TCF Reports Quarterly Net Income of $52.3 Million, or 29 Cents Per Share

Company Release - 7/23/2015 8:00 AM ET

SECOND QUARTER HIGHLIGHTS

  • Revenue of $319.5 million, up 3.0 percent from the second quarter of 2014
  • Loan and lease originations of $3.9 billion, up 14.5 percent from the second quarter of 2014
  • Average deposits of $15.9 billion, up 7.3 percent from the second quarter of 2014
  • Non-accrual loans and leases of $205.7 million, down 21.0 percent from the second quarter of 2014
  • Earnings per share of 29 cents, flat to the second quarter of 2014, up 38.1 percent from the first quarter of 2015

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

                                                 
Summary of Financial Results                                         Table 1
                Percent Change            
(Dollars in thousands, except per-share data) 2Q1Q2Q2Q15 vs     2Q15 vsYTDYTDPercent
2015     2015     2014     1Q15     2Q14     2015     2014     Change
Net income attributable to TCF $ 52,255 $ 39,801 $ 53,125 31.3 % (1.6 )% $ 92,056 $ 97,882 (6.0 )%
Net interest income 206,029 203,420 206,101 1.3 409,449 407,375 0.5
Diluted earnings per common share 0.29 0.21 0.29 38.1 0.50 0.54 (7.4 )
 

Financial Ratios(1)

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

1.94 % 1.58 % 2.05 % 1.76 % 1.96 %
Return on average assets 1.10 0.85 1.17 0.98 1.09
Return on average common equity 9.93 7.47 10.99 8.71 10.18

Return on average tangible common equity(3)

11.34 8.58 12.72 9.98 11.82
Net interest margin 4.44 4.50 4.65 4.47 4.66

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

0.41 0.28 0.45 0.34 0.44
 
(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 $52.3 million for the second quarter of 2015, compared with net income of $53.1 million for the second quarter of 2014, and net income of $39.8 million for the first quarter of 2015. Diluted earnings per common share was 29 cents for the second quarter of 2015, compared with 29 cents for the second quarter of 2014, and 21 cents for the first quarter of 2015.

TCF reported net income of $92.1 million for the first six months of 2015, compared with net income of $97.9 million for the same period in 2014. Diluted earnings per common share was 50 cents for the first six months of 2015, compared with 54 cents for the same period in 2014.

Chairman's Statement

"TCF's second quarter was highlighted by increased fee revenue, reduced expenses and continued strong loan and lease originations,” said William A. Cooper, chairman and chief executive officer. "Banking fees experienced a seasonal rebound while our second auto loan securitization helped gains on sales of loans return to a more normalized level. Expenses declined from the prior quarter as we focus on improving operating leverage moving forward.

"Meanwhile, our continued strong originations, along with loan sale and securitization capabilities, are driving growth and diversification of both the balance sheet and revenue base. With credit issues largely behind us, an asset sensitive balance sheet and opportunities on the horizon, there is much to look forward to at TCF."

                               
Revenue
                                                 
Total Revenue                                         Table 2
Percent Change
(Dollars in thousands) 2Q1Q2Q2Q15 vs2Q15 vsYTDYTDPercent
2015     2015     2014     1Q15     2Q14     2015     2014     Change
Net interest income $ 206,029       $ 203,420       $ 206,101   1.3 % % $ 409,449       $ 407,375   0.5 %
Fees and other revenue:
Fees and service charges 36,295 33,972 38,035 6.8 (4.6 ) 70,267 74,654 (5.9 )
Card revenue 13,902 12,901 13,249 7.8 4.9 26,803 25,499 5.1
ATM revenue   5,540         5,122         5,794   8.2 (4.4 )   10,662         11,113   (4.1 )
Total banking fees 55,737 51,995 57,078 7.2 (2.3 ) 107,732 111,266 (3.2 )
Gains on sales of auto loans, net 10,756 6,265 7,270 71.7 48.0 17,021 15,740 8.1

Gains on sales of consumer real estate loans, net

11,954 8,763 8,151 36.4 46.7 20,717 19,857 4.3
Servicing fee income   7,216         7,342         4,892   (1.7 ) 47.5   14,558         9,199   58.3
Subtotal 29,926 22,370 20,313 33.8 47.3 52,296 44,796 16.7
Leasing and equipment finance 26,385 22,224 23,069 18.7 14.4 48,609 45,049 7.9
Other   1,460         4,127         2,789   (64.6 ) (47.7 )   5,587         5,171   8.0
Total fees and other revenue 113,508 100,716 103,249 12.7 9.9 214,224 206,282 3.9
Gains (losses) on securities, net   (59 )       (78 )       767   24.4 N.M.   (137 )       1,141   N.M.
Total non-interest income   113,449         100,638         104,016   12.7 9.1   214,087         207,423   3.2
Total revenue $ 319,478       $ 304,058       $ 310,117   5.1 3.0 $ 623,536       $ 614,798   1.4
 
Net interest margin(1) 4.44 % 4.50 % 4.65 % 4.47 % 4.66 %
Total non-interest income as a percentage of total revenue 35.5 33.1 33.5 34.3 33.7
 
N.M. Not Meaningful.
(1) Annualized.
 

Net Interest Income

  • Net interest income for the second quarter of 2015 remained consistent compared with the second quarter of 2014 and increased $2.6 million, or 1.3 percent, compared with the first quarter of 2015. The increase from the first quarter of 2015 was primarily due to higher average loan and lease balances in the auto finance and inventory finance portfolios, partially offset by lower first mortgage consumer real estate loan balances due to run-off.
  • Net interest margin in the second quarter of 2015 was 4.44 percent, compared with 4.65 percent in the second quarter of 2014 and 4.50 percent in the first quarter of 2015. The decreases from both periods were primarily due to margin compression resulting from the competitive low interest rate environment. The decrease from the second quarter of 2014 was further driven by a higher total deposit rate.

