

 

 

 

 

 

Index to Exhibits

 

49

 

2


 

PART 1 - FINANCIAL INFORMATION

Item 1.  Financial Statements

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Condition

 

 

 

At

 

At

 

 

 

September 30,

 

December 31,

 

(Dollars in thousands, except per-share data)

 

2009

 

2008

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

329,663

 

$

342,380

 

Investments

 

155,627

 

155,725

 

Securities available for sale

 

2,060,227

 

1,966,104

 

Education loans held for sale

 

 

757

 

Loans and leases:

 

 

 

 

 

Consumer real estate and other

 

7,335,061

 

7,363,583

 

Commercial real estate

 

3,240,846

 

2,984,156

 

Commercial business

 

466,991

 

506,887

 

Leasing and equipment finance

 

3,061,559

 

2,486,082

 

Inventory finance

 

224,807

 

4,425

 

Total loans and leases

 

14,329,264

 

13,345,133

 

Allowance for loan and lease losses

 

(215,732

)

(172,442

)

Net loans and leases

 

14,113,532

 

13,172,691

 

Premises and equipment, net

 

449,264

 

447,826

 

Goodwill

 

152,599

 

152,599

 

Other assets

 

482,097

 

502,275

 

Total assets

 

$

17,743,009

 

$

16,740,357

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

Checking

 

$

4,098,643

 

$

3,969,768

 

Savings

 

5,144,661

 

3,057,623

 

Money market

 

730,046

 

619,678

 

Certificates of deposit

 

1,652,661

 

2,596,283

 

Total deposits

 

11,626,011

 

10,243,352

 

Short-term borrowings

 

21,397

 

226,861

 

Long-term borrowings

 

4,524,955

 

4,433,913

 

Total borrowings

 

4,546,352

 

4,660,774

 

Accrued expenses and other liabilities

 

390,807

 

342,455

 

Total liabilities

 

16,563,170

 

15,246,581

 

Equity:

 

 

 

 

 

Preferred stock, par value $.01 per share, 30,000,000
shares authorized; 0 and 361,172 issued and outstanding

 

 

348,437

 

Common stock, par value $.01 per share, 280,000,000 shares
authorized; 130,373,208 and 130,839,378 shares issued

 

1,304

 

1,308

 

Additional paid-in capital

 

304,190

 

330,474

 

Retained earnings, subject to certain restrictions

 

932,882

 

927,893

 

Accumulated other comprehensive income (loss)

 

805

 

(3,692

)

Treasury stock at cost, 1,623,705 and 3,413,855 shares, and other

 

(62,946

)

(110,644

)

Total TCF Financial Corporation stockholders’ equity

 

1,176,235

 

1,493,776

 

Non-controlling interest in subsidiaries

 

3,604

 

 

Total equity

 

1,179,839

 

1,493,776

 

Total liabilities and equity

 

$

17,743,009

 

$

16,740,357

 

See accompanying notes to consolidated financial statements.

 

3


 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

(In thousands, except per-share data)

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

217,307

 

$

210,651

 

$

642,084

 

$

630,835

 

Securities available for sale

 

20,474

 

28,577

 

69,392

 

85,714

 

Education loans held for sale

 

 

123

 

 

5,331

 

Investments and other

 

1,217

 

1,644

 

3,210

 

4,713

 

Total interest income

 

238,998

 

240,995

 

714,686

 

726,593

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

27,512

 

33,730

 

100,941

 

119,412

 

Borrowings

 

49,997

 

55,100

 

150,380

 

160,625

 

Total interest expense

 

77,509

 

88,830

 

251,321

 

280,037

 

Net interest income

 

161,489

 

152,165

 

463,365

 

446,556

 

Provision for credit losses

 

75,544

 

52,105

 

181,147

 

144,995

 

Net interest income after provision for
credit losses

 

85,945

 

100,060

 

282,218

 

301,561

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

77,433

 

71,783

 

212,033

 

203,291

 

Card revenue

 

26,393

 

26,240

 

77,957

 

77,839

 

ATM revenue

 

7,861

 

8,720

 

23,432

 

24,957

 

Subtotal

 

111,687

 

106,743

 

313,422

 

306,087

 

Leasing and equipment finance

 

15,173

 

13,006

 

44,705

 

39,190

 

Other

 

