Newsroom

TCF Reports Quarterly Net Income of $60.5 Million, or 29 Cents Per Share

Friday, October 27, 2017 7:00 am CDT

Dateline:

WAYZATA, Minn.

Public Company Information:

NYSE:
TCF
"The positive traction we are generating from executing on our business strategy has me very optimistic about the future of TCF. With consistent loan and lease growth, a strong revenue base and the successful launch of a new digital banking platform, there is positive momentum into 2018 at TCF."

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

THIRD QUARTER OBSERVATIONS

  • Revenue of $343.3 million, up 3.5 percent from the third quarter of 2016
  • Net interest income of $234.1 million, up 10.4 percent from the third quarter of 2016
  • Net interest margin of 4.61 percent, up 27 basis points from the third quarter of 2016
  • Period-end loans and leases of $19.0 billion, up 9.2 percent from September 30, 2016
  • Net charge-offs as a percentage of average loans and leases of 0.18 percent, down 8 basis points from the third quarter of 2016
  • Non-accrual loans and leases of $119.6 million, down 37.1 percent from September 30, 2016
  • Average deposits of $17.6 billion, up 2.9 percent from the third quarter of 2016
  • Efficiency ratio of 68.46 percent, improved 54 basis points from the third quarter of 2016
  • Earnings per share of 29 cents, down 2 cents from the third quarter of 2016. Impact of 4 cents per share related to the notice of our intent to redeem the Series A Non-Cumulative Perpetual Preferred Stock.
 
Summary of Financial Results       Table 1
        Change      
(Dollars in thousands, except per-share data) 3Q

2Q

3Q 3Q17 vs   3Q17 vs YTD YTD
2017   2017   2016   2Q17   3Q16   2017   2016   Change
Net income attributable to TCF $ 60,528 $ 60,432 $ 56,292 0.2 % 7.5 % $ 167,238 $ 162,032 3.2 %
Net interest income 234,103 227,161 212,018 3.1 10.4 683,378 636,660 7.3
Diluted earnings per common share 0.29 0.33 0.31 (12.1 ) (6.5 ) 0.86 0.88 (2.3 )
 

Financial Ratios (1)

Return on average assets 1.15 % 1.17 % 1.12 % (2

) bps

3 bps 1.07 % 1.07 % bps
Return on average common equity 8.44 9.96 9.59 (152 ) (115 ) 8.69 9.39 (70 )
Return on average tangible common equity(2) 9.57 11.15 10.78 (158 ) (121 ) 9.77 10.58 (81 )
Net interest margin 4.61 4.52 4.34 9 27 4.53 4.35 18
Net charge-offs as a percentage of average loans and leases 0.18 0.28 0.26 (10 ) (8 ) 0.19 0.25 (6 )
 

(1) Annualized.

(2) See "Reconciliation of GAAP to Non-GAAP Financial Measures" table.

           
 

TCF Financial Corporation ("TCF" or the "Company") (NYSE:TCF) today reported net income of $60.5 million for the third quarter of 2017, compared with $56.3 million for the third quarter of 2016 and $60.4 million for the second quarter of 2017. Diluted earnings per common share was 29 cents for the third quarter of 2017 (inclusive of a one-time reduction in net income available to common stockholders of $5.8 million and accrued dividends payable of $1.6 million, or 4 cents per common share, related to the notice of our intent to redeem the Series A Non-Cumulative Perpetual Preferred Stock), compared with 31 cents for the third quarter of 2016 and 33 cents for the second quarter of 2017.

"TCF reported strong third quarter results highlighted by solid loan and lease growth, continued net interest margin expansion and stable credit quality," said Craig R. Dahl, chairman and chief executive officer. "A loan and lease portfolio purchase in leasing and equipment finance drove strong growth during the quarter. We continued to deliver strong net interest margin expansion and net interest income growth as yields in our variable- and adjustable-rate loan portfolios benefited from rising interest rates.

"We improved our risk profile and recognized recoveries from previous charge-offs through our second consumer real estate non-accrual loan sale this year. Our consistent execution of our diversification strategy has enabled us to maintain stable credit quality performance.

"The positive traction we are generating from executing on our business strategy has me very optimistic about the future of TCF. With consistent loan and lease growth, a strong revenue base and the successful launch of a new digital banking platform, there is positive momentum into 2018 at TCF.”

 
Revenue
 
Total Revenue

 

Table 2

        Change    

(Dollars in thousands)

3Q 2Q 3Q 3Q17 vs   3Q17 vs YTD YTD
2017   2017   2016   2Q17   3Q16   2017   2016   Change
Total interest income $ 257,605 $ 248,517 $ 232,726 3.7 % 10.7 % $ 748,429 $ 699,072 7.1 %
Total interest expense 23,502     21,356     20,708   10.0 13.5 65,051     62,412   4.2
Net interest income 234,103     227,161     212,018   3.1 10.4 683,378     636,660   7.3
Non-interest income:
Fees and service charges 34,605 32,733 35,093 5.7 (1.4 ) 98,620 102,532 (3.8 )
Card revenue 14,177 14,154 13,747 0.2 3.1 41,481 41,193 0.7
ATM revenue 5,234     5,061     5,330   3.4 (1.8 ) 14,970     15,639   (4.3 )
Subtotal 54,016 51,948 54,170 4.0 (0.3 ) 155,071 159,364 (2.7 )
Gains on sales of auto loans, net 380 11,624 (100.0 ) (100.0 ) 3,244 33,687 (90.4 )
Gains on sales of consumer real estate loans, net 8,049 8,980 13,528 (10.4 ) (40.5 ) 25,920 33,751 (23.2 )
Servicing fee income 9,966     10,730     10,393   (7.1 ) (4.1 ) 32,347     28,778   12.4
Subtotal 18,015 20,090 35,545 (10.3 ) (49.3 ) 61,511 96,216 (36.1 )
Leasing and equipment finance 34,080 39,830 28,289 (14.4 ) 20.5 102,208 87,850 16.3
Other 2,930     2,795     2,270   4.8 29.1 8,428     7,518   12.1
Fees and other revenue 109,041 114,663 120,274 (4.9 ) (9.3 ) 327,218 350,948 (6.8 )
Gains (losses) on securities, net 189         (600 ) N.M. N.M. 189     (716 ) N.M.
Total non-interest income 109,230     114,663     119,674   (4.7 ) (8.7 ) 327,407     350,232   (6.5 )
Total revenue $ 343,333     $ 341,824     $ 331,692   0.4 3.5 $ 1,010,785     $ 986,892   2.4
 
Net interest margin(1) 4.61 % 4.52 % 4.34 % 9 bps 27 bps 4.53 % 4.35 % 18 bps
Total non-interest income as a percentage of total revenue 31.8 33.5 36.1 (170) (430) 32.4 35.5 (310)
 
N.M. Not Meaningful.

(1) Annualized.

 

Net Interest Income

  • Net interest income for the third quarter of 2017 increased $22.1 million, or 10.4 percent, from the third quarter of 2016, primarily due to an increase in interest income on loans and leases, partially offset by a decrease in interest income on loans held for sale and an increase in total interest expense. Total interest income increased $24.9 million, or 10.7 percent, from the third quarter of 2016, primarily due to increased average yields and higher average balances of the variable- and adjustable-rate commercial loans and variable-rate inventory finance loans, as well as increased average yields on the variable- and adjustable-rate consumer real estate loans and fixed-rate auto finance loans. These increases were partially offset by a lower average balance in the fixed-rate consumer real estate portfolio. Total interest expense increased $2.8 million, or 13.5 percent, from the third quarter of 2016, primarily due to increased average rates and higher average balances of certificates of deposit, as well as higher average balances of long-term borrowings, partially offset by decreased average rates and lower average balances of money market accounts.
  • Net interest income for the third quarter of 2017 increased $6.9 million, or 3.1 percent, from the second quarter of 2017, primarily due to an increase in interest income on loans and leases, partially offset by an increase in total interest expense. Total interest income increased $9.1 million, or 3.7 percent, from the second quarter of 2017, primarily due to higher average balances and increased average yields on the variable- and adjustable-rate consumer real estate loans and fixed-rate auto finance loans, as well as increased yields on the variable- and adjustable-rate commercial loans. Total interest expense increased $2.1 million, or 10.0 percent, from the second quarter of 2017, primarily due to higher average balances and increased average rates on certificates of deposit.
  • Net interest margin was 4.61 percent for the third quarter of 2017, up 27 basis points from the third quarter of 2016 and up 9 basis points from the second quarter of 2017. The increases from both periods were primarily due to higher average yields on the variable- and adjustable-rate loans due to interest rate increases, partially offset by higher average rates on certificates of deposit.

