Market Overview

TCF Reports Quarterly Net Income of $46.3 Million, or 25 Cents Per Share

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TCF Financial Corporation (NYSE:TCB):

FIRST QUARTER HIGHLIGHTS

  • Revenue of $325.6 million, up 0.4 percent from the first quarter of
    2016
  • Net interest income of $222.1 million, up 4.9 percent from the first
    quarter of 2016
  • Net interest margin of 4.46 percent, up 9 basis points from the first
    quarter of 2016
  • Period-end loans and leases of $18.0 billion, up 0.7 percent from
    March 31, 2016
  • Loan and lease originations of $4.0 billion, down 1.0 percent from the
    first quarter of 2016
  • Net charge-offs as a percentage of average loans and leases of 0.11
    percent, down 16 basis points from the first quarter of 2016
  • Non-accrual loans and leases of $139.0 million, down 30.0 percent from
    March 31, 2016
  • Average deposits of $17.1 billion, up 1.3 percent from the first
    quarter of 2016
  • Effective income tax rate of 30.0 percent, down 480 basis points from
    the first quarter of 2016
  • Earnings per share of 25 cents, down 3.8 percent from the first
    quarter of 2016
                     
Summary of Financial Results               Table 1
        Percent Change
(Dollars in thousands, except per-share data) 1Q 4Q 1Q 1Q17 vs   1Q17 vs
2017   2016   2016   4Q16   1Q16
Net income attributable to TCF $ 46,278 $ 50,092 $ 48,046 (7.6 )% (3.7 )%
Net interest income 222,114 211,446 211,658 5.0 4.9
Diluted earnings per common share 0.25 0.27 0.26 (7.4 ) (3.8 )
 

Financial Ratios(1)

Return on average assets 0.90 % 0.99 % 0.96 %
Return on average common equity 7.64 8.40 8.45
Return on average tangible common equity(2) 8.55 9.43 9.57
Net interest margin 4.46 4.30 4.37
Net charge-offs as a percentage of average loans and leases 0.11 0.27 0.27
 
(1) Annualized.
(2) See "Reconciliation of GAAP to Non-GAAP Financial Measures"
table.
 

TCF Financial Corporation ("TCF" or the "Company") (NYSE:TCB) today
reported net income of $46.3 million for the first quarter of 2017,
compared with $48.0 million for the first quarter of 2016 and $50.1
million for the fourth quarter of 2016. Diluted earnings per common
share was 25 cents for the first quarter of 2017, compared with 26 cents
for the first quarter of 2016 and 27 cents for the fourth quarter of
2016.

"During the first quarter, we completed an auto finance strategic
reassessment which resulted in the implementation of changes to that
business," said Craig R. Dahl, president and chief executive officer.
"In addition, we completed a consumer real estate non-accrual loan sale
which lowered our risk profile and allowed us to recognize recoveries
from previous charge-offs related to these loans. We also saw strong
year-over-year and quarter-over-quarter improvement in net interest
income and net interest margin.

"Changes to our auto finance strategy and continued strategic
investments in technology capabilities resulted in increased expenses
during the first quarter. We are refocusing our auto strategy to ensure
profitable growth and increase operating leverage in this business
moving forward. In addition, we are making key investments in 2017 that
are focused on enhancing our technology capabilities to better serve our
customers and drive efficiencies in our business. These initiatives are
well underway and I am confident that they put us on a path to
generating superior and sustainable returns for our stockholders."

         
Revenue
                     
Total Revenue               Table 2
Percent Change
(Dollars in thousands) 1Q 4Q 1Q 1Q17 vs 1Q17 vs
2017   2016   2016   4Q16   1Q16
Net interest income $ 222,114     $ 211,446     $ 211,658   5.0 % 4.9 %
Non-interest income:
Fees and service charges 31,282 35,132 32,817 (11.0 ) (4.7 )
Card revenue 13,150 13,689 13,363 (3.9 ) (1.6 )
ATM revenue   4,675       4,806       5,021   (2.7 ) (6.9 )
Subtotal 49,107 53,627 51,201 (8.4 ) (4.1 )
Gains on sales of auto loans, net 2,864 1,145 11,920 150.1 (76.0 )
Gains on sales of consumer real estate loans, net 8,891 16,676 9,384 (46.7 ) (5.3 )
Servicing fee income   11,651       11,404       8,883   2.2 31.2
Subtotal 23,406 29,225 30,187 (19.9 ) (22.5 )
Leasing and equipment finance 28,298 31,316 28,487 (9.6 ) (0.7 )
Other   2,703       1,365       2,843   98.0 (4.9 )
Fees and other revenue 103,514 115,533 112,718 (10.4 ) (8.2 )
Gains (losses) on securities, net         135       (116 ) (100.0 ) (100.0 )
Total non-interest income   103,514       115,668       112,602   (10.5 ) (8.1 )
Total revenue $ 325,628     $ 327,114     $ 324,260   (0.5 ) 0.4
 
Net interest margin(1) 4.46 % 4.30 % 4.37 %
Total non-interest income as a percentage of total revenue 31.8 35.4 34.7
 
(1) Annualized.
 

Net Interest Income

  • Net interest income for the first quarter of 2017 increased $10.5
    million, or 4.9 percent, compared with the first quarter of 2016 and
    increased $10.7 million, or 5.0 percent, compared with the fourth
    quarter of 2016. The increase from the first quarter of 2016 was
    primarily due to higher average balances of inventory finance loans,
    leasing and equipment finance loans and leases, securities available
    for sale, loans and leases held for sale, and commercial loans, as
    well as higher average yields on variable- and adjustable-rate
    consumer, commercial and inventory finance loans. These increases were
    partially offset by lower average consumer real estate loan balances.
    The increase from the fourth quarter of 2016 was primarily due to
    higher average yields on all interest-earning assets, seasonally
    higher average inventory finance loan balances and higher average
    commercial loan balances, partially offset by two fewer days in the
    quarter.
  • Net interest margin for the first quarter of 2017 was 4.46 percent,
    compared with 4.37 percent for the first quarter of 2016 and 4.30
    percent for the fourth quarter of 2016. The increase from the first
    quarter of 2016 was primarily due to higher average balances of
    interest-earning assets and higher average yields on the variable- and
    adjustable-rate loans. The increase from the fourth quarter of 2016
    was primarily due to higher average yields on all interest-earning
    assets, seasonally higher average inventory finance loan balances and
    higher average commercial loan balances.

Non-interest Income

  • Fees and service charges for the first quarter of 2017 were $31.3
    million, down $1.5 million, or 4.7 percent, from the first quarter of
    2016 and down $3.9 million, or 11.0 percent, from the fourth quarter
    of 2016. The decreases from both periods were primarily due to lower
    overdraft fees.
  • TCF sold $250.6 million, $444.3 million and $516.0 million of auto
    loans during the first quarters of 2017 and 2016 and the fourth
    quarter of 2016, respectively, resulting in net gains in each
    respective period.
  • TCF sold $379.4 million, $321.4 million and $520.8 million of consumer
    real estate loans during the first quarters of 2017 and 2016 and the
    fourth quarter of 2016, respectively, resulting in net gains in each
    respective period. Included in consumer real estate loans sold in the
    first quarter of 2017 was $49.4 million of non-accrual loans,
    servicing released. As these loans were previously partially
    charged-off, a recovery of $8.7 million was recorded as a reduction to
    provision for credit losses and a loss of $0.8 million was recorded in
    gains on sales of consumer real estate loans, net.
  • Servicing fee income was $11.7 million on $5.6 billion of average
    loans and leases serviced for others for the first quarter of 2017,
    compared with $8.9 million on $4.4 billion for the first quarter of
    2016 and $11.4 million on $5.5 billion for the fourth quarter of 2016.
    The increase from the first quarter of 2016 was due to the cumulative
    effect of the increase in the portfolio of auto finance and consumer
    real estate loans sold with servicing retained by TCF.
 
Loans and Leases
 
Period-End and Average Loans and Leases   Table 3
      Percent Change
(Dollars in thousands) 1Q 4Q 1Q 1Q17 vs   1Q17 vs
2017   2016   2016     4Q16   1Q16
Period-End:
Consumer real estate:
First mortgage lien $ 2,166,691 $ 2,292,596 $ 2,521,492 (5.5 )% (14.1 )%
Junior lien   2,494,696     2,791,756     2,729,075 (10.6 ) (8.6 )
Total consumer real estate 4,661,387 5,084,352 5,250,567 (8.3 ) (11.2 )
Commercial 3,376,050 3,286,478 3,114,594 2.7 8.4
Leasing and equipment finance 4,276,008 4,336,310 4,005,934 (1.4 ) 6.7
Inventory finance 2,864,248 2,470,175 2,676,675 16.0 7.0
Auto finance 2,780,416 2,647,741 2,786,731 5.0 (0.2 )
Other   16,785     18,771     18,940 (10.6 ) (11.4 )
Total $ 17,974,894   $ 17,843,827   $ 17,853,441 0.7 0.7
 
Average:
Consumer real estate:
First mortgage lien $ 2,237,801 $ 2,306,421 $ 2,573,915 (3.0 )% (13.1 )%
Junior lien   2,791,200     2,779,725     2,884,859 0.4 (3.2 )
Total consumer real estate 5,029,001 5,086,146 5,458,774 (1.1 ) (7.9 )
Commercial 3,302,891 3,147,517 3,158,101 4.9 4.6
Leasing and equipment finance 4,285,944 4,252,543 3,992,678 0.8 7.3
Inventory finance 2,696,787 2,389,980 2,433,534 12.8 10.8
Auto finance 2,714,862 2,647,088 2,703,880 2.6 0.4
Other   9,740     9,307     10,018 4.7 (2.8 )
Total $ 18,039,225   $ 17,532,581   $ 17,756,985 2.9 1.6
 
 
  • Period-end loans and leases were $18.0 billion at March 31, 2017, an
    increase of $0.1 billion, or 0.7 percent, compared with March 31, 2016
    and December 31, 2016. Average loans and leases were $18.0 billion for
    the first quarter of 2017, an increase of $0.3 billion, or
    1.6 percent, compared with the first quarter of 2016 and an increase
    of $0.5 billion, or 2.9 percent, compared with the fourth quarter of
    2016.

    The increase from March 31, 2016 for period-end loans
    and leases was primarily due to increases in the leasing and equipment
    finance, commercial and inventory finance portfolios. The increase
    from the first quarter of 2016 for average loans and leases was
    primarily due to increases in the leasing and equipment finance,
    inventory finance and commercial portfolios. Both of these increases
    were partially offset by a decrease in the consumer real estate
    portfolio. The increase from December 31, 2016 for period-end loans
    and leases was primarily due to seasonal increases in the inventory
    finance portfolio and an increase in the auto finance portfolio,
    partially offset by a decrease in the consumer real estate portfolio.
    The increase from the fourth quarter of 2016 for average loans and
    leases was primarily due to seasonal increases in the inventory
    finance portfolio and an increase in the commercial portfolio.
  • Loan and lease originations were $4.0 billion for the first quarter of
    2017, a decrease of 1.0 percent compared with the first quarter of
    2016 and a decrease of $0.3 billion, or 6.9 percent compared with the
    fourth quarter of 2016. The decrease from the fourth quarter of 2016
    was primarily due to decreased originations in consumer real estate,
    leasing and equipment finance and commercial, partially offset by
    seasonally higher inventory finance originations.
 
Credit Quality
                               
Credit Trends                         Table 4
              Change
(Dollars in thousands) 1Q 4Q 3Q 2Q 1Q 1Q17 vs   1Q17 vs
2017   2016   2016   2016   2016     4Q16   1Q16
Over 60-day delinquencies as a percentage of period-end loans and
leases(1)
0.09 % 0.12 % 0.12 % 0.12 % 0.10 % (3) bps (1) bps
Net charge-offs as a percentage of average loans and leases(2) 0.11 0.27 0.26 0.23 0.27 (16 ) (16 )
Non-accrual loans and leases and other real estate owned $ 170,940 $ 228,242 $ 223,759 $ 232,334 $ 241,090 (25.1 )% (29.1 )%
Provision for credit losses 12,193 19,888 13,894 13,250 18,842 (38.7 ) (35.3 )
 
(1) Excludes non-accrual loans and leases.
(2) Annualized.
 
  • The over 60-day delinquency rate, excluding non-accrual loans and
    leases, was 0.09 percent at March 31, 2017, down from 0.10 percent at
    March 31, 2016, and down from 0.12 percent at December 31, 2016. The
    decrease from March 31, 2016 was primarily driven by improved credit
    quality in the consumer real estate first mortgage lien portfolio,
    partially offset by higher delinquencies in the auto finance
    portfolio. The decrease from December 31, 2016 was primarily driven by
    improved delinquencies in the consumer real estate first mortgage lien
    and auto finance portfolios.
  • The net charge-off rate was 0.11 percent for the first quarter of
    2017, down from 0.27 percent for the first quarter and fourth quarter
    of 2016. The decreases from both periods were primarily due to the
    recovery of previously charged-off consumer real estate non-accrual
    loans that were sold, partially offset by increased net charge-offs in
    the commercial portfolio. The decrease from the first quarter of 2016
    was also partially offset by increased net charge-offs in the auto
    finance portfolio. Excluding the $8.7 million recovery from the
    non-accrual loan sale, the net charge-off rate was 0.31% for the first
    quarter of 2017.
  • Non-accrual loans and leases and other real estate owned was $170.9
    million at March 31, 2017, a decrease of $70.2 million, or 29.1
    percent, from March 31, 2016, and a decrease of $57.3 million, or 25.1
    percent, from December 31, 2016. Non-accrual loans and leases were
    $139.0 million at March 31, 2017, a decrease of $59.7 million, or 30.0
    percent, from March 31, 2016 and a decrease of $42.5 million, or 23.4
    percent, from December 31, 2016. The decrease from March 31, 2016 was
    primarily due to the consumer real estate non-accrual loan sale of
    $49.4 million and a decrease in auto finance non-accrual loans,
    partially offset by an increase in non-accrual loans in the commercial
    and inventory finance portfolios. The decrease from December 31, 2016
    was primarily due to the consumer real estate non-accrual loan sale of
    $49.4 million, partially offset by an increase in non-accrual
    commercial loans and non-accrual leasing and equipment finance loans
    and leases. Other real estate owned was $32.0 million at
    March 31, 2017, a decrease of $10.5 million, or 24.7 percent, from
    March 31, 2016, and a decrease of $14.8 million, or 31.7 percent, from
    December 31, 2016. The decreases from both periods were primarily due
    to the sales of consumer real estate properties outpacing additions.
  • Provision for credit losses was $12.2 million for the first quarter of
    2017, a decrease of $6.6 million, or 35.3 percent, from the first
    quarter of 2016, and a decrease of $7.7 million, or 38.7 percent, from
    the fourth quarter of 2016. The decreases from both periods were
    primarily due to the recovery of $8.7 million on previous charge-offs
    related to the consumer real estate non-accrual loans that were sold.
           
Deposits
 
Average Deposits                 Table 5
Percent Change
(Dollars in thousands) 1Q 4Q 1Q 1Q17 vs 1Q17 vs
2017   2016   2016     4Q16   1Q16
 
Checking $ 5,914,203 $ 5,759,806 $ 5,593,300 2.7 % 5.7 %
Savings 4,773,788 4,681,662 4,713,765 2.0 1.3
Money market 2,385,353 2,429,239 2,472,751 (1.8 ) (3.5 )
Certificates of deposit   4,033,143       4,198,190       4,104,951   (3.9 ) (1.7 )
Total average deposits $ 17,106,487     $ 17,068,897     $ 16,884,767   0.2 1.3
 
Average interest rate on deposits(1) 0.33 % 0.35 % 0.36 %
 
(1) Annualized.
 
  • Total average deposits for the first quarter of 2017 increased
    $221.7 million, or 1.3 percent, from the first quarter of 2016 and
    increased $37.6 million or 0.2 percent from the fourth quarter of
    2016. The increase from the first quarter of 2016 was primarily due to
    growth in average checking balances, partially offset by decreases in
    money market balances and certificates of deposit. The increase from
    the fourth quarter of 2016 was primarily due to growth in average
    checking and savings balances, partially offset by a decrease in
    certificates of deposit.
  • The average interest rate on deposits for the first quarter of 2017
    was 0.33 percent, down 3 basis points from the first quarter of 2016
    and down 2 basis points from the fourth quarter of 2016. The decreases
    from both periods were primarily due to decreased average interest
    rates on money market balances and certificates of deposit.
         
Non-interest Expense
 
Non-interest Expense                 Table 6
  Change
(Dollars in thousands) 1Q 4Q 1Q 1Q17 vs 1Q17 vs
2017   2016   2016     4Q16   1Q16
 
Compensation and employee benefits $ 124,477 $ 115,001 $ 124,473 8.2 % %
Occupancy and equipment 39,600 38,150 37,008 3.8 7.0
Other   64,037       59,235       53,348   8.1 20.0
Subtotal 228,114 212,386 214,829 7.4 6.2
Operating lease depreciation 11,242 10,906 9,573 3.1 17.4
Foreclosed real estate and repossessed assets, net 4,549 1,889 3,920 140.8 16.0
Other credit costs, net   101       178       12   (43.3 ) N.M.
Total non-interest expense $ 244,006     $ 225,359     $ 228,334   8.3 6.9
 
Efficiency ratio 74.93 % 68.89 % 70.42 % 604 bps 451 bps
 
N.M. Not Meaningful.
 
  • Compensation and employee benefits expense was consistent with the
    first quarter of 2016 and increased $9.5 million, or 8.2 percent, from
    the fourth quarter of 2016. The increase from the fourth quarter of
    2016 was primarily due to seasonality of payroll taxes, the annual
    pension plan valuation adjustment in the fourth quarter of 2016 and
    the Company's 401K match on incentive compensation, as well as higher
    salaries, partially offset by lower medical and pharmacy claims.
  • Other non-interest expense increased $10.7 million, or 20.0 percent,
    from the first quarter of 2016 and increased $4.8 million, or 8.1
    percent, from the fourth quarter of 2016. The increases were primarily
    due to higher severance expense in our auto finance business and
    higher professional fees related to strategic investments in
    technology capabilities.
  • Net expenses related to foreclosed real estate and repossessed assets
    increased $0.6 million, or 16.0 percent, from the first quarter of
    2016 and increased $2.7 million, or 140.8 percent, from the fourth
    quarter of 2016. The increase from the first quarter of 2016 was
    primarily due to lower gains on sales of other real estate owned and
    higher repossessed assets expense, partially offset by lower valuation
    adjustments and lower operating costs. The increase from the fourth
    quarter of 2016 was primarily due to lower gains on sales of
    commercial properties and higher repossessed assets expense.

Income Tax Expense

  • The Company's effective income tax rate was 30.0 percent for the first
    quarter of 2017, compared with 34.8 percent for the first quarter of
    2016 and 36.4 percent for the fourth quarter of 2016. The effective
    tax rate for the first quarter of 2017 included discrete tax benefits
    totaling $2.3 million, of which $2.0 million resulted from tax
    benefits related to stock compensation recorded in income tax expense
    that were previously recorded in additional paid-in capital subject to
    new accounting guidance adopted January 1, 2017. The decreases from
    both periods were also due to increased investments in tax-exempt
    securities available for sale.
   
Capital
 
Capital Information   Table 7
At Mar. 31, At Dec. 31,
(Dollars in thousands, except per-share data) 2017 2016
Total equity $ 2,490,663 $ 2,444,645
Book value per common share 12.88 12.66
Tangible book value per common share(1) 11.55 11.33
Common equity to assets 10.08 % 10.09 %
Tangible common equity to tangible assets(1) 9.13 9.13
Capital accumulation rate(2) 6.83 8.59
 
At Mar. 31, At Dec. 31,
Regulatory Capital:

2017(3)

2016
Common equity Tier 1 capital $ 2,003,988 $ 1,970,323
Tier 1 capital 2,288,736 2,248,221
Total capital

2,667,204

2,635,925
 
Regulatory Capital Ratios:
Common equity Tier 1 capital ratio 10.11 % 10.24 %
Tier 1 risk-based capital ratio 11.55 11.68
Total risk-based capital ratio 13.46 13.69
Tier 1 leverage ratio 10.64 10.73
 
(1) See "Reconciliation of GAAP to Non-GAAP Financial Measures"
table.
(2) Calculated as the change in annualized year-to-date common
equity Tier 1 capital as a percentage of prior year end common
equity Tier 1 capital.
(3) The regulatory capital ratios for 1Q 2017 are preliminary
pending completion and filing of the Company's regulatory reports.
 
  • TCF maintained strong capital ratios as the Company accumulated
    capital through earnings.
  • Book value per common share increased 1.7 percent from
    December 31, 2016 and tangible book value per common share increased
    1.9 percent from December 31, 2016.
  • On April 20, 2017, TCF's Board of Directors declared a regular
    quarterly cash dividend of 7.5 cents per common share, payable on
    June 1, 2017, to stockholders of record at the close of business on
    May 15, 2017. TCF also declared dividends on the 7.50% Series A and
    6.45% Series B Non-Cumulative Perpetual Preferred Stock, both payable
    on June 1, 2017, to stockholders of record at the close of business on
    May 15, 2017.

Webcast Information

A live webcast of TCF's conference call to discuss the first quarter
earnings will be hosted at TCF's website, http://ir.tcfbank.com,
on April 24, 2017 at 9:00 a.m. CDT. A slide presentation for the call
will be available on the website prior to the call. Additionally, the
webcast will be available for replay on TCF's website after the
conference call. The website also includes free access to company news
releases, TCF's annual report, investor presentations and SEC filings.

TCF is a Wayzata, Minnesota-based national bank holding company. As
of March 31, 2017, TCF had $21.8 billion in total assets and 331
branches in Illinois, Minnesota, Michigan, Colorado, Wisconsin, Arizona
and South Dakota providing retail and commercial banking services. TCF,
through its subsidiaries, also conducts commercial leasing, equipment
finance and auto finance business in all 50 states and commercial
inventory finance business in all 50 states and Canada. For more
information about TCF, please visit
http://ir.tcfbank.com.

Cautionary Statements for Purposes of the Safe Harbor Provisions
of the Securities Litigation Reform Act

Any statements contained in this earnings release regarding the
outlook for the Company's businesses and their respective markets, such
as projections of future performance, guidance, statements of the
Company's plans and objectives, forecasts of market trends and other
matters, are forward-looking statements based on the Company's
assumptions and beliefs. Such statements may be identified by such words
or phrases as "will likely result," "are expected to," "will continue,"
"outlook," "will benefit," "is anticipated," "estimate," "project,"
"management believes" or similar expressions. These forward-looking
statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from those discussed in such
statements and no assurance can be given that the results in any
forward-looking statement will be achieved. For these statements, TCF
claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995. Any
forward-looking statement speaks only as of the date on which it is
made, and we disclaim any obligation to subsequently revise any
forward-looking statement to reflect events or circumstances after such
date or to reflect the occurrence of anticipated or unanticipated events.

Certain factors could cause the Company's future results to differ
materially from those expressed or implied in any forward-looking
statements contained herein. These factors include the factors discussed
in Part I, Item 1A of the Company's Annual Report on Form 10-K for the
year ended December 31, 2016 under the heading "Risk Factors", the
factors discussed below and any other cautionary statements, written or
oral, which may be made or referred to in connection with any such
forward-looking statements. Since it is not possible to foresee all such
factors, these factors should not be considered as complete or
exhaustive.

Adverse Economic or Business Conditions;
Competitive Conditions; Credit and Other Risks.
 Deterioration
in general economic and banking industry conditions, including those
arising from government shutdowns, defaults, anticipated defaults or
rating agency downgrades of sovereign debt (including debt of the U.S.),
or increases in unemployment; adverse economic, business and competitive
developments such as shrinking interest margins, reduced demand for
financial services and loan and lease products, deposit outflows,
increased deposit costs due to competition for deposit growth and
evolving payment system developments, deposit account attrition or an
inability to increase the number of deposit accounts; customers
completing financial transactions without using a bank; adverse changes
in credit quality and other risks posed by TCF's loan, lease,
investment, securities held to maturity and securities available for
sale portfolios, including declines in commercial or residential real
estate values, changes in the allowance for loan and lease losses
dictated by new market conditions or regulatory requirements, or the
inability of home equity line borrowers to make increased payments
caused by increased interest rates or amortization of principal;
deviations from estimates of prepayment rates and fluctuations in
interest rates that result in decreases in the value of assets such as
interest-only strips that arise in connection with TCF's loan sales
activity; interest rate risks resulting from fluctuations in prevailing
interest rates or other factors that result in a mismatch between yields
earned on TCF's interest-earning assets and the rates paid on its
deposits and borrowings; foreign currency exchange risks; counterparty
risk, including the risk of defaults by our counterparties or diminished
availability of counterparties who satisfy our credit quality
requirements; decreases in demand for the types of equipment that TCF
leases or finances; the effect of any negative publicity.

Legislative and Regulatory Requirements. New
consumer protection and supervisory requirements and regulations,
including those resulting from action by the Consumer Financial
Protection Bureau ("CFPB") and changes in the scope of Federal
preemption of state laws that could be applied to national banks and
their subsidiaries; the imposition of requirements that adversely impact
TCF's deposit, lending, loan collection and other business activities
such as mortgage foreclosure moratorium laws, further regulation of
financial institution campus banking programs, or new restrictions on
loan and lease products; changes affecting customer account charges and
fee income, including changes to interchange rates; regulatory actions
or changes in customer opt-in preferences with respect to overdrafts,
which may have an adverse impact on TCF; governmental regulations or
judicial actions affecting the security interests of creditors;
deficiencies in TCF's compliance programs, including under the Bank
Secrecy Act in past or future periods, which may result in regulatory
enforcement action including monetary penalties; increased health care
costs including those resulting from health care reform; regulatory
criticism and resulting enforcement actions or other adverse
consequences such as increased capital requirements, higher deposit
insurance assessments or monetary damages or penalties; heightened
regulatory practices, requirements or expectations, including, but not
limited to, requirements related to enterprise risk management, the Bank
Secrecy Act and anti-money laundering compliance activity.

Earnings/Capital Risks and Constraints,
Liquidity Risks.
Limitations on TCF's ability to pay
dividends or to increase dividends because of financial performance
deterioration, regulatory restrictions or limitations; increased deposit
insurance premiums, special assessments or other costs related to
adverse conditions in the banking industry; the impact on banks of
regulatory reform, including additional capital, leverage, liquidity and
risk management requirements or changes in the composition of qualifying
regulatory capital; adverse changes in securities markets directly or
indirectly affecting TCF's ability to sell assets or to fund its
operations; diminished unsecured borrowing capacity resulting from TCF
credit rating downgrades or unfavorable conditions in the credit markets
that restrict or limit various funding sources; costs associated with
new regulatory requirements or interpretive guidance including those
relating to liquidity; uncertainties relating to future retail deposit
account changes, including limitations on TCF's ability to predict
customer behavior and the impact on TCF's fee revenues.

Branching Risk; Growth Risks. Adverse
developments affecting TCF's supermarket banking relationships or either
of the primary supermarket chains in which TCF maintains supermarket
branches; costs related to closing underperforming branches; inability
to timely close underperforming branches due to long-term lease
obligations; slower than anticipated growth in existing or acquired
businesses; inability to successfully execute on TCF's growth strategy
through acquisitions or expanding existing business relationships;
failure to expand or diversify TCF's balance sheet through new or
expanded programs or opportunities; technology-related risks, including
the failure to successfully attract and retain customers; failure to
effectuate, and risks of claims related to, sales and securitizations of
loans; risks related to new product additions and addition of
distribution channels (or entry into new markets) for existing products.

Technological and Operational Matters. Technological
or operational difficulties, loss or theft of information, cyber-attacks
and other security breaches, counterparty failures and the possibility
that deposit account losses (fraudulent checks, etc.) may increase;
failure to keep pace with technological change, such as by failing to
develop and maintain technology necessary to satisfy customer demands,
costs and possible disruptions related to upgrading systems; the failure
to attract and retain key employees.

Litigation Risks. Results of
litigation or government enforcement actions such as TCF's pending
litigation with the CFPB and related matters, including class action
litigation or enforcement actions concerning TCF's lending or deposit
activities, including account opening/origination, servicing practices,
fees or charges, employment practices, or checking account overdraft
program "opt in" requirements; and possible increases in indemnification
obligations for certain litigation against Visa U.S.A.

Accounting, Audit, Tax and Insurance Matters.
Changes in accounting standards or interpretations of existing
standards; federal or state monetary, fiscal or tax policies, including
adoption of state legislation that would increase state taxes;
ineffective internal controls; adverse federal, state or foreign tax
assessments or findings in tax audits; lack of or inadequate insurance
coverage for claims against TCF; potential for claims and legal action
related to TCF's fiduciary responsibilities.

 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
       
Three Months Ended March 31, Change
2017 2016 $ %
Interest income:
Loans and leases $ 219,548 $ 214,805 $ 4,743 2.2 %
Securities available for sale 7,980 5,498 2,482 45.1
Securities held to maturity 1,280 1,319 (39 ) (3.0 )
Loans held for sale and other   13,499     10,720     2,779   25.9
Total interest income   242,307     232,342     9,965   4.3
Interest expense:
Deposits 13,715 14,991 (1,276 ) (8.5 )
Borrowings   6,478     5,693     785   13.8
Total interest expense   20,193     20,684     (491 ) (2.4 )
Net interest income 222,114 211,658 10,456 4.9
Provision for credit losses   12,193     18,842     (6,649 ) (35.3 )
Net interest income after provision for credit losses   209,921     192,816     17,105   8.9
Non-interest income:
Fees and service charges 31,282 32,817 (1,535 ) (4.7 )
Card revenue 13,150 13,363 (213 ) (1.6 )
ATM revenue   4,675     5,021     (346 ) (6.9 )
Subtotal 49,107 51,201 (2,094 ) (4.1 )
Gains on sales of auto loans, net 2,864 11,920 (9,056 ) (76.0 )
Gains on sales of consumer real estate loans, net 8,891 9,384 (493 ) (5.3 )
Servicing fee income   11,651     8,883     2,768   31.2
Subtotal 23,406 30,187 (6,781 ) (22.5 )
Leasing and equipment finance 28,298 28,487 (189 ) (0.7 )
Other   2,703     2,843     (140 ) (4.9 )
Fees and other revenue 103,514 112,718 (9,204 ) (8.2 )
Gains (losses) on securities, net       (116 )   116   (100.0 )
Total non-interest income   103,514     112,602     (9,088 ) (8.1 )
Non-interest expense:
Compensation and employee benefits 124,477 124,473 4
Occupancy and equipment 39,600 37,008 2,592 7.0
Other   64,037     53,348     10,689   20.0
Subtotal 228,114 214,829 13,285 6.2
Operating lease depreciation 11,242 9,573 1,669 17.4
Foreclosed real estate and repossessed assets, net 4,549 3,920 629 16.0
Other credit costs, net   101     12     89   N.M.
Total non-interest expense   244,006     228,334     15,672   6.9
Income before income tax expense 69,429 77,084 (7,655 ) (9.9 )
Income tax expense   20,843     26,803     (5,960 ) (22.2 )
Income after income tax expense 48,586 50,281 (1,695 ) (3.4 )
Income attributable to non-controlling interest   2,308     2,235     73   3.3
Net income attributable to TCF Financial Corporation 46,278 48,046 (1,768 ) (3.7 )
Preferred stock dividends   4,847     4,847      
Net income available to common stockholders $ 41,431   $ 43,199   $ (1,768 ) (4.1 )
 
Earnings per common share:
Basic $ 0.25 $ 0.26 $ (0.01 ) (3.8 )%
Diluted 0.25 0.26 (0.01 ) (3.8 )
 
Dividends declared per common share $ 0.075 $ 0.075 $ %
 

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

Basic 167,903 166,887 1,016 0.6 %
Diluted 168,530 167,435 1,095 0.7
 

N.M. Not Meaningful.

 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
       
Three Months Ended March 31, Change
2017 2016 $ %
Net income attributable to TCF Financial Corporation $ 46,278   $ 48,046   $ (1,768 ) (3.7 )%
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale and
interest-only strips
2,769 12,037 (9,268 ) (77.0

)

Net unrealized gains (losses) on net investment hedges (313 ) (2,020 ) 1,707 84.5
Foreign currency translation adjustment 581 3,409 (2,828 ) (83.0 )
Recognized postretirement prior service cost   (7 )   (7 )    

Total other comprehensive income (loss), net of tax

  3,030     13,419     (10,389 ) (77.4 )
Comprehensive income $ 49,308   $ 61,465   $ (12,157 ) (19.8 )
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per-share data)
(Unaudited)
       
At March 31, At Dec. 31, Change
2017 2016 $ %
ASSETS:
Cash and due from banks $ 468,584 $ 609,603 $ (141,019 ) (23.1 )%
Investments 81,717 74,714 7,003 9.4
Securities held to maturity 176,236 181,314 (5,078 ) (2.8 )
Securities available for sale 1,475,950 1,423,435 52,515 3.7
Loans and leases held for sale 605,631 268,832 336,799 125.3
Loans and leases:
Consumer real estate:
First mortgage lien 2,166,691 2,292,596 (125,905 ) (5.5 )
Junior lien   2,494,696     2,791,756     (297,060 ) (10.6 )
Total consumer real estate 4,661,387 5,084,352 (422,965 ) (8.3 )
Commercial 3,376,050 3,286,478 89,572 2.7
Leasing and equipment finance 4,276,008 4,336,310 (60,302 ) (1.4 )
Inventory finance 2,864,248 2,470,175 394,073 16.0
Auto finance 2,780,416 2,647,741 132,675 5.0
Other   16,785     18,771     (1,986 ) (10.6 )
Total loans and leases 17,974,894 17,843,827 131,067 0.7
Allowance for loan and lease losses   (160,166 )   (160,269 )   103   0.1
Net loans and leases 17,814,728 17,683,558 131,170 0.7
Premises and equipment, net 423,055 418,372 4,683 1.1
Goodwill 225,640 225,640
Other assets   565,027     555,858     9,169   1.6
Total assets $ 21,836,568   $ 21,441,326   $ 395,242   1.8
 
LIABILITIES AND EQUITY:
Deposits:
Checking $ 6,218,654 $ 6,009,151 $ 209,503 3.5 %
Savings 4,850,742 4,719,481 131,261 2.8
Money market 2,301,643 2,421,467 (119,824 ) (4.9 )
Certificates of deposit   4,094,551     4,092,423     2,128   0.1
Total deposits   17,465,590     17,242,522     223,068   1.3
Short-term borrowings 5,432 4,391 1,041 23.7
Long-term borrowings   1,241,155     1,073,181     167,974   15.7
Total borrowings 1,246,587 1,077,572 169,015 15.7
Accrued expenses and other liabilities   633,728     676,587     (42,859 ) (6.3 )
Total liabilities   19,345,905     18,996,681     349,224   1.8
Equity:

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

263,240 263,240

Common stock, par value $0.01 per share, 280,000,000 shares
authorized; 170,983,828 and 171,034,506 shares issued, respectively

1,710 1,710
Additional paid-in capital 853,024 862,776 (9,752 ) (1.1 )
Retained earnings, subject to certain restrictions 1,410,418 1,382,901 27,517 2.0
Accumulated other comprehensive income (loss) (30,695 ) (33,725 ) 3,030 9.0
Treasury stock at cost, 42,566 shares, and other   (33,585 )   (49,419 )   15,834   32.0
Total TCF Financial Corporation stockholders' equity 2,464,112 2,427,483 36,629 1.5
Non-controlling interest in subsidiaries   26,551     17,162     9,389   54.7
Total equity   2,490,663     2,444,645     46,018   1.9
Total liabilities and equity $ 21,836,568   $ 21,441,326   $ 395,242   1.8
 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF
CREDIT QUALITY DATA

(Dollars in thousands)
(Unaudited)

 

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

               
At At At At At Change from
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Mar. 31,
2017 2016 2016 2016 2016 2016 2016
Consumer real estate:
First mortgage lien 0.28 % 0.40 % 0.36 % 0.36 % 0.39 % (12 )

 bps

(11 )

 bps

Junior lien 0.05 0.05 0.03 0.03 0.05
Total consumer real estate 0.15 0.21 0.18 0.18 0.21 (6 ) (6 )
Commercial 0.01 0.11
Leasing and equipment finance 0.12 0.10 0.14 0.13 0.12 2
Inventory finance 0.01
Auto finance 0.13 0.23 0.20 0.13 0.09 (10 ) 4
Other 0.05 0.10 0.05 0.33 0.13 (5 ) (8 )
Subtotal 0.09 0.12 0.12 0.12 0.10 (3 ) (1 )
Portfolios acquired with deteriorated credit quality 3.06 0.02 1.51 (151 )
Total delinquencies 0.09 0.12 0.12 0.12 0.10 (3 ) (1 )
 

(1) Excludes non-accrual loans and leases.

 
 

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

     
Three Months Ended(1)

Change from

Mar. 31,   Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31, Dec. 31,   Mar. 31,
2017 2016 2016 2016 2016 2016 2016
Consumer real estate:
First mortgage lien (0.18 )% 0.26 % 0.34 % 0.35 % 0.55 % (44 )

 bps

(73 )

 bps

Junior lien (0.89 ) 0.08 0.04 0.05 0.17 (97 ) (106 )
Total consumer real estate (0.58 ) 0.17 0.17 0.19 0.35 (75 ) (93 )
Commercial 0.32 0.01 (0.01 ) 0.08 (0.02 ) 31 34
Leasing and equipment finance 0.13 0.10 0.18 0.11 0.13 3
Inventory finance 0.01 0.07 0.10 0.09 0.04 (6 ) (3 )
Auto finance 1.12 1.09 0.86 0.69 0.81 3 31
Other N.M. N.M. N.M. N.M. N.M. N.M. N.M.
Total 0.11 0.27 0.26 0.23 0.27 (16 ) (16 )
 
N.M. Not Meaningful.
(1) Annualized.
 
 

Non-Accrual Loans and Leases Rollforward

               
Three Months Ended Change from
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Mar. 31,
2017 2016 2016 2016 2016 2016 2016
Balance, beginning of period $ 181,445 $ 190,047 $ 195,542 $ 198,649 $ 200,466 $ (8,602 ) $ (19,021 )
Additions 34,661 32,398 28,697 35,280 38,029 2,263 (3,368 )
Charge-offs (6,412 ) (4,158 ) (5,670 ) (5,475 ) (7,436 ) (2,254 ) 1,024
Transfers to other assets (8,786 ) (17,118 ) (11,687 ) (10,310 ) (12,342 ) 8,332 3,556
Return to accrual status (2,591 ) (4,546 ) (5,447 ) (6,687 ) (7,698 ) 1,955 5,107
Payments received (10,732 ) (14,351 ) (13,845 ) (17,774 ) (15,551 ) 3,619 4,819
Sales (49,916 ) (2,764 ) (900 ) (47,152 ) (49,916 )
Other, net   1,312     1,937     2,457     2,759     3,181     (625 )   (1,869 )
Balance, end of period $ 138,981   $ 181,445   $ 190,047   $ 195,542   $ 198,649   $ (42,464 ) $ (59,668 )
 
 

Other Real Estate Owned Rollforward

               
Three Months Ended Change from
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Mar. 31,
2017 2016 2016 2016 2016 2016 2016
Balance, beginning of period $ 46,797 $ 33,712 $ 36,792 $ 42,441 $ 49,982 $ 13,085 $ (3,185 )
Transferred in 7,212 13,865 10,124 9,661 10,575 (6,653 ) (3,363 )
Sales (14,982 ) (8,655 ) (12,997 ) (16,058 ) (18,885 ) (6,327 ) 3,903
Writedowns (1,538 ) (1,281 ) (1,984 ) (2,027 ) (2,744 ) (257 ) 1,206
Other, net(1)   (5,530 )   9,156     1,777     2,775     3,513     (14,686 )   (9,043 )
Balance, end of period $ 31,959   $ 46,797   $ 33,712  

$

36,792   $ 42,441   $ (14,838 ) $ (10,482 )
 

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

 
     

Allowance for Loan and Lease Losses

             
At At At At At
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2017 2016 2016 2016 2016
% of % of % of % of % of
Balance Portfolio Balance Portfolio Balance Portfolio Balance Portfolio Balance Portfolio
Consumer real estate $ 53,851 1.16 % $ 59,448 1.17 % $ 62,092 1.24 % $ 64,765 1.27 % $ 66,728 1.27 %
Commercial 33,697 1.00 32,695 0.99 31,648 1.00 31,161 1.01 31,547 1.01
Leasing and equipment finance 21,257 0.50 21,350 0.49 20,649 0.49 20,124 0.49 19,454 0.49
Inventory finance 15,816 0.55 13,932 0.56 11,807 0.52 12,084 0.52 13,306 0.50
Auto finance 35,108 1.26 32,310 1.22 29,115 1.07 29,772 1.06 28,535 1.02
Other   437 2.60   534 2.84   530 2.96   666 3.19   504 2.66
Total $ 160,166 0.89 $ 160,269 0.90 $ 155,841 0.90 $ 158,572 0.91 $ 160,074 0.90
 
 

Changes in Allowance for Loan and Lease
Losses

               
Three Months Ended Change from
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Mar. 31,
2017 2016 2016 2016 2016 2016 2016
Balance, beginning of period $ 160,269 $ 155,841 $ 158,572 $ 160,074 $ 156,054 $ 4,428 $ 4,215
Charge-offs (18,902 ) (16,451 ) (16,244 ) (14,723 ) (16,667 ) (2,451 ) (2,235 )
Recoveries   13,813     4,718     4,779     4,592     4,761     9,095     9,052  
Net (charge-offs) recoveries (5,089 ) (11,733 ) (11,465 ) (10,131 ) (11,906 ) 6,644 6,817
Provision for credit losses 12,193 19,888 13,894 13,250 18,842 (7,695 ) (6,649 )
Other   (7,207 )   (3,727 )   (5,160 )   (4,621 )   (2,916 )   (3,480 )   (4,291 )
Balance, end of period $ 160,166   $ 160,269   $ 155,841   $ 158,572   $ 160,074   $ (103 ) $ 92  
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)
           
Three Months Ended March 31,
2017 2016
Average Yields and Average Yields and
Balance Interest(1) Rates(1)(2) Balance Interest(1) Rates(1)(2)
ASSETS:
Investments and other $ 286,519 $ 2,747 3.88 % $ 349,079 $ 2,216 2.55 %
Securities held to maturity 177,939 1,280 2.88 199,303 1,319 2.65
Securities available for sale:(3)
Taxable 815,867 4,654 2.28 640,796 3,818 2.38
Tax-exempt(4) 640,826 5,117 3.19 319,427 2,584 3.24
Loans and leases held for sale 464,301 10,752 9.39 367,686 8,504 9.30
Loans and leases:(5)
Consumer real estate:
Fixed-rate 2,083,472 29,287 5.70 2,430,773 35,202 5.82
Variable- and adjustable-rate   2,945,529   40,239 5.54   3,028,001   40,056 5.32
Total consumer real estate 5,029,001 69,526 5.60 5,458,774 75,258 5.54
Commercial:
Fixed-rate 1,000,316 11,713 4.75 1,012,870 12,429 4.94
Variable- and adjustable-rate   2,302,575   24,391 4.30   2,145,231   21,337 4.00
Total commercial 3,302,891 36,104 4.43 3,158,101 33,766 4.30
Leasing and equipment finance 4,285,944 47,976 4.48 3,992,678 44,654 4.47
Inventory finance 2,696,787 39,451 5.93 2,433,534 34,370 5.68
Auto finance 2,714,862 27,771 4.15 2,703,880 27,837 4.14
Other   9,740   131 5.44   10,018   142 5.63
Total loans and leases   18,039,225   220,959 4.95   17,756,985   216,027 4.89
Total interest-earning assets 20,424,677 245,509 4.86 19,633,276 234,468 4.80
Other assets(6)   1,263,678   1,297,479
Total assets $ 21,688,355 $ 20,930,755
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail $ 1,880,298 $ 1,751,710
Small business 894,845 853,645
Commercial and custodial   626,081   560,983
Total non-interest bearing deposits 3,401,224 3,166,338
Interest-bearing deposits:
Checking 2,530,281 83 0.01 2,440,563 81 0.01
Savings 4,756,486 501 0.04 4,700,164 346 0.03
Money market 2,385,353 2,938 0.50 2,472,751 3,807 0.62
Certificates of deposit   4,033,143   10,193 1.02   4,104,951   10,757 1.05
Total interest-bearing deposits   13,705,263   13,715 0.41   13,718,429   14,991 0.44
Total deposits   17,106,487   13,715 0.33   16,884,767   14,991 0.36
Borrowings:
Short-term borrowings 4,628 7 0.65 5,562 7 0.53
Long-term borrowings   1,459,053   6,471 1.78   1,062,513   5,686 2.14
Total borrowings   1,463,681   6,478 1.78   1,068,075   5,693 2.13
Total interest-bearing liabilities   15,168,944   20,193 0.54   14,786,504   20,684 0.56
Total deposits and borrowings 18,570,168 20,193 0.44 17,952,842 20,684 0.46
Other liabilities   665,301   650,908
Total liabilities   19,235,469   18,603,750
Total TCF Financial Corp. stockholders' equity 2,431,755 2,307,781
Non-controlling interest in subsidiaries   21,131   19,224
Total equity   2,452,886   2,327,005
Total liabilities and equity $ 21,688,355 $ 20,930,755
Net interest income and margin $ 225,316 4.46 $ 213,784 4.37
 
(1) Interest and yields are presented on a fully tax-equivalent
basis.
(2) Annualized.
(3) Average balances and yields of securities available for sale are
based upon historical amortized cost and exclude equity securities.
(4) The yield on tax-exempt securities available for sale is
computed on a tax-equivalent basis using a statutory federal income
tax rate of 35% for all periods presented.
(5) Average balances of loans and leases include non-accrual loans
and leases and are presented net of unearned income.
(6) Includes leased equipment and related initial direct costs under
operating leases of $180.3 million and $133.6 million for the first
quarters of 2017 and 2016, respectively.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per-share data)
(Unaudited)
         
Three Months Ended
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2017 2016 2016 2016 2016
Interest income:
Loans and leases $ 219,548 $ 210,848 $ 210,765 $ 214,128 $ 214,805
Securities available for sale 7,980 7,553 7,126 6,396 5,498
Securities held to maturity 1,280 1,165 1,049 1,116 1,319
Loans held for sale and other   13,499     12,092     13,786     12,364     10,720  
Total interest income   242,307     231,658     232,726     234,004     232,342  
Interest expense:
Deposits 13,715 15,053 15,851 15,893 14,991
Borrowings   6,478     5,159     4,857     5,127     5,693  
Total interest expense   20,193     20,212     20,708     21,020     20,684  
Net interest income 222,114 211,446 212,018 212,984 211,658
Provision for credit losses   12,193     19,888     13,894     13,250     18,842  
Net interest income after provision for credit losses   209,921     191,558     198,124     199,734     192,816  
Non-interest income:
Fees and service charges 31,282 35,132 35,093 34,622 32,817
Card revenue 13,150 13,689 13,747 14,083 13,363
ATM revenue   4,675     4,806     5,330     5,288     5,021  
Subtotal 49,107 53,627 54,170 53,993 51,201
Gains on sales of auto loans, net 2,864 1,145 11,624 10,143 11,920
Gains on sales of consumer real estate loans, net 8,891 16,676 13,528 10,839 9,384
Servicing fee income   11,651     11,404     10,393     9,502     8,883  
Subtotal 23,406 29,225 35,545 30,484 30,187
Leasing and equipment finance 28,298 31,316 28,289 31,074 28,487
Other   2,703     1,365     2,270     2,405     2,843  
Fees and other revenue 103,514 115,533 120,274 117,956 112,718
Gains (losses) on securities, net       135     (600 )       (116 )
Total non-interest income   103,514     115,668     119,674     117,956     112,602  
Non-interest expense:
Compensation and employee benefits 124,477 115,001 117,155 118,093 124,473
Occupancy and equipment 39,600 38,150 37,938 36,884 37,008
Other   64,037     59,235     59,421     59,416     53,348  
Subtotal 228,114 212,386 214,514 214,393 214,829
Operating lease depreciation 11,242 10,906 10,038 9,842 9,573
Foreclosed real estate and repossessed assets, net 4,549 1,889 4,243 3,135 3,920
Other credit costs, net   101     178     83     (54 )   12  
Total non-interest expense   244,006     225,359     228,878     227,316     228,334  
Income before income tax expense 69,429 81,867 88,920 90,374 77,084
Income tax expense   20,843     29,762     30,257     29,706     26,803  
Income after income tax expense 48,586 52,105 58,663 60,668 50,281
Income attributable to non-controlling interest   2,308     2,013     2,371     2,974     2,235  
Net income attributable to TCF Financial Corporation 46,278 50,092 56,292 57,694 48,046
Preferred stock dividends   4,847     4,847     4,847     4,847     4,847  
Net income available to common stockholders $ 41,431   $ 45,245   $ 51,445   $ 52,847   $ 43,199  
 
Earnings per common share:
Basic $ 0.25 $ 0.27 $ 0.31 $ 0.32 $ 0.26
Diluted 0.25 0.27 0.31 0.31 0.26
 
Dividends declared per common share $ 0.075 $ 0.075 $ 0.075 $ 0.075 $ 0.075
 
Financial highlights:(1)
Return on average assets 0.90 % 0.99 % 1.12 % 1.14 % 0.96 %
Return on average common equity 7.64 8.40 9.59 10.09 8.45
Net interest margin 4.46 4.30 4.34 4.35 4.37
 

(1) Annualized.

 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS
(In thousands)
(Unaudited)
         

Mar. 31,
2017

Dec. 31,
2016

Sep. 30,
2016

Jun. 30,
2016

Mar. 31,
2016

ASSETS:
Investments and other $ 286,519 $ 276,018 $ 331,107 $ 322,477 $ 349,079
Securities held to maturity 177,939 182,177 187,414 194,693 199,303
Securities available for sale:(1)
Taxable 815,867 791,289 747,890 697,902 640,796
Tax-exempt 640,826 610,070 570,013 481,246 319,427
Loans and leases held for sale 464,301 492,457 558,649 497,797 367,686
Loans and leases:(2)
Consumer real estate:
Fixed-rate 2,083,472 2,169,493 2,216,945 2,327,409 2,430,773
Variable- and adjustable-rate   2,945,529   2,916,653   2,918,631   2,931,318   3,028,001
Total consumer real estate 5,029,001 5,086,146 5,135,576 5,258,727 5,458,774
Commercial:
Fixed-rate 1,000,316 948,856 944,347 982,914 1,012,870
Variable- and adjustable-rate   2,302,575   2,198,661   2,147,768   2,127,032   2,145,231
Total commercial 3,302,891 3,147,517 3,092,115 3,109,946 3,158,101
Leasing and equipment finance 4,285,944 4,252,543 4,147,488 4,032,112 3,992,678
Inventory finance 2,696,787 2,389,980 2,272,409 2,564,648 2,433,534
Auto finance 2,714,862 2,647,088 2,670,272 2,751,679 2,703,880
Other   9,740   9,307   9,252   9,585   10,018
Total loans and leases   18,039,225   17,532,581   17,327,112   17,726,697   17,756,985
Total interest-earning assets 20,424,677 19,884,592 19,722,185 19,920,812 19,633,276
Other assets(3)   1,263,678   1,253,002   1,303,670   1,286,506   1,297,479
Total assets $ 21,688,355 $ 21,137,594 $ 21,025,855 $ 21,207,318 $ 20,930,755
 
LIABILITIES AND EQUITY:
Non-interest-bearing deposits:
Retail $ 1,880,298 $ 1,773,673 $ 1,771,840 $ 1,817,734 $ 1,751,710
Small business 894,845 926,388 894,761 861,394 853,645
Commercial and custodial   626,081   615,686   583,430   582,041   560,983
Total non-interest bearing deposits 3,401,224 3,315,747 3,250,031 3,261,169 3,166,338
Interest-bearing deposits:
Checking 2,530,281 2,454,815 2,434,934 2,478,673 2,440,563
Savings 4,756,486 4,670,906 4,661,565 4,677,681 4,700,164
Money market 2,385,353 2,429,239 2,496,590 2,557,897 2,472,751
Certificates of deposit   4,033,143   4,198,190   4,304,990   4,308,367   4,104,951
Total interest-bearing deposits   13,705,263   13,753,150   13,898,079   14,022,618   13,718,429
Total deposits   17,106,487   17,068,897   17,148,110   17,283,787   16,884,767
Borrowings:
Short-term borrowings 4,628 5,063 8,485 9,100 5,562
Long-term borrowings   1,459,053   931,720   729,737   840,739   1,062,513
Total borrowings   1,463,681   936,783   738,222   849,839   1,068,075
Total interest-bearing liabilities   15,168,944   14,689,933   14,636,301   14,872,457   14,786,504
Total deposits and borrowings 18,570,168 18,005,680 17,886,332 18,133,626 17,952,842
Other liabilities   665,301   695,778   708,048   690,363   650,908
Total liabilities   19,235,469   18,701,458   18,594,380   18,823,989   18,603,750
Total TCF Financial Corporation stockholders' equity 2,431,755 2,417,222 2,409,312 2,357,509 2,307,781
Non-controlling interest in subsidiaries   21,131   18,914   22,163   25,820   19,224
Total equity   2,452,886   2,436,136   2,431,475   2,383,329   2,327,005
Total liabilities and equity $ 21,688,355 $ 21,137,594 $ 21,025,855 $ 21,207,318 $ 20,930,755
 
(1) Average balances of securities available for sale are based upon
historical amortized cost and exclude equity securities.
(2) Average balances of loans and leases include non-accrual loans
and leases and are presented net of unearned income.
(3) Includes leased equipment and related initial direct costs under
operating leases of $180.3 million, $157.2 million, $138.2 million,
$131.9 million and $133.6 million for the first quarter of 2017, and
for the fourth quarter, third quarter, second quarter and first
quarter of 2016, respectively.
 
 
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY YIELDS AND RATES(1)(2)
(Unaudited)
         

Mar. 31,
2017

Dec. 31,
2016

Sep. 30,
2016

Jun. 30,
2016

Mar. 31,
2016

ASSETS:
Investments and other 3.88 % 3.35 % 2.86 % 2.99 % 2.55 %
Securities held to maturity 2.88 2.56 2.24 2.29 2.65
Securities available for sale:(3)
Taxable 2.28 2.22 2.23 2.21 2.38
Tax-exempt(4) 3.19 3.18 3.19 3.25 3.24
Loans and leases held for sale 9.39 7.89 8.12 8.05 9.30
Loans and leases:
Consumer real estate:
Fixed-rate 5.70 5.57 5.75 5.73 5.82
Variable- and adjustable rate 5.54 5.36 5.29 5.32 5.32
Total consumer real estate 5.60 5.45 5.49 5.50 5.54
Commercial:
Fixed-rate 4.75 4.70 4.92 4.96 4.94
Variable- and adjustable-rate 4.30 4.05 3.91 4.00 4.00
Total commercial 4.43 4.25 4.22 4.30 4.30
Leasing and equipment finance 4.48 4.43 4.48 4.45 4.47
Inventory finance 5.93 5.80 6.07 5.74 5.68
Auto finance 4.15 4.04 4.06 4.19 4.14
Other 5.44 5.72 5.85 5.77 5.63
Total loans and leases 4.95 4.82 4.88 4.88 4.89
 
Total interest-earning assets 4.86 4.70 4.76 4.77 4.80
 
LIABILITIES:
Interest-bearing deposits:
Checking 0.01 0.01 0.01 0.02 0.01
Savings 0.04 0.04 0.03 0.03 0.03
Money market 0.50 0.57 0.61 0.63 0.62
Certificates of deposit 1.02 1.05 1.07 1.07 1.05
Total interest-bearing deposits 0.41 0.44 0.45 0.46 0.44
Total deposits 0.33 0.35 0.37 0.37 0.36
Borrowings:
Short-term borrowings 0.65 0.77 0.86 0.71 0.53
Long-term borrowings 1.78 2.21 2.65 2.43 2.14
Total borrowings 1.78 2.20 2.63 2.42 2.13
 
Total interest-bearing liabilities 0.54 0.55 0.56 0.57 0.56
 
Net interest margin 4.46 4.30 4.34 4.35 4.37
 
(1) Annualized.
(2) Yields are presented on a fully tax-equivalent basis.
(3) Average yields of securities available for sale are based upon
historical amortized cost and exclude equity securities.
(4) The yield on tax-exempt securities available for sale is
computed on a tax-equivalent basis using a statutory federal income
tax rate of 35% for all periods presented.
 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES
RECONCILIATION
OF GAAP TO NON-GAAP FINANCIAL MEASURES
(1)
(Dollars
in thousands)
(Unaudited)

     
At Mar. 31, At Dec. 31,
2017 2016

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

Total equity $ 2,490,663 $ 2,444,645
Less: Non-controlling interest in subsidiaries   26,551     17,162  
Total TCF Financial Corporation stockholders' equity 2,464,112 2,427,483
Less: Preferred stock   263,240     263,240  
Total common stockholders' equity (a) 2,200,872 2,164,243
Less:
Goodwill 225,640 225,640
Other intangibles   1,615     1,738  
Tangible common equity (b) $ 1,973,617   $ 1,936,865  
 
Total assets (c) $ 21,836,568 $ 21,441,326
Less:
Goodwill 225,640 225,640
Other intangibles   1,615     1,738  
Tangible assets (d) $ 21,609,313   $ 21,213,948  
 
Common stock shares outstanding (e) 170,941,262 170,991,940
 
Common equity to assets (a) / (c) 10.08 % 10.09 %
Tangible common equity to tangible assets (b) / (d) 9.13 % 9.13 %
 
Book value per common share (a) / (e) $ 12.88 $ 12.66
Tangible book value per common share (b) / (e) $ 11.55 $ 11.33
 
   
Three Months Ended
Mar. 31,   Dec. 31,   Mar. 31,
2017 2016 2016

Computation of return on average tangible
common equity:

Net income available to common stockholders (f) $ 41,431 $ 45,245 $ 43,199
Plus: Other intangibles amortization 123 290 366
Less: Income tax expense attributable to other intangibles
amortization
  42     103     131  
Adjusted net income available to common stockholders (g) $ 41,512   $ 45,432   $ 43,434  
 
Average balances:
Total equity $ 2,452,886 $ 2,436,136 $ 2,327,005
Less: Non-controlling interest in subsidiaries   21,131     18,914     19,224  
Total TCF Financial Corporation stockholders' equity 2,431,755 2,417,222 2,307,781
Less: Preferred stock   263,240     263,240     263,240  
Average total common stockholders' equity (h) 2,168,515 2,153,982 2,044,541
Less:
Goodwill 225,640 225,640 225,640
Other intangibles   1,675     1,872     2,966  
Average tangible common equity (i) $ 1,941,200   $ 1,926,470   $ 1,815,935  
 
Return on average common equity(2) (f) / (h) 7.64 % 8.40 % 8.45 %
Return on average tangible common equity(2) (g) / (i) 8.55 % 9.43 % 9.57 %
 
(1) When evaluating capital adequacy and utilization, management
considers financial measures such as tangible common equity to
tangible assets, tangible book value per common share and return on
average tangible common equity. These measures are non-GAAP
financial measures and are viewed by management as useful indicators
of capital levels available to withstand unexpected market or
economic conditions and also provide investors, regulators and other
users with information to be viewed in relation to other banking
institutions.
(2) Annualized.
 

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