Non-interest Income

  • Fees and service charges in the second quarter of 2015 were $36.3 million, down $1.7 million, or 4.6 percent, from the second quarter of 2014 and up $2.3 million, or 6.8 percent, from the first quarter of 2015. The decrease from the second quarter of 2014 was primarily due to consumer behavior changes, as well as higher average checking account balances per customer. The increase from the first quarter of 2015 was primarily due to seasonality resulting in an increase in transaction activity and lower average checking account balances per customer.
  • TCF sold $436.4 million, $220.2 million and $203.5 million of auto loans during the second quarters of 2015 and 2014, and the first quarter of 2015, respectively, resulting in net gains in each respective period. The auto loans sold for the second quarter of 2015 related to the execution of the Company's second auto loan securitization.
  • TCF sold $364.9 million, $224.2 million and $264.3 million of consumer real estate loans during the second quarters of 2015 and 2014, and the first quarter of 2015, respectively, resulting in net gains in each respective period. The majority of the consumer real estate loans sold are junior lien loans. Included in consumer real estate loans sold was $74.5 million and $61.8 million of first mortgage loans related to the correspondent lending program for the second quarter of 2015 and the first quarter of 2015, respectively, resulting in net gains in each respective period.
  • Servicing fee income was $7.2 million on $3.7 billion of average loans and leases serviced for others during the second quarter of 2015 compared with $4.9 million on $2.5 billion for the second quarter of 2014 and $7.3 million on $3.5 billion for the first quarter of 2015. The increase from the second quarter of 2014 was primarily due to the cumulative effect of an increase in the portfolio of auto and consumer real estate loans sold with servicing retained by TCF.
 
Loans and Leases
                                                 
Period-End and Average Loans and Leases               Table 3
                Percent Change            
(Dollars in thousands) 2Q1Q2Q2Q15 vs   2Q15 vsYTDYTDPercent
2015     2015     2014     1Q15     2Q14     2015     2014     Change
Period-End:
Consumer real estate:
First mortgage lien $ 2,865,911 $ 3,011,166 $ 3,542,324 (4.8 )% (19.1 )%
Junior lien   2,678,118       2,597,895       2,480,763 3.1 8.0
Total consumer real estate 5,544,029 5,609,061 6,023,087 (1.2 ) (8.0 )
Commercial 3,112,344 3,205,599 3,093,161 (2.9 ) 0.6
Leasing and equipment finance 3,791,215 3,729,386 3,526,264 1.7 7.5
Inventory finance 2,106,087 2,336,518 1,880,667 (9.9 ) 12.0
Auto finance 2,301,714 2,156,139 1,502,860 6.8 53.2
Other   21,852       20,448       24,486 6.9 (10.8 )
Total $ 16,877,241     $ 17,057,151     $ 16,050,525 (1.1 ) 5.2
 
Average:
Consumer real estate:
First mortgage lien $ 2,936,793 $ 3,076,802 $ 3,606,635 (4.6 )% (18.6 )% $ 3,006,411 $ 3,662,985 (17.9 )%
Junior lien   2,650,894       2,614,538       2,498,151 1.4 6.1   2,632,816       2,552,698 3.1
Total consumer real estate 5,587,687 5,691,340 6,104,786 (1.8 ) (8.5 ) 5,639,227 6,215,683 (9.3 )
Commercial 3,148,272 3,154,008 3,131,320 (0.2 ) 0.5 3,151,124 3,126,718 0.8
Leasing and equipment finance 3,751,776 3,729,481 3,500,647 0.6 7.2 3,740,691 3,467,851 7.9
Inventory finance 2,292,481 2,108,871 2,061,437 8.7 11.2 2,201,183 1,968,431 11.8
Auto finance 2,211,014 2,021,144 1,518,194 9.4 45.6 2,116,604 1,423,240 48.7
Other   10,734       11,616       12,040 (7.6 ) (10.8 )   11,173       12,654 (11.7 )
Total $ 17,001,964     $ 16,716,460     $ 16,328,424 1.7 4.1 $ 16,860,002     $ 16,214,577 4.0
                                                                 
 
  • Period-end loans and leases were $16.9 billion at June 30, 2015, an increase of $0.8 billion, or 5.2 percent, compared with June 30, 2014 and a decrease of $0.2 billion, or 1.1 percent, compared with March 31, 2015. Average loans and leases were $17.0 billion for the second quarter of 2015, an increase of $0.7 billion, or 4.1 percent, compared with the second quarter of 2014 and an increase of $0.3 billion, or 1.7 percent, compared with the first quarter of 2015.

    The increases from the second quarter of 2014 for period-end loans and leases and average loans and leases were primarily due to the continued growth of the auto finance portfolio as TCF expands the number of active dealers in its network, as well as increases in the leasing and equipment finance and inventory finance portfolios. These increases were partially offset by a decrease in the consumer real estate portfolio as a result of the troubled debt restructuring ("TDR") loan sale that occurred in the fourth quarter of 2014, run-off in the first mortgage consumer real estate portfolio and increased loan sales in the auto finance and consumer real estate portfolios.

