TCF Reports Quarterly Net Income of $53.1 Million, or 29 Cents Per Share, Up 8 Cents, or 38.1 Percent from the Second Quarter of 2013

Company Release - 7/25/2014 8:00 AM ET

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

SECOND QUARTER HIGHLIGHTS

-Revenue of $310.1 million, up 2.7 percent from the second quarter of 2013

-Loan and lease originations of $3.5 billion, up 8.6 percent from the second quarter of 2013

-Average deposits of $14.8 billion, up 4.6 percent from the second quarter of 2013

-Provision for credit losses of $9.9 million, down 69.6 percent from the second quarter of 2013

-Non-accrual loans and leases of $260.3 million, down 6.5 percent from the second quarter of 2013

-Return on average assets of 1.17 percent, up 27 basis points from the second quarter of 2013

-Return on average tangible common equity of 12.72 percent, up 282 basis points from the second quarter of 2013

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

 

2Q14 vs

    2Q14 vsYTDYTDPercent
2014     2014       2013   1Q14       2Q13         2014       2013Change
Net income attributable to TCF $ 53,125 $ 44,757 $ 38,904 18.7 % 36.6 % $ 97,882 $ 68,878 42.1 %
Net interest income 206,101 201,274 202,044 2.4 2.0 407,375 401,135 1.6
Diluted earnings per common share .29 .24 .21 20.8 38.1 .54 .37 45.9
 

Financial Ratios(1)

Pre-tax pre-provision return on average assets (2)

2.05 % 1.88 % 2.04 % 1.96 % 1.98 %
Return on average assets 1.17 1.00 .90 1.09 .80
Return on average common equity 10.99 9.35 8.39 10.18 7.39

Return on average tangible common equity (3)

12.72 10.89 9.90 11.82 8.76
Net interest margin 4.65 4.66 4.72 4.66 4.72

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

    .45       .43       .70                     .44       .88      
(1) Annualized.
(2) Pre-tax pre-provision profit is calculated as total revenues less non-interest expense.
(3) See "Reconciliation of GAAP to Non-GAAP Financial Measures" table.
 

TCF Financial Corporation (“TCF” or the “Company”) (NYSE: TCB) today reported net income of $53.1 million for the second quarter of 2014, compared with net income of $38.9 million for the second quarter of 2013, and net income of $44.8 million for the first quarter of 2014. Diluted earnings per common share was 29 cents for the second quarter of 2014, compared with 21 cents for the second quarter of 2013, and 24 cents for the first quarter of 2014.

TCF reported net income of $97.9 million for the first six months of 2014, compared with net income of $68.9 million for the same period in 2013. Diluted earnings per common share was 54 cents for the first six months of 2014, compared with 37 cents for the same period in 2013.

Chairman’s Statement

“TCF’s financial metrics continued to improve in the second quarter,” said William A. Cooper, Chairman and Chief Executive Officer. “TCF earned 29 cents per common share during the quarter, up 38 percent from a year ago. Return on average assets was 1.17 percent while return on average tangible common equity was 12.72 percent.

“TCF experienced strong loan and lease originations and deposit growth. Our net interest margin was 4.65 percent, relatively flat with the first quarter of 2014. Fee income was strong and overall credit quality showed continued improvement. The efforts of our employees and the support from our Board of Directors have contributed to the transformation of the Company which is reflected in our current performance. TCF’s net income of $53.1 million during the quarter was the highest level since the fourth quarter of 2007.”

Revenue
 
Total RevenueTable 2
        Percent Change      
(Dollars in thousands) 2Q1Q2Q2Q14 vs   2Q14 vsYTDYTDPercent
  2014       2014       2013     1Q14     2Q13       2014       2013Change
Net interest income $ 206,101     $ 201,274     $ 202,044 2.4 % 2.0 % $ 407,375     $ 401,135 1.6 %
Fees and other revenue:
Fees and service charges 38,035 36,619 41,572 3.9 (8.5) 74,654 80,895 (7.7)
Card revenue 13,249 12,250 13,270 8.2 (.2) 25,499 25,687 (.7)
ATM revenue   5,794       5,319       5,828 8.9 (.6)   11,113       11,333 (1.9)
Total banking fees 57,078 54,188 60,670 5.3 (5.9) 111,266 117,915 (5.6)
Leasing and equipment finance 23,069 21,980 22,609 5.0 2.0 45,049 38,813 16.1
Gains on sales of auto loans, net 7,270 8,470 8,135 (14.2) (10.6) 15,740 15,281 3.0

Gains on sales of consumer real estate loans, net

8,151 11,706 4,069 (30.4) 100.3 19,857 12,195 62.8
Servicing fee income 4,892 4,307 3,128 13.6 56.4 9,199 5,884 56.3
Other   2,789       2,382       1,172 17.1 138.0   5,171       2,398 115.6
Total fees and other revenue   103,249       103,033       99,783 .2 3.5   206,282       192,486 7.2
Subtotal 309,350 304,307 301,827 1.7 2.5 613,657 593,621 3.4
Gains on securities, net   767       374       - 105.1 N.M.   1,141       - N.M.
Total revenue $ 310,117     $ 304,681     $ 301,827 1.8 2.7 $ 614,798     $ 593,621 3.6
 
Net interest margin (1) 4.65 % 4.66 % 4.72 % 4.66 % 4.72 %

Fees and other revenue as a % of total revenue

33.29 33.82 33.06 33.55 32.43
 
N.M. Not meaningful.
(1) Annualized.                                                          

Net Interest Income

  • Net interest income for the second quarter of 2014 increased $4.1 million, or 2 percent, compared with the second quarter of 2013. The increase from the second quarter of 2013 was driven by higher average loan and lease balances in the auto finance, inventory finance and leasing and equipment finance businesses as well as a reduced cost of borrowings. This increase was partially offset by downward pressure on yields across the lending businesses in this increasingly competitive low interest rate environment as well as lower average balances of consumer real estate and higher yielding commercial fixed-rate loans due to run-off exceeding originations.
  • Net interest income for the second quarter of 2014 increased $4.8 million, or 2.4 percent, compared with first quarter of 2014. The increase was primarily due to higher average loan balances in the auto finance portfolio due to continued growth and in the inventory finance portfolio due to seasonality. The increase was partially offset by reduced interest income from lower average balances of consumer real estate loans.
  • Net interest margin in the second quarter of 2014 was 4.65 percent, compared with 4.72 percent in the second quarter of 2013 and remained relatively flat compared to the first quarter of 2014. The decrease from the second quarter of 2013 was primarily due to downward pressure on origination yields in consumer real estate due to the increasingly competitive low interest rate environment as well as a shift in commercial real estate from higher yielding fixed-rate loans to lower yielding variable-rate loans due to marketplace demand.

