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TCF Reports Quarterly Net Income of $34.1 Million, or 21 Cents Per Share

Company Release - 7/23/2013 8:00 AM ET

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

SECOND QUARTER HIGHLIGHTS

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

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

-Net interest margin maintained at 4.72 percent annualized

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

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

-Announced common and preferred stock dividend payments payable August 30, 2013 and September 3, 2013, respectively

                                                       
Summary of Financial Results                                               Table 1
(Dollars in thousands, except per-share data)         Percent Change      
2Q1Q2Q

 

2Q13 vs

  2Q13 vsYTDYTD

 

Percent

2013     2013       2012    

1Q13

    2Q12     2013      

2012(1)

 

 

Change

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

Financial Ratios(3)

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

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

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

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

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

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

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

     
Revenue
                                                         
Total Revenue                                                   Table 2
      Percent Change
2Q1Q2Q2Q13 vs   2Q13 vsYTDYTD

 

Percent

(Dollars in thousands)

  2013     2013     2012     1Q13     2Q12     2013     2012

 

Change

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

Fees and other revenue as a % of total revenue

33.06 31.77 32.07 32.43 28.71
 
N.M. Not meaningful.
(1) Annualized.
 

Net Interest Income

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

Non-interest Income

  • Fees and service charges in the second quarter of 2013 were $41.6 million, down $6.5 million, or 13.6 percent, from the second quarter of 2012 and up $2.2 million, or 5.7 percent, from the first quarter of 2013. The decrease from the second quarter of 2012 was due to the elimination of the monthly maintenance fee on deposit products through the reintroduction of free checking, partially offset by a higher account base. The increase from the first quarter of 2013 was primarily due to higher seasonal transaction activity during the second quarter of 2013, as well as growth in the account base for the fourth consecutive quarter driven by the reintroduction of free checking.
  • Leasing and equipment finance revenue was $22.9 million during the second quarter of 2013, up $6.4 million, or 39 percent, from the first quarter of 2013. The increase was primarily due to higher sales-type lease revenue on the leasing and equipment finance portfolio as a result of customer-driven events.
  • TCF sold $196.9 million, $144.1 million and $179.8 million of auto loans during the second quarters of 2013 and 2012, and the first quarter of 2013, respectively, resulting in gains in the same respective periods.
  • TCF sold $139.2 million and $279.2 million of consumer real estate loans during the second quarter of 2013 and the first quarter of 2013, respectively, resulting in gains in the same respective periods. There were no sales of consumer real estate loans during the second quarter of 2012.
             
Loans and Leases
                                               
Period-End and Average Loans and Leases                           Table 3
Percent Change
(Dollars in thousands) 2Q1Q2Q2Q13 vs2Q13 vsYTDYTDPercent
2013   2013   2012   1Q13   2Q12     2013   2012   Change
Period-End:
Consumer real estate $ 6,356,426 $ 6,418,666 $ 6,811,784 (1.0 ) % (6.7 ) %
Commercial 3,350,334 3,334,716 3,523,070 .5 (4.9 )
Leasing and equipment finance 3,251,703 3,185,234 3,151,105 2.1 3.2
Inventory finance 1,713,528 1,931,363 1,457,263 (11.3 ) 17.6
Auto finance 882,202 719,666 262,188 22.6 N.M.
Other   25,099     23,701     29,094 5.9 (13.7 )
Total $ 15,579,292   $ 15,613,346   $ 15,234,504 (.2 ) 2.3
 
Average:
Consumer real estate $ 6,430,685 $ 6,556,426 $ 6,793,415 (1.9 ) (5.3 ) $ 6,493,208 $ 6,819,239 (4.8 ) %
Commercial 3,336,406 3,345,780 3,492,049 (.3 ) (4.5 ) 3,341,067 3,474,885 (3.9 )
Leasing and equipment finance 3,236,799 3,199,499 3,145,914 1.2 2.9 3,218,252 3,137,122 2.6
Inventory finance 1,875,810 1,686,364 1,571,004 11.2 19.4 1,780,058 1,353,469 31.5
Auto finance 823,102 670,096 223,893 22.8 N.M. 747,022 154,728 N.M.
Other   13,060     13,641     17,647 (4.3 ) (26.0 )   13,348     17,612 (24.2 )
Total $ 15,715,862   $ 15,471,806   $ 15,243,922 1.6 3.1 $ 15,592,955   $ 14,957,055 4.3
 
N.M. Not meaningful.  
 
