TCF Reports Quarterly Net Income of $23.6 Million, or 15 Cents Per Share

WAYZATA, Minn.--()--TCF Financial Corporation (NYSE: TCB):

2012 HIGHLIGHTS

- Net interest margin of 4.65 percent, up 66 basis points from 2011

- Total loans and leases of $15.4 billion, up 9 percent from 2011

- Average deposits increased $1.2 billion, or 10.1 percent from 2011

FOURTH QUARTER HIGHLIGHTS

- Net interest margin of 4.79 percent, up 87 basis points from the fourth quarter of 2011

- Pre-tax pre-provision profit of $87.2 million, up 3.5 percent from the fourth quarter of 2011

- Average deposits increased $1.7 billion, or 13.7 percent from the fourth quarter of 2011

- Non-performing assets decreased $65.8 million, or 12.1 percent from the third quarter of 2012

- Over 60-day accruing delinquent loans improved by $3.2 million, or 3.2 percent from the third quarter of 2012

- Announced common and preferred stock dividend payments, payable February 28, 2013 and March 1, 2013, respectively

                                                         
Summary of Financial Results                                                  

 

 

Table 1

($ in thousands, except per-share data)         Percent Change      
4Q 3Q

4Q

4Q12 vs

  4Q12 vs

YTD

YTD

Percent

2012

 

2012

   

2011

 

3Q12

 

4Q11

 

2012(3)

     

2011

 

Change

Net income (loss) $ 23,551 $ 9,322 $ 16,443 152.6 % 43.2 % $ (218,490 ) $ 109,394 N.M.
Net interest income 201,063 200,559 173,434 .3 15.9 780,019 699,688 11.5 %
Pre-tax pre-provision profit(1) 87,151 115,809 84,191 (24.7 ) 3.5 381,656 379,671 .5
Diluted earnings (loss) per common share .15 .06 .10 150.0 50.0 (1.37 ) .71 N.M.
 

Financial Ratios(2)

Return on average assets .63 % .30 % .37 % (1.14 ) % .61 %
Return on average common equity 5.93 2.36 3.55 (13.33 ) 6.32
Net interest margin 4.79 4.85 3.92 4.65 3.99

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

1.18 2.74 1.63 1.54 1.45
 
N.M. = Not meaningful.

(1) Pre-tax pre-provision profit (''PTPP'') is calculated as total revenues less non-interest expense. 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.

(2) Annualized.
(3) Includes a net, after-tax charge of $295.8 million, or $1.87 per share, related to the balance sheet repositioning.
 

TCF Financial Corporation (“TCF”) (NYSE: TCB) today reported net income for the fourth quarter of 2012 of $23.6 million, compared with net income of $16.4 million in the fourth quarter of 2011 and net income of $9.3 million for the third quarter of 2012. Diluted earnings per common share was 15 cents for the fourth quarter of 2012, compared with 10 cents in the fourth quarter of 2011 and 6 cents in the third quarter of 2012.

TCF reported a net loss of $218.5 million for the year ended December 31, 2012, compared with net income of $109.4 million for the same period in 2011. The net loss for the year ended December 31, 2012 included (i) 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 and (ii) a net after-tax charge of $20.6 million, or 13 cents per common share, related to the implementation of clarifying bankruptcy-related regulatory guidance adopted in the third quarter, which requires loans subject to a borrower’s discharge from personal liability where the borrower has not reaffirmed the debt following Chapter 7 bankruptcy to be reported as non-accrual loans, and written down to the estimated collateral value, regardless of delinquency status. Diluted loss per common share for 2012 was $1.37, compared with diluted earnings per common share of 71 cents in 2011.

Chairman’s Statement

“TCF’s building and investing year was highlighted by several key actions, including the balance sheet repositioning, growth of our national lending businesses and a return to TCF Free Checking,” said William A. Cooper, Chairman and Chief Executive Officer. “I am pleased by the progress TCF made throughout 2012. In the fourth quarter we completed our second preferred stock issuance in 2012, saw continued checking account growth, reduced charge-offs and provision and an overall improvement in credit quality.

“The asset growth in our national platforms, the encouraging signs we are seeing in credit quality, and the execution on TCF Free Checking have provided significant momentum. I am confident that we will be able to continue to execute on the strategies we have put in place and deliver results to our stockholders.”

Revenue  
                                                                       
Total Revenue                                                             Table 2  
          Percent Change      
4Q 3Q 4Q 4Q12 vs   4Q12 vs YTD YTD Percent
($ in thousands)     2012         2012       2011     3Q12   4Q11     2012       2011     Change  
Net interest income $ 201,063       $ 200,559     $ 173,434 .3 % 15.9 % $ 780,019     $ 699,688 11.5 %
Fees and other revenue:
Fees and service charges 44,262 43,745 51,002 1.2 (13.2 ) 177,953 219,363 (18.9 )
Card revenue 12,974 12,927 13,643 .4 (4.9 ) 52,638 96,147 (45.3 )
ATM revenue   5,584         6,122       6,608 (8.8 ) (15.5 )   24,181       27,927 (13.4 )
Total banking fees 62,820 62,794 71,253 N.M. (11.8 ) 254,772 343,437 (25.8 )
Leasing and equipment finance 26,149 20,498 18,492 27.6 41.4 92,721 89,167 4.0
Gains on sales of auto loans 6,869 7,486 1,133 (8.2 ) N.M. 22,101 1,133 N.M.
Gains on sales of consumer real estate loans 854 4,559 - (81.3 ) N.M. 5,413 - N.M.
Other   3,973         3,688       1,570 7.7 153.1   13,184       3,434 N.M.
Total fees and other revenue   100,665         99,025       92,448 1.7 8.9   388,191       437,171 (11.2 )
Subtotal 301,728 299,584 265,882 .7 13.5 1,168,210 1,136,859 2.8
(Losses) gains on securities, net   (528 )       13,033       5,842 (104.1 ) (109.0 )   102,232       7,263 N.M.
Total revenue $ 301,200       $ 312,617     $ 271,724 (3.7 ) 10.8 $ 1,270,442     $ 1,144,122 11.0
 
Net interest margin(1) 4.79 % 4.85 % 3.92 % 4.65 % 3.99 %

Fees and other revenue as a % of total revenue

33.42 31.68 34.02 30.56 38.21
 
N.M. = Not meaningful.
(1) Annualized.                                                                  
 

Net Interest Income

  • Net interest income for the fourth quarter of 2012 increased $27.6 million, or 15.9 percent, compared with the fourth quarter of 2011. The increase was due to the balance sheet repositioning completed in the first quarter of 2012, which resulted in a $37.3 million reduction to the cost of borrowings, partially offset by a $17.1 million reduction of interest income on lower levels of mortgage-backed securities. Additionally, net interest income increased due to higher average loan balances in our national lending businesses, which includes leasing and equipment finance, inventory finance and auto finance businesses. These increases were offset by reduced interest income due to both lower yields and lower average balances of consumer real estate and commercial loans.
  • Net interest margin in the fourth quarter of 2012 was 4.79 percent, compared with 3.92 percent in the fourth quarter of 2011 and 4.85 percent in the third quarter of 2012. The increase from the fourth quarter of 2011 was primarily due to lower average costs of borrowings as a result of the balance sheet repositioning. The decrease from the third quarter of 2012 was due to lower yields on new originations in the national lending portfolio in the current low rate environment.