Non-interest Income

  • Fees and service charges in the second quarter of 2014 were $38 million, down $3.5 million, or 8.5 percent, from the second quarter of 2013 and up $1.4 million, or 3.9 percent, from the first quarter of 2014. The decrease from the second quarter of 2013 was primarily due to customer behavior changes, as well as higher average checking account balances per customer. The increase from the first quarter of 2014 was primarily due to seasonality resulting in an increase in transaction activity and a decrease in average checking account balances per customer.
  • Leasing and equipment finance revenue was $23.1 million during the second quarter of 2014, up $460 thousand, or 2 percent, from the second quarter of 2013 and up$1.1 million, or 5 percent, from the first quarter of 2014. The increases in both periods were primarily due to customer-driven events impacting sales-type lease revenue.
  • TCF sold $224.2 million, $139.2 million and $347.4 million of consumer real estate loans during the second quarters of 2014 and 2013, and the first quarter of 2014, respectively, resulting in net gains in the same respective periods.
  • TCF sold $220.2 million, $196.9 million and $261.7 million of auto loans during the second quarters of 2014 and 2013, and the first quarter of 2014, respectively, resulting in net gains in the same respective periods.
  • Servicing fee income was $4.9 million on $2.6 billion of loans and leases serviced for others during the second quarter of 2014 compared to $3.1 million on $ 1.6 billion of loans and leases serviced for others during the second quarter of 2013 and $4.3 million on $2.4 billion of loans and leases serviced for others during the first quarter of 2014. The increases in servicing fee income in both periods were primarily due to an increase in consumer real estate and auto finance loans serviced for others.
Loans and Leases
 
Period-End and Average Loans and Leases   Table 3
        Percent Change      
(Dollars in thousands) 2Q1Q2Q2Q14 vs   2Q14 vsYTDYTDPercent
  2014     2014     2013   1Q14     2Q13       2014     2013   Change
Period-End:
Consumer real estate:
First mortgage lien $ 3,542,324 $ 3,668,245 $ 3,982,481 (3.4) % (11.1) %
Junior lien   2,480,763     2,407,286     2,373,945 3.1 4.5
Total consumer real estate 6,023,087 6,075,531 6,356,426 (.9) (5.2)
Commercial 3,093,161 3,136,421 3,350,334 (1.4) (7.7)
Leasing and equipment finance 3,526,264 3,456,759 3,251,703 2.0 8.4
Inventory finance 1,880,667 2,123,808 1,713,528 (11.4) 9.8
Auto finance 1,502,860 1,400,527 882,202 7.3 70.4
Other   24,486     22,550     25,099 8.6 (2.4)
Total $ 16,050,525   $ 16,215,596   $ 15,579,292 (1.0) 3.0
 
Average:
Consumer real estate:
First mortgage lien $ 3,606,635 $ 3,719,961 $ 4,068,020 (3.0) % (11.3) % $ 3,662,985 $ 4,127,209 (11.2) %
Junior lien   2,498,151     2,607,851     2,362,665 (4.2) 5.7   2,552,698     2,365,999 7.9
Total consumer real estate 6,104,786 6,327,812 6,430,685 (3.5) (5.1) 6,215,683 6,493,208 (4.3)
Commercial 3,131,320 3,122,066 3,336,406 .3 (6.1) 3,126,718 3,341,067 (6.4)
Leasing and equipment finance 3,500,647 3,434,691 3,236,799 1.9 8.2 3,467,851 3,218,252 7.8
Inventory finance 2,061,437 1,862,745 1,875,810 10.7 9.9 1,968,431 1,780,058 10.6
Auto finance 1,518,194 1,327,232 823,102 14.4 84.4 1,423,240 747,022 90.5
Other   12,040     13,273     13,060 (9.3) (7.8)   12,654     13,348 (5.2)
Total $ 16,328,424   $ 16,087,819   $ 15,715,862 1.5 3.9 $ 16,214,577   $ 15,592,955 4.0
  • Loans and leases were $16.1 billion at June 30, 2014, an increase of $471.2 million, or 3 percent, compared with June 30, 2013 and a decrease of $165.1 million, or 1 percent, compared with March 31, 2014. Average loans and leases were $16.3 billion for the second quarter of 2014, an increase of $612.6 million, or 3.9 percent, compared with the second quarter of 2013 and an increase of $240.6 million, or 1.5 percent, compared with the first quarter of 2014.

The increase from the second quarter of 2013 for period-end loans and leases and the increase from both periods for average loans and leases were primarily due to the continued growth of the auto finance portfolio as TCF expands the number of active dealers and sales force in its network and further penetrates existing territories, as well as an increase in the leasing and equipment finance portfolio. These increases were partially offset by a decrease in commercial real estate loans, primarily due to run-off exceeding new originations, as well as a decrease in total consumer real estate loans driven by run-off in the first mortgage real estate business and on-going loan sales.

The decrease from the first quarter of 2014 for period-end loans and leases was primarily due to seasonality within the inventory finance business, partially offset by the continued growth of the auto finance portfolio, coupled with assets moved to held for sale at the end of the quarter in anticipation of executing the Company’s inaugural auto loan securitization.

  • Loan and lease originations were $3.5 billion for the second quarter of 2014, an increase of $273.8 million, or 8.6 percent, compared with the second quarter of 2013 and an increase of $311.2 million, or 9.9 percent, compared with the first quarter of 2014. The increase from the second quarter of 2013 was primarily due to the continued growth in auto finance and an increase in inventory finance and leasing and equipment finance originations as a result of an improving economic environment, partially offset by a decrease in commercial originations. The increase from the first quarter of 2014 was primarily due to an increase in consumer real estate, auto finance and leasing and equipment finance originations, partially offset by seasonality within the inventory finance business.