  • Loans and leases were $15.6 billion at June 30, 2013, an increase of $344.8 million, or 2.3 percent, compared with June 30, 2012. Quarterly average loans and leases were $15.7 billion for the second quarter of 2013, an increase of $471.9 million, or 3.1 percent, compared with the second quarter of 2012. The increases in period-end and average loans and leases were primarily due to the continued growth of auto finance as TCF continues to expand that business, as well as an increase in the inventory finance portfolio. These increases were partially offset by decreases in consumer real estate loans driven by ongoing sales and a decline in originations of first mortgages.

Credit Quality

(Table 4 - Credit Trends: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50673992&lang=en)

  • Over 60-day delinquencies improved for the sixth consecutive quarter. The over 60-day delinquency rate excluding acquired portfolios and non-accrual loans and leases at June 30, 2013 was .52 percent, down from .53 percent at March 31, 2013 and .74 percent at June 30, 2012. The decrease from June 30, 2012 was primarily a result of reduced delinquencies in the consumer real estate portfolio.
  • Net charge-offs decreased $13.3 million from the first quarter of 2013 and decreased $17.2 million from the second quarter of 2012, respectively, primarily due to improved credit quality in the consumer real estate and commercial portfolios.
  • Non-accrual loans and leases were $278.5 million at June 30, 2013, a decrease of $64.9 million, or 18.9 percent, from March 31, 2013 and a decrease of $46 million, or 14.2 percent, from June 30, 2012. The reduction in the non-accrual consumer real estate balance from March 31, 2013 was primarily due to the sale of $40.5 million of loans during the second quarter of 2013. The decrease from March 31, 2013 and June 30, 2012 was also due to improved credit quality in the commercial and consumer real estate portfolios resulting in fewer commercial and consumer loans entering non-accrual status.
  • Other real estate owned was $66.2 million at June 30, 2013, a decrease of $5.5 million from March 31, 2013, and a decrease of $59.6 million from June 30, 2012. The decrease from June 30, 2012 was primarily due to a portfolio sale of 184 consumer properties during the first quarter of 2013. Additionally, the decrease from both periods was due to a decrease in the number of consumer real estate loans transferred from non-accrual status.
  • Provision for credit losses was $32.6 million for the second quarter of 2013, a decrease of $5.8 million from the first quarter of 2013 and a decrease of $21.5 million from the second quarter of 2012. The decrease from the first quarter of 2013 was primarily due to decreased net charge-offs in the consumer real estate portfolio. The decrease in provision from the second quarter of 2012 was primarily due to decreased net charge-offs in the consumer real estate and commercial portfolios.
               
Deposits
                                                 
Average Deposits                                 Table 5
Percent Change
(Dollars in thousands) 2Q1Q2Q2Q13 vs2Q13 vsYTDYTDPercent
    2013   2013   2012   1Q13     2Q12     2013   2012   Change
 
Checking $ 4,884,433 $ 4,784,945 $ 4,636,701 2.1 % 5.3 % $ 4,834,964 $ 4,600,882 5.1 %
Savings 6,082,200 6,114,219 6,053,264 (.5 ) .5 6,098,121 5,979,191 2.0
Money market   791,859       815,374       748,016   (2.9 ) 5.9   803,551       705,255   13.9
Subtotal 11,758,492 11,714,538 11,437,981 .4 2.8 11,736,636 11,285,328 4.0
Certificates   2,360,881       2,323,267       1,608,653   1.6 46.8   2,342,178       1,372,164   70.7
Total average deposits $ 14,119,373     $ 14,037,805     $ 13,046,634  

.6

8.2 $ 14,078,814     $ 12,657,492   11.2
 
Average interest rate on deposits (1) .25 % .28 % .31 % .27 % .31 %
 
(1) Annualized.
 
  • Total average deposits for the second quarter of 2013 increased $1.1 billion, or 8.2 percent, from the second quarter of 2012 and increased $81.6 million, or .6 percent, from the first quarter of 2013, primarily due to special programs for certificates of deposit and the reintroduction of free checking.
  • The average interest rate on deposits in the second quarter of 2013 was .25 percent, down six basis points from the second quarter of 2012 and down three basis points from the first quarter of 2013, primarily due to declines in average interest rates on various savings accounts.
               
Non-interest Expense
                                                 
Non-interest Expense                                         Table 6
Percent Change
(Dollars in thousands) 2Q1Q2Q2Q13 vs2Q13 vsYTDYTDPercent
2013   2013   2012   1Q13   2Q12   2013   2012   Change

Compensation and employee benefits

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

Foreclosed real estate and repossessed assets, net

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

N.M. Not meaningful.