    The decrease from the first quarter of 2015 for period-end loans and leases was primarily due to seasonality in the inventory finance portfolio and a decrease in the commercial portfolio, partially offset by the growth in the auto finance portfolio. The increase from the first quarter of 2015 for average loans and leases was due to the growth in the auto finance portfolio and further driven by peak seasonality balances in the inventory finance portfolio during the first two months of the second quarter of 2015, partially offset by a decrease in the first mortgage consumer real estate portfolio due to run-off.
  • Loan and lease originations were $3.9 billion for the second quarter of 2015, an increase of $0.5 billion, or 14.5 percent, compared with the second quarter of 2014 and an increase of $0.4 billion, or 10.7 percent, compared with the first quarter of 2015. The increase in originations from the second quarter of 2014 was primarily due to an increase in consumer real estate junior lien originations and growth in the lawn and garden segment of inventory finance. The increase from the first quarter of 2015 was primarily due to an increase in consumer real estate junior lien and leasing and equipment finance originations.
 
Credit Quality
                                           
Credit Trends                                   Table 4
                        Percent Change
(Dollars in thousands) 2Q1Q4Q3Q2Q2Q15 vs     2Q15 vs
2015     2015     2014     2014     2014     1Q15     2Q14
Over 60-day delinquencies as a percentage of portfolio(1) 0.10 % 0.14 % 0.14 % 0.17 % 0.18 % (4 ) bps (8 ) bps
Net charge-offs as a percentage of portfolio(2) 0.41 0.28 0.40 0.66 0.45 13 (4 )
Non-accrual loans and leases and other real estate owned $ 263,717 $ 284,541 $ 282,384 $ 342,725 $ 325,374 (7.3 )% (18.9 )%
Provision for credit losses 12,528 12,791 55,597 15,739 9,909 (2.1 ) 26.4
 
(1) Excludes acquired portfolios and non-accrual loans and leases.
(2) Annualized.
 
  • The over 60-day delinquency rate, excluding acquired portfolios and non-accrual loans and leases, was 0.10 percent at June 30, 2015, down from 0.18 percent at June 30, 2014, and down from 0.14 percent at March 31, 2015. The decreases from both periods were primarily a result of the stabilization of the consumer real estate portfolio as economic conditions improved in our markets.
  • The net charge-off rate was 0.41 percent for the second quarter of 2015, down from 0.45 percent for the second quarter of 2014, and up from 0.28 percent for the first quarter of 2015. The decrease from the second quarter of 2014 was primarily due to improved credit quality in the commercial and consumer real estate portfolios. The increase from the first quarter of 2015 was driven by increased charge-offs of loans in the consumer real estate first mortgage lien portfolio and net recoveries in the commercial portfolio during the first quarter of 2015.
  • Non-accrual loans and leases and other real estate owned totaled $263.7 million at June 30, 2015, a decrease of $61.7 million, or 18.9 percent, from June 30, 2014, and a decrease of $20.8 million, or 7.3 percent, from March 31, 2015. The decrease from June 30, 2014 was primarily due to the TDR loan sale that occurred in the fourth quarter of 2014, which included $40.1 million of non-accrual loans, as well as improving credit quality trends and continued efforts to actively work out problem loans in the commercial portfolio. The decrease from March 31, 2015 was driven by improved credit quality in the commercial portfolio.
  • Provision for credit losses was $12.5 million for the second quarter of 2015, an increase of $2.6 million, or 26.4 percent, from the second quarter of 2014, and a decrease of $0.3 million, or 2.1 percent, from the first quarter of 2015. The increase from the second quarter of 2014 was driven by growth in the auto finance and consumer real estate junior lien portfolios.
 
Deposits
                                                 
Average Deposits                                         Table 5
                Percent Change            
(Dollars in thousands) 2Q1Q2Q2Q15 vs     2Q15 vsYTDYTDPercent
2015     2015     2014     1Q15     2Q14     2015     2014     Change
 
Checking $ 5,428,419 $ 5,300,699 $ 5,098,650 2.4 % 6.5 % $ 5,364,911 $ 5,057,612 6.1 %
Savings 5,048,053 5,161,697 5,908,219 (2.2 ) (14.6 ) 5,104,561 6,024,936 (15.3 )
Money market   2,261,567         2,149,340         1,019,543   5.2 121.8   2,205,764         919,981   139.8
Subtotal 12,738,039 12,611,736 12,026,412 1.0 5.9 12,675,236 12,002,529 5.6
Certificates of deposit   3,116,718         3,041,790         2,742,832   2.5 13.6   3,079,461         2,643,639   16.5
Total average deposits $ 15,854,757       $ 15,653,526       $ 14,769,244   1.3 7.3 $ 15,754,697       $ 14,646,168   7.6
 
Average interest rate on deposits(1) 0.28 % 0.29 % 0.24 % 0.28 % 0.23 %
 
(1) Annualized.
 
  • Total average deposits for the second quarter of 2015 increased $1.1 billion, or 7.3 percent, from the second quarter of 2014 and increased $0.2 billion, or 1.3 percent, from the first quarter of 2015. The increases from both periods were primarily due to special campaigns for money market accounts and certificates of deposit.
  • The average interest rate on deposits for the second quarter of 2015 was 0.28 percent, up 4 basis points from the second quarter of 2014 and down 1 basis point from the first quarter of 2015. The increase from the second quarter of 2014 was primarily due to increased average interest rates resulting from promotions for money market accounts and certificates of deposit. The decrease from the first quarter of 2015 was primarily due to a reduction in average interest rates on various money market, savings, and checking accounts, partially offset by certificates of deposit promotions.
 
