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TCF Reports Quarterly Net Income of $48.0 Million, or 26 Cents Per Share

Company Release - 4/21/2016 8:00 AM ET

FIRST QUARTER HIGHLIGHTS

- Revenue of $324.3 million, up 6.6 percent from the first quarter of 2015

- Non-interest expense of $228.3 million, up 0.7 percent from the first quarter of 2015

- Efficiency ratio of 70.4 percent, down 416 basis points from the first quarter of 2015

- Period-end loans and leases of $17.9 billion, up 4.7 percent from the first quarter of 2015

- Average deposits of $16.9 billion, up 7.9 percent from the first quarter of 2015

- Net charge-offs as a percentage of average loans and leases of 0.27 percent, down 1 basis point from the first quarter of 2015

- Non-accrual loans and leases of $198.6 million, down 10.6 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) 1Q 4Q 1Q 1Q16 vs   1Q16 vs
2016   2015   2015   4Q15   1Q15
Net income attributable to TCF $ 48,046 $ 52,492 $ 39,801 (8.5 )% 20.7 %
Net interest income 211,658 205,669 203,420 2.9 4.0
Diluted earnings per common share 0.26 0.29 0.21 (10.3 ) 23.8
 

Financial Ratios(1)

Pre-tax pre-provision return on average assets(2) 1.83 % 1.95 % 1.58 %
Return on average assets 0.96 1.08 0.85
Return on average common equity 8.45 9.53 7.47
Return on average tangible common equity(3) 9.57 10.82 8.58
Net interest margin 4.37 4.35 4.50
Net charge-offs as a percentage of average loans and leases 0.27 0.29 0.28
 
(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 $48.0 million for the first quarter of 2016, compared with net income of $39.8 million for the first quarter of 2015, and net income of $52.5 million for the fourth quarter of 2015. Diluted earnings per common share was 26 cents for the first quarter of 2016, compared with 21 cents for the first quarter of 2015, and 29 cents for the fourth quarter of 2015.

"TCF reported strong first quarter results as we continued to emphasize our four strategic pillars of diversification, profitable growth, operating leverage and core funding, in all areas of the organization," said Craig R. Dahl, president and chief executive officer. "Our consistent and sustainable loan and lease origination capabilities, funded by a growing deposit base, continued to drive revenue growth and diversification. Meanwhile, credit quality showed additional improvement as net charge-offs, delinquencies as a percentage of portfolio and non-performing assets all decreased during the quarter. Finally, we took another step toward improving our operating efficiencies by announcing, as part of extending our retail banking relationship with Jewel-Osco, plans to close 33 in-store branches in Chicago, replacing them with full function, image-enabled ATMs.

"Based on these results, I am more encouraged than ever by the strategies and teams we have in place. We will continue to execute on our strategic pillars with the ultimate goal of accelerating value creation for our shareholders."

Revenue          
                     
Total Revenue                   Table 2
Percent Change
(Dollars in thousands) 1Q 4Q 1Q 1Q16 vs 1Q16 vs
2016   2015   2015   4Q15   1Q15
Net interest income $ 211,658     $ 205,669     $ 203,420   2.9 % 4.0 %
Non-interest income:
Fees and service charges 32,817 37,741 33,972 (13.0 ) (3.4 )
Card revenue 13,363 13,781 12,901 (3.0 ) 3.6
ATM revenue 5,021     5,143     5,122   (2.4 ) (2.0 )
Subtotal 51,201 56,665 51,995 (9.6 ) (1.5 )
Gains on sales of auto loans, net 11,920 3,136 6,265 N.M. 90.3
Gains on sales of consumer real estate loans, net 9,384 13,104 8,763 (28.4 ) 7.1
Servicing fee income 8,883     8,622     7,342   3.0 21.0
Subtotal 30,187 24,862 22,370 21.4 34.9
Leasing and equipment finance 28,487 32,355 22,224 (12.0 ) 28.2
Other 2,843     1,806     4,127   57.4 (31.1 )
Fees and other revenue 112,718 115,688 100,716 (2.6 ) 11.9
Gains (losses) on securities, net (116 )   (29 )   (78 ) N.M. (48.7 )
Total non-interest income 112,602     115,659     100,638   (2.6 ) 11.9
Total revenue $ 324,260     $ 321,328     $ 304,058   0.9 6.6
 
Net interest margin(1) 4.37 % 4.35 % 4.50 %
Total non-interest income as a percentage of total revenue 34.7 36.0 33.1
 
N.M. Not Meaningful.
(1) Annualized.                    
 

Net Interest Income

  • Net interest income for the first quarter of 2016 increased $8.2 million, or 4.0 percent, compared with the first quarter of 2015. The increase was primarily due to higher average loan and lease balances in the auto finance, inventory finance and leasing and equipment finance portfolios, partially offset by the run-off of consumer real estate first mortgage lien balances, overall net margin compression and higher promotional rates paid on certificates of deposit.
  • Net interest income for the first quarter of 2016 increased $6.0 million, or 2.9 percent, compared with the fourth quarter of 2015. The increase was primarily due to higher than expected seasonality in average loan balances in the inventory finance portfolio and higher average loan balances in the auto finance portfolio due to maturation of the business model, partially offset by higher promotional rates paid on certificates of deposit.
  • Net interest margin for the first quarter of 2016 was 4.37 percent, compared with 4.50 percent for the first quarter of 2015 and 4.35 percent for the fourth quarter of 2015. The decrease compared with the first quarter of 2015 was primarily due to margin compression resulting from the impact of the competitive low interest rate environment and higher rates paid on certificates of deposit. The increase compared with the fourth quarter of 2015 was primarily due to higher average loan balances in the inventory finance portfolio, partially offset by higher rates paid on certificates of deposit.

