Table 4 - Credit Trends (Graphic: TCF Financial Corporation)

TCF Financial Corporation (NYSE: TCB):

SECOND QUARTER HIGHLIGHTS

- Total revenue of $301.8 million, up 3.4 percent from the first quarter of 2013

- Pre-tax pre-provision profit of $93.3 million, up 6.3 percent from the first quarter of 2013

- Net interest margin maintained at 4.72 percent annualized

- Provision for credit losses of $32.6 million, down 15.1 percent from the first quarter of 2013

- Non-accrual loans and leases and other real estate owned decreased $70.4 million, or 17 percent, from the first quarter of 2013

- Announced common and preferred stock dividend payments payable August 30, 2013 and September 3, 2013, respectively
                                                       
Summary of Financial Results                                               Table 1
(Dollars in thousands, except per-share data)         Percent Change      
2Q 1Q 2Q

 

2Q13 vs
  2Q13 vs YTD YTD

 

Percent
2013     2013       2012    

1Q13
    2Q12     2013      

2012(1)

 
 

Change
Net income (loss) $ 34,057 $ 25,450 $ 31,531 33.8 % 8.0 % $ 59,507 $ (251,363 ) N.M. %
Net interest income 202,044 199,091 198,224 1.5 1.9 401,135 378,397 6.0
Pre-tax pre-provision profit(2) 93,311 87,742 108,118 6.3 (13.7 ) 181,053 178,696 1.3
Diluted earnings (loss) per common share .21 .16 .20 31.3 5.0 .37 (1.58 ) N.M.
 

Financial Ratios(3)
Return on average assets .90 % .70 % .76 % .80 % (2.71 ) %
Return on average common equity 8.39 6.36 8.13 7.39 (29.84 )
Net interest margin 4.72 4.72 4.86 4.72 4.49

Net charge-offs as a percentage of average loans and leases
.70 1.06 1.18 .88 1.12
 
(1) Includes a net, after-tax charge of $295.8 million, or $1.87 per common share, related to the balance sheet repositioning.
(2) Pre-tax pre-provision profit (''PTPP'') is calculated as total revenues less non-interest expense. Year-to-date 2012 PTPP excludes the non-recurring net loss of $473.8 million related to the balance sheet repositioning completed in the first quarter of 2012.
(3) Annualized.
N.M. Not Meaningful.

TCF Financial Corporation (“TCF” or the “Company”) (NYSE: TCB) today reported net income for the second quarter of 2013 of $34.1 million, compared with net income of $31.5 million for the second quarter of 2012 (inclusive of a net after-tax gain of $8.2 million from the sale of Visa® Class B stock), and compared with net income of $25.5 million for the first quarter of 2013. Diluted earnings per common share was 21 cents for the second quarter of 2013, compared with diluted earnings per common share of 20 cents for the second quarter of 2012 (inclusive of a net after-tax gain of 5 cents per common share related to the sale of Visa Class B stock) and diluted earnings per common share of 16 cents for the first quarter of 2013.

TCF reported net income for the first six months of 2013 of $59.5 million, compared with a net loss of $251.4 million for the same period in 2012 (inclusive of a net after-tax charge of $295.8 million, or $1.87 per common share, related to a balance sheet repositioning involving certain investments and borrowings in the first quarter of 2012 and a net after-tax gain of $8.2 million, or 5 cents per common share, related to the sale of Visa® Class B stock in the second quarter of 2012). Diluted earnings per common share was 37 cents for the first six months of 2013, compared with a diluted loss per common share of $1.58 for the same period in 2012 (earnings per common share of 23 cents before the balance sheet repositioning charge and the gain related to the sale of Visa® Class B stock).

Chairman’s Statement“During the second quarter, TCF experienced solid increases throughout its multiple core revenue sources and another quarter of solid improvement in credit trends,” said William A. Cooper, Chairman and Chief Executive Officer. “Over the last three quarters, TCF has seen continued improvement in our credit metrics, particularly in the consumer real estate portfolio where home values have risen and consumer confidence has strengthened, and we have maintained strong performance in our national businesses.

“TCF made strategic investments in 2012 to position the Company for 2013 and beyond. The Company has made good progress in the first half of 2013 executing on these strategic initiatives, including disciplined loan and lease growth, diversifying our revenue sources, improving our credit performance, and expanding our deposit account base.”
     
Revenue
                                                         
Total Revenue                                                   Table 2
      Percent Change
2Q 1Q 2Q 2Q13 vs   2Q13 vs YTD YTD

 

Percent

(Dollars in thousands)
  2013     2013     2012     1Q13     2Q12     2013     2012

 

Change
Net interest income $ 202,044     $ 199,091     $ 198,224 1.5 % 1.9 % $ 401,135     $ 378,397 6.0 %
Fees and other revenue:
Fees and service charges 41,572 39,323 48,090 5.7 (13.6 ) 80,895 89,946 (10.1 )
Card revenue 13,270 12,417 13,530 6.9 (1.9 ) 25,687 26,737 (3.9 )
ATM revenue   5,828       5,505       6,276 5.9 (7.1 )   11,333       12,475 (9.2 )
Total banking fees 60,670 57,245 67,896 6.0 (10.6 ) 117,915 129,158 (8.7 )
Leasing and equipment finance 22,874 16,460 23,207 39.0 (1.4 ) 39,334 46,074 (14.6 )
Gains on sales of auto loans 8,135 7,146 5,496 13.8 48.0 15,281 7,746 97.3
Gains on sales of consumer real estate loans 4,069 8,126 - (49.9 ) N.M. 12,195 - N.M.
Other   4,035       3,726       3,168 8.3 27.4   7,761       5,523 40.5
Total fees and other revenue   99,783       92,703       99,767 7.6 -   192,486       188,501 2.1
Subtotal 301,827 291,794 297,991 3.4 1.3 593,621 566,898 4.7
Gains on securities, net   -       -       13,116 N.M. (100.0 )   -       89,727 (100.0 )
Total revenue $ 301,827     $ 291,794     $ 311,107 3.4 (3.0 ) $ 593,621     $ 656,625 (9.6 )
 
Net interest margin (1) 4.72 % 4.72 % 4.86 % 4.72 % 4.49 %

Fees and other revenue as a % of total revenue
33.06 31.77 32.07 32.43 28.71
 
N.M. Not meaningful.
(1) Annualized.
 

Net Interest Income
  • Net interest income for the second quarter of 2013 increased $3.8 million, or 1.9 percent, compared with the second quarter of 2012. This increase was due to higher average loan balances primarily from the auto finance and inventory finance portfolios as a result of continued growth in those businesses, partially offset by lower average balances of consumer real estate loans due to various sales that occurred in the second half of 2012 and the first half of 2013. The increase was also due to a reduced cost of borrowings from the redemption of trust preferred securities in July 2012.
  • Net interest income for the second quarter of 2013 increased $3 million, or 1.5 percent, compared with the first quarter of 2013. The increase was primarily due to higher average loan balances primarily from continued growth in the auto finance portfolio and a seasonally high inventory finance portfolio. These increases were partially offset by reduced interest income from lower average balances of consumer real estate loans as a result of various loan sales that occurred during the second quarter of 2013 and the run-off of first mortgages, compared with the first quarter of 2013.
  • Net interest margin in the second quarter of 2013 was 4.72 percent, compared with 4.86 percent in the second quarter of 2012 and remained unchanged from the first quarter of 2013. The decrease from the second quarter of 2012 was primarily due to increased cash held at the Federal Reserve and lower yields as new originations in our lending business continued to be impacted by the low interest rate environment. These decreases were partially offset by the reduced cost of borrowings due to the redemption of trust preferred securities in July 2012.

Non-interest Income
  • Fees and service charges in the second quarter of 2013 were $41.6 million, down $6.5 million, or 13.6 percent, from the second quarter of 2012 and up $2.2 million, or 5.7 percent, from the first quarter of 2013. The decrease from the second quarter of 2012 was due to the elimination of the monthly maintenance fee on deposit products through the reintroduction of free checking, partially offset by a higher account base. The increase from the first quarter of 2013 was primarily due to higher seasonal transaction activity during the second quarter of 2013, as well as growth in the account base for the fourth consecutive quarter driven by the reintroduction of free checking.
  • Leasing and equipment finance revenue was $22.9 million during the second quarter of 2013, up $6.4 million, or 39 percent, from the first quarter of 2013. The increase was primarily due to higher sales-type lease revenue on the leasing and equipment finance portfolio as a result of customer-driven events.
  • TCF sold $196.9 million, $144.1 million and $179.8 million of auto loans during the second quarters of 2013 and 2012, and the first quarter of 2013, respectively, resulting in gains in the same respective periods.
  • TCF sold $139.2 million and $279.2 million of consumer real estate loans during the second quarter of 2013 and the first quarter of 2013, respectively, resulting in gains in the same respective periods. There were no sales of consumer real estate loans during the second quarter of 2012.
             