Non-interest Income

  • TCF sold no auto loans during the third quarter of 2017 due to the strategic shift in auto finance. TCF sold $614.9 million and $48.0 million of auto loans during the third quarter of 2016 and the second quarter of 2017, respectively, resulting in net gains in each respective period.
  • TCF sold $291.0 million, $437.1 million and $273.4 million of consumer real estate loans during the third quarters of 2017 and 2016 and the second quarter of 2017, respectively, resulting in net gains in each respective period. Included in consumer real estate loans sold in the third quarter of 2017 was $21.8 million of non-accrual loans, servicing released. As these loans were previously partially charged-off, a recovery of $4.6 million was recorded as a reduction to provision for credit losses and transaction fees of $0.4 million related to the sale were recorded in gains on sales of consumer real estate loans, net.
  • Servicing fee income was $10.0 million on $5.0 billion of average loans and leases serviced for others for the third quarter of 2017, compared with $10.4 million on $5.1 billion for the third quarter of 2016 and $10.7 million on $5.3 billion for the second quarter of 2017. The decreases from both periods were primarily due to run-off in the auto finance serviced for others portfolio.
  • Leasing and equipment finance non-interest income for the third quarter of 2017 increased $5.8 million, or 20.5 percent, from the third quarter of 2016 and decreased $5.8 million, or 14.4 percent, from the second quarter of 2017. The increase from the third quarter of 2016 was primarily due to an increase in operating lease revenue mainly driven by the acquisition of Equipment Financing & Leasing Corporation ("EFLC") in the second quarter of 2017, partially offset by a decrease in sales-type lease revenue due to customer-driven events. The decrease from the second quarter of 2017 was due to customer-driven events resulting in a decrease in sales-type lease revenue, partially offset by an increase in operating lease revenue due to the acquisition of EFLC.
 
Loans and Leases
 
Period-End and Average Loans and Leases   Table 3
        Percent Change      
(Dollars in thousands) 3Q 2Q 3Q 3Q17 vs   3Q17 vs YTD YTD Percent
2017   2017   2016   2Q17   3Q16   2017   2016   Change
Period-End:
Consumer real estate:
First mortgage lien $ 1,953,199 $ 2,070,385 $ 2,313,044 (5.7 )% (15.6 )%
Junior lien 2,977,613     2,701,592     2,674,280   10.2 11.3
Total consumer real estate 4,930,812 4,771,977 4,987,324 3.3 (1.1 )
Commercial 3,489,680 3,488,725 3,150,199 10.8
Leasing and equipment finance 4,730,931 4,333,735 4,236,224 9.2 11.7
Inventory finance 2,576,077 2,509,485 2,261,086 2.7 13.9
Auto finance 3,240,413 3,243,144 2,731,900 (0.1 ) 18.6
Other 20,439     19,459     17,886   5.0 14.3
Total $ 18,988,352     $ 18,366,525     $ 17,384,619   3.4 9.2
 
Average:
Consumer real estate:
First mortgage lien $ 2,016,049 $ 2,117,138 $ 2,353,097 (4.8 )% (14.3 )% $ 2,122,850 $ 2,463,497 (13.8 )%
Junior lien 2,821,051     2,628,980     2,782,479   7.3 1.4 2,747,187     2,820,319   (2.6 )
Total consumer real estate 4,837,100 4,746,118 5,135,576 1.9 (5.8 ) 4,870,037 5,283,816 (7.8 )
Commercial 3,473,425 3,417,052 3,092,115 1.6 12.3 3,398,413 3,119,952 8.9
Leasing and equipment finance 4,316,434 4,277,376 4,147,488 0.9 4.1 4,293,364 4,057,755 5.8
Inventory finance 2,479,416 2,723,340 2,272,409 (9.0 ) 9.1 2,632,385 2,422,979 8.6
Auto finance 3,280,612 3,149,974 2,670,272 4.1 22.9 3,050,555 2,708,470 12.6
Other 11,567     10,235     9,252   13.0 25.0 10,520     9,617   9.4
Total $ 18,398,554     $ 18,324,095     $ 17,327,112   0.4 6.2 $ 18,255,274     $ 17,602,589   3.7
 
 
  • Period-end loans and leases were $19.0 billion at September 30, 2017, an increase of $1.6 billion, or 9.2 percent, from September 30, 2016 and an increase of $621.8 million, or 3.4 percent, from June 30, 2017. Average loans and leases were $18.4 billion for the third quarter of 2017, an increase of $1.1 billion, or 6.2 percent, from the third quarter of 2016 and an increase of $74.5 million, or 0.4 percent, from the second quarter of 2017.

    The increase from September 30, 2016 for period-end loans and leases was primarily due to increases in the auto finance and leasing and equipment finance portfolios, as well as increases in the commercial and inventory finance portfolios. The increase in the auto finance portfolio was primarily due to the reclassification of loans from held for sale to held for investment during the second quarter of 2017. The increase in the leasing and equipment finance portfolio was primarily attributable to a loan and lease portfolio purchase of $445.5 million on September 29, 2017. The increase in average loans and leases from September 30, 2016 was primarily due to increases in the auto finance and commercial loan portfolios, as well as increases in the inventory finance and leasing and equipment finance portfolios, partially offset by a decrease in the consumer real estate portfolio. The decrease in the consumer real estate portfolio was primarily due to a decrease in the first mortgage lien portfolio due to run-off and the non-accrual loan sales in the first and third quarters of 2017 totaling $71.2 million.

    The increase from June 30, 2017 for period-end loans and leases was primarily due to an increase in the leasing and equipment finance portfolio due to a loan and lease portfolio purchase during the third quarter of 2017 and an increase in the consumer real estate junior lien portfolio.
  • Loan and lease originations were $3.9 billion for the third quarter of 2017, a decrease of $314.2 million, or 7.4 percent, from the third quarter of 2016 and a decrease of $150.9 million, or 3.7 percent, from the second quarter of 2017. The decrease from the third quarter of 2016 was primarily due to decreased originations in auto finance, leasing and equipment finance, and consumer real estate, partially offset by higher inventory finance originations. The decrease from the second quarter of 2017 was primarily due to decreased originations in leasing and equipment finance, partially offset by higher commercial originations.
 
Credit Quality
 
Credit Trends   Table 4
            Change
(Dollars in thousands) 3Q 2Q 1Q 4Q 3Q 3Q17 vs   3Q17 vs
2017   2017   2017   2016   2016   2Q17   3Q16
Over 60-day delinquencies as a percentage of period-end loans and leases(1) 0.13 % 0.11 % 0.09 % 0.12 % 0.12 % 2 bps 1 bps
Net charge-offs as a percentage of average loans and leases(2), (3), (4) 0.18 0.28 0.11 0.27 0.26 (10 ) (8 )
Non-accrual loans and leases and other real estate owned $

146,024

$ 158,000 $ 170,940 $ 228,242 $ 223,759

(7.6

)%

(34.7

)%
Provision for credit losses 14,545 19,446 12,193 19,888 13,894 (25.2 ) 4.7
 

(1) Excludes non-accrual loans and leases.

(2) Annualized.

(3) Excluding the $4.6 million recovery from the consumer real estate non-accrual loan sale, net charge-offs as a percentage of average loans and leases was 0.28% for 3Q 2017.

(4) Excluding the $8.7 million recovery from the consumer real estate non-accrual loan sale, net charge-offs as a percentage of average loans and leases was 0.31% for 1Q 2017.

