Allowance for Loan and Lease Losses and Credit Quality Information

The rollforwards of the allowance for loan and lease losses were as follows:



	At or For the Year Ended December 31, 2018
(In thousands)	Consumer Real Estate			Commercial			Leasing and Equipment Finance			Inventory Finance			Auto Finance			Other			Total
Balance, beginning of period	$	47,168		$	37,195		$	22,528		$	13,233		$	50,225		$	692		$	171,041
Charge-offs	(7,129		)	(3,585		)	(9,695		)	(6,928		)	(49,833		)	(7,558		)	(84,728		)
Recoveries	11,751			228			2,252			736			11,289			3,447			29,703
Net (charge-offs) recoveries	4,622			(3,357		)	(7,443		)	(6,192		)	(38,544		)	(4,111		)	(55,025		)
Provision for credit losses	(2,038		)	7,344			8,960			5,613			22,648			4,241			46,768
Other⁽¹⁾	(4,886		)	—			(254		)	(198		)	—			—			(5,338		)
Balance, end of period	$	44,866		$	41,182		$	23,791		$	12,456		$	34,329		$	822		$	157,446

	At or For the Year Ended December 31, 2017
(In thousands)	Consumer Real Estate			Commercial			Leasing and Equipment Finance			Inventory Finance			Auto Finance			Other			Total
Balance, beginning of period	$	59,448		$	32,695		$	21,350		$	13,932		$	32,310		$	534		$	160,269
Charge-offs	(11,861		)	(5,431		)	(10,816		)	(3,014		)	(41,101		)	(6,869		)	(79,092		)
Recoveries	20,781			833			2,065			838			6,625			3,510			34,652
Net (charge-offs) recoveries	8,920			(4,598		)	(8,751		)	(2,176		)	(34,476		)	(3,359		)	(44,440		)
Provision for credit losses	(12,318		)	9,098			10,067			1,367			56,712			3,517			68,443
Other⁽¹⁾	(8,882		)	—			(138		)	110			(4,321		)	—			(13,231		)
Balance, end of period	$	47,168		$	37,195		$	22,528		$	13,233		$	50,225		$	692		$	171,041

	At or For the Year Ended December 31, 2016
(In thousands)	Consumer Real Estate			Commercial			Leasing and Equipment Finance			Inventory Finance			Auto Finance			Other			Total
Balance, beginning of period	$	67,992		$	30,185		$	19,018		$	11,128		$	26,486		$	1,245		$	156,054
Charge-offs	(18,624		)	(753		)	(7,738		)	(2,623		)	(26,994		)	(7,353		)	(64,085		)
Recoveries	7,065			373			2,386			816			3,853			4,357			18,850
Net (charge-offs) recoveries	(11,559		)	(380		)	(5,352		)	(1,807		)	(23,141		)	(2,996		)	(45,235		)
Provision for credit losses	9,304			2,890			7,706			4,540			39,149			2,285			65,874
Other⁽¹⁾	(6,289		)	—			(22		)	71			(10,184		)	—			(16,424		)
Balance, end of period	$	59,448		$	32,695		$	21,350		$	13,932		$	32,310		$	534		$	160,269


(1)	Primarily includes the transfer of the allowance for loan and lease losses to loans and leases held for sale.

The allowance for loan and lease losses and loans and leases outstanding by type of allowance methodology were as follows:



	At December 31, 2018
(In thousands)	Consumer Real Estate		Commercial		Leasing and Equipment Finance		Inventory Finance		Auto Finance		Other		Total
Allowance for loan and lease losses:
Collectively evaluated for impairment	$	22,134	$	36,411	$	20,108	$	11,621	$	34,157	$	822	$	125,253
Individually evaluated for impairment	22,732		4,771		3,683		835		172		—		32,193
Total	$	44,866	$	41,182	$	23,791	$	12,456	$	34,329	$	822	$	157,446
Loans and leases outstanding:
Collectively evaluated for impairment	$	5,295,817	$	3,815,422	$	4,672,168	$	3,099,073	$	1,968,645	$	21,291	$	18,872,416
Individually evaluated for impairment	114,523		35,881		23,755		8,283		13,632		4		196,078
Loans acquired with deteriorated credit quality	—		—		3,817		—		—		—		3,817
Total	$	5,410,340	$	3,851,303	$	4,699,740	$	3,107,356	$	1,982,277	$	21,295	$	19,072,311



	At December 31, 2017
(In thousands)	Consumer Real Estate		Commercial		Leasing and Equipment Finance		Inventory Finance		Auto Finance		Other		Total
Allowance for loan and lease losses:
Collectively evaluated for impairment	$	28,851	$	35,635	$	19,083	$	12,945	$	49,900	$	691	$	147,105
Individually evaluated for impairment	18,317		1,560		3,445		288		325		1		23,936
Total	$	47,168	$	37,195	$	22,528	$	13,233	$	50,225	$	692	$	171,041
Loans and leases outstanding:
Collectively evaluated for impairment	$	4,675,626	$	3,524,864	$	4,721,905	$	2,735,638	$	3,188,810	$	22,513	$	18,869,356
Individually evaluated for impairment	144,070		36,329		27,912		4,116		10,829		4		223,260
Loans acquired with deteriorated credit quality	—		—		11,844		—		—		—		11,844
Total	$	4,819,696	$	3,561,193	$	4,761,661	$	2,739,754	$	3,199,639	$	22,517	$	19,104,460

Accruing and Non-accrual Loans and Leases TCF's key credit quality indicator is the receivable's payment performance status, defined as accruing or non-accruing. Non-accrual loans and leases are those which management believes have a higher risk of loss. Delinquent balances are determined based on the contractual terms of the loan or lease. Loans and leases that are over 60 days delinquent have a higher potential to become non-accrual and generally are a leading indicator for future charge-off trends. TCF's accruing and non-accrual loans and leases were as follows:



	At December 31, 2018
(In thousands)	Current-59 Days Delinquent and Accruing		60-89 Days Delinquent and Accruing		90 Days or More Delinquent and Accruing		Total Accruing		Non-accrual		Total
Consumer real estate:
First mortgage lien	$	2,403,391	$	3,281	$	1,276	$	2,407,948	$	36,432	$	2,444,380
Junior lien	2,942,414		1,213		—		2,943,627		22,333		2,965,960
Total consumer real estate	5,345,805		4,494		1,276		5,351,575		58,765		5,410,340
Commercial:
Commercial real estate	2,903,629		—		—		2,903,629		4,518		2,908,147
Commercial business	932,648		1		—		932,649		10,507		943,156
Total commercial	3,836,277		1		—		3,836,278		15,025		3,851,303
Leasing and equipment finance	4,670,021		7,996		2,642		4,680,659		15,264		4,695,923
Inventory finance	3,098,763		310		—		3,099,073		8,283		3,107,356
Auto finance	1,962,042		8,326		3,331		1,973,699		8,578		1,982,277
Other	21,264		11		17		21,292		3		21,295
Subtotal	18,934,172		21,138		7,266		18,962,576		105,918		19,068,494
Portfolios acquired with deteriorated credit quality	3,639		—		178		3,817		—		3,817
Total	$	18,937,811	$	21,138	$	7,444	$	18,966,393	$	105,918	$	19,072,311



	At December 31, 2017
(In thousands)	Current-59 Days Delinquent and Accruing		60-89 Days Delinquent and Accruing		90 Days or More Delinquent and Accruing		Total Accruing		Non-accrual		Total
Consumer real estate:
First mortgage lien	$	1,892,771	$	4,073	$	593	$	1,897,437	$	61,950	$	1,959,387
Junior lien	2,837,767		1,268		—		2,839,035		21,274		2,860,309
Total consumer real estate	4,730,538		5,341		593		4,736,472		83,224		4,819,696
Commercial:
Commercial real estate	2,744,500		—		—		2,744,500		6,785		2,751,285
Commercial business	809,907		1		—		809,908		—		809,908
Total commercial	3,554,407		1		—		3,554,408		6,785		3,561,193
Leasing and equipment finance	4,726,339		4,272		2,117		4,732,728		17,089		4,749,817
Inventory finance	2,735,430		191		17		2,735,638		4,116		2,739,754
Auto finance	3,183,196		6,078		2,999		3,192,273		7,366		3,199,639
Other	22,506		3		6		22,515		2		22,517
Subtotal	18,952,416		15,886		5,732		18,974,034		118,582		19,092,616
Portfolios acquired with deteriorated credit quality	10,283		361		1,200		11,844		—		11,844
Total	$	18,962,699	$	16,247	$	6,932	$	18,985,878	$	118,582	$	19,104,460

Interest income recognized on loans and leases in non-accrual status and contractual interest that would have been recorded had the loans and leases performed in accordance with their original contractual terms were as follows:



	Year Ended December 31,
(In thousands)	2018		2017		2016
Contractual interest due on non-accrual loans and leases	$	10,921	$	15,009	$	20,604
Interest income recognized on non-accrual loans and leases	1,351		2,982		4,152
Unrecognized interest income	$	9,570	$	12,027	$	16,452

Consumer real estate loans to customers currently involved in ongoing Chapter 7 or Chapter 13 bankruptcy proceedings which have not yet been discharged, dismissed or completed were as follows:



	At December 31,
(In thousands)	2018		2017
Consumer real estate loans to customers in bankruptcy:
0-59 days delinquent and accruing	$	3,306	$	7,324
Non-accrual	9,046		10,552
Total consumer real estate loans to customers in bankruptcy	$	12,352	$	17,876

Loan Modifications for Borrowers with Financial Difficulties Included within loans and leases in the previous accruing and non-accrual loans and leases tables are certain loans that have been modified in order to maximize collection of loan balances. If, for economic or legal reasons related to the customer's financial difficulties, TCF grants a concession, the modified loan is classified as a TDR loan. When a loan is modified as a TDR, principal balances are generally not forgiven. All loans classified as TDR loans are considered to be impaired. For purposes of this disclosure, PCI loans have been excluded.

TDR loans were as follows:



	At December 31,
	2018						2017
(In thousands)	Accruing TDR Loans		Non-accrual TDR Loans		Total TDR Loans		Accruing TDR Loans		Non-accrual TDR Loans		Total TDR Loans
Consumer real estate	$	80,739	$	16,192	$	96,931	$	88,092	$	34,282	$	122,374
Commercial	4,174		3,946		8,120		12,249		83		12,332
Leasing and equipment finance	8,491		1,754		10,245		10,263		1,413		11,676
Inventory finance	—		453		453		—		476		476
Auto finance	5,054		6,362		11,416		3,464		5,351		8,815
Other	1		—		1		3		1		4
Total	$	98,459	$	28,707	$	127,166	$	114,071	$	41,606	$	155,677

Consumer real estate TDR loans generally remain on accruing status following modification if they are less than 90 days past due and payment in full under the modified terms of the loan is expected based on a current credit evaluation and historical payment performance. Of the non-accrual TDR balance at December 31, 2018, $7.8 million, or 48.2%, were loans discharged in Chapter 7 bankruptcy that were not reaffirmed by the borrower, of which 56.5% were current. Of the non-accrual TDR balance at December 31, 2017, $22.3 million, or 65.0%, were loans discharged in Chapter 7 bankruptcy that were not reaffirmed by the borrower, of which 70.0% were current. All eligible loans are re-aged to current delinquency status upon modification.

The allowance on accruing consumer real estate TDR loans was $15.5 million, or 19.2% of the outstanding balance, at December 31, 2018 and $17.1 million, or 19.4% of the outstanding balance, at December 31, 2017. At December 31, 2018 and 2017, 0.3% and 0.5%, respectively, of accruing consumer real estate TDR loans were 60 days or more delinquent. The allowance on accruing TDRs and the percentage of accruing TDR loans that were 60 days or more delinquent were not material for the remaining classes of finance receivables at December 31, 2018 and 2017.

Unfunded commitments to consumer real estate loans classified as TDRs were $0.6 million and $0.4 million at December 31, 2018 and 2017, respectively. There were no unfunded commitments to commercial loans classified as TDRs at December 31, 2018 and $0.5 million at December 31, 2017. At December 31, 2018 and 2017, no additional funds were committed to leasing and equipment finance, inventory finance or auto finance loans classified as TDRs.

Loan modifications to troubled borrowers are no longer disclosed as TDR loans in the calendar years after modification if the loans were modified to an interest rate equal to or greater than the yields of new loan originations with comparable risk at the time of restructuring and if the loan is performing based on the restructured terms; however, these loans are still considered impaired and follow TCF's impaired loan reserve policies.

Interest income on TDR loans is recognized based on the restructured terms. Unrecognized interest represents the financial impact of TDR loans and is the difference between interest income recognized on accruing TDR loans and the contractual interest that would have been recorded had the loans performed in accordance with their original contractual terms. The following table summarizes the financial effects of consumer real estate accruing TDR loans. The financial effects of TDR loans for the remaining classes of finance receivables were not material for 2018, 2017 and 2016.



(In thousands)	Contractual Interest Due		Interest Income		Unrecognized Interest
Year ended December 31, 2018:
Consumer real estate:
First mortgage lien	$	4,161	$	2,473	$	1,688
Junior lien	1,642		1,122		520
Total consumer real estate	$	5,803	$	3,595	$	2,208
Year ended December 31, 2017:
Consumer real estate:
First mortgage lien	$	4,522	$	2,707	$	1,815
Junior lien	1,923		1,327		596
Total consumer real estate	$	6,445	$	4,034	$	2,411
Year ended December 31, 2016:
Consumer real estate:
First mortgage lien	$	4,722	$	2,765	$	1,957
Junior lien	2,325		1,632		693
Total consumer real estate	$	7,047	$	4,397	$	2,650

TCF considers a loan to have defaulted when under the modified terms it becomes 90 or more days delinquent, has been transferred to non-accrual status, has been charged down or has been transferred to other real estate owned or repossessed and returned assets. The following table summarizes the TDR loans that defaulted during the periods presented that were modified during the respective reporting period or within one year of the beginning of the respective reporting period.



	Year Ended December 31,
(In thousands)	2018		2017		2016
Defaulted TDR loan balances modified during the applicable period:⁽¹⁾
Consumer real estate:
First mortgage lien	$	3,514	$	3,081	$	8,193
Junior lien	302		579		1,630
Total consumer real estate	3,816		3,660		9,823
Commercial business	4,697		—		—
Leasing and equipment finance	—		555		—
Auto finance	1,436		1,169		1,693
Defaulted TDR loans modified during the applicable period	$	9,949	$	5,384	$	11,516


(1)	The loan balances presented are not materially different than the pre-modification loan balances as TCF's loan modifications generally do not forgive principal amounts.

Impaired Loans TCF considers impaired loans to include non-accrual commercial loans, non-accrual equipment finance loans and non-accrual inventory finance loans, as well as all TDR loans. For purposes of this disclosure, PCI loans have been excluded. Non-accrual impaired loans, including non-accrual TDR loans, are included in non-accrual loans and leases within the previous tables. Accruing TDR loans have been disclosed by delinquency status within the previous tables of accruing and non-accrual loans and leases. In the following table, the loan balance of impaired loans represents the amount recorded within loans and leases on the Consolidated Statements of Financial Condition, whereas the unpaid contractual balance represents the balances legally owed by the borrowers.

Information on impaired loans was as follows:



	At December 31,
	2018						2017
(In thousands)	Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded		Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded
Impaired loans with an allowance recorded:
Consumer real estate:
First mortgage lien	$	64,529	$	61,744	$	16,848	$	91,624	$	80,802	$	13,792
Junior lien	25,861		24,264		5,656		32,327		29,544		4,165
Total consumer real estate	90,390		86,008		22,504		123,951		110,346		17,957
Commercial:
Commercial real estate	4,905		4,474		1,108		6,810		6,702		1,000
Commercial business	12,317		9,192		3,663		7,841		7,841		560
Total commercial	17,222		13,666		4,771		14,651		14,543		1,560
Leasing and equipment finance	15,763		15,763		1,856		17,105		17,105		1,345
Inventory finance	7,364		7,371		835		1,296		1,298		288
Auto finance	917		646		81		1,333		1,016		243
Other	2		1		—		3		4		1
Total impaired loans with an allowance recorded	131,658		123,455		30,047		158,339		144,312		21,394
Impaired loans without an allowance recorded:
Consumer real estate:
First mortgage lien	11,829		9,586		—		12,898		10,445		—
Junior lien	10,427		1,337		—		17,697		1,583		—
Total consumer real estate	22,256		10,923		—		30,595		12,028		—
Commercial real estate	4,275		4,208		—		4,552		4,491		—
Commercial business	1,328		1,325		—		—		—		—
Total commercial	5,603		5,533		—		4,552		4,491		—
Inventory finance	911		912		—		2,810		2,818		—
Auto finance	15,071		10,770		—		10,566		7,799		—
Other	329		—		—		331		—		—
Total impaired loans without an allowance recorded	44,170		28,138		—		48,854		27,136		—
Total impaired loans	$	175,828	$	151,593	$	30,047	$	207,193	$	171,448	$	21,394

The average loan balances of impaired loans and interest income recognized on impaired loans were as follows:



	Year Ended December 31,
	2018				2017				2016
(In thousands)	Average Loan Balance		Interest Income Recognized		Average Loan Balance		Interest Income Recognized		Average Loan Balance		Interest Income Recognized
Impaired loans with an allowance recorded:
Consumer real estate:
First mortgage lien	$	71,273	$	2,172	$	92,702	$	2,748	$	114,164	$	3,597
Junior lien	26,904		1,090		40,477		1,488		54,888		2,606
Total consumer real estate	98,177		3,262		133,179		4,236		169,052		6,203
Commercial:
Commercial real estate	5,588		—		8,388		16		5,186		353
Commercial business	8,517		130		3,927		97		15		—
Total commercial	14,105		130		12,315		113		5,201		353
Leasing and equipment finance	16,433		82		13,502		58		8,579		40
Inventory finance	4,335		70		2,831		192		2,619		56
Auto finance	831		—		3,218		—		6,741		112
Other	3		—		5		—		9		—
Total impaired loans with an allowance recorded	133,884		3,544		165,050		4,599		192,201		6,764
Impaired loans without an allowance recorded:
Consumer real estate:
First mortgage lien	10,016		689		11,560		921		7,951		449
Junior lien	1,460		182		1,733		438		1,201		672
Total consumer real estate	11,476		871		13,293		1,359		9,152		1,121
Commercial:
Commercial real estate	4,350		231		10,136		709		23,468		743
Commercial business	662		1		177		4		1,970		—
Total commercial	5,012		232		10,313		713		25,438		743
Inventory finance	1,865		172		1,794		196		523		95
Auto finance	9,284		302		5,102		209		1,792		—
Total impaired loans without an allowance recorded	27,637		1,577		30,502		2,477		36,905		1,959
Total impaired loans	$	161,521	$	5,121	$	195,552	$	7,076	$	229,106	$	8,723

Other Real Estate Owned and Repossessed and Returned Assets Other real estate owned and repossessed and returned assets were as follows:



	At December 31,
(In thousands)	2018		2017
Other real estate owned	$	17,403	$	18,225
Repossessed and returned assets	14,574		12,630
Consumer real estate loans in process of foreclosure	15,540		22,622

Other real estate owned and repossessed and returned assets were written down $3.4 million, $6.2 million and $8.3 million in 2018, 2017 and 2016, respectively.