Loans and Leases
                                               
Period-End and Average Loans and Leases                           Table 3
Percent Change
(Dollars in thousands) 2Q 1Q 2Q 2Q13 vs 2Q13 vs YTD YTD Percent
2013   2013   2012   1Q13   2Q12     2013   2012   Change
Period-End:
Consumer real estate $ 6,356,426 $ 6,418,666 $ 6,811,784 (1.0 ) % (6.7 ) %
Commercial 3,350,334 3,334,716 3,523,070 .5 (4.9 )
Leasing and equipment finance 3,251,703 3,185,234 3,151,105 2.1 3.2
Inventory finance 1,713,528 1,931,363 1,457,263 (11.3 ) 17.6
Auto finance 882,202 719,666 262,188 22.6 N.M.
Other   25,099     23,701     29,094 5.9 (13.7 )
Total $ 15,579,292   $ 15,613,346   $ 15,234,504 (.2 ) 2.3
 
Average:
Consumer real estate $ 6,430,685 $ 6,556,426 $ 6,793,415 (1.9 ) (5.3 ) $ 6,493,208 $ 6,819,239 (4.8 ) %
Commercial 3,336,406 3,345,780 3,492,049 (.3 ) (4.5 ) 3,341,067 3,474,885 (3.9 )
Leasing and equipment finance 3,236,799 3,199,499 3,145,914 1.2 2.9 3,218,252 3,137,122 2.6
Inventory finance 1,875,810 1,686,364 1,571,004 11.2 19.4 1,780,058 1,353,469 31.5
Auto finance 823,102 670,096 223,893 22.8 N.M. 747,022 154,728 N.M.
Other   13,060     13,641     17,647 (4.3 ) (26.0 )   13,348     17,612 (24.2 )
Total $ 15,715,862   $ 15,471,806   $ 15,243,922 1.6 3.1 $ 15,592,955   $ 14,957,055 4.3
 
N.M. Not meaningful.  
 
  • Loans and leases were $15.6 billion at June 30, 2013, an increase of $344.8 million, or 2.3 percent, compared with June 30, 2012. Quarterly average loans and leases were $15.7 billion for the second quarter of 2013, an increase of $471.9 million, or 3.1 percent, compared with the second quarter of 2012. The increases in period-end and average loans and leases were primarily due to the continued growth of auto finance as TCF continues to expand that business, as well as an increase in the inventory finance portfolio. These increases were partially offset by decreases in consumer real estate loans driven by ongoing sales and a decline in originations of first mortgages.

Credit Quality

(Table 4 - Credit Trends: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50673992&lang=en )
  • Over 60-day delinquencies improved for the sixth consecutive quarter. The over 60-day delinquency rate excluding acquired portfolios and non-accrual loans and leases at June 30, 2013 was .52 percent, down from .53 percent at March 31, 2013 and .74 percent at June 30, 2012. The decrease from June 30, 2012 was primarily a result of reduced delinquencies in the consumer real estate portfolio.
  • Net charge-offs decreased $13.3 million from the first quarter of 2013 and decreased $17.2 million from the second quarter of 2012, respectively, primarily due to improved credit quality in the consumer real estate and commercial portfolios.
  • Non-accrual loans and leases were $278.5 million at June 30, 2013, a decrease of $64.9 million, or 18.9 percent, from March 31, 2013 and a decrease of $46 million, or 14.2 percent, from June 30, 2012. The reduction in the non-accrual consumer real estate balance from March 31, 2013 was primarily due to the sale of $40.5 million of loans during the second quarter of 2013. The decrease from March 31, 2013 and June 30, 2012 was also due to improved credit quality in the commercial and consumer real estate portfolios resulting in fewer commercial and consumer loans entering non-accrual status.
  • Other real estate owned was $66.2 million at June 30, 2013, a decrease of $5.5 million from March 31, 2013, and a decrease of $59.6 million from June 30, 2012. The decrease from June 30, 2012 was primarily due to a portfolio sale of 184 consumer properties during the first quarter of 2013. Additionally, the decrease from both periods was due to a decrease in the number of consumer real estate loans transferred from non-accrual status.
  • Provision for credit losses was $32.6 million for the second quarter of 2013, a decrease of $5.8 million from the first quarter of 2013 and a decrease of $21.5 million from the second quarter of 2012. The decrease from the first quarter of 2013 was primarily due to decreased net charge-offs in the consumer real estate portfolio. The decrease in provision from the second quarter of 2012 was primarily due to decreased net charge-offs in the consumer real estate and commercial portfolios.
               
Deposits
                                                 
Average Deposits                                 Table 5
Percent Change
(Dollars in thousands) 2Q 1Q 2Q 2Q13 vs 2Q13 vs YTD YTD Percent
    2013   2013   2012   1Q13     2Q12     2013   2012   Change
 
Checking $ 4,884,433 $ 4,784,945 $ 4,636,701 2.1 % 5.3 % $ 4,834,964 $ 4,600,882 5.1 %
Savings 6,082,200 6,114,219 6,053,264 (.5 ) .5 6,098,121 5,979,191 2.0
Money market   791,859       815,374       748,016   (2.9 ) 5.9   803,551       705,255   13.9
Subtotal 11,758,492 11,714,538 11,437,981 .4 2.8 11,736,636 11,285,328 4.0
Certificates   2,360,881       2,323,267       1,608,653   1.6 46.8   2,342,178       1,372,164   70.7
Total average deposits $ 14,119,373     $ 14,037,805     $ 13,046,634  

.6
8.2 $ 14,078,814     $ 12,657,492   11.2
 
Average interest rate on deposits (1) .25 % .28 % .31 % .27 % .31 %
 
(1) Annualized.
 
  • Total average deposits for the second quarter of 2013 increased $1.1 billion, or 8.2 percent, from the second quarter of 2012 and increased $81.6 million, or .6 percent, from the first quarter of 2013, primarily due to special programs for certificates of deposit and the reintroduction of free checking.
  • The average interest rate on deposits in the second quarter of 2013 was .25 percent, down six basis points from the second quarter of 2012 and down three basis points from the first quarter of 2013, primarily due to declines in average interest rates on various savings accounts.
               
Non-interest Expense
                                                 
Non-interest Expense                                         Table 6
Percent Change
(Dollars in thousands) 2Q 1Q 2Q 2Q13 vs 2Q13 vs YTD YTD Percent
2013   2013   2012   1Q13   2Q12   2013   2012   Change

Compensation and employee benefits
$ 105,537 $ 104,229 $ 97,787 1.3 % 7.9 % $ 209,766 $ 193,754 8.3 %
Occupancy and equipment 33,062 32,875 32,731 .6 1.0 65,937 64,977 1.5
FDIC insurance 8,362 7,710 8,469 8.5 (1.3 ) 16,072 14,855 8.2
Operating lease depreciation 6,150 5,635 6,417 9.1 (4.2 ) 11,785 13,148 (10.4 )
Advertising and marketing 5,532 5,732 5,404 (3.5 ) 2.4 11,264 8,021 40.4
Deposit account premiums 600 602 1,690 (.3 ) (64.5 ) 1,202 7,661 (84.3 )
Other   41,946       37,939       36,956 10.6 13.5   79,885       74,252 7.6
Core operating expenses 201,189 194,722 189,454 3.3 6.2 395,911 376,668 5.1
Loss on termination of debt - - - N.M. N.M. - 550,735 (100.0 )

Foreclosed real estate and repossessed assets, net
7,555 10,167 12,059 (25.7 ) (37.3 ) 17,722 23,106 (23.3 )
Other credit costs, net   (228 )     (837 )     1,476 72.8 (115.4 )   (1,065 )     1,188 (189.6 )
Total non-interest expense $ 208,516     $ 204,052     $ 202,989 2.2 2.7 $ 412,568     $ 951,697 (56.6 )
 

N.M. Not meaningful.
 
