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TCF Reports Quarterly Net Income of $86.2 Million and Diluted Earnings Per Common Share of 51 Cents

Third Quarter Observations

  • Revenue of $365.6 million, up 6.5% from the third quarter of 2017
  • Provision for credit losses of $2.3 million, which was impacted by a $6.6 million recovery on previous charge-offs related to the sale of consumer real estate non-accrual loans
  • Net interest margin of 4.66%, down 1 basis point from the second quarter of 2018, up 5 basis points from the third quarter of 2017
  • Efficiency ratio of 67.41%, down 105 basis points from the third quarter of 2017
  • Average interest-earning asset growth of 4.6% from the third quarter of 2017
  • Period-end loans and leases of $18.4 billion, down 3.0% from September 30, 2017; period-end loans and leases, excluding auto finance, up 2.5%(1) from September 30, 2017
  • Auto finance portfolio run-off of $328.1 million in the third quarter of 2018 and $924.5 million year-to-date
  • Return on average common equity ("ROACE") of 14.44%
  • Return on average tangible common equity ("ROATCE") of 15.76%(2)
  • Repurchased 0.9 million shares of common stock at a cost of $24.0 million
Monday, October 22, 2018 7:00 am CDT

Dateline:

WAYZATA, Minn.

Public Company Information:

NYSE:
TCF
"Our strong third quarter financial results were highlighted by positive year-over-year operating leverage and improving returns on capital"

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

 
Summary of Financial Results
  At or For the Quarter Ended   Change From
Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30, Jun. 30,   Sep. 30,
(Dollars in thousands, except per share data)   2018   2018   2018   2017   2017 2018   2017
Net income attributable to TCF $ 86,196 $ 58,749 $ 73,761 $ 101,399 $ 60,528 46.7 % 42.4 %
Net interest income 249,121 250,799 243,199 241,860 234,103 (0.7 ) 6.4
Basic earnings per common share 0.51 0.34 0.39 0.58 0.29 50.0 75.9
Diluted earnings per common share 0.51 0.34 0.39 0.57 0.29 50.0 75.9
Adjusted diluted earnings per common share(2) 0.51 0.49 0.39 0.57 0.29 4.1 75.9
 
Financial Ratios
Return on average assets(3) 1.55 % 1.08 % 1.33 % 1.82 % 1.15 % 47 bps 40 bps
ROACE(3) 14.44 9.72 11.23 16.95 8.44 472 600
Adjusted ROACE(2)(3) 14.44 14.11 11.23 16.95 8.44 33 600
ROATCE(2)(3) 15.76 10.65 12.26 32.87 9.57 511 619
Adjusted ROATCE(2)(3) 15.76 15.39 12.26 32.87 9.57 37 619
Net interest margin(3) 4.66 4.67 4.59 4.57 4.61 (1 ) 5
Net charge-offs as a percentage of average loans and leases(3) 0.15 0.27 0.29 0.38 0.18 (12 ) (3 )
Non-performing assets as a percentage of total loans and leases and other real estate owned 0.59 0.54 0.74 0.72 0.77 5 (18 )
Efficiency ratio 67.41 74.55 69.21 95.88 68.46 (714 ) (105 )
Adjusted efficiency ratio(2)   67.41     65.78     69.21     95.88     68.46     163       (105 )  
(1)   Calculated by subtracting auto finance loans of $2.3 billion and $3.2 billion at September 30, 2018 and 2017, respectively, from total loans and leases of $18.4 billion and $19.0 billion at September 30, 2018 and 2017, respectively.
(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 $86.2 million for the third quarter of 2018, compared with $60.5 million for the third quarter of 2017 and $58.7 million for the second quarter of 2018. Diluted earnings per common share was 51 cents for the third quarter of 2018, compared with 29 cents for the third quarter of 2017 and 34 cents for the second quarter of 2018.

"Our strong third quarter financial results were highlighted by positive year-over-year operating leverage and improving returns on capital," said Craig R. Dahl, chairman and chief executive officer. "We produced strong revenue growth with disciplined expense management while continuing to lower the risk profile of the Company. Credit trends remained stable, the auto finance portfolio run-off performed as expected and our mix of interest-earning assets improved as we continued to shift toward increasingly more capital efficient assets. Our commitment to increasing return on capital has shown through in our results and we remain focused on delivering value for shareholders."

Net Interest Income and Net Interest Margin

Net interest income was $249.1 million for the third quarter of 2018, an increase of $15.0 million, or 6.4%, from the third quarter of 2017 and a decrease of $1.7 million, or 0.7%, from the second quarter of 2018. Net interest margin was 4.66% for the third quarter of 2018, up 5 basis points from the third quarter of 2017 and down 1 basis point from the second quarter of 2018. The increases in net interest income and net interest margin from the third quarter of 2017 were primarily due to increased average yields and higher average loan balances in the variable- and adjustable-rate loan portfolios, partially offset by increased cost of funds.

Non-interest Income

Non-interest income was $116.4 million for the third quarter of 2018, an increase of $7.2 million, or 6.6%, from the third quarter of 2017 and an increase of $2.3 million, or 2.1%, from the second quarter of 2018. The increases from both periods were primarily due to increased leasing and equipment finance non-interest income, partially offset by decreased servicing fee income due to the continued run-off in the auto finance serviced for others portfolio.

Non-interest Expense

Non-interest expense was $246.4 million for the third quarter of 2018, an increase of $11.4 million, or 4.8%, from the third quarter of 2017 and a decrease of $25.6 million, or 9.4%, from the second quarter of 2018. The increase from the third quarter of 2017 was primarily due to an increase in compensation and employee benefits expense. The second quarter of 2018 included $32.0 million of expenses related to the settlement with the Bureau of Consumer Financial Protection and the Office of the Comptroller of the Currency.

Income Tax Expense

The Company's effective income tax rate was 24.0% for the third quarter of 2018, compared with 32.7% for the third quarter of 2017 and 20.9% for the second quarter of 2018. The effective income tax rate was primarily impacted by the change in the corporate statutory tax rate as a result of the Tax Cuts and Jobs Act.

Credit Quality

Provision for credit losses The provision for credit losses was $2.3 million for the third quarter of 2018, a decrease of $12.3 million, or 84.4%, from the third quarter of 2017 and a decrease of $12.0 million, or 84.1%, from the second quarter of 2018. The decreases from both periods were primarily due to run-off in and maturation of the auto finance portfolio, as well as the recovery of $6.6 million on previous charge-offs related to the sale of consumer real estate non-accrual loans.

Net charge-off rate The annualized net charge-off rate was 0.15% for the third quarter of 2018, down 3 basis points from the third quarter of 2017 and down 12 basis points from the second quarter of 2018. The decreases from both periods were primarily due to the recovery of $6.6 million on previous charge-offs related to the sale of consumer real estate non-accrual loans, partially offset by the increased auto finance net charge-off rate resulting from a lower average loan balance due to the continued run-off of the portfolio. The annualized net charge-off rate excluding auto finance net charge-offs of $9.5 million and the recovery of $6.6 million on previous charge-offs related to the sale of consumer real estate non-accrual loans was 0.10%.

Over 60-day delinquency rate The over 60-day delinquency rate, excluding non-accrual loans and leases, was 0.12% at September 30, 2018, down 1 basis point from the September 30, 2017 rate and up 1 basis point from the June 30, 2018 rate.

Non-performing assets Non-performing assets, consisting of non-accrual loans and leases and other real estate owned, were $109.4 million at September 30, 2018, a decrease of $36.6 million, or 25.1%, from September 30, 2017 and an increase of $8.3 million, or 8.2%, from June 30, 2018. The decrease from September 30, 2017 was primarily due to the $34.7 million sale of consumer real estate non-accrual loans in the third quarter of 2018.

Balance Sheet

Average debt securities held to maturity and debt securities available for sale The total average debt securities portfolio was $2.5 billion for the third quarter of 2018, an increase of $773.2 million, or 44.7%, from the third quarter of 2017 and an increase of $256.6 million, or 11.4%, from the second quarter of 2018.

Average loans and leases Average loans and leases were $18.4 billion for the third quarter of 2018, an increase of $17.0 million, or 0.1%, from the third quarter of 2017 and a decrease of $678.1 million, or 3.6%, from the second quarter of 2018. The decrease from the second quarter of 2018 was primarily due to the seasonal decrease in the inventory finance portfolio and the continued run-off of the auto finance portfolio. Average loans and leases, excluding auto finance were $16.0 billion, an increase of $861.7 million, or 5.7%, from the third quarter of 2017 and a decrease of $418.0 million, or 2.5%, from the second quarter of 2018.

Average deposits Average deposits were $18.3 billion for the third quarter of 2018, an increase of $637.2 million, or 3.6%, from the third quarter of 2017 and a decrease of $77.9 million, or 0.4%, from the second quarter of 2018.

Capital TCF continues to maintain strong capital ratios, with a common equity Tier 1 capital ratio of 11.04%. TCF repurchased $24.0 million of common stock during the quarter and had the authority to repurchase an additional $141.0 million in aggregate value of shares as of September 30, 2018 pursuant to its share repurchase program.

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 22, 2018 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, 2018, TCF had $22.9 billion in total assets and 315 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, 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.

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) Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, 2018   Sep. 30, 2017
  2018   2018   2018   2017   2017 $   %   $   %
ASSETS:  
Cash and due from banks $ 569,968 $ 581,876 $ 588,893 $ 621,782 $ 711,734 $ (11,908 ) (2.0 )% $ (141,766 ) (19.9 )%
Investments 80,672 95,661 91,661 82,644 87,690 (14,989 ) (15.7 ) (7,018 ) (8.0 )
Debt securities held to maturity 152,881 155,962 158,099 161,576 165,315 (3,081 ) (2.0 ) (12,434 ) (7.5 )
Debt securities available for sale 2,379,546 2,249,784 1,954,246 1,709,018 1,598,163 129,762 5.8 781,383 48.9
Loans and leases held for sale 114,198 291,871 50,706 134,862 254,903 (177,673 ) (60.9 ) (140,705 ) (55.2 )
Loans and leases:
Consumer real estate:
First mortgage lien 1,960,756 1,800,885 1,878,441 1,959,387 1,953,199 159,871 8.9 7,557 0.4
Junior lien   2,940,701     2,830,029     2,843,221     2,860,309     2,977,613   110,672   3.9 (36,912 ) (1.2 )
Total consumer real estate 4,901,457 4,630,914 4,721,662 4,819,696 4,930,812 270,543 5.8 (29,355 ) (0.6 )
Commercial 3,741,164 3,706,401 3,678,181 3,561,193 3,489,680 34,763 0.9 251,484 7.2
Leasing and equipment finance 4,601,887 4,648,049 4,666,239 4,761,661 4,730,931 (46,162 ) (1.0 ) (129,044 ) (2.7 )
Inventory finance 2,880,404 3,005,165 3,457,855 2,739,754 2,576,077 (124,761 ) (4.2 ) 304,327 11.8
Auto finance 2,275,134 2,603,260 2,839,363 3,199,639 3,240,413 (328,126 ) (12.6 ) (965,279 ) (29.8 )
Other   21,107     20,957     19,854     22,517     20,439   150   0.7 668   3.3
Total loans and leases 18,421,153 18,614,746 19,383,154 19,104,460 18,988,352 (193,593 ) (1.0 ) (567,199 ) (3.0 )
Allowance for loan and lease losses   (160,621 )   (165,619 )   (167,703 )   (171,041 )   (168,244 ) 4,998   3.0 7,623   4.5
Net loans and leases 18,260,532 18,449,127 19,215,451 18,933,419 18,820,108 (188,595 ) (1.0 ) (559,576 ) (3.0 )
Premises and equipment, net 429,648 430,956 427,497 421,549 425,112 (1,308 ) (0.3 ) 4,536 1.1
Goodwill, net 154,757 154,757 154,757 154,757 227,798 (73,041 ) (32.1 )
Other assets   762,583     774,468     743,742     782,552     714,215   (11,885 ) (1.5 ) 48,368   6.8
Total assets   $ 22,904,785     $ 23,184,462     $ 23,385,052     $ 23,002,159     $ 23,005,038     $ (279,677 )   (1.2 )   $ (100,253 )   (0.4 )
LIABILITIES AND EQUITY:
Deposits:
Checking $ 6,382,667 $ 6,408,174 $ 6,541,409 $ 6,300,127 $ 6,197,608 $ (25,507 ) (0.4 )% $ 185,059 3.0 %
Savings 5,737,144 5,570,979 5,551,155 5,287,606 4,972,529 166,165 3.0 764,615 15.4
Money market 1,504,952 1,562,008 1,609,472 1,764,998 1,965,291 (57,056 ) (3.7 ) (460,339 ) (23.4 )
Certificates of deposit   4,871,748     4,822,112     4,995,636     4,982,271     4,972,058   49,636   1.0 (100,310 ) (2.0 )
Total deposits 18,496,511 18,363,273 18,697,672 18,335,002 18,107,486 133,238 0.7 389,025 2.1
Short-term borrowings 2,324 761 775 1,563 N.M. 2,324 N.M.
Long-term borrowings   1,168,400     1,554,569     1,457,976     1,249,449     1,382,588   (386,169 ) (24.8 ) (214,188 ) (15.5 )
Total borrowings 1,170,724 1,555,330 1,458,751 1,249,449 1,382,588 (384,606 ) (24.7 ) (211,864 ) (15.3 )
Accrued expenses and other liabilities   709,538     761,281     677,679     737,124     918,450   (51,743 ) (6.8 ) (208,912 ) (22.7 )
Total liabilities   20,376,773     20,679,884     20,834,102     20,321,575     20,408,524   (303,111 ) (1.5 ) (31,751 ) (0.2 )
Equity:
Preferred stock 169,302 169,302 169,302 265,821 265,967 (96,665 ) (36.3 )
Common stock 1,736 1,735 1,725 1,722 1,719 1 0.1 17 1.0
Additional paid-in capital 882,321 877,364 878,096 877,217 864,632 4,957 0.6 17,689 2.0
Retained earnings, subject to certain restrictions 1,708,410 1,649,449 1,618,041 1,577,311 1,488,966 58,961 3.6 219,444 14.7
Accumulated other comprehensive income (loss) (65,259 ) (52,811 ) (46,851 ) (18,517 ) (13,809 ) (12,448 ) (23.6 ) (51,450 ) N.M.
Treasury stock at cost and other   (189,652 )   (164,107 )   (97,800 )   (40,797 )   (30,867 ) (25,545 ) (15.6 ) (158,785 ) N.M.
Total TCF Financial Corporation stockholders' equity 2,506,858 2,480,932 2,522,513 2,662,757 2,576,608 25,926 1.0 (69,750 ) (2.7 )
Non-controlling interest in subsidiaries   21,154     23,646     28,437     17,827     19,906   (2,492 ) (10.5 ) 1,248   6.3
Total equity   2,528,012     2,504,578     2,550,950     2,680,584     2,596,514   23,434   0.9 (68,502 ) (2.6 )
Total liabilities and equity   $ 22,904,785     $ 23,184,462     $ 23,385,052     $ 23,002,159     $ 23,005,038     $ (279,677 )   (1.2 )   $ (100,253 )   (0.4 )

N.M. Not Meaningful

 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
                 
Quarter Ended Change From
(Dollars in thousands) Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, 2018 Sep. 30, 2017
  2018   2018   2018   2017   2017 $   %   $   %
Interest income:
Loans and leases $ 264,678 $ 269,280 $ 260,375 $ 256,633 $ 243,973 $ (4,602 ) (1.7 )% $ 20,705 8.5 %
Debt securities available for sale 14,838 12,516 10,123 8,760 8,486 2,322 18.6 6,352 74.9
Debt securities held to maturity 988 998 1,019 1,048 1,073 (10 ) (1.0 ) (85 ) (7.9 )
Loans held for sale and other   6,678     3,529     3,745     4,187     4,073   3,149   89.2 2,605   64.0
Total interest income   287,182     286,323     275,262     270,628     257,605   859   0.3 29,577   11.5
Interest expense:
Deposits 27,335 23,953 22,510 20,846 17,015 3,382 14.1 10,320 60.7
Borrowings   10,726     11,571     9,553     7,922     6,487   (845 ) (7.3 ) 4,239   65.3
Total interest expense   38,061     35,524     32,063     28,768     23,502   2,537   7.1 14,559   61.9
Net interest income 249,121 250,799 243,199 241,860 234,103 (1,678 ) (0.7 ) 15,018 6.4
Provision for credit losses   2,270     14,236     11,368     22,259     14,545   (11,966 ) (84.1 ) (12,275 ) (84.4 )
Net interest income after provision for credit losses   246,851     236,563     231,831     219,601     219,558   10,288   4.3 27,293   12.4
Non-interest income:
Fees and service charges 32,574 32,670 30,751 33,267 34,605 (96 ) (0.3 ) (2,031 ) (5.9 )
Card revenue 15,065 14,962 13,759 14,251 14,177 103 0.7 888 6.3
ATM revenue   5,053     4,933     4,650     4,654     5,234   120   2.4 (181 ) (3.5 )
Subtotal 52,692 52,565 49,160 52,172 54,016 127 0.2 (1,324 ) (2.5 )
Gains on sales of auto loans, net 2,216
Gains on sales of consumer real estate loans, net 8,764 7,192 9,123 11,407 8,049 1,572 21.9 715 8.9
Servicing fee income   6,032     7,484     8,295     9,000     9,966   (1,452 ) (19.4 ) (3,934 ) (39.5 )
Subtotal 14,796 14,676 17,418 22,623 18,015 120 0.8 (3,219 ) (17.9 )
Leasing and equipment finance 45,045 42,904 41,847 42,831 34,080 2,141 5.0 10,965 32.2
Other   3,818     3,934     3,716     3,218     2,930   (116 ) (2.9 ) 888   30.3
Fees and other revenue 116,351 114,079 112,141 120,844 109,041 2,272 2.0 7,310 6.7
Gains (losses) on debt securities, net   94     24     63     48     189   70   N.M. (95 ) (50.3 )
Total non-interest income   116,445     114,103     112,204     120,892     109,230   2,342   2.1 7,215   6.6
Non-interest expense:
Compensation and employee benefits 123,127 120,575 123,840 127,630 114,954 2,552 2.1 8,173 7.1
Occupancy and equipment 42,337 40,711 40,514 39,578 38,766 1,626 4.0 3,571 9.2
Other   57,989     89,084     58,819     159,019     61,581   (31,095 ) (34.9 ) (3,592 ) (5.8 )
Subtotal 223,453 250,370 223,173 326,227 215,301 (26,917 ) (10.8 ) 8,152 3.8
Operating lease depreciation 19,525 17,945 17,274 16,497 15,696 1,580 8.8 3,829 24.4
Foreclosed real estate and repossessed assets, net 3,881 3,857 4,916 4,739 3,829 24 0.6 52 1.4
Other credit costs, net   (436 )   (133 )   617     343     209   (303 ) N.M. (645 ) N.M.
Total non-interest expense   246,423     272,039     245,980     347,806     235,035   (25,616 ) (9.4 ) 11,388   4.8
Income (loss) before income tax expense (benefit) 116,873 78,627 98,055 (7,313 ) 93,753 38,246 48.6 23,120 24.7
Income tax expense (benefit)   28,034     16,418     21,631     (110,965 )   30,704   11,616   70.8 (2,670 ) (8.7 )
Income after income tax expense (benefit) 88,839 62,209 76,424 103,652 63,049 26,630 42.8 25,790 40.9
Income attributable to non-controlling interest   2,643     3,460     2,663     2,253     2,521   (817 ) (23.6 ) 122   4.8
Net income attributable to TCF Financial Corporation 86,196 58,749 73,761 101,399 60,528 27,447 46.7 25,668 42.4
Preferred stock dividends 2,494 2,494 4,106 3,746 6,464 (3,970 ) (61.4 )
Impact of preferred stock redemption or notice to redeem preferred stock           3,481         5,779     (5,779 ) (100.0 )
Net income available to common stockholders   $ 83,702     $ 56,255     $ 66,174     $ 97,653     $ 48,285     $ 27,447     48.8     $ 35,417     73.3  

N.M. Not Meaningful

 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
 
  Nine Months Ended  
September 30, Change
(Dollars in thousands, except per share data)   2018   2017 $   %  
Interest income:    
Loans and leases $ 794,333 $ 697,613 $ 96,720 13.9 %
Debt securities available for sale 37,477 24,518 12,959 52.9
Debt securities held to maturity 3,005 3,388 (383 ) (11.3 )
Loans held for sale and other   13,952     22,910   (8,958 ) (39.1 )
Total interest income   848,767     748,429   100,338   13.4
Interest expense:
Deposits 73,798 45,166 28,632 63.4
Borrowings   31,850     19,885   11,965   60.2
Total interest expense   105,648     65,051   40,597   62.4
Net interest income 743,119 683,378 59,741 8.7
Provision for credit losses   27,874     46,184   (18,310 ) (39.6 )
Net interest income after provision for credit losses   715,245     637,194   78,051   12.2
Non-interest income:
Fees and service charges 95,995 98,620 (2,625 ) (2.7 )
Card revenue 43,786 41,481 2,305 5.6
ATM revenue   14,636     14,970   (334 ) (2.2 )
Subtotal 154,417 155,071 (654 ) (0.4 )
Gains on sales of auto loans, net 3,244 (3,244 ) (100.0 )
Gains on sales of consumer real estate loans, net 25,079 25,920 (841 ) (3.2 )
Servicing fee income   21,811     32,347   (10,536 ) (32.6 )
Subtotal 46,890 61,511 (14,621 ) (23.8 )
Leasing and equipment finance 129,796 102,208 27,588 27.0
Other   11,468     8,428   3,040   36.1
Fees and other revenue 342,571 327,218 15,353 4.7
Gains (losses) on debt securities, net   181     189   (8 ) (4.2 )
Total non-interest income   342,752     327,407   15,345   4.7
Non-interest expense:
Compensation and employee benefits 367,542 354,882 12,660 3.6
Occupancy and equipment 123,562 117,331 6,231 5.3
Other   205,892     187,160   18,732   10.0
Subtotal 696,996 659,373 37,623 5.7
Operating lease depreciation 54,744 39,404 15,340 38.9
Foreclosed real estate and repossessed assets, net 12,654 13,017 (363 ) (2.8 )
Other credit costs, net   48     334   (286 ) (85.6 )
Total non-interest expense   764,442     712,128   52,314   7.3
Income before income tax expense 293,555 252,473 41,082 16.3
Income tax expense   66,083     77,341   (11,258 ) (14.6 )
Income after income tax expense 227,472 175,132 52,340 29.9
Income attributable to non-controlling interest   8,766     7,894   872   11.0
Net income attributable to TCF Financial Corporation 218,706 167,238 51,468 30.8
Preferred stock dividends 9,094 16,158 (7,064 ) (43.7 )
Impact of preferred stock redemption or notice to redeem preferred stock   3,481     5,779   (2,298 ) (39.8 )
Net income available to common stockholders   $ 206,131     $ 145,301     $ 60,830     41.9    
 
Earnings per common share:
Basic $ 1.24 $ 0.86 $ 0.38 44.2 %
Diluted 1.23 0.86 0.37 43.0
 
Dividends declared per common share   $ 0.45     $ 0.225     $ 0.225     100.0   %
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
 
  Quarter Ended September 30,
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 $ 306,257 $ 3,089 4.01 % $ 279,839 $ 2,679 3.80 %
Debt securities held to maturity 153,652 988 2.57 166,883 1,073 2.57
Debt securities available for sale:
Taxable 1,525,665 10,511 2.76 825,192 4,619 2.24
Tax-exempt(3) 823,854 5,478 2.66 737,859 5,949 3.22
Loans and leases held for sale 216,669 3,589 6.57 96,143 1,394 5.75
Loans and leases:(4)
Consumer real estate:
Fixed-rate 1,694,661 23,316 5.46 1,872,607 26,490 5.61
Variable- and adjustable-rate   3,002,225     49,719   6.57 2,964,493     44,160   5.91

Total consumer real estate

4,696,886 73,035 6.17 4,837,100 70,650 5.80
Commercial:
Fixed-rate 856,324 9,830 4.55 980,262 11,411 4.62
Variable- and adjustable-rate   2,921,471     40,134   5.45 2,493,163     29,915   4.76
Total commercial 3,777,795 49,964 5.25 3,473,425 41,326 4.72
Leasing and equipment finance 4,624,968 57,844 5.00 4,316,434 48,874 4.53
Inventory finance 2,866,460 51,714 7.16 2,479,416 41,922 6.71
Auto finance 2,435,868 32,940 5.36 3,280,612 42,785 5.17
Other   13,547     144   4.25 11,567     146   5.03
Total loans and leases   18,415,524     265,641   5.73 18,398,554     245,703   5.31
Total interest-earning assets 21,441,621 289,296 5.36 20,504,470 261,417 5.07
Other assets(5)   1,462,783   1,434,957  
Total assets   $ 22,904,404   $ 21,939,427  
LIABILITIES AND EQUITY:
Non-interest bearing deposits $ 3,874,421 $ 3,521,044
Interest-bearing deposits:
Checking 2,427,288 234 0.04 2,539,211 99 0.02
Savings 5,620,161 4,994 0.35 4,846,090 932 0.08
Money market 1,496,223 2,941 0.78 2,106,814 2,478 0.47
Certificates of deposit   4,868,286     19,166   1.56 4,636,007     13,506   1.16
Total interest-bearing deposits   14,411,958     27,335   0.75 14,128,122     17,015   0.48
Total deposits   18,286,379     27,335   0.59 17,649,166     17,015   0.38
Borrowings:
Short-term borrowings 3,357 21 2.46 6,448 21 1.33
Long-term borrowings   1,351,585     10,705   3.15 983,004     6,466   2.62
Total borrowings   1,354,942     10,726   3.15 989,452     6,487   2.62
Total interest-bearing liabilities   15,766,900     38,061   0.96 15,117,574     23,502   0.62
Total deposits and borrowings 19,641,321 38,061 0.77 18,638,618 23,502 0.50
Accrued expenses and other liabilities   751,100   723,792  
Total liabilities   20,392,421   19,362,410  
Total TCF Financial Corp. stockholders' equity 2,488,435 2,554,667
Non-controlling interest in subsidiaries   23,548   22,350  
Total equity   2,511,983   2,577,017  
Total liabilities and equity   $ 22,904,404   $ 21,939,427  
Net interest income and margin       $ 251,235     4.66         $ 237,915     4.61  
(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 September 30, 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 $290.9 million and $249.0 million for the quarters ended September 30, 2018 and 2017, respectively.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
           
Nine Months Ended September 30,
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 $ 315,803 $ 8,722 3.69 % $ 275,278 $ 8,142 3.95 %
Debt securities held to maturity 156,170 3,005 2.57 172,341 3,388 2.62
Debt securities available for sale:
Taxable 1,258,708 24,487 2.59 820,968 13,707 2.23
Tax-exempt(3) 824,551 16,444 2.66 689,807 16,632 3.21
Loans and leases held for sale 108,992 5,230 6.41 240,753 14,768 8.20
Loans and leases:(4)
Consumer real estate:
Fixed-rate 1,731,858 71,541 5.52 1,972,528 83,456 5.66
Variable- and adjustable-rate   3,013,488     143,931   6.39 2,897,509     124,381   5.74
Total consumer real estate 4,745,346 215,472 6.07 4,870,037 207,837 5.71
Commercial:
Fixed-rate 895,746 30,514 4.55 982,414 34,250 4.66
Variable- and adjustable-rate   2,798,680     111,338   5.32 2,415,999     81,504   4.51
Total commercial 3,694,426 141,852 5.13 3,398,413 115,754 4.55
Leasing and equipment finance 4,651,605 171,487 4.92 4,293,364 144,786 4.50
Inventory finance 3,097,290 160,047 6.91 2,632,385 123,633 6.28
Auto finance 2,715,192 107,857 5.31 3,050,555 109,865 4.82
Other   13,943     434   4.17 10,520     414   5.27
Total loans and leases   18,917,802     797,149   5.63 18,255,274     702,289   5.14
Total interest-earning assets 21,582,026 855,037 5.29 20,454,421 758,926 4.96
Other assets(5)   1,449,082   1,338,670  
Total assets   $ 23,031,108   $ 21,793,091  
LIABILITIES AND EQUITY:
Non-interest bearing deposits $ 3,833,543 $ 3,465,741
Interest-bearing deposits:
Checking 2,449,723 466 0.03 2,541,384 265 0.01
Savings 5,520,287 11,895 0.29 4,803,310 1,971 0.05
Money market 1,588,210 7,970 0.67 2,236,972 7,897 0.47
Certificates of deposit   4,924,804     53,467   1.45 4,314,088     35,033   1.09
Total interest-bearing deposits   14,483,024     73,798   0.68 13,895,754     45,166   0.43
Total deposits   18,316,567     73,798   0.54 17,361,495     45,166   0.35
Borrowings:
Short-term borrowings 3,473 58 2.24 5,776 41 0.95
Long-term borrowings   1,435,088     31,792   2.96 1,220,615     19,844   2.17
Total borrowings   1,438,561     31,850   2.96 1,226,391     19,885   2.16
Total interest-bearing liabilities   15,921,585     105,648   0.89 15,122,145     65,051   0.57
Total deposits and borrowings 19,755,128 105,648 0.71 18,587,886 65,051 0.47
Accrued expenses and other liabilities   741,222   687,826  
Total liabilities   20,496,350   19,275,712  
Total TCF Financial Corp. stockholders' equity 2,509,625 2,494,152
Non-controlling interest in subsidiaries   25,133   23,227  
Total equity   2,534,758   2,517,379  
Total liabilities and equity   $ 23,031,108   $ 21,793,091  
Net interest income and margin       $ 749,389     4.64         $ 693,875     4.53  
(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 nine month periods ended September 30, 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 $287.1 million and $210.2 million for the nine month periods ended September 30, 2018 and 2017, respectively.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Quarterly Average Balance Sheets (Unaudited)
                 
Quarter Ended Change From
Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, 2018 Sep. 30, 2017
(Dollars in thousands)   2018   2018   2018   2017   2017 $   %   $   %
ASSETS:
Investments and other $ 306,257 $ 309,120 $ 332,319 $ 303,958 $ 279,839 $ (2,863 ) (0.9 )% $ 26,418 9.4 %
Debt securities held to maturity 153,652 155,779 159,139 163,080 166,883 (2,127 ) (1.4 ) (13,231 ) (7.9 )
Debt securities available for sale:
Taxable 1,525,665 1,262,642 981,843 831,113 825,192 263,023 20.8 700,473 84.9
Tax-exempt 823,854 828,131 821,642 779,964 737,859 (4,277 ) (0.5 ) 85,995 11.7
Loans and leases held for sale 216,669 45,525 63,095 113,501 96,143 171,144 N.M. 120,526 125.4
Loans and leases:(1)
Consumer real estate:
Fixed-rate 1,694,661 1,715,289 1,786,636 1,821,240 1,872,607 (20,628 ) (1.2 ) (177,946 ) (9.5 )
Variable- and adjustable-rate   3,002,225     3,026,310     3,012,036     3,151,183     2,964,493   (24,085 ) (0.8 ) 37,732   1.3
Total consumer real estate 4,696,886 4,741,599 4,798,672 4,972,423 4,837,100 (44,713 ) (0.9 ) (140,214 ) (2.9 )
Commercial:
Fixed-rate 856,324 900,462 931,275 963,703 980,262 (44,138 ) (4.9 ) (123,938 ) (12.6 )
Variable- and adjustable-rate   2,921,471     2,802,059     2,669,745     2,573,022     2,493,163   119,412   4.3 428,308   17.2
Total commercial 3,777,795 3,702,521 3,601,020 3,536,725 3,473,425 75,274 2.0 304,370 8.8
Leasing and equipment finance 4,624,968 4,639,703 4,690,868 4,713,015 4,316,434 (14,735 ) (0.3 ) 308,534 7.1
Inventory finance 2,866,460 3,299,996 3,128,290 2,688,387 2,479,416 (433,536 ) (13.1 ) 387,044 15.6
Auto finance 2,435,868 2,695,943 3,020,187 3,267,855 3,280,612 (260,075 ) (9.6 ) (844,744 ) (25.7 )
Other   13,547     13,845     14,446     13,007     11,567   (298 ) (2.2 ) 1,980   17.1
Total loans and leases   18,415,524     19,093,607     19,253,483     19,191,412     18,398,554   (678,083 ) (3.6 ) 16,970   0.1
Total interest-earning assets 21,441,621 21,694,804 21,611,521 21,383,028 20,504,470 (253,183 ) (1.2 ) 937,151 4.6
Other assets(2)   1,462,783     1,430,621     1,453,742     1,437,126     1,434,957   32,162   2.2 27,826   1.9
Total assets   $ 22,904,404     $ 23,125,425     $ 23,065,263     $ 22,820,154     $ 21,939,427     $ (221,021 )   (1.0 )   $ 964,977     4.4  
LIABILITIES AND EQUITY:
Non-interest bearing deposits $ 3,874,421 $ 3,879,048 $ 3,745,745 $ 3,570,846 $ 3,521,044 $ (4,627 ) (0.1 )% $ 353,377 10.0 %
Interest-bearing deposits:
Checking 2,427,288 2,460,709 2,461,548 2,541,475 2,539,211 (33,421 ) (1.4 ) (111,923 ) (4.4 )
Savings 5,620,161 5,542,565 5,395,669 5,140,417 4,846,090 77,596 1.4 774,071 16.0
Money market 1,496,223 1,572,560 1,698,064 1,854,442 2,106,814 (76,337 ) (4.9 ) (610,591 ) (29.0 )
Certificates of deposit   4,868,286     4,909,422     4,998,133     5,032,085     4,636,007     (41,136 ) (0.8 ) 232,279   5.0
Total interest-bearing deposits   14,411,958     14,485,256     14,553,414     14,568,419     14,128,122     (73,298 ) (0.5 ) 283,836   2.0
Total deposits   18,286,379     18,364,304     18,299,159     18,139,265     17,649,166     (77,925 ) (0.4 ) 637,213   3.6
Borrowings:
Short-term borrowings 3,357 3,116 3,952 3,759 6,448 241 7.7 (3,091 ) (47.9 )
Long-term borrowings   1,351,585     1,531,389     1,423,075     1,295,268     983,004   (179,804 ) (11.7 ) 368,581   37.5
Total borrowings   1,354,942     1,534,505     1,427,027     1,299,027     989,452   (179,563 ) (11.7 ) 365,490   36.9
Total interest-bearing liabilities   15,766,900     16,019,761     15,980,441     15,867,446     15,117,574   (252,861 ) (1.6 ) 649,326   4.3
Total deposits and borrowings 19,641,321 19,898,809 19,726,186 19,438,292 18,638,618 (257,488 ) (1.3 ) 1,002,703 5.4
Accrued expenses and other liabilities   751,100     714,488     758,157     790,850     723,792   36,612   5.1 27,308   3.8
Total liabilities   20,392,421     20,613,297     20,484,343     20,229,142     19,362,410   (220,876 ) (1.1 ) 1,030,011   5.3
Total TCF Financial Corporation stockholders' equity 2,488,435 2,483,474 2,557,729 2,570,613 2,554,667 4,961 0.2 (66,232 ) (2.6 )
Non-controlling interest in subsidiaries   23,548     28,654     23,191     20,399     22,350   (5,106 ) (17.8 ) 1,198   5.4
Total equity   2,511,983     2,512,128     2,580,920     2,591,012     2,577,017   (145 ) (65,034 ) (2.5 )
Total liabilities and equity   $ 22,904,404     $ 23,125,425     $ 23,065,263     $ 22,820,154     $ 21,939,427     $ (221,021 )   (1.0 )   $ 964,977     4.4  
N.M. Not Meaningful
(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 $290.9 million, $288.4 million, $281.9 million, $267.8 million and $249.0 million for the third, second and first quarters of 2018 and the fourth and third quarters of 2017, respectively.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Quarterly Yields and Rates (1)(2) (Unaudited)
 
  Quarter Ended   Change From
Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30, Jun. 30,   Sep. 30,
    2018   2018   2018   2017   2017 2018   2017
ASSETS:
Investments and other 4.01 % 3.71 % 3.38 % 3.07 % 3.80 % 30 bps 21 bps
Debt securities held to maturity 2.57 2.56 2.56 2.57 2.57 1
Debt securities available for sale:
Taxable 2.76 2.59 2.37 2.25 2.24 17 52
Tax-exempt(3) 2.66 2.66 2.66 3.22 3.22 (56 )
Loans and leases held for sale 6.57 5.93 6.22 6.43 5.75 64 82
Loans and leases:
Consumer real estate:
Fixed-rate 5.46 5.52 5.58 5.61 5.61 (6 ) (15 )
Variable- and adjustable-rate 6.57 6.41 6.18 5.95 5.91 16 66
Total consumer real estate 6.17 6.09 5.96 5.83 5.80 8 37
Commercial:
Fixed-rate 4.55 4.49 4.61 5.49 4.62 6 (7 )
Variable- and adjustable-rate 5.45 5.45 5.04 4.68 4.76 69
Total commercial 5.25 5.21 4.93 4.90 4.72 4 53
Leasing and equipment finance 5.00 4.93 4.81 4.90 4.53 7 47
Inventory finance 7.16 6.94 6.64 6.01 6.71 22 45
Auto finance 5.36 5.30 5.28 5.23 5.17 6 19
Other 4.25 4.10 4.16 4.75 5.03 15 (78 )
Total loans and leases 5.73 5.67 5.49 5.35 5.31 6 42
 
Total interest-earning assets 5.36 5.33 5.19 5.11 5.07 3 29
 
LIABILITIES:
Interest-bearing deposits:
Checking 0.04 0.02 0.02 0.02 0.02 2 2
Savings 0.35 0.27 0.24 0.18 0.08 8 27
Money market 0.78 0.67 0.58 0.48 0.47 11 31
Certificates of deposit 1.56 1.43 1.36 1.28 1.16 13 40
Total interest-bearing deposits 0.75 0.66 0.63 0.57 0.48 9 27
Total deposits 0.59 0.52 0.50 0.46 0.38 7 21
Borrowings:
Short-term borrowings 2.46 2.33 1.99 1.75 1.33 13 113
Long-term borrowings 3.15 3.02 2.70 2.43 2.62 13 53
Total borrowings 3.15 3.02 2.70 2.43 2.62 13 53
 
Total interest-bearing liabilities 0.96 0.89 0.81 0.72 0.62 7 34
 
Net interest margin   4.66     4.67     4.59     4.57     4.61     (1 )     5    
(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 all prior periods.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Summary of Credit Quality Data (Unaudited)
 
Allowance for Loan and Lease Losses
 
  At Sep. 30,   At Jun. 30,   At Mar. 31,   At Dec. 31,   At Sep. 30,
2018   2018   2018   2017   2017
  % of   % of   % of   % of   % of
(Dollars in thousands)   Balance

 

Portfolio

  Balance

 

Portfolio

  Balance

 

Portfolio

  Balance

 

Portfolio

  Balance   Portfolio
Consumer real estate $ 45,258 0.92 % $ 43,954 0.95 % $ 47,685 1.01 % $ 47,168 0.98 % $ 47,838 0.97 %
Commercial 40,470 1.08 40,291 1.09 37,198 1.01 37,195 1.04 36,344 1.04
Leasing and equipment finance 22,926 0.50 22,247 0.48 23,182 0.50 22,528 0.47 22,771 0.48
Inventory finance 11,361 0.39 11,840 0.39 13,253 0.38 13,233 0.48 11,978 0.46
Auto finance 39,852 1.75 46,608 1.79 45,822 1.61 50,225 1.57 48,660 1.50
Other   754   3.57 679   3.24 563   2.84 692   3.07 653   3.19
Total   $ 160,621     0.87     $ 165,619     0.89     $ 167,703     0.87     $ 171,041     0.90     $ 168,244     0.89  
 
 
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,
(In thousands)   2018   2018   2018   2017   2017 2018   2017
Balance, beginning of period $ 165,619 $ 167,703 $ 171,041 $ 168,244 $ 165,620 $ (2,084 ) $ (1 )
Charge-offs (19,448 ) (18,188 ) (19,865 ) (23,865 ) (17,999 ) (1,260 ) (1,449 )
Recoveries   12,658     5,418     5,714     5,580     9,847   7,240     2,811  
Net (charge-offs) recoveries (6,790 ) (12,770 ) (14,151 ) (18,285 ) (8,152 ) 5,980 1,362
Provision for credit losses 2,270 14,236 11,368 22,259 14,545 (11,966 ) (12,275 )
Other   (478 )   (3,550 )   (555 )   (1,177 )   (3,769 ) 3,072     3,291  
Balance, end of period   $ 160,621     $ 165,619     $ 167,703     $ 171,041     $ 168,244     $ (4,998 )   $ (7,623 )
 
 
Net Charge-offs
 
  Quarter Ended
Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,
2018   2018   2018   2017   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 $ (3,721 ) (0.82 )% $ 714 0.16 % $ 790 0.16 % $ 876 0.18 % $ (801 ) (0.16 )%
Junior lien   (2,709 ) (0.37 ) 64     0.01 327   0.05 (218 ) (0.03 ) (2,651 ) (0.38 )
Total consumer real estate (6,430 ) (0.55 ) 778 0.07 1,117 0.09 658 0.05 (3,452 ) (0.29 )
Commercial (8 ) (27 ) (14 ) (378 ) (0.04 ) (196 ) (0.02 )
Leasing and equipment finance 1,930 0.17 2,106 0.18 1,340 0.11 4,775 0.41 1,046 0.10
Inventory finance 637 0.09 517 0.06 409 0.05 995 0.15 469 0.08
Auto finance 9,485 1.56 8,516 1.26 10,656 1.41 11,111 1.36 9,248 1.13
Other   1,176   N.M. 880     N.M. 643   N.M. 1,124   N.M. 1,037   N.M.
Total   $ 6,790     0.15     $ 12,770     0.27     $ 14,151     0.29     $ 18,285     0.38     $ 8,152     0.18  
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 Sep. 30, At Jun. 30, At Mar. 31, At Dec. 31, At Sep. 30, Jun. 30,   Sep. 30,
    2018   2018   2018   2017   2017 2018   2017
Consumer real estate:
First mortgage lien 0.18 % 0.20 % 0.23 % 0.25 % 0.32 % (2 ) bps (14 ) bps
Junior lien 0.04 0.07 0.06 0.04 0.05 (3 ) (1 )
Total consumer real estate 0.10 0.12 0.13 0.13 0.15 (2 ) (5 )
Commercial
Leasing and equipment finance 0.15 0.11 0.11 0.14 0.15 4
Inventory finance 0.01 0.01 (1 )
Auto finance 0.41 0.33 0.24 0.28 0.25 8 16
Other 0.30 0.16 0.24 0.04 0.07 14 23
Subtotal 0.11 0.11 0.09 0.11 0.12 (1 )
Portfolios acquired with deteriorated credit quality 16.70 13.48 12.95 13.18 9.42 322 728
Total delinquencies   0.12     0.11     0.10     0.12     0.13     1       (1 )  

(1) Excludes non-accrual loans and leases

 
 
Non-performing Assets
            Change From
At Sep. 30, At Jun. 30, At Mar. 31, At Dec. 31, At Sep. 30, Jun. 30,   Sep. 30,
(Dollars in thousands)   2018   2018   2018   2017   2017 2018   2017
Non-accrual loans and leases:
Consumer real estate $ 55,092 $ 49,155 $ 84,237 $ 83,224 $ 80,731 $ 5,937 $ (25,639 )
Commercial 9,888 9,978 11,401 6,785 10,337 (90 ) (449 )
Leasing and equipment finance 16,061 16,300 19,968 17,089 18,720 (239 ) (2,659 )
Inventory finance 1,640 2,093 3,621 4,116 3,178 (453 ) (1,538 )
Auto finance 7,613 7,312 7,199 7,366 6,653 301 960
Other   2     21     2     2       (19 )   2  

Total non-accrual loans and leases

90,296 84,859 126,428 118,582 119,619 5,437 (29,323 )
Other real estate owned   19,079     16,266     17,179     18,225     26,405   2,813     (7,326 )
Total non-performing assets   $ 109,375     $ 101,125     $ 143,607     $ 136,807     $ 146,024   $ 8,250     $ (36,649 )
 
Non-accrual loans and leases as a percentage of total loans and leases 0.49 % 0.46 % 0.65 % 0.62 % 0.63 % 3 bps (14 ) bps
Non-performing assets as a percentage of total loans and leases and other real estate owned 0.59 0.54 0.74 0.72 0.77 5 (18 )
Allowance for loan and lease losses as a percentage of non-accrual loans and leases   177.88     195.17     132.65     144.24     140.65     (1,729 )     3,723    
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Capital Information (Unaudited)
           
    At or For the Quarter Ended Change From
(Dollars in thousands, except per share data) Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Sep. 30,
  2018   2018   2018   2017   2017 2018 2017
Dividends declared per common share $ 0.15 $ 0.15 $ 0.15 $ 0.075 $ 0.075 % 100.0 %
Book value per common share 14.01 13.79 13.89 13.96 13.45 1.6 4.2
Tangible book value per common share(1) 12.96 12.73 12.84 12.92 11.99 1.8 8.1
Common equity ratio 10.21 % 9.97 % 10.06 % 10.42 % 10.04 % 24 bps 17 bps
Tangible common equity ratio(1) 9.51 9.28 9.37 9.72 9.06 23 45
 
Regulatory Capital: (2)
Common equity Tier 1 capital $ 2,226,820 $ 2,186,528 $ 2,222,390 $ 2,242,410 $ 2,080,729 1.8 % 7.0 %
Tier 1 capital 2,412,869 2,375,210 2,414,838 2,522,178 2,362,926 1.6 2.1
Total capital 2,754,615 2,728,076 2,786,637 2,889,323 2,734,260 1.0 0.7
 
Common equity Tier 1 capital ratio 11.04 % 10.60 % 10.57 % 10.79 % 10.05 % 44 bps 99 bps
Tier 1 risk-based capital ratio 11.96 11.51 11.49 12.14 11.41 45 55
Total risk-based capital ratio 13.66 13.22 13.26 13.90 13.21 44 45
Tier 1 leverage ratio   10.58     10.31     10.52     11.12     10.88     27   (30 )
(1)   See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables
(2) September 30, 2018 amounts are preliminary pending completion and filing of the Company's regulatory reports
 
 
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
 
Computation of adjusted diluted earnings per common share:
 
    Quarter Ended
Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,
(Dollars in thousands, except per share data)       2018   2018   2018   2017   2017
Net income available to common stockholders $ 83,702 $ 56,255 $ 66,174 $ 97,653 $ 48,285
Less: Earnings allocated to participating securities       13     8     9     17     8
Earnings allocated to common stock (a) 83,689 56,247 66,165 97,636 48,277
Plus: BCFP/OCC settlement adjustment 32,000
Less: Income tax expense attributable to BCFP/OCC settlement adjustment           6,491            
Adjusted earnings allocated to common stock   (b)   $ 83,689     $ 81,756     $ 66,165     $ 97,636     $ 48,277
 
Weighted-average common shares outstanding for diluted earnings per common share (c) 165,533,225 166,857,640 169,997,146 170,068,986 169,240,251
 
Diluted earnings per common share (a) / (c) $ 0.51 $ 0.34 $ 0.39 $ 0.57 $ 0.29
Adjusted diluted earnings per common share   (b) / (c)   0.51     0.49     0.39     0.57     0.29
 
 
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
Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,
(Dollars in thousands)       2018   2018   2018   2017   2017
Net income available to common stockholders (a) $ 83,702 $ 56,255 $ 66,174 $ 97,653 $ 48,285
Plus: Goodwill impairment 73,041
Plus: Other intangibles amortization and impairment 913 835 831 1,187 806
Less: Income tax expense attributable to other intangibles amortization and impairment       220     201     199     530     277  
Adjusted net income available to common stockholders   (b)   $ 84,395     $ 56,889     $ 66,806     $ 171,351     $ 48,814  
 
Net income available to common stockholders adjusted for BCFP/OCC settlement:
Net income available to common stockholders $ 83,702 $ 56,255 $ 66,174 $ 97,653 $ 48,285
Plus: BCFP/OCC settlement adjustment 32,000
Less: Income tax expense attributable to BCFP/OCC settlement adjustment           6,491              
Net income available to common stockholders adjusted for BCFP/OCC settlement (c) 83,702 81,764 66,174 97,653 48,285
Plus: Goodwill impairment 73,041
Plus: Other intangibles amortization and impairment 913 835 831 1,187 806
Less: Income tax expense attributable to other intangibles amortization and impairment       220     201     199     530     277  
Adjusted net income available to common stockholders adjusted for BCFP/OCC settlement   (d)   $ 84,395     $ 82,398     $ 66,806     $ 171,351     $ 48,814  
 
Average balances:
Total equity $ 2,511,983 $ 2,512,128 $ 2,580,920 $ 2,591,012 $ 2,577,017
Less: Non-controlling interest in subsidiaries       23,548     28,654     23,191     20,399     22,350  
Total TCF Financial Corporation stockholders' equity 2,488,435 2,483,474 2,557,729 2,570,613 2,554,667
Less: Preferred stock       169,302     169,302     200,404     265,821     265,556  
Average total common stockholders' equity (e) 2,319,133 2,314,172 2,357,325 2,304,792 2,289,111
Less:
Goodwill, net 154,757 154,757 154,757 197,734 227,539
Other intangibles, net       21,798     22,672     23,274     21,901     22,279  
Average tangible common stockholders' equity   (f)   $ 2,142,578     $ 2,136,743     $ 2,179,294     $ 2,085,157     $ 2,039,293  
 
Average total common stockholders' equity adjusted for BCFP/OCC settlement:
Average total common stockholders' equity $ 2,319,133 $ 2,314,172 $ 2,357,325 $ 2,304,792 $ 2,289,111
Plus: BCFP/OCC settlement adjustment to average total common stockholders' equity           4,205              
Average total common stockholders' equity adjusted for BCFP/OCC settlement (g) 2,319,133 2,318,377 2,357,325 2,304,792 2,289,111
Less:
Goodwill, net 154,757 154,757 154,757 197,734 227,539
Other intangibles, net       21,798     22,672     23,274     21,901     22,279  
Adjusted average tangible common stockholders' equity   (h)   $ 2,142,578     $ 2,140,948     $ 2,179,294     $ 2,085,157     $ 2,039,293  
 
ROACE(1) (a) / (e) 14.44 % 9.72 % 11.23 % 16.95 % 8.44 %
Adjusted ROACE(1) (c) / (g) 14.44 14.11 11.23 16.95 8.44
ROATCE(1) (b) / (f) 15.76 10.65 12.26 32.87 9.57
Adjusted ROATCE(1)   (d) / (h)   15.76     15.39     12.26     32.87     9.57  

(1) Annualized

 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited), Continued
         
Computation of adjusted efficiency ratio:
 
Quarter Ended
Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30,
(Dollars in thousands)       2018   2018   2018   2017   2017
Total non-interest expense (a) $ 246,423 $ 272,039 $ 245,980 $ 347,806 $ 235,035
Less: BCFP/OCC settlement adjustment           32,000              
Adjusted non-interest expense   (b)   $ 246,423     $ 240,039     $ 245,980     $ 347,806     $ 235,035  
 
Revenue (c) $ 365,566 $ 364,902 $ 355,403 $ 362,752 $ 343,333
 
Efficiency ratio (a) / (c) 67.41 % 74.55 % 69.21 % 95.88 % 68.46 %
Adjusted efficiency ratio   (b) / (c)   67.41     65.78     69.21     95.88     68.46  
 
Computation of tangible common equity ratio and tangible book value per common share:
 
At Sep. 30, At Jun. 30, At Mar. 31, At Dec. 31, At Sep. 30,
(Dollars in thousands, except per share data)       2018   2018   2018   2017   2017
Total equity $ 2,528,012 $ 2,504,578 $ 2,550,950 $ 2,680,584 $ 2,596,514
Less: Non-controlling interest in subsidiaries       21,154     23,646     28,437     17,827     19,906  
Total TCF Financial Corporation stockholders' equity 2,506,858 2,480,932 2,522,513 2,662,757 2,576,608
Less: Preferred stock       169,302     169,302     169,302     265,821     265,967  
Total common stockholders' equity   (d)   2,337,556     2,311,630     2,353,211     2,396,936     2,310,641  
Less:
Goodwill, net 154,757 154,757 154,757 154,757 227,798
Other intangibles, net       21,364     22,247     23,112     23,687     21,874  
Tangible common stockholders' equity   (e)   $ 2,161,435     $ 2,134,626     $ 2,175,342     $ 2,218,492     $ 2,060,969  
 
Total assets (f) $ 22,904,785 $ 23,184,462 $ 23,385,052 $ 23,002,159 $ 23,005,038
Less:
Goodwill, net 154,757 154,757 154,757 154,757 227,798
Other intangibles, net       21,364     22,247     23,112     23,687     21,874  
Tangible assets   (g)   $ 22,728,664     $ 23,007,458     $ 23,207,183     $ 22,823,715     $ 22,755,366  
 
Common stock shares outstanding (h) 166,812,524 167,684,971 169,415,834 171,669,419 171,833,926
 
Common equity ratio (d) / (f) 10.21 % 9.97 % 10.06 % 10.42 % 10.04 %
Tangible common equity ratio (e) / (g) 9.51 9.28 9.37 9.72 9.06
 
Book value per common share (d) / (h) $ 14.01 $ 13.79 $ 13.89 $ 13.96 $ 13.45
Tangible book value per common share   (e) / (h)   12.96     12.73     12.84     12.92     11.99  
 

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