 
  • The over 60-day delinquency rate, excluding non-accrual loans and leases, was 0.13 percent at September 30, 2017, up 1 basis point from September 30, 2016, and up 2 basis points from June 30, 2017. The increases from both periods were primarily driven by the leasing and equipment finance loan and lease portfolio purchase and higher delinquencies in the auto finance portfolio. The increase from September 30, 2016 was partially offset by improved credit quality in the consumer real estate first mortgage lien portfolio.
  • The net charge-off rate was 0.18 percent for the third quarter of 2017, down 8 basis points from the third quarter of 2016 and down 10 basis points from the second quarter of 2017. The decreases from both periods were primarily due to the recovery of previous charge-offs related to the consumer real estate non-accrual loans that were sold, partially offset by increased net charge-offs in the auto finance portfolio. The decrease from the second quarter of 2017 was also due to a net recovery in the commercial portfolio. Excluding the $4.6 million recovery from the non-accrual consumer real estate loan sale, the net charge-off rate was 0.28 percent for the third quarter of 2017, up 2 basis points from the third quarter of 2016 and consistent with the second quarter of 2017.
  • Non-accrual loans and leases and other real estate owned were $146.0 million at September 30, 2017, a decrease of $77.7 million, or 34.7 percent, from September 30, 2016, and a decrease of $12.0 million, or 7.6 percent, from June 30, 2017. Non-accrual loans and leases were $119.6 million at September 30, 2017, a decrease of $70.4 million, or 37.1 percent, from September 30, 2016 and a decrease of $9.7 million, or 7.5 percent, from June 30, 2017. The decrease from September 30, 2016 was primarily due to the consumer real estate non-accrual loan sales in the first and third quarters of 2017, totaling $71.2 million, partially offset by an increase in non-accrual loans and leases in the leasing and equipment finance portfolio. The decrease from June 30, 2017 was primarily due to the consumer real estate non-accrual loan sale of $21.8 million, partially offset by an increase in non-accrual loans and leases in the leasing and equipment finance and commercial portfolios. Other real estate owned was $26.4 million at September 30, 2017, a decrease of $7.3 million, or 21.7 percent, from September 30, 2016, and a decrease of $2.3 million, or 8.1 percent, from June 30, 2017. The decreases from both periods were primarily due to the sales of consumer real estate properties outpacing additions.
  • Provision for credit losses was $14.5 million for the third quarter of 2017, an increase of $0.7 million, or 4.7 percent, from the third quarter of 2016, and a decrease of $4.9 million, or 25.2 percent, from the second quarter of 2017. The increase from the third quarter of 2016 was primarily due to increased reserve requirements related to recent hurricanes of $5.2 million based on an initial analysis of current exposure and historical portfolio performance following similar natural disasters, primarily related to the auto finance portfolio. The increase was also due to increased net charge-offs in the auto finance portfolio and increased reserve requirements unrelated to the recent hurricanes in the commercial portfolio. These increases were partially offset by the recovery of $4.6 million on previous charge-offs related to the non-accrual loans that were sold and lower reserve requirements in the consumer real estate portfolio. The decrease from the second quarter of 2017 was primarily due to the recovery of previous charge-offs related to the non-accrual loans that were sold and lower reserve requirements in the consumer real estate portfolio, partially offset by increased reserve requirements of $5.2 million related to recent hurricanes. In addition, the provision for credit losses for the second quarter of 2017 included a provision attributable to the reclassification of auto finance loans from held for sale to held for investment.
 
Deposits
 
Average Deposits   Table 5
        Change      
(Dollars in thousands) 3Q 2Q 3Q 3Q17 vs   3Q17 vs YTD YTD
2017   2017   2016   2Q17   3Q16   2017   2016   Change
 
Checking $ 6,046,372 $ 6,012,235 $ 5,673,888 0.6 % 6.6 % $ 5,991,419 $ 5,664,812 5.8 %
Savings 4,859,973 4,822,338 4,672,642 0.8 4.0 4,819,016 4,692,189 2.7
Money market 2,106,814 2,221,807 2,496,590 (5.2 ) (15.6 ) 2,236,972 2,509,033 (10.8 )
Certificates of deposit 4,636,007     4,266,488     4,304,990   8.7 7.7 4,314,088     4,239,676   1.8
Total average deposits $ 17,649,166     $ 17,322,868     $ 17,148,110   1.9 2.9 $ 17,361,495     $ 17,105,710   1.5
 
Average interest rate on deposits(1) 0.38 % 0.33 % 0.37 % 5 bps 1 bps 0.35 % 0.36 % (1 ) bps
 

(1) Annualized.

 
  • Total average deposits for the third quarter of 2017 increased $501.1 million, or 2.9 percent, from the third quarter of 2016 and increased $326.3 million or 1.9 percent, from the second quarter of 2017. The increase from the third quarter of 2016 was primarily due to growth in average checking balances, certificates of deposit and savings balances, partially offset by a decrease in money market balances. The increase from the second quarter of 2017 was primarily due to growth in average certificates of deposit, partially offset by a decrease in money market balances.
  • The average interest rate on deposits for the third quarter of 2017 was 0.38 percent, up 1 basis point from the third quarter of 2016 and up 5 basis points from the second quarter of 2017. The increases from both periods were primarily due to increased average interest rates on certificates of deposit and savings balances. The increase from the third quarter of 2016 was partially offset by decreased average interest rates on money market balances.
 
Non-interest Expense
 
Non-interest Expense   Table 6
        Change      
(Dollars in thousands) 3Q 2Q 3Q 3Q17 vs   3Q17 vs YTD YTD
2017   2017   2016   2Q17   3Q16   2017   2016   Change
 
Compensation and employee benefits $ 115,127 $ 115,918 $ 117,155 (0.7 )% (1.7 )% $ 355,522 $ 359,721 (1.2 )%
Occupancy and equipment 38,766 38,965 37,938 (0.5 ) 2.2 117,331 111,830 4.9
Other 61,408     61,075     59,421   0.5 3.3 186,520     172,185   8.3
Subtotal 215,301 215,958 214,514 (0.3 ) 0.4 659,373 643,736 2.4
Operating lease depreciation 15,696 12,466 10,038 25.9 56.4 39,404 29,453 33.8
Foreclosed real estate and repossessed assets, net 3,829 4,639 4,243 (17.5 ) (9.8 ) 13,017 11,298 15.2
Other credit costs, net 209     24     83   N.M. 151.8 334     41   N.M.
Total non-interest expense $ 235,035     $ 233,087     $ 228,878   0.8 2.7 $ 712,128     $ 684,528   4.0
 
Efficiency ratio 68.46 % 68.19 % 69.00 % 27 bps (54 ) bps 70.45 % 69.36 % 109 bps
 
N.M. Not Meaningful.
 
  • Non-interest expense for the third quarter of 2017 increased $6.2 million, or 2.7 percent, from the third quarter of 2016, primarily due to increases in operating lease depreciation and other non-interest expense, partially offset by a decrease in compensation and employee benefits. Non-interest expense for the third quarter of 2017 increased $1.9 million, or 0.8 percent, from the second quarter of 2017, primarily due to an increase in operating lease depreciation, partially offset by decreases in foreclosed real estate and repossessed assets expense and compensation and employee benefits.
  • Compensation and employee benefits expense decreased $2.0 million, or 1.7 percent, from the third quarter of 2016 and decreased $0.8 million, or 0.7 percent, from the second quarter of 2017. The decrease from the third quarter of 2016 was primarily due to reduced headcount in auto finance, partially offset by higher enterprise services contract labor utilization. The decrease from the second quarter of 2017 was primarily due to lower sales commissions and incentive compensation, partially offset by higher salaries.
  • Other non-interest expense increased $2.0 million, or 3.3 percent, from the third quarter of 2016 and remained consistent with the second quarter of 2017. The increase from the third quarter of 2016 was primarily due to higher professional fees related to strategic investments in technology capabilities, partially offset by a decrease in impairment charges on interest-only strips.
  • Operating lease depreciation increased $5.7 million, or 56.4 percent, from the third quarter of 2016 and increased $3.2 million, or 25.9 percent, from the second quarter of 2017. The increases from both periods were due to increases in leasing and equipment finance operating lease revenue related to the acquisition of EFLC.
  • Net expenses related to foreclosed real estate and repossessed assets remained consistent with the third quarter of 2016 and decreased $0.8 million, or 17.5 percent, from the second quarter of 2017. The decrease from the second quarter of 2017 was primarily due to higher gains on sale of consumer and commercial properties and lower operating costs associated with maintaining fewer consumer properties, partially offset by higher repossessed assets expense attributable to auto finance.

Income Tax Expense

  • The Company’s effective income tax rate was 32.7 percent for the third quarter of 2017, compared with 34.0 percent for the third quarter of 2016 and 28.9 percent for the second quarter of 2017. The effective income tax rate for the second quarter of 2017 was impacted by a $3.4 million favorable state tax settlement.
 
Capital
 
Capital Information   Table 7
  At Sep. 30,   At Dec. 31,
(Dollars in thousands, except per-share data) 2017 2016
Total equity $ 2,596,514 $ 2,444,645
Book value per common share 13.45 12.66
Tangible book value per common share(1) 11.99 11.33
Common equity to assets 10.04 % 10.09 %
Tangible common equity to tangible assets(1) 9.06 9.13
Capital accumulation rate(2) 7.47 8.59
 
At Sep. 30, At Dec. 31,
Regulatory Capital: 2017 (3) 2016
Common equity Tier 1 capital $ 2,080,729 $ 1,970,323
Tier 1 capital

2,362,926

2,248,221
Total capital

2,734,260

2,635,925
 
Regulatory Capital Ratios:
Common equity Tier 1 capital ratio 10.05 % 10.24 %
Tier 1 risk-based capital ratio 11.41 11.68
Total risk-based capital ratio 13.21 13.69
Tier 1 leverage ratio 10.88 10.73
 

(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 3Q 2017 are preliminary pending completion and filing of the Company's regulatory reports.

