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Press Release

TCF Reports Net Income of $31.5 Million, or 20 Cents Per Share

Company Release - 7/19/2012 8:00 AM ET

WAYZATA, Minn.--(BUSINESS WIRE)-- TCF Financial Corporation (“TCF”) (NYSE:TCB):

SECOND QUARTER HIGHLIGHTS

  • Net interest margin of 4.86 percent, up 84 bps from June 30, 2011
  • Pre-tax pre-provision profit of $108.1 million, up 13.6% from June 30, 2011
  • Total delinquent loans declined $23.7 million from March 31, 2012
  • Total loans and leases of $15.2 billion, increase of 4.1 percent from $14.6 billion at June 30, 2011
  • Completed $172.5 million preferred stock offering
  • Issued $110 million of subordinated notes
  • Acquired $778 million of deposits from Prudential Bank & Trust, FSB
  • Announced common and preferred stock dividend payments, payable August 31, 2012 and September 4, 2012, respectively
                                                                 
Summary of Financial Results     Table 1  
($ in thousands, except per-share data)         Percent Change      

 

2Q

 

1Q

2Q

 

2Q12 vs

   

2Q12 vs

 

YTD

YTD

Percent

 

2012

   

 

2012(3)

 

      2011     1Q12       2Q11    

 

2012

        2011    

Change

 
Net income (loss) $ 31,531 $ (282,894 ) $ 30,424 N.M. % 3.6 % $ (251,363 ) $ 60,696 N.M. %
Pre-tax pre-provision profit(1) 108,118

70,578

 

95,201

53.2

13.6

178,696

 

190,508

(6.2

)

Diluted earnings (loss) per common share .20 (1.78 ) .19 N.M. 5.3 (1.58 ) .40 N.M.
 

Financial Ratios(2)

Return on average assets .76 % (5.96 ) % .68 % (2.71 ) % .68 %
Return on average common equity 8.13 (63.38 ) 7.00 (29.84 ) 7.46
Net interest margin 4.86 4.14 4.02 4.49 4.04

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

1.18 1.06 1.19 1.12 1.35
 
N.M. = Not meaningful.

(1) Pre-tax pre-provision profit ("PTPP") is calculated as total revenues less non-interest expense. First quarter and year-to-date 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.

(3) Includes a net, after-tax charge of $295.8 million, or $1.87 per share, related to repositioning certain investments and borrowings.

 
 

TCF Financial Corporation (“TCF”) (NYSE:TCB) today reported net income for the second quarter of 2012 of $31.5 million, compared with net income of $30.4 million in the second quarter of 2011 and a net loss of $282.9 million for the first quarter of 2012. The net loss for the first quarter of 2012 included a net, after-tax charge of $295.8 million, or $1.87 per share, related to a balance sheet repositioning involving certain investments and borrowings. Diluted earnings per common share was 20 cents for the second quarter of 2012, compared with diluted earnings per common share of 19 cents in the second quarter of 2011 and diluted loss per common share of $1.78 in the first quarter of 2012.

TCF reported a net loss of $251.4 million for the first six months of 2012, compared with net income of $60.7 million for the same period in 2011. Diluted loss per common share for the first six months of 2012 was $1.58, compared with earnings per common share of 40 cents for the same period in 2011.

TCF declared a dividend on its 7.50 percent Series A Non-cumulative Perpetual Preferred Stock payable on September 4, 2012 to stockholders of record at the close of business on August 15, 2012. TCF also declared a quarterly cash dividend of 5 cents per common share payable on August 31, 2012 to stockholders of record at the close of business on August 15, 2012.

Chairman’s Statement

“We began the year by saying 2012 would be a ‘building and investing’ year for TCF, and at the half-way point, it has been just that,” said William A. Cooper, Chairman and Chief Executive Officer. “TCF has been proactive in preparing for the future through actions such as a balance sheet repositioning and disciplined asset growth in national lending businesses. TCF listened to what consumers want in a checking product and reintroduced TCF Free Checking to its customers during the quarter. TCF also bolstered its capital position during the quarter through preferred stock and subordinated debt offerings, while announcing the redemption of its trust preferred securities.

“The second quarter highlighted TCF’s earnings potential through a significant increase in net interest margin due to the full quarter impact of the balance sheet repositioning, as well as a change in trends in banking fees partially due to our deposit product fee structures. Meanwhile, credit quality remains a challenge as we continue to work through problem credits. We are seeing some encouraging trends in consumer real estate delinquencies, a leading indicator of consumer credit for TCF, which have decreased for a second consecutive quarter.

“I am excited about the evolution that has taken place at TCF over the past year and the return to our roots with TCF Free Checking. Today, we are in a much better position for success than we were a year ago. As we continue to build on our recent investments, I am confident in our ability to improve future stockholder value.”

Revenue
                                                                 
Total Revenue   Table 2  
        Percent Change          
2Q1Q2Q2Q12 vs   2Q12 vsYTDYTDPercent
($ in thousands)     2012       2012       2011       1Q12     2Q11         2012       2011       Change  
Net interest income $ 198,224     $ 180,173     $ 176,150   10.0 % 12.5 % $ 378,397     $ 350,190   8.1 %
Fees and other revenue:
Fees and service charges 48,090 41,856 56,396 14.9 (14.7 ) 89,946 109,909 (18.2 )
Card revenue 13,530 13,207 28,219 2.4 (52.1 ) 26,737 54,803 (51.2 )
ATM revenue   6,276       6,199       7,091   1.2 (11.5 )   12,475       13,796   (9.6 )
Total banking fees 67,896 61,262 91,706 10.8 (26.0 ) 129,158 178,508 (27.6 )
Leasing and equipment finance 23,207 22,867 22,279 1.5

4.2

46,074 49,029 (6.0 )
Gains on sales of auto loans 5,496 2,250 - 144.3 N.M. 7,746 - N.M.
Other   3,168       2,355       384   34.5 N.M.   5,523       1,078   N.M.
Total fees and other revenue   99,767       88,734       114,369   12.4 (12.8 )   188,501       228,615   (17.5 )
Subtotal 297,991 268,907 290,519 10.8 2.6 566,898 578,805 (2.1 )
Gains (losses) on securities, net   13,116       76,611       (227 ) (82.9 ) N.M.   89,727       (227 ) N.M.
Total revenue $ 311,107     $ 345,518     $ 290,292   (10.0 ) 7.2 $ 656,625     $ 578,578   13.5
 
Net interest margin(1) 4.86 % 4.14 % 4.02 % 4.49 % 4.04 %

Fees and other revenue as a % of total revenue

32.07 25.68 39.40 28.71 39.51
 
N.M. = Not meaningful.
(1) Annualized.
 