Non-interest Income

  • Fees and service charges in the first quarter of 2016 were $32.8 million, down $1.2 million, or 3.4 percent, from the first quarter of 2015 and down $4.9 million, or 13.0 percent, from the fourth quarter of 2015. The decrease compared with the first quarter of 2015 was primarily due to ongoing consumer behavior changes, as well as higher average checking account balances per customer. The decrease compared with the fourth quarter of 2015 was primarily due to seasonality, as well as higher average checking account balances per customer.
  • TCF sold $444.3 million, $203.5 million and $271.1 million of auto loans during the first quarters of 2016 and 2015, and the fourth quarter of 2015, respectively, resulting in net gains in each respective period.
  • TCF sold $321.4 million, $264.3 million and $389.1 million of consumer real estate loans during the first quarters of 2016 and 2015, and the fourth quarter of 2015, respectively, resulting in net gains in each respective period. TCF has two consumer real estate loan sale programs; one that sells nationally originated junior lien loans and the other that originates first mortgage lien loans in our primary banking markets and sells the loans through a correspondent relationship.
  • Servicing fee income was $8.9 million on $4.4 billion of average loans and leases serviced for others during the first quarter of 2016, compared with $7.3 million on $3.5 billion for the first quarter of 2015 and $8.6 million on $4.2 billion for the fourth quarter of 2015. The increases from both periods were primarily due to the cumulative effect of the 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) 1Q 4Q 1Q 1Q16 vs 1Q16 vs
2016   2015   2015   4Q15   1Q15
Period-End:
Consumer real estate:
First mortgage lien $ 2,521,492 $ 2,624,956 $ 3,011,166

(3.9

)%

(16.3

)%

Junior lien 2,729,075     2,839,316     2,597,895   (3.9 ) 5.0
Total consumer real estate 5,250,567 5,464,272 5,609,061 (3.9 ) (6.4 )
Commercial 3,114,594 3,145,832 3,205,599 (1.0 ) (2.8 )
Leasing and equipment finance 4,005,934 4,012,248 3,729,386 (0.2 ) 7.4
Inventory finance 2,676,675 2,146,754 2,336,518 24.7 14.6
Auto finance 2,786,731 2,647,596 2,156,139 5.3 29.2
Other 18,940     19,297     20,448   (1.9 ) (7.4 )
Total $ 17,853,441     $ 17,435,999     $ 17,057,151   2.4 4.7
 
Average:
Consumer real estate:
First mortgage lien $ 2,573,915 $ 2,670,355 $ 3,076,802 (3.6 )% (16.3 )%
Junior lien 2,884,859     2,934,169     2,614,538   (1.7 ) 10.3
Total consumer real estate 5,458,774 5,604,524 5,691,340 (2.6 ) (4.1 )
Commercial 3,158,101 3,117,983 3,154,008 1.3 0.1
Leasing and equipment finance 3,992,678 3,911,025 3,729,481 2.1 7.1
Inventory finance 2,433,534 2,180,534 2,108,871 11.6 15.4
Auto finance 2,703,880 2,514,923 2,021,144 7.5 33.8
Other 10,018     9,060     11,616   10.6 (13.8 )
Total $ 17,756,985     $ 17,338,049     $ 16,716,460   2.4 6.2
 
  • Period-end loans and leases were $17.9 billion at March 31, 2016, an increase of $0.8 billion, or 4.7 percent, compared with March 31, 2015 and an increase of $0.4 billion, or 2.4 percent, compared with December 31, 2015. Average loans and leases were $17.8 billion for the first quarter of 2016, an increase of $1.0 billion, or 6.2 percent, compared with the first quarter of 2015 and an increase of $0.4 billion, or 2.4 percent, compared with the fourth quarter of 2015.

    The increases from the first quarter of 2015 were primarily due to the maturation of the business model in auto finance and increased seasonality in the early shipment of spring product and expansion of the number of active dealers in inventory finance, as well as an increase in the leasing and equipment finance portfolio due to strong fourth quarter originations, partially offset by run-off in the consumer real estate first mortgage lien portfolio. The increases from the fourth quarter of 2015 were primarily due to seasonally higher balances in the inventory finance portfolio and continued growth in the auto finance portfolio, partially offset by a decrease in the total consumer real estate portfolio.
  • Loan and lease originations were $4.0 billion for the first quarter of 2016, an increase of $0.5 billion, or 13.1 percent, compared with the first quarter of 2015 and an increase of $0.2 billion, or 4.8 percent, compared with the fourth quarter of 2015. The increase from the first quarter of 2015 was primarily due to strong growth in the lawn and garden segment of inventory finance and increases in auto finance and leasing and equipment finance originations, partially offset by decreases in commercial and consumer real estate originations. The increase from the fourth quarter of 2015 was primarily due to seasonally higher inventory finance originations and the continued growth in auto finance, partially offset by decreases in leasing and equipment finance, commercial and consumer real estate originations.
Credit Quality              
                             
Credit Trends                           Table 4
Change
(Dollars in thousands) 1Q 4Q 3Q 2Q 1Q 1Q16 vs 1Q16 vs
2016   2015   2015   2015   2015   4Q15   1Q15
Over 60-day delinquencies as a percentage of period-end loans and leases(1) 0.10 % 0.11 % 0.17 % 0.10 % 0.14 % (1

) bps

(4 ) bps
Net charge-offs as a percentage of average loans and leases(2) 0.27 0.29 0.23 0.41 0.28 (2 ) (1 )
Non-accrual loans and leases and other real estate owned $ 241,090 $ 250,448 $ 264,694 $ 263,717 $ 284,541 (3.7 )% (15.3 )%
Provision for credit losses 18,842 17,607 10,018 12,528 12,791 7.0 47.3
 
(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 March 31, 2016, down from 0.14 percent at March 31, 2015, and down from 0.11 percent at December 31, 2015. The decreases from both periods were primarily due to the stabilization of the consumer real estate portfolio as economic conditions improved in our markets.
  • The net charge-off rate was 0.27 percent for the first quarter of 2016, down from 0.28 percent for the first quarter of 2015, and down from 0.29 percent for the fourth quarter of 2015. The decrease from the first quarter of 2015 was primarily due to improved credit quality in the consumer real estate portfolio, partially offset by increased net charge-offs in the auto finance portfolio. The decrease from the fourth quarter of 2015 was due to net recoveries in the commercial portfolio and decreased net charge-offs in the leasing and equipment finance portfolio.
  • Non-accrual loans and leases and other real estate owned was $241.1 million at March 31, 2016, a decrease of $43.5 million, or 15.3 percent, from March 31, 2015, and a decrease of $9.4 million, or 3.7 percent, from December 31, 2015. The decreases from both periods were primarily due to increased sales of consumer real estate properties, improving credit quality trends and continued efforts to actively work out problem loans in the commercial portfolio.
  • Provision for credit losses was $18.8 million for the first quarter of 2016, an increase of $6.1 million, or 47.3 percent, from the first quarter of 2015, and an increase of $1.2 million, or 7.0 percent, from the fourth quarter of 2015. The increase from the first quarter of 2015 was primarily due to increased reserve requirements related to changes in economic outlook, growth in the auto finance, inventory finance, and leasing and equipment finance portfolios and increased net charge-offs in the auto finance portfolio due primarily to maturation of the portfolio. The increase from the fourth quarter of 2015 was primarily due to increased reserve requirements related to changes in economic outlook and growth in the inventory finance portfolio.
Deposits          
                     