Credit Quality

(Table 4 - Credit Trends: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50911437&lang=en)

  • Non-accrual loans and leases and other real estate owned totaled $325.4 million at June 30, 2014, a decrease of $19.3 million, or 5.6 percent, from June 30, 2013, and a decrease of $4.8 million, or 1.4 percent, from March 31, 2014. The decrease from June 30, 2013 was primarily due to improving credit quality trends and continued efforts to actively work out problem loans in the commercial portfolio, partially offset by $48.6 million of delinquent loans being transferred to non-accrual status due to a change in the non-accrual policy for consumer real estate loans during the third quarter of 2013. The decrease from March 31, 2014 was driven by improved credit quality in the consumer real estate and commercial portfolios.
  • The over 60-day delinquency rate, excluding acquired portfolios and non-accrual loans and leases, was .18 percent at June 30, 2014, down from .52 percent at June 30, 2013, and down slightly from .19 percent at March 31, 2014. The decrease from June 30, 2013 was primarily a result of reduced over 60-day delinquencies in the consumer real estate portfolio due to a change in the non-accrual policy for consumer real estate loans during the third quarter of 2013, which increased non-accrual loans and leases, along with stabilization of our consumer real estate portfolio as property values improved in our markets.
  • Net charge-offs were $18.4 million for the second quarter of 2014, a decrease of $9.3 million, or 33.7 percent, from the second quarter of 2013, and an increase of $939 thousand, or 5.4 percent, from the first quarter of 2014. The decrease from the second quarter of 2013 was primarily due to improved credit quality in the consumer real estate portfolio as home values improved and incident rates of default declined. The increase from the first quarter of 2014 was driven by one previously reserved commercial loan charge-off. Consumer real estate net charge-offs decreased for the seventh consecutive quarter.
  • Provision for credit losses was $9.9 million for the second quarter of 2014, a decrease of $22.7 million, or 69.6 percent, from the second quarter of 2013, and a decrease of $4.6 million, or 31.6 percent, from the first quarter of 2014. The decrease from the second quarter of 2013 was primarily due to decreased net charge-offs in the consumer real estate portfolio resulting from improved home values and a reduction in incidents of default. The decrease from the first quarter of 2014 was due to reduced reserve requirements in the commercial and consumer real estate portfolios as credit quality in those portfolios improved.
Deposits
 
Average DepositsTable 5
        Percent Change    
(Dollars in thousands) 2Q1Q2Q2Q14 vs   2Q14 vsYTDYTDPercent
2014   2014   2013   1Q14     2Q13     2014   2013   Change  
 
Checking $ 5,098,650 $ 5,016,118 $ 4,884,433 1.6 % 4.4 % $ 5,057,612 $ 4,834,964 4.6 %
Savings 5,908,219 6,142,950 6,082,200 (3.8) (2.9) 6,024,936 6,098,121 (1.2)
Money market   1,019,543     819,312     791,859 24.4 28.8   919,981     803,551 14.5
Subtotal 12,026,412 11,978,380 11,758,492 .4 2.3 12,002,529 11,736,636 2.3
Certificates of deposit   2,742,832     2,543,345     2,360,881 7.8 16.2   2,643,639     2,342,178 12.9
Total average deposits $ 14,769,244   $ 14,521,725   $ 14,119,373 1.7 4.6 $ 14,646,168   $ 14,078,814 4.0
 
Average interest rate on deposits (1) .24% .22% .25% .23% .27%
 
(1) Annualized.
  • Total average deposits for the second quarter of 2014 increased $649.9 million, or 4.6 percent, from the second quarter of 2013 and increased $247.5 million, or 1.7 percent, from the first quarter of 2014. The increase from the second quarter of 2013 was primarily due to special campaigns for certificates of deposit and money market accounts, as well as higher average checking account balances per customer. The increase from the first quarter of 2014 was primarily due to special campaigns for certificates of deposit and money market accounts, partially offset by a reduction in savings.
  • The average interest rate on deposits for the second quarter of 2014 was .24 percent, down one basis point from the second quarter of 2013 and up two basis points from the first quarter of 2014. The decrease from the second quarter of 2013 was primarily due to a reduction in average interest rates on various certificates of deposit, checking, and savings, partially offset by increased average interest rates on various money market accounts. The increase from the first quarter of 2014 was primarily due to increased average interest rates on various money market accounts and certificates of deposit.
Non-interest Expense
 
Non-interest ExpenseTable 6
        Percent Change    
(Dollars in thousands) 2Q1Q2Q2Q14 vs   2Q14 vsYTDYTDPercent
  2014     2014     2013   1Q14     2Q13       2014     2013   Change  

Compensation and employee benefits

$ 109,664 $ 115,089 $ 105,537 (4.7) % 3.9 % $ 224,753 $ 209,766 7.1 %
Occupancy and equipment 34,316 34,839 33,062 (1.5) 3.8 69,155 65,937 4.9
FDIC insurance 7,625 7,563 8,362 .8 (8.8) 15,188 16,072 (5.5)
Operating lease depreciation 6,613 6,227 6,150 6.2 7.5 12,840 11,785 9.0
Advertising and marketing 5,862 5,478 5,532 7.0 6.0 11,340 11,264 .7
Deposit account premiums 383 418 600 (8.4) (36.2) 801 1,202 (33.4)
Other   42,618     41,335     41,946 3.1 1.6   83,953     79,885 5.1
Subtotal 207,081 210,949 201,189 (1.8) 2.9 418,030 395,911 5.6