Non-interest Income

  • Banking fees and service charges in the fourth quarter of 2012 were $44.3 million, down $6.7 million, or 13.2 percent, from the fourth quarter of 2011. The decrease in banking fees and service charges from the fourth quarter of 2011 was primarily due to changes in our deposit product fee structure and the elimination of the monthly maintenance fee. Banking fees and service charges in the fourth quarter of 2012 increased $517 thousand from the third quarter of 2012 as seasonal decreases in incident rates were offset by an increase in checking accounts and additional fees related to accounts acquired from Prudential.
  • Leasing and equipment finance revenue was $26.1 million during fourth quarter of 2012, up $7.7 million, or 41.4 percent, from the fourth quarter of 2011, and up $5.7 million, or 27.6 percent from the third quarter of 2012. The increases were primarily due to sales-type lease revenue growth in the leasing and equipment finance portfolio as a result of customer-driven events.
  • TCF sold $159.6 million, $37.4 million and $161.1 million of auto loans during the fourth quarters of 2012 and 2011, and the third quarter of 2012, respectively, resulting in gains in the same respective periods.
  • In the fourth quarter of 2012, TCF sold $25.8 million of consumer real estate loans, recognizing a gain of $854 thousand. In the third quarter of 2012, TCF sold $136.7 million of consumer real estate loans, recognizing a gain of $4.6 million.
Loans and Leases                
                                                       
Period-End and Average Loans and Leases                         Table 3  
  Percent Change
($ in thousands) 4Q 3Q 4Q 4Q12 vs 4Q12 vs YTD YTD Percent
  2012     2012     2011   3Q12   4Q11     2012     2011   Change  
Period-End:
Consumer real estate $ 6,674,501 $ 6,648,036 $ 6,895,291 .4 % (3.2 ) %
Commercial 3,405,235 3,511,234 3,449,492 (3.0 ) (1.3 )
Leasing and equipment finance 3,198,017 3,157,977 3,142,259 1.3 1.8
Inventory finance 1,567,214 1,466,269 624,700 6.9 150.9
Auto finance 552,833 407,091 3,628 35.8 N.M.
Other   27,924     27,610     34,885 1.1 (20.0 )
Total $ 15,425,724   $ 15,218,217   $ 14,150,255 1.4 9.0
 
Average:
Consumer real estate $ 6,663,660 $ 6,729,254 $ 6,933,051 (1.0 ) (3.9 ) $ 6,757,512 $ 7,013,281 (3.6 ) %
Commercial 3,452,768 3,538,111 3,476,660 (2.4 ) (.7 ) 3,485,218 3,565,085 (2.2 )
Leasing and equipment finance 3,184,540 3,164,592 3,043,329 .6 4.6 3,155,946 3,074,207 2.7
Inventory finance 1,570,829 1,440,298 766,885 9.1 104.8 1,434,643 856,271 67.5
Auto finance 504,565 367,271 1,442 37.4 N.M. 296,083 363 N.M.
Other   14,704     16,280     17,944 (9.7 ) (18.1 )   16,549     19,324 (14.4 )
Total $ 15,391,066   $ 15,255,806   $ 14,239,311 .9 8.1 $ 15,145,951   $ 14,528,531 4.2
 
N.M. = Not meaningful.                                                    
 
  • Loans and leases were $15.4 billion at December 31, 2012, an increase of $1.3 billion, or 9 percent, compared with December 31, 2011, and up slightly compared with September 30, 2012. The increase from 2011 was due to growth in inventory finance, primarily from the new program with Bombardier Recreational Products, Inc. (“BRP”), the continued growth of auto finance, acquired in November 2011, and growth in leasing and equipment finance, partially offset by decreases in consumer real estate loans driven by sales in the third and fourth quarter of 2012 and a decline in origination of first mortgages.
  • Auto finance increased its portfolio of managed loans, which includes portfolio loans, loans held for sale, and loans sold and serviced for others, to $1.3 billion as of December 31, 2012, an increase of $242.1 million from September 30, 2012, and an increase of $864.5 million from December 31, 2011. At December 31, 2012, auto finance had 6,176 active dealers, compared with 6,087 at September 30, 2012 and 3,451 at December 31, 2011.
  • Total loan and lease originations were $2.8 billion for the fourth quarter of 2012, an increase of $1.4 billion, or 105.1 percent, compared with the fourth quarter of 2011. This increase was primarily due to strong growth in our national lending businesses as it expanded its origination sources through new segments, programs and dealers. Total loan and lease originations increased $378.9 million, or 15.5 percent, compared with the third quarter of 2012, due to increases in the inventory finance portfolio as well as increased originations of commercial and leasing and equipment finance loans.
  • Quarterly average loans and leases were $15.4 billion for the quarter ended December 31, 2012, an increase of $1.2 billion, or 8.1 percent, compared with the quarter ended December 31, 2011. The increase from the quarter ended December 31, 2011 was primarily due to growth in the inventory finance portfolio due to the funding of dealers of BRP products, as well as the growth in the auto finance portfolio since its acquisition in November 2011.

Credit Quality

(Table 4 - Credit Trends: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50544997&lang=en)

  • Over 60-day delinquencies improved for the fourth consecutive quarter. Net charge-offs decreased $58.9 million from the third quarter, primarily due to the $43.9 million in charge-offs recorded at September 30, 2012 related to the implementation of clarifying bankruptcy-related regulatory guidance. Non-performing assets decreased from the third quarter due to decreases in commercial non-accrual loans and decreases in balances of commercial and consumer real estate other real estate owned.
  • The over 60-day delinquency rate at December 31, 2012, was .64 percent, down from .85 percent at December 31, 2011. The decrease was primarily a result of reduced delinquencies in the consumer real estate portfolio.
  • Non-accrual loans and leases were $379.5 million at December 31, 2012, a decrease of $42.4 million, or 10 percent, from September 30, 2012 and an increase of $81.1 million, or 27.2 percent, from December 31, 2011. The decrease from September 30, 2012 was primarily due to $27.7 million of commercial loans returning to accrual status, as well as payments received on commercial non-accrual loans. The increase from December 31, 2011 was primarily due to the implementation of clarifying bankruptcy-related regulatory guidance in the third quarter of 2012. At December 31, 2012, $117.7 million of non-accrual assets were associated with the clarifying bankruptcy-related guidance of which 87.5% were less than 60 days past due.
  • Other real estate owned was $97 million at December 31, 2012, a decrease of $23.4 million from September 30, 2012, and a decrease of $37.9 million from December 31, 2011. Both decreases were primarily due to a decrease in the number of consumer and commercial properties owned driven by increased sales activity.
  • Provision for credit losses was $48.5 million, a decrease of $47.8 million from the third quarter of 2012 and a decrease of $10.7 million from the fourth quarter of 2011. The decrease from the third quarter of 2012 was primarily due to the non-recurring impact resulting from the implementation of bankruptcy-related regulatory guidance in the third quarter. The decrease from the fourth quarter of 2011 was primarily due to decreasing net charge-offs.
Deposits                
                                                 
Average Deposits                                           Table 5
Percent Change
($ in thousands) 4Q 3Q 4Q 4Q12 vs 4Q12 vs YTD YTD Percent
2012   2012   2011   3Q12   4Q11   2012   2011   Change
 
Checking $ 4,627,627 $ 4,582,088 $ 4,449,640 1.0 % 4.0 % $ 4,602,881 $ 4,499,211 2.3 %
Savings 6,103,302 6,173,524 5,878,392 (1.1 ) 3.8 6,059,237 5,692,324 6.4
Money market   819,596       848,899       662,024   (3.5 ) 23.8   770,104       658,693   16.9
Subtotal 11,550,525 11,604,511 10,990,056 (.5 ) 5.1 11,432,222 10,850,228 5.4
Certificates   2,206,173       1,953,208       1,112,735  

13.0

98.3   1,727,859       1,103,231   56.6
Total average deposits $ 13,756,698     $ 13,557,719     $ 12,102,791   1.5 13.7 $ 13,160,081     $ 11,953,459   10.1
 
Average interest rate on deposits (1) .32 % .32 % .32 % .31 % .38 %
 
 
(1) Annualized.                                                
 