Average Deposits                   Table 5
Percent Change
(Dollars in thousands) 1Q 4Q 1Q 1Q16 vs 1Q16 vs
2016   2015   2015   4Q15   1Q15
 
Checking $ 5,593,300 $ 5,412,454 $ 5,300,699 3.3 % 5.5 %
Savings 4,713,765 4,733,703 5,161,697 (0.4 ) (8.7 )
Money market 2,472,751 2,349,127 2,149,340 5.3 15.0
Certificates of deposit 4,104,951     3,793,653     3,041,790   8.2 35.0
Total average deposits $ 16,884,767     $ 16,288,937     $ 15,653,526   3.7 7.9
 
Average interest rate on deposits(1) 0.36 % 0.34 % 0.29 %
 
(1) Annualized.                    
 
  • Total average deposits for the first quarter of 2016 increased $1.2 billion, or 7.9 percent, from the first quarter of 2015 and increased $0.6 billion, or 3.7 percent, from the fourth quarter of 2015. The increases from both periods were primarily due to special campaigns for certificates of deposit and money market accounts.
  • The average interest rate on deposits for the first quarter of 2016 was 0.36 percent, up 7 basis points from the first quarter of 2015 and up 2 basis points from the fourth quarter of 2015. The increases from both periods were primarily due to increased average interest rates resulting from promotions for certificates of deposit.
Non-interest Expense          
                     
Non-interest Expense                   Table 6
Change
(Dollars in thousands) 1Q 4Q 1Q 1Q16 vs 1Q16 vs
2016   2015   2015   4Q15   1Q15
 
Compensation and employee benefits $ 124,473 $ 109,061 $ 115,815 14.1 % 7.5 %
Occupancy and equipment 37,008 37,824 36,827 (2.2 ) 0.5
FDIC insurance 4,113 5,173 5,393 (20.5 ) (23.7 )
Advertising and marketing 5,887 5,316 6,523 10.7 (9.8 )
Other 43,348     46,441     48,133   (6.7 ) (9.9 )
Subtotal 214,829 203,815 212,691 5.4 1.0
Operating lease depreciation 9,573 13,608 7,734 (29.7 ) 23.8
Foreclosed real estate and repossessed assets, net 3,920 4,940 6,196 (20.6 ) (36.7 )
Other credit costs, net 12     224     146   (94.6 ) (91.8 )
Total non-interest expense $ 228,334     $ 222,587     $ 226,767   2.6 0.7
 
Efficiency ratio 70.42 % 69.27 % 74.58 % 115 bps (416

)bps

 
  • Compensation and employee benefits expense increased $8.7 million, or 7.5 percent, from the first quarter of 2015 and increased $15.4 million, or 14.1 percent, from the fourth quarter of 2015. The increase from the first quarter of 2015 was primarily due to increased staff levels to support the continued growth of auto finance and higher incentives based on production results. The increase from the fourth quarter of 2015 was primarily due to seasonality of payroll taxes, higher incentives based on production results and non-recurring items in the fourth quarter of 2015, including the annual pension plan valuation adjustment resulting from an increase to the discount rate.
  • Operating lease depreciation is a transactional cost that is typically more than offset by increases in leasing and equipment finance non-interest income.
Capital    
         
Capital Information       Table 7
 
(Dollars in thousands, except per-share data) 1Q 2016 4Q 2015
Total equity $ 2,368,841 $ 2,306,917
Book value per common share 12.19 11.94
Tangible book value per common share(1) 10.85 10.59
Tangible common equity to tangible assets(1) 8.78 % 8.79 %
Capital accumulation rate(2) 8.73 10.44
 
Regulatory Capital: 1Q 2016(3) 4Q 2015
Common equity Tier 1 capital $ 1,854,048 $ 1,814,442
Tier 1 capital 2,139,609 2,092,195
Total capital 2,527,888 2,487,060
 
Regulatory Capital Ratios:
Common equity Tier 1 capital ratio 9.98 % 10.00 %
Tier 1 risk-based capital ratio 11.51 11.54
Total risk-based capital ratio 13.60 13.71
Tier 1 leverage ratio 10.33 10.46
 
(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 1Q 2016 are preliminary pending completion and filing of the Company's regulatory reports.
 
  • TCF maintained strong capital ratios as the Company accumulates capital through earnings. The decreases in the regulatory capital ratios from the fourth quarter of 2015 were primarily the result of asset growth.
  • On April 20, 2016, TCF's Board of Directors declared a regular quarterly cash dividend of 7.5 cents per common share, payable on June 1, 2016, to stockholders of record at the close of business on May 13, 2016. TCF also declared dividends on the 7.50% Series A and 6.45% Series B Non-Cumulative Perpetual Preferred Stock, both payable on June 1, 2016, to stockholders of record at the close of business on May 13, 2016.

Webcast Information

A live webcast of TCF's conference call to discuss the first quarter earnings will be hosted at TCF's website, http://ir.tcfbank.com, on April 21, 2016 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 March 31, 2016, TCF had $21.3 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, 2015 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 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; 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; inability to timely close underperforming branches due to long-term lease obligations; 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.

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 opening/origination, servicing practices, fees or charges, employment practices, or checking account overdraft program "opt in" requirements; and possible increases in indemnification obligations for certain litigation against Visa U.S.A.