 
  • TCF maintained strong capital ratios as the Company accumulated capital through earnings.
  • On September 14, 2017, TCF completed the public offering of 7,000,000 depositary shares, each representing a 1/1000th ownership interest in a share of the 5.70% Series C Non-Cumulative Perpetual Preferred Stock (the "Series C Preferred Stock"), par value $0.01 per share. Net proceeds of the offering to TCF, after deducting deferred stock issuance costs of $5.6 million, were $169.4 million.
  • On September 15, 2017, TCF provided notice of its intent to redeem all outstanding shares of its Series A Non-Cumulative Perpetual Preferred Stock (the "Series A Preferred Stock") and the related depositary shares during the fourth quarter of 2017. As a result, TCF reclassified the outstanding liquidation preference amount of the Series A Preferred Stock totaling $172.5 million from preferred stock to accrued expenses and other liabilities on the Consolidated Statement of Financial Condition because upon the notification date, the Series A Preferred Stock became mandatorily redeemable. The liquidation preference amount equals the redemption price for all outstanding shares of the Series A Preferred Stock. Deferred stock issuance costs of $5.8 million originally recorded as a reduction to preferred stock upon the issuance of the Series A Preferred Stock were reclassified to retained earnings and resulted in a non-cash, one-time reduction to net income available to common stockholders utilized in the computation of earnings per common share and diluted earnings per common share. In addition, dividends of $1.6 million on the Series A Preferred Stock were accrued through October 15, 2017. These two items lowered earnings per common share and diluted earnings per common share by 4 cents per share for the third quarter and first nine months of 2017. Effective October 16, 2017, TCF redeemed all outstanding shares of its Series A Preferred Stock and the related depositary shares using the net proceeds from the offering of its Series C Preferred Stock and additional cash on hand.
  • On October 18, 2017, TCF's Board of Directors declared a regular quarterly cash dividend of 7.5 cents per common share, payable on December 1, 2017, to stockholders of record at the close of business on November 15, 2017. TCF also declared dividends on the 6.45% Series B and 5.70% Series C Non-Cumulative Perpetual Preferred Stock, both payable on December 1, 2017, to stockholders of record at the close of business on November 15, 2017.

Other Matters

As previously announced, the United States District Court for the District of Minnesota (the "Court") granted TCF National Bank's motion to dismiss the Consumer Financial Protection Bureau’s ("CFPB") Regulation E claims. In addition, the Court dismissed the CFPB’s unfair, deceptive and abusive conduct claims under the Consumer Financial Protection Act ("CFPA") for periods prior to July 21, 2011. The Court did not grant TCF National Bank's motion to dismiss CFPA claims for periods after July 21, 2011.

Webcast Information

A live webcast of TCF's conference call to discuss the third quarter earnings will be hosted at TCF's website, http://ir.tcfbank.com , on October 27, 2017 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 September 30, 2017, TCF had $23.0 billion in total assets and 321 bank branches in Illinois, Minnesota, Michigan, Colorado, Wisconsin, Arizona and South Dakota providing retail and commercial banking services. TCF, through its subsidiaries, also conducts commercial leasing, equipment finance and auto finance business in all 50 states and commercial inventory finance business in 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, targets, 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, 2016 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; the effects of man-made and natural disasters, including fires, floods, tornadoes, hurricanes, acts of terrorism, civil disturbances and environmental damage, which may negatively affect our operations and/or our customers.

Legislative and Regulatory Requirements.  New consumer protection and supervisory requirements and regulations, including those resulting from action by the Consumer Financial Protection Bureau ("CFPB") 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, restrictions on arbitration, or new restrictions on loan and lease 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; governmental regulations or judicial actions affecting the security interests of creditors; deficiencies in TCF's compliance programs, including under the Bank Secrecy Act in past or future periods, which may result in regulatory enforcement action including monetary penalties; increased health care costs including those resulting from 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 including those 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 either of the primary 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 expanding existing business relationships; failure to expand or diversify TCF's balance sheet through new or expanded programs or opportunities; 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, such as by failing to develop and maintain technology necessary to satisfy customer demands, costs and possible disruptions related to upgrading systems; the failure to attract and retain key employees.

Litigation Risks. Results of litigation or government enforcement actions such as TCF's pending litigation with the CFPB and related matters, 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; 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)
 
  Quarter Ended September 30,   Change
2017   2016 $   %
Interest income:
Loans and leases $ 243,973 $ 210,765 $ 33,208 15.8 %
Securities available for sale 8,486 7,126 1,360 19.1
Securities held to maturity 1,073 1,049 24 2.3
Loans held for sale and other 4,073   13,786   (9,713 ) (70.5 )
Total interest income 257,605   232,726   24,879   10.7
Interest expense:
Deposits 17,015 15,851 1,164 7.3
Borrowings 6,487   4,857   1,630   33.6
Total interest expense 23,502   20,708   2,794   13.5
Net interest income 234,103 212,018 22,085 10.4
Provision for credit losses 14,545   13,894   651   4.7
Net interest income after provision for credit losses 219,558   198,124   21,434   10.8
Non-interest income:
Fees and service charges 34,605 35,093 (488 ) (1.4 )
Card revenue 14,177 13,747 430 3.1
ATM revenue 5,234   5,330   (96 ) (1.8 )
Subtotal 54,016 54,170 (154 ) (0.3 )
Gains on sales of auto loans, net 11,624 (11,624 ) (100.0 )
Gains on sales of consumer real estate loans, net 8,049 13,528 (5,479 ) (40.5 )
Servicing fee income 9,966   10,393   (427 ) (4.1 )
Subtotal 18,015 35,545 (17,530 ) (49.3 )
Leasing and equipment finance 34,080 28,289 5,791 20.5
Other 2,930   2,270   660   29.1
Fees and other revenue 109,041 120,274 (11,233 ) (9.3 )
Gains (losses) on securities, net 189   (600 ) 789   N.M.
Total non-interest income 109,230   119,674   (10,444 ) (8.7 )
Non-interest expense:
Compensation and employee benefits 115,127 117,155 (2,028 ) (1.7 )
Occupancy and equipment 38,766 37,938 828 2.2
Other 61,408   59,421   1,987   3.3
Subtotal 215,301 214,514 787 0.4
Operating lease depreciation 15,696 10,038 5,658 56.4
Foreclosed real estate and repossessed assets, net 3,829 4,243 (414 ) (9.8 )
Other credit costs, net 209   83   126   151.8
Total non-interest expense 235,035   228,878   6,157   2.7
Income before income tax expense 93,753 88,920 4,833 5.4
Income tax expense 30,704   30,257   447   1.5
Income after income tax expense 63,049 58,663 4,386 7.5
Income attributable to non-controlling interest 2,521   2,371   150   6.3
Net income attributable to TCF Financial Corporation 60,528 56,292 4,236 7.5
Preferred stock dividends 6,464 4,847 1,617 33.4

Impact of notice to redeem preferred stock

5,779     5,779   N.M.

Net income available to common stockholders

$ 48,285   $ 51,445   $ (3,160 ) (6.1 )
 
Earnings per common share:
Basic $ 0.29 $ 0.31 $ (0.02 ) (6.5 )%
Diluted 0.29 0.31 (0.02 ) (6.5 )
 
Dividends declared per common share $ 0.075 $ 0.075 $

%
 
Average common and common equivalent shares
outstanding (in thousands):
Basic 168,971 167,366 1,605 1.0 %
Diluted 169,240 167,968 1,272 0.8
 

N.M. Not Meaningful.