1,197

 

3,296

 

2,475

 

11,977

 

Fees and other revenue

 

128,057

 

123,045

 

360,602

 

357,254

 

Gains on securities

 

 

498

 

22,104

 

7,899

 

Visa share redemption

 

 

 

 

8,308

 

Total non-interest income

 

128,057

 

123,543

 

382,706

 

373,461

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

90,680

 

84,895

 

267,622

 

257,880

 

Occupancy and equipment

 

31,619

 

31,832

 

95,193

 

95,450

 

Deposit account premiums

 

7,472

 

7,292

 

21,335

 

11,229

 

Advertising and marketing

 

4,766

 

5,017

 

13,345

 

14,507

 

FDIC premiums and assessments

 

5,085

 

426

 

22,183

 

1,284

 

Foreclosed real estate and repossessed assets, net

8,038

 

4,883

 

18,454

 

12,390

 

Other

 

38,873

 

39,028

 

111,271

 

108,664

 

Subtotal

 

186,533

 

173,373

 

549,403

 

501,404

 

Operating lease depreciation

 

3,734

 

4,215

 

11,618

 

13,189

 

Total non-interest expense

 

190,267

 

177,588

 

561,021

 

514,593

 

Income before income tax expense

 

23,735

 

46,015

 

103,903

 

160,429

 

Income tax expense

 

6,491

 

15,889

 

36,469

 

59,175

 

Income after income tax expense

 

17,244

 

30,126

 

67,434

 

101,254

 

Income (loss) attributable to non-controlling interest

(207

)

 

(207

)

 

Net income

 

17,451

 

30,126

 

67,641

 

101,254

 

Preferred stock dividends

 

 

 

6,378

 

 

Non-cash deemed preferred stock dividend

 

 

 

12,025

 

 

Net income available to common stockholders

$

17,451

 

$

30,126

 

$

49,238

 

$

101,254

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

.14

 

$

.24

 

$

.39

 

$

.81

 

Diluted

 

$

.14

 

$

.24

 

$

.39

 

$

.81

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

.05

 

$

.25

 

$

.35

 

$

.75

 

See accompanying notes to consolidated financial statements.

 

4


 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Equity

(Unaudited)

 

 

 

TCF Financial Corporation

 

 

 

 

 

(Dollars in thousands)

 

Number of
Common
Shares Issued

 

Preferred
Stock

 

Common
Stock

 

Additional
Paid-in
Capital

 

Retained
Earnings

 

Accumulated
Other
Comprehensive
Income (Loss)

 

Treasury
Stock
and Other

 

Total

 

Non-
controlling
Interests

 

Total

 

Balance, December 31, 2007

 

131,468,699

 

$

 

$

1,315

 

$

354,563

 

$

926,875

 

$

(18,055

)

$

(165,686

)

$

1,099,012

 

$

 

$

1,099,012

 

Pension and postretirement measurement date change

 

 

 

 

 

65

 

 

 

65

 

 

65

 

Subtotal

 

131,468,699

 

 

1,315

 

354,563

 

926,940

 

(18,055

)

(165,686

)

1,099,077

 

 

1,099,077

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

101,254

 

 

 

101,254

 

 

101,254

 

Other comprehensive income (loss)

 

 

 

 

 

 

(3,500

)

 

(3,500

)

 

(3,500

)

Comprehensive income (loss)

 

 

 

 

 

101,254

 

(3,500

)

 

97,754

 

 

97,754

 

Dividends on common stock

 

 

 

 

 

(94,767

)

 

 

(94,767

)

 

(94,767

)

Issuance of 729,895 common shares

 

 

 

 

(18,901

)

 

 

18,901

 

 

 

 

Treasury shares sold to TCF employee benefit plans, 361,660 shares

 

 

 

 

(3,988

)

 

 

9,366

 

5,378

 

 

5,378

 

Cancellation of common shares

 

(123,700

)

 

(3

)

(3,093

)

694

 

 

 

(2,402

)

 

(2,402

)

Cancellation of common shares for tax withholding

 

(393,305

)

 

(4

)

(6,241

)

 

 

 

(6,245

)

 

(6,245

)

Amortization of stock compensation

 

 

 

 

6,537

 

 

 

 

6,537

 

 

6,537

 

Exercise of stock options, 13,000 shares

 