  • Compensation and employee benefits expense for the second quarter of 2013 increased $7.8 million, or 7.9 percent, from the second quarter of 2012 due to increased staff levels to support the growth of auto finance and expenses related to higher commissions based on production results and incentives based on performance.
  • Foreclosed real estate and repossessed assets expense decreased $4.5 million, or 37.3 percent, from the second quarter of 2012 and decreased $2.6 million, or 25.7 percent, from the first quarter of 2013. The decrease from the second quarter of 2012 was driven by reduced expenses related to fewer consumer real estate and commercial foreclosed properties. The change from the first quarter of 2013 was driven by an acceleration of expense related to a portfolio sale of consumer properties during the first quarter of 2013.
         
Capital
                               
Capital Information                     Table 7
At period end
(Dollars in thousands, except per-share data) 2Q 4Q
2013 2012
Total equity $ 1,906,181 $ 1,876,643
Book value per common share $ 9.89 $ 9.79
Tangible realized common equity to tangible assets (1) 7.77 % 7.52 %
 
Risk-based capital (2)
Tier 1 $ 1,695,092 11.27 % $ 1,633,336 11.09 %
Total 2,034,312 13.53 2,007,835 13.63
 
Tier 1 leverage capital $ 1,695,092 9.34 % $ 1,633,336 9.21 %
 
Tier 1 common capital (3) $ 1,415,190 9.41 % $ 1,356,826 9.21 %
 
(1) Excludes the impact of goodwill, other intangibles and accumulated other comprehensive (loss) income (see “Reconciliation of GAAP to Non-GAAP Financial Measures” table).
(2) The Company's capital ratios continue to be in excess of "well-capitalized" regulatory benchmarks.
(3) Excludes the effect of preferred shares and qualifying non-controlling interest in subsidiaries (see “Reconciliation of GAAP to Non-GAAP Financial Measures” table).
 
  • On July 22, 2013, the Board of Directors of TCF declared a regular quarterly cash dividend of 5 cents per common share payable on August 30, 2013, to stockholders of record at the close of business on August 15, 2013. TCF also declared dividends on the 7.50% Series A and 6.45% Series B Non-Cumulative Perpetual Preferred Stock, both payable on September 3, 2013, to stockholders of record at the close of business on August 15, 2013.

Webcast InformationA live webcast of TCF’s conference call to discuss the second quarter earnings will be hosted at TCF’s website, http://ir.tcfbank.com, on July 23, 2013 at 8:00 a.m. CT. A slide presentation for the call will be available on the website prior to the call. Additionally, the webcast will be 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, investor presentations and SEC filings.
 

TCF is a Wayzata, Minnesota-based national bank holding company with $18.4 billion in total assets at June 30, 2013. TCF has over 425 branches in Minnesota, Illinois, Michigan, Colorado, Wisconsin, Indiana, Arizona and South Dakota, providing retail and commercial banking services. TCF, through its subsidiaries, also conducts commercial leasing and equipment finance business in all 50 states, commercial inventory finance business in the U.S. and Canada, and indirect auto finance business in over 40 states. For more information about TCF, please visit http://ir.tcfbank.com.
 

Cautionary Statements for Purposes of the Safe Harbor Provisions of the Securities Litigation Reform Act Any statements contained in this earnings release regarding the outlook for the Company’s businesses and their respective markets, such as projections of future performance, guidance, statements of the Company’s plans and objectives, forecasts of market trends and other matters, are forward-looking statements based on the Company’s assumptions and beliefs. Such statements may be identified by such words or phrases as “will likely result,” “are expected to,” “will continue,” “outlook,” “will benefit,” “is anticipated,” “estimate,” “project,” “management believes” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such statements and no assurance can be given that the results in any forward-looking statement will be achieved. For these statements, TCF claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.

Certain factors could cause the Company’s future results to differ materially from those expressed or implied in any forward-looking statements contained in this earnings release. These factors include the factors discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 under the heading “Risk Factors,” the factors discussed below and any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statements. Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive.

Adverse Economic or Business Conditions; Competitive Conditions; Credit and Other Risks. Deterioration in general economic and banking industry conditions, including defaults, anticipated defaults or rating agency downgrades of sovereign debt (including debt of the U.S.), or continued high rates of or increases in unemployment in TCF’s primary banking markets; adverse economic, business and competitive developments such as shrinking interest margins, reduced demand for financial services and loan and lease products, deposit outflows, deposit account attrition or an inability to increase the number of deposit accounts; customers completing financial transactions without using a bank; adverse changes in credit quality and other risks posed by TCF’s loan, lease, investment and securities available for sale portfolios, including declines in commercial or residential real estate values, changes in the allowance for loan and lease losses dictated by new market conditions or regulatory requirements, or the inability of home equity line borrowers to make increased payments caused by increased interest rates or amortization of principal; interest rate risks resulting from fluctuations in prevailing interest rates or other factors that result in a mismatch between yields earned on TCF’s interest-earning assets and the rates paid on its deposits and borrowings; foreign currency exchange risks; counterparty risk, including the risk of defaults by our counterparties or diminished availability of counterparties who satisfy our credit quality requirements; decreases in demand for the types of equipment that TCF leases or finances; the effect of any negative publicity.

Legislative and Regulatory Requirements. New consumer protection and supervisory requirements and regulations, including those resulting from action by the Consumer Financial Protection Bureau and changes in the scope of Federal preemption of state laws that could be applied to national banks; the imposition of requirements with an adverse impact relating to TCF’s lending, loan collection and other business activities as a result of the Dodd-Frank Act, or other legislative or regulatory developments such as mortgage foreclosure moratorium laws or imposition of underwriting or other limitations that impact the ability to use certain variable-rate products; impact of legislative, regulatory or other changes affecting customer account charges and fee income; changes to bankruptcy laws which would result in the loss of all or part of TCF’s security interest due to collateral value declines; deficiencies in TCF’s compliance under the Bank Secrecy Act in past or future periods, which may result in regulatory enforcement action including monetary penalties; increased health care costs resulting from Federal health care reform legislation; adverse regulatory examinations and resulting enforcement actions or other adverse consequences such as increased capital requirements or higher deposit insurance assessments; heightened regulatory practices, requirements or expectations, including, but not limited to, requirements related to the Bank Secrecy Act and anti-money laundering compliance activity.

Earnings/Capital Risks and Constraints, Liquidity Risks. Limitations on TCF’s ability to pay dividends or to increase dividends because of financial performance deterioration, regulatory restrictions or limitations; increased deposit insurance premiums, special assessments or other costs related to adverse conditions in the banking industry, the economic impact on banks of the Dodd-Frank Act and other regulatory reform legislation; the impact of financial regulatory reform, including additional capital, leverage, liquidity and risk management requirements or changes in the composition of qualifying regulatory capital (including those resulting from U.S. implementation of Basel III requirements); adverse changes in securities markets directly or indirectly affecting TCF’s ability to sell assets or to fund its operations; diminished unsecured borrowing capacity resulting from TCF credit rating downgrades and unfavorable conditions in the credit markets that restrict or limit various funding sources; costs associated with new regulatory requirements or interpretive guidance relating to liquidity; uncertainties relating to regulatory requirements or customer opt-in preferences with respect to overdraft fees on point of sale and ATM transactions, which may have an adverse impact on TCF’s fee revenue; uncertainties relating to future retail deposit account changes, including limitations on TCF’s ability to predict customer behavior and the impact on TCF’s fee revenues.

Supermarket Branching Risk; Growth Risks. Adverse developments affecting TCF’s supermarket banking relationships or any of the supermarket chains in which TCF maintains supermarket branches; slower than anticipated growth in existing or acquired businesses; inability to successfully execute on TCF’s growth strategy through acquisitions or cross-selling opportunities; failure to expand or diversify TCF’s balance sheet through programs or new opportunities; failure to successfully attract and retain new customers, including the failure to attract and retain manufacturers and dealers to expand the inventory finance business; failure to effectuate, and risks of claims related to, sales and securitizations of loans; risks related to new product additions and addition of distribution channels (or entry into new markets) for existing products.

Technological and Operational Matters. Technological or operational difficulties, loss or theft of information, cyber-attacks and other security breaches, counterparty failures and the possibility that deposit account losses (fraudulent checks, etc.) may increase; failure to keep pace with technological change.

Litigation Risks. Results of litigation, including class action litigation concerning TCF’s lending or deposit activities including account servicing processes or fees or charges, or employment practices, and possible increases in indemnification obligations for certain litigation against Visa U.S.A. and potential reductions in card revenues resulting from such litigation or other litigation against Visa.