Non-interest Expense
                                                 
Non-interest Expense                                         Table 6
                Percent Change            
(Dollars in thousands) 2Q1Q2Q2Q15 vs     2Q15 vsYTDYTDPercent
2015     2015     2014     1Q15     2Q14     2015     2014     Change
 
Compensation and employee benefits $ 116,159 $ 115,815 $ 109,664 0.3 % 5.9 % $ 231,974 $ 224,753 3.2 %
Occupancy and equipment 36,152 36,827 34,316 (1.8 ) 5.4 72,979 69,155 5.5
FDIC insurance 4,864 5,393 7,625 (9.8 ) (36.2 ) 10,257 15,188 (32.5 )
Operating lease depreciation 8,582 7,734 6,613 11.0 29.8 16,316 12,840 27.1
Advertising and marketing 5,150 6,523 6,245 (21.0 ) (17.5 ) 11,673 12,141 (3.9 )
Other   45,887         48,133       42,618 (4.7 ) 7.7   94,020       83,953 12.0
Subtotal 216,794 220,425 207,081 (1.6 ) 4.7 437,219 418,030 4.6
Foreclosed real estate and repossessed assets, net 6,377 6,196 5,743 2.9 11.0 12,573 11,811 6.5
Other credit costs, net   (62 )       146       371 N.M. N.M.   84       490 (82.9 )
Total non-interest expense $ 223,109       $ 226,767     $ 213,195 (1.6 ) 4.7 $ 449,876     $ 430,331 4.5
 
N.M. Not Meaningful.
 
  • Compensation and employee benefits expense increased $6.5 million, or 5.9 percent, from the second quarter of 2014 and remained consistent with the first quarter of 2015. The increase from the second quarter of 2014 was primarily due to the increased staff levels to support the growth of auto finance.
  • FDIC insurance expense decreased $2.8 million, or 36.2 percent, from the second quarter of 2014 and decreased $0.5 million, or 9.8 percent from the first quarter of 2015. The decrease from the second quarter of 2014 was due to a lower assessment rate primarily as a result of the TDR loan sale in the fourth quarter of 2014 and improved credit metrics.
       
Capital
               
Capital Information     Table 7
 
(Dollars in thousands, except per-share data) 2Q 20154Q 2014  
Total equity $ 2,222,022 $ 2,135,364
Book value per common share 11.47 11.10
Tangible book value per common share(1) 10.11 9.72
Tangible common equity to tangible assets(1) 8.72 % 8.50 %
Capital accumulation rate(2) 10.90 10.36
 
2Q 2015(3)4Q 2014  
Regulatory Capital: Under Basel III Under Basel I  
Common equity Tier 1 capital $ 1,732,437 N.A.
Tier 1 capital 2,013,347 $ 1,919,887
Total capital 2,407,268 2,209,999
 
Regulatory Capital Ratios:
Common equity Tier 1 capital ratio 9.97 % N.A.
Tier 1 risk-based capital ratio 11.59 11.76 %
Total risk-based capital ratio 13.86 13.54
Tier 1 leverage ratio 10.22 10.07
 
N.A. Not Applicable.
(1) See "Reconciliation of GAAP to Non-GAAP Financial Measures" table.
(2) Calculated as the change in annualized year-to-date common equity Tier 1 capital as a percentage of prior year end common equity Tier 1 capital.
(3) The regulatory capital ratios for 2Q 2015 are preliminary pending completion and filing of the Company's regulatory reports.
 
  • Maintained strong capital ratios as the Company accumulates capital through earnings. The decrease in the Tier 1 risk-based capital ratio from the fourth quarter of 2014 was primarily the result of strong asset growth.
  • On July 20, 2015, TCF's Board of Directors declared a regular quarterly cash dividend of 5 cents per common share, payable on September 1, 2015, to stockholders of record at the close of business on August 14, 2015. TCF also declared dividends on the 7.50% Series A and 6.45% Series B Non-Cumulative Perpetual Preferred Stock, both payable on September 1, 2015, to stockholders of record at the close of business on August 14, 2015.

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, 2015 at 9:00 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 on 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, 2015, TCF had $19.8 billion in total assets and 376 branches in Illinois, Minnesota, Michigan, Colorado, Wisconsin, Arizona, South Dakota and Indiana, 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 all 50 states 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, 2014, 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 increases in unemployment; adverse economic, business and competitive developments such as shrinking interest margins, reduced demand for financial services and loan and lease products, deposit outflows, increased deposit costs due to competition for deposit growth and evolving payment system developments, 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, securities held to maturity 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 the 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 such as mortgage foreclosure moratorium laws, further regulation of financial institution campus banking programs, use by municipalities of eminent domain on property securing troubled residential mortgage loans, or imposition of underwriting or other limitations that impact the ability to offer certain variable-rate products; changes affecting customer account charges and fee income, including changes to interchange rates; regulatory actions or changes in customer opt-in preferences with respect to overdrafts, which may have an adverse impact on TCF's fee revenue; 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; 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 enterprise risk management, 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 impact on banks of regulatory reform, including additional capital, leverage, liquidity and risk management requirements or changes in the composition of qualifying regulatory capital; 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 or 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 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 new or expanded programs or 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, including the failure to develop and maintain technology necessary to satisfy customer demands. Ability to attract and retain employees given competitive conditions and the impact of consolidating facilities.