Net Interest Income

  • Net interest income for the second quarter of 2012 increased $22.1 million, or 12.5 percent, compared with the second quarter of 2011. The increase was primarily due to the balance sheet repositioning completed in the first quarter of 2012, which resulted in a $37.9 million reduction to the cost of borrowings, partially offset by a $13.9 million reduction of interest income on mortgage-backed securities. Additionally, average balances of inventory finance loans and auto finance loans were higher, and the average cost of deposits was lower, during the second quarter of 2012 compared to the same period in 2011. Offsetting the increase in net interest income were lower yields on leasing and equipment finance loans and leases and consumer and commercial real estate loans as the portfolio rebalances to the current rate environment. Net interest income for the second quarter of 2012 increased $18.1 million, or 10 percent, compared with the first quarter of 2012. The increase in net interest income from the first quarter of 2012 was primarily due to the full quarter impact of the balance sheet repositioning, which resulted in a $28.6 million reduction to the cost of borrowings, partially offset by a $12.4 million reduction of interest income on mortgage-backed securities. Also offsetting the increase was reduced interest income on loans and leases, driven by lower yields on consumer and commercial loans, offset by higher average balances of inventory finance and auto finance loans.
  • Net interest margin in the second quarter of 2012 was 4.86 percent, compared with 4.02 percent in the second quarter of 2011. This increase was primarily due to lower average cost of borrowings due to the effects of the balance sheet repositioning, which increased net interest margin by 92 basis points, as well as decreased rates on various deposit products and a positive mix shift to the higher yielding business lines including inventory finance and auto finance. These increases were partially offset by a decrease in yields in the consumer, commercial, and leasing and equipment finance portfolios as a result of the lower interest rate environment. Net interest margin increased by 72 basis points from 4.14 percent in the first quarter of 2012. This increase was primarily due to a lower average cost of borrowings due to the effects of the balance sheet repositioning, which increased net interest margin by 69 basis points, and growth in the inventory finance and auto finance portfolios. These increases were partially offset by decreased levels of higher yielding loans in the consumer portfolio as a result of the lower interest rate environment and increased balances in higher rate deposit accounts.
  • At June 30, 2012, interest-bearing deposits held at the Federal Reserve and unencumbered securities were $1.1 billion, an increase of $395 million from the second quarter of 2011 and $46 million from the first quarter of 2012.

Non-interest Income

  • Banking fees and service charges in the second quarter of 2012 were $48.1 million, down $8.3 million, or 14.7 percent, from the second quarter of 2011 and up $6.2 million, or 14.9 percent, from the first quarter of 2012. The decrease in banking fees and revenues from the second quarter of 2011 was primarily due to checking account program changes that resulted in a reduced number of accounts. The increase from the first quarter of 2012 was primarily due to seasonality of checking account transactions and our deposit product fee structure changes.
  • Card revenues were $13.5 million in the second quarter of 2012, a decrease of $14.7 million, or 52.1 percent, from the second quarter of 2011 and up $323 thousand, or 2.4 percent, from the first quarter of 2012. The decrease from the prior year is due to new debit card interchange regulations which took effect on October 1, 2011. The increase in card revenue from the first quarter of 2012 was primarily due to seasonal increases in transaction volume offset by a lower number of active checking accounts.
  • TCF sold $144.1 million of auto loans and recognized $5.5 million in associated gains during the second quarter of 2012, compared with the sale of $72 million of auto loans and recognition of $2.3 million in associated gains during the first quarter of 2012.
  • During the second quarter of 2012, TCF recognized a $13.1 million gain on sales of securities on the sale of its Visa® Class B stock.
Loans and Leases
                                                     
Period-End and Average Loans and Leases     Table 3  
          Percent Change          
($ in thousands) 2Q1Q2Q2Q12 vs   2Q12 vsYTDYTDPercent
  2012     2012     2011     1Q12     2Q11       2012     2011     Change  
Period-End:
Consumer real estate $ 6,811,784 $ 6,815,909 $ 7,018,240 (.1 ) % (2.9 ) %
Commercial 3,523,070 3,467,089 3,614,395 1.6 (2.5 )
Leasing and equipment finance 3,151,105 3,118,755 3,055,878 1.0 3.1
Inventory finance 1,457,263 1,637,958 905,922 (11.0 ) 60.9
Auto finance 262,188 139,047 - 88.6 N.M.
Other   29,094     29,178     37,510 (.3 ) (22.4 )
Total $ 15,234,504   $ 15,207,936   $ 14,631,945 .2 4.1
 
Average:
Consumer real estate $ 6,793,415 $ 6,845,063 $ 7,034,448 (.8 ) (3.4 ) $ 6,819,239 $ 7,068,018 (3.5 ) %
Commercial 3,492,049 3,457,720 3,597,644 1.0 (2.9 ) 3,474,885 3,610,481 (3.8 )
Leasing and equipment finance 3,145,914 3,128,329 3,068,550 .6 2.5 3,137,122 3,093,969 1.4
Inventory finance 1,571,004 1,145,183 978,505 37.2 60.6 1,353,469 925,913 46.2
Auto finance 223,893 85,562 - 161.7 N.M. 154,728 - N.M.
Other   17,647     17,582     19,463 .4 (9.3 )   17,612     20,603 (14.5 )
Total $ 15,243,922   $ 14,679,439   $ 14,698,610 3.8 3.7 $ 14,957,055   $ 14,718,984 1.6
 
N.M. = Not meaningful.
 