  • Total average deposits for the fourth quarter of 2012 increased $1.7 billion, or 13.7 percent, from the fourth quarter of 2011, primarily due to special programs for certificates of deposits, the assumption of $778 million of deposits from Prudential Bank & Trust, FSB in June 2012 and the reintroduction of free checking.
  • The average interest rate on deposits in the fourth quarter of 2012 was .32 percent and has remained relatively flat for the past five quarters.
Non-interest Expense                
                                                         
Non-interest Expense                                                 Table 6  
  Percent Change
($ in thousands) 4Q 3Q 4Q 4Q12 vs 4Q12 vs YTD YTD Percent
  2012     2012     2011   3Q12   4Q11     2012     2011   Change  

Compensation and employee benefits

$ 101,678 $ 98,409 $ 82,595 3.3 % 23.1 % $ 393,841 $ 348,792 12.9 %
Occupancy and equipment 32,809 33,006 32,366 (.6 ) 1.4 130,792 126,437 3.4
FDIC insurance 8,671 6,899 6,647 25.7 30.4 30,425 28,747 5.8
Advertising and marketing 4,303 4,248 2,250 1.3 91.2 16,572 10,034 65.2
Deposit account premiums 523 485 6,482 7.8 (91.9 ) 8,669 22,891 (62.1 )
Operating lease depreciation 5,905 6,325 6,811 (6.6 ) (13.3 ) 25,378 30,007 (15.4 )
Other   53,472       36,173     39,148   47.8 36.6   163,897     145,489 12.7
Core operating expenses 207,361 185,545 176,299 11.8 17.6 769,574 712,397 8.0
Loss on termination of debt - - - - - 550,735 - N.M.

Foreclosed real estate and repossessed assets, net

7,582 10,670 11,323 (28.9 ) (33.0 ) 41,358 49,238 (16.0 )
Other credit costs, net   (894 )     593     (89 ) N.M. N.M.   887     2,816 (68.5 )
Total non-interest expense $ 214,049     $ 196,808   $ 187,533   8.8 14.1 $ 1,362,554   $ 764,451 78.2
 
N.M. = Not meaningful.                                                      
 
  • Compensation and employee benefits expense for the fourth quarter of 2012 increased $19.1 million, or 23.1 percent, from the fourth quarter of 2011. The increase was primarily due to increasing staff levels to support the growth of Gateway One, acquired in November 2011, as well as increased staffing levels to support the increased assets of the BRP program in Inventory Finance.
  • The combined expense associated with advertising, marketing and deposit account premiums decreased $3.9 million from the fourth quarter of 2011. The decrease from the fourth quarter of 2011 is attributable to TCF’s shift in strategy for acquiring high quality accounts, through the reintroduction of a free checking product, versus the utilization of deposit account premiums.
  • Included in other expense is $10 million for the civil money penalty assessed pursuant to previously disclosed deficiencies in TCF’s Bank Secrecy Act compliance program.
Capital        
                             
Capital Information                         Table 7  
At period end
($ in thousands, except per-share data) 4Q 4Q
2012 2011
Total equity $ 1,876,643 $ 1,878,627
Book value per common share $ 9.79 $ 11.65
Tangible realized common equity to tangible assets(1) 7.52 % 8.42 %
 
Risk-based capital
Tier 1 $ 1,633,336 11.09 % $ 1,706,926 12.67 %
Total(2) 2,007,835 13.63 1,994,875 14.80
 
Tier 1 leverage capital $ 1,633,336 9.21 % $ 1,706,926 9.15 %
 
Tier 1 common capital(3) $ 1,356,826 9.21 % $ 1,581,432 11.74 %
 

(1) Excludes the impact of goodwill, other intangibles and accumulated other comprehensive income (loss) (see “Reconciliation of GAAP to Non-GAAP 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, qualifying trust preferred securities and qualifying non-controlling interest in subsidiaries (see “Reconciliation of GAAP to Non-GAAP Measures” table).
   
 
  • During the fourth quarter of 2012, TCF issued $100 million of 6.45% Series B Non-Cumulative Perpetual Preferred Stock, par value $.01 per share, which qualifies as Tier 1 capital.
  • On January 24, 2013, the Board of Directors of TCF declared a regular quarterly cash dividend of 5 cents per common share payable on February 28, 2013, to stockholders of record at the close of business on February 15, 2013. TCF also declared a dividend on the 7.50% Series A and 6.45% Series B Non-Cumulative Perpetual Preferred Stock payable on March 1, 2013, to stockholders of record at the close of business on February 15, 2013.

Webcast Information

A live webcast of TCF’s conference call to discuss 2012 year-end and fourth quarter earnings will be hosted at TCF’s website, http://ir.tcfbank.com, on January 30, 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 $18.2 billion in total assets at December 31, 2012. TCF has nearly 430 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 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 or changes in the allowance for loan and lease losses dictated by new market conditions or regulatory requirements; 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 customer opt-in preferences with respect to overdraft fees on point of sale and ATM transactions or the success of TCF’s reintroduction of TCF Free CheckingSM 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, including the announcement on January 10, 2013 by SUPERVALU that it had entered into an agreement to sell several of its supermarket chains, including Jewel-Osco® in which TCF has 157 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; 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 COMPREHENSIVE INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
             
Three Months Ended December 31, Change
2012 2011 $ %
Interest income:
Loans and leases $ 210,490 $ 205,415 $ 5,075 2.5 %
Securities available for sale 4,615 22,559 (17,944 ) (79.5 )
Investments and other 3,922   2,333   1,589   68.1
Total interest income 219,027   230,307   (11,280 ) (4.9 )
Interest expense:
Deposits 10,972 9,791 1,181 12.1
Borrowings 6,992   47,082   (40,090 ) (85.1 )
Total interest expense 17,964   56,873   (38,909 ) (68.4 )
Net interest income 201,063 173,434 27,629 15.9
Provision for credit losses 48,520   59,249   (10,729 ) (18.1 )

Net interest income after provision for credit losses

152,543   114,185   38,358   33.6
Non-interest income:
Fees and service charges 44,262 51,002 (6,740 ) (13.2 )
Card revenue 12,974 13,643 (669 ) (4.9 )
ATM revenue 5,584   6,608   (1,024 ) (15.5 )
Subtotal 62,820 71,253 (8,433 ) (11.8 )
Leasing and equipment finance 26,149 18,492 7,657 41.4
Gain on sales of auto loans 6,869 1,133 5,736 N.M.
Gain on sale of consumer real estate loans 854 - 854 N.M.
Other 3,973   1,570   2,403   153.1
Fees and other revenue 100,665 92,448 8,217 8.9
(Losses) gains on securities, net (528 ) 5,842   (6,370 ) (109.0 )
Total non-interest income 100,137   98,290   1,847   1.9
Non-interest expense:
Compensation and employee benefits 101,678 82,595 19,083 23.1
Occupancy and equipment 32,809 32,366 443 1.4
FDIC insurance 8,671 6,647 2,024 30.4
Advertising and marketing 4,303 2,250 2,053 91.2
Deposit account premiums 523 6,482 (5,959 ) (91.9 )
Operating lease depreciation 5,905 6,811 (906 ) (13.3 )
Other 53,472   39,148   14,324   36.6
Subtotal 207,361 176,299 31,062 17.6
Foreclosed real estate and repossessed assets, net 7,582 11,323 (3,741 ) (33.0 )
Other credit costs, net (894 ) (89 ) (805 ) N.M.
Total non-interest expense 214,049   187,533   26,516   14.1
Income before income tax expense 38,631 24,942 13,689 54.9
Income tax expense 10,540   7,424   3,116   42.0
Income after income tax expense 28,091 17,518 10,573 60.4
Income attributable to non-controlling interest 1,306 1,075 231 21.5
Preferred stock dividends 3,234   -   3,234   N.M.
Net income available to common stockholders 23,551   16,443   7,108   43.2
Other comprehensive loss:

Reclassification adjustment for securities gains included in net income

- (6,130 ) 6,130 (100.0 )

Unrealized holding losses arising during the period on securities available for sale

(8,589 ) (4,334 ) (4,255 ) (98.2 )
Foreign currency hedge 136 (458 ) 594 (129.7 )
Foreign currency translation adjustment (170 ) 443 (613 ) (138.4 )

Recognized postretirement prior service cost and transition obligation

144 305 (161 ) (52.8 )
Income tax expense 2,855   3,890   (1,035 ) (26.6 )
Total other comprehensive loss (5,624 ) (6,284 ) 660   10.5
Comprehensive income $ 17,927   $ 10,159   $ 7,768   76.5
Net income per common share:
Basic $ .15 $ .10 $ .05 50.0
Diluted .15 .10 .05 50.0
 
Dividends declared per common share $ .05 $ .05 $ - -
 

 

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

Basic 159,914 157,829 2,085 1.3
Diluted 160,500 158,152 2,348 1.5
N.M. Not meaningful.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
             
Year Ended December 31, Change
2012 2011 $ %
Interest income:
Loans and leases $ 835,380 $ 844,796 $ (9,416 ) (1.1 ) %
Securities available for sale 35,150 85,188 (50,038 ) (58.7 )
Investments and other 14,093   7,967   6,126   76.9
Total interest income 884,623   937,951   (53,328 ) (5.7 )
Interest expense:
Deposits 40,987 45,108 (4,121 ) (9.1 )
Borrowings 63,617   193,155   (129,538 ) (67.1 )
Total interest expense 104,604   238,263   (133,659 ) (56.1 )
Net interest income 780,019 699,688 80,331 11.5
Provision for credit losses 247,443   200,843   46,600   23.2

Net interest income after provision for credit losses

532,576   498,845   33,731   6.8
Non-interest income:
Fees and service charges 177,953 219,363 (41,410 ) (18.9 )
Card revenue 52,638 96,147 (43,509 ) (45.3 )
ATM revenue 24,181   27,927   (3,746 ) (13.4 )
Subtotal 254,772 343,437 (88,665 ) (25.8 )
Leasing and equipment finance 92,721 89,167 3,554 4.0
Gain on sales of auto loans 22,101 1,133 20,968 N.M.
Gain on sale of consumer real estate loans 5,413 - 5,413 N.M.
Other 13,184   3,434   9,750   N.M.
Fees and other revenue 388,191 437,171 (48,980 ) (11.2 )
Gains on securities, net 102,232   7,263   94,969   N.M.
Total non-interest income 490,423   444,434   45,989   10.3
Non-interest expense:
Compensation and employee benefits 393,841 348,792 45,049 12.9
Occupancy and equipment 130,792 126,437 4,355 3.4
FDIC insurance 30,425 28,747 1,678 5.8
Advertising and marketing 16,572 10,034 6,538 65.2
Deposit account premiums 8,669 22,891 (14,222 ) (62.1 )
Operating lease depreciation 25,378 30,007 (4,629 ) (15.4 )
Other 163,897   145,489   18,408   12.7
Subtotal 769,574 712,397 57,177 8.0
Loss on termination of debt 550,735 - 550,735 N.M.
Foreclosed real estate and repossessed assets, net 41,358 49,238 (7,880 ) (16.0 )
Other credit costs, net 887   2,816   (1,929 ) (68.5 )
Total non-interest expense 1,362,554   764,451   598,103   78.2
(Loss) income before income tax expense (339,555 ) 178,828 (518,383 ) N.M.
Income tax (benefit) expense (132,858 ) 64,441   (197,299 ) N.M.
(Loss) income after income tax expense (206,697 ) 114,387 (321,084 ) N.M.
Income attributable to non-controlling interest 6,187 4,993 1,194 23.9
Preferred stock dividends 5,606   -   5,606   N.M.
Net (loss) income available to common stockholders (218,490 ) 109,394   (327,884 ) N.M.
Other comprehensive (loss) income:

Reclassification adjustment for securities gains included in net income

(89,879 ) (8,045 ) (81,834 ) N.M.

Unrealized holding gains arising during the period on securities available for sale

19,794 122,638 (102,844 ) (83.9 )
Foreign currency hedge (630 ) 261 (891 ) N.M.
Foreign currency translation adjustment 531 (433 ) 964 N.M.

Recognized postretirement prior service cost and transition obligation

123 308 (185 ) (60.1 )
Income tax expense (benefit) 25,678   (42,211 ) 67,889   (160.8 )
Total other comprehensive (loss) income (44,383 ) 72,518   (116,901 ) (161.2 )
Comprehensive (loss) income $ (262,873 ) $ 181,912   $ (444,785 ) N.M.
Net (loss) income per common share:
Basic $ (1.37 ) $ .71 $ (2.08 ) N.M.
Diluted (1.37 ) .71 (2.08 ) N.M.
 
Dividends declared per common share $ .20 $ .20 $ - -
 

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

Basic 159,269 154,222 5,047 3.3
Diluted 159,269 154,509 4,760 3.1
N.M. Not meaningful.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per-share data)
(Unaudited)
             
At Dec. 31 At Dec. 31 Change
2012 2011 $ %
ASSETS
 
Cash and due from banks $ 1,100,347 $ 1,389,704 $ (289,357 ) (20.8 ) %
Investments 120,867 157,780 (36,913 ) (23.4 )
Securities available for sale 712,091 2,324,038 (1,611,947 ) (69.4 )
Loans and leases held for sale 10,289 14,321 (4,032 ) (28.2 )
Loans and leases:
Consumer real estate 6,674,501 6,895,291 (220,790 ) (3.2 )
Commercial 3,405,235 3,449,492 (44,257 ) (1.3 )
Leasing and equipment finance 3,198,017 3,142,259 55,758 1.8
Inventory finance 1,567,214 624,700 942,514 150.9
Auto finance 552,833 3,628 549,205 N.M.
Other loans and leases 27,924   34,885   (6,961 ) (20.0 )
Total loans and leases 15,425,724 14,150,255 1,275,469 9.0
Allowance for loan and lease losses (267,128 ) (255,672 ) (11,456 ) (4.5 )
Net loans and leases 15,158,596 13,894,583 1,264,013 9.1
Premises and equipment, net 440,466 436,281 4,185 1.0
Goodwill 225,640 225,640 - -
Other assets 457,621   537,041   (79,420 ) (14.8 )
Total assets $ 18,225,917   $ 18,979,388   $ (753,471 ) (4.0 )
 
LIABILITIES AND EQUITY
 
Deposits:
Checking $ 4,834,632 $ 4,629,749 $ 204,883 4.4
Savings 6,104,104 5,855,263 248,841 4.2
Money market 820,553   651,377   169,176   26.0
Subtotal 11,759,289 11,136,389 622,900 5.6
Certificates of deposit 2,291,497   1,065,615   1,225,882   115.0
Total deposits 14,050,786   12,202,004   1,848,782   15.2
Short-term borrowings 2,619 6,416 (3,797 ) (59.2 )
Long-term borrowings 1,931,196   4,381,664   (2,450,468 ) (55.9 )
Total borrowings 1,933,815 4,388,080 (2,454,265 ) (55.9 )
Accrued expenses and other liabilities 364,673   510,677   (146,004 ) (28.6 )
Total liabilities 16,349,274   17,100,761   (751,487 ) (4.4 )
Equity:

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

263,240 - 263,240 N.M.