Litigation Risks.Results of litigation or government enforcement actions, including class action litigation or enforcement actions 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 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
20152014$%
Interest income:
Loans and leases $ 207,164 $ 206,788 $ 376 0.2 %
Securities available for sale 3,543 2,805 738 26.3
Securities held to maturity 1,384 1,443 (59 ) (4.1 )
Investments and other   10,990     9,055   1,935   21.4
Total interest income   223,081     220,091   2,990   1.4
Interest expense:
Deposits 11,080 8,877 2,203 24.8
Borrowings   5,972     5,113   859   16.8
Total interest expense   17,052     13,990   3,062   21.9
Net interest income 206,029 206,101 (72 )
Provision for credit losses   12,528     9,909   2,619   26.4
Net interest income after provision for credit losses   193,501     196,192   (2,691 ) (1.4 )
Non-interest income:
Fees and service charges 36,295 38,035 (1,740 ) (4.6 )
Card revenue 13,902 13,249 653 4.9
ATM revenue   5,540     5,794   (254 ) (4.4 )
Subtotal 55,737 57,078 (1,341 ) (2.3 )
Gains on sales of auto loans, net 10,756 7,270 3,486 48.0
Gains on sales of consumer real estate loans, net 11,954 8,151 3,803 46.7
Servicing fee income   7,216     4,892   2,324   47.5
Subtotal 29,926 20,313 9,613 47.3
Leasing and equipment finance 26,385 23,069 3,316 14.4
Other   1,460     2,789   (1,329 ) (47.7 )
Fees and other revenue 113,508 103,249 10,259 9.9
Gains (losses) on securities, net   (59 )   767   (826 ) N.M.
Total non-interest income   113,449     104,016   9,433   9.1
Non-interest expense:
Compensation and employee benefits 116,159 109,664 6,495 5.9
Occupancy and equipment 36,152 34,316 1,836 5.4
FDIC insurance 4,864 7,625 (2,761 ) (36.2 )
Operating lease depreciation 8,582 6,613 1,969 29.8
Advertising and marketing 5,150 6,245 (1,095 ) (17.5 )
Other   45,887     42,618   3,269   7.7
Subtotal 216,794 207,081 9,713 4.7
Foreclosed real estate and repossessed assets, net 6,377 5,743 634 11.0
Other credit costs, net   (62 )   371   (433 ) N.M.
Total non-interest expense   223,109     213,195   9,914   4.7
Income before income tax expense 83,841 87,013 (3,172 ) (3.6 )
Income tax expense   28,902     31,385   (2,483 ) (7.9 )
Income after income tax expense 54,939 55,628 (689 ) (1.2 )
Income attributable to non-controlling interest   2,684     2,503   181   7.2
Net income attributable to TCF Financial Corporation   52,255     53,125   (870 ) (1.6 )
Preferred stock dividends   4,847     4,847    
Net income available to common stockholders $ 47,408   $ 48,278 $ (870 ) (1.8 )
 
Net income per common share:
Basic $ 0.29 $ 0.30 $ (0.01 ) (3.3 )%
Diluted 0.29 0.29
 
Dividends declared per common share $ 0.05 $ 0.05 $ %
 

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

Basic 165,589 163,253 2,336 1.4 %
Diluted 166,118 163,714 2,404 1.5
 
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
20152014$%
Interest income:
Loans and leases $ 413,140 $ 409,325 $ 3,815 0.9 %
Securities available for sale 6,623 5,968 655 11.0
Securities held to maturity 2,789 2,407 382 15.9
Investments and other   20,323     17,018   3,305   19.4
Total interest income   442,875     434,718   8,157   1.9
Interest expense:
Deposits 22,152 16,914 5,238 31.0
Borrowings   11,274     10,429   845   8.1
Total interest expense   33,426     27,343   6,083   22.2
Net interest income 409,449 407,375 2,074 0.5
Provision for credit losses   25,319     24,401   918   3.8
Net interest income after provision for credit losses   384,130     382,974   1,156   0.3
Non-interest income:
Fees and service charges 70,267 74,654 (4,387 ) (5.9 )
Card revenue 26,803 25,499 1,304 5.1
ATM revenue   10,662     11,113   (451 ) (4.1 )
Subtotal 107,732 111,266 (3,534 ) (3.2 )
Gains on sales of auto loans, net 17,021 15,740 1,281 8.1
Gains on sales of consumer real estate loans, net 20,717 19,857 860 4.3
Servicing fee income   14,558     9,199   5,359   58.3
Subtotal 52,296 44,796 7,500 16.7
Leasing and equipment finance 48,609 45,049 3,560 7.9
Other   5,587     5,171   416   8.0
Fees and other revenue 214,224 206,282 7,942 3.9
Gains (losses) on securities, net   (137 )   1,141   (1,278 ) N.M.
Total non-interest income   214,087     207,423   6,664   3.2
Non-interest expense:
Compensation and employee benefits 231,974 224,753 7,221 3.2
Occupancy and equipment 72,979 69,155 3,824 5.5
FDIC insurance 10,257 15,188 (4,931 ) (32.5 )
Operating lease depreciation 16,316 12,840 3,476 27.1
Advertising and marketing 11,673 12,141 (468 ) (3.9 )
Other   94,020     83,953   10,067   12.0
Subtotal 437,219 418,030 19,189 4.6
Foreclosed real estate and repossessed assets, net 12,573 11,811 762 6.5
Other credit costs, net   84     490   (406 ) (82.9 )
Total non-interest expense   449,876     430,331   19,545   4.5
Income before income tax expense 148,341 160,066 (11,725 ) (7.3 )
Income tax expense   51,730     57,964   (6,234 ) (10.8 )
Income after income tax expense 96,611 102,102 (5,491 ) (5.4 )
Income attributable to non-controlling interest   4,555     4,220   335   7.9
Net income attributable to TCF Financial Corporation   92,056     97,882   (5,826 ) (6.0 )
Preferred stock dividends   9,694     9,694    
Net income available to common stockholders $ 82,362   $ 88,188 $ (5,826 ) (6.6 )
 
Net income per common share:
Basic $ 0.50 $ 0.54 $ (0.04 ) (7.4 )%
Diluted 0.50 0.54 (0.04 ) (7.4 )
 