 
  • Compensation and employee benefits expense for the second quarter of 2013 increased $7.8 million, or 7.9 percent, from the second quarter of 2012 due to increased staff levels to support the growth of auto finance and expenses related to higher commissions based on production results and incentives based on performance.
  • Foreclosed real estate and repossessed assets expense decreased $4.5 million, or 37.3 percent, from the second quarter of 2012 and decreased $2.6 million, or 25.7 percent, from the first quarter of 2013. The decrease from the second quarter of 2012 was driven by reduced expenses related to fewer consumer real estate and commercial foreclosed properties. The change from the first quarter of 2013 was driven by an acceleration of expense related to a portfolio sale of consumer properties during the first quarter of 2013.
         
Capital
                               
Capital Information                     Table 7
At period end
(Dollars in thousands, except per-share data) 2Q4Q
20132012
Total equity $ 1,906,181 $ 1,876,643
Book value per common share $ 9.89 $ 9.79
Tangible realized common equity to tangible assets (1) 7.77 % 7.52 %
 
Risk-based capital (2)
Tier 1 $ 1,695,092 11.27 % $ 1,633,336 11.09 %
Total 2,034,312 13.53 2,007,835 13.63
 
Tier 1 leverage capital $ 1,695,092 9.34 % $ 1,633,336 9.21 %
 
Tier 1 common capital (3) $ 1,415,190 9.41 % $ 1,356,826 9.21 %
 
(1) Excludes the impact of goodwill, other intangibles and accumulated other comprehensive (loss) income (see “Reconciliation of GAAP to Non-GAAP Financial Measures” table).
(2) The Company's capital ratios continue to be in excess of "well-capitalized" regulatory benchmarks.
(3) Excludes the effect of preferred shares and qualifying non-controlling interest in subsidiaries (see “Reconciliation of GAAP to Non-GAAP Financial Measures” table).
 
  • On July 22, 2013, the Board of Directors of TCF declared a regular quarterly cash dividend of 5 cents per common share payable on August 30, 2013, to stockholders of record at the close of business on August 15, 2013. TCF also declared dividends on the 7.50% Series A and 6.45% Series B Non-Cumulative Perpetual Preferred Stock, both payable on September 3, 2013, to stockholders of record at the close of business on August 15, 2013.

Webcast 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 23, 2013 at 8:00 a.m. CT. A slide presentation for the call will be available on the website prior to the call. Additionally, the webcast will be available for replay at TCF’s website after the conference call. The website also includes free access to company news releases, TCF’s annual report, investor presentations and SEC filings.

 

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

 

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

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

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

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

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

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

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

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

Accounting, Audit, Tax and Insurance Matters.Changes in accounting standards or interpretations of existing standards; federal or state monetary, fiscal or tax policies, including adoption of state legislation that would increase state taxes; ineffective internal controls; adverse state or Federal tax assessments or findings in tax audits; lack of or inadequate insurance coverage for claims against TCF; potential for claims and legal action related to TCF’s fiduciary responsibilities.

 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
       
Three Months Ended June 30,Change
20132012$%
Interest income:
Loans and leases$206,675$208,766$(2,091)(1.0)%
Securities available for sale4,6375,816(1,179)(20.3)
Investments and other   6,296     3,633   2,663   73.3
Total interest income   217,608     218,215   (607)(.3)
Interest expense:
Deposits8,85110,197(1,346)(13.2)
Borrowings   6,713     9,794   (3,081)(31.5)
Total interest expense   15,564     19,991   (4,427)(22.1)
Net interest income202,044198,2243,8201.9
Provision for credit losses   32,591     54,106   (21,515)(39.8)

Net interest income after provision for credit losses

  169,453     144,118   25,335   17.6
Non-interest income:
Fees and service charges41,57248,090(6,518)(13.6)
Card revenue13,27013,530(260)(1.9)
ATM revenue   5,828     6,276   (448)(7.1)
Subtotal60,67067,896(7,226)(10.6)
Leasing and equipment finance22,87423,207(333)(1.4)
Gain on sales of auto loans8,1355,4962,63948.0
Gain on sale of consumer real estate loans4,069-4,069N.M.
Other   4,035     3,168   867   27.4
Fees and other revenue99,78399,76716-
Gains on securities, net   -     13,116   (13,116)(100.0)
Total non-interest income   99,783     112,883   (13,100)(11.6)
Non-interest expense:
Compensation and employee benefits105,53797,7877,7507.9
Occupancy and equipment33,06232,7313311.0
FDIC insurance8,3628,469(107)(1.3)
Operating lease depreciation6,1506,417(267)(4.2)
Advertising and marketing5,5325,4041282.4
Deposit account premiums6001,690(1,090)(64.5)
Other   41,946     36,956   4,990   13.5
Subtotal201,189189,45411,7356.2
Foreclosed real estate and repossessed assets, net7,55512,059(4,504)(37.3)
Other credit costs, net   (228)   1,476   (1,704)N.M.
Total non-interest expense   208,516     202,989   5,527   2.7
Income before income tax expense60,72054,0126,70812.4
Income tax expense   19,444     20,542   (1,098)(5.3)
Income after income tax expense41,27633,4707,80623.3
Income attributable to non-controlling interest   2,372     1,939   433   22.3
Net income attributable to TCF Financial Corporation   38,904     31,531   7,373   23.4
Preferred stock dividends   4,847     -   4,847   N.M.
Net income available to common stockholders$34,057   $31,531$2,526   8.0
 