 

 

 

(173

)

 

 

336

 

163

 

 

163

 

Stock compensation tax benefits

 

 

 

 

5,534

 

 

 

 

5,534

 

 

5,534

 

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

 

 

 

 

(4,341

)

 

 

4,341

 

 

 

 

Balance, September 30, 2008

 

130,951,694

 

$

 

$

1,308

 

$

329,897

 

$

934,121

 

$

(21,555

)

$

(132,742

)

$

1,111,029

 

$

 

$

1,111,029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2008

 

130,839,378

 

$

348,437

 

$

1,308

 

$

330,474

 

$

927,893

 

$

(3,692

)

$

(110,644

)

$

1,493,776

 

$

 

$

1,493,776

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income after income tax expense

 

 

 

 

 

67,434

 

 

 

67,434

 

 

67,434

 

Income (loss) attributable to non-controlling interest

 

 

 

 

 

(207

)

 

 

(207

)

(207

)

 

Other comprehensive income (loss)

 

 

 

 

 

 

4,497

 

 

4,497

 

 

4,497

 

Comprehensive income (loss)

 

 

 

 

 

67,641

 

4,497

 

 

72,138

 

(207

)

71,931

 

Non-controlling interest capital contribution

 

 

 

 

 

 

 

 

 

3,811

 

3,811

 

Dividends on preferred stock

 

 

710

 

 

 

(6,378

)

 

 

(5,668

)

 

(5,668

)

Dividends on common stock

 

 

 

 

 

(44,440

)

 

 

(44,440

)

 

(44,440

)

Non-cash deemed preferred stock dividend

 

 

12,025

 

 

 

(12,025

)

 

 

 

 

 

Redemption of preferred stock

 

 

(361,172

)

 

 

 

 

 

(361,172

)

 

(361,172

)

Issuance of 549,920 common shares

 

 

 

 

(14,241

)

 

 

14,241

 

 

 

 

Treasury shares sold to TCF employee benefit plans, 1,131,430 shares

 

 

 

 

(14,150

)

 

 

29,299

 

15,149

 

 

15,149

 

Cancellation of common shares

 

(448,500

)

 

(4

)

(481

)

191

 

 

 

(294

)

 

(294

)

Cancellation of common shares for tax withholding

 

(17,670

)

 

 

(235

)

 

 

 

(235

)

 

(235

)

Amortization of stock compensation

 

 

 

 

6,515

 

 

 

 

6,515

 

 

6,515

 

Exercise of stock options, 108,800 shares

 

 

 

 

(1,279

)

 

 

2,817

 

1,538

 

 

1,538

 

Stock compensation tax expense

 

 

 

 

(1,072

)

 

 

 

(1,072

)

 

(1,072

)

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

 

 

 

 

(1,341

)

 

 

1,341

 

 

 

 

Balance, September 30, 2009

 

130,373,208

 

$

 

$

1,304

 

$

304,190

 

$

932,882

 

$

805

 

$

(62,946

)

$

1,176,235

 

$

3,604

 

$

1,179,839

 

See accompanying notes to consolidated financial statements.

 

5


 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

(In thousands)

 

2009

 

2008

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

67,641

 

$

101,254

 

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

 

 

 

 

 

Provision for credit losses

 

181,147

 

144,995

 

Depreciation and amortization

 

46,959

 

48,834

 

Proceeds from sales of education loans held for sale

 

708

 

243,021

 

Principal collected on education loans held for sale

 

23

 

1,658

 

Originations of education loans held for sale

 

(221

)

(95,209

)

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

 

19,654

 

(11,300

)

Gains on sales of assets, net

 

(22,305

)

(7,899

)

Other, net

 

9,908

 

8,365

 

Total adjustments

 

235,873

 

332,465

 

Net cash provided by operating activities

 

303,514

 

433,719

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Principal collected on loans and leases

 

2,369,532

 

2,351,376

 

Originations and purchases of loans

 

(2,494,580

)

(2,665,692

)

Purchases of equipment for lease financing

 

(562,834

)

(593,760

)

Purchase of leasing and equipment finance portfolios

 

(329,432

)

 

Proceeds from sales of securities available for sale

 

1,097,711

 

1,263,313

 

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

 

274,455

 

181,591

 

Purchases of securities available for sale

 

(1,312,101

)

(1,482,203

)

Purchases of Federal Home Loan Bank stock

 

 

(102,336

)

Proceeds from redemptions of Federal Home Loan Bank stock

 

 

84,570

 

Proceeds from sales of real estate owned

 

34,534

 

29,826

 

Purchases of premises and equipment

 

(31,510

)

(33,566

)

Proceeds from sales of premises and equipment

 

1,271

 

1,336

 

Net cash paid for Fidelity National Capital, Inc.