  • Loans and leases were $15.2 billion at June 30, 2012, an increase of $602.6 million, or 4.1 percent, compared with June 30, 2011, and flat compared with March 31, 2012. The increase from June 30, 2011 was primarily due to growth in the inventory finance and auto finance portfolios, partially offset by lower balances in consumer real estate and commercial loans. The increase in the inventory finance portfolio from the second quarter of 2011 was primarily due to the funding of dealers of Bombardier Recreational Products Inc. (“BRP”), which began on February 1, 2012. Increases in auto finance and commercial loans from the first quarter of 2012 were offset by decreases in inventory finance loans as a result of payments related to seasonal sales in the powersports and lawn and garden segments. Auto finance loans are expected to continue growing throughout 2012 as Gateway One Lending and Finance, LLC (“Gateway One”) expands its sales force, number of active dealers and number of states in its network. Gateway One increased its portfolio of managed loans, which includes loans, loans held for sale, and loans sold and serviced for others, by 40.4 percent to $780.3 million at June 30, 2012 from $555.8 million at March 31, 2012. Gateway One expanded its active dealers to 5,420 at June 30, 2012 from 4,452 at March 31, 2012.
  • Average loans and leases were $15.2 billion at June 30, 2012, an increase of $545.3 million, or 3.7 percent, compared with June 30, 2011, and an increase of $564.5 million, or 3.8 percent, compared with March 31, 2012. The increases from June 30, 2011 and from March 31, 2012 were primarily due to growth in the inventory finance and auto finance portfolios, partially offset by a decrease in the consumer real estate portfolio. The decreases in the average consumer real estate portfolios reflect a decline in production of new fixed-rate first mortgage loans as market rates available for such loans are not as attractive to TCF. The increase in average inventory finance portfolios from both the second quarter of 2011 and the first quarter of 2012 was primarily due to the funding of dealers of BRP products.

Credit Quality

(Table 4 - Credit Trends: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50344889&lang=en)

  • Over 60-day delinquencies decreased from March 31, 2012 and net charge-offs remained under peak 2010 levels, down $15.9 million year-to-date compared with the same 2011 period. Non-performing assets increased from the first quarter due to increased non-accrual loans, primarily in commercial real estate.
     
Credit Quality Summary of Performing and Underperforming Loans and LeasesTable 5  
           
($ in thousands) 60+ Days Non-accrual
Performing Loans and Leases(1) Delinquent and Loans and Total Loans

June 30, 2012

Non-classified     Classified(2)     Total     Accruing     Leases     and Leases
Consumer real estate $ 6,547,940 $ 22,485 $ 6,570,425 $ 100,681 $ 140,678 $ 6,811,784
Commercial 3,070,917 296,322 3,367,239 5,616 150,215 3,523,070
Leasing and equipment finance 3,103,094 15,687 3,118,781 2,895 29,429 3,151,105
Inventory finance 1,446,730 8,427 1,455,157 206 1,900 1,457,263
Auto finance 262,046 - 262,046 142 - 262,188
Other   26,856       -       26,856       34       2,204       29,094
Total loans and leases $ 14,457,583     $ 342,921     $ 14,800,504     $ 109,574     $ 324,426     $ 15,234,504
Percent of total loans and leases 94.9

%

 

2.3 % 97.2

%

 

.7

%

 

2.1

%

 

100.0 %
                                                 
 
60+ Days Non-accrual
Performing Loans and Leases(1) Delinquent and Loans and Total Loans

March 31, 2012

Non-classified     Classified(2)     Total     Accruing     Leases     and Leases
Consumer real estate $ 6,542,851 $ 20,099 $ 6,562,950 $ 103,655 $ 149,304 $ 6,815,909
Commercial 3,013,883 314,104 3,327,987 3,425 135,677 3,467,089
Leasing and equipment finance 3,071,833 19,956 3,091,789 6,951 20,015 3,118,755
Inventory finance 1,630,126 6,538 1,636,664 185 1,109 1,637,958
Auto finance 138,879 - 138,879 168 - 139,047
Other   26,288       -       26,288       52       2,838       29,178
Total loans and leases $ 14,423,860     $ 360,697     $ 14,784,557     $ 114,436     $ 308,943     $ 15,207,936
Percent of total loans and leases 94.8

%

 

2.4 % 97.2

%

 

.8

%

 

2.0

%

 

100.0 %
                                                 
 
60+ Days Non-accrual
Performing Loans and Leases(1) Delinquent and Loans and Total Loans

December 31, 2011

Non-classified     Classified(2)     Total     Accruing     Leases     and Leases
Consumer real estate $

6,614,679

$

21,606

$ 6,636,285 $ 109,635 $ 149,371 $ 6,895,291
Commercial 2,990,515 330,310 3,320,825 1,148 127,519 3,449,492
Leasing and equipment finance 3,093,194 22,227 3,115,421 6,255 20,583 3,142,259
Inventory finance 616,677 7,040 623,717 160 823 624,700
Auto finance 3,231 - 3,231 397 - 3,628
Other   34,829       -       34,829       41       15       34,885
Total loans and leases $

13,353,125

    $

381,183

    $ 13,734,308     $ 117,636     $ 298,311     $ 14,150,255
Percent of total loans and leases

94.4

%

 

2.7

% 97.1

%

 

.8

%

 

2.1

%

 

100.0 %
 

(1) Includes all loans and leases, including TDRs, that are not 60+ days delinquent or on non-accrual status.

(2) Excludes classified loans and leases that are 60+ days delinquent. Classified loans and leases are those for which management has concerns regarding the borrower's ability to meet the existing terms and conditions, but may never become non-performing or result in a loss.
 