 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
 
  Nine Months Ended  
September 30, Change
2017   2016 $   %
Interest income:
Loans and leases $ 697,613 $ 639,698 $ 57,915 9.1 %
Securities available for sale 24,518 19,020 5,498 28.9
Securities held to maturity 3,388 3,484 (96 ) (2.8 )
Loans held for sale and other 22,910   36,870   (13,960 ) (37.9 )
Total interest income 748,429   699,072   49,357   7.1
Interest expense:
Deposits 45,166 46,735 (1,569 ) (3.4 )
Borrowings 19,885   15,677   4,208   26.8
Total interest expense 65,051   62,412   2,639   4.2
Net interest income 683,378 636,660 46,718 7.3
Provision for credit losses 46,184   45,986   198   0.4
Net interest income after provision for credit losses 637,194   590,674   46,520   7.9
Non-interest income:
Fees and service charges 98,620 102,532 (3,912 ) (3.8 )
Card revenue 41,481 41,193 288 0.7
ATM revenue 14,970   15,639   (669 ) (4.3 )

Subtotal

155,071 159,364 (4,293 ) (2.7 )
Gains on sales of auto loans, net 3,244 33,687 (30,443 ) (90.4 )
Gains on sales of consumer real estate loans, net 25,920 33,751 (7,831 ) (23.2 )
Servicing fee income 32,347   28,778   3,569   12.4
Subtotal 61,511 96,216 (34,705 ) (36.1 )
Leasing and equipment finance 102,208 87,850 14,358 16.3
Other 8,428   7,518   910   12.1
Fees and other revenue 327,218 350,948 (23,730 ) (6.8 )
Gains (losses) on securities, net 189   (716 ) 905   N.M.
Total non-interest income 327,407   350,232   (22,825 ) (6.5 )
Non-interest expense:
Compensation and employee benefits 355,522 359,721 (4,199 ) (1.2 )
Occupancy and equipment 117,331 111,830 5,501 4.9
Other 186,520   172,185   14,335   8.3
Subtotal 659,373 643,736 15,637 2.4
Operating lease depreciation 39,404 29,453 9,951 33.8
Foreclosed real estate and repossessed assets, net 13,017 11,298 1,719 15.2
Other credit costs, net 334   41   293   N.M.
Total non-interest expense 712,128   684,528   27,600   4.0
Income before income tax expense 252,473 256,378 (3,905 ) (1.5 )
Income tax expense 77,341   86,766   (9,425 ) (10.9 )
Income after income tax expense 175,132 169,612 5,520 3.3
Income attributable to non-controlling interest 7,894   7,580   314   4.1
Net income attributable to TCF Financial Corporation 167,238 162,032 5,206 3.2
Preferred stock dividends 16,158 14,541 1,617 11.1
Impact of notice to redeem preferred stock 5,779     5,779   N.M.
Net income available to common stockholders $ 145,301   $ 147,491   $ (2,190 ) (1.5 )
 
Earnings per common share:
Basic $ 0.86 $ 0.88 $ (0.02 ) (2.3 )%
Diluted 0.86 0.88 (0.02 ) (2.3 )
 
Dividends declared per common share $ 0.225 $ 0.225 $ %
 
Average common and common equivalent shares
outstanding (in thousands):
Basic 168,493 167,155 1,338 0.8 %
Diluted 168,823 167,708 1,115 0.7
 

N.M. Not Meaningful.

 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
 
  Quarter Ended September 30,   Change
2017   2016 $   %
Net income attributable to TCF Financial Corporation $ 60,528   $ 56,292   $ 4,236   7.5 %
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale and interest-only strips 2,445 (4,464 ) 6,909 N.M.
Net unrealized gains (losses) on net investment hedges (1,682 ) 561 (2,243 ) N.M.
Foreign currency translation adjustment 2,939 (957 ) 3,896 N.M.
Recognized postretirement prior service cost (8 ) (8 )  
Total other comprehensive income (loss), net of tax 3,694   (4,868 ) 8,562   N.M.
Comprehensive income $ 64,222   $ 51,424   $ 12,798   24.9
 

Nine Months Ended

September 30,

Change
2017 2016 $ %
Net income attributable to TCF Financial Corporation $ 167,238   $ 162,032   $ 5,206   3.2 %
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale and interest-only strips 17,555 21,141 (3,586 ) (17.0 )
Net unrealized gains (losses) on net investment hedges (3,144 ) (1,669 ) (1,475 ) (88.4 )
Foreign currency translation adjustment 5,527 2,791 2,736 98.0
Recognized postretirement prior service cost (22 ) (22 )  
Total other comprehensive income (loss), net of tax 19,916   22,241   (2,325 ) (10.5 )
Comprehensive income $ 187,154   $ 184,273   $ 2,881   1.6
 
N.M. Not Meaningful.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per-share data)
(Unaudited)
 
  At Sep. 30,   At Dec. 31,   Change
2017 2016 $   %
ASSETS:
Cash and due from banks $ 711,734 $ 609,603 $ 102,131 16.8 %
Investments 87,690 74,714 12,976 17.4
Securities held to maturity 165,315 181,314 (15,999 ) (8.8 )
Securities available for sale 1,598,163 1,423,435 174,728 12.3
Loans and leases held for sale 254,903 268,832 (13,929 ) (5.2 )
Loans and leases:
Consumer real estate:
First mortgage lien 1,953,199 2,292,596 (339,397 ) (14.8 )
Junior lien 2,977,613   2,791,756   185,857   6.7
Total consumer real estate 4,930,812 5,084,352 (153,540 ) (3.0 )
Commercial 3,489,680 3,286,478 203,202 6.2
Leasing and equipment finance 4,730,931 4,336,310 394,621 9.1
Inventory finance 2,576,077 2,470,175 105,902 4.3
Auto finance 3,240,413 2,647,741 592,672 22.4
Other 20,439   18,771   1,668   8.9
Total loans and leases 18,988,352 17,843,827 1,144,525 6.4
Allowance for loan and lease losses (168,244 ) (160,269 ) (7,975 ) (5.0 )
Net loans and leases 18,820,108 17,683,558 1,136,550 6.4
Premises and equipment, net 425,112 418,372 6,740 1.6
Goodwill 227,798 225,640 2,158 1.0
Other assets 714,215   555,858   158,357   28.5
Total assets $ 23,005,038   $ 21,441,326   $ 1,563,712   7.3
 

LIABILITIES AND EQUITY:

Deposits:
Checking $ 6,197,608 $ 6,009,151 $ 188,457 3.1 %
Savings 4,972,529 4,719,481 253,048 5.4
Money market 1,965,291 2,421,467 (456,176 ) (18.8 )
Certificates of deposit 4,972,058   4,092,423   879,635   21.5
Total deposits 18,107,486   17,242,522   864,964   5.0
Short-term borrowings 4,391 (4,391 ) (100.0 )
Long-term borrowings 1,382,588   1,073,181   309,407   28.8
Total borrowings 1,382,588 1,077,572 305,016 28.3
Accrued expenses and other liabilities 918,450   676,587   241,863   35.7
Total liabilities 20,408,524   18,996,681   1,411,843   7.4
Equity:

Preferred stock, par value $0.01 per share, 30,000,000 shares authorized; 4,007,000 and 4,006,900 shares issued, respectively

265,967 263,240 2,727 1.0

Common stock, par value $0.01 per share, 280,000,000 shares authorized; 171,876,492 and 171,034,506 shares issued, respectively

1,719 1,710 9 0.5
Additional paid-in capital 864,632 862,776 1,856 0.2
Retained earnings, subject to certain restrictions 1,488,966 1,382,901 106,065 7.7
Accumulated other comprehensive income (loss) (13,809 ) (33,725 ) 19,916 59.1
Treasury stock at cost, 42,566 shares, and other (30,867 ) (49,419 ) 18,552   37.5
Total TCF Financial Corporation stockholders' equity 2,576,608 2,427,483 149,125 6.1
Non-controlling interest in subsidiaries 19,906   17,162   2,744   16.0
Total equity 2,596,514   2,444,645   151,869   6.2
Total liabilities and equity $ 23,005,038   $ 21,441,326   $ 1,563,712   7.3
 
 
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
Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Sep. 30,
2017 2017 2017 2016 2016 2017 2016
Consumer real estate:
First mortgage lien 0.32 % 0.31 % 0.28 %

0.40

% 0.36 % 1 bps (4 ) bps
Junior lien 0.05 0.05 0.05 0.05 0.03 2
Total consumer real estate 0.15 0.16 0.15 0.21 0.18 (1 ) (3 )
Commercial 0.01 (1 )
Leasing and equipment finance 0.15 0.14 0.12

0.10

0.14 1 1
Inventory finance 0.01 0.01 0.01
Auto finance 0.25

0.20

0.13 0.23

0.20

5 5
Other 0.07

0.30

0.05

0.10

0.05 (23 ) 2
Subtotal 0.12 0.11 0.09 0.12 0.12 1
Portfolios acquired with deteriorated credit quality

9.42

3.06

942

636

Total delinquencies 0.13 0.11 0.09 0.12 0.12 2 1
 
(1) Excludes non-accrual loans and leases.
 