Foreclosed real estate and repossessed assets, net

5,743 6,068 7,555 (5.4) (24.0) 11,811 17,722 (33.4)
Other credit costs, net   371     119     (228) N.M. N.M.   490     (1,065) N.M.
Total non-interest expense $ 213,195   $ 217,136   $ 208,516 (1.8) 2.2 $ 430,331   $ 412,568 4.3
N.M. Not meaningful.
  • Compensation and employee benefits expense increased $4.1 million, or 3.9 percent, from the second quarter of 2013 and decreased $5.4 million, or 4.7 percent, from the first quarter of 2014. The increase from the second quarter of 2013 was primarily due to increased staff levels to support the growth of auto finance and risk management. The decrease from the first quarter of 2014 was due to the seasonality of payroll taxes and the reduction in personnel expense related to the branch realignment completed during the first quarter of 2014.
  • Foreclosed real estate and repossessed assets expense decreased $1.8 million, or 24 percent, from the second quarter of 2013 and decreased $325 thousand, or 5.4 percent compared to the first quarter of 2014. The decreases from both periods were driven by a reduction in write-downs of existing foreclosed properties as a result of improved property values, and improved exit values on commercial properties.
Capital
 
Capital InformationTable 7
At period end      
(Dollars in thousands, except per-share data) 2Q4Q
2014   2013
Total equity $ 2,071,711 $ 1,964,759
Book value per common share $ 10.74 $ 10.23
Tangible book value per common share (1) $ 9.35 $ 8.83
Tangible common equity to tangible assets (1) 8.39 % 8.03 %
Capital accumulation rate (2) 12.17 % 9.72 %
 
Risk-based capital (3)
Tier 1 $ 1,859,271 11.56 % $ 1,763,682 11.41 %
Total 2,185,783 13.59 2,107,981 13.64
 
Tier 1 leverage capital $ 1,859,271 9.91 % $ 1,763,682 9.71 %
 
Tier 1 common capital (4) $ 1,579,226 9.82 % $ 1,488,651 9.63 %
 
(1) Excludes the impact of preferred shares, goodwill and other intangibles (see “Reconciliation of GAAP to Non-GAAP Financial Measures” table).
(2) Calculated as the change in annualized year to date Tier 1 common capital as a percentage of prior period Tier 1 common capital.
(3) The Company's capital ratios continue to be in excess of "well-capitalized" regulatory benchmarks.
(4) Excludes the effect of preferred shares and qualifying non-controlling interest in subsidiaries (see “Reconciliation of GAAP to Non-GAAP Financial Measures” table).
  • Capital ratios continue to improve as the Company accumulates capital through earnings. Total risk-based capital decreased slightly as the Company grows its risk-based assets.
  • On July 21, 2014, TCF’s Board of Directors declared a regular quarterly cash dividend of 5 cents per common share, payable on September 2, 2014, to stockholders of record at the close of business on August 15, 2014. TCF also declared dividends on the 7.50% Series A and 6.45% Series B Non-Cumulative Perpetual Preferred Stock, both payable on September 2, 2014, to stockholders of record at the close of business on August 15, 2014.

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 25, 2014 at 8:00 a.m. CDT. 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. As of June 30, 2014, TCF had $18.8 billion in total assets and 380 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, equipment finance, and auto finance business in all 50 states and commercial inventory finance business in the U.S. and Canada. 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 herein. 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, 2013, 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 those arising from government shutdowns, 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; deviations from estimates of prepayment rates and fluctuations in interest rates that result in decreases in value of assets such as interest-only strips that arise in connection with TCF’s loan sales activity; 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 and their subsidiaries; the imposition of requirements that adversely impact TCF’s deposit, 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, regulation of campus banking programs between colleges or universities and financial institutions, use by municipalities of eminent domain on underwater mortgages, or imposition of underwriting or other limitations that impact the ability to use certain variable-rate products; changes affecting customer account charges and fee income, including changes to interchange rates; 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; regulatory criticism and resulting enforcement actions or other adverse consequences such as increased capital requirements, higher deposit insurance assessments or monetary damages or penalties; 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; regulatory actions or changes in customer opt-in preferences with respect to overdraft, 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.

Branching Risk; Growth Risks.Adverse developments affecting TCF’s supermarket banking relationships or any of the supermarket chains in which TCF maintains supermarket branches; costs related to closing underperforming 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; the effect of interchange rate litigation against the Federal Reserve on debit card interchange fees; 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 federal, state or foreign 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
20142013$%
Interest income:
Loans and leases $ 206,788 $ 206,675 $ 113 .1 %
Securities available for sale 2,805 4,637 (1,832 ) (39.5 )
Securities held to maturity 1,443 62 1,381 N.M.
Investments and other   9,055   6,234     2,821   45.3
Total interest income   220,091   217,608     2,483   1.1
Interest expense:
Deposits 8,877 8,851 26 .3
Borrowings   5,113   6,713     (1,600 ) (23.8 )
Total interest expense   13,990   15,564     (1,574 ) (10.1 )
Net interest income 206,101 202,044 4,057 2.0
Provision for credit losses   9,909   32,591     (22,682 ) (69.6 )
Net interest income after provision for credit losses   196,192   169,453     26,739   15.8
Non-interest income:
Fees and service charges 38,035 41,572 (3,537 ) (8.5 )
Card revenue 13,249 13,270 (21 ) (.2 )
ATM revenue   5,794   5,828     (34 ) (.6 )
Subtotal 57,078 60,670 (3,592 ) (5.9 )
Leasing and equipment finance 23,069 22,609 460 2.0
Gains on sales of auto loans, net 7,270 8,135 (865 ) (10.6 )
Gains on sales of consumer real estate loans, net 8,151 4,069 4,082 100.3
Servicing fee income 4,892 3,128 1,764 56.4
Other   2,789   1,172     1,617   138.0
Fees and other revenue 103,249 99,783 3,466 3.5
Gains on securities, net   767   -     767   N.M.
Total non-interest income   104,016   99,783     4,233   4.2
Non-interest expense:
Compensation and employee benefits 109,664 105,537 4,127 3.9
Occupancy and equipment 34,316 33,062 1,254 3.8
FDIC insurance 7,625 8,362 (737 ) (8.8 )
Operating lease depreciation 6,613 6,150 463 7.5
Advertising and marketing 5,862 5,532 330 6.0
Deposit account premiums 383 600 (217 ) (36.2 )
Other   42,618   41,946     672   1.6
Subtotal 207,081 201,189 5,892 2.9
Foreclosed real estate and repossessed assets, net 5,743 7,555 (1,812 ) (24.0 )
Other credit costs, net   371   (228 )   599   N.M.
Total non-interest expense   213,195   208,516     4,679   2.2
Income before income tax expense 87,013 60,720 26,293 43.3
Income tax expense   31,385   19,444     11,941   61.4
Income after income tax expense 55,628 41,276 14,352 34.8
Income attributable to non-controlling interest   2,503   2,372     131   5.5
Net income attributable to TCF Financial Corporation   53,125   38,904     14,221   36.6
Preferred stock dividends   4,847   4,847     -   -
Net income available to common stockholders $ 48,278 $ 34,057   $ 14,221   41.8
 