Net income per common share:
Basic$.21$.20$.015.0
Diluted.21.20.015.0
 
Dividends declared per common share$.05$.05$--
 

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

Basic160,895159,1131,7821.1
Diluted161,749159,5392,2101.4
 
N.M. Not meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
       
Six Months Ended June 30,Change
20132012$%
Interest income:
Loans and leases$411,580$414,750$(3,170)(.8)%
Securities available for sale9,43224,928(15,496)(62.2)
Investments and other   12,146     6,066     6,080   100.2
Total interest income   433,158     445,744     (12,586)(2.8)
Interest expense:
Deposits18,53219,258(726)(3.8)
Borrowings   13,491     48,089     (34,598)(71.9)
Total interest expense   32,023     67,347     (35,324)(52.5)
Net interest income401,135378,39722,7386.0
Provision for credit losses   70,974     102,648     (31,674)(30.9)

Net interest income after provision for credit losses

  330,161     275,749     54,412   19.7
Non-interest income:
Fees and service charges80,89589,946(9,051)(10.1)
Card revenue25,68726,737(1,050)(3.9)
ATM revenue   11,333     12,475     (1,142)(9.2)
Subtotal117,915129,158(11,243)(8.7)
Leasing and equipment finance39,33446,074(6,740)(14.6)
Gain on sales of auto loans15,2817,7467,53597.3
Gain on sale of consumer real estate loans12,195-12,195N.M.
Other   7,761     5,523     2,238   40.5
Fees and other revenue192,486188,5013,9852.1
Gains on securities, net   -     89,727     (89,727)(100.0)
Total non-interest income   192,486     278,228     (85,742)(30.8)
Non-interest expense:
Compensation and employee benefits209,766193,75416,0128.3
Occupancy and equipment65,93764,9779601.5
FDIC insurance16,07214,8551,2178.2
Operating lease depreciation11,78513,148(1,363)(10.4)
Advertising and marketing11,2648,0213,24340.4
Deposit account premiums1,2027,661(6,459)(84.3)
Other   79,885     74,252     5,633   7.6
Subtotal395,911376,66819,2435.1
Loss on termination of debt-550,735(550,735)(100.0)
Foreclosed real estate and repossessed assets, net17,72223,106(5,384)(23.3)
Other credit costs, net   (1,065)   1,188     (2,253)N.M.
Total non-interest expense   412,568     951,697     (539,129)(56.6)
Income (loss) before income tax expense (benefit)110,079(397,720)507,799N.M.
Income tax expense (benefit)   37,003     (149,702)   186,705   N.M.
Income (loss) after income tax expense (benefit)73,076(248,018)321,094N.M.
Income attributable to non-controlling interest   4,198     3,345     853   25.5
Net income (loss) attributable to TCF Financial Corporation68,878(251,363)320,241N.M.
Preferred stock dividends   9,371     -     9,371   N.M.
Net income (loss) available to common stockholders$59,507   $(251,363)$310,870   N.M.
 
Net income (loss) per common share:
Basic$.37$(1.58)$1.95N.M.
Diluted.37(1.58)1.95N.M.
 
Dividends declared per common share$.10$.10$--
 

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

Basic160,644158,8101,8341.2
Diluted161,443158,8102,6331.7
 
N.M. Not meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
       
Three Months Ended June 30,Change
20132012$%
Net income attributable to TCF Financial Corporation$38,904   $31,531   $7,373   23.4 %
Other comprehensive income (loss):

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

(34,420)19,868(54,288)N.M.
Foreign currency hedge874268606N.M.
Foreign currency translation adjustment(973)(324)(649)N.M.