 

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

 

Quarter Ended (1)

Change from
Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Sep. 30,
2017 2017 2017

2016

2016 2017 2016
Consumer real estate:
First mortgage lien (0.16 )% 0.15 % (0.18 )% 0.26 % 0.34 % (31 ) bps (50 ) bps
Junior lien (0.38 ) 0.05 (0.89 ) 0.08 0.04 (43 ) (42 )
Total consumer real estate (0.29 ) 0.09 (0.58 ) 0.17 0.17 (38 ) (46 )
Commercial (0.02 ) 0.29 0.32 0.01 (0.01 ) (31 ) (1 )
Leasing and equipment finance

0.10

0.14 0.13

0.10

0.18 (4 ) (8 )
Inventory finance 0.08 0.09 0.01 0.07

0.10

(1 ) (2 )
Auto finance 1.13 0.83 1.12 1.09 0.86 30 27
Other N.M. N.M. N.M. N.M. N.M. N.M. N.M.
Total 0.18 0.28 0.11 0.27 0.26 (10 ) (8 )
 
N.M. Not Meaningful.
(1) Annualized.
 
 

Non-Accrual Loans and Leases Rollforward

 

Quarter Ended

Change from

 

Sep. 30,

Jun. 30,

Mar. 31,

Dec. 31,

Sep. 30,

Jun. 30,

Sep. 30,

2017

2017

2017

2016

2016

2017

2016

Balance, beginning of period

$

129,273

$

138,981

$

181,445

$

190,047

$

195,542

$

(9,708

)

$

(66,269

)

Additions

39,094

23,667

34,661

32,398

28,697

15,427

10,397

Charge-offs

(3,916

)

(6,819

)

(6,412

)

(4,158

)

(5,670

)

2,903

1,754

Transfers to other assets

(7,308

)

(10,870

)

(8,786

)

(17,118

)

(11,687

)

3,562

4,379

Return to accrual status

(3,559

)

(3,077

)

(2,591

)

(4,546

)

(5,447

)

(482

)

1,888

Payments received

(7,993

)

(11,647

)

(10,732

)

(14,351

)

(13,845

)

3,654

5,852

Sales

(25,924

)

(892

)

(49,916

)

(2,764

)

(25,032

)

 

(25,924

)

Other, net

 

(48

)

 

(70

)

 

 

1,312

   

1,937

   

2,457

   

22

   

(2,505

)

Balance, end of period

$

119,619

 

$

129,273

 

$

138,981

 

$

181,445

 

$

190,047

 

$

(9,654

)

$

(70,428

)

 

 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)
 

Other Real Estate Owned Rollforward

             
Quarter Ended Change from
Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Sep. 30,
2017 2017 2017 2016 2016 2017 2016
Balance, beginning of period $ 28,727 $ 31,959 $ 46,797 $ 33,712 $ 36,792 $ (3,232 ) $ (8,065 )
Transferred in 5,685 8,638 7,212 13,865 10,124 (2,953 ) (4,439 )
Sales (9,204 ) (11,243 ) (14,982 ) (8,655 ) (12,997 ) 2,039 3,793
Writedowns (1,345 ) (1,674 ) (1,538 ) (1,281 ) (1,984 ) 329 639
Other, net(1) 2,542   1,047   (5,530 ) 9,156   1,777   1,495   765  
Balance, end of period $ 26,405   $ 28,727   $ 31,959   $ 46,797   $ 33,712   $ (2,322 ) $ (7,307 )
 

(1) Includes transfers (to) from premises and equipment.

 
                 

Allowance for Loan and Lease Losses

 
At At At At At
Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30,
2017 2017 2017 2016 2016
% of % of % of % of % of
Balance

 

Portfolio

Balance

 

Portfolio

Balance

 

Portfolio

Balance

 

Portfolio

Balance Portfolio
Consumer real estate $ 47,838 0.97 % $ 52,408 1.10 % $ 53,851 1.16 % $ 59,448 1.17 % $ 62,092 1.24 %
Commercial 36,344 1.04 34,669 0.99 33,697 1.00 32,695 0.99 31,648 1.00
Leasing and equipment finance 22,771 0.48 21,922 0.51 21,257 0.50 21,350 0.49 20,649 0.49
Inventory finance 11,978 0.46 12,129 0.48 15,816 0.55 13,932 0.56 11,807 0.52
Auto finance 48,660 1.50 43,893 1.35 35,108 1.26 32,310 1.22 29,115 1.07
Other 653   3.19 599   3.08 437   2.60 534   2.84 530   2.96
Total $ 168,244   0.89 $ 165,620   0.90 $ 160,166   0.89 $ 160,269   0.90 $ 155,841   0.90
 
 

Changes in Allowance for Loan and Lease Losses

             
Quarter Ended Change from
Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Sep. 30,
2017 2017 2017 2016 2016 2017 2016
Balance, beginning of period $ 165,620 $ 160,166 $ 160,269 $ 155,841 $ 158,572 $ 5,454 $ 7,048
Charge-offs (17,999 ) (18,326 ) (18,902 ) (16,451 ) (16,244 ) 327 (1,755 )
Recoveries 9,847   5,412   13,813   4,718   4,779   4,435   5,068  
Net (charge-offs) recoveries (8,152 ) (12,914 ) (5,089 ) (11,733 ) (11,465 ) 4,762 3,313
Provision for credit losses 14,545 19,446 12,193 19,888 13,894 (4,901 ) 651
Other (3,769 ) (1,078 ) (7,207 ) (3,727 ) (5,160 ) (2,691 ) 1,391  
Balance, end of period $ 168,244   $ 165,620   $ 160,166   $ 160,269   $ 155,841   $ 2,624   $ 12,403  
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)
           
Quarter Ended September 30,
2017 2016
Average Yields and Average Yields and
Balance Interest (1)

Rates (1)(2)

Balance Interest (1) Rates (1)(2)
ASSETS:
Investments and other $ 279,839 $ 2,679 3.80 % $ 331,107 $ 2,380 2.86 %
Securities held to maturity 166,883 1,073 2.57 187,414 1,049 2.24
Securities available for sale:(3)
Taxable 825,192 4,619 2.24 747,890 4,167 2.23
Tax-exempt(4) 737,859 5,949 3.22 570,013 4,553 3.19
Loans and leases held for sale 96,143 1,394 5.75 558,649 11,406 8.12
Loans and leases:(5)
Consumer real estate:
Fixed-rate 1,872,607 26,490 5.61 2,216,945 32,041 5.75
Variable- and adjustable-rate 2,964,493   44,160   5.91 2,918,631   38,796   5.29
Total consumer real estate 4,837,100 70,650 5.80 5,135,576 70,837 5.49
Commercial:
Fixed-rate 980,262 11,411 4.62 944,347 11,675 4.92
Variable- and adjustable-rate 2,493,163   29,915   4.76 2,147,768   21,121   3.91
Total commercial 3,473,425 41,326 4.72 3,092,115 32,796 4.22
Leasing and equipment finance 4,316,434 48,874 4.53 4,147,488 46,422 4.48
Inventory finance 2,479,416 41,922 6.71 2,272,409 34,665 6.07

Auto finance

3,280,612 42,785 5.17 2,670,272 27,251 4.06
Other 11,567   146   5.03 9,252   136   5.85
Total loans and leases 18,398,554   245,703   5.31 17,327,112   212,107   4.88
Total interest-earning assets 20,504,470 261,417 5.07 19,722,185 235,662 4.76
Other assets(6) 1,434,957   1,303,670  
Total assets $ 21,939,427   $ 21,025,855  
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,940,797 $ 1,771,840
Small business 937,847 894,761
Commercial and custodial 642,400   583,430  
Total non-interest bearing deposits 3,521,044 3,250,031
Interest-bearing deposits:
Checking 2,539,211 99 0.02 2,434,934 88 0.01
Savings 4,846,090 932 0.08 4,661,565 399 0.03
Money market 2,106,814 2,478 0.47 2,496,590 3,823 0.61
Certificates of deposit 4,636,007   13,506   1.16 4,304,990   11,541   1.07
Total interest-bearing deposits 14,128,122   17,015   0.48 13,898,079   15,851   0.45
Total deposits 17,649,166   17,015   0.38 17,148,110   15,851   0.37
Borrowings:
Short-term borrowings 6,448 21 1.33 8,485 19 0.86
Long-term borrowings 983,004   6,466   2.62 729,737   4,838   2.65
Total borrowings 989,452   6,487   2.62 738,222   4,857   2.63
Total interest-bearing liabilities 15,117,574   23,502   0.62 14,636,301   20,708   0.56
Total deposits and borrowings 18,638,618 23,502 0.50 17,886,332 20,708 0.46
Other liabilities 723,792   708,048  
Total liabilities 19,362,410   18,594,380  
Total TCF Financial Corp. stockholders' equity 2,554,667 2,409,312
Non-controlling interest in subsidiaries 22,350   22,163  
Total equity 2,577,017   2,431,475  
Total liabilities and equity $ 21,939,427   $ 21,025,855  
Net interest income and margin $ 237,915   4.61 $ 214,954   4.34
 