  • Performing loans and leases includes all loans and leases, including TDRs, that are not over 60-days delinquent or on non-accrual status. Performing loans and leases comprised 97.2 percent of total loans and leases at June 30, 2012, flat compared with March 31, 2012.
  • The over 60-day delinquency rate was .73 percent, down from .77 percent at March 31, 2012 and unchanged from June 30, 2011. The decrease from the first quarter of 2012 was primarily due to decreases in leasing and equipment finance and consumer real estate delinquencies.
  • Non-accrual loans and leases were $324.4 million at June 30, 2012, an increase of $15.5 million, or 5 percent, from March 31, 2012 and an increase of $2.7 million, or less than 1 percent, from June 30, 2011. The increase from March 31, 2012 was primarily due to a $15.8 million increase in commercial real estate non-accrual loans and one large non-accrual lease, partially offset by an $8.6 million decrease in consumer real estate non-accrual loans. The slight increase from June 30, 2011 was primarily due to increased commercial real estate non-accrual loans, partially offset by decreases in consumer real estate and commercial business non-accrual loans. Of the $324.4 million of non-accrual loans and leases at June 30, 2012, 39 percent were less than 60 days past due.
  • Other real estate owned was $125.9 million at June 30, 2012, a decrease of $1.3 million from March 31, 2012 and a decrease of $10.6 million from June 30, 2011. The decrease from June 30, 2011 was primarily due to a decrease in the number of consumer properties owned.
  • Consumer real estate TDRs include loans where a payment modification (but generally not a reduction of principal) has been granted to a residential real estate customer. Based on clarifying guidance from the Securities and Exchange Commission, beginning in the second quarter of 2012, TCF now classifies trial modifications as TDRs at the beginning of the trial period. Previously, these loans were not classified as TDRs until performance was demonstrated at a reduced payment amount during a short trial period, resulting in a one-time $13.4 million increase of TDRs during the second quarter of 2012. Accruing consumer real estate TDRs totaled $465.6 million at June 30, 2012, and averaged 17 months since modification. These loans had a weighted average yield of 4 percent, and are reserved at an average rate of 14.1 percent. Of the accruing consumer real estate TDRs, 8.13 percent were over 60-days delinquent at June 30, 2012. Included in the $465.6 million of accruing consumer real estate TDRs at June 30, 2012 are $336.4 million, or 72% of the total, of “non-classified” loans, meaning the loans were current and have not been delinquent for at least six months.
  • Commercial TDRs include loans where a payment or other modification (but generally not a reduction of principal) has been granted. Accruing commercial TDRs had a weighted average yield of 5.3 percent.
Allowance for Loan and Lease Losses
 
Credit Quality Summary   Table 6
($ in thousands)     Percent Change    
2Q1Q2Q2Q12 vs   2Q12 vsYTDYTDPercent

Allowance for Loan and Lease Losses

2012       2012       2011       1Q12       2Q11         2012       2011       Change    
Balance at beginning of period $ 265,293 $ 255,672 $ 255,308 3.8 % 3.9 % $ 255,672 $ 265,819 (3.8 ) %
Charge-offs (49,833 ) (44,675 ) (48,457 ) 11.6 2.8 (94,509 ) (109,561 ) (13.7 )
Recoveries 4,974   5,742   4,612   (13.4 ) 7.8 10,716   9,904   8.2
Net charge-offs (44,859 ) (38,933 ) (43,845 ) 15.2 2.3 (83,793 ) (99,657 ) (15.9 )
Provision for credit losses 54,106 48,542 44,005 11.5 23.0 102,648 89,279 15.0
Other (379 ) 12   4   N.M.

N.M.

(366 ) 31   N.M.
Balance at end of period $ 274,161   $ 265,293   $ 255,472   3.3 7.3 $ 274,161   $ 255,472   7.3
 
Net charge-offs as a percentage of
average loans and leases(1)
Consumer real estate
First mortgage lien 1.58

%

 

1.66

%

 

1.78 % (8 ) bps (20 ) bps 1.62 1.80 (18 ) bps
Junior lien 3.07 3.03 2.75 4 32 3.05 2.56 49
Total consumer real estate 2.05 2.09 2.09 (4 ) (4 ) 2.07 2.04 3
Commercial .97 .18 .30 79 67 .57 1.13 (56 )
Leasing and equipment finance .15 .02 .45 13 (30 ) .08 .41 (33 )
Inventory finance .06 .22 .13 (16 ) (7 ) .13 .12 1
Auto finance .14 .01 - 13 14 .11 - 11

Other

N.M.

N.M.

N.M.

N.M.

N.M.

N.M.

N.M.

N.M.

Total 1.18 1.06 1.19 12 (1 ) 1.12 1.35 (23 )
 

Allowance as a percentage of period end loans and leases

1.80

%

 

1.74

%

 

1.75 % 1.80

%

 

1.75 %
Ratio of allowance to net charge-offs(1) 1.50

X

 

1.70

X

 

1.50 X 1.60

X

 

1.30 X
 
N.M. = Not meaningful.
(1) Annualized.                                                                    
 
  • Allowance for loan and lease losses was $274.2 million, or 1.80 percent of loans and leases, an increase of $8.9 million, compared with $265.3 million, or 1.74 percent, at March 31, 2012 and an increase of $18.7 million, compared with $255.5 million, or 1.75 percent, at June 30, 2011.
  • Provision for credit losses was $54.1 million, an increase of $5.6 million from $48.5 million recorded in the first quarter of 2012 and an increase of $10.1 million from $44 million in the second quarter of 2011. The increase from both periods was primarily due to increased provision expense on commercial loans and a $4 million reserve loss on one large lease exposure. The increase from the first quarter of 2012 was partially offset by decreased provision expense in inventory finance due to the first quarter on-boarding of the BRP program and lower seasonal loan balances.
  • Net loan and lease charge-offs were $44.9 million, or 1.18 percent, annualized, of average loans and leases, up $6 million from $38.9 million, or 1.06 percent, annualized, in the first quarter of 2012 and up $1.1 million from $43.8 million, or 1.19 percent, annualized, in the second quarter of 2011. The increase in net charge-offs from the first quarter of 2012 was primarily due to increased net charge-offs on commercial real estate loans. The increase in net charge-offs from the second quarter of 2011 was primarily due to increased net charge-offs on commercial real estate loans, partially offset by decreased net charge-offs on leasing and equipment finance loans and leases.
Deposits
   