Recognized postretirement prior service cost and transition obligation

(12)(7)(5)(71.4)
Income tax benefit (expense)12,662   (7,375)20,037   N.M.
Total other comprehensive (loss) income(21,869)12,430   (34,299)N.M.
Comprehensive income$17,035   $43,961   $(26,926)(61.2)
 
 
Six Months Ended June 30,Change
20132012$%
Net income (loss) attributable to TCF Financial Corporation$68,878   $(251,363)$320,241   N.M. %
Other comprehensive income (loss):

Reclassification adjustment for securities gains included in net income (loss) attributable to TCF Financial Corporation

-(76,967)76,967(100.0)

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

(48,249)12,100(60,349)N.M.
Foreign currency hedge1,411(136)1,547N.M.
Foreign currency translation adjustment(1,595)61(1,656)N.M.

Recognized postretirement prior service cost and transition obligation

(24)(14)(10)(71.4)
Income tax benefit17,681   23,833   (6,152)(25.8)
Total other comprehensive loss(30,776)(41,123)10,347   25.2
Comprehensive income (loss)$38,102   $(292,486)$330,588   N.M.
 

N.M. Not meaningful.

 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per-share data)
(Unaudited)
       

At Jun. 30,

At Dec. 31,

Change
20132012$%
ASSETS
 
Cash and due from banks$1,132,436$1,100,347$32,0892.9%
Investments118,918120,867(1,949)(1.6)
Securities available for sale620,260712,091(91,831)(12.9)
Loans and leases held for sale104,93310,28994,644N.M.
Loans and leases:
Consumer real estate6,356,4266,674,501(318,075)(4.8)
Commercial3,350,3343,405,235(54,901)(1.6)
Leasing and equipment finance3,251,7033,198,01753,6861.7
Inventory finance1,713,5281,567,214146,3149.3
Auto finance882,202552,833329,36959.6
Other loans and leases   25,099     27,924     (2,825)(10.1)
Total loans and leases15,579,29215,425,724153,5681.0
Allowance for loan and lease losses   (265,599)   (267,128)   1,529   .6
Net loans and leases15,313,69315,158,596155,0971.0
Premises and equipment, net439,048440,466(1,418)(.3)
Goodwill225,640225,640--
Other assets   444,679     457,621     (12,942)(2.8)
Total assets$18,399,607   $18,225,917   $173,690   1.0
 
LIABILITIES AND EQUITY
 
Deposits:
Checking$4,931,189$4,834,632$96,5572.0
Savings6,101,6426,104,104(2,462)-
Money market   810,249     820,553     (10,304)(1.3)
Subtotal11,843,08011,759,28983,791.7
Certificates of deposit   2,442,504     2,291,497     151,007   6.6
Total deposits   14,285,584     14,050,786     234,798   1.7
Short-term borrowings3,0302,61941115.7
Long-term borrowings   1,787,728     1,931,196     (143,468)(7.4)
Total borrowings1,790,7581,933,815(143,057)(7.4)
Accrued expenses and other liabilities   417,084     364,673     52,411   14.4
Total liabilities   16,493,426     16,349,274     144,152   .9
Equity:

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

263,240263,240--

Common stock, par value $.01 per share, 280,000,000 shares authorized; 164,453,669 and 163,428,763 shares issued

1,6451,63411.7
Additional paid-in capital763,349750,04013,3091.8
Retained earnings, subject to certain restrictions920,894877,44543,4495.0
Accumulated other comprehensive (loss) income(18,333)12,443(30,776)N.M.
Treasury stock at cost, 42,566 shares, and other   (41,276)   (41,429)   153   .4
Total TCF Financial Corporation stockholders' equity   1,889,519     1,863,373     26,146   1.4
Non-controlling interest in subsidiaries   16,662     13,270     3,392   25.6
Total equity   1,906,181     1,876,643     29,538   1.6
Total liabilities and equity$18,399,607   $18,225,917   $173,690   1.0
 

N.M. Not meaningful.

 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA
(Dollars in thousands)
(Unaudited)
             
AtAtAtAtAtChange from
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2013201320122012201220132012

Delinquency Data - Principal Balances (1)

60 days or more:
Consumer real estate
First mortgage lien$66,876$66,164$76,020$80,153$86,714$712$(19,838)
Junior lien8,022   9,674   13,141   13,388   13,967   (1,652)(5,945)
Total consumer real estate74,89875,83889,16193,541100,681(940)(25,783)
Commercial1,6799062,6302,6525,616773(3,937)
Leasing and equipment finance1,8402,0672,5681,5541,492(227)348
Inventory finance3315611980206(123)(173)
Auto finance86856353230562305806
Other26   -   31   22   34   26   (8)
Subtotal79,34479,53095,04198,154108,091(186)(28,747)
Acquired portfolios627   578   982   1,069   1,483   49   (856)
Total delinquencies$79,971   $80,108   $96,023   $99,223   $109,574   $(137)$(29,603)
 