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 March 31, Change
2016 2015 $ %
Interest income:
Loans and leases $ 214,805 $ 205,976 $ 8,829 4.3 %
Securities available for sale 5,498 3,080 2,418 78.5
Securities held to maturity 1,319 1,405 (86 ) (6.1 )
Investments and other 10,720   9,333   1,387   14.9
Total interest income 232,342   219,794   12,548   5.7
Interest expense:
Deposits 14,991 11,072 3,919 35.4
Borrowings 5,693   5,302   391   7.4
Total interest expense 20,684   16,374   4,310   26.3
Net interest income 211,658 203,420 8,238 4.0
Provision for credit losses 18,842   12,791   6,051   47.3
Net interest income after provision for credit losses 192,816   190,629   2,187   1.1
Non-interest income:
Fees and service charges 32,817 33,972 (1,155 ) (3.4 )
Card revenue 13,363 12,901 462 3.6
ATM revenue 5,021   5,122   (101 ) (2.0 )
Subtotal 51,201 51,995 (794 ) (1.5 )
Gains on sales of auto loans, net 11,920 6,265 5,655 90.3
Gains on sales of consumer real estate loans, net 9,384 8,763 621 7.1
Servicing fee income 8,883   7,342   1,541   21.0
Subtotal 30,187 22,370 7,817 34.9
Leasing and equipment finance 28,487 22,224 6,263 28.2
Other 2,843   4,127   (1,284 ) (31.1 )
Fees and other revenue 112,718 100,716 12,002 11.9
Gains (losses) on securities, net (116 ) (78 ) (38 ) (48.7 )
Total non-interest income 112,602   100,638   11,964   11.9
Non-interest expense:
Compensation and employee benefits 124,473 115,815 8,658 7.5
Occupancy and equipment 37,008 36,827 181 0.5
FDIC insurance 4,113 5,393 (1,280 ) (23.7 )
Advertising and marketing 5,887 6,523 (636 ) (9.8 )
Other 43,348   48,133   (4,785 ) (9.9 )
Subtotal 214,829 212,691 2,138 1.0
Operating lease depreciation 9,573 7,734 1,839 23.8
Foreclosed real estate and repossessed assets, net 3,920 6,196 (2,276 ) (36.7 )
Other credit costs, net 12   146   (134 ) (91.8 )
Total non-interest expense 228,334   226,767   1,567   0.7
Income before income tax expense 77,084 64,500 12,584 19.5
Income tax expense 26,803   22,828   3,975   17.4
Income after income tax expense 50,281 41,672 8,609 20.7
Income attributable to non-controlling interest 2,235   1,871   364   19.5
Net income attributable to TCF Financial Corporation 48,046   39,801   8,245   20.7
Preferred stock dividends 4,847   4,847    
Net income available to common stockholders $ 43,199   $ 34,954   $ 8,245   23.6
 
Net income per common share:
Basic $ 0.26 $ 0.21 $ 0.05 23.8 %
Diluted 0.26 0.21 0.05 23.8
 
Dividends declared per common share $ 0.075 $ 0.05 $ 0.025 50.0 %
 
Average common and common equivalent shares
outstanding (in thousands):
Basic 166,887 164,845 2,042 1.2 %
Diluted 167,435 165,366 2,069 1.3
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
       
Three Months Ended March 31, Change
2016 2015 $ %
Net income attributable to TCF Financial Corporation $ 48,046   $ 39,801   $ 8,245   20.7 %
Other comprehensive income (loss):
Securities available for sale:
Unrealized gains (losses) arising during the period 19,135 4,139 14,996 N.M.
Reclassification of net (gains) losses to net income 274 304 (30 ) (9.9 )
Net investment hedges:
Unrealized gains (losses) arising during the period (3,257 ) 3,588 (6,845 ) N.M.
Foreign currency translation adjustment:
Unrealized gains (losses) arising during the period 3,409 (3,886 ) 7,295 N.M.
Recognized postretirement prior service cost:
Reclassification of net (gains) losses to net income (12 ) (12 )
Income tax (expense) benefit (6,130 ) (3,029 ) (3,101 ) (102.4 )
Total other comprehensive income (loss) 13,419   1,104   12,315   N.M.
Comprehensive income $ 61,465   $ 40,905   $ 20,560   50.3
 
N.M. Not Meaningful.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per-share data)
(Unaudited)
       
At Mar. 31, At Dec. 31, Change
2016 2015 $ %
ASSETS:
Cash and due from banks $ 870,153 $ 889,337 $ (19,184 ) (2.2 )%
Investments 71,586 70,537 1,049 1.5
Securities held to maturity 198,178 201,920 (3,742 ) (1.9 )
Securities available for sale 1,135,890 888,885 247,005 27.8
Loans and leases held for sale 211,151 157,625 53,526 34.0
Loans and leases:
Consumer real estate:
First mortgage lien 2,521,492 2,624,956 (103,464 ) (3.9 )
Junior lien 2,729,075   2,839,316   (110,241 ) (3.9 )
Total consumer real estate 5,250,567 5,464,272 (213,705 ) (3.9 )
Commercial 3,114,594 3,145,832 (31,238 ) (1.0 )
Leasing and equipment finance 4,005,934 4,012,248 (6,314 ) (0.2 )
Inventory finance 2,676,675 2,146,754 529,921 24.7
Auto finance 2,786,731 2,647,596 139,135 5.3
Other 18,940   19,297   (357 ) (1.9 )
Total loans and leases 17,853,441 17,435,999 417,442 2.4
Allowance for loan and lease losses (160,074 ) (156,054 ) (4,020 ) (2.6 )
Net loans and leases 17,693,367 17,279,945 413,422 2.4
Premises and equipment, net 439,507 445,934 (6,427 ) (1.4 )
Goodwill 225,640 225,640
Other assets 475,630   529,786   (54,156 ) (10.2 )
Total assets $ 21,321,102   $ 20,689,609   $ 631,493   3.1
 
LIABILITIES AND EQUITY:
Deposits:
Checking $ 5,764,392 $ 5,690,559 $ 73,833 1.3 %
Savings 4,741,850 4,717,457 24,393 0.5
Money market 2,539,124 2,408,180 130,944 5.4
Certificates of deposit 4,267,003   3,903,793   363,210   9.3
Total deposits 17,312,369   16,719,989   592,380   3.5
Short-term borrowings 2,426 5,381 (2,955 ) (54.9 )
Long-term borrowings 1,003,168   1,034,557   (31,389 ) (3.0 )
Total borrowings 1,005,594 1,039,938 (34,344 ) (3.3 )
Accrued expenses and other liabilities 634,298   622,765   11,533   1.9
Total liabilities 18,952,261   18,382,692   569,569   3.1
Equity:

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

263,240 263,240

Common stock, par value $0.01 per share, 280,000,000 shares authorized; 170,647,255 and 169,887,030 shares issued, respectively

1,707 1,699 8 0.5
Additional paid-in capital 860,307 851,836 8,471 1.0
Retained earnings, subject to certain restrictions 1,271,031 1,240,347 30,684 2.5
Accumulated other comprehensive income (loss) (1,927 ) (15,346 ) 13,419 87.4
Treasury stock at cost, 42,566 shares, and other (51,445 ) (50,860 ) (585 ) (1.2 )
Total TCF Financial Corporation stockholders' equity 2,342,913 2,290,916 51,997 2.3
Non-controlling interest in subsidiaries 25,928   16,001   9,927   62.0
Total equity 2,368,841   2,306,917   61,924   2.7
Total liabilities and equity $ 21,321,102   $ 20,689,609   $ 631,493   3.1
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA
(Dollars in thousands)
(Unaudited)
 

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

             
At At At At At Change from
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Mar. 31,
2016 2015 2015 2015 2015 2015 2015
Consumer real estate:
First mortgage lien 0.38 % 0.46 % 0.36 % 0.38 % 0.53 % (8 ) bps (15 ) bps
Junior lien 0.05 0.05 0.08 0.08 0.11 (6 )
Total consumer real estate 0.20 0.23 0.21 0.22 0.32 (3 ) (12 )
Commercial 0.25
Leasing and equipment finance 0.12 0.06 0.19 0.06 0.09 6 3
Inventory finance 0.01 0.01 (1 )
Auto finance 0.09 0.14 0.11 0.11 0.16 (5 ) (7 )
Other 0.16 0.13 0.17 0.11 0.02 3 14
Subtotal 0.10 0.11 0.17 0.10 0.14 (1 ) (4 )
Acquired portfolios 0.41 0.41 0.37 0.28 0.21 20
Total delinquencies 0.10 0.11 0.17 0.10 0.14 (1 ) (4 )
 
(1) Excludes non-accrual loans and leases.
 

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

   
Quarter Ended(1) Change from
Mar. 31,   Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31, Dec. 31,   Mar. 31,
2016 2015 2015 2015 2015 2015 2015
Consumer real estate:
First mortgage lien 0.55 % 0.54 % 0.53 % 0.79 % 0.62 % 1 bps (7 ) bps
Junior lien 0.17 0.17 0.11 0.59 0.38 (21 )
Total consumer real estate 0.35 0.34 0.32 0.69 0.51 1 (16 )
Commercial (0.02 ) 0.05 0.21 (0.07 ) (7 ) 5
Leasing and equipment finance 0.13 0.16 0.09 0.16 0.10 (3 ) 3
Inventory finance 0.04 0.05 0.03 0.11 0.08 (1 ) (4 )
Auto finance 0.81 0.75 0.62 0.66 0.66 6 15
Other N.M. N.M. N.M. N.M. N.M. N.M. N.M.
Total 0.27 0.29 0.23 0.41 0.28 (2 ) (1 )
 
N.M. Not Meaningful.
(1) Annualized.
 

Non-Accrual Loans and Leases Rollforward

             
Quarter Ended Change from
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Mar. 31,
2016 2015 2015 2015 2015 2015 2015
Balance, beginning of period $ 200,466 $ 206,110 $ 205,710 $ 222,143 $ 216,734 $ (5,644 ) $ (16,268 )
Additions 38,029 44,387 48,505 40,846 51,647 (6,358 ) (13,618 )
Charge-offs (7,436 ) (9,002 ) (7,055 ) (14,050 ) (8,921 ) 1,566 1,485
Transfers to other assets (12,342 ) (13,612 ) (16,400 ) (17,738 ) (16,781 ) 1,270 4,439
Return to accrual status (7,698 ) (9,282 ) (10,190 ) (10,298 ) (7,668 ) 1,584 (30 )
Payments received (15,551 ) (20,103 ) (14,721 ) (15,543 ) (10,974 ) 4,552 (4,577 )
Sales (775 ) (705 ) (353 ) (2,250 ) 775 2,250
Other, net 3,181   2,743   966   703   356   438   2,825  
Balance, end of period $ 198,649   $ 200,466   $ 206,110   $ 205,710   $ 222,143   $ (1,817 ) $ (23,494 )
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)
 

Other Real Estate Owned Rollforward

             
Quarter Ended Change from
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Mar. 31,
2016 2015 2015 2015 2015 2015 2015
Balance, beginning of period $ 49,982 $ 58,584 $ 58,007 $ 62,398 $ 65,650 $ (8,602 ) $ (15,668 )
Transferred in 10,575 12,626 15,087 15,359 15,513 (2,051 ) (4,938 )
Sales

(18,885

) (19,174 ) (13,442 ) (17,164 ) (15,399 )

289

(3,486

)
Writedowns (2,744 ) (2,130 ) (2,868 ) (4,003 ) (3,424 ) (614 ) 680
Other, net

3,513

  76   1,800   1,417   58  

3,437

 

3,455

 
Balance, end of period $ 42,441   $ 49,982   $ 58,584   $ 58,007   $ 62,398   $ (7,541 ) $ (19,957 )
 

Allowance for Loan and Lease Losses

                           
At At At At At
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2016 2015 2015 2015 2015
% of % of % of % of % of
Balance Portfolio Balance Portfolio Balance Portfolio Balance Portfolio Balance Portfolio
Consumer real estate $ 66,728 1.27 % $ 67,992 1.24 % $ 70,329 1.25 % $ 74,687 1.35 % $ 80,292 1.43 %
Commercial 31,547 1.01 30,185 0.96 30,006 0.96 30,205 0.97 32,121 1.00
Leasing and equipment finance 19,454 0.49 19,018 0.47 18,177 0.47 17,669 0.47 17,921 0.48
Inventory finance 13,306 0.50 11,128 0.52 11,121 0.52 10,879 0.52 12,409 0.53
Auto finance 28,535 1.02 26,486 1.00 23,722 0.98 22,061 0.96 20,426 0.95
Other 504   2.66 1,245   6.45 607   2.94 614   2.81 630   3.08
Total $ 160,074   0.90 $ 156,054   0.90 $ 153,962   0.90 $ 156,115   0.93 $ 163,799   0.96
 