Net income per common share:
Basic $ .30 $ .21 $ .09 42.9 %
Diluted .29 .21 .08 38.1
 
Dividends declared per common share $ .05 $ .05 $ - - %
 
Average common and common equivalent
shares outstanding (in thousands):
Basic 163,253 160,895 2,358 1.5 %
Diluted 163,714 161,749 1,965 1.2
 
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
20142013$%
Interest income:
Loans and leases $ 409,325 $ 411,580 $ (2,255 ) (.5 ) %
Securities available for sale 5,968 9,432 (3,464 ) (36.7 )
Securities held to maturity 2,407 126 2,281 N.M.
Investments and other   17,018   12,020     4,998   41.6
Total interest income   434,718   433,158     1,560   .4
Interest expense:
Deposits 16,914 18,532 (1,618 ) (8.7 )
Borrowings   10,429   13,491     (3,062 ) (22.7 )
Total interest expense   27,343   32,023     (4,680 ) (14.6 )
Net interest income 407,375 401,135 6,240 1.6
Provision for credit losses   24,401   70,974     (46,573 ) (65.6 )
Net interest income after provision for credit losses   382,974   330,161     52,813   16.0
Non-interest income:
Fees and service charges 74,654 80,895 (6,241 ) (7.7 )
Card revenue 25,499 25,687 (188 ) (.7 )
ATM revenue   11,113   11,333     (220 ) (1.9 )
Subtotal 111,266 117,915 (6,649 ) (5.6 )
Leasing and equipment finance 45,049 38,813 6,236 16.1
Gains on sales of auto loans, net 15,740 15,281 459 3.0
Gains on sales of consumer real estate loans, net 19,857 12,195 7,662 62.8
Servicing fee income 9,199 5,884 3,315 56.3
Other   5,171   2,398     2,773   115.6
Fees and other revenue 206,282 192,486 13,796 7.2
Gains on securities, net   1,141   -     1,141   N.M.
Total non-interest income   207,423   192,486     14,937   7.8
Non-interest expense:
Compensation and employee benefits 224,753 209,766 14,987 7.1
Occupancy and equipment 69,155 65,937 3,218 4.9
FDIC insurance 15,188 16,072 (884 ) (5.5 )
Operating lease depreciation 12,840 11,785 1,055 9.0
Advertising and marketing 11,340 11,264 76 .7
Deposit account premiums 801 1,202 (401 ) (33.4 )
Other   83,953   79,885     4,068   5.1
Subtotal 418,030 395,911 22,119 5.6
Foreclosed real estate and repossessed assets, net 11,811 17,722 (5,911 ) (33.4 )
Other credit costs, net   490   (1,065 )   1,555   N.M.
Total non-interest expense   430,331   412,568     17,763   4.3
Income before income tax expense 160,066 110,079 49,987 45.4
Income tax expense   57,964   37,003     20,961   56.6
Income after income tax expense 102,102 73,076 29,026 39.7
Income attributable to non-controlling interest   4,220   4,198     22   .5
Net income attributable to TCF Financial Corporation   97,882   68,878     29,004   42.1
Preferred stock dividends   9,694   9,371     323   3.4
Net income available to common stockholders $ 88,188 $ 59,507   $ 28,681   48.2
 
Net income per common share:
Basic $ .54 $ .37 $ .17 45.9 %
Diluted .54 .37 .17 45.9
 
Dividends declared per common share $ .10 $ .10 $ - - %
 
Average common and common equivalent
shares outstanding (in thousands):
Basic 163,011 160,644 2,367 1.5 %
Diluted 163,491 161,443 2,048 1.3
 
N.M. Not meaningful.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
           
Three Months Ended June 30,Change
20142013$%
Net income attributable to TCF Financial Corporation $ 53,125   $ 38,904   $ 14,221   36.6 %
Other comprehensive income (loss):
Securities available for sale:
Unrealized gains (losses) arising during the period 8,648 (34,420 ) 43,068 N.M.
Reclassification of net gains to net income (452 ) - (452 ) N.M.
Net investment hedges:
Unrealized (losses) gains arising during the period (1,382 ) 874 (2,256 ) N.M.
Foreign currency translation adjustment:
Unrealized gains (losses) arising during the period 1,399 (973 ) 2,372 N.M.
Recognized postretirement prior service cost and transition obligation:
Net actuarial losses arising during the period (11 ) (12 ) 1 8.3
Income tax (expense) benefit   (2,561 )   12,662     (15,223 ) N.M.
Total other comprehensive income (loss)   5,641     (21,869 )   27,510   N.M.
Comprehensive income $ 58,766   $ 17,035   $ 41,731   N.M.
 