Delinquency Data - % of Portfolio (1)

60 days or more:
Consumer real estate
First mortgage lien1.74%1.67%1.88%1.93%1.93%7bps(19)bps
Junior lien.34.43.55.59.64(9)(30)
Total consumer real estate1.211.221.381.461.51(1)(30)
Commercial.05.03.08.08.172(12)
Leasing and equipment finance.06.07.08.05.05(1)1
Inventory finance-.01.01.01.01(1)(1)
Auto finance.10.08.10.08.0228
Other.11-.12.09.1311(2)
Subtotal.52.53.64.67.74(1)(22)
Acquired portfolios.51.37.58.50.5814(7)
Total delinquencies.52.52.64.67.73-(21)
 
(1) Excludes non-accrual loans and leases.
AtAtAtAtAtChange from
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2013201320122012201220132012

Non-Accrual Loans and Leases

Non-accrual loans and leases:
Consumer real estate
First mortgage lien$132,586$186,218$199,631$197,649$122,406$(53,632)$10,180
Junior lien30,744   33,907   35,269   35,936   18,272   (3,163)12,472  
Total consumer real estate163,330220,125234,900233,585140,678(56,795)22,652
Commercial102,103108,505127,746169,339150,215(6,402)(48,112)
Leasing and equipment finance11,10311,69513,65215,81229,429(592)(18,326)
Inventory finance1,0081,4801,4871,1201,900(472)(892)
Auto finance118106101--12118
Other809   1,477   1,571   1,957   2,204   (668)(1,395)
Total non-accrual loans and leases$278,471   $343,388   $379,457   $421,813   $324,426   $(64,917)$(45,955)
 
Non-accrual loans and leases - rollforward
Balance, beginning of period$343,388$379,457$421,813$324,426$308,943$(36,069)$34,445
Additions41,54956,71288,235210,916111,739(15,163)(70,190)
Charge-offs(12,780)(23,773)(27,657)(49,116)(28,228)10,99315,448
Transfers to other assets(16,014)(20,087)(17,305)(24,632)(34,473)4,07318,459
Return to accrual status(21,360)(34,692)(55,261)(30,300)(22,200)13,332840
Payments received(16,977)(15,399)(30,832)(9,652)(12,261)(1,578)(4,716)
Sales(40,461)(133)---(40,328)(40,461)
Other, net1,126   1,303   464   171   906   (177)220  
Balance, end of period$278,471   $343,388   $379,457   $421,813   $324,426   $(64,917)$(45,955)
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)
 
Change from
Jun 30,Mar 31,Dec 31,Sep 30,Jun 30,Mar 31,Jun 30,
2013201320122012201220132012

Other Real Estate Owned

Other real estate owned (1)
Consumer real estate$44,759$46,404$69,599$85,764$83,176$(1,645)$(38,417)
Commercial real estate21,473   25,359   27,379   34,662   42,700   (3,886)(21,227)
Total other real estate owned$66,232   $71,763   $96,978   $120,426   $125,876   $(5,531)$(59,644)
 
Other real estate owned - rollforward
Balance, beginning of period$71,763$96,978$120,426$125,876$127,228$(25,215)$(55,465)
Transferred in16,50320,85518,44426,09733,739(4,352)(17,236)
Sales(17,895)(40,456)(39,528)(28,479)(29,448)22,56111,553
Writedowns(4,270)(5,294)(4,614)(3,493)(6,237)1,0241,967
Other, net131   (320)2,250   425   594   451   (463)
Balance, end of period$66,232   $71,763   $96,978   $120,426   $125,876   $(5,531)$(59,644)
 
Ending number of properties owned
Consumer real estate24622441842542622(180)
Commercial real estate20   18   18   26   32   2   (12)
Total266   242   436   451   458   24   (192)
 
(1) Includes properties owned and foreclosed properties subject to redemption.
 
