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TCF Reports Quarterly Net Income of $85.7 Million, or $0.51 Per Share and Annual Net Income of $304.4 Million, or $1.74 Per Share

Fourth Quarter Observations

  • Revenue of $377.0 million, up 3.9% from the fourth quarter of 2017
  • Improved efficiency ratio of 66.30%
  • Average interest-earning asset growth of 1.4% from the fourth quarter of 2017
  • Period-end loans and leases of $19.1 billion, down 0.2% from December 31, 2017; period-end loans and leases excluding auto finance up 7.5%(1) from December 31, 2017
  • Net charge-off rate of 0.46%, up 8 basis points from the fourth quarter of 2017; net charge-off rate excluding auto finance net charge-offs of 0.28%(2), up 10 basis points from the fourth quarter of 2017
  • Return on average common equity ("ROACE") of 14.30%; return on average tangible common equity ("ROATCE") of 15.59%(2)

2018 Observations

  • Revenue of $1.5 billion, up 6.5% from 2017; net interest income of $992.0 million, up 7.2% from 2017
  • Reported efficiency ratio of 69.34%; adjusted efficiency ratio of 67.15%(2)
  • Net charge-off rate of 0.29%, up 5 basis points from 2017; net charge-off rate excluding auto finance net charge-offs and recoveries on consumer real estate loan sales of 0.14%(2), down 1 basis point from 2017
  • ROACE of 12.42%; reported ROATCE of 13.56%(2); adjusted ROATCE of 14.74%(2)
Monday, January 28, 2019 5:03 am CST

Dateline:

WAYZATA, Minn.

Public Company Information:

NYSE:
TCF
"Reconciliation of GAAP to Non-GAAP Financial Measures"

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

Summary of Financial Results
  At or For the Quarter Ended   Change From
Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31, Sep. 30, Dec. 31,
(Dollars in thousands, except per share data)   2018   2018   2018   2018   2017   2018 2017
Net income attributable to TCF $ 85,652 $ 86,196 $ 58,749 $ 73,761 $ 101,399 (0.6 ) % (15.5 ) %
Net interest income 248,888 249,121 250,799 243,199 241,860 (0.1 ) 2.9
Basic earnings per common share 0.51 0.51 0.34 0.39 0.58 (12.1 )
Diluted earnings per common share 0.51 0.51 0.34 0.39 0.57 (10.5 )
Adjusted diluted earnings per common share(2) 0.51 0.51 0.49 0.39 0.57 (10.5 )
 
Financial Ratios
Return on average assets(3) 1.52 % 1.55 % 1.08 % 1.33 % 1.82 % (3 ) bps (30 ) bps
ROACE(3) 14.30 14.44 9.72 11.23 16.95 (14 ) (265 )
Adjusted ROACE(2)(3) 14.30 14.44 14.11 11.23 16.95 (14 ) (265 )
ROATCE(2)(3) 15.59 15.76 10.65 12.26 32.87 (17 ) (1,728 )
Adjusted ROATCE(2)(3) 15.59 15.76 15.39 12.26 32.87 (17 ) (1,728 )
Net interest margin(3) 4.60 4.66 4.67 4.59 4.57 (6 ) 3
Net charge-offs as a percentage of average loans and leases(3) 0.46 0.15 0.27 0.29 0.38 31 8
Non-performing assets as a percentage of total loans and leases and other real estate owned 0.65 0.59 0.54 0.74 0.72 6 (7 )
Efficiency ratio 66.30 67.41 74.55 69.21 95.88 (111 ) (2,958 )
Adjusted efficiency ratio(2)   66.30     67.41     65.78     69.21     95.88     (111 )   (2,958 )  

(1)

  Calculated by subtracting auto finance loans of $2.0 billion and $3.2 billion at December 31, 2018 and 2017, respectively, from total loans and leases of $19.1 billion at December 31, 2018 and 2017.
(2) See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables.
(3) Annualized

TCF Financial Corporation ("TCF" or the "Company") (NYSE: TCF) today reported net income of $85.7 million for the fourth quarter of 2018, compared with $101.4 million for the fourth quarter of 2017 and $86.2 million for the third quarter of 2018. Diluted earnings per common share was 51 cents for the fourth quarter of 2018, compared with 57 cents for the fourth quarter of 2017 and 51 cents for the third quarter of 2018.

"Our strong results in the fourth quarter capped off a successful year in which we remixed the balance sheet while we reduced our risk profile, improved efficiencies and enhanced return on capital, all of which drove record net income for the Company in 2018," said Craig R. Dahl, chairman and chief executive officer. "By continuing to build customer relationships, we drove growth in our core, retail deposit base and in our loan and lease portfolio excluding auto finance. Our improved capital efficiency, coupled with strong financial performance, allowed us to return over 100 percent of earnings to shareholders in the form of dividends and share repurchases throughout the year. Based on the execution of our business strategies and the investments we are making across the organization, I believe we are well-positioned to continue providing an exceptional customer experience while enhancing shareholder value."

Net Interest Income and Net Interest Margin

Net interest income was $248.9 million for the fourth quarter of 2018, an increase of $7.0 million, or 2.9%, from the fourth quarter of 2017 and a decrease of $0.2 million, or 0.1%, from the third quarter of 2018. Net interest margin was 4.60% for the fourth quarter of 2018, up 3 basis points from the fourth quarter of 2017 and down 6 basis points from the third quarter of 2018. The increases in net interest income and net interest margin from the fourth quarter of 2017 were primarily due to increased average yields and higher average loan balances in the variable- and adjustable-rate loan portfolios and higher average balances of debt securities available for sale, partially offset by increased cost of funds and decreased interest income on auto finance loans. The decrease in net interest margin from the third quarter of 2018 was primarily due to increased cost of funds, partially offset by increased average yields on variable- and adjustable-rate consumer real estate and commercial loans.

Non-interest Income

Non-interest income was $128.1 million for the fourth quarter of 2018, an increase of $7.2 million, or 6.0%, from the fourth quarter of 2017 and an increase of $11.7 million, or 10.0%, from the third quarter of 2018. The increases from both periods were primarily due to increased leasing and equipment finance non-interest income and increased fees and service charges. The increase from the fourth quarter of 2017 was partially offset by decreased gains on sales of loans and decreased servicing fee income.

Non-interest Expense

Non-interest expense was $250.0 million for the fourth quarter of 2018, a decrease of $97.8 million, or 28.1%, from the fourth quarter of 2017 and an increase of $3.5 million, or 1.4%, from the third quarter of 2018. The decrease from the fourth quarter of 2017 was primarily due to charges related to the discontinuation of auto finance loan originations in the fourth quarter of 2017. The increase from the third quarter of 2018 was primarily due to an increase in compensation and employee benefits expense impacted by a large medical claim of $6.8 million.

Income Tax Expense (Benefit)

Income tax expense was $20.0 million for the fourth quarter of 2018, compared with income tax benefit of $111.0 million for the fourth quarter of 2017 and income tax expense of $28.0 million for the third quarter of 2018. The Company's effective income tax rate was 18.5% for the fourth quarter of 2018, compared with 24.0% for the third quarter of 2018. The lower effective income tax rates in 2018 were primarily impacted by the change in the corporate statutory tax rate as a result of the Tax Cuts and Jobs Act. The lower effective income tax rate from the third quarter of 2018 was also impacted by a change in the state statutory tax rates. The income tax benefit for the fourth quarter of 2017 was impacted by the re-measurement of the Company's estimated net deferred tax liability as a result of the Tax Cuts and Jobs Act.