Changes in Allowance for Loan and Lease Losses

             
Quarter Ended Change from
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Mar. 31,
2016 2015 2015 2015 2015 2015 2015
Balance, beginning of period $ 156,054 $ 153,962 $ 156,115 $ 163,799 $ 164,169 $ 2,092 $ (8,115 )
Charge-offs (16,667 ) (18,101 ) (15,338 ) (22,984 ) (18,124 ) 1,434 1,457
Recoveries 4,761   5,523   5,397   5,506   6,587   (762 ) (1,826 )
Net (charge-offs) recoveries (11,906 ) (12,578 ) (9,941 ) (17,478 ) (11,537 ) 672 (369 )
Provision for credit losses 18,842 17,607 10,018 12,528 12,791 1,235 6,051
Other (2,916 ) (2,937 ) (2,230 ) (2,734 ) (1,624 ) 21   (1,292 )
Balance, end of period $ 160,074   $ 156,054   $ 153,962   $ 156,115   $ 163,799   $ 4,020   $ (3,725 )
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)
           
Three Months Ended March 31,
2016 2015
Average Yields and Average Yields and
Balance Interest(1) Rates(1)(2) Balance Interest(1) Rates(1)(2)
ASSETS:
Investments and other $ 349,079 $ 2,216 2.55 % $ 665,606 $ 3,497 2.13 %
Securities held to maturity 199,303 1,319 2.65 211,646 1,405 2.66
Securities available for sale(3)
Taxable 640,796 3,818 2.38 474,697 3,080 2.60
Tax-exempt(4) 319,427 2,584 3.24
Loans and leases held for sale 367,686 8,504 9.30 276,149 5,836 8.57
Loans and leases:(5)
Consumer real estate:
Fixed-rate 2,430,773 35,202 5.82 2,912,535 43,360 6.03
Variable-rate 3,028,001   40,056   5.32 2,778,805   35,216   5.14
Total consumer real estate 5,458,774 75,258 5.54 5,691,340 78,576 5.60
Commercial:
Fixed-rate 1,012,870 12,429 4.94 1,273,806 15,730 5.01
Variable- and adjustable-rate 2,145,231   21,337   4.00 1,880,202   18,249   3.94
Total commercial 3,158,101 33,766 4.30 3,154,008 33,979 4.37
Leasing and equipment finance 3,992,678 44,654 4.47 3,729,481 43,485 4.66
Inventory finance 2,433,534 34,370 5.68 2,108,871 29,692 5.71
Auto finance 2,703,880 27,837 4.14 2,021,144 20,851 4.18
Other 10,018   142   5.63 11,616   213   7.44
Total loans and leases 17,756,985   216,027   4.89 16,716,460   206,796   5.00
Total interest-earning assets 19,633,276 234,468 4.80 18,344,558 220,614 4.86
Other assets(6) 1,297,479   1,233,887  
Total assets $ 20,930,755   $ 19,578,445  
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,751,710 $ 1,646,769
Small business 853,645 804,323
Commercial and custodial 560,983   489,248  
Total non-interest bearing deposits 3,166,338 2,940,340
Interest-bearing deposits:
Checking 2,440,563 81 0.01 2,378,761 151 0.03
Savings 4,700,164 346 0.03 5,143,295 1,101 0.09
Money market 2,472,751 3,807 0.62 2,149,340 3,567 0.67
Certificates of deposit 4,104,951   10,757   1.05 3,041,790   6,253   0.83
Total interest-bearing deposits 13,718,429   14,991   0.44 12,713,186   11,072   0.35
Total deposits 16,884,767   14,991   0.36 15,653,526   11,072   0.29
Borrowings:
Short-term borrowings 5,562 7 0.53 7,999 18 0.89
Long-term borrowings 1,062,513   5,686   2.14 1,177,521   5,284   1.80
Total borrowings 1,068,075   5,693   2.13 1,185,520   5,302   1.79
Total interest-bearing liabilities 14,786,504   20,684   0.56 13,898,706   16,374   0.48
Total deposits and borrowings 17,952,842 20,684 0.46 16,839,046 16,374 0.39
Other liabilities 650,908   588,541  
Total liabilities 18,603,750   17,427,587  
Total TCF Financial Corp. stockholders' equity 2,307,781 2,133,781
Non-controlling interest in subsidiaries 19,224   17,077  
Total equity 2,327,005   2,150,858  
Total liabilities and equity $ 20,930,755   $ 19,578,445  
Net interest income and margin $ 213,784   4.37 $ 204,240   4.50
 
(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) The yield on tax-exempt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 35% for all periods presented.

(5) Average balances of loans and leases include non-accrual loans and leases and are presented net of unearned income.

(6) Includes leased equipment and related initial direct costs under operating leases of $133.6 million and $88.8 million for the first quarter of 2016 and 2015, respectively.

 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per-share data)
(Unaudited)
         