Common stock, par value $.01 per share, 280,000,000 shares authorized; 163,428,763 and 160,366,380 shares issued

1,634 1,604 30 1.9
Additional paid-in capital 750,040 715,247 34,793 4.9
Retained earnings, subject to certain restrictions 877,445 1,127,823 (250,378 ) (22.2 )
Accumulated other comprehensive income 12,443 56,826 (44,383 ) (78.1 )
Treasury stock at cost, 42,566 shares, and other (41,429 ) (33,367 ) (8,062 ) (24.2 )
Total TCF Financial Corporation stockholders' equity 1,863,373   1,868,133   (4,760 ) (.3 )
Non-controlling interest in subsidiaries 13,270   10,494   2,776   26.5
Total equity 1,876,643   1,878,627   (1,984 ) (.1 )
Total liabilities and equity $ 18,225,917   $ 18,979,388   $ (753,471 ) (4.0 )
 
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
Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Dec. 31,
2012 2012 2012 2012 2011 2012 2011

Delinquency Data - Principal Balances (1)

60 days or more:
Consumer real estate
First mortgage lien $ 76,020 $ 80,153 $ 86,714 $ 88,092 $ 87,358 $ (4,133 ) $ (11,338 )
Junior lien 13,141   13,388   13,967   15,563   22,277   (247 ) (9,136 )
Total consumer real estate 89,161 93,541 100,681 103,655 109,635 (4,380 ) (20,474 )
Commercial 2,630 2,652 5,616 3,425 1,148 (22 ) 1,482
Leasing and equipment finance 2,568 1,554 1,492 4,919 3,512 1,014 (944 )
Inventory finance 119 80 206 185 160 39 (41 )
Auto finance 532 305 62 2 - 227 532
Other 31   22   34   52   41   9   (10 )
Subtotal 95,041 98,154 108,091 112,238 114,496 (3,113 ) (19,455 )
Acquired portfolios 982   1,069   1,483   2,198   3,140   (87 ) (2,158 )
Total delinquencies $ 96,023   $ 99,223   $ 109,574   $ 114,436   $ 117,636   $ (3,200 ) $ (21,613 )
 

Delinquency Data - % of Portfolio (1)

60 days or more:
Consumer real estate
First mortgage lien 1.88 % 1.93 % 1.93 % 1.93 % 1.89 % (5 ) bps (1 ) bps
Junior lien .55 .59 .64 .74 1.04 (4 ) (49 )
Total consumer real estate 1.38 1.46 1.51 1.55 1.63 (8 ) (25 )
Commercial .08 .08 .17 .10 .03 - 5
Leasing and equipment finance .08 .05 .05 .17 .13 3 (5 )
Inventory finance .01 .01 .01 .01 .03 - (2 )
Auto finance .10 .08 .02 - - 2 10
Other .12 .09 .13 .20 .12 3 -
Subtotal .64 .67 .74 .77 .85 (3 ) (21 )
Acquired portfolios .58 .50 .58 .66 .84 8 (26 )
Total delinquencies .64 .67 .73 .77 .85 (3 ) (21 )
 
(1) Excludes non-accrual loans and leases.
At At At At At Change from
Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Dec. 31,
2012 2012 2012 2012 2011 2012 2011

Non-Accrual Loans and Leases

Non-accrual loans and leases:
Consumer real estate
First mortgage lien $ 199,631 $ 197,649 $ 122,406 $ 125,895 $ 129,114 $ 1,982 $ 70,517
Junior lien 35,269   35,936   18,272   23,409   20,257   (667 ) 15,012  
Total consumer real estate 234,900 233,585 140,678 149,304 149,371 1,315 85,529
Commercial 127,746 169,339 150,215 135,677 127,519 (41,593 ) 227
Leasing and equipment finance 13,652 15,812 29,429 20,015 20,583 (2,160 ) (6,931 )
Inventory finance 1,487 1,120 1,900 1,109 823 367 664
Auto finance 101 - - - - 101 101
Other 1,571   1,957   2,204   2,838   15   (386 ) 1,556  
Total non-accrual loans and leases $ 379,457   $ 421,813   $ 324,426   $ 308,943   $ 298,311   $ (42,356 ) $ 81,146  
 
Non-accrual loans and leases - rollforward
Balance, beginning of period $ 421,813 $ 324,426 $ 308,943 $ 298,311 $ 307,672 $ 97,387 $ 114,141
Additions 88,235 210,916 111,739 85,670 125,893 (122,681 ) (37,658 )
Charge-offs (27,657 ) (49,116 ) (28,228 ) (19,683 ) (38,263 ) 21,459 10,606
Transfers to other assets (17,305 ) (24,632 ) (34,473 ) (25,603 ) (31,486 ) 7,327 14,181
Return to accrual status (55,261 ) (30,300 ) (22,200 ) (21,243 ) (19,932 ) (24,961 ) (35,329 )
Payments received (30,832 ) (9,652 ) (12,261 ) (9,202 ) (45,238 ) (21,180 ) 14,406
Other, net 464   171   906   693   (335 ) 293   799  
Balance, end of period $ 379,457   $ 421,813   $ 324,426   $ 308,943   $ 298,311   $ (42,356 ) $ 81,146  
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)
                     
 
 
Change from
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Dec 31,
2012 2012 2012 2012 2011 2012 2011

Other Real Estate Owned

Other real estate owned (1)
Consumer real estate $ 69,599 $ 85,764 $ 83,176 $ 84,996 $ 87,792 $ (16,165 ) $ (18,193 )
Commercial real estate 27,379   34,662   42,700   42,232   47,106   (7,283 ) (19,727 )
Total other real estate owned $ 96,978   $ 120,426   $ 125,876   $ 127,228   $ 134,898   $ (23,448 ) $ (37,920 )
 
Other real estate owned - rollforward
Balance, beginning of period $ 120,426 $ 125,876 $ 127,228 $ 134,898 $ 130,414 $ (5,450 ) $ (9,988 )
Transferred in 18,444 26,097 33,739 25,624 33,864 (7,653 ) (15,420 )
Sales (39,528 ) (28,479 ) (29,448 ) (28,601 ) (25,909 ) (11,049 ) (13,619 )
Writedowns (4,614 ) (3,493 ) (6,237 ) (5,267 ) (5,719 ) (1,121 ) 1,105
Other, net 2,250   425   594   574   2,248   1,825   2  
Balance, end of period $ 96,978   $ 120,426   $ 125,876   $ 127,228   $ 134,898   $ (23,448 ) $ (37,920 )
 
Ending number of properties owned
Consumer real estate 418 425 426 466 465 (7 ) (47 )
Commercial real estate 18   26   32   32   33   (8 ) (15 )
Total 436   451   458   498   498   (15 ) (62 )
 
(1) Includes properties owned and foreclosed properties subject to redemption.
 