Change from
Jun 30,Mar 31,Dec 31,Sep 30,Jun 30,Mar 31,Jun 30,
2013201320122012201220132012

Non-Accrual Loans and Leases and Other Real Estate Owned

Non-accrual loans and leases$196,996$221,278$261,796$318,611$324,426$(24,282)$(127,430)
Loans discharged in bankruptcy (1)81,475122,110117,661103,202-(40,635)81,475
Other real estate owned66,232   71,763   96,978   120,426   125,876   (5,531)(59,644)
Total non-accrual loans and leases and other real estate owned$344,703   $415,151   $476,435   $542,239   $450,302   $(70,448)$(105,599)
 
Percent of total loans and leases and other real estate owned2.20%2.65%3.07%3.54%2.93%(45)bps(73)bps
 
(1) Consumer real estate loans required to be reported as nonaccrual loans, regardless of delinquency status, due to the implementation of clarifying regulatory guidance in the third quarter of 2012, related to the discharge of a borrowers' personal liability following Chapter 7 bankruptcy proceedings.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)
         

Allowance for Loan and Lease Losses

At June 30, 2013At March 31, 2013At June 30, 2012Change from
% of% of% ofMar. 31,Jun. 30,
BalancePortfolioBalancePortfolioBalancePortfolio20132012
Consumer real estate$181,0522.85%$182,6872.85%$188,0872.76%-bps9bps
Commercial50,0721.4948,5561.4650,6991.4435

Leasing and equipment finance

17,975.5517,541.5525,450.81-(26)
Inventory finance8,197.488,788.467,072.492(1)
Auto finance7,509.855,390.751,951.741011
Other7943.166342.679023.10496
Total$265,5991.70$263,5961.69$274,1611.801(10)
 

Net Charge-Offs

Change from
Quarter EndedQuarter Ended
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2013201320122012201220132012
Consumer real estate
First mortgage lien$15,084$19,907$22,163$40,469$18,369

 

$

(4,823)

 

$

(3,285)
Junior lien8,642   10,54011,75734,20216,487(1,898)(7,845)
Total consumer real estate23,72630,44733,92074,67134,856(6,721)(11,130)
Commercial2,4497,8498,35120,5478,455(5,400)(6,006)
Leasing and equipment finance2441,2101,3457,5211,173(966)(929)
Inventory finance(14)355193444225(369)(239)
Auto finance76583677128081(71)684
Other524   30794099169217   455  
Total$27,694   $41,004$45,520$104,454$44,859

 

$

(13,310)

 

$

(17,165)
 

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

Change from
Quarter Ended (1)Quarter Ended
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2013201320122012201220132012
Consumer real estate
First mortgage lien1.48%1.90%2.06%3.60%1.58%(42)bps(10)bps
Junior lien1.461.781.996.123.07(32)(161)
Total consumer real estate1.481.862.044.442.05(38)(57)
Commercial.29.94.972.32.97(65)(68)
Leasing and equipment finance.03.15.17.95.15(12)(12)
Inventory finance-.08.05.12.06(8)(6)
Auto finance.37.50.61.30.14(13)23
Other16.059.01N.M.N.M.N.M.704N.M.
Total.701.061.182.741.18(36)(48)
 
(1) Annualized.
N.M. Not Meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)
           
Three Months Ended June 30,
20132012
AverageYields andAverageYields and
BalanceInterest

Rates(1)(2)

BalanceInterest

Rates(1)(2)

ASSETS:
Investments and other$735,078$3,7612.05%$430,084$2,6542.48%
U.S. Government sponsored entities:
Mortgage-backed securities, fixed rate654,9684,6362.83733,7965,8133.17
U.S. Treasury securities494-.07---
Other securities   93   12.54   225   34.14
Total securities available for sale (3)   655,555   4,6372.83   734,021   5,8163.17
Loans and leases held for sale116,3902,5358.7444,7889798.80
Loans and leases:
Consumer real estate:
Fixed-rate3,809,06655,9775.894,365,67063,4325.84
Variable-rate   2,621,619   33,5455.13   2,427,745   30,2025.00
Total consumer real estate   6,430,685   89,5225.58   6,793,415   93,6345.54
Commercial:
Fixed- and adjustable-rate2,392,31531,2545.242,730,08537,2425.49
Variable-rate   944,091   8,3543.55   761,964   7,5503.99
Total commercial   3,336,406   39,6084.76   3,492,049   44,7925.16
Leasing and equipment finance3,236,79939,9904.943,145,91443,1095.48
Inventory finance1,875,81027,8605.961,571,00423,6906.07
Auto finance823,10210,1934.97223,8933,8356.89
Other   13,060   2638.10   17,647   3367.66
Total loans and leases (4)   15,715,862   207,4365.29   15,243,922   209,3965.52
Total interest-earning assets   17,222,885   218,3695.08   16,452,815   218,8455.34
Other assets (5)   1,110,213   1,202,003
Total assets$18,333,098$17,654,818
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail$1,476,173$1,316,767
Small business752,395725,052
Commercial and custodial   326,773   310,321
Total non-interest bearing deposits   2,555,341   2,352,140
Interest-bearing deposits:
Checking2,351,652377.062,306,810883.15
Savings6,059,6402,790.186,031,0155,164.34
Money market   791,859   547.28   748,016   718.39
Subtotal9,203,1513,714.169,085,8416,765.30
Certificates of deposit   2,360,881   5,137.87   1,608,653   3,432.86
Total interest-bearing deposits   11,564,032   8,851.31   10,694,494   10,197.38
Total deposits   14,119,373   8,851.25   13,046,634   10,197.31
Borrowings:
Short-term borrowings7,3148.44705,888535.30
Long-term borrowings   1,879,576   6,7051.43   1,986,182   9,2591.87
Total borrowings   1,886,890   6,7131.42   2,692,070   9,7941.46
Total interest-bearing liabilities   13,450,922   15,564.46   13,386,564   19,991.60
Total deposits and borrowings   16,006,263   15,564.39   15,738,704   19,991.51
Other liabilities   420,398   335,113
Total liabilities   16,426,661   16,073,817

