10-Q 1 a11-25571_110q.htm 10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended

September 30, 2011

 

or

 

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 001-10253

 

TCF FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

 

41-1591444

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

200 Lake Street East, Mail Code EX0-03-A,

Wayzata, Minnesota 55391-1693

(Address and Zip Code of principal executive offices)

 

(952) 745-2760

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]

 

No [   ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X]

 

No [   ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

[X]

 

Accelerated filer

[   ]

Non-accelerated filer

[   ]

(Do not check if a smaller reporting company)

Smaller reporting company

[   ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [   ]

 

No [X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

 

Outstanding at
October 20, 2011

Common Stock, $.01 par value

 

160,047,893 shares

 



 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

 

INDEX

 

Part I.

Financial Information

Pages

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

Consolidated Statements of Financial Condition
at September 30, 2011 and December 31, 2010

3

 

 

 

 

Consolidated Statements of Income for the
Three and Nine Months Ended September 30, 2011 and 2010

4

 

 

 

 

Consolidated Statements of Equity for the
Nine Months Ended September 30, 2011 and 2010

5

 

 

 

 

Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2011 and 2010

6

 

 

 

 

Notes to Consolidated Financial Statements

7

 

 

 

 

 

 

 

Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations

33

 

 

 

 

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

62

 

 

 

 

 

 

 

Item 4. Controls and Procedures

63

 

 

 

 

 

 

 

Supplementary Information

64

 

 

 

 

 

 

Part II.

Other Information

 

 

 

 

 

 

 

 

Items 1-6

65

 

 

 

 

 

 

 

Signatures

67

 

 

 

 

 

 

 

Index to Exhibits

68

 

2



 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Condition

(Unaudited)

 

PART 1 - FINANCIAL INFORMATION

Item 1.  Financial Statements

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Condition

 

 

 

At

 

At

 

 

 

September 30,

 

December 31,

 

(Dollars in thousands, except per-share data)

 

2011

 

2010

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

1,165,736

 

$

663,901

 

Investments

 

162,719

 

179,768

 

Securities available for sale

 

2,600,806

 

1,931,174

 

Loans and leases:

 

 

 

 

 

Consumer real estate and other

 

7,003,909

 

7,195,269

 

Commercial

 

3,495,797

 

3,646,203

 

Leasing and equipment finance

 

3,011,795

 

3,154,478

 

Inventory finance

 

828,214

 

792,354

 

Total loans and leases

 

14,339,715

 

14,788,304

 

Allowance for loan and lease losses

 

(254,325

)

(265,819

)

Net loans and leases

 

14,085,390

 

14,522,485

 

Premises and equipment, net

 

434,333

 

443,768

 

Goodwill

 

152,599

 

152,599

 

Other assets

 

490,483

 

571,330

 

Total assets

 

$

19,092,066

 

$

18,465,025

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

Checking

 

$

4,633,924

 

$

4,530,064

 

Savings

 

5,870,280

 

5,390,802

 

Money market

 

632,467

 

635,922

 

Certificates of deposit

 

1,183,831

 

1,028,327

 

Total deposits

 

12,320,502

 

11,585,115

 

Short-term borrowings

 

7,204

 

126,790

 

Long-term borrowings

 

4,397,750

 

4,858,821

 

Total borrowings

 

4,404,954

 

4,985,611

 

Accrued expenses and other liabilities

 

494,527

 

414,136

 

Total liabilities

 

17,219,983

 

16,984,862

 

Equity:

 

 

 

 

 

Preferred stock, par value $.01 per share, 30,000,000 shares authorized;
none issued and outstanding

 

-

 

-

 

Common stock, par value $.01 per share, 280,000,000 shares
authorized; 160,007,417 and 142,965,012 shares issued

 

1,600

 

1,430

 

Additional paid-in capital

 

708,601

 

459,884

 

Retained earnings, subject to certain restrictions

 

1,133,386

 

1,064,978

 

Accumulated other comprehensive income (loss)

 

49,038

 

(31,514

)

Treasury stock at cost, 45,504 and 51,160 shares, and other

 

(32,815

)

(23,115

)

Total TCF Financial Corporation stockholders’ equity

 

1,859,810

 

1,471,663

 

Non-controlling interest in subsidiaries

 

12,273

 

8,500

 

Total equity

 

1,872,083

 

1,480,163

 

Total liabilities and equity

 

$

19,092,066

 

$

18,465,025

 

See accompanying notes to consolidated financial statements.