 

(57,728

)

 

Other, net

 

19,707

 

14,256

 

Net cash used by investing activities

 

(990,975

)

(951,289

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Net increase in deposits

 

1,382,659

 

273,688

 

Net (decrease)/increase in short-term borrowings

 

(205,464

)

47,163

 

Proceeds from long-term borrowings

 

18,202

 

234,285

 

Payments on long-term borrowings

 

(132,584

)

(18,161

)

Non-controlling interest capital contribution

 

3,811

 

 

Redemption of preferred stock

 

(361,172

)

 

Dividends paid on common stock

 

(44,440

)

(94,767

)

Dividends paid on preferred stock

 

(7,925

)

 

Stock compensation tax (expense) benefit

 

(1,072

)

5,534

 

Treasury shares sold to TCF employee benefit plans

 

15,149

 

5,378

 

Other, net

 

7,580

 

3,963

 

Net cash provided by financing activities

 

674,744

 

457,083

 

Net decrease in cash and due from banks

 

(12,717

)

(60,487

)

Cash and due from banks at beginning of period

 

342,380

 

358,188

 

Cash and due from banks at end of period

 

$

329,663

 

$

297,701

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

Cash paid for:

 

 

 

 

 

Interest on deposits and borrowings

 

$

255,513

 

$

281,914

 

Income taxes

 

$

9,536

 

$

38,264

 

Transfer of loans and leases to other assets

 

$

113,957

 

$

68,784

 

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.  Management has evaluated subsequent events for disclosure or recognition up to the time of filing these financial statements with the Securities and Exchange Commission on October 28, 2009.

 

(2)                     Investments

 

The carrying values of investments consist of the following.

 

 

 

At

 

At

 

 

 

September 30,

 

December 31,

 

(In thousands)

 

2009

 

2008

 

Federal Home Loan Bank stock, at cost:

 

 

 

 

 

Des Moines

 

$

120,262

 

$

120,263

 

Chicago

 

4,618

 

4,617

 

Subtotal

 

124,880

 

124,880

 

Federal Reserve Bank stock, at cost

 

22,798

 

22,706

 

Other

 

7,949

 

8,139

 

Total investments

 

$

155,627

 

$

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 September 30, 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

 

U.S. Government sponsored entities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

$

1,419,265

 

$

35,720

 

$

(152

)

$

1,454,833

 

$

1,928,245

 

$

37,310

 

$

 

$

1,965,555

 

Debentures

 

600,096

 

4,780

 

 

604,876

 

 

 

 

 

Other securities

 

518

 

 

 

518

 

549

 

 

 

549

 

Total

 

$

2,019,879

 

$

40,500

 

$

(152

)

$

2,060,227

 

$

1,928,794

 

$

37,310

 

$

 

$

1,966,104

 

Weighted-average yield

 

4.02

%

 

 

 

 

 

 

5.17

%

 

 

 

 

 

 

 

At September 30, 2009 and December 31, 2008, TCF had $1.8 billion of mortgage-backed securities and debentures pledged as collateral to secure certain borrowings and deposits.

 

The following table shows the securities available for sale portfolio’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.  Unrealized losses on securities available for sale are due to changes in interest rates and not due to credit quality issues.  TCF has the ability and intent to hold these investments until a recovery of fair value.  Accordingly, TCF has concluded that no other-than-temporary impairment has occurred at September 30, 2009.