 
Six Months Ended June 30,Change
20142013$%
Net income attributable to TCF Financial Corporation $ 97,882   $ 68,878   $ 29,004   42.1 %
Other comprehensive income (loss):
Securities available for sale:
Unrealized gains (losses) arising during the period 20,514 (48,249 ) 68,763 N.M.
Reclassification of net gains to net income (629 ) - (629 ) N.M.
Net investment hedges:
Unrealized (losses) gains arising during the period (172 ) 1,411 (1,583 ) N.M.
Foreign currency translation adjustment:
Unrealized gains (losses) arising during the period 23 (1,595 ) 1,618 N.M.
Recognized postretirement prior service cost and transition obligation:
Net actuarial losses arising during the period (23 ) (24 ) 1 4.2
Income tax (expense) benefit   (7,415 )   17,681     (25,096 ) N.M.
Total other comprehensive income (loss)   12,298     (30,776 )   43,074   N.M.
Comprehensive income $ 110,180   $ 38,102   $ 72,078   189.2
 
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
20142013$%
ASSETS
Cash and due from banks $ 881,396 $ 915,076 $ (33,680 ) (3.7 ) %
Investments 85,449 94,326 (8,877 ) (9.4 )
Securities held to maturity 220,801 19,912 200,889 N.M.
Securities available for sale 413,316 551,064 (137,748 ) (25.0 )
Loans and leases held for sale 314,277 79,768 234,509 N.M.
Loans and leases:
Consumer real estate:
First mortgage lien 3,542,324 3,766,421 (224,097 ) (5.9 )
Junior lien   2,480,763     2,572,905     (92,142 ) (3.6 )
Total consumer real estate 6,023,087 6,339,326 (316,239 ) (5.0 )
Commercial 3,093,161 3,148,352 (55,191 ) (1.8 )
Leasing and equipment finance 3,526,264 3,428,755 97,509 2.8
Inventory finance 1,880,667 1,664,377 216,290 13.0
Auto finance 1,502,860 1,239,386 263,474 21.3
Other loans and leases   24,486     26,743     (2,257 ) (8.4 )
Total loans and leases 16,050,525 15,846,939 203,586 1.3
Allowance for loan and lease losses   (236,081 )   (252,230 )   16,149   6.4
Net loans and leases 15,814,444 15,594,709 219,735 1.4
Premises and equipment, net 436,558 437,602 (1,044 ) (.2 )
Goodwill 225,640 225,640 - -
Other assets   445,896     461,743     (15,847 ) (3.4 )
Total assets $ 18,837,777   $ 18,379,840   $ 457,937   2.5
 
LIABILITIES AND EQUITY
Deposits:
Checking $ 5,120,671 $ 4,980,451 $ 140,220 2.8
Savings 5,685,776 6,194,003 (508,227 ) (8.2 )
Money market   1,284,213     831,910     452,303   54.4
Subtotal 12,090,660 12,006,364 84,296 .7
Certificates of deposit   2,955,492     2,426,412     529,080   21.8
Total deposits   15,046,152     14,432,776     613,376   4.2
Short-term borrowings 8,263 4,918 3,345 68.0
Long-term borrowings   1,221,537     1,483,325     (261,788 ) (17.6 )
Total borrowings 1,229,800 1,488,243 (258,443 ) (17.4 )
Accrued expenses and other liabilities   490,114     494,062     (3,948 ) (.8 )
Total liabilities   16,766,066     16,415,081     350,985   2.1
Equity:
Preferred stock, par value $.01 per share,
30,000,000 authorized; and 4,006,900 shares issued 263,240 263,240 - -
Common stock, par value $.01 per share,
280,000,000 shares authorized; 166,924,026
and 165,164,861 shares issued, respectively 1,669 1,652 17 1.0
Additional paid-in capital 806,645 779,641 27,004 3.5
Retained earnings, subject to certain restrictions 1,049,725 977,846 71,879 7.4
Accumulated other comprehensive loss (14,915 ) (27,213 ) 12,298 45.2
Treasury stock at cost, 42,566 shares, and other   (51,458 )   (42,198 )   (9,260 ) (21.9 )
Total TCF Financial Corporation stockholders' equity 2,054,906 1,952,968 101,938 5.2
Non-controlling interest in subsidiaries   16,805     11,791     5,014   42.5
Total equity   2,071,711     1,964,759     106,952   5.4
Total liabilities and equity $ 18,837,777   $ 18,379,840   $ 457,937   2.5
 
N.M. Not Meaningful.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA
(Dollars in thousands)
(Unaudited)
     

At

AtAtAtAtChange from
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2014201420132013201320142013

Delinquency Data - Principal Balances (1)

60 days or more:
Consumer real estate
First mortgage lien $ 20,678 $ 20,051 $ 20,894 $ 23,576 $ 66,876 $ 627 $ (46,198 )
Junior lien 2,415   4,049   3,532   3,822   8,022   (1,634 ) (5,607 )
Total consumer real estate 23,093 24,100 24,426 27,398 74,898 (1,007 ) (51,805 )
Commercial - 1,905 1,430 7,201 1,679 (1,905 ) (1,679 )
Leasing and equipment finance 2,642 2,864 2,401 2,539 1,840 (222 ) 802
Inventory finance 204 212 50 71 33 (8 ) 171
Auto finance 2,152 1,554 1,877 1,429 868 598 1,284
Other 2   3   10   -   26   (1 ) (24 )
Subtotal 28,093 30,638 30,194 38,638 79,344 (2,545 ) (51,251 )
Acquired portfolios 252   240   458   334   627   12   (375 )
Total delinquencies $ 28,345   $ 30,878   $ 30,652   $ 38,972   $ 79,971   $ (2,533 ) $ (51,626 )
 

Delinquency Data - % of Portfolio (1)

60 days or more:
Consumer real estate
First mortgage lien .61 % .57 % .58 % .64 % 1.74 % 4 bps (113 ) bps
Junior lien .10 .17 .14 .15 .34 (7 ) (24 )
Total consumer real estate .40 .41 .40 .44 1.21 (1 ) (81 )
Commercial - .06 .05 .23 .05 (6 ) (5 )
Leasing and equipment finance .08 .08 .07 .08 .06 - 2
Inventory finance .01 .01 - - - - 1
Auto finance .14 .11 .15 .13 .10 3 4
Other .01 .01 .04 - .11 - (10 )
Subtotal .18 .19 .19 .25 .52 (1 ) (34 )
Acquired portfolios 2.27 1.38 1.64 .80 .99 89 128
Total delinquencies .18 .19 .20 .25 .52 (1 ) (34 )
 
(1) Excludes non-accrual loans and leases.
AtAtAtAtAtChange from
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2014201420132013201320142013