 

3



 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

(In thousands, except per-share data)

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

 

  $

210,885

 

  $

219,974

 

  $

639,381

 

  $

663,151

 

Securities available for sale

 

22,561

 

19,901

 

62,629

 

62,373

 

Investments and other

 

1,997

 

1,232

 

5,634

 

3,609

 

Total interest income

 

235,443

 

241,107

 

707,644

 

729,133

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

11,883

 

13,974

 

35,317

 

47,859

 

Borrowings

 

47,496

 

53,378

 

146,073

 

156,358

 

Total interest expense

 

59,379

 

67,352

 

181,390

 

204,217

 

Net interest income

 

176,064

 

173,755

 

526,254

 

524,916

 

Provision for credit losses

 

52,315

 

59,287

 

141,594

 

158,791

 

Net interest income after provision for
credit losses

 

123,749

 

114,468

 

384,660

 

366,125

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Fees and service charges

 

58,452

 

67,684

 

168,361

 

211,701

 

Card revenue

 

27,701

 

27,779

 

82,504

 

83,442

 

ATM revenue

 

7,523

 

7,985

 

21,319

 

22,851

 

Subtotal

 

93,676

 

103,448

 

272,184

 

317,994

 

Leasing and equipment finance

 

21,646

 

24,912

 

70,675

 

65,792

 

Other

 

786

 

1,077

 

1,864

 

4,767

 

Fees and other revenue

 

116,108

 

129,437

 

344,723

 

388,553

 

Gains on securities, net

 

1,648

 

8,505

 

1,421

 

7,938

 

Total non-interest income

 

117,756

 

137,942

 

346,144

 

396,491

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

88,599

 

90,282

 

268,869

 

265,490

 

Occupancy and equipment

 

31,129

 

32,091

 

94,071

 

95,583

 

FDIC insurance

 

7,363

 

5,486

 

22,100

 

16,186

 

Deposit account premiums

 

7,045

 

3,340

 

16,409

 

15,616

 

Advertising and marketing

 

1,145

 

3,354

 

7,784

 

9,908

 

Other

 

34,708

 

39,481

 

106,341

 

108,944

 

Subtotal

 

169,989

 

174,034

 

515,574

 

511,727

 

Foreclosed real estate and repossessed assets, net

 

12,430

 

9,588

 

37,915

 

27,604

 

Operating lease depreciation

 

7,409

 

8,965

 

23,196

 

28,817

 

Other credit costs, net

 

(139)

 

(834)

 

2,905

 

4,476

 

Total non-interest expense

 

189,689

 

191,753

 

579,590

 

572,624

 

Income before income tax expense

 

51,816

 

60,657

 

151,214

 

189,992

 

Income tax expense

 

18,856

 

22,852

 

56,056

 

71,754

 

Income after income tax expense

 

32,960

 

37,805

 

95,158

 

118,238

 

Income attributable to non-controlling interest

 

1,243

 

912

 

3,918

 

2,399

 

Net income available to common stockholders

 

  $

31,717

 

  $

36,893

 

  $

91,240

 

  $

115,839

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

  $

.20

 

  $

.26

 

  $

.59

 

  $

.84

 

Diluted

 

  $

.20

 

  $

.26

 

  $

.59

 

  $

.84

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

  $

.05

 

  $

.05

 

  $

.15

 

  $

.15

 

See accompanying notes to consolidated financial statements.

 

4


 


 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Equity

(Unaudited)

 

 

 

TCF Financial Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Number of

 

 

 

Additional

 

 

 

Other

 

Treasury

 

 

 

Non-

 

 

 

 

 

Common

 

Common

 

Paid-in

 

Retained

 

Comprehensive

 

Stock

 

 

 

controlling

 

Total

 

(Dollars in thousands)

 

Shares Issued

 

Stock

 

Capital

 

Earnings

 

Income (Loss)

 

and Other

 

Total

 

Interests

 

Equity

 

Balance, December 31, 2009

 

130,339,500

 

$

1,303

 

$

297,429

 

$

946,002

 

$

(18,545

)

$

(50,827

)

$

1,175,362

 

$

4,393

 

$

1,179,755

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income after income tax expense

 

-

 

 -

 

-

 

115,839

 

-

 

-

 

115,839

 

2,399

 

118,238

 

Other comprehensive income

 

-

 

-

 

-

 

-

 