Accounting, Audit, Tax and Insurance Matters. Changes in accounting standards or interpretations of existing standards; federal or state monetary, fiscal or tax policies, including adoption of state legislation that would increase state taxes; ineffective internal controls; adverse state or Federal tax assessments or findings in tax audits; lack of or inadequate insurance coverage for claims against TCF; potential for claims and legal action related to TCF’s fiduciary responsibilities.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
       
Three Months Ended June 30, Change
2013 2012 $ %
Interest income:
Loans and leases $ 206,675 $ 208,766 $ (2,091 ) (1.0 ) %
Securities available for sale 4,637 5,816 (1,179 ) (20.3 )
Investments and other   6,296     3,633   2,663   73.3
Total interest income   217,608     218,215   (607 ) (.3 )
Interest expense:
Deposits 8,851 10,197 (1,346 ) (13.2 )
Borrowings   6,713     9,794   (3,081 ) (31.5 )
Total interest expense   15,564     19,991   (4,427 ) (22.1 )
Net interest income 202,044 198,224 3,820 1.9
Provision for credit losses   32,591     54,106   (21,515 ) (39.8 )

Net interest income after provision for credit losses
  169,453     144,118   25,335   17.6
Non-interest income:
Fees and service charges 41,572 48,090 (6,518 ) (13.6 )
Card revenue 13,270 13,530 (260 ) (1.9 )
ATM revenue   5,828     6,276   (448 ) (7.1 )
Subtotal 60,670 67,896 (7,226 ) (10.6 )
Leasing and equipment finance 22,874 23,207 (333 ) (1.4 )
Gain on sales of auto loans 8,135 5,496 2,639 48.0
Gain on sale of consumer real estate loans 4,069 - 4,069 N.M.
Other   4,035     3,168   867   27.4
Fees and other revenue 99,783 99,767 16 -
Gains on securities, net   -     13,116   (13,116 ) (100.0 )
Total non-interest income   99,783     112,883   (13,100 ) (11.6 )
Non-interest expense:
Compensation and employee benefits 105,537 97,787 7,750 7.9
Occupancy and equipment 33,062 32,731 331 1.0
FDIC insurance 8,362 8,469 (107 ) (1.3 )
Operating lease depreciation 6,150 6,417 (267 ) (4.2 )
Advertising and marketing 5,532 5,404 128 2.4
Deposit account premiums 600 1,690 (1,090 ) (64.5 )
Other   41,946     36,956   4,990   13.5
Subtotal 201,189 189,454 11,735 6.2
Foreclosed real estate and repossessed assets, net 7,555 12,059 (4,504 ) (37.3 )
Other credit costs, net   (228 )   1,476   (1,704 ) N.M.
Total non-interest expense   208,516     202,989   5,527   2.7
Income before income tax expense 60,720 54,012 6,708 12.4
Income tax expense   19,444     20,542   (1,098 ) (5.3 )
Income after income tax expense 41,276 33,470 7,806 23.3
Income attributable to non-controlling interest   2,372     1,939   433   22.3
Net income attributable to TCF Financial Corporation   38,904     31,531   7,373   23.4
Preferred stock dividends   4,847     -   4,847   N.M.
Net income available to common stockholders $ 34,057   $ 31,531 $ 2,526   8.0
 
Net income per common share:
Basic $ .21 $ .20 $ .01 5.0
Diluted .21 .20 .01 5.0
 
Dividends declared per common share $ .05 $ .05 $ - -
 

Average common and common equivalent shares outstanding (in thousands):
Basic 160,895 159,113 1,782 1.1
Diluted 161,749 159,539 2,210 1.4
 
N.M. Not meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
       
Six Months Ended June 30, Change
2013 2012 $ %
Interest income:
Loans and leases $ 411,580 $ 414,750 $ (3,170 ) (.8 ) %
Securities available for sale 9,432 24,928 (15,496 ) (62.2 )
Investments and other   12,146     6,066     6,080   100.2
Total interest income   433,158     445,744     (12,586 ) (2.8 )
Interest expense:
Deposits 18,532 19,258 (726 ) (3.8 )
Borrowings   13,491     48,089     (34,598 ) (71.9 )
Total interest expense   32,023     67,347     (35,324 ) (52.5 )
Net interest income 401,135 378,397 22,738 6.0
Provision for credit losses   70,974     102,648     (31,674 ) (30.9 )

Net interest income after provision for credit losses
  330,161     275,749     54,412   19.7
Non-interest income:
Fees and service charges 80,895 89,946 (9,051 ) (10.1 )
Card revenue 25,687 26,737 (1,050 ) (3.9 )
ATM revenue   11,333     12,475     (1,142 ) (9.2 )
Subtotal 117,915 129,158 (11,243 ) (8.7 )
Leasing and equipment finance 39,334 46,074 (6,740 ) (14.6 )
Gain on sales of auto loans 15,281 7,746 7,535 97.3
Gain on sale of consumer real estate loans 12,195 - 12,195 N.M.
Other   7,761     5,523     2,238   40.5
Fees and other revenue 192,486 188,501 3,985 2.1
Gains on securities, net   -     89,727     (89,727 ) (100.0 )
Total non-interest income   192,486     278,228     (85,742 ) (30.8 )
Non-interest expense:
Compensation and employee benefits 209,766 193,754 16,012 8.3
Occupancy and equipment 65,937 64,977 960 1.5
FDIC insurance 16,072 14,855 1,217 8.2
Operating lease depreciation 11,785 13,148 (1,363 ) (10.4 )
Advertising and marketing 11,264 8,021 3,243 40.4
Deposit account premiums 1,202 7,661 (6,459 ) (84.3 )
Other   79,885     74,252     5,633   7.6
Subtotal 395,911 376,668 19,243 5.1
Loss on termination of debt - 550,735 (550,735 ) (100.0 )
Foreclosed real estate and repossessed assets, net 17,722 23,106 (5,384 ) (23.3 )
Other credit costs, net   (1,065 )   1,188     (2,253 ) N.M.
Total non-interest expense   412,568     951,697     (539,129 ) (56.6 )
Income (loss) before income tax expense (benefit) 110,079 (397,720 ) 507,799 N.M.
Income tax expense (benefit)   37,003     (149,702 )   186,705   N.M.
Income (loss) after income tax expense (benefit) 73,076 (248,018 ) 321,094 N.M.
Income attributable to non-controlling interest   4,198     3,345     853   25.5
Net income (loss) attributable to TCF Financial Corporation 68,878 (251,363 ) 320,241 N.M.
Preferred stock dividends   9,371     -     9,371   N.M.
Net income (loss) available to common stockholders $ 59,507   $ (251,363 ) $ 310,870   N.M.
 
Net income (loss) per common share:
Basic $ .37 $ (1.58 ) $ 1.95 N.M.
Diluted .37 (1.58 ) 1.95 N.M.
 
Dividends declared per common share $ .10 $ .10 $ - -
 

Average common and common equivalent shares outstanding (in thousands):
Basic 160,644 158,810 1,834 1.2
Diluted 161,443 158,810 2,633 1.7
 
N.M. Not meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
       
Three Months Ended June 30, Change
2013 2012 $ %
Net income attributable to TCF Financial Corporation $ 38,904   $ 31,531   $ 7,373   23.4 %
Other comprehensive income (loss):

Unrealized holding (losses) gains arising during the period on securities available for sale
(34,420 ) 19,868 (54,288 ) N.M.
Foreign currency hedge 874 268 606 N.M.
Foreign currency translation adjustment (973 ) (324 ) (649 ) N.M.

Recognized postretirement prior service cost and transition obligation
(12 ) (7 ) (5 ) (71.4 )
Income tax benefit (expense) 12,662   (7,375 ) 20,037   N.M.
Total other comprehensive (loss) income (21,869 ) 12,430   (34,299 ) N.M.
Comprehensive income $ 17,035   $ 43,961   $ (26,926 ) (61.2 )
 
 
Six Months Ended June 30, Change
2013 2012 $ %
Net income (loss) attributable to TCF Financial Corporation $ 68,878   $ (251,363 ) $ 320,241   N.M. %
Other comprehensive income (loss):

Reclassification adjustment for securities gains included in net income (loss) attributable to TCF Financial Corporation
- (76,967 ) 76,967 (100.0 )

Unrealized holding (losses) gains arising during the period on securities available for sale
(48,249 ) 12,100 (60,349 ) N.M.
Foreign currency hedge 1,411 (136 ) 1,547 N.M.
Foreign currency translation adjustment (1,595 ) 61 (1,656 ) N.M.

Recognized postretirement prior service cost and transition obligation
(24 ) (14 ) (10 ) (71.4 )
Income tax benefit 17,681   23,833   (6,152 ) (25.8 )
Total other comprehensive loss (30,776 ) (41,123 ) 10,347   25.2
Comprehensive income (loss) $ 38,102   $ (292,486 ) $ 330,588   N.M.
 