Dividends declared per common share $ 0.10 $ 0.10 $ %
 

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

Basic 165,219 163,011 2,208 1.4 %
Diluted 165,744 163,491 2,253 1.4
 
N.M. Not Meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
                 
Three Months Ended June 30,Change
20152014$%
Net income attributable to TCF Financial Corporation $ 52,255   $ 53,125   $ (870 ) (1.6 )%
Other comprehensive income (loss):
Securities available for sale:
Unrealized gains (losses) arising during the period (11,140 ) 8,648 (19,788 ) N.M.
Reclassification of net (gains) losses to net income 286 (452 ) 738 N.M.
Net investment hedges:
Unrealized gains (losses) arising during the period (674 ) (1,382 ) 708 51.2
Foreign currency translation adjustment:
Unrealized gains (losses) arising during the period 617 1,399 (782 ) (55.9 )
Recognized postretirement prior service cost:
Reclassification of net (gains) losses to net income (11 ) (11 )
Income tax (expense) benefit 4,358   (2,561 ) 6,919   N.M.
Total other comprehensive income (loss) (6,564 ) 5,641   (12,205 ) N.M.
Comprehensive income $ 45,691   $ 58,766   $ (13,075 ) (22.2 )
 
 
Six Months Ended June 30,Change
20152014$%
Net income attributable to TCF Financial Corporation $ 92,056   $ 97,882   $ (5,826 ) (6.0 )%
Other comprehensive income (loss):
Securities available for sale:
Unrealized gains (losses) arising during the period (7,001 ) 20,514 (27,515 ) N.M.
Reclassification of net (gains) losses to net income 590 (629 ) 1,219 N.M.
Net investment hedges:
Unrealized gains (losses) arising during the period 2,914 (172 ) 3,086 N.M.
Foreign currency translation adjustment:
Unrealized gains (losses) arising during the period (3,269 ) 23 (3,292 ) N.M.
Recognized postretirement prior service cost:
Reclassification of net (gains) losses to net income (23 ) (23 )
Income tax (expense) benefit 1,329   (7,415 ) 8,744   N.M.
Total other comprehensive income (loss) (5,460 ) 12,298   (17,758 ) N.M.
Comprehensive income $ 86,596   $ 110,180   $ (23,584 ) (21.4 )
 
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
20152014$%
ASSETS:
Cash and due from banks $ 912,461 $ 1,115,250 $ (202,789 ) (18.2 )%
Investments 78,518 85,492 (6,974 ) (8.2 )
Securities held to maturity 208,911 214,454 (5,543 ) (2.6 )
Securities available for sale 629,848 463,294 166,554 35.9
Loans and leases held for sale 200,034 132,266 67,768 51.2
Loans and leases:
Consumer real estate:
First mortgage lien 2,865,911 3,139,152 (273,241 ) (8.7 )
Junior lien 2,678,118   2,543,212   134,906   5.3
Total consumer real estate 5,544,029 5,682,364 (138,335 ) (2.4 )
Commercial 3,112,344 3,157,665 (45,321 ) (1.4 )
Leasing and equipment finance 3,791,215 3,745,322 45,893 1.2
Inventory finance 2,106,087 1,877,090 228,997 12.2
Auto finance 2,301,714 1,915,061 386,653 20.2
Other 21,852   24,144   (2,292 ) (9.5 )
Total loans and leases 16,877,241 16,401,646 475,595 2.9
Allowance for loan and lease losses (156,115 ) (164,169 ) 8,054   4.9
Net loans and leases 16,721,126 16,237,477 483,649 3.0
Premises and equipment, net 435,600 436,361 (761 ) (0.2 )
Goodwill 225,640 225,640
Other assets 414,212   484,377   (70,165 ) (14.5 )
Total assets $ 19,826,350   $ 19,394,611   $ 431,739   2.2
 
LIABILITIES AND EQUITY:
Deposits:
Checking $ 5,375,818 $ 5,195,243 $ 180,575 3.5
Savings 4,968,398 5,212,320 (243,922 ) (4.7 )
Money market 2,286,773   1,993,130   293,643   14.7
Subtotal 12,630,989 12,400,693 230,296 1.9
Certificates of deposit 3,196,230   3,049,189   147,041   4.8
Total deposits 15,827,219   15,449,882   377,337   2.4
Short-term borrowings 7,305 4,425 2,880 65.1
Long-term borrowings 1,210,736   1,232,065   (21,329 ) (1.7 )
Total borrowings 1,218,041 1,236,490 (18,449 ) (1.5 )
Accrued expenses and other liabilities 559,068   572,875   (13,807 ) (2.4 )
Total liabilities 17,604,328   17,259,247   345,081   2.0
Equity:

Preferred stock, par value $0.01 per share, 30,000,000 shares authorized; 4,006,900 issued

263,240 263,240

Common stock, par value $0.01 per share, 280,000,000 shares authorized; 169,144,261 and 167,503,568 shares issued, respectively

1,691 1,675 16 1.0
Additional paid-in capital 838,755 817,130 21,625 2.6
Retained earnings, subject to certain restrictions 1,165,753 1,099,914 65,839 6.0
Accumulated other comprehensive income (loss) (16,370 ) (10,910 ) (5,460 ) (50.0 )
Treasury stock at cost, 42,566 shares, and other (50,558 ) (49,400 ) (1,158 ) (2.3 )
Total TCF Financial Corporation stockholders' equity 2,202,511 2,121,649 80,862 3.8
Non-controlling interest in subsidiaries 19,511   13,715   5,796   42.3
Total equity 2,222,022   2,135,364   86,658   4.1
Total liabilities and equity $ 19,826,350   $ 19,394,611   $ 431,739   2.2
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA
(Dollars in thousands)
(Unaudited)
 

Over 60-Day Delinquencies as a Percentage of Portfolio(1)