41,003

 

-

 

41,003

 

-

 

41,003

 

Comprehensive income

 

-

 

-

 

-

 

115,839

 

41,003

 

-

 

156,842

 

2,399

 

159,241

 

Public offering of common stock

 

12,322,250

 

124

 

164,443

 

-

 

-

 

-

 

164,567

 

-

 

164,567

 

Net investment by non-controlling interest

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

3,215

 

3,215

 

Dividends on common stock

 

-

 

-

 

-

 

(20,538

)

-

 

-

 

(20,538

)

-

 

(20,538

)

Grants of restricted stock, 324,663 shares

 

-

 

-

 

(8,407

)

-

 

-

 

8,407

 

-

 

-

 

-

 

Common shares purchased by TCF
employee benefit plans

 

177,011

 

2

 

2,623

 

-

 

-

 

-

 

2,625

 

-

 

2,625

 

Treasury shares sold to TCF employee
benefit plans, 757,612 shares

 

-

 

-

 

(7,893

)

-

 

-

 

19,619

 

11,726

 

-

 

11,726

 

Cancellation of shares of restricted stock

 

(21,223

)

-

 

(221

)

28

 

-

 

-

 

(193

)

 

 

(193

)

Cancellation of common shares for
tax withholding

 

(132,262

)

(2

)

(1,891

)

-

 

-

 

-

 

(1,893

)

-

 

(1,893

)

Amortization of stock compensation

 

-

 

-

 

7,168

 

-

 

-

 

-

 

7,168

 

-

 

7,168

 

Stock compensation tax benefits

 

-

 

-

 

289

 

-

 

-

 

-

 

289

 

-

 

289

 

Change in shares held in trust for
deferred compensation plans, at cost

 

-

 

-

 

599

 

-

 

-

 

(599

)

-

 

-

 

-

 

Balance, September 30, 2010

 

142,685,276

 

$

1,427

 

$

454,139

 

$

1,041,331

 

$

22,458

 

$

(23,400

)

$

1,495,955

 

$

10,007

 

$

1,505,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2010

 

142,965,012

 

$

1,430

 

$

459,884

 

$

1,064,978

 

$

(31,514

)

$

(23,115

)

$

1,471,663

 

$

8,500

 

$

1,480,163

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income after income tax expense

 

-

 

-

 

-

 

91,240

 

-

 

-

 

91,240

 

3,918

 

95,158

 

Other comprehensive income

 

-

 

-

 

-

 

-

 

80,552

 

-

 

80,552

 

-

 

80,552

 

Comprehensive income

 

-

 

-

 

-

 

91,240

 

80,552

 

-

 

171,792

 

3,918

 

175,710

 

Public offering of common stock

 

15,081,968

 

151

 

219,515

 

-

 

-

 

-

 

219,666

 

-

 

219,666

 

Net distribution to non-controlling interest

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(145

)

(145

)

Dividends on common stock

 

-

 

-

 

-

 

(22,863

)

-

 

-

 

(22,863

)

-

 

(22,863

)

Grants of restricted stock to directors, 5,656 shares

 

-

 

-

 

(146

)

-

 

-

 

146

 

-

 

-

 

-

 

Grants of restricted stock

 

1,213,000

 

12

 

(12

)

-

 

-

 

-

 

-

 

-

 

-

 

Common shares purchased by TCF employee
benefit plans

 

1,044,128

 

10

 

14,282

 

-

 

-

 

-

 

14,292

 

-

 

14,292

 

Cancellation of shares of restricted stock

 

(93,536

)

(1

)

(397

)

31

 

-

 

-

 

(367

)

-

 

(367

)

Cancellation of common shares for tax
withholding

 

(203,155

)

(2

)

(3,052

)

-

 

-

 

-

 

(3,054

)

-

 

(3,054

)

Amortization of stock compensation

 

-

 

-

 

8,304

 

-

 

-

 

-

 

8,304

 

-

 

8,304

 

Stock compensation tax benefits

 

-

 

-

 

377

 

-

 

-

 

-

 

377

 

-

 

377

 

Change in shares held in trust for
deferred compensation plans, at cost

 

-

 

-

 

9,846

 

-

 

-

 

(9,846

)

-

 

-

 

-

 

Balance, September 30, 2011

 

160,007,417

 

$

1,600

 

$

708,601

 

$

1,133,386

 

$

49,038

 

$

(32,815

)

$

1,859,810

 

$

12,273

 

$

1,872,083

 

See accompanying notes to consolidated financial statements.

 

5



 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

(In thousands)

 

2011

 

2010

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

91,240

 

$

115,839

 

Adjustments to reconcile net income to net cash
provided by operating activities:

 

 

 

 

 

Provision for credit losses

 

141,594

 

158,791

 

Depreciation and amortization

 

55,232

 

58,677

 

Net increase in other assets and
accrued expenses and other liabilities

 

96,296

 

26,574

 

Gains on sales of assets, net

 

(3,761

)

(10,513

)

Net income attributable to non-controlling interest

 

3,918

 

2,399

 

Other, net

 

14,554

 

14,567

 

Total adjustments

 

307,833

 

250,495

 

Net cash provided by operating activities

 

399,073

 

366,334

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Principal collected on loans and leases,
net of loan originations and purchases

 

564,355

 

256,019

 

Purchases of equipment for lease financing

 

(615,919

)

(570,420

)

Purchase of leasing and equipment finance portfolios

 

(9,735

)

(186,779

)

Purchase of inventory finance portfolios

 

(5,905

)

(168,612

)

Proceeds from sales of loans and leases

 

150,319

 

-

 

Proceeds from sales of securities available for sale

 

49,593

 

284,681

 

Purchases of securities available for sale

 

(1,039,058

)

(498,822

)

Proceeds from maturities of and principal collected on
securities available for sale

 

446,745

 

245,635

 

Purchases of Federal Home Loan Bank stock

 

(5,551

)

(10,008

)

Redemption of Federal Home Loan Bank stock

 

23,363

 

11,135

 

Proceeds from sales of real estate owned

 

81,893

 

64,924

 

Purchases of premises and equipment

 

(22,155

)

(28,491

)

Other, net

 

25,729

 

25,186

 

Net cash used by investing activities

 

(356,326

)

(575,552

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Net increase (decrease) in deposits

 

735,387

 

(106,800

)

Net (decrease) increase in short-term borrowings

 

(119,586

)

100,077

 

Proceeds from long-term borrowings

 

1,513

 

166,785

 

Payments on long-term borrowings

 

(376,184

)

(31,733

)

Net proceeds from public offering of common stock

 

219,666

 

164,567

 

Net (distribution to) investment by non-controlling interest

 

(145

)

3,215

 

Dividends paid on common stock

 

(22,863

)

(20,538

)

Common stock sold to TCF employee benefit plans

 

14,292

 

2,623

 

Treasury shares sold to TCF employee benefit plans

 

-

 

11,726

 

Other, net

 

7,008

 

6,840

 

Net cash provided by financing activities

 

459,088

 

296,762

 

Net increase in cash and due from banks

 

501,835

 

87,544

 

Cash and due from banks at beginning of period

 

663,901

 

299,127

 

Cash and due from banks at end of period

 

$

1,165,736

 

$

386,671

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

Cash paid for:

 

 

 

 

 

Interest on deposits and borrowings

 

$

176,902

 

$

195,605

 

Income taxes (refunded) paid, net

 

$

(12,547

)

$

70,636

 

Transfer of loans and leases to other assets

 

$

132,069

 

$

151,995

 

See accompanying notes to consolidated financial statements.

 

6



 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

(1)       Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all the information and notes necessary for complete financial statements in conformity with generally accepted accounting principles (“GAAP”). The information in this Quarterly Report on Form 10-Q is written with the presumption that the users of the interim financial statements have read or have access to the most recent Annual Report on Form 10-K of TCF Financial Corporation (“TCF” or the “Company”), which contains the latest audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2010 and for the year then ended. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period financial statements to conform to the current period presentation.  For Consolidated Statements of Cash Flow purposes, cash and cash equivalents include cash and due from banks.

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. These estimates are based on information available to management at the time the estimates are made.  Actual results could differ from those estimates.  In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal recurring items, considered necessary for fair presentation.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year.

 

(2)       Investments

 

The carrying values of investments consist of the following.

 

 

 

At

 

At

 

 

 

September 30,

 

December 31,

 

(In thousands)

 

2011

 

2010

 

Federal Home Loan Bank stock, at cost:

 

 

 

 

 

Des Moines

 

$

119,087

 

$

136,899

 

Chicago

 

4,617

 

4,617

 

Subtotal

 

123,704

 

141,516

 

Federal Reserve Bank stock, at cost

 

31,722

 

30,684

 

Other

 

7,293

 

7,568

 

Total investments

 

$

162,719

 

$

179,768

 

 

The investments in Federal Home Loan Bank (“FHLB”) stock are required investments related to TCF’s current and previous borrowings from these banks.  FHLBs obtain their funding primarily through issuance of consolidated obligations of the Federal Home Loan Bank system.  The U.S. Government does not guarantee these obligations, and each of the 12 FHLBs are generally jointly and severally liable for repayment of each other’s debt.  Therefore, TCF’s investments in these banks could be adversely impacted by the financial operations of the FHLBs and actions of their regulator, the Federal Housing Finance Agency. Other investments primarily consist of non-traded mortgage-backed securities and other bonds which qualify for investment credit under the Community Reinvestment Act.

 

During the first nine months of 2011, TCF recorded impairment charges of $16 thousand on other investments, which had a carrying value of $7.3 million at September 30, 2011. During the first nine months of 2010, TCF recorded impairment charges of $241 thousand on other investments, which had a carrying value of $7.7 million at September 30, 2010.

 

7



 

(3)       Securities Available for Sale

 

Securities available for sale consist of the following.

 

 

 

At September 30, 2011

 

At December 31, 2010

 

 

 

 

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

(Dollars in thousands)

 

Cost

 

Gains

 

Losses

 

Value

 

Cost

 

Gains

 

Losses

 

Value

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government sponsored
enterprises and federal
agencies

 

$

2,499,218

 

$

99,567

 

$

-

 

$

2,598,785

 

$

1,929,098

 

$

16,579

 

$

42,141

 

$

1,903,536

 

Other

 

158

 

-

 

-

 

158

 

222

 

-

 

-

 

222

 

U.S. Treasury securities

 

-

 

-

 

-

 

-

 

24,999

 

1

 

-

 

25,000

 

Other securities

 

2,130

 

-

 

267

 

1,863

 

2,610

 

-

 

194

 

2,416

 

Total

 

$

2,501,506

 

$

99,567

 

$

267

 

$

2,600,806

 

$

1,956,929

 

$

16,580

 

$

42,335

 

$

1,931,174

 

Weighted-average yield

 

3.83

 %

 

 

 

 

 

 

3.87

 %

 

 

 

 

 

 

 

TCF recorded impairment charges of $269 thousand and $1 million on other securities for the third quarters of 2011 and 2010, respectively.  TCF recorded impairment charges of $480 thousand and $1.4 million on other securities for the first nine months of 2011 and 2010, respectively.

 

The following table shows the securities available for sale portfolio’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.  Unrealized losses on securities available for sale are due to changes in interest rates, lower values for equity securities and not due to credit quality issues.  TCF has the ability and intent to hold these investments until a recovery of fair value occurs.

 

 

 

Less than 12 months

 

12 months or more

 

Total

 

 

 

 

 

Unrealized

 

 

 

Unrealized

 

 

 

Unrealized

 

(In thousands)

 

Fair Value

 

Losses

 

Fair Value

 

Losses

 

Fair Value

 

Losses

 

At September 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

Other securities

 

$

1,663

 

$

267

 

$

-

 

$

-

 

$

1,663

 

$

267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government sponsored
enterprises and federal agencies

 

$

988,753

 

$

42,141

 

$

-

 

$

-

 

$

988,753

 

$

42,141

 

Other securities

 

2,216

 

194

 

-

 

-

 

2,216

 

194

 

Total

 

$

990,969

 

$

42,335

 

$

-

 

$

-

 

$

990,969

 

$

42,335

 

 

The amortized cost and fair value of securities available for sale at September 30, 2011, by contractual maturity, are shown below.

 

 

 

Amortized

 

 

 

(In thousands)

 

Cost

 

Fair Value

 

Due in one year or less

 

$

200

 

$

200

 

Due in 1-5 years

 

105

 

113

 

Due in 5-10 years

 

175

 

179

 

Due after 10 years

 

2,499,096

 

2,598,651

 

No stated maturity

 

1,930

 

1,663

 

Total

 

$

2,501,506

 

$

2,600,806

 

 

8



 

(4)       Loans and Leases

 

The following table sets forth information about loans and leases.

 

 

 

At

 

At

 

 

 

 

 

September 30,

 

December 31,

 

Percentage

 

(Dollars in thousands)

 

2011

 

2010

 

Change

 

Consumer real estate and other:

 

 

 

 

 

 

 

Consumer real estate:

 

 

 

 

 

 

 

First mortgage lien

 

$

4,798,607

 

$

4,893,887

 

(1.9

)  %

Junior lien

 

2,172,214

 

2,262,194

 

(4.0

)

Total consumer real estate

 

6,970,821

 

7,156,081

 

(2.6

)

Other

 

33,088

 

39,188

 

(15.6

)

Total consumer real estate and other

 

7,003,909

 

7,195,269

 

(2.7

)

Commercial:

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

Permanent

 

3,032,066

 

3,125,837

 

(3.0

)

Construction and development

 

170,121

 

202,379

 

(15.9

)

Total commercial real estate

 

3,202,187

 

3,328,216

 

(3.8

)

Commercial business

 

293,610

 

317,987

 

(7.7

)

Total commercial

 

3,495,797

 

3,646,203

 

(4.1

)

Leasing and equipment finance (1):

 

 

 

 

 

 

 

Equipment finance loans

 

1,019,982

 

939,474

 

8.6

 

Lease financings:

 

 

 

 

 

 

 

Direct financing leases

 

2,018,111

 

2,277,753

 

(11.4

)

Sales-type leases

 

32,597

 

29,728

 

9.7

 

Lease residuals

 

106,070

 

109,555

 

(3.2

)

Unearned income and deferred lease costs

 

(164,965

)

(202,032

)

(18.3

)

Total lease financings

 

1,991,813

 

2,215,004

 

(10.1

)

Total leasing and equipment finance

 

3,011,795

 

3,154,478

 

(4.5

)

Inventory finance

 

828,214

 

792,354

 

4.5

 

Total loans and leases

 

$

14,339,715

 

$

14,788,304

 

(3.0

)  %

(1)      Operating leases of $65.8 million and $77.4 million at September 30, 2011 and December 31, 2010, respectively, are included  in other assets in the Consolidated Statements of Financial Condition.

 

For certain leases, TCF sells minimum lease payments to third-party financial institutions at fixed rates.  For those transactions which achieve sale treatment, the related lease cash flow stream is not recognized on TCF’s Statements of Financial Condition.  During the three months ended September 30, 2011, TCF sold $36.3 million of minimum lease payment receivables, received cash of $36.4 million and recognized a gain of $159 thousand. During the nine months ended September 30, 2011, TCF sold $81.1 million of minimum lease payment receivables, received cash of $87.4 million and recognized a gain of $6.3 million.  At September 30, 2011, TCF’s lease residuals reported within the table above include $5.5 million related to all historical sales of minimum lease payment receivables.

 

Acquired Loans and Leases  During the first nine months of 2011, TCF paid $5.9 million to acquire inventory finance loans with a portfolio balance of $6 million.  Non-accretable discounts of $2.8 million and $4.2 million remained on purchased loan and lease portfolios at September 30, 2011 and December 31, 2010, respectively.  In the future, if TCF is unable to collect the expected cash flows or reduces its expectations for cash flows below the current level, an allowance for credit losses will be established on these acquired portfolios.

 

The excess of expected cash flows to be collected over the initial fair value of the acquired portfolios is referred to as the accretable yield and is accreted into interest income over the estimated life of the acquired portfolios using the effective yield method.  The accretable yield is affected by changes in interest rate indices for variable-rate acquired portfolios, changes in prepayment assumptions and changes in the expected principal and interest payments over the estimated life of the loan.  These loans and leases are classified as accruing and interest income continues to be recognized unless expected losses exceed the non-accretable discount.

 

9



 

Within TCF’s $365.8 million acquired loan and lease portfolios at September 30, 2011, there are certain loans which had experienced deterioration in credit quality at the time of acquisition.  These loans had outstanding principal balances of $8.5 million and $13.7 million at September 30, 2011 and December 31, 2010, respectively.  The non-accretable discount on loans acquired with deteriorated credit quality was $749 thousand and $769 thousand at September 30, 2011 and December 31, 2010, respectively.  The remaining accretion to be recognized in income for these loans was $115 thousand at September 30, 2011 and $207 thousand at December 31, 2010.  Accretion of $26 thousand and $40 thousand was recorded to income during the three months ended September 30, 2011 and September 30, 2010, respectively. Accretion of $92 thousand and $125 thousand was recorded to income during the nine months ended September 30, 2011 and September 30, 2010, respectively.

 

10



 

(5)       Allowance for Loan and Lease Losses and Credit Quality Information

 

Allowance for Loan and Lease Losses  The following tables provide information regarding the allowance for loan and lease losses:

 

 

 

Consumer

 

 

 

Leasing and

 

 

 

 

 

 

 

Real Estate and

 

 

 

Equipment

 

Inventory

 

 

 

(In thousands)

 

Other

 

Commercial

 

Finance

 

Finance

 

Total

 

At or For the Three Months Ended September 30, 2011

 

 

 

 

 

 

 

 

 

Balance, at beginning of quarter

 

$

177,137

 

$

50,783

 

$

24,611

 

$

2,941

 

$

255,472

 

Charge-offs

 

(48,551

)

(5,290

)

(3,636

)

(284

)

(57,761

)

Recoveries

 

3,234

 

250

 

853

 

22

 

4,359

 

Net charge-offs

 

(45,317

)

(5,040

)

(2,783

)

(262

)

(53,402

)

Provision for credit losses

 

46,829

 

3,756

 

1,472

 

258

 

52,315

 

Other

 

-

 

-

 

-

 

(60

)

(60

)

Balance, at end of quarter

 

$

178,649

 

$

49,499

 

$

23,300

 

$

2,877

 

$

254,325

 

At or For the Three Months Ended September 30, 2010

 

 

 

 

 

 

 

 

 

 

 

Balance, at beginning of quarter

 

$

171,380

 

$

45,255

 

$

32,443

 

$

2,565

 

$

251,643

 

Charge-offs

 

(39,803

)

(13,463

)

(9,555

)

(124

)

(62,945

)

Recoveries

 

3,573

 

637

 

881

 

44

 

5,135

 

Net charge-offs

 

(36,230

)

(12,826

)

(8,674

)

(80

)

(57,810

)

Provision for credit losses

 

36,662

 

17,155

 

5,205

 

265

 

59,287

 

Balance, at end of quarter

 

$

171,812

 

$

49,584

 

$

28,974

 

$

2,750

 

$

253,120

 

At or For the Nine Months Ended September 30, 2011

 

 

 

 

 

 

 

 

 

Balance, at beginning of year

 

$

174,503

 

$

62,478

 

$

26,301

 

$

2,537

 

$

265,819

 

Charge-offs

 

(127,795

)

(26,232

)

(12,441

)

(855

)

(167,323

)

Recoveries

 

10,085

 

730

 

3,391

 

57

 

14,263

 

Net charge-offs

 

(117,710

)

(25,502

)

(9,050

)

(798

)

(153,060

)

Provision for credit losses

 

121,856

 

12,523

 

6,049

 

1,166

 

141,594

 

Other

 

-

 

-

 

-

 

(28

)

(28

)

Balance, at end of period

 

$

178,649

 

$

49,499

 

$

23,300

 

$

2,877

 

$

254,325

 

At or For the Nine Months Ended September 30, 2010

 

 

 

 

 

 

 

 

 

 

 

Balance, at beginning of year

 

$

167,442

 

$

43,504

 

$

32,063

 

$

1,462

 

$

244,471

 

Charge-offs

 

(109,869

)

(30,886

)

(25,640

)

(755

)

(167,150

)

Recoveries

 

12,942

 

1,081

 

2,809

 

176

 

17,008

 

Net charge-offs

 

(96,927

)

(29,805

)

(22,831

)

(579

)

(150,142

)

Provision for credit losses

 

101,297

 

35,885

 

19,742

 

1,867

 

158,791

 

Balance, at end of period

 

$

171,812

 

$

49,584

 

$

28,974

 

$

2,750

 

$

253,120

 

 

The following tables provide other information regarding the allowance for loan and lease losses and balances by type of allowance methodology.

 

 

 

At September 30, 2011

 

 

 

Consumer

 

 

 

Leasing and

 

 

 

 

 

 

 

Real Estate and

 

 

 

Equipment

 

Inventory

 

 

 

(In thousands)

 

Other

 

Commercial

 

Finance

 

Finance

 

Total

 

Allowance for loan and lease losses:

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated for loss potential

 

$

177,578

 

$

25,013

 

$

17,706

 

$

2,750

 

$

223,047

 

Individually evaluated for loss potential

 

1,071

 

24,486

 

5,594

 

127

 

31,278

 

Total

 

$

178,649

 

$

49,499

 

$

23,300

 

$

2,877

 

$

254,325

 

Loans and leases outstanding:

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated for loss potential

 

$

6,997,773

 

$

2,790,168

 

$

2,977,981

 

$

819,950

 

$

13,585,872

 

Individually evaluated for loss potential

 

6,136

 

705,629

 

25,350

 

8,264

 

745,379

 

Loans acquired with deteriorated credit quality

 

-

 

-

 

8,464

 

-

 

8,464

 

Total

 

$

7,003,909

 

$

3,495,797

 

$

3,011,795

 

$

828,214

 

$

14,339,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2010

 

 

 

Consumer

 

 

 

Leasing and

 

 

 

 

 

 

 

Real Estate and

 

 

 

Equipment

 

Inventory

 

 

 

(In thousands)

 

Other

 

Commercial

 

Finance

 

Finance

 

Total

 

Allowance for loan and lease losses:

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated for loss potential

 

$

173,726

 

$

26,928

 

$

17,478

 

$

2,097

 

$

220,229

 

Individually evaluated for loss potential

 

777

 

35,550

 

8,823

 

440

 

45,590

 

Total

 

$

174,503

 

$

62,478

 

$

26,301

 

$

2,537

 

$

265,819

 

Loans and leases outstanding:

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated for loss potential

 

$

7,182,753

 

$

2,933,466

 

$

3,102,581

 

$

785,231

 

$

14,004,031

 

Individually evaluated for loss potential

 

12,516

 

712,737

 

38,243

 

7,123

 

770,619

 

Loans acquired with deteriorated credit quality

 

-

 

-

 

13,654

 

-

 

13,654

 

Total

 

$

7,195,269

 

$

3,646,203

 

$

3,154,478

 

$

792,354

 

$

14,788,304

 

 

11



 

Performing and Non-accrual Loans and Leases    The following tables set forth information regarding TCF’s performing and non-accrual loans and leases. Performing loans and leases are considered to have a lower risk of loss and are on accruing status. Non-accrual loans and leases are those which management believes have a higher risk of loss than performing loans and leases. Delinquent balances are determined based on the contractual terms of the loan or lease.

 

 

 

At September 30, 2011

 

 

 

 

 

 

 

90 Days or

 

Total 60+

 

 

 

 

 

 

 

 

 

0-59 Days

 

60-89 Days

 

More

 

Days

 

 

 

 

 

 

 

 

 

Delinquent and

 

Delinquent and

 

Delinquent and

 

Delinquent and

 

Total

 

 

 

 

 

(In thousands)

 

Accruing

 

Accruing

 

Accruing

 

Accruing

 

Performing

 

Non-Accrual

 

Total

 

Consumer real estate and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First mortgage lien

 

$

4,589,695

 

$

35,044

 

$

43,197

 

$

78,241

 

$

4,667,936

 

$

130,671

 

$

4,798,607

 

Junior lien

 

2,135,492

 

9,507

 

8,992

 

18,499

 

2,153,991

 

18,223

 

2,172,214

 

Other

 

33,026

 

49

 

9

 

58

 

33,084

 

4

 

33,088

 

Total consumer real estate
and other

 

6,758,213

 

44,600

 

52,198

 

96,798

 

6,855,011

 

148,898

 

7,003,909

 

Commercial real estate

 

3,097,257

 

2,718

 

-

 

2,718

 

3,099,975

 

102,212

 

3,202,187

 

Commercial business

 

262,201

 

7

 

354

 

361

 

262,562

 

31,048

 

293,610

 

Total commercial

 

3,359,458

 

2,725

 

354

 

3,079

 

3,362,537

 

133,260

 

3,495,797

 

Leasing and equipment finance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Middle market

 

1,569,718

 

1,586

 

39

 

1,625

 

1,571,343

 

17,898

 

1,589,241

 

Small ticket

 

705,214

 

1,326

 

455

 

1,781

 

706,995

 

6,180

 

713,175

 

Winthrop

 

461,627

 

25

 

-

 

25

 

461,652

 

163

 

461,815

 

Other

 

170,901

 

1

 

-

 

1

 

170,902

 

196

 

171,098

 

Total leasing and
equipment finance

 

2,907,460

 

2,938

 

494

 

3,432

 

2,910,892

 

24,437

 

2,935,329

 

Inventory finance

 

826,829

 

134

 

174

 

308

 

827,137