Average Deposits   Table 7
        Percent Change      
($ in thousands) 2Q1Q2Q2Q12 vs   2Q12 vsYTDYTDPercent
2012   2012   2011   1Q12   2Q11   2012   2011   Change  
 
Checking $ 4,636,701 $ 4,565,065 $ 4,570,543 1.6 % 1.4 % $ 4,600,882 $ 4,536,427 1.4 %
Savings 6,053,264 5,905,118 5,628,249 2.5 7.6 5,979,191 5,536,823 8.0
Money market   748,016       662,493       648,862 12.9 15.3   705,255       661,114 6.7
Subtotal 11,437,981 11,132,676 10,847,654 2.7 5.4 11,285,328 10,734,364 5.1
Certificates   1,608,653       1,135,673       1,092,368 41.6 47.3   1,372,164       1,092,452 25.6
Total deposits $ 13,046,634     $ 12,268,349     $ 11,940,022 6.3 9.3 $ 12,657,492     $ 11,826,816 7.0
 
Average interest rate on deposits(1) .31 % .30 % .38 % .31 % .40 %
 
(1) Annualized.  
 
  • Total average deposits increased $1.1 billion, or 9.3 percent, from the second quarter of 2011 and increased $778.3 million, or 6.3 percent, from the first quarter of 2012, primarily due to the assumption of $778 million of deposits from Prudential Bank & Trust, FSB (“PB&T”). The deposits consist primarily of IRA accounts with certificates of deposit, savings accounts and brokerage sweep accounts gathered by PB&T through its relationship with Prudential Retirement.
  • The average interest cost of deposits in the second quarter of 2012 was .31 percent, down 7 basis points from the second quarter of 2011 and basically flat from the first quarter of 2012. The decrease in the average interest cost of deposits from the second quarter of 2011 was primarily due to pricing strategies on certain deposit products, partially offset by higher average interest costs on the PB&T deposits assumed in June 2012.
Non-interest Expense
 
Non-interest Expense   Table 8  
          Percent Change      
($ in thousands) 2Q1Q2Q2Q12 vs   2Q12 vsYTDYTDPercent
  2012     2012     2011   1Q12     2Q11       2012     2011   Change  

Compensation and employee benefits

$ 97,787 $ 95,967 $ 89,082 1.9 % 9.8 % $ 193,754 $ 178,439 8.6 %
Occupancy and equipment 32,731 32,246 30,783 1.5 6.3 64,977 62,942 3.2
FDIC insurance 8,469 6,386 7,542 32.6 12.3 14,855 14,737 .8
Advertising and marketing 5,404 2,617 3,479 106.5 55.3 8,021 6,639 20.8
Deposit account premiums 1,690 5,971 6,166 (71.7 ) (72.6 ) 7,661 9,364 (18.2 )
Other   36,956     37,296       37,067 (.9 ) (.3 )   74,252     71,633 3.7
Core operating expenses 183,037 180,483 174,119 1.4 5.1 363,520 343,754 5.8
Loss on termination of debt - 550,735 - (100.0 ) - 550,735 - N.M.

Foreclosed real estate and repossessed assets, net

12,059 11,047 12,617 9.2 (4.4 ) 23,106 25,485 (9.3 )
Operating lease depreciation 6,417 6,731 7,859 (4.7 ) (18.3 ) 13,148 15,787 (16.7 )
Other credit costs, net   1,476     (288 )     496 N.M. 197.6   1,188     3,044 (61.0 )
Total non-interest expense $ 202,989   $ 748,708     $ 195,091 (72.9 ) 4.0 $ 951,697   $ 388,070 145.2
 
N.M. = Not meaningful.
 
  • Compensation and employee benefits expense increased $8.7 million, or 9.8 percent, from the second quarter of 2011 and increased $1.8 million, or 1.9 percent, from the first quarter of 2012. The increase from the second quarter of 2011 was primarily due to 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 increase from the first quarter of 2012 was primarily due to higher salary expense in the auto finance business as it ramps up capacity to originate and service higher loan volumes, increased lending staff across all businesses and an increase in medical plan expenses, partially offset by the seasonal decrease in payroll taxes.
  • FDIC insurance expense increased $927 thousand, or 12.3 percent, from the second quarter of 2011 and increased $2.1 million, or 32.6 percent, from the first quarter of 2012. These increases were primarily due to increased insurance rates as a result of the net loss associated with the balance sheet repositioning completed in the first quarter of 2012.
  • Foreclosed real estate and repossessed asset expense decreased $558 thousand, or 4.4 percent, from the second quarter of 2011 and increased $1 million, or 9.2 percent, from the first quarter of 2012. The decrease from the second quarter of 2011 was primarily due to fewer consumer real estate properties owned. The increase from the first quarter of 2012 was primarily due to increased write-downs on commercial real estate properties owned.
Capital and Borrowing Capacity
 
Capital Information   Table 9  
At period end        
($ in thousands, except per-share data) 2Q4Q
20122011
Total equity $ 1,755,908 $ 1,878,627
Total equity to total assets 9.83 % 9.90 %
Book value per common share $ 9.67 $ 11.65
Tangible realized common equity to tangible assets(1) 7.50 % 8.42 %
 
Risk-based capital
Tier 1 $ 1,508,176 10.53 % $ 1,706,926 12.67 %
Total(2) 1,877,714 13.11 1,994,875 14.80
 

Tier 1 leverage capital

$ 1,508,176 8.64 % $ 1,706,926 9.15 %
 

Tier 1 common capital(3)

$ 1,326,518 9.26 % $ 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 qualifying trust preferred securities and qualifying non-controlling interest in subsidiaries (see
“Reconciliation of GAAP to Non-GAAP Measures” table).