N.M. Not meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per-share data)
(Unaudited)
       

At Jun. 30,

At Dec. 31,
Change
2013 2012 $ %
ASSETS
 
Cash and due from banks $ 1,132,436 $ 1,100,347 $ 32,089 2.9 %
Investments 118,918 120,867 (1,949 ) (1.6 )
Securities available for sale 620,260 712,091 (91,831 ) (12.9 )
Loans and leases held for sale 104,933 10,289 94,644 N.M.
Loans and leases:
Consumer real estate 6,356,426 6,674,501 (318,075 ) (4.8 )
Commercial 3,350,334 3,405,235 (54,901 ) (1.6 )
Leasing and equipment finance 3,251,703 3,198,017 53,686 1.7
Inventory finance 1,713,528 1,567,214 146,314 9.3
Auto finance 882,202 552,833 329,369 59.6
Other loans and leases   25,099     27,924     (2,825 ) (10.1 )
Total loans and leases 15,579,292 15,425,724 153,568 1.0
Allowance for loan and lease losses   (265,599 )   (267,128 )   1,529   .6
Net loans and leases 15,313,693 15,158,596 155,097 1.0
Premises and equipment, net 439,048 440,466 (1,418 ) (.3 )
Goodwill 225,640 225,640 - -
Other assets   444,679     457,621     (12,942 ) (2.8 )
Total assets $ 18,399,607   $ 18,225,917   $ 173,690   1.0
 
LIABILITIES AND EQUITY
 
Deposits:
Checking $ 4,931,189 $ 4,834,632 $ 96,557 2.0
Savings 6,101,642 6,104,104 (2,462 ) -
Money market   810,249     820,553     (10,304 ) (1.3 )
Subtotal 11,843,080 11,759,289 83,791 .7
Certificates of deposit   2,442,504     2,291,497     151,007   6.6
Total deposits   14,285,584     14,050,786     234,798   1.7
Short-term borrowings 3,030 2,619 411 15.7
Long-term borrowings   1,787,728     1,931,196     (143,468 ) (7.4 )
Total borrowings 1,790,758 1,933,815 (143,057 ) (7.4 )
Accrued expenses and other liabilities   417,084     364,673     52,411   14.4
Total liabilities   16,493,426     16,349,274     144,152   .9
Equity:

Preferred stock, par value $.01 per share, 30,000,000 authorized; and 4,006,900 shares issued
263,240 263,240 - -

Common stock, par value $.01 per share, 280,000,000 shares authorized; 164,453,669 and 163,428,763 shares issued
1,645 1,634 11 .7
Additional paid-in capital 763,349 750,040 13,309 1.8
Retained earnings, subject to certain restrictions 920,894 877,445 43,449 5.0
Accumulated other comprehensive (loss) income (18,333 ) 12,443 (30,776 ) N.M.
Treasury stock at cost, 42,566 shares, and other   (41,276 )   (41,429 )   153   .4
Total TCF Financial Corporation stockholders' equity   1,889,519     1,863,373     26,146   1.4
Non-controlling interest in subsidiaries   16,662     13,270     3,392   25.6
Total equity   1,906,181     1,876,643     29,538   1.6
Total liabilities and equity $ 18,399,607   $ 18,225,917   $ 173,690   1.0
 

N.M. Not meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA
(Dollars in thousands)
(Unaudited)
             
At At At At At Change from
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Jun. 30,
2013 2013 2012 2012 2012 2013 2012

Delinquency Data - Principal Balances (1)
60 days or more:
Consumer real estate
First mortgage lien $ 66,876 $ 66,164 $ 76,020 $ 80,153 $ 86,714 $ 712 $ (19,838 )
Junior lien 8,022   9,674   13,141   13,388   13,967   (1,652 ) (5,945 )
Total consumer real estate 74,898 75,838 89,161 93,541 100,681 (940 ) (25,783 )
Commercial 1,679 906 2,630 2,652 5,616 773 (3,937 )
Leasing and equipment finance 1,840 2,067 2,568 1,554 1,492 (227 ) 348
Inventory finance 33 156 119 80 206 (123 ) (173 )
Auto finance 868 563 532 305 62 305 806
Other 26   -   31   22   34   26   (8 )
Subtotal 79,344 79,530 95,041 98,154 108,091 (186 ) (28,747 )
Acquired portfolios 627   578   982   1,069   1,483   49   (856 )
Total delinquencies $ 79,971   $ 80,108   $ 96,023   $ 99,223   $ 109,574   $ (137 ) $ (29,603 )
 

Delinquency Data - % of Portfolio (1)
60 days or more:
Consumer real estate
First mortgage lien 1.74 % 1.67 % 1.88 % 1.93 % 1.93 % 7 bps (19 ) bps
Junior lien .34 .43 .55 .59 .64 (9 ) (30 )
Total consumer real estate 1.21 1.22 1.38 1.46 1.51 (1 ) (30 )
Commercial .05 .03 .08 .08 .17 2 (12 )
Leasing and equipment finance .06 .07 .08 .05 .05 (1 ) 1
Inventory finance - .01 .01 .01 .01 (1 ) (1 )
Auto finance .10 .08 .10 .08 .02 2 8
Other .11 - .12 .09 .13 11 (2 )
Subtotal .52 .53 .64 .67 .74 (1 ) (22 )
Acquired portfolios .51 .37 .58 .50 .58 14 (7 )
Total delinquencies .52 .52 .64 .67 .73 - (21 )
 
(1) Excludes non-accrual loans and leases.
At At At At At Change from
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Jun. 30,
2013 2013 2012 2012 2012 2013 2012

Non-Accrual Loans and Leases
Non-accrual loans and leases:
Consumer real estate
First mortgage lien $ 132,586 $ 186,218 $ 199,631 $ 197,649 $ 122,406 $ (53,632 ) $ 10,180
Junior lien 30,744   33,907   35,269   35,936   18,272   (3,163 ) 12,472  
Total consumer real estate 163,330 220,125 234,900 233,585 140,678 (56,795 ) 22,652
Commercial 102,103 108,505 127,746 169,339 150,215 (6,402 ) (48,112 )
Leasing and equipment finance 11,103 11,695 13,652 15,812 29,429 (592 ) (18,326 )
Inventory finance 1,008 1,480 1,487 1,120 1,900 (472 ) (892 )
Auto finance 118 106 101 - - 12 118
Other 809   1,477   1,571   1,957   2,204   (668 ) (1,395 )
Total non-accrual loans and leases $ 278,471   $ 343,388   $ 379,457   $ 421,813   $ 324,426   $ (64,917 ) $ (45,955 )
 
Non-accrual loans and leases - rollforward
Balance, beginning of period $ 343,388 $ 379,457 $ 421,813 $ 324,426 $ 308,943 $ (36,069 ) $ 34,445
Additions 41,549 56,712 88,235 210,916 111,739 (15,163 ) (70,190 )
Charge-offs (12,780 ) (23,773 ) (27,657 ) (49,116 ) (28,228 ) 10,993 15,448
Transfers to other assets (16,014 ) (20,087 ) (17,305 ) (24,632 ) (34,473 ) 4,073 18,459
Return to accrual status (21,360 ) (34,692 ) (55,261 ) (30,300 ) (22,200 ) 13,332 840
Payments received (16,977 ) (15,399 ) (30,832 ) (9,652 ) (12,261 ) (1,578 ) (4,716 )
Sales (40,461 ) (133 ) - - - (40,328 ) (40,461 )
Other, net 1,126   1,303   464   171   906   (177 ) 220  
Balance, end of period $ 278,471   $ 343,388   $ 379,457   $ 421,813   $ 324,426   $ (64,917 ) $ (45,955 )
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)
 
Change from
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Jun 30,
2013 2013 2012 2012 2012 2013 2012

Other Real Estate Owned
Other real estate owned (1)
Consumer real estate $ 44,759 $ 46,404 $ 69,599 $ 85,764 $ 83,176 $ (1,645 ) $ (38,417 )
Commercial real estate 21,473   25,359   27,379   34,662   42,700   (3,886 ) (21,227 )
Total other real estate owned $ 66,232   $ 71,763   $ 96,978   $ 120,426   $ 125,876   $ (5,531 ) $ (59,644 )
 
Other real estate owned - rollforward
Balance, beginning of period $ 71,763 $ 96,978 $ 120,426 $ 125,876 $ 127,228 $ (25,215 ) $ (55,465 )
Transferred in 16,503 20,855 18,444 26,097 33,739 (4,352 ) (17,236 )
Sales (17,895 ) (40,456 ) (39,528 ) (28,479 ) (29,448 ) 22,561 11,553
Writedowns (4,270 ) (5,294 ) (4,614 ) (3,493 ) (6,237 ) 1,024 1,967
Other, net 131   (320 ) 2,250   425   594   451   (463 )
Balance, end of period $ 66,232   $ 71,763   $ 96,978   $ 120,426   $ 125,876   $ (5,531 ) $ (59,644 )
 
Ending number of properties owned
Consumer real estate 246 224 418 425 426 22 (180 )
Commercial real estate 20   18   18   26   32   2   (12 )
Total 266   242   436   451   458   24   (192 )
 
(1) Includes properties owned and foreclosed properties subject to redemption.
 