             
Change from
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Dec 31,
2012 2012 2012 2012 2011 2012 2011

Non-Performing Assets

Non-accrual loans and leases $ 261,796 $ 318,611 $ 324,426 $ 308,943 $ 298,311 $ (56,815 ) $ (36,515 )
Loans discharged in bankruptcy(1) 117,661 103,202 - - - 14,459 117,661
Other real estate owned 96,978 120,426 125,876 127,228 134,898 (23,448 ) (37,920 )
Total non-performing assets $ 476,435 $ 542,239 $ 450,302 $ 436,171 $ 433,209 $ (65,804 ) $ 43,226  
 
Percent of total loans and leases and other real estate owned 3.07 % 3.54 % 2.93 % 2.84 % 3.03 % (47 ) bps 4 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 December 31, 2012 At September 30, 2012 At December 31, 2011 Change from
% of % of % of Sep. 30, Dec. 31,
Balance Portfolio Balance Portfolio Balance Portfolio 2012 2011
Consumer real estate $ 182,013 2.73 % $ 178,942 2.69 % $ 183,435 2.66

%

 

4 bps 7 bps
Commercial 51,575 1.51 53,756 1.53 46,954 1.36 (2 ) 15

Leasing and equipment finance

21,037 .66 21,331 .68 21,173 .67 (2 ) (1 )
Inventory finance 7,569 .48 7,003 .48 2,996 .48 - -
Auto finance 4,136 .75 3,059 .75 - - - N.M.
Other 798 2.86 750 2.72 1,114 3.19 14 (33 )
Total $ 267,128 1.73 $ 264,841 1.74 $ 255,672 1.81 (1 ) (8 )
 

Net Charge-Offs

Change from
Quarter Ended Quarter Ended
Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Dec. 31,
2012 2012 2012 2012 2011 2012 2011
Consumer real estate
First mortgage lien $ 22,163 40,469 18,369 19,526 23,081 (18,306 ) (918 )
Junior lien 11,757 34,202 16,487 16,162 14,219 (22,445 ) (2,462 )
Total consumer real estate 33,920 74,671 34,856 35,688 37,300 (40,751 ) (3,380 )
Commercial 8,351 20,547 8,455 1,524 15,577 (12,196 ) (7,226 )
Leasing and equipment finance 1,345 7,521 1,173 151 3,473 (6,176 ) (2,128 )
Inventory finance 193 444 225 643 53 (251 ) 140
Auto finance 771 280 81 2 - 491 771
Other 940 991 69 925 1,519 (51 ) (579 )
Total $ 45,520 $ 104,454

 

$

44,859 $ 38,933 $ 57,922 $ (58,934 )

 

$

(12,402 )
 

Net Charge-Offs as a Percentage of Average Loans and Leases

Change from
Quarter Ended (1) Quarter Ended
Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Dec. 31,
2012 2012 2012 2012 2011 2012 2011
Consumer real estate
First mortgage lien 2.06 % 3.60 % 1.58 % 1.66

%

 

1.94

%

 

(154 ) bps 12 bps
Junior lien 1.99 6.12 3.07 3.03 2.63 (413 ) (64 )
Total consumer real estate 2.04 4.44 2.05 2.09 2.15 (240 ) (11 )
Commercial .97 2.32 .97 .18 1.79 (135 ) (82 )
Leasing and equipment finance .17 .95 .15 .02 .46 (78 ) (29 )
Inventory finance .05 .12 .06 .22 .03 (7 ) 2
Auto finance .61 .30 .14 .01 - 31 N.M.
Other N.M. N.M. N.M. N.M. N.M. N.M. N.M.
Total 1.18 2.74 1.18 1.06 1.63 (156 ) (45 )
 
(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 December 31,
2012 2011
Average Yields and Average Yields and
Balance Interest Rates(1) (2) Balance Interest Rates(1) (2)
ASSETS:
Investments and other $ 642,580 $ 2,854 1.77 % $ 1,046,883 $ 2,202 .84 %
U.S. Government sponsored entities:
Mortgage-backed securities, fixed-rate 699,528 4,614 2.64 2,381,193 22,557 3.79
Other securities 115 1 2.52 237 2 3.36
Total securities available for sale(3) 699,643 4,615 2.64 2,381,430 22,559 3.79
Loans and leases held for sale 53,140 1,068 8.00 4,822 131 10.78
Loans and leases:
Consumer real estate:
Fixed-rate 4,012,702 59,968 5.95 4,528,165 68,919 6.04
Variable-rate 2,650,958 33,817 5.07 2,404,886 30,841 5.09
Total consumer real estate 6,663,660 93,785 5.60 6,933,051 99,760 5.71
Commercial:
Fixed- and adjustable-rate 2,614,824 36,776 5.60 2,775,219 39,734 5.68
Variable-rate 837,944 7,475 3.55 701,441 7,569 4.28
Total commercial 3,452,768 44,251 5.10 3,476,660 47,303 5.40
Leasing and equipment finance 3,184,540 41,729 5.24 3,043,329 44,762 5.88
Inventory finance 1,570,829 24,124 6.11 766,885 13,767 7.12
Auto finance 504,565 7,016 5.53 1,442 12 3.30
Other 14,704 307 8.31 17,944 403 8.91
Total loans and leases 15,391,066 211,212 5.47 14,239,311 206,007 5.75
Total interest-earning assets 16,786,429 219,749 5.21 17,672,446 230,899 5.20
Other assets 1,161,959 1,248,000
Total assets $ 17,948,388 $ 18,920,446
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,294,027 $ 1,330,462
Small business 775,334 738,867
Commercial and custodial 329,919 303,216
Total non-interest bearing deposits 2,399,280 2,372,545
Interest-bearing deposits:
Checking 2,248,481 625 .11 2,096,340 818 .15
Savings 6,083,168 4,511 .29 5,859,147 6,254 .42
Money market 819,596 716 .35 662,024 620 .37
Subtotal 9,151,245 5,852 .25 8,617,511 7,692 .35
Certificates of deposit 2,206,173 5,120 .92 1,112,735 2,099 .75
Total interest-bearing deposits 11,357,418 10,972 .38 9,730,246 9,791 .40
Total deposits 13,756,698 10,972 .32 12,102,791 9,791 .32
Borrowings:
Short-term borrowings 47,715

49

.41

37,081 27 .29
Long-term borrowings 1,928,507

6,943

1.44

4,387,036 47,055 4.26
Total borrowings 1,976,222 6,992 1.41 4,424,117 47,082 4.23
Total interest-bearing liabilities 13,333,640 17,964 .54 14,154,363 56,873 1.59
Total deposits and borrowings 15,732,920 17,964 .45 16,526,908 56,873 1.37
Other liabilities 434,471 538,148
Total liabilities 16,167,391 17,065,056
Total TCF Financial Corporation stockholders' equity 1,768,002 1,850,968
Non-controlling interest in subsidiaries 12,995 4,422
Total equity 1,780,997 1,855,390
Total liabilities and equity $ 17,948,388 $ 18,920,446
Net interest income and margin $ 201,785 4.79 $ 174,026 3.92
 
(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 the historical amortized cost and excludes equity securities.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)
                   
Year Ended December 31,
2012 2011
Average Yields and Average Yields and
Balance Interest

Rates(1)

Balance Interest

Rates(1)

ASSETS:
Investments and other $ 574,422 $ 10,404 1.81 % $ 820,981 $ 7,836 .95 %
U.S. Government sponsored entities:
Mortgage-backed securities, fixed-rate 1,055,868 35,143 3.33 2,198,188 85,138 3.87
U.S. Treasury securities - - - 48,178 34 .07
Other securities 180 7 3.70 329 16 4.86

Total securities available for sale(2)

1,056,048 35,150 3.33 2,246,695 85,188 3.79
Loans and leases held for sale 46,201 3,689 7.98 1,215 131 10.78
Loans and leases:
Consumer real estate:
Fixed-rate 4,254,039 252,233 5.93 4,627,047 281,427 6.08
Variable-rate 2,503,473 126,158 5.04 2,386,234 122,532 5.13
Total consumer real estate 6,757,512 378,391 5.60 7,013,281 403,959 5.76
Commercial:
Fixed- and adjustable-rate 2,691,004 149,793 5.57 2,854,327 164,368 5.76
Variable-rate 794,214 30,653 3.86 710,758 30,742 4.33
Total commercial 3,485,218 180,446 5.18 3,565,085 195,110 5.47
Leasing and equipment finance 3,155,946 170,991 5.42 3,074,207 184,575 6.00
Inventory finance 1,434,643 88,934 6.20 856,271 61,583 7.19
Auto finance 296,083 17,949 6.06 363 13 3.31
Other 16,549 1,332 8.05 19,324 1,702 8.81
Total loans and leases 15,145,951 838,043 5.53 14,528,531 846,942 5.83
Total interest-earning assets 16,822,622 887,286 5.27 17,597,422 940,097 5.34
Other assets 1,233,042 1,194,550
Total assets $ 18,055,664 $ 18,791,972
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,311,561 $ 1,414,659
Small business 738,949 698,903
Commercial and custodial 317,432 291,986
Total non-interest bearing deposits 2,367,942 2,405,548
Interest-bearing deposits:
Checking 2,256,237 3,105 .14 2,114,098 4,451 .21
Savings 6,037,939 19,834 .33 5,671,889 28,942 .51
Money market 770,104 2,859 .37 658,693 2,951 .45
Subtotal 9,064,280 25,798 .28 8,444,680 36,344 .43
Certificates of deposit 1,727,859 15,189 .88 1,103,231 8,764 .79
Total interest-bearing deposits 10,792,139 40,987 .38 9,547,911 45,108 .47
Total deposits 13,160,081 40,987 .31 11,953,459 45,108 .38
Borrowings:
Short-term borrowings 312,417