 
  • During the second quarter of 2012, TCF issued $172.5 million of 7.50 percent Series A Non-Cumulative Perpetual Preferred Stock, par value $.01 per share. The preferred stock qualifies as Tier 1 capital.
  • On June 25, 2012, TCF announced that it will fully redeem $115 million of 10.75 percent trust preferred securities on July 30, 2012. As a result, the trust preferred securities are no longer included within the computation of Tier 1 capital.
  • Also during the second quarter of 2012, TCF National Bank issued $110 million of subordinated notes. The notes are due June 8, 2022 and bear interest at a fixed rate of 6.25% until maturity, and qualify as Tier 2 capital.
  • On July 18, 2012, the Board of Directors of TCF declared a regular quarterly cash dividend of 5 cents per common share payable on August 31, 2012 to stockholders of record at the close of business on August 15, 2012 and a dividend on the 7.50 percent Series A Non-cumulative Perpetual Preferred Stock payable on September 4, 2012 to stockholders of record at the close of business on August 15, 2012.
  • At June 30, 2012, TCF had $2.7 billion in unused, secured borrowing capacity at the FHLB of Des Moines, $525 million in unused, secured borrowing capacity at the Federal Reserve Discount Window and $532 million in unused borrowing capacity under existing federal funds lines.

Website Information

A 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 19, 2012 at 10:00 a.m. CT. 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 $17.9 billion in total assets at June 30, 2012. TCF has over 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 and leverage lending in all 50 states, commercial inventory finance business in the U.S. and Canada, and indirect auto finance business in over 30 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 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, 2011 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, Credit and Other RisksDeterioration 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, deposit outflows, deposit account attrition or an inability to increase the number of deposit accounts; 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; limitations on TCF’s ability to attract and retain manufacturers and dealers to expand the inventory finance business.

Legislative and Regulatory RequirementsNew consumer protection and supervisory requirements and regulations, including those resulting from action by the CFPB 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 theDodd-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 RisksLimitations 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 the phase out of trust preferred securities in tier 1 capital called for by the Dodd-Frank Act, or 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 the Free Checking product 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.

Competitive Conditions; Supermarket Branching Risk; Growth RisksReduced demand for financial services and loan and lease products; adverse developments affecting TCF’s supermarket banking relationships or any of the supermarket chains in which TCF maintains supermarket branches including the announcement on July 11, 2012 by SuperValu that it is exploring strategic alternatives; customers completing financial transactions without using a bank; the effect of any negative publicity; 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 our balance sheet through programs or new opportunities; failure to successfully attract and retain new customers;product additions and addition of distribution channels (or entry into new markets) for existing products.

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

Litigation RisksResults 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 financial 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 MattersChanges 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 June 30,Change
20122011$%
Interest income:
Loans and leases$208,766$213,823$(5,057)(2.4)%
Securities available for sale5,81620,639(14,823)(71.8)
Investments and other3,633   1,836   1,797   97.9
Total interest income218,215   236,298   (18,083)(7.7)
Interest expense:
Deposits10,19711,430(1,233)(10.8)
Borrowings9,794   48,718   (38,924)(79.9)
Total interest expense19,991   60,148   (40,157)(66.8)
Net interest income198,224176,15022,07412.5
Provision for credit losses54,106   44,005   10,101   23.0

Net interest income after provision for credit losses

144,118   132,145   11,973   9.1
Non-interest income:
Fees and service charges48,09056,396(8,306)(14.7)
Card revenue13,53028,219(14,689)(52.1)
ATM revenue6,276   7,091   (815)(11.5)
Subtotal67,89691,706(23,810)(26.0)
Leasing and equipment finance23,20722,2799284.2
Gains on sales of auto loans5,496-5,496N.M.
Other3,168   384   2,784   N.M.
Fees and other revenue99,767114,369(14,602)(12.8)
Gains (losses) on securities, net13,116   (227)13,343   N.M.
Total non-interest income112,883   114,142   (1,259)(1.1)
Non-interest expense:
Compensation and employee benefits97,78789,0828,7059.8
Occupancy and equipment32,73130,7831,9486.3
FDIC insurance8,4697,54292712.3
Advertising and marketing5,4043,4791,92555.3
Deposit account premiums1,6906,166(4,476)(72.6)
Other36,956   37,067   (111)(.3)
Subtotal183,037174,1198,9185.1
Loss on termination of debt----
Foreclosed real estate and repossessed assets, net12,05912,617(558)(4.4)
Operating lease depreciation6,4177,859(1,442)(18.3)
Other credit costs, net1,476   496   980   197.6
Total non-interest expense202,989   195,091   7,898   4.0
Income before income tax expense54,01251,1962,8165.5
Income tax expense20,542   19,086   1,456   7.6
Income after income tax expense33,47032,1101,3604.2
Income attributable to non-controlling interest1,939   1,686   253   15.0
Net income available to common stockholders$31,531   $30,424   $1,107   3.6
Other comprehensive income:

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

19,86831,084(11,216)(36.1)
Foreign currency hedge268(93)361N.M.
Foreign currency translation adjustment(324)120(444)N.M.

Recognized post retirement prior service cost and transition obligation

(7)1(8)N.M.
Income tax expense(7,375)(11,362)3,987   (35.1)
Total other comprehensive income12,430   19,750   (7,320)(37.1)
Comprehensive income$43,961   $50,174   $(6,213)(12.4)
Net income per common share:
Basic$.20$.19$.015.3
Diluted.20.19.015.3
 
Dividends declared per common share$.05$.05$--
 

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

Basic159,113157,0642,0481.3
Diluted159,539157,4632,0771.3
 
N.M. Not meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
       
Six Months Ended June 30,Change
20122011$%
Interest income:
Loans and leases$414,750$428,496$(13,746)(3.2)%
Securities available for sale24,92840,068(15,140)(37.8)
Investments and other6,066   3,637   2,429   138.6  
Total interest income445,744   472,201   (26,457)(5.6)
Interest expense:
Deposits19,25823,434(4,176)(17.8)
Borrowings48,089   98,577   (50,488)(51.2)
Total interest expense67,347   122,011   (54,664)(44.8)
Net interest income378,397350,19028,2078.1
Provision for credit losses102,648   89,279   13,369   15.0  

Net interest income after provision for credit losses

275,749   260,911   14,838   5.7  
Non-interest income:
Fees and service charges89,946109,909(19,963)(18.2)
Card revenue26,73754,803(28,066)(51.2)
ATM revenue12,475   13,796   (1,321)(9.6)
Subtotal129,158178,508(49,350)(27.6)
Leasing and equipment finance46,07449,029(2,955)(6.0)
Gains on sales of auto loans7,746-(40,114)(17.5)
Other5,523   1,078   7,746   100.0  
Fees and other revenue188,501228,615(84,673)(37.0)
Gains (losses) on securities, net89,727   (227)-   -  
Total non-interest income278,228   228,388   89,954   -  
Non-interest expense:
Compensation and employee benefits193,754178,439--
Occupancy and equipment64,97762,94215,3158.6
FDIC insurance14,85514,7372,0353.2
Advertising and marketing8,0216,639(1,703)(18.2)
Deposit account premiums7,6619,3641180.8
Other74,252   71,633   1,382   20.8  
Subtotal363,520343,7542,6193.7
Loss on termination of debt550,735-(1,856)(61.0)
Foreclosed real estate and repossessed assets, net23,10625,48519,7665.8
Operating lease depreciation13,14815,787(2,379)(9.3)
Other credit costs, net1,188   3,044   (2,639)(16.7)
Total non-interest expense951,697   388,070   550,735   100.0  
(Loss) income before income tax expense(397,720)101,229563,627145.2
Income tax (benefit) expense(149,702)37,858   (498,949)-  
(Loss) income after income tax expense(248,018)63,371(187,560)-
Income attributable to non-controlling interest3,345   2,675   (311,389)-  
Net (loss) income available to common stockholders$(251,363)$60,696   $670   25.0  
Other comprehensive (loss) income:

Reclassification adjustment for securities gains included in net income

(76,967)-(76,967)N.M.

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

12,10010,0142,08620.8
Foreign currency hedge(136)(600)464(77.3)
Foreign currency translation adjustment61534(473)(88.6)

Recognized postretirement actuarial service cost and transition obligation

(14)2(16)N.M.
Income tax benefit (expense)23,833   (3,458)27,291   N.M.
Total other comprehensive (loss) income(41,123)6,492   (47,615)N.M.
Comprehensive (loss) income$(292,486)$67,188   $(359,674)N.M.
Net income per common share:
Basic$(1.58)$.40$(1.98)N.M.
Diluted(1.58).40(1.98)N.M.
 
Dividends declared per common share$.10$.10$--
 

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

Basic158,810150,7658,0455.3
Diluted158,810151,1367,6735.1
 
N.M. Not meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per-share data)
(Unaudited)
       
At Jun. 30At Dec. 31Change
20122011$%
ASSETS
 
Cash and due from banks$865,257$1,389,704$(524,447)(37.7)%
Investments120,814157,780(36,966)(23.4)
Securities available for sale757,2332,324,038(1,566,805)(67.4)
Loans and leases held for sale9,66414,321(4,657)(32.5)
Loans and leases:
Consumer real estate6,811,7846,895,291(83,507)(1.2)
Commercial3,523,0703,449,49273,5782.1
Leasing and equipment finance3,151,1053,142,2598,846.3
Inventory finance1,457,263624,700832,563N.M.
Auto finance262,1883,628258,560N.M.
Other29,094   34,885   (5,791)(16.6)
Total loans and leases15,234,50414,150,2551,084,2497.7
Allowance for loan and lease losses(274,161)(255,672)(18,489)7.2
Net loans and leases14,960,34313,894,5831,065,7607.7
Premises and equipment, net442,311436,2816,0301.4
Goodwill225,640225,640--
Other assets489,335   537,041   (47,706)(8.9)
Total assets$17,870,597   $18,979,388   $(1,108,791)(5.8)
 
LIABILITIES AND EQUITY
 
Deposits:
Checking$4,701,917$4,629,749$72,1681.6
Savings6,227,1335,855,263371,8706.4
Money market880,545   651,377   229,168   35.2
Subtotal11,809,59511,136,389673,2066.0
Certificates of deposit1,894,711   1,065,615   829,096   77.8
Total deposits13,704,306   12,202,004   1,502,302   12.3
Short-term borrowings7,4876,4161,07116.7
Long-term borrowings2,075,923   4,381,664   (2,305,741)(52.6)
Total borrowings2,083,4104,388,080(2,304,670)(52.5)
Accrued expenses and other liabilities326,973   510,677   (183,704)(36.0)
Total liabilities16,114,689   17,100,761   $(986,072)(5.8)
Equity:

Preferred stock, par value $.01 per share, 30,000,000 authorized; and 6,900 shares issued

166,721-166,721N.M.

Common stock, par value $.01 per share, 280,000,000 shares authorized; 162,790,655 and 160,366,380 shares issued

1,6281,604241.5
Additional paid-in capital738,437715,24723,1903.2
Retained earnings, subject to certain restrictions860,5601,127,823(267,263)(23.7)

Accumulated other comprehensive income

15,70356,826(41,123)(72.4)
Treasury stock at cost, 42,566 shares, and other(42,078)(33,367)(8,711)26.1
Total TCF Financial Corp. stockholders' equity1,740,971   1,868,133   (127,162)(6.8)
Non-controlling interest in subsidiaries14,937   10,494   4,443   42.3
Total equity1,755,908   1,878,627   (122,719)(6.5)
Total liabilities and equity$17,870,597   $18,979,388   (1,108,791)(5.8)
 
N.M. Not meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA
(Dollars in thousands)
(Unaudited)
             
AtAtAtAtAtChange from
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2012201220112011201120122011

Delinquency Data - Principal Balances(1)

60 days or more:
Consumer real estate
First mortgage lien$86,714$88,092$87,358$78,241$74,090$(1,378)$12,624
Junior lien13,967   15,563   22,277   18,499   17,780   (1,596)(3,813)
Total consumer real estate100,681103,655109,63596,74091,870(2,974)8,811
Commercial5,6163,4251,1483,0796,2382,191(622)
Leasing and equipment finance1,4924,9193,5122,8402,447(3,427)(955)
Inventory finance2061851603061452161
Auto finance622---6062
Other34   52   41   58   171   (18)(137)
Subtotal108,091112,238114,496103,023100,871(4,147)7,220
Acquired portfolios1,483   2,198   3,140   1,870   2,993   (715)(1,510)
Total delinquencies$109,574   $114,436   $117,636   $104,893   $103,864   $(4,862)$5,710  
 

Delinquency Data - % of Portfolio(1)

60 days or more:
Consumer real estate
First mortgage lien1.93%1.93%1.89%1.68%1.58%-bps35bps
Junior lien.64.741.04.86.82(10)(18)
Total consumer real estate1.511.551.631.421.34(4)17
Commercial.17.10.03.09.187(1)
Leasing and equipment finance.05.17.13.11.09(12)(4)
Inventory finance.01.01.03.04.02-(1)
Auto finance.02----22
Other.13.20.12.18.46(7)(33)
Subtotal.74.77.85.75.73(3)1
Acquired portfolios.58.66.84.51.70(8)(12)
Total delinquencies.73.77.85.75.73(4)-
 
(1) Excludes non-accrual loans and leases.
AtAtAtAtAtChange from
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2012201220112011201120122011

Non-Accrual Loans and Leases

Non-accrual loans and leases:
Consumer real estate
First mortgage lien$122,406$125,895129,114130,671129,837$(3,489)$(7,431)
Junior lien18,272   23,409   20,257   18,223   21,069   (5,137)(2,797)
Total consumer real estate140,678149,304149,371148,894150,906(8,626)(10,228)
Commercial150,215135,677127,519133,260140,40714,5389,808
Leasing and equipment finance29,42920,01520,58324,43729,6829,414(253)
Inventory finance1,9001,1098231,0776347911,266
Other2,204   2,838   15   4   32   (634)2,172  
Total non-accrual loans and leases$324,426   $308,943   298,311   307,672   321,661   $15,483   $2,765  
 
Non-accrual loans and leases - rollforward
Balance, beginning of period$308,943$298,311$307,672$321,661$319,049$10,632$(10,106)
Additions111,73985,670125,89380,01486,99626,06924,743
Charge-offs(28,228)(19,683)(38,263)(29,338)(22,401)(8,545)(5,827)
Transfers to other assets(34,473)(25,603)(31,486)(21,654)(27,078)(8,870)(7,395)
Return to accrual status(22,200)(21,243)(19,932)(20,272)(21,985)(957)(215)
Payments received(12,261)(9,202)(45,238)(23,843)(14,383)(3,059)2,122
Other, net906   693   (335)1,104   1,463   213   (557)
Balance, end of period$324,426   $308,943   $298,311   $307,672   $321,661   $15,483   $2,765  
 
 
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,
2012201220112011201120122011

Other Real Estate Owned

Other real estate owned(1)
Consumer real estate$83,176$84,996$87,792$88,206$94,311$(1,820)$(11,135)
Commercial real estate42,700   42,232   47,106   42,207   42,188   468   512  
Total other real estate owned$125,876   $127,228   $134,898   $130,413   $136,499   $(1,352)$(10,623)
 
Other real estate owned - rollforward
Balance, beginning of period$127,228$134,898$130,413$136,499$142,154$(7,670)$(14,926)
Transferred in33,73925,62433,86424,93927,6498,1156,090
Sales(29,448)(28,601)(25,909)(26,095)(28,759)(847)(689)
Writedowns(6,237)(5,267)(5,719)(6,337)(6,741)(970)504
Other, net594   574   2,249   1,407   2,196   20   (1,602)
Balance, end of period$125,876   $127,228   $134,898   $130,413   $136,499   $(1,352)$(10,623)
 
Ending number of properties owned
Consumer real estate426466465456488(40)(62)
Commercial real estate32   32   33   33   26   -   6  
Total458   498   498   489   514   (40)(56)
 
(1) Includes properties owned and foreclosed properties subject to redemption.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)
               

Allowance for Loan and Lease Losses

At June 30, 2012At March 31, 2012At June 30, 2011Change from
% of% of% ofMar. 31,Jun. 30,
BalancePortfolioBalancePortfolioBalancePortfolio20122011
Consumer real estate$188,0872.76%$183,8252.70%$175,7162.50%6bps26bps
Commercial50,6991.4450,4441.4550,7831.41(1)3

Leasing and equipment finance

25,450.8121,537.6924,611.8112-
Inventory finance7,072.497,556.462,941.32317
Auto finance1,951.741,019.73--1N.M.
Other9023.109123.131,4213.79(3)(69)
Total$274,1611.80$265,2931.74$255,4721.7565
 

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,
2012201220112011201120122011
Consumer real estate
First mortgage lien1.58%1.66%1.94%2.29%1.78%(8)bps(20)bps
Junior lien3.073.032.632.992.75432
Total consumer real estate2.052.092.152.512.09(4)(4)
Commercial.97.181.79.57.307967
Leasing and equipment finance.15.02.46.36.4513(30)
Inventory finance.06.22