Change from
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Jun 30,
2013 2013 2012 2012 2012 2013 2012

Non-Accrual Loans and Leases and Other Real Estate Owned
Non-accrual loans and leases $ 196,996 $ 221,278 $ 261,796 $ 318,611 $ 324,426 $ (24,282 ) $ (127,430 )
Loans discharged in bankruptcy (1) 81,475 122,110 117,661 103,202 - (40,635 ) 81,475
Other real estate owned 66,232   71,763   96,978   120,426   125,876   (5,531 ) (59,644 )
Total non-accrual loans and leases and other real estate owned $ 344,703   $ 415,151   $ 476,435   $ 542,239   $ 450,302   $ (70,448 ) $ (105,599 )
 
Percent of total loans and leases and other real estate owned 2.20 % 2.65 % 3.07 % 3.54 % 2.93 % (45 ) bps (73 ) bps
 
(1) Consumer real estate loans required to be reported as nonaccrual loans, regardless of delinquency status, due to the implementation of clarifying regulatory guidance in the third quarter of 2012, related to the discharge of a borrowers' personal liability following Chapter 7 bankruptcy proceedings.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)
         

Allowance for Loan and Lease Losses
At June 30, 2013 At March 31, 2013 At June 30, 2012 Change from
% of % of % of Mar. 31, Jun. 30,
Balance Portfolio Balance Portfolio Balance Portfolio 2013 2012
Consumer real estate $ 181,052 2.85 % $ 182,687 2.85 % $ 188,087 2.76 % - bps 9 bps
Commercial 50,072 1.49 48,556 1.46 50,699 1.44 3 5

Leasing and equipment finance
17,975 .55 17,541 .55 25,450 .81 - (26 )
Inventory finance 8,197 .48 8,788 .46 7,072 .49 2 (1 )
Auto finance 7,509 .85 5,390 .75 1,951 .74 10 11
Other 794 3.16 634 2.67 902 3.10 49 6
Total $ 265,599 1.70 $ 263,596 1.69 $ 274,161 1.80 1 (10 )
 

Net Charge-Offs
Change from
Quarter Ended Quarter Ended
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Jun. 30,
2013 2013 2012 2012 2012 2013 2012
Consumer real estate
First mortgage lien $ 15,084 $ 19,907 $ 22,163 $ 40,469 $ 18,369

 

$
(4,823 )

 

$
(3,285 )
Junior lien 8,642   10,540 11,757 34,202 16,487 (1,898 ) (7,845 )
Total consumer real estate 23,726 30,447 33,920 74,671 34,856 (6,721 ) (11,130 )
Commercial 2,449 7,849 8,351 20,547 8,455 (5,400 ) (6,006 )
Leasing and equipment finance 244 1,210 1,345 7,521 1,173 (966 ) (929 )
Inventory finance (14 ) 355 193 444 225 (369 ) (239 )
Auto finance 765 836 771 280 81 (71 ) 684
Other 524   307 940 991 69 217   455  
Total $ 27,694   $ 41,004 $ 45,520 $ 104,454 $ 44,859

 

$
(13,310 )

 

$
(17,165 )
 

Net Charge-Offs as a Percentage of Average Loans and Leases
Change from
Quarter Ended (1) Quarter Ended
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Jun. 30,
2013 2013 2012 2012 2012 2013 2012
Consumer real estate
First mortgage lien 1.48 % 1.90 % 2.06 % 3.60 % 1.58 % (42 ) bps (10 ) bps
Junior lien 1.46 1.78 1.99 6.12 3.07 (32 ) (161 )
Total consumer real estate 1.48 1.86 2.04 4.44 2.05 (38 ) (57 )
Commercial .29 .94 .97 2.32 .97 (65 ) (68 )
Leasing and equipment finance .03 .15 .17 .95 .15 (12 ) (12 )
Inventory finance - .08 .05 .12 .06 (8 ) (6 )
Auto finance .37 .50 .61 .30 .14 (13 ) 23
Other 16.05 9.01 N.M. N.M. N.M. 704 N.M.
Total .70 1.06 1.18 2.74 1.18 (36 ) (48 )
 
(1) Annualized.
N.M. Not Meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)
           
Three Months Ended June 30,
2013 2012
Average Yields and Average Yields and
Balance Interest

Rates(1)(2)
Balance Interest

Rates(1)(2)
ASSETS:
Investments and other $ 735,078 $ 3,761 2.05 % $ 430,084 $ 2,654 2.48 %
U.S. Government sponsored entities:
Mortgage-backed securities, fixed rate 654,968 4,636 2.83 733,796 5,813 3.17
U.S. Treasury securities 494 - .07 - - -
Other securities   93   1 2.54   225   3 4.14
Total securities available for sale (3)   655,555   4,637 2.83   734,021   5,816 3.17
Loans and leases held for sale 116,390 2,535 8.74 44,788 979 8.80
Loans and leases:
Consumer real estate:
Fixed-rate 3,809,066 55,977 5.89 4,365,670 63,432 5.84
Variable-rate   2,621,619   33,545 5.13   2,427,745   30,202 5.00
Total consumer real estate   6,430,685   89,522 5.58   6,793,415   93,634 5.54
Commercial:
Fixed- and adjustable-rate 2,392,315 31,254 5.24 2,730,085 37,242 5.49
Variable-rate   944,091   8,354 3.55   761,964   7,550 3.99
Total commercial   3,336,406   39,608 4.76   3,492,049   44,792 5.16
Leasing and equipment finance 3,236,799 39,990 4.94 3,145,914 43,109 5.48
Inventory finance 1,875,810 27,860 5.96 1,571,004 23,690 6.07
Auto finance 823,102 10,193 4.97 223,893 3,835 6.89
Other   13,060   263 8.10   17,647   336 7.66
Total loans and leases (4)   15,715,862   207,436 5.29   15,243,922   209,396 5.52
Total interest-earning assets   17,222,885   218,369 5.08   16,452,815   218,845 5.34
Other assets (5)   1,110,213   1,202,003
Total assets $ 18,333,098 $ 17,654,818
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,476,173 $ 1,316,767
Small business 752,395 725,052
Commercial and custodial   326,773   310,321
Total non-interest bearing deposits   2,555,341   2,352,140
Interest-bearing deposits:
Checking 2,351,652 377 .06 2,306,810 883 .15
Savings 6,059,640 2,790 .18 6,031,015 5,164 .34
Money market   791,859   547 .28   748,016   718 .39
Subtotal 9,203,151 3,714 .16 9,085,841 6,765 .30
Certificates of deposit   2,360,881   5,137 .87   1,608,653   3,432 .86
Total interest-bearing deposits   11,564,032   8,851 .31   10,694,494   10,197 .38
Total deposits   14,119,373   8,851 .25   13,046,634   10,197 .31
Borrowings:
Short-term borrowings 7,314 8 .44 705,888 535 .30
Long-term borrowings   1,879,576   6,705 1.43   1,986,182   9,259 1.87
Total borrowings   1,886,890   6,713 1.42   2,692,070   9,794 1.46
Total interest-bearing liabilities   13,450,922   15,564 .46   13,386,564   19,991 .60
Total deposits and borrowings   16,006,263   15,564 .39   15,738,704   19,991 .51
Other liabilities   420,398   335,113
Total liabilities   16,426,661   16,073,817

Total TCF Financial Corp. stockholders' equity
1,886,138 1,563,158
Non-controlling interest in subsidiaries   20,299   17,843
Total equity   1,906,437   1,581,001
Total liabilities and equity $ 18,333,098 $ 17,654,818
Net interest income and margin $ 202,805 4.72 $ 198,854 4.86
 