Credit Quality

Provision for credit losses The provision for credit losses was $18.9 million for the fourth quarter of 2018, a decrease of $3.4 million, or 15.1%, from the fourth quarter of 2017 and an increase of $16.6 million from the third quarter of 2018. The increase from the third quarter of 2018 was primarily due to the recovery of $6.6 million on previous charge-offs related to the consumer real estate non-accrual loan sale in third quarter of 2018 and an increase in the provision for credit losses attributable to the inventory finance and commercial portfolios.

Net charge-off rate The annualized net charge-off rate was 0.46% for the fourth quarter of 2018, up 8 basis points from the fourth quarter of 2017 and up 31 basis points from the third quarter of 2018. The increase from the fourth quarter of 2017 was primarily due to increased net charge-offs in the commercial and inventory finance portfolios, partially offset by decreased net-charge-offs in the leasing and equipment finance and auto finance portfolios. The increase from the third quarter of 2018 was primarily due to the recovery of $6.6 million on previous charge-offs related to the consumer real estate non-accrual loan sale in the third quarter of 2018. The increase from the third quarter of 2018 was also impacted by increased net charge-offs in the inventory finance portfolio and charge-offs related to one commercial customer. The annualized net charge-off rate excluding auto finance charge-offs and recoveries on previous charge-offs related to sales of consumer real estate non-accrual loans was 0.28% for the fourth quarter of 2018, up 10 basis points from the fourth quarter of 2017 and up 18 basis points from the third quarter of 2018 (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

Over 60-day delinquency rate The over 60-day delinquency rate, excluding non-accrual loans and leases, was 0.15% at December 31, 2018, up 3 basis points from both the December 31, 2017 and September 30, 2018 rates. The increase from both periods was primarily due to higher over 60-day delinquency rates for the auto finance and leasing and equipment finance portfolios.

Non-performing assets Non-performing assets, consisting of non-accrual loans and leases and other real estate owned, were $123.3 million at December 31, 2018, a decrease of $13.5 million, or 9.9%, from December 31, 2017 and an increase of $13.9 million, or 12.8%, from September 30, 2018. The decrease from December 31, 2017 was primarily due to the $34.7 million sale of consumer real estate non-accrual loans in the third quarter of 2018, partially offset by increases in commercial and inventory finance non-accrual loans. The increase from September 30, 2018 was primarily due to increases in inventory finance, commercial and consumer real estate non-accrual loans.

Balance Sheet

Average debt securities held to maturity and debt securities available for sale The total average debt securities portfolio was $2.7 billion for the fourth quarter of 2018, an increase of $944.3 million, or 53.2%, from the fourth quarter of 2017 and an increase of $215.3 million, or 8.6%, from the third quarter of 2018. The increases from both periods were primarily due to purchases of available for sale mortgage-backed debt securities.

Average loans and leases Average loans and leases were $18.6 billion for the fourth quarter of 2018, a decrease of $636.8 million, or 3.3%, from the fourth quarter of 2017 and an increase of $139.1 million, or 0.8%, from the third quarter of 2018. Average loans and leases excluding auto finance were $16.4 billion for the fourth quarter of 2018, an increase of $509.1 million, or 3.2%, from the fourth quarter of 2017 and an increase of $453.0 million, or 2.8%, from the third quarter of 2018.

Average deposits Average deposits were $18.5 billion for the fourth quarter of 2018, an increase of $327.6 million, or 1.8%, from the fourth quarter of 2017 and an increase of $180.5 million, or 1.0%, from the third quarter of 2018. The increases from both periods were primarily due to increases in savings accounts.

Capital TCF continues to maintain strong capital ratios, with a common equity Tier 1 capital ratio of 10.82%. TCF repurchased $63.0 million of common stock during the quarter and had the authority to repurchase an additional $78.1 million in aggregate value of shares as of December 31, 2018 pursuant to its share repurchase program.

 

TCF is a Wayzata, Minnesota-based national bank holding company. As of December 31, 2018, TCF had $23.7 billion in total assets and 314 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 and equipment 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, 2017 under the heading "Risk Factors" 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.

Use of Non-GAAP Financial Measures

Management uses the adjusted diluted earnings per common share, net charge-off rate excluding auto finance and recoveries from non-accrual loan sales, adjusted ROACE, ROATCE, adjusted ROATCE, adjusted efficiency ratio, tangible common equity ratio and tangible book value per common share internally to measure performance and believes that these financial measures not recognized under generally accepted accounting principles in the United States ("GAAP") (i.e. non-GAAP) provide meaningful information to investors that will permit them to assess the Company's capital and ability to withstand unexpected market or economic conditions and to assess the performance of the Company in relation to other banking institutions on the same basis as that applied by management, analysts and banking regulators. TCF adjusts certain results to exclude auto finance because TCF no longer originates auto finance loans, and therefore management believes it is useful to investors in understanding TCF's business and operating results.

These non-GAAP financial measures are not defined by GAAP and other entities may calculate them differently than TCF does. Non-GAAP financial measures have inherent limitations and are not required to be uniformly applied. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes selected items does not represent the amount that effectively accrues directly to stockholders.

 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition (Unaudited)
 