Three Months Ended
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2016 2015 2015 2015 2015
Interest income:
Loans and leases $ 214,805 $ 212,346 $ 207,250 $ 207,164 $ 205,976
Securities available for sale 5,498 4,864 4,161 3,543 3,080
Securities held to maturity 1,319 1,336 1,361 1,384 1,405
Investments and other 10,720   6,905   10,832   10,990   9,333  
Total interest income 232,342   225,451   223,604   223,081   219,794  
Interest expense:
Deposits 14,991 13,772 12,302 11,080 11,072
Borrowings 5,693   6,010   6,032   5,972   5,302  
Total interest expense 20,684   19,782   18,334   17,052   16,374  
Net interest income 211,658 205,669 205,270 206,029 203,420
Provision for credit losses 18,842   17,607   10,018   12,528   12,791  
Net interest income after provision for credit losses 192,816   188,062   195,252   193,501   190,629  
Non-interest income:
Fees and service charges 32,817 37,741 36,991 36,295 33,972
Card revenue 13,363 13,781 13,803 13,902 12,901
ATM revenue 5,021   5,143   5,739   5,540   5,122  
Subtotal 51,201 56,665 56,533 55,737 51,995
Gains on sales of auto loans, net 11,920 3,136 10,423 10,756 6,265
Gains on sales of consumer real estate loans, net 9,384 13,104 7,143 11,954 8,763
Servicing fee income 8,883     8,622     8,049     7,216     7,342  
Subtotal 30,187 24,862 25,615 29,926 22,370
Leasing and equipment finance 28,487 32,355 27,165 26,385 22,224
Other 2,843   1,806   3,070   1,460   4,127  
Fees and other revenue 112,718 115,688 112,383 113,508 100,716
Gains (losses) on securities, net (116 ) (29 ) (131 ) (59 ) (78 )
Total non-interest income 112,602   115,659   112,252   113,449   100,638  
Non-interest expense:
Compensation and employee benefits 124,473 109,061 116,708 116,159 115,815
Occupancy and equipment 37,008 37,824 34,159 36,152 36,827
FDIC insurance 4,113 5,173 4,832 4,864 5,393
Advertising and marketing 5,887 5,316 5,793 5,150 6,523
Other 43,348   46,441   45,750   45,887   48,133  
Subtotal 214,829 203,815 207,242 208,212 212,691
Operating lease depreciation 9,573 13,608 9,485 8,582 7,734
Foreclosed real estate and repossessed assets, net 3,920 4,940 5,680 6,377 6,196
Other credit costs, net 12   224   (123 ) (62 ) 146  
Total non-interest expense 228,334   222,587   222,284   223,109   226,767  
Income before income tax expense 77,084 81,134 85,220 83,841 64,500
Income tax expense 26,803   26,614   30,528   28,902   22,828  
Income after income tax expense 50,281 54,520 54,692 54,939 41,672
Income attributable to non-controlling interest 2,235   2,028   2,117   2,684   1,871  
Net income attributable to TCF Financial Corporation 48,046   52,492   52,575   52,255   39,801  
Preferred stock dividends 4,847   4,847   4,847   4,847   4,847  
Net income available to common stockholders $ 43,199   $ 47,645   $ 47,728   $ 47,408   $ 34,954  
 
Net income per common share:
Basic $ 0.26 $ 0.29 $ 0.29 $ 0.29 $ 0.21
Diluted 0.26 0.29 0.29 0.29 0.21
 
Dividends declared per common share $ 0.075 $ 0.075 $ 0.05 $ 0.05 $ 0.05
 
Financial highlights:
Pre-tax pre-provision profit(1) $ 95,926 $ 98,741 $ 95,238 $ 96,369 $ 77,291
Return on average assets(2) 0.96 % 1.08 % 1.10 % 1.11 % 0.85 %
Return on average common equity(2) 8.45 9.53 9.76 9.93 7.47
Net interest margin(2) 4.37 4.35 4.40 4.44 4.50
 
(1) Pre-tax pre-provision profit is calculated as total revenues less non-interest expense.
(2) Annualized.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS
(In thousands)
(Unaudited)
         

Mar. 31,
2016

Dec. 31,
2015

Sep. 30,
2015

Jun. 30,
2015

Mar. 31,
2015

ASSETS:
Investments and other $ 349,079 $ 405,252 $ 463,312 $ 551,630 $ 665,606
Securities held to maturity 199,303 201,944 205,264 209,834 211,646
Securities available for sale:(1)
Taxable 640,796 611,816 601,889 566,499 474,697
Tax-exempt 319,427 221,113 92,484 7,420
Loans and leases held for sale 367,686 180,278 348,215 340,912 276,149
Loans and leases:(2)
Consumer real estate:
Fixed-rate 2,430,773 2,520,567 2,637,875 2,776,177 2,912,535
Variable-rate 3,028,001   3,083,957   2,968,507   2,811,510   2,778,805
Total consumer real estate 5,458,774 5,604,524 5,606,382 5,587,687 5,691,340
Commercial:
Fixed-rate 1,012,870 1,090,001 1,137,744 1,193,011 1,273,806
Variable- and adjustable-rate 2,145,231   2,027,982   1,980,280   1,955,261   1,880,202
Total commercial 3,158,101 3,117,983 3,118,024 3,148,272 3,154,008
Leasing and equipment finance 3,992,678 3,911,025 3,821,590 3,751,776 3,729,481
Inventory finance 2,433,534 2,180,534 2,036,054 2,292,481 2,108,871
Auto finance 2,703,880 2,514,923 2,361,057 2,211,014 2,021,144
Other 10,018   9,060   9,833   10,734   11,616
Total loans and leases 17,756,985   17,338,049   16,952,940   17,001,964   16,716,460
Total interest-earning assets 19,633,276 18,958,452 18,664,104 18,678,259 18,344,558
Other assets(3) 1,297,479   1,245,751   1,217,396   1,209,514   1,233,887
Total assets $ 20,930,755   $ 20,204,203   $ 19,881,500   $ 19,887,773   $ 19,578,445
 
LIABILITIES AND EQUITY:
Non-interest-bearing deposits:
Retail $ 1,751,710 $ 1,639,550 $ 1,649,995 $ 1,699,668 $ 1,646,769
Small business 853,645 874,892 852,211 822,683 804,323
Commercial and custodial 560,983   525,692   516,461   497,883   489,248
Total non-interest bearing deposits 3,166,338 3,040,134 3,018,667 3,020,234 2,940,340
Interest-bearing deposits:
Checking 2,440,563 2,384,452 2,399,119 2,422,909 2,378,761
Savings 4,700,164 4,721,571 4,860,509 5,033,329 5,143,295
Money market 2,472,751 2,349,127 2,297,893 2,261,567 2,149,340
Certificates of deposit 4,104,951   3,793,653   3,400,282   3,116,718   3,041,790
Total interest-bearing deposits 13,718,429   13,248,803   12,957,803   12,834,523   12,713,186
Total deposits 16,884,767   16,288,937   15,976,470   15,854,757   15,653,526
Borrowings:
Short-term borrowings 5,562 28,364 30,326 8,246 7,999
Long-term borrowings 1,062,513   1,009,591   1,057,903   1,234,205   1,177,521
Total borrowings 1,068,075   1,037,955   1,088,229   1,242,451   1,185,520
Total interest-bearing liabilities 14,786,504   14,286,758   14,046,032   14,076,974   13,898,706
Total deposits and borrowings 17,952,842 17,326,892 17,064,699 17,097,208 16,839,046
Other liabilities 650,908   595,317   578,718   594,352   588,541
Total liabilities 18,603,750   17,922,209   17,643,417   17,691,560   17,427,587
Total TCF Financial Corporation stockholders' equity 2,307,781 2,263,018 2,218,614 2,173,699 2,133,781
Non-controlling interest in subsidiaries 19,224   18,976   19,469   22,514   17,077
Total equity 2,327,005   2,281,994   2,238,083   2,196,213   2,150,858
Total liabilities and equity $ 20,930,755   $ 20,204,203   $ 19,881,500   $ 19,887,773   $ 19,578,445
 

(1) Average balances of securities available for sale are based upon historical amortized cost and exclude equity securities.