(1) Annualized.
(2) Interest and yields are presented on a fully tax equivalent basis.
(3) Average balances and yields of securities available for sale are based upon historical amortized cost and exclude equity securities.
(4) Average balances of loans and leases include non-accrual loans and leases, and are presented net of unearned income.
(5) Includes operating leases.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)
           
Six Months Ended June 30,
2013 2012
Average Yields and Average Yields and
Balance Interest

Rates(1)(2)
Balance Interest

Rates(1)(2)
ASSETS:
Investments and other $ 774,987 $ 7,007 1.82 % $ 587,802 $ 5,042 1.72 %
U.S. Government sponsored entities:
Mortgage-backed securities, fixed rate 664,858 9,430 2.84 1,410,407 24,924 3.53
U.S. Treasury securities 696 - .07 - - -
Other securities   100   2 2.52   227   4 4.13
Total securities available for sale (3)   665,654   9,432 2.83   1,410,634   24,928 3.53
Loans and leases held for sale 135,472 5,139 7.65 25,330 1,024 8.13
Loans and leases:
Consumer real estate:
Fixed-rate 3,862,590 113,035 5.90 4,404,410 129,584 5.92
Variable-rate   2,630,618   66,627 5.11   2,414,829   60,270 5.02
Total consumer real estate   6,493,208   179,662 5.58   6,819,239   189,854 5.60
Commercial:
Fixed- and adjustable-rate 2,434,960 63,808 5.28 2,733,967 75,452 5.55
Variable-rate   906,107   15,868 3.53   740,918   15,062 4.09
Total commercial   3,341,067   79,676 4.81   3,474,885   90,514 5.24
Leasing and equipment finance 3,218,252 80,903 5.03 3,137,122 87,109 5.55
Inventory finance 1,780,058 53,465 6.06 1,353,469 42,416 6.30
Auto finance 747,022 18,835 5.08 154,728 5,418 7.04
Other   13,348   539 8.15   17,612   705 8.04
Total loans and leases (4)   15,592,955   413,080 5.33   14,957,055   416,016 5.59
Total interest-earning assets   17,169,068   434,658 5.10   16,980,821   447,010 5.29
Other assets (5)   1,118,397   1,290,585
Total assets $ 18,287,465 $ 18,271,406
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,451,381 $ 1,338,539
Small business 748,304 716,734
Commercial and custodial   328,373   307,427
Total non-interest bearing deposits   2,528,058   2,362,700
Interest-bearing deposits:
Checking 2,330,078 874 .08 2,260,499 1,785 .16
Savings 6,074,949 6,159 .20 5,956,874 10,602 .36
Money market   803,551   1,177 .30   705,255   1,328 .38
Subtotal 9,208,578 8,210 .18 8,922,628 13,715 .31
Certificates of deposit   2,342,178   10,322 .89   1,372,164   5,543 .81
Total interest-bearing deposits   11,550,756   18,532 .32   10,294,792   19,258 .38
Total deposits   14,078,814   18,532 .27   12,657,492   19,258 .31
Borrowings:
Short-term borrowings 7,966 16 .42 571,019 865 .30
Long-term borrowings   1,903,227   13,475 1.42   2,901,673   47,224 3.27
Total borrowings   1,911,193   13,491 1.42   3,472,692   48,089 2.78
Total interest-bearing liabilities   13,461,949   32,023 .48   13,767,484   67,347 .98
Total deposits and borrowings   15,990,007   32,023 .40   16,130,184   67,347 .84
Other liabilities   404,571   435,210
Total liabilities   16,394,578   16,565,394

Total TCF Financial Corp. stockholders' equity
1,874,348 1,690,337
Non-controlling interest in subsidiaries   18,539   15,675
Total equity   1,892,887   1,706,012
Total liabilities and equity $ 18,287,465 $ 18,271,406
Net interest income and margin $ 402,635 4.72 $ 379,663 4.49
 
(1) Annualized.
(2) Interest and yields are presented on a fully tax equivalent basis.
(3) Average balances and yields of securities available for sale are based upon historical amortized cost and exclude equity securities.
(4) Average balances of loans and leases include non-accrual loans and leases, and are presented net of unearned income.
(5) Includes operating leases.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per-share data)
(Unaudited)
         
Three Months Ended
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2013 2013 2012 2012 2012
Interest income:
Loans and leases $ 206,675 $ 204,905 $ 210,490 $ 210,140 $ 208,766
Securities available for sale 4,637 4,795 4,615 5,607 5,816
Investments and other   6,296     5,850     3,922     4,105   3,633
Total interest income   217,608     215,550     219,027     219,852   218,215
Interest expense:
Deposits 8,851 9,681 10,972 10,757 10,197
Borrowings   6,713     6,778     6,992     8,536   9,794
Total interest expense   15,564     16,459     17,964     19,293   19,991
Net interest income 202,044 199,091 201,063 200,559 198,224
Provision for credit losses   32,591     38,383     48,520     96,275   54,106

Net interest income after provision for credit losses
  169,453     160,708     152,543     104,284   144,118
Non-interest income:
Fees and service charges 41,572 39,323 44,262 43,745 48,090
Card revenue 13,270 12,417 12,974 12,927 13,530
ATM revenue   5,828     5,505     5,584     6,122   6,276
Subtotal 60,670 57,245 62,820 62,794 67,896
Leasing and equipment finance 22,874 16,460 26,149 20,498 23,207
Gain on sales of auto loans 8,135 7,146 6,869 7,486 5,496
Gain on sale of consumer real estate loans 4,069 8,126 854 4,559 -
Other   4,035     3,726     3,973     3,688   3,168
Fees and other revenue 99,783 92,703 100,665 99,025 99,767
Gains on securities, net   -     -     (528 )   13,033   13,116
Total non-interest income   99,783     92,703     100,137     112,058   112,883
Non-interest expense:
Compensation and employee benefits 105,537 104,229 101,678 98,409 97,787
Occupancy and equipment 33,062 32,875 32,809 33,006 32,731
FDIC insurance 8,362 7,710 8,671 6,899 8,469
Operating lease depreciation 6,150 5,635 5,905 6,325 6,417
Advertising and marketing 5,532 5,732 4,303 4,248 5,404
Deposit account premiums 600 602 523 485 1,690
Other   41,946     37,939     53,472     36,173   36,956
Subtotal 201,189 194,722 207,361 185,545 189,454
Foreclosed real estate and repossessed assets, net 7,555 10,167 7,582 10,670 12,059
Other credit costs, net   (228 )   (837 )   (894 )   593   1,476
Total non-interest expense   208,516     204,052     214,049     196,808   202,989
Income before income tax expense 60,720 49,359 38,631 19,534 54,012
Income tax expense   19,444     17,559     10,540     6,304   20,542
Income after income tax expense 41,276 31,800 28,091 13,230 33,470
Income attributable to non-controlling interest   2,372     1,826     1,306     1,536   1,939
Net income attributable to TCF Financial Corporation   38,904     29,974     26,785     11,694   31,531
Preferred stock dividends   4,847     4,524     3,234     2,372   -
Net income available to common stockholders $ 34,057   $ 25,450   $ 23,551   $ 9,322 $ 31,531
 
Net income per common share:
Basic $ .21 $ .16 $ .15 $ .06 $ .20
Diluted .21 .16 .15 .06 .20
 
Dividends declared per common share $ .05 $ .05 $ .05 $ .05 $ .05
 
Financial Highlights:
Pre-tax pre-provision profit(1) $ 93,311 $ 87,742 $ 87,151 $ 115,809 $ 108,118
Return on average assets(2) .90 % .70 % .63 % .30 % .76 %
Return on average common equity(2) 8.39 6.36 5.93 2.36 8.13
Net interest margin(2) 4.72 4.72 4.79 4.85 4.86
 
(1) Pre-tax pre-provision profit (''PTPP'') is calculated as total revenues less non-interest expense.
(2) Annualized.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS
(In thousands)
(Unaudited)
         