            Change From
(Dollars in thousands) Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, 2018 Dec. 31, 2017
  2018   2018   2018   2018   2017 $   % $   %
ASSETS:    
Cash and due from banks $ 587,057 $ 569,968 $ 581,876 $ 588,893 $ 621,782 $ 17,089 3.0 % $ (34,725 ) (5.6 )%
Investments 91,654 80,672 95,661 91,661 82,644 10,982 13.6 9,010 10.9
Debt securities held to maturity 148,852 152,881 155,962 158,099 161,576 (4,029 ) (2.6 ) (12,724 ) (7.9 )
Debt securities available for sale 2,470,065 2,379,546 2,249,784 1,954,246 1,709,018 90,519 3.8 761,047 44.5
Loans and leases held for sale 90,664 114,198 291,871 50,706 134,862 (23,534 ) (20.6 ) (44,198 ) (32.8 )
Loans and leases:
Consumer real estate:
First mortgage lien 2,444,380 1,960,756 1,800,885 1,878,441 1,959,387 483,624 24.7 484,993 24.8
Junior lien   2,965,960     2,940,701     2,830,029     2,843,221     2,860,309   25,259   0.9 105,651   3.7
Total consumer real estate 5,410,340 4,901,457 4,630,914 4,721,662 4,819,696 508,883 10.4 590,644 12.3
Commercial 3,851,303 3,741,164 3,706,401 3,678,181 3,561,193 110,139 2.9 290,110 8.1
Leasing and equipment finance 4,699,740 4,601,887 4,648,049 4,666,239 4,761,661 97,853 2.1 (61,921 ) (1.3 )
Inventory finance 3,107,356 2,880,404 3,005,165 3,457,855 2,739,754 226,952 7.9 367,602 13.4
Auto finance 1,982,277 2,275,134 2,603,260 2,839,363 3,199,639 (292,857 ) (12.9 ) (1,217,362 ) (38.0 )
Other   21,295     21,107     20,957     19,854     22,517   188   0.9 (1,222 ) (5.4 )
Total loans and leases 19,072,311 18,421,153 18,614,746 19,383,154 19,104,460 651,158 3.5 (32,149 ) (0.2 )
Allowance for loan and lease losses (157,446 )   (160,621 )   (165,619 )   (167,703 )   (171,041 ) 3,175   2.0 13,595   7.9
Net loans and leases 18,914,865 18,260,532 18,449,127 19,215,451 18,933,419 654,333 3.6 (18,554 ) (0.1 )
Premises and equipment, net 427,534 429,648 430,956 427,497 421,549 (2,114 ) (0.5 ) 5,985 1.4
Goodwill, net 154,757 154,757 154,757 154,757 154,757
Other assets   814,164     762,583     774,468     743,742     782,552   51,581   6.8 31,612   4.0
Total assets   $ 23,699,612     $ 22,904,785     $ 23,184,462     $ 23,385,052     $ 23,002,159     $ 794,827     3.5   $ 697,453     3.0  
LIABILITIES AND EQUITY:
Deposits:
Checking $ 6,381,327 $ 6,382,667 $ 6,408,174 $ 6,541,409 $ 6,300,127 $ (1,340 ) % $ 81,200 1.3 %
Savings 6,122,257 5,737,144 5,570,979 5,551,155 5,287,606 385,113 6.7 834,651 15.8
Money market 1,609,422 1,504,952 1,562,008 1,609,472 1,764,998 104,470 6.9 (155,576 ) (8.8 )
Certificates of deposit   4,790,680     4,871,748     4,822,112     4,995,636     4,982,271   (81,068 ) (1.7 ) (191,591 ) (3.8 )
Total deposits 18,903,686 18,496,511 18,363,273 18,697,672 18,335,002 407,175 2.2 568,684 3.1
Short-term borrowings 2,324 761 775 (2,324 ) (100.0 )
Long-term borrowings   1,449,472     1,168,400     1,554,569     1,457,976     1,249,449   281,072   24.1 200,023   16.0
Total borrowings 1,449,472 1,170,724 1,555,330 1,458,751 1,249,449 278,748 23.8 200,023 16.0
Accrued expenses and other liabilities   790,194     709,538     761,281     677,679     737,124   80,656   11.4 53,070   7.2
Total liabilities   21,143,352     20,376,773     20,679,884     20,834,102     20,321,575   766,579   3.8 821,777   4.0
Equity:
Preferred stock 169,302 169,302 169,302 169,302 265,821 (96,519 ) (36.3 )
Common stock 1,736 1,736 1,735 1,725 1,722 14 0.8
Additional paid-in capital 885,089 882,321 877,364 878,096 877,217 2,768 0.3 7,872 0.9
Retained earnings, subject to certain restrictions 1,766,994 1,708,410 1,649,449 1,618,041 1,577,311 58,584 3.4 189,683 12.0
Accumulated other comprehensive income (loss) (33,138 ) (65,259 ) (52,811 ) (46,851 ) (18,517 ) 32,121 49.2 (14,621 ) (79.0 )
Treasury stock at cost and other   (252,182 )   (189,652 )   (164,107 )   (97,800 )   (40,797 ) (62,530 ) (33.0 ) (211,385 ) N.M.
Total TCF Financial Corporation stockholders' equity 2,537,801 2,506,858 2,480,932 2,522,513 2,662,757 30,943 1.2 (124,956 ) (4.7 )
Non-controlling interest in subsidiaries   18,459     21,154     23,646     28,437     17,827   (2,695 ) (12.7 ) 632   3.5
Total equity   2,556,260     2,528,012     2,504,578     2,550,950     2,680,584   28,248   1.1 (124,324 ) (4.6 )
Total liabilities and equity   $ 23,699,612     $ 22,904,785     $ 23,184,462     $ 23,385,052     $ 23,002,159     $ 794,827     3.5   $ 697,453     3.0  

N.M. Not Meaningful

 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
 
  Quarter Ended   Change From
(Dollars in thousands) Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31, Sep. 30, 2018   Dec. 31, 2017
2018   2018   2018   2018   2017 $   %   $   %
Interest income:    
Loans and leases $ 270,804 $ 264,678 $ 269,280 $ 260,375 $ 256,633 $ 6,126 2.3 % $ 14,171 5.5 %
Debt securities available for sale 17,097 14,838 12,516 10,123 8,760 2,259 15.2 8,337 95.2
Debt securities held to maturity 965 988 998 1,019 1,048 (23 ) (2.3 ) (83 ) (7.9 )
Loans held for sale and other   4,631     6,678     3,529     3,745     4,187   (2,047 ) (30.7 ) 444   10.6
Total interest income   293,497     287,182     286,323     275,262     270,628     6,315   2.2 22,869   8.5
Interest expense:
Deposits 33,315 27,335 23,953 22,510 20,846 5,980 21.9 12,469 59.8
Borrowings   11,294     10,726     11,571     9,553     7,922   568   5.3 3,372   42.6
Total interest expense   44,609     38,061     35,524     32,063     28,768   6,548   17.2 15,841   55.1
Net interest income 248,888 249,121 250,799 243,199 241,860 (233 ) (0.1 ) 7,028 2.9
Provision for credit losses   18,894     2,270     14,236     11,368     22,259     16,624   N.M. (3,365 ) (15.1 )
Net interest income after provision for credit losses   229,994     246,851     236,563     231,831     219,601   (16,857 ) (6.8 ) 10,393   4.7
Non-interest income:
Leasing and equipment finance 55,311 45,045 42,904 41,847 42,831 10,266 22.8 12,480 29.1
Fees and service charges 36,206 32,574 32,670 30,751 33,267 3,632 11.1 2,939 8.8
Card revenue 15,078 15,065 14,962 13,759 14,251 13 0.1 827 5.8
ATM revenue 5,054 5,053 4,933 4,650 4,654 1 400 8.6
Gains on sales of loans, net 8,419 8,764 7,192 9,123 13,623 (345 ) (3.9 ) (5,204 ) (38.2 )
Servicing fee income 5,523 6,032 7,484 8,295 9,000 (509 ) (8.4 ) (3,477 ) (38.6 )
Gains (losses) on debt securities, net 167 94 24 63 48 73 77.7 119 N.M.
Other   2,375     3,818     3,934     3,716     3,218   (1,443 ) (37.8 ) (843 ) (26.2 )
Total non-interest income   128,133     116,445     114,103     112,204     120,892   11,688   10.0 7,241   6.0
Non-interest expense:
Compensation and employee benefits 129,521 123,127 120,575 123,840 127,630 6,394 5.2 1,891 1.5
Occupancy and equipment 42,250 42,337 40,711 40,514 39,578 (87 ) (0.2 ) 2,672 6.8
Operating lease depreciation 19,085 19,525 17,945 17,274 16,497 (440 ) (2.3 ) 2,588 15.7
Foreclosed real estate and repossessed assets, net 4,396 3,881 3,857 4,916 4,739 515 13.3 (343 ) (7.2 )
Other   54,706     57,553     88,951     59,436     159,362   (2,847 ) (4.9 ) (104,656 ) (65.7 )
Total non-interest expense   249,958     246,423     272,039     245,980     347,806   3,535   1.4 (97,848 ) (28.1 )
Income (loss) before income tax expense (benefit) 108,169 116,873 78,627 98,055 (7,313 ) (8,704 ) (7.4 ) 115,482 N.M.
Income tax expense (benefit)   20,013     28,034     16,418     21,631     (110,965 ) (8,021 ) (28.6 ) 130,978   N.M.
Income after income tax expense (benefit) 88,156 88,839 62,209 76,424 103,652 (683 ) (0.8 ) (15,496 ) (15.0 )
Income attributable to non-controlling interest   2,504     2,643     3,460     2,663     2,253   (139 ) (5.3 ) 251   11.1
Net income attributable to TCF Financial Corporation 85,652 86,196 58,749 73,761 101,399 (544 ) (0.6 ) (15,747 ) (15.5 )
Preferred stock dividends 2,494 2,494 2,494 4,106 3,746 (1,252 ) (33.4 )
Impact of preferred stock redemption               3,481          
Net income available to common stockholders   $ 83,158     $ 83,702     $ 56,255     $ 66,174     $ 97,653     $ (544 )   (0.6 )   $ (14,495 )   (14.8 )