Non-Accrual Loans and Leases

Non-accrual loans and leases:
Consumer real estate
First mortgage lien $ 172,256 $ 176,841 $ 180,811 $ 170,306 $ 132,586 $ (4,585 ) $ 39,670
Junior lien 38,146   39,222   38,222   35,732   30,744   (1,076 ) 7,402  
Total consumer real estate 210,402 216,063 219,033 206,038 163,330 (5,661 ) 47,072
Commercial 30,051 35,209 40,539 62,273 102,103 (5,158 ) (72,052 )
Leasing and equipment finance 16,093 13,908 14,041 11,820 11,103 2,185 4,990
Inventory finance 1,988 307 2,529 1,802 1,008 1,681 980
Auto finance 1,468 856 470 212 118 612 1,350
Other 292   336   410   728   809   (44 ) (517 )
Total non-accrual loans and leases $ 260,294   $ 266,679   $ 277,022   $ 282,873   $ 278,471   $ (6,385 ) $ (18,177 )
 
Non-accrual loans and leases - rollforward:
Balance, beginning of period $ 266,679 $ 277,022 $ 282,873 $ 278,471 $ 343,388 $ (10,343 ) $ (76,709 )
Additions 61,242 54,432 71,513 93,337 41,549 6,810 19,693
Charge-offs (15,135 ) (15,323 ) (25,195 ) (10,225 ) (12,780 ) 188 (2,355 )
Transfers to other assets (17,994 ) (15,609 ) (23,085 ) (23,810 ) (16,014 ) (2,385 ) (1,980 )
Return to accrual status (18,224 ) (16,334 ) (13,085 ) (16,218 ) (21,360 ) (1,890 ) 3,136
Payments received (14,910 ) (17,925 ) (13,331 ) (40,319 ) (16,977 ) 3,015 2,067
Sales (1,900 ) - (3,602 ) - (40,461 ) (1,900 ) 38,561
Other, net 536   416   934   1,637   1,126   120   (590 )
Balance, end of period $ 260,294   $ 266,679   $ 277,022   $ 282,873   $ 278,471   $ (6,385 ) $ (18,177 )
 
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,
2014201420132013201320142013

Other Real Estate Owned

Other real estate owned:
Consumer real estate $ 42,745 $ 43,149 $ 47,637 $ 48,910 $ 44,759 $ (404 ) $ (2,014 )
Commercial real estate 22,335   20,299   21,237   16,669   21,473   2,036   862  
Total other real estate owned $ 65,080   $ 63,448   $ 68,874   $ 65,579   $ 66,232   $ 1,632   $ (1,152 )
 
Other real estate owned - rollforward:
Balance, beginning of period $ 63,448 $ 68,874 $ 65,579 $ 66,232 $ 71,763 $ (5,426 ) $ (8,315 )
Transferred in 15,751 14,160 21,045 23,339 16,503 1,591 (752 )
Sales (15,998 ) (17,526 ) (15,939 ) (22,683 ) (17,895 ) 1,528 1,897
Writedowns (2,782 ) (3,147 ) (3,496 ) (2,197 ) (4,270 ) 365 1,488
Other, net 4,661   1,087   1,685   888   131   3,574   4,530  
Balance, end of period $ 65,080   $ 63,448   $ 68,874   $ 65,579   $ 66,232   $ 1,632   $ (1,152 )
 
Ending number of properties: (1)
Consumer real estate 396 411 479 511 433 (15 ) (37 )
Commercial real estate 14   16   18   18   22   (2 ) (8 )
Total 410   427   497   529   455   (17 ) (45 )
 
(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, 2014At March 31, 2014At June 30, 2013Change from
% of% of% ofMar. 31,Jun. 30,
BalancePortfolioBalancePortfolioBalancePortfolio20142013
Consumer real estate $ 161,349 2.68 % $ 169,367 2.79 % $ 181,052 2.85 % (11) bps (17) bps
Commercial 31,361 1.01 36,062 1.15 50,072 1.49 (14) (48)

Leasing and equipment finance

19,184 .54 18,623 .54 17,975 .55 - (1)
Inventory finance 9,539 .51 10,309 .49 8,197 .48 2 3
Auto finance 13,865 .92 12,062 .86 7,509 .85 6 7
Other 783 3.20 623 2.76 794 3.16 44 4
Total $ 236,081 1.47 $ 247,046 1.52 $ 265,599 1.70 (5) (23)
 

Net Charge-Offs

Change from
Quarter EndedQuarter Ended
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2014201420132013201320142013
Consumer real estate
First mortgage lien $ 7,165 $ 9,678 $ 10,545 $ 12,770 $ 15,084 $ (2,513) $ (7,919)
Junior lien 4,292 3,025 5,901 5,474 8,642 1,267 (4,350)
Total consumer real estate 11,457 12,703 16,446 18,244 23,726 (1,246) (12,269)
Commercial 3,477 1,510 9,363 6,513 2,449 1,967 1,028
Leasing and equipment finance 974 749 1,197 658 244 225 730
Inventory finance 107 (134) 341 86 (14) 241 121
Auto finance 1,833 2,276 1,976 1,122 765 (443) 1,068
Other 507 312 774 993 524 195 (17)
Total $ 18,355 $ 17,416 $ 30,097 $ 27,616 $ 27,694 $ 939 $ (9,339)
 

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,
2014201420132013201320142013
Consumer real estate
First mortgage lien .79 % 1.04 % 1.11 % 1.30 % 1.48 % (25) bps (69) bps
Junior lien .69 .46 .91 .88 1.46 23 (77)
Total consumer real estate .75 .80 1.03 1.14 1.48 (5) (73)
Commercial .44 .19 1.21 .79 .29 25 15
Leasing and equipment finance .11 .09 .14 .08 .03 2 8
Inventory finance .02 (.03) .08 .02 - 5 2
Auto finance .48 .69 .68 .46 .37 (21) 11
Other N.M. N.M. N.M. N.M. 16.05 N.M. N.M.
Total .45 .43 .76 .71 .70 2 (25)
 
(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,
20142013
AverageYields andAverageYields and
Balance

Interest (2)

Rates (1)(2)