(2) Average balances of loans and leases include non-accrual loans and leases and are presented net of unearned income.

(3) Includes leased equipment and related initial direct costs under operating leases of $133.6 million, $123.8 million, $107.5 million, $96.0 million and $88.8 million for the first quarter of 2016 and for the fourth quarter, third quarter, second quarter and first quarter of 2015, respectively.

 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY YIELDS AND RATES(1)(2)
(Unaudited)
         

Mar. 31,
2016

Dec. 31,
2015

Sep. 30,
2015

 

Jun. 30,
2015

Mar. 31,
2015

ASSETS:
Investments and other 2.55 % 2.59 % 2.52 % 2.34 % 2.13 %
Securities held to maturity 2.65 2.64 2.65 2.64 2.66
Securities available for sale:(3)
Taxable 2.38 2.41 2.43 2.47 2.60
Tax-exempt(4) 3.24 3.26 3.35 3.50
Loans and leases held for sale 9.30 9.38 9.00 9.15 8.57
Loans and leases:
Consumer real estate:
Fixed-rate 5.82 5.73 5.72 5.73 6.03
Variable-rate 5.32 5.18 5.12 5.13 5.14
Total consumer real estate 5.54 5.43 5.40 5.43 5.60
Commercial:
Fixed-rate 4.94 5.05 5.05 5.03 5.01
Variable- and adjustable-rate 4.00 4.05 3.80 3.85 3.94
Total commercial 4.30 4.40 4.26 4.30 4.37
Leasing and equipment finance 4.47 4.55 4.59 4.66 4.66
Inventory finance 5.68 5.66 5.83 5.61 5.71
Auto finance 4.14 4.17 4.13 4.11 4.18
Other 5.63 6.88 6.31 6.92 7.44
Total loans and leases 4.89 4.89 4.88 4.90 5.00
 
Total interest-earning assets 4.80 4.76 4.79 4.81 4.86
 
LIABILITIES:
Interest-bearing deposits:
Checking 0.01 0.02 0.02 0.02 0.03
Savings 0.03 0.04 0.05 0.06 0.09
Money market 0.62 0.62 0.62 0.61 0.67
Certificates of deposit 1.05 1.00 0.93 0.86 0.83
Total interest-bearing deposits 0.44 0.41 0.38 0.35 0.35
Total deposits 0.36 0.34 0.31 0.28 0.29
Borrowings:
Short-term borrowings 0.53 0.09 0.22 0.63 0.89
Long-term borrowings 2.14 2.37 2.27 1.93 1.80
Total borrowings 2.13 2.31 2.21 1.92 1.79
 
Total interest-bearing liabilities 0.56 0.55 0.52 0.49 0.48
 
Net interest margin 4.37 4.35 4.40 4.44 4.50
 
(1) Annualized.
(2) Yields are presented on a fully tax-equivalent basis.

(3) Average yields of securities available for sale are based upon historical amortized cost and exclude equity securities.

(4) The yield on tax-exempt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 35% for all periods presented.

 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(1)
(Dollars in thousands)
(Unaudited)
   
At Mar. 31, At Dec. 31,
2016 2015

Computation of tangible common equity to tangible assets:

Total equity $ 2,368,841 $ 2,306,917
Less: Non-controlling interest in subsidiaries 25,928   16,001  
Total TCF Financial Corporation stockholders' equity 2,342,913 2,290,916
Less:
Preferred stock 263,240 263,240
Goodwill 225,640 225,640
Other intangibles 2,760   3,126  
Tangible common equity $ 1,851,273   $ 1,798,910  
 
Total assets $ 21,321,102 $ 20,689,609
Less:
Goodwill 225,640 225,640
Other intangibles 2,760   3,126  
Tangible assets $ 21,092,702   $ 20,460,843  
 
Tangible common equity to tangible assets 8.78 % 8.79 %
 
At Mar. 31, At Dec. 31,
2016 2015

Computation of tangible book value per common share:

Tangible common equity $ 1,851,273 $ 1,798,910
Common stock shares outstanding 170,604,689 169,844,464
 
Tangible book value per common share $ 10.85 $ 10.59
  Three Months Ended
Mar. 31,   Dec. 31,   Mar. 31,
2016 2015 2015

Computation of return on average tangible common equity:

Net income available to common stockholders $ 43,199 $ 47,645 $ 34,954
Other intangibles amortization, net of tax 235   251   245  
Adjusted net income available to common stockholders $ 43,434   $ 47,896   $ 35,199  
 
Average balances:
Total equity $ 2,327,005 $ 2,281,994 $ 2,150,858
Less: Non-controlling interest in subsidiaries 19,224   18,976   17,077  
Total TCF Financial Corporation stockholders' equity 2,307,781 2,263,018 2,133,781
Less:
Preferred stock 263,240 263,240 263,240
Goodwill 225,640 225,640 225,640
Other intangibles 2,966   3,342   4,474  
Average tangible common equity $ 1,815,935   $ 1,770,796   $ 1,640,427  
 
Return on average tangible common equity(2) 9.57 % 10.82 % 8.58 %
(1) When evaluating capital adequacy and utilization, management considers financial measures such as tangible common equity to tangible assets, tangible book value per common share and return on average tangible common equity. These measures are non-GAAP financial measures and are viewed by management as useful indicators of capital levels available to withstand unexpected market or economic conditions and also provide investors, regulators and other users with information to be viewed in relation to other banking institutions.
(2) Annualized.

TCF Financial Corporation
Media:
Mark Goldman, 952-475-7050
[email protected]
or
Investors:
Jason Korstange, 952-745-2755
[email protected]

Source: TCF Financial Corporation

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