937

.30

49,442 171 .35
Long-term borrowings 2,426,655

62,680

2.58 4,500,564 192,984 4.29
Total borrowings 2,739,072 63,617 2.32 4,550,006 193,155 4.24
Total interest-bearing liabilities 13,531,211 104,604 .77 14,097,917 238,263 1.69
Total deposits and borrowings 15,899,153 104,604 .66 16,503,465 238,263 1.44
Other liabilities 412,170 551,206
Total liabilities 16,311,323 17,054,671
Total TCF Financial Corporation stockholders' equity 1,729,537 1,729,660
Non-controlling interest in subsidiaries 14,804 7,641
Total equity 1,744,341 1,737,301
Total liabilities and equity $ 18,055,664 $ 18,791,972
Net interest income and margin $ 782,682 4.65 $ 701,834 3.99

 

(1) Interest and yields are presented on a fully tax equivalent basis.

(2) Average balances and yields of securities available for sale are based upon the historical amortized cost and excludes equity securities.

 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME AND FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per-share data)
(Unaudited)
        At or For the Three Months Ended
Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,
2012       2012       2012       2012       2011
Interest income:
Loans and leases $ 210,490 $ 210,140 $ 208,766 $ 205,984 $ 205,415
Securities available for sale 4,615 5,607 5,816 19,112 22,559
Investments and other 3,922   4,105   3,633   2,433   2,333  
Total interest income 219,027   219,852   218,215   227,529   230,307  
Interest expense:
Deposits 10,972 10,757 10,197 9,061 9,791
Borrowings 6,992   8,536   9,794   38,295   47,082  
Total interest expense 17,964   19,293   19,991   47,356   56,873  
Net interest income 201,063 200,559 198,224 180,173 173,434
Provision for credit losses 48,520   96,275   54,106   48,542   59,249  

Net interest income after provision for credit losses

152,543   104,284   144,118   131,631   114,185  
Non-interest income:
Fees and service charges 44,262 43,745 48,090 41,856 51,002
Card revenue 12,974 12,927 13,530 13,207 13,643
ATM revenue 5,584   6,122   6,276   6,199   6,608  
Subtotal 62,820 62,794 67,896 61,262 71,253
Leasing and equipment finance 26,149 20,498 23,207 22,867 18,492
Gain on sale of auto loans 6,869 7,486 5,496 2,250 1,133
Gain on sale of consumer real estate loans 854 4,559 - - -
Other 3,973   3,688   3,168   2,355   1,570  
Fees and other revenue 100,665 99,025 99,767 88,734 92,448
(Losses) gains on securities, net (528 ) 13,033   13,116   76,611   5,842  
Total non-interest income 100,137   112,058   112,883   165,345   98,290  
Non-interest expense:
Compensation and employee benefits 101,678 98,409 97,787 95,967 82,595
Occupancy and equipment 32,809 33,006 32,731 32,246 32,366
FDIC insurance 8,671 6,899 8,469 6,386 6,647
Advertising and marketing 4,303 4,248 5,404 2,617 2,250
Deposit account premiums 523 485 1,690 5,971 6,482
Operating lease depreciation 5,905 6,325 6,417 6,731 6,811
Other 53,472   36,173   36,956   37,296   39,148  
Subtotal 207,361 185,545 189,454 187,214 176,299
Loss on termination of debt - - - 550,735 -
Foreclosed real estate and repossessed assets, net 7,582 10,670 12,059 11,047 11,323
Other credit costs, net (894 ) 593   1,476   (288 ) (89 )
Total non-interest expense 214,049   196,808   202,989   748,708   187,533  
Income (loss) before income tax expense 38,631 19,534 54,012 (451,732 ) 24,942
Income tax expense (benefit) 10,540   6,304   20,542   (170,244 ) 7,424  
Income (loss) after income tax expense 28,091 13,230 33,470 (281,488 ) 17,518
Income attributable to non-controlling interest 1,306 1,536 1,939 1,406 1,075
Preferred stock dividends 3,234   2,372   -   -   -  
Net income (loss) available to common stockholders 23,551   9,322   31,531   (282,894 ) 16,443  
Other comprehensive (loss) income:

Reclassification adjustment for securities gains included in net income

- (12,912 ) - (76,967 ) (6,130 )

Unrealized holding (losses) gains arising during the period on securities available for sale

(8,589 ) 16,283 19,868 (7,768 ) (4,334 )
Foreign currency hedge 136 (630 ) 268 (404 ) (458 )
Foreign currency translation adjustment (170 ) 640 (324 ) 385 443

Recognized postretirement prior service cost and transition obligation

144 (7 ) (7 ) (7 ) 305
Income tax expense (benefit) 2,855   (1,010 ) (7,375 ) 31,208   3,890  
Total other comprehensive (loss) income (5,624 ) 2,364   12,430   (53,553 ) (6,284 )
Comprehensive income (loss) $ 17,927   $ 11,686   $ 43,961   $ (336,447 ) $ 10,159  
Net income (loss) per common share:
Basic $ .15 $ .06 $ .20 $ (1.78 ) $ .10
Diluted .15 .06 .20 (1.78 ) .10
 
Dividends declared per common share $ .05 $ .05 $ .05 $ .05 $ .05
Financial Highlights:
Pre-tax pre-provision profit(1) $ 87,151 $ 115,809 108,118 70,578 84,191
Return on average assets(2) .63 % .30 % .76 % (5.96 ) % .37 %
Return on average common equity(2) 5.93 2.36 8.13 (63.38 ) 3.55
Net interest margin(2) 4.79 4.85 4.86 4.14 3.92
 

(1) Pre-tax pre-provision profit (''PTPP'') is calculated as total revenues less non-interest expense. First quarter 2012 PTPP excludes the net loss of $473.8 million related to the balance sheet repositioning completed in the first quarter of 2012.