                                 
AtAtAtAtAtChange from
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2015201520142014201420152014
Consumer real estate:
First mortgage lien 0.38 % 0.53 % 0.49 % 0.45 % 0.61 % (15 ) bps (23 ) bps
Junior lien 0.08 0.11 0.08 0.10 0.10 (3 ) (2 )
Total consumer real estate 0.22 0.32 0.30 0.30 0.40 (10 ) (18 )
Commercial 0.13
Leasing and equipment finance 0.06 0.09 0.07 0.06 0.08 (3 ) (2 )
Inventory finance 0.01 0.01 (1 )

 

Auto finance 0.11 0.16 0.22 0.21 0.14 (5 ) (3 )
Other 0.11 0.02 0.02 0.01 9 10
Subtotal 0.10 0.14 0.14 0.17 0.18 (4 ) (8 )
Acquired portfolios 0.28 0.21 0.03 2.27 2.26 7 (198 )
Total delinquencies 0.10 0.14 0.14 0.17 0.18 (4 ) (8 )
 
(1) Excludes non-accrual loans and leases.

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

         
Quarter Ended(1)Change from
Jun. 30,     Mar. 31,     Dec. 31,     Sep. 30,     Jun. 30,Mar. 31,   Jun. 30,
2015201520142014201420152014
Consumer real estate:
First mortgage lien 0.79 % 0.62 % 0.80 % 2.10 % 0.79 % 17 bps bps
Junior lien 0.59 0.38 0.46 0.59 0.69 21 (10 )
Total consumer real estate 0.69 0.51 0.66 1.45 0.75 18 (6 )
Commercial 0.21 (0.07 ) 0.12 (0.02 ) 0.44 28 (23 )
Leasing and equipment finance 0.16 0.10 0.08 0.13 0.11 6 5
Inventory finance 0.11 0.08 0.12 0.06 0.02 3 9
Auto finance 0.66 0.66 0.83 0.61 0.48 18
Other N.M. N.M. N.M. N.M. N.M. N.M. N.M.
Total 0.41 0.28 0.40 0.66 0.45 13 (4 )
 
N.M. Not Meaningful.
(1) Annualized.

Non-Accrual Loans and Leases Rollforward

                             
Quarter EndedChange from
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2015201520142014201420152014
Balance, beginning of period $ 222,143 $ 216,734 $ 275,111 $ 260,294 $ 266,679 $ 5,409 $ (44,536 )
Additions 40,846 51,647 44,626 83,597 61,242 (10,801 ) (20,396 )
Charge-offs (14,050 ) (8,921 ) (14,456 ) (24,430 ) (15,135 ) (5,129 ) 1,085
Transfers to other assets (17,738 ) (16,781 ) (18,471 ) (17,404 ) (17,994 ) (957 ) 256
Return to accrual status (10,298 ) (7,668 ) (8,280 ) (12,966 ) (18,224 ) (2,630 ) 7,926
Payments received (15,543 ) (10,974 ) (21,859 ) (13,459 ) (14,910 ) (4,569 ) (633 )
Sales (353 ) (2,250 ) (40,354 ) (1,900 ) 1,897 1,547
Other, net 703   356   417   (521 ) 536   347   167  
Balance, end of period $ 205,710   $ 222,143   $ 216,734   $ 275,111   $ 260,294   $ (16,433 ) $ (54,584 )
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)
 

Other Real Estate Owned Rollforward

                             
Quarter EndedChange from
Jun. 30,Mar. 31,Dec. 31,Sep. 30,Jun. 30,Mar. 31,Jun. 30,
2015201520142014201420152014
Balance, beginning of period $ 62,398 $ 65,650 $ 67,614 $ 65,080 $ 63,448 $ (3,252 ) $ (1,050 )
Transferred in 15,359 15,513 18,220 14,854 15,751 (154 ) (392 )
Sales (17,164 ) (15,399 ) (13,766 ) (11,943 ) (15,998 ) (1,765 ) (1,166 )
Writedowns (4,003 ) (3,424 ) (5,753 ) (2,750 ) (2,782 ) (579 ) (1,221 )
Other, net 1,417   58   (665 ) 2,373   4,661   1,359   (3,244 )
Balance, end of period $ 58,007   $ 62,398   $ 65,650   $ 67,614   $ 65,080   $ (4,391 ) $ (7,073 )

Allowance for Loan and Lease Losses

                               

At June 30,

At March 31,At June 30,
201520152014Change from
% of% of% ofMar. 31,Jun. 30,
BalancePortfolioBalancePortfolioBalancePortfolio20152014
Consumer real estate $ 74,687 1.35 % $ 80,292 1.43 % $ 161,349 2.68 % (8 ) bps (133 ) bps
Commercial 30,205 0.97 32,121 1.00 31,361 1.01 (3 ) (4 )
Leasing and equipment finance 17,669 0.47 17,921 0.48 19,184 0.54 (1 ) (7 )
Inventory finance 10,879 0.52 12,409 0.53 9,539 0.51 (1 ) 1
Auto finance 22,061 0.96 20,426 0.95 13,865 0.92 1 4
Other 614   2.81 630   3.08 783   3.20 (27 ) (39 )
Total $ 156,115   0.93 $ 163,799   0.96 $ 236,081   1.47 (3 ) (54 )
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)
                         