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2013 2013 2012 2012 2012
ASSETS
Cash and due from banks $ 871,288 $ 945,928 $ 777,995 $ 628,697 $ 555,590
Investments 120,427 122,014 122,970 123,223 149,813
U.S. Government sponsored entities:
Mortgage-backed securities 655,795 676,296 696,506 701,155 736,251
U.S. Treasury securities 494 900 - - -
Other securities   2,575     2,400     2,150     2,224     2,097  
Total securities available for sale 658,864 679,596 698,656 703,379 738,348
Loans and leases held for sale 116,390 154,766 53,140 80,549 44,788
Loans and leases:
Consumer real estate:
Fixed-rate 3,809,066 3,916,709 4,012,702 4,197,903 4,365,670
Variable-rate   2,621,619     2,639,717     2,650,958     2,531,351     2,427,745  
Total consumer real estate 6,430,685 6,556,426 6,663,660 6,729,254 6,793,415
Commercial:
Fixed- and adjustable-rate 2,392,315 2,478,079 2,614,824 2,682,193 2,730,085
Variable-rate   944,091     867,701     837,944     855,918     761,964  
Total commercial 3,336,406 3,345,780 3,452,768 3,538,111 3,492,049
Leasing and equipment finance 3,236,799 3,199,499 3,184,540 3,164,592 3,145,914
Inventory finance 1,875,810 1,686,364 1,570,829 1,440,298 1,571,004
Auto finance 823,102 670,096 504,565 367,271 223,893
Other   13,060     13,641     14,704     16,280     17,647  
Total loans and leases   15,715,862     15,471,806     15,391,066     15,255,806     15,243,922  
Allowance for loan and lease losses   (264,403 )   (265,392 )   (269,578 )   (264,626 )   (266,187 )
Net loans and leases 15,451,459 15,206,414 15,121,488 14,991,180 14,977,735
Premises and equipment, net 440,383 440,437 442,287 442,456 438,438
Goodwill 225,640 225,640 225,640 225,640 225,640
Other assets   448,647     469,757     506,212     521,397     524,466  
Total assets $ 18,333,098   $ 18,244,552   $ 17,948,388   $ 17,716,521   $ 17,654,818  
 
LIABILITIES AND EQUITY
Non-interest-bearing deposits:
Retail $ 1,476,173 $ 1,426,314 $ 1,294,027 $ 1,275,722 $ 1,316,767
Small business 752,395 744,168 775,334 746,511 725,052
Commercial and custodial   326,773     329,992     329,919     324,739     310,321  
Total non-interest bearing deposits 2,555,341 2,500,474 2,399,280 2,346,972 2,352,140
Interest-bearing deposits:
Checking 2,351,652 2,308,263 2,248,481 2,255,561 2,306,810
Savings 6,059,640 6,090,427 6,083,168 6,153,079 6,031,015
Money market   791,859     815,374     819,596     848,899     748,016  
Subtotal 9,203,151 9,214,064 9,151,245 9,257,539 9,085,841
Certificates of deposit   2,360,881     2,323,267     2,206,173     1,953,208     1,608,653  
Total interest-bearing deposits   11,564,032     11,537,331     11,357,418     11,210,747     10,694,494  
Total deposits   14,119,373     14,037,805     13,756,698     13,557,719     13,046,634  
Borrowings:
Short-term borrowings 7,314 8,631 47,715 65,531 705,888
Long-term borrowings   1,879,576     1,927,139     1,928,507     1,985,094     1,986,182  
Total borrowings 1,886,890 1,935,770 1,976,222 2,050,625 2,692,070
Accrued expenses and other liabilities   420,398     390,825     434,471     343,336     335,113  
Total liabilities   16,426,661     16,364,400     16,167,391     15,951,680     16,073,817  
Equity:
Preferred stock 263,240 263,240 180,359 166,721 10,993
Common stock 1,642 1,637 1,634 1,631 1,625
Additional paid-in capital 760,256 753,583 749,445 742,598 738,089
Retained earnings, subject to certain restrictions 903,300 880,582 866,895 862,570 846,349
Accumulated other comprehensive (loss) income (758 ) 5,624 13,131 19,321 11,601
Treasury stock at cost and other   (41,542 )   (41,273 )   (43,462 )   (42,890 )   (45,499 )
Total TCF Financial Corporation stockholders' equity 1,886,138 1,863,393 1,768,002 1,749,951 1,563,158
Non-controlling interest in subsidiaries   20,299     16,759     12,995     14,890     17,843  
Total equity   1,906,437     1,880,152     1,780,997     1,764,841     1,581,001  
Total liabilities and equity $ 18,333,098   $ 18,244,552   $ 17,948,388   $ 17,716,521   $ 17,654,818  
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY YIELDS AND RATES(1)(2)
(Unaudited)
         
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2013 2013 2012 2012 2012
ASSETS
 
Investments and other 2.05 % 1.61 % 1.77 % 2.09 % 2.48 %
U.S. Government sponsored entities:
Mortgage-backed securities, fixed-rate 2.83 2.84 2.64 3.15 3.17
U.S. Treasury securities .07 .07 - - -
Other securities 2.54 2.49 2.52 3.32 4.14
Total securities available for sale(3) 2.83 2.84 2.64 3.15 3.17
Loans and leases held for sale 8.74 6.82 8.00 7.89 8.80
Loans and leases:
Consumer real estate:
Fixed-rate 5.89 5.91 5.95 5.94 5.84
Variable-rate 5.13 5.08 5.07 5.04 5.00
Total consumer real estate 5.58 5.58 5.60 5.60 5.54
Commercial:
Fixed- and adjustable-rate 5.24 5.33 5.60 5.57 5.49
Variable-rate 3.55 3.51 3.55 3.77 3.99
Total commercial 4.76 4.86 5.10 5.14 5.16
Leasing and equipment finance 4.94 5.11 5.24 5.33 5.48
Inventory finance 5.96 6.16 6.11 6.19 6.07
Auto finance 4.97 5.23 5.53 5.97 6.89
Other 8.10 8.19 8.31 7.83 7.66
Total loans and leases 5.29 5.38 5.47 5.50 5.52
 
Total interest-earning assets 5.08 5.11 5.21 5.32 5.34
 
LIABILITIES
 
Interest-bearing deposits:
Checking .06 .09 .11 .12 .15
Savings .18 .22 .29 .31 .34
Money market .28 .31 .35 .38 .39

Subtotal
.16 .20 .25 .27 .30
Certificates of deposit .87 .90 .92 .92 .86
Total interest-bearing deposits .31 .34 .38 .38 .38
Total deposits .25 .28 .32 .32 .31
Borrowings:
Short-term borrowings .44 .40 .41 .24 .30
Long-term borrowings 1.43 1.41 1.44 1.71 1.87
Total borrowings 1.42 1.41 1.41 1.66 1.46
 
Total interest-bearing liabilities .46 .49 .54 .58 .60
 
Net interest margin 4.72 4.72 4.79 4.85 4.86
 
(1) Annualized.
(2) Yields are presented on a fully tax equivalent basis.
(3) Average yields of securities available for sale are based upon the historical amortized cost and excludes equity securities.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(1)
(Dollars in thousands)
(Unaudited)
 
  At Jun. 30,   At Dec. 31,
2013 2012
Computation of tangible realized common equity to tangible assets:
Total equity $ 1,906,181 $ 1,876,643
Less: Non-controlling interest in subsidiaries   16,662     13,270
Total TCF Financial Corporation stockholders’ equity 1,889,519 1,863,373
Less:
Preferred stock 263,240 263,240
Goodwill 225,640 225,640
Other intangibles 7,345 8,674
Accumulated other comprehensive (loss) income   (18,333 )   12,443
Tangible realized common equity $ 1,411,627   $ 1,353,376
 
Total assets $ 18,399,607 $ 18,225,917
Less:
Goodwill 225,640 225,640
Other intangibles   7,345     8,674
Tangible assets $ 18,166,622   $ 17,991,603
 
Tangible realized common equity to tangible assets 7.77 % 7.52 %
 
At Jun. 30, At Dec. 31,
  2013     2012
Computation of tier 1 risk-based capital ratio:
Total tier 1 capital $ 1,695,092 $ 1,633,336
Total risk-weighted assets 15,038,256 14,733,203
Total tier 1 risk-based capital ratio 11.27 % 11.09 %
 
Computation of tier 1 common capital ratio:
Total tier 1 capital $ 1,695,092 $ 1,633,336
Less:
Preferred stock 263,240 263,240
Qualifying non-controlling interest in subsidiaries   16,662     13,270
Total tier 1 common capital $ 1,415,190   $ 1,356,826
 
Total tier 1 common capital ratio 9.41 % 9.21 %

 

(1) When evaluating capital adequacy and utilization, management considers financial measures such as Tangible Realized Common Equity to Tangible Assets and the Tier 1 Common Capital Ratio. These measures are non-GAAP financial measures and are viewed by management as useful indicators of capital levels available to withstand unexpected market or economic conditions, and also provide investors, regulators, and other users with information to be viewed in relation to other banking institutions.
 

Copyright Business Wire 2010

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