N.M. Not Meaningful

 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
 
  Year Ended December 31,   Change
(Dollars in thousands, except per share data)   2018   2017 $   %  
Interest income:    
Loans and leases $ 1,065,137 $ 954,246 $ 110,891 11.6 %
Debt securities available for sale 54,574 33,278 21,296 64.0
Debt securities held to maturity 3,970 4,436 (466 ) (10.5 )
Loans held for sale and other   18,583     27,097   (8,514 ) (31.4 )
Total interest income   1,142,264     1,019,057   123,207   12.1
Interest expense:
Deposits 107,113 66,012 41,101 62.3
Borrowings   43,144     27,807   15,337   55.2
Total interest expense   150,257     93,819   56,438   60.2
Net interest income 992,007 925,238 66,769 7.2
Provision for credit losses   46,768     68,443   (21,675 ) (31.7 )
Net interest income after provision for credit losses   945,239     856,795   88,444   10.3
Non-interest income:
Leasing and equipment finance 185,107 145,039 40,068 27.6
Fees and service charges 132,201 131,887 314 0.2
Card revenue 58,864 55,732 3,132 5.6
ATM revenue 19,690 19,624 66 0.3
Gains on sales of loans, net 33,498 42,787 (9,289 ) (21.7 )
Servicing fee income 27,334 41,347 (14,013 ) (33.9 )
Gains (losses) on debt securities, net 348 237 111 46.8
Other   13,843     11,646   2,197   18.9
Total non-interest income   470,885     448,299   22,586   5.0
Non-interest expense:
Compensation and employee benefits 497,063 482,512 14,551 3.0
Occupancy and equipment 165,812 156,909 8,903 5.7
Operating lease depreciation 73,829 55,901 17,928 32.1
Foreclosed real estate and repossessed assets, net 17,050 17,756 (706 ) (4.0 )
Other   260,646     346,856   (86,210 ) (24.9 )
Total non-interest expense   1,014,400     1,059,934   (45,534 ) (4.3 )
Income before income tax expense (benefit) 401,724 245,160 156,564 63.9
Income tax expense (benefit)   86,096     (33,624 ) 119,720   N.M.
Income after income tax expense (benefit) 315,628 278,784 36,844 13.2
Income attributable to non-controlling interest   11,270     10,147   1,123   11.1
Net income attributable to TCF Financial Corporation 304,358 268,637 35,721 13.3
Preferred stock dividends 11,588 19,904 (8,316 ) (41.8 )
Impact of preferred stock redemption   3,481     5,779   (2,298 ) (39.8 )
Net income available to common stockholders   $ 289,289     $ 242,954     $ 46,335     19.1    
 
Earnings per common share:
Basic $ 1.75 $ 1.44 $ 0.31 21.5 %
Diluted 1.74 1.44 0.30 20.8
 
Dividends declared per common share   $ 0.60     $ 0.30     $ 0.30     100.0   %

N.M. Not Meaningful

 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
 
  Quarter Ended December 31,
2018   2017
Average     Yields and   Average     Yields and
(Dollars in thousands)   Balance   Interest (1)   Rates (1)(2)   Balance   Interest (1)   Rates (1)(2)
ASSETS:
Investments and other $ 330,359 $ 3,242 3.90 % $ 303,958 $ 2,349 3.07 %
Debt securities held to maturity 150,016 965 2.58 163,080 1,048 2.57
Debt securities available for sale:
Taxable 1,779,654 12,949 2.91 831,113 4,675 2.25
Tax-exempt(3) 788,806 5,250 2.66 779,964 6,284 3.22
Loans and leases held for sale 86,169 1,389 6.40 113,501 1,838 6.43
Loans and leases:(4)
Consumer real estate:
Fixed-rate 1,962,804 26,309 5.33 1,821,240 25,729 5.61
Variable- and adjustable-rate   3,067,216     52,360   6.77 3,151,183     47,290   5.95
Total consumer real estate 5,030,020 78,669 6.21 4,972,423 73,019 5.83
Commercial:
Fixed-rate 815,626 9,275 4.51 963,703 13,337 5.49
Variable- and adjustable-rate   2,932,739     41,730   5.65 2,573,022     30,382   4.68
Total commercial 3,748,365 51,005 5.40 3,536,725 43,719 4.90
Leasing and equipment finance 4,616,715 58,931 5.11 4,713,015 57,722 4.90
Inventory finance 3,024,961 54,215 7.11 2,688,387 40,753 6.01
Auto finance 2,121,969 28,835 5.39 3,267,855 43,109 5.23
Other   12,599     145   4.55 13,007     157   4.75
Total loans and leases   18,554,629     271,800   5.82 19,191,412     258,479   5.35
Total interest-earning assets 21,689,633 295,595 5.42 21,383,028 274,673 5.11
Other assets(5)   1,464,620   1,437,126  
Total assets   $ 23,154,253   $ 22,820,154  
LIABILITIES AND EQUITY:
Non-interest bearing deposits $ 3,873,023 $ 3,570,846
Interest-bearing deposits:
Checking 2,403,370 248 0.04 2,541,475 114 0.02
Savings 5,922,724 8,114 0.54 5,140,417 2,284 0.18
Money market 1,449,531 3,612 0.99 1,854,442 2,242 0.48
Certificates of deposit   4,818,211     21,341   1.76 5,032,085     16,206   1.28
Total interest-bearing deposits   14,593,836     33,315   0.91 14,568,419     20,846   0.57
Total deposits   18,466,859     33,315   0.72 18,139,265     20,846   0.46
Borrowings:
Short-term borrowings 2,738 19 2.76 3,759 17 1.75
Long-term borrowings   1,344,228     11,275   3.34 1,295,268     7,905   2.43
Total borrowings   1,346,966     11,294   3.34 1,299,027     7,922   2.43
Total interest-bearing liabilities   15,940,802     44,609   1.11 15,867,446     28,768   0.72
Total deposits and borrowings 19,813,825 44,609 0.89 19,438,292 28,768 0.59
Accrued expenses and other liabilities   822,558   790,850  
Total liabilities   20,636,383   20,229,142  
Total TCF Financial Corp. stockholders' equity 2,495,952 2,570,613
Non-controlling interest in subsidiaries   21,918   20,399  
Total equity   2,517,870   2,591,012  
Total liabilities and equity   $ 23,154,253   $ 22,820,154  
Net interest income and margin       $ 250,986     4.60         $ 245,905     4.57  
 
(1)   Interest and yields are presented on a fully tax-equivalent basis.
(2) Annualized
(3) The yield on tax-exempt debt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 21% and 35% for the quarters ended December 31, 2018 and 2017, respectively.
(4) Average balances of loans and leases include non-accrual loans and leases and are presented net of unearned income.
(5) Includes leased equipment and related initial direct costs under operating leases of $292.0 million and $267.8 million for the quarters ended December 31, 2018 and 2017, respectively.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
 