(2) Annualized.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS
(In thousands)
(Unaudited)
                         
 
Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31,
2012 2012 2012 2012 2011
 
ASSETS
Cash and due from banks $ 777,995 $ 628,697 $ 555,590 $ 863,310 $ 1,175,118
Investments 122,970 123,223 149,813 168,805 162,359
U.S. Government sponsored entities:
Mortgage-backed securities 696,506 701,155 736,251 2,021,574 2,374,026
Other securities 2,150   2,224   2,097   1,678   1,816  
Total securities available for sale 698,656 703,379 738,348 2,023,252 2,375,842
Loans and leases held for sale 53,140 80,549 44,788 5,872 4,822
Loans and leases:
Consumer real estate:
Fixed-rate 4,012,702 4,197,903 4,365,670 4,443,148 4,528,165
Variable-rate 2,650,958   2,531,351   2,427,745   2,401,915   2,404,886  
Total consumer real estate 6,663,660 6,729,254 6,793,415 6,845,063 6,933,051
Commercial:
Fixed- and adjustable-rate 2,614,824 2,682,193 2,730,085 2,737,848 2,775,219
Variable-rate 837,944   855,918   761,964   719,872   701,441  
Total commercial 3,452,768 3,538,111 3,492,049 3,457,720 3,476,660
Leasing and equipment finance 3,184,540 3,164,592 3,145,914 3,128,329 3,043,329
Inventory finance 1,570,829 1,440,298 1,571,004 1,145,183 766,885
Auto finance 504,565 367,271 223,893 85,562 1,442
Other 14,704   16,280   17,647   17,582   17,944  
Total loans and leases 15,391,066   15,255,806   15,243,922   14,679,439   14,239,311  
Allowance for loan and lease losses (269,578 ) (264,626 ) (266,187 ) (257,895 ) (251,158 )
Net loans and leases 15,121,488 14,991,180 14,977,735 14,421,544 13,988,153
Premises and equipment, net 442,287 442,456 438,438 435,412 436,715
Goodwill 225,640 225,640 225,640 225,640 179,070
Other assets 506,212   521,397   524,466   753,873   598,367  
Total assets $ 17,948,388   $ 17,716,521   $ 17,654,818   $ 18,897,708   $ 18,920,446  
 
LIABILITIES AND EQUITY
Non-interest-bearing deposits:
Retail $ 1,294,027 $ 1,275,722 $ 1,316,767 $ 1,359,781 $ 1,330,462
Small business 775,334 746,511 725,052 708,416 738,867
Commercial and custodial 329,919   324,739   310,321   305,064   303,216  
Total non-interest bearing deposits 2,399,280 2,346,972 2,352,140 2,373,261 2,372,545
Interest-bearing deposits:
Checking 2,248,481 2,255,561 2,306,810 2,214,192 2,096,340
Savings 6,083,168 6,153,079 6,031,015 5,882,730 5,859,147
Money market 819,596   848,899   748,016   662,493   662,024  
Subtotal 9,151,245 9,257,539 9,085,841 8,759,415 8,617,511
Certificates of deposit 2,206,173   1,953,208   1,608,653   1,135,673   1,112,735  
Total interest-bearing deposits 11,357,418   11,210,747   10,694,494   9,895,088   9,730,246  
Total deposits 13,756,698   13,557,719   13,046,634   12,268,349   12,102,791  
Borrowings:
Short-term borrowings 47,715 65,531 705,888 436,171 37,081
Long-term borrowings 1,928,507   1,985,094   1,986,182   3,817,165   4,387,036  
Total borrowings 1,976,222 2,050,625 2,692,070 4,253,336 4,424,117
Accrued expenses and other liabilities 434,471   343,336   335,113   577,142   538,148  
Total liabilities 16,167,391   15,951,680   16,073,817   17,098,827   17,065,056  
Equity:
Preferred stock 180,359 166,721 10,993 - -
Common stock 1,634 1,631 1,625 1,617 1,602
Additional paid-in capital 749,445 742,598 738,089 727,596 711,914
Retained earnings, subject to certain restrictions 866,895 862,570 846,349 1,052,632 1,121,866
Accumulated other comprehensive income 13,131 19,321 11,601 46,029 48,618
Treasury stock at cost and other (43,462 ) (42,890 ) (45,499 ) (42,499 ) (33,032 )
Total TCF Financial Corporation stockholders equity 1,768,002 1,749,951 1,563,158 1,785,375 1,850,968
Non-controlling interest in subsidiaries 12,995   14,890   17,843   13,506   4,422  
Total equity 1,780,997   1,764,841   1,581,001   1,798,881   1,855,390  
Total liabilities and equity $ 17,948,388   $ 17,716,521   $ 17,654,818   $ 18,897,708   $ 18,920,446  
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY YIELDS AND RATES(1) (2)
(Unaudited)
                         
Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31,
2012 2012 2012 2012 2011
 
ASSETS
 
Investments and other 1.77 % 2.09 % 2.48 % 1.29 % .84 %
U.S. Government sponsored entities:
Mortgage-backed securities, fixed-rate 2.64 3.15 3.17 3.66 3.79
Other securities 2.52 3.32 4.14 5.24 3.36
Total securities available for sale(3) 2.64 3.15 3.17 3.66 3.79
Loans and leases held for sale 8.00 7.89 8.80 3.08 10.78
Loans and leases:
Consumer real estate:
Fixed-rate 5.95 5.94 5.84 5.99 6.04
Variable-rate 5.07 5.04 5.00 5.03 5.09
Total consumer real estate 5.60 5.60 5.54 5.65 5.71
Commercial:
Fixed- and adjustable-rate 5.60 5.57 5.49 5.61 5.68
Variable-rate 3.55 3.77 3.99 4.20 4.28
Total commercial 5.10 5.14 5.16 5.32 5.40
Leasing and equipment finance 5.24 5.33 5.48 5.63 5.88
Inventory finance 6.11 6.19 6.07 6.58 7.12
Auto finance 5.53 5.97 6.89 7.44 3.30
Other 8.31 7.83 7.66 8.42 8.91
Total loans and leases 5.47 5.50 5.52 5.65 5.75
 
Total interest-earning assets 5.21 5.32 5.34 5.24 5.20
 
LIABILITIES
 
Interest-bearing deposits:
Checking .11 .12 .15 .16 .15
Savings .29 .31 .34 .37 .42
Money market .35 .38 .39 .37 .37
Subtotal .25 .27 .30 .32 .35
Certificates of deposit .92 .92 .86 .75 .75
Total interest-bearing deposits .38 .38 .38 .37 .40
Total deposits .32 .32 .31 .30 .32
Borrowings:
Short-term borrowings

.41

.24

.30 .30 .29
Long-term borrowings

1.44

1.71

1.87 4.00 4.26
Total borrowings 1.41 1.66 1.46 3.62 4.23
 
Total interest-bearing liabilities .54 .58 .60 1.35 1.59
 
Net interest margin 4.79 4.85 4.86 4.14 3.92
 
(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 MEASURES(1)
(Dollars in thousands)
(Unaudited)
  At Dec. 31,   At Dec. 31,
2012 2011
Computation of tangible realized common equity to tangible assets:
Total equity $ 1,876,643 $ 1,878,627
Less: Non-controlling interest in subsidiaries   13,270   10,494
Total TCF Financial Corp. stockholders’ equity 1,863,373 1,868,133
Less:
Preferred stock 263,240 -
Goodwill 225,640 225,640
Other intangibles 8,674 7,134
Accumulated other comprehensive income   12,443   56,826
Tangible realized common equity $ 1,353,376 $ 1,578,533
 
Total assets $ 18,225,917 $ 18,979,388
Less:
Goodwill 225,640 225,640
Other intangibles   8,674   7,134
Tangible assets $ 17,991,603 $ 18,746,614
 
Tangible realized common equity to tangible assets 7.52 % 8.42 %
 
At Dec. 31, At Dec. 31,
2012 2011
Computation of tier 1 risk-based capital ratio:
Total tier 1 capital $ 1,633,336 $ 1,706,926
Total risk-weighted assets 14,733,203 13,475,330
Total tier 1 risk-based capital ratio 11.09 % 12.67 %
 
Computation of tier 1 common capital ratio:
Total tier 1 capital $ 1,633,336 $ 1,706,926
Less:
Preferred stock 263,240 -
Qualifying non-controlling interest in subsidiaries 13,270 10,494
Qualifying trust preferred securities   -   115,000
Total tier 1 common capital $ 1,356,826 $ 1,581,432
 
Total tier 1 common capital ratio 9.21 % 11.74 %
 

(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.

Contacts

TCF Financial Corporation, Wayzata
Jason Korstange, 952-745-2755
tcfbank.com

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

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

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Contacts

TCF Financial Corporation, Wayzata
Jason Korstange, 952-745-2755
tcfbank.com