Three Months Ended June 30,
20152014
AverageYields andAverageYields and
BalanceInterest(1)Rates(1)(2)BalanceInterest(1)Rates(1)(2)
ASSETS:
Investments and other $ 551,630 $ 3,216 2.34 % $ 623,721 $ 4,054 2.61 %
Securities held to maturity 209,834 1,384 2.64 217,477 1,443 2.65
Securities available for sale(3) 573,919 3,566 2.49 408,075 2,805 2.75
Loans and leases held for sale 340,912 7,774 9.15 240,304 5,001 8.35
Loans and leases:
Consumer real estate:
Fixed-rate 2,776,177 39,696 5.73 3,393,788 48,372 5.72
Variable-rate 2,811,510   35,973   5.13 2,710,998   34,757   5.14
Total consumer real estate 5,587,687 75,669 5.43 6,104,786 83,129 5.46
Commercial:
Fixed-rate 1,193,011 14,954 5.03 1,515,353 19,503 5.16
Variable- and adjustable-rate 1,955,261   18,765   3.85 1,615,967   16,151   4.01
Total commercial 3,148,272 33,719 4.30 3,131,320 35,654 4.57
Leasing and equipment finance 3,751,776 43,738 4.66 3,500,647 41,276 4.72
Inventory finance 2,292,481 32,064 5.61 2,061,437 30,482 5.93
Auto finance 2,211,014 22,633 4.11 1,518,194 16,770 4.43
Other 10,734   185   6.92 12,040   230   7.63
Total loans and leases(4) 17,001,964   208,008   4.90 16,328,424   207,541   5.10
Total interest-earning assets 18,678,259 223,948 4.81 17,818,001 220,844 4.97
Other assets(5) 1,211,774   1,123,148  
Total assets $ 19,890,033   $ 18,941,149  
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,699,668 $ 1,579,528
Small business 822,683 788,540
Commercial and custodial 497,883   388,562  
Total non-interest bearing deposits 3,020,234 2,756,630
Interest-bearing deposits:
Checking 2,422,909 137 0.02 2,363,106 261 0.04
Savings 5,033,329 800 0.06 5,887,133 2,406 0.16
Money market 2,261,567   3,450   0.61 1,019,543   1,098   0.43
Subtotal 9,717,805 4,387 0.18 9,269,782 3,765 0.16
Certificates of deposit 3,116,718   6,693   0.86 2,742,832   5,112   0.75
Total interest-bearing deposits 12,834,523   11,080   0.35 12,012,614   8,877   0.30
Total deposits 15,854,757   11,080   0.28 14,769,244   8,877   0.24
Borrowings:
Short-term borrowings 8,246 12 0.63 220,042 145 0.26
Long-term borrowings 1,236,465   5,960   1.93 1,368,480   4,968   1.45
Total borrowings 1,244,711   5,972   1.92 1,588,522   5,113   1.29
Total interest-bearing liabilities 14,079,234   17,052   0.49 13,601,136   13,990   0.41
Total deposits and borrowings 17,099,468 17,052 0.40 16,357,766 13,990 0.34
Other liabilities 594,352   541,458  
Total liabilities 17,693,820   16,899,224  
Total TCF Financial Corp. stockholders' equity 2,173,699 2,020,815
Non-controlling interest in subsidiaries 22,514   21,110  
Total equity 2,196,213   2,041,925  
Total liabilities and equity $ 19,890,033   $ 18,941,149  
Net interest income and margin $ 206,896   4.44 $ 206,854   4.65
 
(1) Interest and yields are presented on a fully tax-equivalent basis.
(2) Annualized.
(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,
20152014
AverageYields andAverageYields and
BalanceInterest(1)Rates(1)(2)BalanceInterest(1)Rates(1)(2)
ASSETS:
Investments and other $ 608,303 $ 6,713 2.22 % $ 622,277 $ 8,039 2.60 %
Securities held to maturity 210,735 2,789 2.65 179,509 2,407 2.68
Securities available for sale(3) 524,582 6,646 2.53 437,786 5,968 2.73
Loans and leases held for sale 308,709 13,610 8.89 218,210 8,979 8.30
Loans and leases:
Consumer real estate:
Fixed-rate 2,843,979 83,056 5.89 3,446,020 96,904 5.67
Variable-rate 2,795,248   71,189   5.14 2,769,663   70,573   5.14
Total consumer real estate 5,639,227 154,245 5.51 6,215,683 167,477 5.43
Commercial:
Fixed-rate 1,233,186 30,684 5.02 1,537,549 38,999 5.11
Variable- and adjustable-rate 1,917,938   37,014   3.89 1,589,169   32,329   4.10
Total commercial 3,151,124 67,698 4.33 3,126,718 71,328 4.60
Leasing and equipment finance 3,740,691 87,223 4.66 3,467,851 82,055 4.73
Inventory finance 2,201,183 61,756 5.66 1,968,431 57,951 5.94
Auto finance 2,116,604 43,484 4.14 1,423,240 31,557 4.47
Other 11,173   398   7.19 12,654   472   7.52
Total loans and leases(4) 16,860,002   414,804   4.95 16,214,577   410,840   5.10
Total interest-earning assets 18,512,331 444,562 4.83 17,672,359 436,233 4.97
Other assets(5) 1,223,486   1,109,685  
Total assets $ 19,735,817   $ 18,782,044  
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,673,364 $ 1,558,414
Small business 813,554 780,229
Commercial and custodial 493,590   387,749  
Total non-interest bearing deposits 2,980,508 2,726,392
Interest-bearing deposits:
Checking 2,400,957 288 0.02 2,353,156 522 0.04
Savings 5,088,007 1,901 0.08 6,003,000 4,935 0.17
Money market 2,205,764   7,017   0.64 919,981   1,673   0.37
Subtotal 9,694,728 9,206 0.19 9,276,137 7,130 0.15
Certificates of deposit 3,079,461   12,946   0.85 2,643,639   9,784   0.75
Total interest-bearing deposits 12,774,189   22,152   0.35 11,919,776   16,914   0.29
Total deposits 15,754,697   22,152   0.28 14,646,168   16,914   0.23