  Year Ended December 31,
2018   2017
Average     Yields and   Average     Yields and
(Dollars in thousands)   Balance   Interest (1)   Rates (1)   Balance   Interest (1)   Rates (1)
ASSETS:
Investments and other $ 319,472 $ 11,964 3.74 % $ 282,507 $ 10,491 3.71 %
Debt securities held to maturity 154,619 3,970 2.57 170,006 4,436 2.61
Debt securities available for sale:
Taxable 1,390,016 37,436 2.69 823,526 18,382 2.23
Tax-exempt(2) 815,540 21,694 2.66 712,530 22,916 3.22
Loans and leases held for sale 103,240 6,619 6.41 208,678 16,606 7.96
Loans and leases:(3)
Consumer real estate:
Fixed-rate 1,790,069 97,850 5.47 1,934,395 109,185 5.64
Variable- and adjustable-rate   3,027,030     196,291   6.48 2,961,449     171,671   5.80
Total consumer real estate 4,817,099 294,141 6.11 4,895,844 280,856 5.74
Commercial:
Fixed-rate 875,551 39,789 4.54 977,698 47,587 4.87
Variable- and adjustable-rate   2,832,471     153,068   5.40 2,455,578     111,886   4.56
Total commercial 3,708,022 192,857 5.20 3,433,276 159,473 4.64
Leasing and equipment finance 4,642,811 230,418 4.96 4,399,138 202,508 4.60
Inventory finance 3,079,059 214,262 6.96 2,646,500 164,386 6.21
Auto finance 2,565,668 136,692 5.33 3,105,326 152,974 4.93
Other   13,603     579   4.26 11,149     571   5.11
Total loans and leases   18,826,262     1,068,949   5.68 18,491,233     960,768   5.20
Total interest-earning assets 21,609,149 1,150,632 5.32 20,688,480 1,033,599 5.00
Other assets(4)   1,452,999   1,363,487  
Total assets   $ 23,062,148   $ 22,051,967  
LIABILITIES AND EQUITY:
Non-interest bearing deposits $ 3,843,494 $ 3,492,233
Interest-bearing deposits:
Checking 2,438,040 714 0.03 2,541,407 379 0.01
Savings 5,621,723 20,009 0.36 4,888,280 4,255 0.09
Money market 1,553,255 11,582 0.75 2,140,553 10,139 0.47
Certificates of deposit   4,897,937     74,808   1.53 4,495,062     51,239   1.14
Total interest-bearing deposits   14,510,955     107,113   0.74 14,065,302     66,012   0.47
Total deposits   18,354,449     107,113   0.58 17,557,535     66,012   0.38
Borrowings:
Short-term borrowings 3,288 77 2.35 5,267 58 1.10
Long-term borrowings   1,412,186     43,067   3.05 1,239,433     27,749   2.24
Total borrowings   1,415,474     43,144   3.05 1,244,700     27,807   2.23
Total interest-bearing liabilities   15,926,429     150,257   0.94 15,310,002     93,819   0.61
Total deposits and borrowings 19,769,923 150,257 0.76 18,802,235 93,819 0.50
Accrued expenses and other liabilities   761,723   713,794  
Total liabilities   20,531,646   19,516,029  
Total TCF Financial Corp. stockholders' equity 2,506,179 2,513,424
Non-controlling interest in subsidiaries   24,323   22,514  
Total equity   2,530,502   2,535,938  
Total liabilities and equity   $ 23,062,148   $ 22,051,967  
Net interest income and margin       $ 1,000,375     4.63         $ 939,780     4.54  
(1)   Interest and yields are presented on a fully tax-equivalent basis.
(2) The yield on tax-exempt debt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 21% and 35% for the years ended December 31, 2018 and 2017, respectively.
(3) Average balances of loans and leases include non-accrual loans and leases and are presented net of unearned income.
(4) Includes leased equipment and related initial direct costs under operating leases of $288.4 million and $224.7 million for the years ended December 31, 2018 and 2017, respectively.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Quarterly Average Balance Sheets (Unaudited)
 
  Quarter Ended   Change From
Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31, Sep. 30, 2018   Dec. 31, 2017
(Dollars in thousands)   2018   2018   2018   2018   2017 $   %   $   %
ASSETS:    
Investments and other $ 330,359 $ 306,257 $ 309,120 $ 332,319 $ 303,958 $ 24,102 7.9 % $ 26,401 8.7 %
Debt securities held to maturity 150,016 153,652 155,779 159,139 163,080 (3,636 ) (2.4 ) (13,064 ) (8.0 )
Debt securities available for sale:
Taxable 1,779,654 1,525,665 1,262,642 981,843 831,113 253,989 16.6 948,541 114.1
Tax-exempt 788,806 823,854 828,131 821,642 779,964 (35,048 ) (4.3 ) 8,842 1.1
Loans and leases held for sale 86,169 216,669 45,525 63,095 113,501 (130,500 ) (60.2 ) (27,332 ) (24.1 )
Loans and leases:(1)
Consumer real estate:
Fixed-rate 1,962,804 1,694,661 1,715,289 1,786,636 1,821,240 268,143 15.8 141,564 7.8
Variable- and adjustable-rate   3,067,216     3,002,225     3,026,310     3,012,036     3,151,183   64,991   2.2 (83,967 ) (2.7 )
Total consumer real estate 5,030,020 4,696,886 4,741,599 4,798,672 4,972,423 333,134 7.1 57,597 1.2
Commercial:
Fixed-rate 815,626 856,324 900,462 931,275 963,703 (40,698 ) (4.8 ) (148,077 ) (15.4 )
Variable- and adjustable-rate   2,932,739     2,921,471     2,802,059     2,669,745     2,573,022   11,268   0.4 359,717   14.0
Total commercial 3,748,365 3,777,795 3,702,521 3,601,020 3,536,725 (29,430 ) (0.8 ) 211,640 6.0
Leasing and equipment finance 4,616,715 4,624,968 4,639,703 4,690,868 4,713,015 (8,253 ) (0.2 ) (96,300 ) (2.0 )
Inventory finance 3,024,961 2,866,460 3,299,996 3,128,290 2,688,387 158,501 5.5 336,574 12.5
Auto finance 2,121,969 2,435,868 2,695,943 3,020,187 3,267,855 (313,899 ) (12.9 ) (1,145,886 ) (35.1 )
Other   12,599     13,547     13,845     14,446     13,007   (948 ) (7.0 ) (408 ) (3.1 )
Total loans and leases   18,554,629     18,415,524     19,093,607     19,253,483     19,191,412   139,105   0.8 (636,783 ) (3.3 )
Total interest-earning assets 21,689,633 21,441,621 21,694,804 21,611,521 21,383,028 248,012 1.2 306,605 1.4
Other assets(2)   1,464,620     1,462,783     1,430,621     1,453,742     1,437,126   1,837   0.1 27,494   1.9
Total assets   $ 23,154,253     $ 22,904,404     $ 23,125,425     $ 23,065,263     $ 22,820,154     $ 249,849     1.1     $ 334,099     1.5  
LIABILITIES AND EQUITY:
Non-interest bearing deposits $ 3,873,023 $ 3,874,421 $ 3,879,048 $ 3,745,745 $ 3,570,846 $ (1,398 ) % $ 302,177 8.5 %
Interest-bearing deposits:
Checking 2,403,370 2,427,288 2,460,709 2,461,548 2,541,475 (23,918 ) (1.0 ) (138,105 ) (5.4 )
Savings 5,922,724 5,620,161 5,542,565 5,395,669 5,140,417 302,563 5.4 782,307 15.2
Money market 1,449,531 1,496,223 1,572,560 1,698,064 1,854,442 (46,692 ) (3.1 ) (404,911 ) (21.8 )
Certificates of deposit   4,818,211     4,868,286     4,909,422     4,998,133     5,032,085   (50,075 ) (1.0 ) (213,874 ) (4.3 )
Total interest-bearing deposits   14,593,836     14,411,958     14,485,256     14,553,414     14,568,419   181,878   1.3 25,417   0.2
Total deposits   18,466,859     18,286,379     18,364,304     18,299,159     18,139,265   180,480   1.0 327,594   1.8
Borrowings:
Short-term borrowings 2,738 3,357 3,116 3,952 3,759 (619 ) (18.4 ) (1,021 ) (27.2 )
Long-term borrowings   1,344,228     1,351,585     1,531,389     1,423,075     1,295,268   (7,357 ) (0.5 ) 48,960   3.8
Total borrowings   1,346,966     1,354,942     1,534,505     1,427,027     1,299,027   (7,976 ) (0.6 ) 47,939   3.7
Total interest-bearing liabilities   15,940,802     15,766,900     16,019,761     15,980,441     15,867,446   173,902   1.1 73,356   0.5
Total deposits and borrowings 19,813,825 19,641,321 19,898,809 19,726,186 19,438,292 172,504 0.9 375,533 1.9
Accrued expenses and other liabilities   822,558     751,100     714,488     758,157     790,850   71,458   9.5 31,708   4.0
Total liabilities   20,636,383     20,392,421     20,613,297     20,484,343     20,229,142   243,962   1.2 407,241   2.0
Total TCF Financial Corporation stockholders' equity 2,495,952 2,488,435 2,483,474 2,557,729 2,570,613 7,517 0.3 (74,661 ) (2.9 )
Non-controlling interest in subsidiaries   21,918     23,548     28,654     23,191     20,399   (1,630 ) (6.9 ) 1,519   7.4
Total equity   2,517,870     2,511,983     2,512,128     2,580,920     2,591,012   5,887   0.2 (73,142 ) (2.8 )
Total liabilities and equity   $ 23,154,253     $ 22,904,404     $ 23,125,425     $ 23,065,263     $ 22,820,154     $ 249,849     1.1     $ 334,099     1.5  
(1)   Average balances of loans and leases include non-accrual loans and leases and are presented net of unearned income.
(2) Includes leased equipment and related initial direct costs under operating leases of $292.0 million, $290.9 million, $288.4 million, $281.9 million and $267.8 million for the fourth, third, second and first quarters of 2018 and the fourth quarter of 2017, respectively.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Quarterly Yields and Rates (1)(2) (Unaudited)
 
  Quarter Ended   Change From
Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31, Sep. 30,   Dec. 31,
    2018   2018   2018   2018   2017 2018   2017
ASSETS:
Investments and other 3.90 % 4.01 % 3.71 % 3.38 % 3.07 % (11 ) bps 83 bps
Debt securities held to maturity 2.58 2.57 2.56 2.56 2.57 1 1
Debt securities available for sale:
Taxable 2.91 2.76 2.59 2.37 2.25 15 66
Tax-exempt(3) 2.66 2.66 2.66 2.66 3.22 (56 )
Loans and leases held for sale 6.40 6.57 5.93 6.22 6.43 (17 ) (3 )
Loans and leases:
Consumer real estate:
Fixed-rate 5.33 5.46 5.52 5.58 5.61 (13 ) (28 )
Variable- and adjustable-rate 6.77 6.57 6.41 6.18 5.95 20 82
Total consumer real estate 6.21 6.17 6.09 5.96 5.83 4 38
Commercial:
Fixed-rate 4.51 4.55 4.49 4.61 5.49 (4 ) (98 )
Variable- and adjustable-rate 5.65 5.45 5.45 5.04 4.68 20 97
Total commercial 5.40 5.25 5.21 4.93 4.90 15 50
Leasing and equipment finance 5.11 5.00 4.93 4.81 4.90 11 21
Inventory finance 7.11 7.16 6.94 6.64 6.01 (5 ) 110
Auto finance 5.39 5.36 5.30 5.28 5.23 3 16
Other 4.55 4.25 4.10 4.16 4.75 30 (20 )
Total loans and leases 5.82 5.73 5.67 5.49 5.35 9 47
 
Total interest-earning assets 5.42 5.36 5.33 5.19 5.11 6 31
 
LIABILITIES:
Interest-bearing deposits:
Checking 0.04 0.04 0.02 0.02 0.02 2
Savings 0.54 0.35 0.27 0.24 0.18 19 36
Money market 0.99 0.78 0.67 0.58 0.48 21 51
Certificates of deposit 1.76 1.56 1.43 1.36 1.28 20 48
Total interest-bearing deposits 0.91 0.75 0.66 0.63 0.57 16 34
Total deposits 0.72 0.59 0.52 0.50 0.46 13 26
Borrowings:
Short-term borrowings 2.76 2.46 2.33 1.99 1.75 30 101
Long-term borrowings 3.34 3.15 3.02 2.70 2.43 19 91
Total borrowings 3.34 3.15 3.02 2.70 2.43 19 91
 
Total interest-bearing liabilities 1.11 0.96 0.89 0.81 0.72 15 39
 
Net interest margin   4.60     4.66     4.67     4.59     4.57     (6 )     3    
(1)   Annualized
(2) Yields are presented on a fully tax-equivalent basis.
(3) The yield on tax-exempt debt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 21% beginning in the first quarter of 2018 and 35% for the fourth quarter of 2017.
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Summary of Credit Quality Data (Unaudited)
 
 
Allowance for Loan and Lease Losses
 
  At Dec. 31,   At Sep. 30,   At Jun. 30,   At Mar. 31,   At Dec. 31,
2018   2018   2018   2018   2017
  % of   % of   % of   % of   % of
(Dollars in thousands)   Balance   Portfolio   Balance   Portfolio   Balance   Portfolio   Balance   Portfolio   Balance   Portfolio
Consumer real estate $ 44,866   0.83 % $ 45,258   0.92 % $ 43,954   0.95 % $ 47,685   1.01 % $ 47,168 0.98 %
Commercial 41,182 1.07 40,470 1.08 40,291 1.09 37,198 1.01 37,195 1.04
Leasing and equipment finance 23,791 0.51 22,926 0.50 22,247 0.48 23,182 0.50 22,528 0.47
Inventory finance 12,456 0.40 11,361 0.39 11,840 0.39 13,253 0.38 13,233 0.48
Auto finance 34,329 1.73 39,852 1.75 46,608 1.79 45,822 1.61 50,225 1.57
Other   822   3.86 754   3.57 679   3.24 563   2.84 692   3.07
Total   $ 157,446       0.83       $ 160,621       0.87       $ 165,619       0.89       $ 167,703       0.87       $ 171,041     0.90  
 
Changes in Allowance for Loan and Lease Losses
 
  Quarter Ended   Change From
Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31, Sep. 30,   Dec. 31,
(In thousands)   2018   2018   2018   2018   2017 2018   2017
Balance, beginning of period $ 160,621 $ 165,619 $ 167,703 $ 171,041 $ 168,244 $ (4,998 ) $ (7,623 )
Charge-offs (27,227 ) (19,448 ) (18,188 ) (19,865 ) (23,865 ) (7,779 ) (3,362 )
Recoveries   5,913     12,658     5,418     5,714     5,580   (6,745 )   333  
Net (charge-offs) recoveries (21,314 ) (6,790 ) (12,770 ) (14,151 ) (18,285 ) (14,524 ) (3,029 )
Provision for credit losses 18,894 2,270 14,236 11,368 22,259 16,624 (3,365 )
Other   (755 )   (478 )   (3,550 )   (555 )   (1,177 ) (277 )   422  
Balance, end of period   $ 157,446     $ 160,621     $ 165,619     $ 167,703     $ 171,041     $ (3,175 )   $ (13,595 )
 
Net Charge-offs
 
  Quarter Ended
Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,
2018   2018   2018   2018   2017
(Dollars in thousands)   Balance   Rate (1)   Balance   Rate (1)   Balance   Rate (1)   Balance   Rate (1)   Balance   Rate (1)
Consumer real estate:          
First mortgage lien $ 123 0.02 % $ (3,721 ) (0.82 )% $ 714 0.16 % $ 790 0.16 % $ 876 0.18 %
Junior lien   (210 ) (0.03 ) (2,709 )   (0.37 ) 64   0.01 327   0.05 (218 ) (0.03 )
Total consumer real estate (87 ) (0.01 ) (6,430 ) (0.55 ) 778 0.07 1,117 0.09 658 0.05
Commercial 3,406 0.36 (8 ) (27 ) (14 ) (378 ) (0.04 )
Leasing and equipment finance 2,067 0.18 1,930 0.17 2,106 0.18 1,340 0.11 4,775 0.41
Inventory finance 4,629 0.61 637 0.09 517 0.06 409 0.05 995 0.15
Auto finance 9,887 1.86 9,485 1.56 8,516 1.26 10,656 1.41 11,111 1.36
Other   1,412   N.M. 1,176     N.M. 880   N.M. 643   N.M. 1,124   N.M.
Total   $ 21,314     0.46     $ 6,790     0.15     $ 12,770     0.27     $ 14,151     0.29     $ 18,285     0.38  

N.M. Not Meaningful

(1)   Annualized net charge-off rate based on average loans and leases
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Summary of Credit Quality Data (Unaudited), Continued
 
 
Over 60-Day Delinquencies as a Percentage of Portfolio (1)
  Change From
  At Dec. 31,   At Sep. 30,   At Jun. 30,   At Mar. 31,   At Dec. 31, Sep. 30,   Dec. 31,
    2018   2018   2018   2018   2017 2018   2017
Consumer real estate:
First mortgage lien 0.19 % 0.18 % 0.20 % 0.23 % 0.25 % 1 bps (6 ) bps
Junior lien 0.04 0.04 0.07 0.06 0.04
Total consumer real estate 0.11 0.10 0.12 0.13 0.13 1 (2 )
Commercial
Leasing and equipment finance 0.23 0.15 0.11 0.11 0.14 8 9
Inventory finance 0.01 0.01 1
Auto finance 0.59 0.41 0.33 0.24 0.28 18 31
Other 0.14 0.30 0.16 0.24 0.04 (16 ) 10
Subtotal 0.15 0.11 0.11 0.09 0.11 4 4
Portfolios acquired with deteriorated credit quality 4.65 16.70 13.48 12.95 13.18 (1,205 ) (853 )
Total delinquencies   0.15     0.12     0.11     0.10     0.12     3       3    
(1)   Excludes non-accrual loans and leases
 
Non-performing Assets
  Change From
  At Dec. 31,   At Sep. 30,   At Jun. 30,   At Mar. 31,   At Dec. 31, Sep. 30, Dec. 31,
(Dollars in thousands)   2018   2018   2018   2018   2017 2018 2017
Non-accrual loans and leases:
Consumer real estate $ 58,765 $ 55,092 $ 49,155 $ 84,237 $ 83,224 $ 3,673 $ (24,459 )
Commercial 15,025 9,888 9,978 11,401 6,785 5,137 8,240
Leasing and equipment finance 15,264 16,061 16,300 19,968 17,089 (797 ) (1,825 )
Inventory finance 8,283 1,640 2,093 3,621 4,116 6,643 4,167
Auto finance 8,578 7,613 7,312 7,199 7,366 965 1,212
Other   3     2     21     2     2   1     1  
Total non-accrual loans and leases 105,918 90,296 84,859 126,428 118,582 15,622 (12,664 )
Other real estate owned   17,403     19,079     16,266     17,179     18,225   (1,676 )   (822 )
Total non-performing assets   $ 123,321     $ 109,375     $ 101,125     $ 143,607     $ 136,807   $ 13,946     $ (13,486 )
 
Non-accrual loans and leases as a percentage of total loans and leases 0.56 % 0.49 % 0.46 % 0.65 % 0.62 % 7 bps (6 ) bps
Non-performing assets as a percentage of total loans and leases and other real estate owned 0.65 0.59 0.54 0.74 0.72 6 (7 )
Allowance for loan and lease losses as a percentage of non-accrual loans and leases   148.65     177.88     195.17     132.65     144.24     (2,923 )   441    
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Capital Information (Unaudited)
 
  At or For the Quarter Ended   Change From
(Dollars in thousands, except per share data) Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31, Sep. 30,   Dec. 31,
2018   2018   2018   2018   2017 2018   2017
Dividends declared per common share $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.075 % 100.0 %
Book value per common share 14.45 14.01 13.79 13.89 13.96 3.1 3.5
Tangible book value per common share(1) 13.38 12.96 12.73 12.84 12.92 3.2 3.6
Common equity ratio 9.99 % 10.21 % 9.97 % 10.06 % 10.42 % (22 ) bps (43 ) bps
Tangible common equity ratio(1) 9.32 9.51 9.28 9.37 9.72 (19 ) (40 )
 
Regulatory Capital: (2)
Common equity Tier 1 capital $ 2,224,183 $ 2,226,820 $ 2,186,528 $ 2,222,390 $ 2,242,410 (0.1 ) % (0.8 ) %
Tier 1 capital 2,408,393 2,412,869 2,375,210 2,414,838 2,522,178 (0.2 ) (4.5 )
Total capital 2,750,581 2,754,615 2,728,076 2,786,637 2,889,323 (0.1 ) (4.8 )
 
Common equity Tier 1 capital ratio 10.82 % 11.04 % 10.60 % 10.57 % 10.79 % (22 ) bps 3 bps
Tier 1 risk-based capital ratio 11.72 11.96 11.51 11.49 12.14 (24 ) (42 )
Total risk-based capital ratio 13.38 13.66 13.22 13.26 13.90 (28 ) (52 )
Tier 1 leverage ratio   10.44     10.58     10.31     10.52     11.12     (14 )     (68 )  
(1)   See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables
(2) December 31, 2018 amounts are preliminary pending completion and filing of the Company's regulatory reports
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
 
Computation of adjusted diluted earnings per common share:
 
    Quarter Ended
Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,
(Dollars in thousands, except per share data)       2018   2018   2018   2018   2017
Net income available to common stockholders $ 83,158 $ 83,702 $ 56,255 $ 66,174 $ 97,653
Less: Earnings allocated to participating securities       12     13     8     9     17
Earnings allocated to common stock (a) 83,146 83,689 56,247 66,165 97,636
Plus: Consumer Financial Protection Bureau ("CFPB")/Office of the Comptroller of the Currency ("OCC") settlement adjustment 32,000
Less: Income tax expense attributable to CFPB/OCC settlement adjustment               6,491        
Adjusted earnings allocated to common stock   (b)   $ 83,146     $ 83,689     $ 81,756     $ 66,165     $ 97,636
 
Weighted-average common shares outstanding for diluted earnings per common share (c) 163,878,805 165,533,225 166,857,640 169,997,146 170,068,986
 
Diluted earnings per common share (a) / (c) $ 0.51 $ 0.51 $ 0.34 $ 0.39 $ 0.57
Adjusted diluted earnings per common share   (b) / (c)   0.51     0.51     0.49     0.39     0.57
 
Computation of net charge-off rate excluding auto finance and recoveries from non-accrual loan sales:
 
    Quarter Ended   Year Ended
Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31, Dec. 31,   Dec. 31,
(Dollars in thousands)       2018   2018   2018   2018   2017 2018   2017
Net charge-offs (d) $ 21,314 $ 6,790 $ 12,770 $ 14,151 $ 18,285 $ 55,025 $ 44,440
Less: Auto finance net charge-offs       9,887     9,485     8,516     10,656     11,111   38,544     34,476  
Total net charge-offs excluding auto finance net charge-offs (e) 11,427 (2,695 ) 4,254 3,495 7,174 16,481 9,964
Plus: Recoveries from consumer real estate non-accrual loan sales           6,626               6,626     13,289  
Total net charge-offs excluding auto finance net charge-offs and recoveries from consumer real estate non-accrual loan sales   (f)   $ 11,427     $ 3,931     $ 4,254     $ 3,495     $ 7,174   $ 23,107     $ 23,253  
 
Average total loans and leases (g) $ 18,554,629 $ 18,415,524 $ 19,093,607 $ 19,253,483 $ 19,191,412 $ 18,826,262 $ 18,491,233
Less: Average auto finance loans       2,121,969     2,435,868     2,695,943     3,020,187     3,267,855   2,565,668     3,105,326  
Average total loans and leases excluding auto finance loans   (h)   $ 16,432,660     $ 15,979,656     $ 16,397,664     $ 16,233,296     $ 15,923,557   $ 16,260,594     $ 15,385,907  
 
Net charge-off rate(1) (d) / (g) 0.46 % 0.15 % 0.27 % 0.29 % 0.38 % 0.29 % 0.24 %
Net charge-off rate excluding auto finance net charge-offs(1) (e) / (h) 0.28 (0.07 ) 0.10 0.09 0.18 0.10 0.06
Net charge-off rate excluding auto finance net charge-offs and recoveries from consumer real estate non-accrual loan sales(1)   (f) / (h)   0.28     0.10     0.10     0.09     0.18     0.14     0.15  
(1)   QTD ratios are annualized
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited), Continued
 
Computation of adjusted return on average common equity, return on average tangible common equity and adjusted return on average tangible common equity:
 
    Quarter Ended   Year Ended
Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31, Dec. 31,
(Dollars in thousands)       2018   2018   2018   2018   2017 2018
Net income available to common stockholders (a) $ 83,158 $ 83,702 $ 56,255 $ 66,174 $ 97,653 $ 289,289
Plus: Goodwill impairment 73,041
Plus: Other intangibles amortization and impairment 847 913 835 831 1,187 3,426
Less: Income tax expense attributable to other intangibles amortization and impairment       198     220     201     199     530     801  
Adjusted net income available to common stockholders   (b)   $ 83,807     $ 84,395     $ 56,889     $ 66,806     $ 171,351   $ 291,914  
 
Net income available to common stockholders adjusted for CFPB/OCC settlement:
Net income available to common stockholders $ 83,158 $ 83,702 $ 56,255 $ 66,174 $ 97,653 $ 289,289
Plus: CFPB/OCC settlement adjustment 32,000 32,000
Less: Income tax expense attributable to CFPB/OCC settlement adjustment               6,491           6,491  
Net income available to common stockholders adjusted for CFPB/OCC settlement (c) 83,158 83,702 81,764 66,174 97,653 314,798
Plus: Goodwill impairment 73,041
Plus: Other intangibles amortization and impairment 847 913 835 831 1,187 3,426
Less: Income tax expense attributable to other intangibles amortization and impairment       198     220     201     199     530   801  
Adjusted net income available to common stockholders adjusted for CFPB/OCC settlement   (d)   $ 83,807     $ 84,395     $ 82,398     $ 66,806     $ 171,351   $ 317,423  
 
Average balances:
Total equity $ 2,517,870 $ 2,511,983 $ 2,512,128 $ 2,580,920 $ 2,591,012 $ 2,530,502
Less: Non-controlling interest in subsidiaries       21,918     23,548     28,654     23,191     20,399   24,323  
Total TCF Financial Corporation stockholders' equity 2,495,952 2,488,435 2,483,474 2,557,729 2,570,613 2,506,179
Less: Preferred stock       169,302     169,302     169,302     200,404     265,821   176,971  
Average total common stockholders' equity (e) 2,326,650 2,319,133 2,314,172 2,357,325 2,304,792 2,329,208
Less:
Goodwill, net 154,757 154,757 154,757 154,757 197,734 154,757
Other intangibles, net       20,931     21,798     22,672     23,274     21,901   22,162  
Average tangible common stockholders' equity   (f)   $ 2,150,962     $ 2,142,578     $ 2,136,743     $ 2,179,294     $ 2,085,157   $ 2,152,289  
 
Average total common stockholders' equity adjusted for CFPB/OCC settlement:
Average total common stockholders' equity $ 2,326,650 $ 2,319,133 $ 2,314,172 $ 2,357,325 $ 2,304,792 $ 2,329,208
Plus: CFPB/OCC settlement adjustment to average total common stockholders' equity               4,205           1,048  
Average total common stockholders' equity adjusted for CFPB/OCC settlement (g) 2,326,650 2,319,133 2,318,377 2,357,325 2,304,792 2,330,256
Less:
Goodwill, net 154,757 154,757 154,757 154,757 197,734 154,757
Other intangibles, net       20,931     21,798     22,672     23,274     21,901   22,162  
Adjusted average tangible common stockholders' equity   (h)   $ 2,150,962     $ 2,142,578     $ 2,140,948     $ 2,179,294     $ 2,085,157   $ 2,153,337  
 
ROACE(1) (a) / (e) 14.30 % 14.44 % 9.72 % 11.23 % 16.95 % 12.42 %
Adjusted ROACE(1) (c) / (g) 14.30 14.44 14.11 11.23 16.95 13.51
ROATCE(1) (b) / (f) 15.59 15.76 10.65 12.26 32.87 13.56
Adjusted ROATCE(1)   (d) / (h)   15.59     15.76     15.39     12.26     32.87     14.74  
(1)   QTD ratios are annualized
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited), Continued
 

Computation of adjusted efficiency ratio:

 
    Quarter Ended   Year Ended
Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31, Dec. 31,
(Dollars in thousands)       2018   2018   2018   2018   2017 2018
Non-interest expense (a) $ 249,958 $ 246,423 $ 272,039 $ 245,980 $ 347,806 $ 1,014,400
Less: CFPB/OCC settlement adjustment               32,000           32,000  
Adjusted non-interest expense   (b)   249,958     246,423     240,039     245,980     347,806  

 

982,400  

 

Net interest income $ 248,888 $ 249,121 $ 250,799 $ 243,199 $ 241,860 $ 992,007
Non-interest income       128,133     116,445     114,103     112,204     120,892   470,885  
Total revenue  

(c)

  377,021     365,566     364,902     355,403     362,752   1,462,892  
 
Efficiency ratio

(a) / (c)

66.30 % 67.41 % 74.55 % 69.21 % 95.88 % 69.34 %
Adjusted efficiency ratio  

(b) / (c)

  66.30     67.41     65.78     69.21     95.88     67.15  
 
 
Computation of tangible common equity ratio and tangible book value per common share:
           
At Dec. 31, At Sep. 30, At Jun. 30, At Mar. 31, At Dec. 31,
(Dollars in thousands, except per share data)       2018   2018   2018   2018   2017
Total equity $ 2,556,260 $ 2,528,012 $ 2,504,578 $ 2,550,950 $ 2,680,584
Less: Non-controlling interest in subsidiaries       18,459     21,154     23,646     28,437     17,827  
Total TCF Financial Corporation stockholders' equity 2,537,801 2,506,858 2,480,932 2,522,513 2,662,757
Less: Preferred stock       169,302     169,302     169,302     169,302     265,821  
Total common stockholders' equity

(d)

2,368,499 2,337,556 2,311,630 2,353,211 2,396,936
Less:
Goodwill, net 154,757 154,757 154,757 154,757 154,757
Other intangibles, net       20,518     21,364     22,247     23,112     23,687  
Tangible common stockholders' equity  

(e)

  $ 2,193,224     $ 2,161,435     $ 2,134,626     $ 2,175,342     $ 2,218,492  
 
Total assets

(f)

$ 23,699,612 $ 22,904,785 $ 23,184,462 $ 23,385,052 $ 23,002,159
Less:
Goodwill, net 154,757 154,757 154,757 154,757 154,757
Other intangibles, net       20,518     21,364     22,247     23,112     23,687  
Tangible assets  

(g)

  $ 23,524,337     $ 22,728,664     $ 23,007,458     $ 23,207,183     $ 22,823,715  
 
Common stock shares outstanding

(h)

163,923,227 166,812,524 167,684,971 169,415,834 171,669,419
 
Common equity ratio

(d) / (f)

9.99 % 10.21 % 9.97 % 10.06 % 10.42 %
Tangible common equity ratio

(e) / (g)

9.32 9.51 9.28 9.37 9.72
 
Book value per common share

(d) / (h)

$ 14.45 $ 14.01 $ 13.79 $ 13.89 $ 13.96
Tangible book value per common share  

(e) / (h)

  13.38     12.96     12.73     12.84     12.92  

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(Media)
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news@tcfbank.com

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