BalanceInterest (2)

Rates (1)(2)

ASSETS:
Investments and other $ 623,721 $ 4,054 2.61 % $ 729,514 $ 3,699 2.03 %
Securities held to maturity 217,477 1,443 2.65 5,564 62 4.47
Securities available for sale:
U.S. Government sponsored entities:
Mortgage-backed securities, fixed rate 408,000 2,804 2.75 654,968 4,636 2.83
U.S. Treasury securities - - - 494 - .07
Other securities   75   1 2.46   93   1 2.54
Total securities available for sale (3) 408,075 2,805 2.75 655,555 4,637 2.83
Loans and leases held for sale 240,304 5,001 8.35 116,390 2,535 8.74
Loans and leases:
Consumer real estate:
Fixed-rate 3,393,788 48,372 5.72 3,809,066 55,977 5.89
Variable-rate   2,710,998   34,757 5.14   2,621,619   33,545 5.13
Total consumer real estate 6,104,786 83,129 5.46 6,430,685 89,522 5.58
Commercial:
Fixed-rate 1,515,353 19,503 5.16 1,833,144 24,006 5.25
Variable- and adjustable-rate   1,615,967   16,151 4.01   1,503,262   15,602 4.16
Total commercial 3,131,320 35,654 4.57 3,336,406 39,608 4.76
Leasing and equipment finance 3,500,647 41,276 4.72 3,236,799 39,990 4.94
Inventory finance 2,061,437 30,482 5.93 1,875,810 27,860 5.96
Auto finance 1,518,194 16,770 4.43 823,102 10,193 4.97
Other   12,040   230 7.63   13,060   263 8.10
Total loans and leases (4)   16,328,424   207,541 5.10   15,715,862   207,436 5.29
Total interest-earning assets 17,818,001 220,844 4.97 17,222,885 218,369 5.08
Other assets (5)   1,123,148   1,110,213
Total assets $ 18,941,149 $ 18,333,098
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,579,528 $ 1,476,173
Small business 788,540 752,395
Commercial and custodial   388,562   326,773
Total non-interest bearing deposits 2,756,630 2,555,341
Interest-bearing deposits:
Checking 2,363,106 261 .04 2,351,652 377 .06
Savings 5,887,133 2,406 .16 6,059,640 2,790 .18
Money market   1,019,543   1,098 .43   791,859   547 .28
Subtotal 9,269,782 3,765 .16 9,203,151 3,714 .16
Certificates of deposit   2,742,832   5,112 .75   2,360,881   5,137 .87
Total interest-bearing deposits   12,012,614   8,877 .30   11,564,032   8,851 .31
Total deposits   14,769,244   8,877 .24   14,119,373   8,851 .25
Borrowings:
Short-term borrowings 220,042 145 .26 7,314 8 .44
Long-term borrowings   1,368,480   4,968 1.45   1,879,576   6,705 1.43
Total borrowings   1,588,522   5,113 1.29   1,886,890   6,713 1.42
Total interest-bearing liabilities   13,601,136   13,990 .41   13,450,922   15,564 .46
Total deposits and borrowings 16,357,766 13,990 .34 16,006,263 15,564 .39
Other liabilities   541,458   420,398
Total liabilities   16,899,224   16,426,661
Total TCF Financial Corp. stockholders' equity 2,020,815 1,886,138
Non-controlling interest in subsidiaries   21,110   20,299
Total equity   2,041,925   1,906,437
Total liabilities and equity $ 18,941,149 $ 18,333,098
Net interest income and margin $ 206,854 4.65 $ 202,805 4.72
 
(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,
20142013
AverageYields andAverageYields and
Balance

Interest (2)

Rates (1)(2)

Balance

Interest (2)

Rates (1)(2)

ASSETS:
Investments and other $ 622,277 $ 8,039 2.60 % $ 769,379 $ 6,881 1.80 %
Securities held to maturity 179,509 2,407 2.68 5,608 126 4.50
Securities available for sale:
U.S. Government sponsored entities:
Mortgage-backed securities, fixed rate 437,708 5,967 2.73 664,858 9,430 2.84
U.S. Treasury securities - - - 696 - .07
Other securities   78   1 2.47   100   2 2.52
Total securities available for sale (3) 437,786 5,968 2.73 665,654 9,432 2.83
Loans and leases held for sale 218,210 8,979 8.30 135,472 5,139 7.65
Loans and leases:
Consumer real estate:
Fixed-rate 3,446,020 96,904 5.67 3,862,590 113,035 5.90
Variable-rate   2,769,663   70,573 5.14   2,630,618   66,627 5.11
Total consumer real estate   6,215,683   167,477 5.43   6,493,208   179,662 5.58
Commercial:
Fixed-rate 1,537,549 38,999 5.11 1,866,667 49,191 5.31
Variable- and adjustable-rate   1,589,169   32,329 4.10   1,474,400   30,485 4.17
Total commercial 3,126,718 71,328 4.60 3,341,067 79,676 4.81
Leasing and equipment finance 3,467,851 82,055 4.73 3,218,252 80,903 5.03
Inventory finance 1,968,431 57,951 5.94 1,780,058 53,465 6.06
Auto finance 1,423,240 31,557 4.47 747,022 18,835 5.08
Other   12,654   472 7.52   13,348   539 8.15
Total loans and leases (4)   16,214,577   410,840 5.10   15,592,955   413,080 5.33
Total interest-earning assets 17,672,359 436,233 4.97 17,169,068 434,658 5.10
Other assets (5)   1,109,685   1,118,397
Total assets $ 18,782,044 $ 18,287,465
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,558,414 $ 1,451,381
Small business 780,229 748,304
Commercial and custodial   387,749   328,373
Total non-interest bearing deposits 2,726,392 2,528,058
Interest-bearing deposits:
Checking 2,353,156 522 .04 2,330,078 874 .08
Savings 6,003,000 4,935 .17 6,074,949 6,159 .20
Money market   919,981   1,673 .37   803,551   1,177 .30
Subtotal 9,276,137 7,130 .15 9,208,578 8,210 .18
Certificates of deposit   2,643,639   9,784 .75