 

 

 

At September 30, 2009

 

 

 

Less than 12 months

 

12 months or more

 

Total

 

 

 

 

 

Unrealized

 

 

 

Unrealized

 

 

 

Unrealized

 

(In thousands)

 

Fair Value

 

Losses

 

Fair Value

 

Losses

 

Fair Value

 

Losses

 

U.S. Government sponsored entities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

$

28,699

 

$

(152

)

$

 

$

 

$

28,699

 

$

(152

)

Debentures

 

 

 

 

 

 

 

Total

 

$

28,699

 

$

(152

)

$

 

$

 

$

28,699

 

$

(152

)

 

At 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

 

 

 

 

 

 

September 30,

 

December 31,

 

 

Percentage

 

(Dollars in thousands)

 

2009

 

2008

 

 

Change

 

Consumer real estate and other:

 

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

First mortgage liens

 

$

4,949,607

 

$

4,881,662

 

 

   1.4%

 

Junior liens

 

2,328,250

 

2,420,116

 

 

(3.8)

 

Total consumer real estate

 

7,277,857

 

7,301,778

 

 

(0.3)

 

Other

 

57,204

 

61,805

 

 

(7.4)

 

Total consumer real estate and other

 

7,335,061

 

7,363,583

 

 

(0.4)

 

Commercial:

 

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

Permanent

 

2,976,463

 

2,693,085

 

 

10.5  

 

Construction and development

 

264,383

 

291,071

 

 

(9.2)

 

Total commercial real estate

 

3,240,846

 

2,984,156

 

 

8.6

 

Commercial business

 

466,991

 

506,887

 

 

(7.9)

 

Total commercial

 

3,707,837

 

3,491,043

 

 

6.2

 

Leasing and equipment finance (1):

 

 

 

 

 

 

 

 

Equipment finance loans (2)

 

864,425

 

789,869

 

 

9.4

 

Lease financings:

 

 

 

 

 

 

 

 

Direct financing leases (2)

 

2,282,544

 

1,813,254

 

 

25.9  

 

Sales-type leases

 

27,216

 

22,095

 

 

23.2  

 

Lease residuals

 

103,398

 

52,906

 

 

95.4  

 

Unearned income

 

(216,024

)

(192,042

)

 

(12.5)  

 

Total lease financings

 

2,197,134

 

1,696,213

 

 

29.5  

 

Total leasing and equipment finance

 

3,061,559

 

2,486,082

 

 

23.1  

 

Inventory finance

 

224,807

 

4,425

 

 

N.M.  

 

Total loans and leases

 

$

14,329,264

 

$

13,345,133

 

 

7.4

 

(1)     Operating leases of $107.4 million at September 30, 2009 and $58.8 million at December 31, 2008 are included in other assets in the Consolidated Statements of Financial Condition.

(2)     Included in these amounts at September 30, 2009 is a total of $13 million of non-accretable credit valuation reserves, which were recorded as a result of portfolio purchases.

N.M. Not Meaningful.

 

9


 

(5)                     Long-term Borrowings

 

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

 

 

 

 

 

At September 30, 2009

 

At December 31, 2008

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

Weighted-

 

 

 

Stated

 

 

 

 

Average

 

 

 

 

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

 

71,020

 

 

1.93

 

74,917

 

 

5.27

 

 

 

2015

 

49,923

 

 

5.37

 

49,790

 

 

5.37

 

 

 

2016

 

74,505

 

 

5.63

 

74,457

 

 

5.63

 

Sub-total

 

 

 

195,448

 

 

4.22

 

199,164

 

 

5.43

 

Junior subordinated notes (trust preferred)

 

2068

 

110,441

 

 

11.20  

 

110,440

 

 

11.20  

 

Discounted lease rentals

 

2009

 

29,071

 

 

5.43

 

25,104

 

 

6.38

 

 

 

2010

 

100,556

 

 

5.48

 

17,077

 

 

6.29

 

 

 

2011

 

66,845

 

 

5.62

 

8,976

 

 

6.34

 

 

 

2012

 

41,508

 

 

5.70

 

4,059

 

 

6.47

 

 

 

2013

 

24,128

 

 

5.77

 

1,118

 

 

6.94

 

 

 

2014

 

6,232

 

 

5.86

 

9

 

 

7.73

 

 

 

2015

 

496

 

 

5.89

 

 

 

  —

 

 

 

2016

 

230

 

 

5.91

 

 

 

  —

 

Sub-total

 

 

 

269,066

 

 

5.58

 

56,343

 

 

6.36

 

Other borrowings

 

2009

 

 

 

  —

 

966

 

 

5.00

 

Total long-term borrowings

 

 

 

$

4,524,955

 

 

4.65

 

$

4,433,913

 

 

4.69

 

 

Included in FHLB advances and repurchase agreements at September 30, 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 $1.7 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 at the call date. 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 September 30, 2009 were as follows.