Total TCF Financial Corp. stockholders' equity

1,886,1381,563,158
Non-controlling interest in subsidiaries   20,299   17,843
Total equity   1,906,437   1,581,001
Total liabilities and equity$18,333,098$17,654,818
Net interest income and margin$202,8054.72$198,8544.86
 
(1) Annualized.
(2) Interest and yields are presented on a fully tax equivalent basis.
(3) Average balances and yields of securities available for sale are based upon historical amortized cost and exclude equity securities.
(4) Average balances of loans and leases include non-accrual loans and leases, and are presented net of unearned income.
(5) Includes operating leases.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)
           
Six Months Ended June 30,
20132012
AverageYields andAverageYields and
BalanceInterest

Rates(1)(2)

BalanceInterest

Rates(1)(2)

ASSETS:
Investments and other$774,987$7,0071.82%$587,802$5,0421.72%
U.S. Government sponsored entities:
Mortgage-backed securities, fixed rate664,8589,4302.841,410,40724,9243.53
U.S. Treasury securities696-.07---
Other securities   100   22.52   227   44.13
Total securities available for sale (3)   665,654   9,4322.83   1,410,634   24,9283.53
Loans and leases held for sale135,4725,1397.6525,3301,0248.13
Loans and leases:
Consumer real estate:
Fixed-rate3,862,590113,0355.904,404,410129,5845.92
Variable-rate   2,630,618   66,6275.11   2,414,829   60,2705.02
Total consumer real estate   6,493,208   179,6625.58   6,819,239   189,8545.60
Commercial:
Fixed- and adjustable-rate2,434,96063,8085.282,733,96775,4525.55
Variable-rate   906,107   15,8683.53   740,918   15,0624.09
Total commercial   3,341,067   79,6764.81   3,474,885   90,5145.24
Leasing and equipment finance3,218,25280,9035.033,137,12287,1095.55
Inventory finance1,780,05853,4656.061,353,46942,4166.30
Auto finance747,02218,8355.08154,7285,4187.04
Other   13,348   5398.15   17,612   7058.04
Total loans and leases (4)   15,592,955   413,0805.33   14,957,055   416,0165.59
Total interest-earning assets   17,169,068   434,6585.10   16,980,821   447,0105.29
Other assets (5)   1,118,397   1,290,585
Total assets$18,287,465$18,271,406
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail$1,451,381$1,338,539
Small business748,304716,734
Commercial and custodial   328,373   307,427
Total non-interest bearing deposits   2,528,058   2,362,700
Interest-bearing deposits:
Checking2,330,078874.082,260,4991,785.16
Savings6,074,9496,159.205,956,87410,602.36
Money market   803,551   1,177.30   705,255   1,328.38
Subtotal9,208,5788,210.188,922,62813,715.31
Certificates of deposit   2,342,178   10,322.89   1,372,164   5,543.81
Total interest-bearing deposits   11,550,756   18,532.32   10,294,792   19,258.38
Total deposits   14,078,814   18,532.27   12,657,492   19,258.31
Borrowings:
Short-term borrowings7,96616.42571,019865.30
Long-term borrowings   1,903,227   13,4751.42   2,901,673   47,2243.27
Total borrowings   1,911,193   13,4911.42   3,472,692   48,0892.78
Total interest-bearing liabilities   13,461,949   32,023.48   13,767,484   67,347.98
Total deposits and borrowings   15,990,007   32,023.40   16,130,184   67,347.84
Other liabilities