(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 $249.0 million and $138.2 million for the third quarters of 2017 and 2016, respectively.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)
           
Nine Months Ended September 30,
2017 2016
Average Yields and Average Yields and
Balance Interest (1) Rates (1)(2) Balance Interest (1) Rates (1)(2)
ASSETS:
Investments and other $ 275,278 $ 8,142 3.95 % $ 334,210 $ 6,992 2.79 %
Securities held to maturity 172,341 3,388 2.62 193,780 3,484 2.40
Securities available for sale:(3)
Taxable 820,968 13,707 2.23 695,721 11,838 2.27
Tax-exempt(4) 689,807 16,632 3.21 457,308 11,049 3.22
Loans and leases held for sale 240,753 14,768 8.20 475,017 29,878 8.40
Loans and leases:(5)
Consumer real estate:
Fixed-rate 1,972,528 83,456 5.66 2,324,648 100,386 5.77
Variable- and adjustable-rate 2,897,509   124,381   5.74 2,959,168   117,625   5.31
Total consumer real estate 4,870,037 207,837 5.71 5,283,816 218,011 5.51
Commercial:
Fixed-rate 982,414 34,250 4.66 979,913 36,233 4.94
Variable- and adjustable-rate 2,415,999   81,504   4.51 2,140,039   63,601   3.97
Total commercial 3,398,413 115,754 4.55 3,119,952 99,834 4.27
Leasing and equipment finance 4,293,364 144,786 4.50 4,057,755 135,900 4.47
Inventory finance 2,632,385 123,633 6.28 2,422,979 105,633 5.82
Auto finance 3,050,555 109,865 4.82 2,708,470 83,748 4.13
Other 10,520   414   5.27 9,617   413   5.75
Total loans and leases 18,255,274   702,289   5.14 17,602,589   643,539   4.88
Total interest-earning assets 20,454,421 758,926 4.96 19,758,625 706,780 4.78
Other assets(6) 1,338,670   1,295,913  
Total assets $ 21,793,091   $ 21,054,538  
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,929,767 $ 1,780,397
Small business 910,185 870,024
Commercial and custodial 625,789   575,513  
Total non-interest bearing deposits 3,465,741 3,225,934
Interest-bearing deposits:
Checking 2,541,384 265 0.01 2,451,330 261 0.01
Savings 4,803,310 1,971 0.05 4,679,737 1,081 0.03
Money market 2,236,972 7,897 0.47 2,509,033 11,663 0.62
Certificates of deposit 4,314,088   35,033   1.09 4,239,676   33,730   1.06
Total interest-bearing deposits 13,895,754   45,166   0.43 13,879,776   46,735   0.45
Total deposits 17,361,495   45,166   0.35 17,105,710   46,735   0.36
Borrowings:
Short-term borrowings 5,776 41 0.95 7,718 42 0.72
Long-term borrowings 1,220,615   19,844   2.17 877,123   15,635   2.38
Total borrowings 1,226,391   19,885   2.16 884,841   15,677   2.36
Total interest-bearing liabilities 15,122,145   65,051   0.57 14,764,617   62,412   0.56
Total deposits and borrowings 18,587,886 65,051 0.47 17,990,551 62,412 0.46
Other liabilities 687,826   683,198  
Total liabilities 19,275,712   18,673,749  
Total TCF Financial Corp. stockholders' equity 2,494,152 2,358,387
Non-controlling interest in subsidiaries 23,227   22,402  
Total equity 2,517,379   2,380,789  
Total liabilities and equity $ 21,793,091   $ 21,054,538  
Net interest income and margin $ 693,875   4.53 $ 644,368   4.35
 
(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 $210.2 million and $134.6 million for the nine months ended September 30, 2017 and 2016, respectively.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per-share data)
(Unaudited)
         
Quarter Ended
Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30,
2017 2017 2017 2016 2016
Interest income:
Loans and leases $ 243,973 $ 234,092 $ 219,548 $ 210,848 $ 210,765
Securities available for sale 8,486 8,052 7,980 7,553 7,126
Securities held to maturity 1,073 1,035 1,280 1,165 1,049
Loans held for sale and other 4,073   5,338   13,499   12,092   13,786  
Total interest income 257,605   248,517   242,307   231,658   232,726  
Interest expense:
Deposits 17,015 14,436 13,715 15,053 15,851
Borrowings 6,487   6,920   6,478   5,159   4,857  
Total interest expense 23,502   21,356   20,193   20,212   20,708  
Net interest income 234,103 227,161 222,114 211,446 212,018
Provision for credit losses 14,545   19,446   12,193   19,888   13,894  
Net interest income after provision for credit losses 219,558   207,715   209,921   191,558   198,124  
Non-interest income:
Fees and service charges 34,605 32,733 31,282 35,132 35,093
Card revenue 14,177 14,154 13,150 13,689 13,747
ATM revenue 5,234   5,061   4,675   4,806   5,330  
Subtotal 54,016 51,948 49,107 53,627 54,170
Gains on sales of auto loans, net 380 2,864 1,145 11,624
Gains on sales of consumer real estate loans, net 8,049 8,980 8,891 16,676 13,528
Servicing fee income 9,966   10,730   11,651   11,404   10,393  
Subtotal 18,015 20,090 23,406 29,225 35,545

Leasing and equipment finance

34,080 39,830 28,298 31,316 28,289
Other 2,930   2,795   2,703   1,365   2,270  
Fees and other revenue 109,041 114,663 103,514 115,533 120,274
Gains (losses) on securities, net 189       135   (600 )
Total non-interest income 109,230   114,663   103,514   115,668   119,674  
Non-interest expense:
Compensation and employee benefits 115,127 115,918 124,477 115,001 117,155
Occupancy and equipment 38,766 38,965 39,600 38,150 37,938
Other 61,408   61,075   64,037   59,235   59,421  
Subtotal 215,301 215,958 228,114 212,386 214,514
Operating lease depreciation 15,696 12,466 11,242 10,906 10,038
Foreclosed real estate and repossessed assets, net 3,829 4,639 4,549 1,889 4,243
Other credit costs, net 209   24   101   178   83  
Total non-interest expense 235,035   233,087   244,006   225,359   228,878  
Income before income tax expense 93,753 89,291 69,429 81,867 88,920
Income tax expense 30,704   25,794   20,843   29,762   30,257  
Income after income tax expense 63,049 63,497 48,586 52,105 58,663
Income attributable to non-controlling interest 2,521   3,065   2,308   2,013   2,371  
Net income attributable to TCF Financial Corporation 60,528 60,432 46,278 50,092 56,292
Preferred stock dividends 6,464 4,847 4,847 4,847 4,847
Impact of notice to redeem preferred stock 5,779          
Net income available to common stockholders $ 48,285   $ 55,585   $ 41,431   $ 45,245   $ 51,445  
 
Earnings per common share:
Basic $ 0.29 $ 0.33 $ 0.25 $ 0.27 $ 0.31
Diluted 0.29 0.33 0.25 0.27 0.31
 
Dividends declared per common share $ 0.075 $ 0.075 $ 0.075 $ 0.075 $ 0.075
 
Financial highlights: (1)
Return on average assets 1.15 % 1.17 % 0.90 % 0.99 % 1.12 %
Return on average common equity 8.44 9.96 7.64 8.40 9.59
Net interest margin 4.61 4.52 4.46 4.30 4.34
 
(1)   Annualized.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS
(In thousands)
(Unaudited)
         

Sep. 30,
2017

Jun. 30,
2017

Mar. 31,
2017

Dec. 31,
2016

Sep. 30,
2016

ASSETS:
Investments and other $ 279,839 $ 259,548 $ 286,519 $ 276,018 $ 331,107
Securities held to maturity 166,883 172,322 177,939 182,177 187,414
Securities available for sale:(1)
Taxable 825,192 821,744 815,867 791,289 747,890
Tax-exempt 737,859 689,667 640,826 610,070 570,013
Loans and leases held for sale 96,143 165,859 464,301 492,457 558,649
Loans and leases:(2)
Consumer real estate:
Fixed-rate 1,872,607 1,963,822 2,083,472 2,169,493 2,216,945
Variable- and adjustable-rate 2,964,493   2,782,296   2,945,529   2,916,653   2,918,631
Total consumer real estate 4,837,100 4,746,118 5,029,001 5,086,146 5,135,576
Commercial:
Fixed-rate 980,262 966,884 1,000,316 948,856 944,347
Variable- and adjustable-rate 2,493,163   2,450,168   2,302,575   2,198,661   2,147,768
Total commercial 3,473,425 3,417,052 3,302,891 3,147,517 3,092,115
Leasing and equipment finance 4,316,434 4,277,376 4,285,944 4,252,543 4,147,488
Inventory finance 2,479,416 2,723,340 2,696,787 2,389,980 2,272,409
Auto finance 3,280,612 3,149,974 2,714,862 2,647,088 2,670,272
Other 11,567   10,235   9,740   9,307   9,252
Total loans and leases 18,398,554   18,324,095   18,039,225   17,532,581   17,327,112
Total interest-earning assets 20,504,470 20,433,235 20,424,677 19,884,592 19,722,185
Other assets(3) 1,434,957   1,315,495   1,263,678   1,253,002   1,303,670
Total assets $ 21,939,427   $ 21,748,730   $ 21,688,355   $ 21,137,594   $ 21,025,855
 
LIABILITIES AND EQUITY:
Non-interest-bearing deposits:
Retail $ 1,940,797 $ 1,967,542 $ 1,880,298 $ 1,773,673 $ 1,771,840
Small business 937,847 897,391 894,845 926,388 894,761
Commercial and custodial 642,400   608,706   626,081   615,686   583,430
Total non-interest bearing deposits 3,521,044 3,473,639 3,401,224 3,315,747 3,250,031
Interest-bearing deposits:
Checking 2,539,211 2,554,563 2,530,281 2,454,815 2,434,934
Savings 4,846,090 4,806,371 4,756,486 4,670,906 4,661,565
Money market 2,106,814 2,221,807 2,385,353 2,429,239 2,496,590
Certificates of deposit 4,636,007   4,266,488   4,033,143   4,198,190   4,304,990
Total interest-bearing deposits 14,128,122   13,849,229   13,705,263   13,753,150   13,898,079
Total deposits 17,649,166   17,322,868   17,106,487   17,068,897   17,148,110
Borrowings:
Short-term borrowings 6,448 6,230 4,628 5,063 8,485
Long-term borrowings 983,004   1,225,022   1,459,053   931,720   729,737
Total borrowings 989,452   1,231,252   1,463,681   936,783   738,222
Total interest-bearing liabilities 15,117,574   15,080,481   15,168,944   14,689,933   14,636,301
Total deposits and borrowings 18,638,618 18,554,120 18,570,168 18,005,680 17,886,332
Other liabilities 723,792   673,740   665,301   695,778   708,048
Total liabilities 19,362,410   19,227,860   19,235,469   18,701,458   18,594,380
Total TCF Financial Corporation stockholders' equity 2,554,667 2,494,682 2,431,755 2,417,222 2,409,312
Non-controlling interest in subsidiaries 22,350   26,188   21,131   18,914   22,163
Total equity 2,577,017   2,520,870   2,452,886   2,436,136   2,431,475
Total liabilities and equity $ 21,939,427   $ 21,748,730   $ 21,688,355   $ 21,137,594   $ 21,025,855
 
(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 $249.0 million, $200.7 million, $180.3 million, $157.2 million and $138.2 million for the third, second and first quarters of 2017, and for the fourth and third quarters of 2016, respectively.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY YIELDS AND RATES (1)(2)
(Unaudited)
         

Sep. 30,
2017

Jun. 30,
2017

Mar. 31,
2017

Dec. 31,
2016

Sep. 30,
2016

ASSETS:
Investments and other 3.80 % 4.20 % 3.88 % 3.35 % 2.86 %
Securities held to maturity 2.57 2.40 2.88 2.56 2.24
Securities available for sale:(3)
Taxable 2.24 2.16 2.28 2.22 2.23
Tax-exempt(4) 3.22 3.23 3.19 3.18 3.19
Loans and leases held for sale 5.75 6.34 9.39 7.89 8.12
Loans and leases:
Consumer real estate:
Fixed-rate 5.61 5.65 5.70 5.57 5.75
Variable- and adjustable rate 5.91 5.76 5.54 5.36 5.29
Total consumer real estate 5.80 5.72 5.60 5.45 5.49
Commercial:
Fixed-rate 4.62 4.62 4.75 4.70 4.92
Variable- and adjustable-rate 4.76 4.45 4.30 4.05 3.91
Total commercial 4.72 4.50 4.43 4.25 4.22
Leasing and equipment finance 4.53 4.48 4.48 4.43 4.48
Inventory finance 6.71 6.22 5.93 5.80 6.07
Auto finance 5.17 5.01 4.15 4.04 4.06
Other 5.03 5.37 5.44 5.72 5.85
Total loans and leases 5.31 5.15 4.95 4.82 4.88
 
Total interest-earning assets 5.07 4.94 4.86 4.70 4.76
 
LIABILITIES:
Interest-bearing deposits:
Checking 0.02 0.01 0.01 0.01 0.01
Savings 0.08 0.04 0.04 0.04 0.03
Money market 0.47 0.45 0.50 0.57 0.61
Certificates of deposit 1.16 1.07 1.02 1.05 1.07
Total interest-bearing deposits 0.48 0.42 0.41 0.44 0.45
Total deposits 0.38 0.33 0.33 0.35 0.37
Borrowings:
Short-term borrowings 1.33 0.79 0.65 0.77 0.86
Long-term borrowings 2.62 2.26 1.78 2.21 2.65
Total borrowings 2.62 2.25 1.78 2.20 2.63
 
Total interest-bearing liabilities 0.62 0.57 0.54 0.55 0.56
 
Net interest margin 4.61 4.52 4.46 4.30 4.34
 
(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, except per share data)
(Unaudited)
    At Sep. 30,   At Dec. 31,
2017 2016

Computation of tangible common equity to tangible assets and tangible book value per common share:

Total equity $ 2,596,514 $ 2,444,645
Less: Non-controlling interest in subsidiaries 19,906   17,162  
Total TCF Financial Corporation stockholders' equity 2,576,608 2,427,483
Less: Preferred stock 265,967   263,240  
Total common stockholders' equity (a) 2,310,641 2,164,243
Less:
Goodwill 227,798 225,640
Other intangibles 21,874   1,738  
Tangible common equity (b) $ 2,060,969   $ 1,936,865  
 
Total assets (c) $ 23,005,038 $ 21,441,326
Less:
Goodwill 227,798 225,640
Other intangibles 21,874   1,738  
Tangible assets (d) $ 22,755,366   $ 21,213,948  
 
Common stock shares outstanding (e) 171,833,926 170,991,940
 
Common equity to assets (a) / (c) 10.04 % 10.09 %
Tangible common equity to tangible assets (b) / (d) 9.06 % 9.13 %
 
Book value per common share (a) / (e) $ 13.45 $ 12.66
Tangible book value per common share (b) / (e) $ 11.99 $ 11.33
 
    Quarter Ended   Nine Months Ended
Sep. 30,   Jun. 30,   Sep. 30, Sep. 30,   Sep. 30,
2017 2017 2016 2017 2016

Computation of return on average tangible common equity:

Net income available to common stockholders (f) $ 48,285 $ 55,585 $ 51,445 $ 145,301 $ 147,491
Plus: Other intangibles amortization 806 238 366 1,167 1,098
Less: Income tax expense attributable to other intangibles amortization 277   83   128   401   385  
Adjusted net income available to common stockholders (g) $ 48,814   $ 55,740   $ 51,683   $ 146,067   $ 148,204  
 
Average balances:
Total equity $ 2,577,017 $ 2,520,870 $ 2,431,475 $ 2,517,379 $ 2,380,789
Less: Non-controlling interest in subsidiaries 22,350   26,188   22,163   23,227   22,402  
Total TCF Financial Corporation stockholders' equity 2,554,667 2,494,682 2,409,312 2,494,152 2,358,387
Less: Preferred stock 265,556   263,240   263,240   264,021   263,240  
Average total common stockholders' equity (h) 2,289,111 2,231,442 2,146,072 2,230,131 2,095,147
Less:
Goodwill 227,539 225,876 225,640 226,359 225,640
Other intangibles 22,279   5,045   2,233   9,743   2,597  
Average tangible common equity (i) $ 2,039,293   $ 2,000,521   $ 1,918,199   $ 1,994,029   $ 1,866,910  
 
Return on average common equity(2) (f) / (h) 8.44 % 9.96 % 9.59 % 8.69 % 9.39 %
Return on average tangible common equity(2) (g) / (i) 9.57 % 11.15 % 10.78 % 9.77 % 10.58 %
 
(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.
 

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TCF Financial Corporation
Media
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