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

Stated

 

 

Weighted-

 

Year

 

Next Call

 

 

Average Rate

 

Maturity

 

 

Average Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

$

1,100,000

 

 

4.50

%  

$

 

 

%

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

 

 

 

 

600,000

 

 

4.42

 

2017

 

 

 

 

1,250,000

 

 

4.60

 

2018

 

 

 

 

300,000

 

 

3.51

 

Total

 

$

2,950,000

 

 

4.44

 

$

2,950,000

 

 

4.44

 

 

10


 

(6)                      Equity

 

Treasury stock and other consists of the following.

 

 

 

At

 

At

 

 

 

September 30,

 

December 31,

 

(In thousands)

 

2009

 

2008

 

Treasury stock, at cost

 

$

(42,047

)

$

(88,404

)

Shares held in trust for deferred
compensation plans, at cost

 

(20,899

)

(22,240

)

Total

 

$

(62,946

)

$

(110,644

)

 

At September 30, 2009, TCF had 5.4 million shares in its stock repurchase program authorized by its Board of Directors.

 

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.  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 non-cash deemed preferred stock dividend had no impact on total stockholders equity, but reduced earnings per diluted common share by 10 cents year-to-date.  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.

 

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.

 

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 September 30, 2009:

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage capital

 

 

 

 

 

 

 

 

 

 

 

 

 

TCF

 

$

1,142,351

 

6.57

%

$

521,357

 

3.00

%

N.A.

 

N.A.

 

TCF National Bank

 

1,051,337

 

6.11

 

515,861

 

3.00

 

$

859,768

 

5.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 risk-based capital

 

 

 

 

 

 

 

 

 

 

 

 

 

TCF

 

1,142,351

 

8.57

 

532,976

 

4.00

 

799,464

 

6.00

 

TCF National Bank

 

1,051,337

 

7.94

 

529,503

 

4.00

 

794,255

 

6.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital

 

 

 

 

 

 

 

 

 

 

 

 

 

TCF

 

1,491,365

 

11.19

 

1,065,952

 

8.00

 

1,332,440

 

10.00

 

TCF National Bank

 

1,399,271

 

10.57

 

1,059,006

 

8.00

 

1,323,758

 

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 (“OCC”) for TCF National Bank and TCF National Bank Arizona pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991.  At

 

11


 

September 30, 2009, TCF, TCF National Bank and TCF National Bank Arizona exceeded their stated regulatory capital requirements and are considered “well-capitalized”.  On October 15, 2009, TCF received approval from the OCC to merge TCF National Bank Arizona into TCF National Bank effective as of October 31, 2009.

 

(7)                      Joint Venture

 

In the third quarter of 2009, TCF formed a joint venture with The Toro Company (“Toro”) called Red Iron Acceptance, LLC (“Red Iron”). Red Iron provides U.S. distributors and dealers and select Canadian distributors of the Toro and Exmark brands with reliable, cost-effective sources of financing. TCF and Toro will maintain a 55% and 45% ownership interest, respectively, in Red Iron.  As TCF has a controlling financial interest in Red Iron, its financial results are consolidated in TCF’s financial statements.  Toro’s interest is reported as a non-controlling interest within equity and qualifies as tier 1 regulatory capital.  In October of 2009, Red Iron purchased $72.7 million of inventory finance loans from Toro.

 

(8)                      Fair Value Measurement

 

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 willing market participants at the measurement date.

 

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

 

 

 

Readily Available

 

Observable

 

Company Determined

 

Total at

 

(In thousands)

 

Market Prices (1)

 

Market Prices (2)

 

Market Prices (3)

 

Fair Value

 

At September 30, 2009:

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

U.S. Government sponsored entities:

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

$

 

$

1,454,833

 

$

 

$

1,454,833

 

Debentures

 

 

604,876

 

 

604,876

 

Other securities

 

 

 

518

 

518

 

Assets held in trust for deferred compensation plans (4)

 

6,961

 

 

 

6,961

 

Total assets

 

$

6,961

 

$

2,059,709

 

$

518

 

$

2,067,188

 

At December 31, 2008: