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--Net income of $17.5 million
--Net interest margin of 3.92 percent
--Average loans and leases increased by $995 million, or 7.7 percent
--Average deposits increased by $1.6 billion, or 16.1 percent
--Announced quarterly cash dividend of five cents per common share, payable November 30, 2009
TCF Financial Corporation (NYSE:TCB):
Earnings Summary Table 1
($ in thousands, except per-share data) Percent Change
3Q 2Q 3Q 3Q09 vs 3Q09 vs YTD YTD Percent
2009 2009 2008 2Q09 3Q08 2009 2008 Change
Net income $ 17,451 $ 23,543 $ 30,126 (25.9 ) (42.1 ) $ 67,641 $ 101,254 (33.2 )
Diluted earnings per common share .14 .08 .24 75.0 (41.7 ) .39 .81 (51.9 )
Financial Ratios (1)
Return on average assets .39 % .53 % .73 % .52 % .83 %
Return on average common equity(2) 6.03 7.82 11.11 7.13 12.29
Net interest margin 3.92 3.80 3.97 3.80 3.94
Net charge-offs as a percentage of average loans and leases 1.52 1.43 .82 1.33 .70
(1) Annualized
(2) Excludes non-cash deemed preferred stock dividend of $12,025 in
the second quarter and year-to-date of 2009. Including this amount,
the return on average common equity was 3.61% and 5.73% for the
second quarter and year-to-date of 2009, respectively.
TCF Financial Corporation ("TCF") (NYSE:TCB) today reported third quarter 2009 diluted earnings per common share of 14 cents, compared with 24 cents in the third quarter of 2008 and 8 cents for the second quarter of 2009. Net income for the third quarter of 2009 was $17.5 million, compared with $30.1 million in the third quarter of 2008 and $23.5 million in the second quarter of 2009.
Diluted earnings per common share for the first nine months of 2009 was 39 cents, compared with 81 cents for the same 2008 period. Net income for the first nine months of 2009 was $67.6 million, compared with $101.3 million for the same 2008 period.
TCF declared a quarterly cash dividend of five cents per common share payable on November 30, 2009 to stockholders of record at the close of business on October 30, 2009.
Chairman's Statement
"The third quarter continued to pose many challenges for TCF and other banks as the effects of high unemployment and the resulting increase in consumer defaults and softness in spending continue to pressure earnings," said William A. Cooper, TCF Chairman and CEO. "While credit losses continue to dampen our results, fee income and net interest margin remained strong. In addition, our focus on growing low cost deposits and expanding our specialty finance businesses position TCF for improved earnings as the economy improves."
Total Revenue Table 2
Percent Change
($ in thousands) 3Q 2Q 3Q 3Q09 vs 3Q09 vs YTD 2009 YTD 2008 Percent
2009 2009 2008 2Q09 3Q08 Change
Net interest income $ 161,489 $ 156,463 $ 152,165 3.2 % 6.1 % $ 463,365 $ 446,556 3.8 %
Fees and other revenue:
Fees and service charges 77,433 77,536 71,783 (.1 ) 7.9 212,033 203,291 4.3
Card revenue 26,393 26,604 26,240 (.8 ) .6 77,957 77,839 .2
ATM revenue 7,861 7,973 8,720 (1.4 ) (9.9 ) 23,432 24,957 (6.1 )
Total banking fees 111,687 112,113 106,743 (.4 ) 4.6 313,422 306,087 2.4
Leasing and equipment finance 15,173 16,881 13,006 (10.1 ) 16.7 44,705 39,190 14.1
Other 1,197 820 3,296 46.0 (63.7 ) 2,475 11,977 (79.3 )
Total fees and other revenue 128,057 129,814 123,045 (1.4 ) 4.1 360,602 357,254 .9
Gains on securities - 10,556 498 N.M. N.M. 22,104 7,899 179.8
Visa share redemption - - - - - - 8,308 N.M.
Total non-interest income 128,057 140,370 123,543 (8.8 ) 3.7 382,706 373,461 2.5
Total revenue $ 289,546 $ 296,833 $ 275,708 (2.5 ) 5.0 $ 846,071 $ 820,017 3.2
Net interest margin(1) 3.92 % 3.80 % 3.97 % 3.80 % 3.94 %
Fees and other revenue as a % of total revenue 44.23 43.73 44.63 42.62 43.57
N.M. = Not Meaningful
(1) Annualized
Net Interest Income
-- The increase in net interest income from the third quarter of 2008 was primarily due to an increase in average loans and leases, partially offset by a decrease in net interest margin. The increase in net interest income from the second quarter of 2009 was primarily due to an increase in average loans and leases and an increase in net interest margin.
-- The decrease in net interest margin from the third quarter of 2008 was primarily due to declines in yields on interest-earning assets, resulting from lower market interest rates, the effect of higher balances of non-accrual loans and leases, loan modifications and investments in lower yielding agency debentures, partially offset by declines in rates paid on average deposits.
-- The increase in net interest margin from the second quarter of 2009 was primarily due to reductions in rates paid on deposits, partially offset by the effects of higher balances of non-accrual loans and leases, loan modifications and lower average yields on the leasing and equipment finance portfolio.
Non-interest Income
-- Banking fees and service charges were $77.4 million, up $5.7 million, or 7.9 percent, from the third quarter of 2008 and essentially flat with the second quarter of 2009. The increase from the third quarter of 2008 was primarily due to an increased number of checking accounts and related fee income.
-- Card revenues totaled $26.4 million for the third quarter of 2009, essentially flat with the third quarter of 2008 and the second quarter of 2009. Growth in active accounts was offset by fewer transactions and lower average transaction amounts.
-- Leasing and equipment finance revenues were $15.2 million for the third quarter of 2009, up $2.2 million, or 16.7 percent, from the third quarter of 2008 and down $1.7 million, or 10.1 percent, from the second quarter of 2009. The increase in leasing revenue from the third quarter of 2008 and decrease from the second quarter of 2009 was primarily due to sales-type lease revenue which varies from period to period based on customer-driven events.
-- Other non-interest income was $1.2 million for the third quarter of 2009, down $2.1 million, or 63.7 percent, from the third quarter of 2008, and up $377 thousand, or 46 percent, from the second quarter of 2009. The decrease in other non-interest income from the third quarter of 2008 was primarily due to TCF no longer selling investment and insurance products in the branches, partially offset by servicing fees generated by TCF Inventory Finance.
Loans and Leases
Average Loans and Leases Table 3
Percent Change
($ in thousands) 3Q 2Q 3Q 3Q09 vs 3Q09 vs YTD 2009 YTD 2008 Percent
2009 2009 2008 2Q09 3Q08 Change
Loans and leases:
Consumer real estate
First mortgage lien $ 4,939,529 $ 4,938,187 $ 4,874,190 - % 1.3 % $ 4,924,902 $ 4,825,185 2.1 %
Junior lien 2,329,096 2,355,913 2,434,392 (1.1 ) (4.3 ) 2,361,140 2,407,350 (1.9 )
Total consumer real estate 7,268,625 7,294,100 7,308,582 (.3 ) (.5 ) 7,286,042 7,232,535 .7
Consumer other 35,015 36,255 45,939 (3.4 ) (23.8 ) 36,920 45,481 (18.8 )
Total consumer 7,303,640 7,330,355 7,354,521 (.4 ) (.7 ) 7,322,962 7,278,016 .6
Commercial real estate 3,193,686 3,110,030 2,776,830 2.7 15.0 3,101,459 2,666,948 16.3
Commercial business 477,041 483,493 544,826 (1.3 ) (12.4 ) 486,680 539,348 (9.8 )
Total commercial 3,670,727 3,593,523 3,321,656 2.1 10.5 3,588,139 3,206,296 11.9
Leasing and equipment finance 2,811,165 2,809,787 2,300,429 - 22.2 2,751,935 2,223,811 23.7
Inventory finance 185,914 118,317 - 57.1 N.M. 111,479 - N.M.
Total Loans and Leases $ 13,971,446 $ 13,851,982 $ 12,976,606 .9 7.7 $ 13,774,515 $ 12,708,123 8.4
N.M. = Not meaningful
-- Average consumer real estate loan balances were relatively flat from the third quarter of 2008 and the second quarter of 2009 reflecting less demand for home equity financing due in part to declines in home values and very competitive pricing from government sponsored and supported programs.
-- At September 30, 2009, 68 percent of the consumer real estate loan portfolio was secured by first liens.
-- Average commercial loan balances increased $349.1 million, or 10.5 percent, from the third quarter of 2008 and increased $77.2 million, or 2.1 percent, from the second quarter of 2009 as a reduction in competitive alternatives has increased the opportunity to attract high quality customers.
-- Average leasing and equipment finance balances increased $510.7 million, or 22.2 percent, from the third quarter of 2008 and were relatively flat when compared to the second quarter of 2009. At the end of September 2009, TCF's leasing subsidiary, Winthrop Resources Corporation, acquired Fidelity National Capital, Inc., with over $200 million in direct financing leases. Additionally, this acquisition included $57.9 million in operating leases which are recorded as other assets. Portfolio purchases and company acquisitions in the first and third quarters of 2009 contributed $198.2 million of the increase in average balances from the third quarter of 2008.
-- Average inventory finance loans increased $67.6 million, or 57.1 percent, to $185.9 million from the second quarter of 2009.
-- In the third quarter of 2009, TCF announced the creation of Red Iron Acceptance, LLC, a joint venture with The Toro Company, which will provide U.S. Toro distributors and dealers with floor plan and open account financing. In October 2009, this joint venture purchased $72.7 million of inventory finance loans from The Toro Company. Red Iron Acceptance, LLC is consolidated with the operating results of TCF.
Securities Available for Sale
Average Securities Available for Sale Table 4
Yield Yield
($ in thousands) 3Q 2Q 3Q 3Q09 3Q08 YTD 2009 YTD 2008 YTD YTD
2009 2009 2008 2009 2008
U.S. Government sponsored entities:
Mortgage-backed securities $ 1,432,670 $ 1,656,767 $ 2,157,047 4.80 % 5.29% $ 1,695,377 $2,146,185 4.97 % 5.30 %
Debentures 600,098 527,562 - 2.19 - 381,022 - 2.16 -
Other securities 489 498 3,840 4.91 3.64 497 15,938 5.37 3.48
Total $ 2,033,257 $ 2,184,827 $ 2,160,887 4.03 5.29 $ 2,076,896 $ 2,162,123 4.45 5.29
-- TCF purchased $5 million of mortgage-backed securities in the third quarter of 2009, compared with $204 million of purchases and $381 million of sales in the second quarter of 2009.
-- In late March and April of 2009, TCF purchased $600.1 million of Fannie Mae and Freddie Mac callable debentures with maturities of three years or less resulting in a reduction in lower yielding interest-bearing deposits at the Federal Reserve.
Deposits
Average Deposits Table 5
Percent Change
($ in thousands) 3Q 2Q 3Q 3Q09 vs 3Q09 vs YTD YTD Percent
2009 2009 2008 2Q09 3Q08 2009 2008 Change
Non-interest bearing deposits:
Retail $ 1,380,591 $ 1,446,215 $ 1,409,855 (4.5 )% (2.1 )% $ 1,418,244 $ 1,429,752 (.8 )%
Small business 591,451 571,676 597,894 3.5 (1.1 ) 575,558 580,248 (.8 )
Commercial 277,135 260,079 253,900 6.6 9.2 255,066 231,184 10.3
Subtotal 2,249,177 2,277,970 2,261,649 (1.3 ) (.6 ) 2,248,868 2,241,184 .3
Interest-bearing deposits:
Checking 1,800,583 1,792,493 1,837,540 .5 (2.0 ) 1,780,380 1,855,963 (4.1 )
Savings 5,071,509 4,823,897 2,791,559 5.1 81.7 4,569,882 2,800,120 63.2
Money market 723,098 690,201 629,905 4.8 14.8 686,830 609,629 12.7
Subtotal 7,595,190 7,306,591 5,259,004 3.9 44.4 7,037,092 5,265,712 33.6
Certificates 1,757,884 2,087,490 2,469,327 (15.8 ) (28.8 ) 2,100,342 2,480,262 (15.3 )
Subtotal 9,353,074 9,394,081 7,728,331 (.4 ) 21.0 9,137,434 7,745,974 18.0
Total deposits $ 11,602,251 $ 11,672,051 $ 9,989,980 (.6 ) 16.1 $ 11,386,302 $ 9,987,158 14.0
Average interest rate on deposits .94 % 1.15 % 1.34 % 1.19 % 1.60 %
-- Total average deposits increased $1.6 billion from the third quarter of 2008 and remained relatively flat compared to the second quarter of 2009. The increase from the third quarter of 2008 was primarily due to strong growth in savings deposits due to several initiatives involving products, pricing and marketing efforts, partially offset by declines in certificates of deposits resulting from reduced interest rates. Average deposit balances remained relatively flat from the second quarter of 2009 primarily due to increases in savings deposits offset by a decrease in certificates of deposit.
-- The average rate paid on deposits was .94 percent in the third quarter of 2009, down 40 basis points from the third quarter of 2008 and down 21 basis points from the second quarter of 2009 due to reductions in interest rates paid on certain deposit products and mix changes due to management's strategy to reduce balances of certificates of deposit. The weighted average interest rate on total deposits was .90 percent at September 30, 2009.
-- The number of new checking accounts opened in the third quarter of 2009 increased 12.6 percent compared with the third quarter of 2008 and increased 8.9 percent from the second quarter of 2009.
Non-interest Expense
Non-interest Expense Table 6
Percent Change
($ in thousands) 3Q 2Q 3Q 3Q09 vs 3Q09 vs YTD YTD Percent
2009 2009 2008 2Q09 3Q08 2009 2008 Change
Compensation and employee benefits
$ 90,680 $ 90,752 $ 84,895 (.1 )% 6.8 % $ 267,622 $ 257,880 3.8 %
Occupancy and equipment 31,619 31,527 31,832 .3 (.7 ) 95,193 95,450 (.3 )
Deposit account premiums 7,472 7,287 7,292 2.5 2.5 21,335 11,229 90.0
Advertising and marketing 4,766 4,134 5,017 15.3 (5.0 ) 13,345 14,507 (8.0 )
Operating lease depreciation 3,734 3,860 4,215 (3.3 ) (11.4 ) 11,618 13,189 (11.9 )
FDIC premiums and assessments 5,085 13,303 426 (61.8 ) N.M. 22,183 1,284 N.M.
Foreclosed real estate and repossessed assets 8,038 6,125 4,883 31.2 64.6 18,454 12,390 48.9
Other 38,873 39,558 39,028 (1.7 ) (.4 ) 111,271 108,664 2.4
Total non-interest expense $ 190,267 $ 196,546 $ 177,588 (3.2 ) 7.1 $ 561,021 $ 514,593 9.0
N.M. = Not meaningful
-- Compensation and benefits expenses increased $5.8 million, or 6.8 percent, from the third quarter of 2008 and were relatively flat compared to the second quarter of 2009. The increase from the third quarter of 2008 was primarily due to increases in leasing and equipment finance and inventory finance compensation costs as a result of expansion and growth, and increased employee medical plan expenses.
-- FDIC premiums and assessments were up $4.7 million from the third quarter of 2008 and down $8.2 million from the second quarter of 2009. The increase from the third quarter of 2008 was primarily due to higher insurance rates and deposit growth. The decrease from the second quarter of 2009 was primarily attributable to a FDIC special assessment of $8.2 million in June of 2009.
-- Foreclosed real estate and repossessed asset expenses increased $3.2 million from the third quarter of 2008 and increased $1.9 million from the second quarter of 2009. The increases from both periods were primarily due to increased numbers of foreclosed commercial and consumer real estate properties, adjustments to property valuations and losses on sales of properties.
Credit Quality
Credit Quality Summary Table 7
Percent Change
($ in thousands) 3Q 2Q 3Q 3Q09 vs 3Q09 vs YTD YTD %
2009 2009 2008 2Q09 3Q08 2009 2008 Chg
Allowance for Loan and Lease Losses
Balance at beginning of period $ 193,445 $ 181,216 $ 133,637 6.7 % 44.8 % $ 172,442 $ 80,942 113.0 %
Charge-offs (57,214 ) (53,462 ) (29,976 ) 7.0 90.9 (149,557 ) (77,700 ) 92.5
Recoveries 3,957 3,800 3,212 4.1 23.2 11,700 10,741 8.9
Net charge-offs (53,257 ) (49,662 ) (26,764 ) 7.2 99.0 (137,857 ) (66,959 ) 105.9
Provision for credit losses 75,544 61,891 52,105 22.1 45.0 181,147 144,995 24.9
Balance at end of period $ 215,732 $ 193,445 $ 158,978 11.5 35.7 $ 215,732 $ 158,978 35.7
Allowance as a percentage of period end loans and leases 1.51 % 1.39 % 1.21 % 1.51 % 1.21 %
Ratio of allowance to net charge-offs(1) 1.0X 1.0X 1.5X 1.2X 1.8X
Credit Loss Reserves
Allowance for loan and lease losses $ 215,732 $ 193,445 $ 158,978 11.5 35.7
Reserves netted against portfolio asset balances 12,951 13,828 - (6.3 ) N.M.
Reserves for unfunded commitments 2,871 2,655 1,678 8.1 71.1
Total credit loss reserves $ 231,554 $ 209,928 $ 160,656 10.3 44.1
Total credit loss reserves as a % of period end loans and leases 1.61 % 1.50 % 1.23 %
Ratio of total credit loss reserves to net 1.0X 1.0X 1.5X
charge-offs(1) (2)
Non-accrual loans and leases $ 268,834 $ 239,917 $ 145,890 12.1 84.3
Real estate owned 94,167 96,862 54,179 (2.8 ) 73.8
Total non-performing assets $ 363,001 $ 336,779 $ 200,069 7.8 81.4
Non-performing assets as a 2.57 % 2.45 % 1.55 %
percentage of net loans and leases
Accruing consumer troubled debt $ 159,881 $ 51,483 $ 23,844 N.M. N.M.
restructurings
N.M. = Not Meaningful
(1) Annualized
(2) Includes $1.9 million in write-offs related to credit reserves
netted against portfolio asset balances in the third quarter of 2009
At September 30, 2009, TCF's:
-- Allowance for loan and lease losses was $215.7 million, or 1.51 percent of loans and leases, up from $193.4 million, or 1.39 percent of loans and leases at June 30, 2009.
-- Over-60-day delinquency rate was .81 percent, up from .72 percent at June 30, 2009, primarily due to increases in consumer real estate.
-- Non-accrual loans and leases increased $28.9 million, or 12.1 percent, from June 30, 2009 primarily due to increases in consumer and commercial real estate non-accrual loans.
-- TCF completed $215.2 million and $590.7 million of consumer real estate loan modifications in the third quarter and first nine months of 2009, respectively. Of these modifications, $112.3 million in the third quarter and $144.7 million in the first nine months were considered troubled debt restructurings which continue to accrue interest.
-- TCF has several programs designed to help consumer real estate customers avoid home foreclosures by extending payment dates or reducing interest rates. Loan modification programs for consumer real estate borrowers implemented in the third quarter of 2009 have resulted in a significant increase in restructured loans. Primarily these loans are classified as troubled debt restructurings and generally accrue interest although at lower rates than the original loan. TCF expects the balance of consumer real estate troubled debt restructurings to increase into 2010.
For the quarter ended September 30, 2009, TCF's:
-- Provision for credit losses was $75.5 million, up from $52.1 million in the third quarter of 2008 and up from $61.9 million in the second quarter of 2009. The increase from the third quarter of 2008 was primarily due to increased consumer real estate, commercial and leasing net charge-offs and reserves for certain commercial loans and restructured consumer real estate loans. The increase from the second quarter of 2009 was primarily due to increased leasing and equipment finance and consumer real estate net charge-offs and reserves for restructured consumer real estate loans, partially offset by decreased commercial real estate net charge-offs.
-- Net loan and lease charge-offs were $53.3 million, or 1.52 percent annualized, of average loans and leases, up from $49.7 million, or 1.43 percent annualized, of average loans and leases, from the second quarter of 2009 primarily due to increases in consumer real estate and leasing and equipment finance net charge-offs, partially offset by decreased commercial real estate net charge-offs.
Income Taxes
-- Income tax expense was 27.4 percent of pre-tax income for the third quarter of 2009, compared with 34.5 percent for the comparable 2008 period and 38.7 percent for the second quarter of 2009. The third quarter of 2009 income tax expense included a $3 million decrease in income tax expense related to favorable developments in uncertain tax positions, partially offset by a slight increase in the effective income tax rate. Excluding the decrease in income tax expense related to favorable developments in uncertain tax positions and first six months impact of the increase in the effective income tax rate, the effective income tax rate for the third quarter of 2009 was 38.8 percent.
Capital and Liquidity
Capital Information Table 8
At period end
($ in thousands, except per-share data) 3Q 4Q
2009 2008
Total TCF stockholders' equity $ 1,176,235 $ 1,493,776
Total equity $ 1,179,839 $ 1,493,776
Total equity to total assets 6.65 % 8.92 %
Book value per common share $ 9.14 $ 8.99
Tangible realized common equity to tangible assets(1) 5.81 % 6.01 %
Risk-based capital
Tier 1 $ 1,142,351 8.57 % $ 1,461,973 11.79 %
Total 1,491,365 11.19 1,817,225 14.65
Total stated "well-capitalized" requirement 1,332,440 10.00 1,240,147 10.00
Excess over stated "well-capitalized" requirement 158,925 1.19 577,078 4.65
(1) Excludes the impact of preferred stock, goodwill, customer based
intangibles and accumulated other comprehensive income (loss) (see
"Reconciliation of GAAP to Non-GAAP Measures" table)
-- TCF's total risk-based capital at September 30, 2009 of $1.5 billion, or 11.19 percent of risk-weighted assets, was $158.9 million in excess of the stated "well-capitalized" requirement.
-- On October 19, 2009, the Board of Directors of TCF declared a regular quarterly cash dividend of five cents per common share payable on November 30, 2009 to stockholders of record at the close of business on October 30, 2009.
-- At September 30, 2009, TCF had $58.9 million on deposit with the Federal Reserve, which is included in cash and due from banks, compared with $147.9 million at June 30, 2009.
-- At September 30, 2009, TCF had $2.1 billion in unused, secured borrowing capacity at the FHLB of Des Moines and $818 million in unused, secured borrowing capacity at the Federal Reserve Discount Window. Also, TCF had $1.2 billion of active, unsecured federal funds purchased lines which are not contractually committed.
Website Information
A live webcast of TCF's conference call to discuss third quarter earnings will be hosted at TCF's website, www.tcfbank.com, on October 21, 2009 at 10:00 a.m. CDT. Additionally, the webcast is available for replay at TCF's website after the conference call. The website also includes free access to company news releases, TCF's annual report, quarterly reports, investor presentations and SEC filings.
TCF is a Wayzata, Minnesota-based national financial holding company with $17.7 billion in total assets. TCF has 443 banking offices in Minnesota, Illinois, Michigan, Colorado, Wisconsin, Indiana, Arizona and South Dakota, providing retail and commercial banking services. TCF also conducts commercial leasing and equipment finance business in all 50 states and commercial inventory finance business in the U.S. and Canada. For more information about TCF, please visit www.tcfbank.com.
Forward-Looking Information
This earnings release and other reports issued by the Company, including reports filed with the SEC, may contain "forward-looking" statements that deal with future results, plans or performance. In addition, TCF's management may make such statements orally to the media, or to securities analysts, investors or others. Forward-looking statements deal with matters that do not relate strictly to historical facts. TCF's future results may differ materially from historical performance and forward-looking statements about TCF's expected financial results or other plans and are subject to a number of risks and uncertainties. These include, but are not limited to, continued or deepening deterioration in general economic and banking industry conditions; continued increases in unemployment in TCF's primary banking markets; limitations on TCF's ability to pay dividends or to increase dividends in the future because of financial performance deterioration, regulatory restrictions or limitations; increased deposit insurance premiums, special assessments or other costs related to deteriorating conditions in the banking industry and the economic impact on banks of the Emergency Economic Stabilization Act, as amended ("EESA") or other related legislative and regulatory developments; the impact of the Obama Administration's financial regulatory reform proposals including possible additional capital, consumer protection and supervisory requirements which could include the creation of a new consumer protection agency and limits on Federal preemption for state laws that could be applied to national banks; the imposition of requirements with an adverse financial impact relating to TCF's lending, loan collection and other business activities as a result of the EESA, or other legislative or regulatory developments such as mortgage foreclosure moratorium laws; possible regulatory or legislative changes, including restrictions on deposit fees and reduction of interchange revenue from debit card transactions and adverse economic, business and competitive developments such as shrinking interest margins, deposit outflows, an inability to increase the number of deposit accounts and the possibility that deposit account losses (fraudulent checks, etc.) may increase; impact of legislative, regulatory or other changes affecting customer account charges and fee income; legislative changes to bankruptcy laws which would result in the loss of all or part of TCF's security interest due to collateral value declines (so-called "cramdown" provisions); reduced demand for financial services and loan and lease products; adverse developments affecting TCF's supermarket banking relationships or any of the supermarket chains in which TCF maintains supermarket branches; changes in accounting standards or interpretations of existing standards; monetary, fiscal or tax policies of the federal or state governments, including adoption of state legislation that would increase state taxes; adverse state or Federal tax assessments or findings in tax audits; adverse regulatory examinations and resulting enforcement actions, including those provided for under the Bank Secrecy Act; changes in credit and other risks posed by TCF's loan, lease, investment, and securities available for sale portfolios, including continuing declines in commercial or residential real estate values or changes in allowance for loan and lease losses methodology dictated by new market conditions or regulatory requirements; lack of or inadequate insurance coverage for claims against TCF; technological, computer related or operational difficulties or loss or theft of information; adverse changes in securities markets directly or indirectly affecting TCF's ability to sell assets or to fund its operations; results of litigation, including class action litigation concerning TCF's lending or deposit activities or fees or charges, or employment practices, and possible increases in indemnification obligations for certain litigation against Visa U.S.A. ("covered litigation") and potential reductions in card revenues resulting from covered litigation or other litigation against Visa; heightened regulatory practices, requirements or expectations, including, but not limited to, requirements related to the Bank Secrecy Act and anti-money laundering compliance activity; or other significant uncertainties. Investors should consult TCF's Annual Report on Form 10-K, and Forms 10-Q and 8-K for additional important information about the Company.
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
Three Months Ended
September 30, Change
2009 2008 $ %
Interest income:
Loans and leases $ 217,307 $ 210,651 $ 6,656 3.2 %
Securities available for sale 20,474 28,577 (8,103 ) (28.4 )
Education loans held for sale - 123 (123 ) N.M.
Investments and other 1,217 1,644 (427 ) (26.0 )
Total interest income 238,998 240,995 (1,997 ) (.8 )
Interest expense:
Deposits 27,512 33,730 (6,218 ) (18.4 )
Borrowings 49,997 55,100 (5,103 ) (9.3 )
Total interest expense 77,509 88,830 (11,321 ) (12.7 )
Net interest income 161,489 152,165 9,324 6.1
Provision for credit losses 75,544 52,105 23,439 45.0
Net interest income after provision for credit losses 85,945 100,060 (14,115 ) (14.1 )
Non-interest income:
Fees and service charges 77,433 71,783 5,650 7.9
Card revenue 26,393 26,240 153 .6
ATM revenue 7,861 8,720 (859 ) (9.9 )
Subtotal 111,687 106,743 4,944 4.6
Leasing and equipment finance 15,173 13,006 2,167 16.7
Other 1,197 3,296 (2,099 ) (63.7 )
Fees and other revenue 128,057 123,045 5,012 4.1
Gains on securities - 498 (498 ) N.M.
Total non-interest income 128,057 123,543 4,514 3.7
Non-interest expense:
Compensation and employee benefits 90,680 84,895 5,785 6.8
Occupancy and equipment 31,619 31,832 (213 ) (.7 )
Deposit account premiums 7,472 7,292 180 2.5
Advertising and promotions 4,766 5,017 (251 ) (5.0 )
FDIC premiums and assessments 5,085 426 4,659 N.M.
Foreclosed real estate and repossessed assets 8,038 4,883 3,155 64.6
Operating lease depreciation 3,734 4,215 (481 ) (11.4 )
Other 38,873 39,028 (155 ) (.4 )
Total non-interest expense 190,267 177,588 12,679 7.1
Pretax income 23,735 46,015 (22,280 ) (48.4 )
Income tax expense 6,491 15,889 (9,398 ) (59.1 )
Income after income tax expense 17,244 30,126 (12,882 ) (42.8 )
Income (loss) attributable to non-controlling interest (207 ) - (207 ) N.M.
Net income 17,451 30,126 (12,675 ) (42.1 )
Preferred stock dividends - - - -
Net income available to common stockholders $ 17,451 $ 30,126 $ (12,675 ) (42.1 )
Net income per common share:
Basic $ .14 $ .24 $ (.10 ) (41.7 )
Diluted .14 .24 (.10 ) (41.7 )
Dividends declared per common share $ .05 $ .25 $ (.20 ) (80.0 )
Average common and common equivalent shares outstanding (in
thousands):
Basic 126,811 124,978 1,833 1.5
Diluted 126,833 124,986 1,847 1.5
N.M. Not meaningful
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)
Nine Months Ended
September 30, Change
2009 2008 $ %
Interest income:
Loans and leases $ 642,084 $ 630,835 $ 11,249 1.8 %
Securities available for sale 69,392 85,714 (16,322 ) (19.0 )
Education loans held for sale - 5,331 (5,331 ) N.M.
Investments and other 3,210 4,713 (1,503 ) (31.9 )
Total interest income 714,686 726,593 (11,907 ) (1.6 )
Interest expense:
Deposits 100,941 119,412 (18,471 ) (15.5 )
Borrowings 150,380 160,625 (10,245 ) (6.4 )
Total interest expense 251,321 280,037 (28,716 ) (10.3 )
Net interest income 463,365 446,556 16,809 3.8
Provision for credit losses 181,147 144,995 36,152 24.9
Net interest income after provision for credit losses 282,218 301,561 (19,343 ) (6.4 )
Non-interest income:
Fees and service charges 212,033 203,291 8,742 4.3
Card revenue 77,957 77,839 118 .2
ATM revenue 23,432 24,957 (1,525 ) (6.1 )
Subtotal 313,422 306,087 7,335 2.4
Leasing and equipment finance 44,705 39,190 5,515 14.1
Other 2,475 20,285 (17,810 ) (87.8 )
Fees and other revenue 360,602 365,562 (4,960 ) (1.4 )
Gains on securities 22,104 7,899 14,205 179.8
Total non-interest income 382,706 373,461 9,245 2.5
Non-interest expense:
Compensation and employee benefits 267,622 257,880 9,742 3.8
Occupancy and equipment 95,193 95,450 (257 ) (.3 )
Deposit account premiums 21,335 11,229 10,106 90.0
Advertising and promotions 13,345 14,507 (1,162 ) (8.0 )
FDIC premiums and assessments 22,183 1,284 20,899 N.M.
Foreclosed real estate and repossessed assets 18,454 12,390 6,064 48.9
Operating lease depreciation 11,618 13,189 (1,571 ) (11.9 )
Other 111,271 108,664 2,607 2.4
Total non-interest expense 561,021 514,593 46,428 9.0
Pretax income 103,903 160,429 (56,526 ) (35.2 )
Income tax expense 36,469 59,175 (22,706 ) (38.4 )
Income after income tax expense 67,434 101,254 (33,820 ) (33.4 )
Income (loss) attributable to non-controlling interest (207 ) - (207 ) N.M.
Net income 67,641 101,254 (33,613 ) (33.2 )
Preferred stock dividends 18,403 - 18,403 N.M.
Net income available to common stockholders $ 49,238 $ 101,254 $ (52,016 ) (51.4 )
Net income per common share:
Basic $ .39 $ .81 $ (.42 ) (51.9 )
Diluted .39 .81 (.42 ) (51.9 )
Dividends declared per common share $ .35 $ .75 $ (.40 ) (53.3 )
Average common and common equivalent shares outstanding (in
thousands):
Basic 126,403 124,807 1,596 1.3
Diluted 126,403 124,825 1,578 1.3
N.M. Not meaningful.
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per-share data)
(Unaudited)
At At At % Change from
September 30, December 31, September 30, December 31, September 30,
2009 2008 2008 2008 2008
ASSETS
Cash and due from banks $ 329,663 $ 342,380 $ 297,701 (3.7 ) % 10.7 %
Investments 155,627 155,725 167,115 (.1 ) (6.9 )
U.S. Government sponsored entities:
Mortgage-backed securities 1,454,833 1,965,554 2,099,358 (26.0 ) (30.7 )
Debentures 604,876 - - N.M. N.M.
Other securities 518 550 3,398 (5.8 ) (84.8 )
Total securities available for sale 2,060,227 1,966,104 2,102,756 4.8 (2.0 )
Education loans held for sale - 757 3,569 N.M. N.M.
Loans and leases:
Consumer real estate and other 7,335,061 7,363,583 7,368,736 (.4 ) (.5 )
Commercial real estate 3,240,846 2,984,156 2,852,754 8.6 13.6
Commercial business 466,991 506,887 549,337 (7.9 ) (15.0 )
Leasing and equipment finance 3,061,559 2,486,082 2,330,841 23.1 31.3
Inventory finance 224,807 4,425 - N.M. N.M.
Total loans and leases 14,329,264 13,345,133 13,101,668 7.4 9.4
Allowance for loan and lease losses (215,732 ) (172,442 ) (158,978 ) (25.1 ) (35.7 )
Net loans and leases 14,113,532 13,172,691 12,942,690 7.1 9.0
Premises and equipment, net 449,264 447,826 441,904 .3 1.7
Goodwill 152,599 152,599 152,599 - -
Other assets 482,097 502,275 402,261 (4.0 ) 19.8
Total assets $ 17,743,009 $ 16,740,357 $ 16,510,595 6.0 7.5
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Checking $ 4,098,643 $ 3,969,768 $ 4,089,044 3.2 .2
Savings 5,144,661 3,057,623 2,717,635 68.3 89.3
Money market 730,046 619,678 646,655 17.8 12.9
Subtotal 9,973,350 7,647,069 7,453,334 30.4 33.8
Certificates of deposit 1,652,661 2,596,283 2,396,903 (36.3 ) (31.1 )
Total deposits 11,626,011 10,243,352 9,850,237 13.5 18.0
Short-term borrowings 21,397 226,861 603,233 (90.6 ) (96.5 )
Long-term borrowings 4,524,955 4,433,913 4,630,776 2.1 (2.3 )
Total borrowings 4,546,352 4,660,774 5,234,009 (2.5 ) (13.1 )
Accrued expenses and other liabilities 390,807 342,455 315,320 14.1 23.9
Total liabilities 16,563,170 15,246,581 15,399,566 8.6 7.6
Stockholders' equity:
Preferred stock, par value $.01 per share, - 348,437 - N.M. -
30,000,000
authorized; 0, 361,172 and 0 issued
Common stock, par value $.01 per share,
280,000,000 shares authorized;130,373,208,
130,839,378 and 130,951,694 shares issued 1,304 1,308 1,308 (.3 ) (.3 )
Additional paid-in capital 304,190 330,474 329,897 (8.0 ) (7.8 )
Retained earnings, subject to certain restrictions 932,882 927,893 934,121 .5 (.1 )
Accumulated other comprehensive income (loss) 805 (3,692 ) (21,555 ) N.M. N.M.
Treasury stock at cost, 1,623,705, 3,413,855 and 3,761,925 (62,946 ) (110,644 ) (132,742 ) (43.1 ) (52.6 )
shares, and other
Total TCF stockholders' equity 1,176,235 1,493,776 1,111,029 (21.3 ) 5.9
Non-controlling interest in subsidiaries 3,604 - - N.M. N.M.
Total equity 1,179,839 1,493,776 1,111,029 (21.0 ) 6.2
Total liabilities and stockholders' equity $ 17,743,009 $ 16,740,357 $ 16,510,595 6.0 7.5
N.M. Not meaningful.
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CREDIT QUALITY DATA
(Dollars in thousands)
(Unaudited)
Allowance for loan and lease Allowance as % of Portfolio
losses
At September 30, 2009 At June 30, 2009 At September 30, 2008 Change from
Allowance Allowance Allowance Jun. 30, Sep. 30,
Balance % of Portfolio Balance % of Portfolio Balance % of Portfolio 2009 2008
Consumer real estate $ 136,783 1.88 % $ 114,283 1.57 % $ 84,693 1.16 % 31 bps 72 bps
Consumer other 2,945 5.15 3,026 5.00 2,938 4.18 15 97
Total consumer real estate and other 139,728 1.90 117,309 1.60 87,631 1.19 30 71
Commercial real estate 38,335 1.18 36,208 1.15 39,636 1.39 3 (21 )
Commercial business 7,706 1.65 10,354 2.13 12,575 2.29 (48 ) (64 )
Leasing and equipment finance 29,130 .95 28,921 1.02 19,136 .82 (7 ) 13
Inventory finance 833 .37 653 .42 - - (5 ) 37
Total allowance for loan and lease losses $ 215,732 For full details on Tcf Financial Corp (TCB) click here. Tcf Financial Corp (TCB) has Short Term PowerRatings of 6. Details on Tcf Financial Corp (TCB) Short Term PowerRatings is available at This Link.
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