TCF FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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EX-99.2 - EXHIBIT 99.2 - TCF FINANCIAL CORP	a4q16earningspresentatio.htm
8-K - 8-K - TCF FINANCIAL CORP	tcf123116form8-kearningsre.htm

Exhibit 99.1

NEWS RELEASE

TCF Financial Corporation • 200 Lake Street East • Wayzata MN 55391

FOR IMMEDIATE RELEASE

Contact:

Mark Goldman (952) 475-7050 news@tcfbank.com (Media)

Jason Korstange (952) 745-2755 investor@tcfbank.com (Investors)

TCF REPORTS QUARTERLY NET INCOME OF $50.1 MILLION, OR 27 CENTS PER SHARE

AND ANNUAL NET INCOME OF $212.1 MILLION, OR $1.15 PER SHARE

2016 HIGHLIGHTS

- Revenue of $1.3 billion, up 4.1 percent from 2015

- Non-interest expense of $909.9 million, up 1.7 percent from 2015

- Efficiency ratio of 69.25 percent, down 163 basis points from 2015

- Period-end loans and leases of $17.8 billion, up 2.3 percent from December 31, 2015

- Loan and lease originations of $16.8 billion, up 10.3 percent from 2015

- Average deposits of $17.1 billion, up 7.2 percent from 2015

- Non-accrual loans and leases of $181.4 million, down 9.5 percent from December 31, 2015

- Net charge-offs as a percentage of average loans and leases of 0.26 percent, down 4 basis points from 2015

- Earnings per share of $1.15, up 7.5 percent from 2015

FOURTH QUARTER HIGHLIGHTS

- Revenue of $327.1 million, up 1.8 percent from the fourth quarter of 2015

- Non-interest expense of $225.4 million, up 1.2 percent from the fourth quarter of 2015

- Efficiency ratio of 68.89 percent, down 38 basis points from the fourth quarter of 2015

- Loan and lease originations of $4.3 billion, up 11.4 percent from the fourth quarter of 2015

- Average deposits of $17.1 billion, up 4.8 percent from the fourth quarter of 2015

- Net charge-offs as a percentage of average loans and leases of 0.27 percent, down 2 basis points from the fourth quarter of 2015

- Earnings per share of 27 cents, down 6.9 percent from the fourth quarter of 2015



Summary of Financial Results																				Table 1
										Percent Change
(Dollars in thousands, except per-share data)	4Q			3Q			4Q			4Q16 vs		4Q16 vs		YTD			YTD			Percent
	2016			2016			2015			3Q16		4Q15		2016			2015			Change
Net income attributable to TCF	$	50,092		$	56,292		$	52,492		(11.0	)%	(4.6	)%	$	212,124		$	197,123		7.6	%
Net interest income	211,446			212,018			205,669			(0.3	)	2.8		848,106			820,388			3.4
Diluted earnings per common share	0.27			0.31			0.29			(12.9	)	(6.9	)	1.15			1.07			7.5

Financial Ratios⁽¹⁾
Return on average assets	0.99		%	1.12		%	1.08		%					1.05		%	1.03		%
Return on average common equity	8.40			9.59			9.53							9.13			9.19
Return on average tangible common equity⁽²⁾	9.43			10.78			10.82							10.29			10.48
Net interest margin	4.30			4.34			4.35							4.34			4.42
Net charge-offs as a percentage of average loans and leases	0.27			0.26			0.29							0.26			0.30

(1) Annualized.
(2) See "Reconciliation of GAAP to Non-GAAP Financial Measures" table.

WAYZATA, Minn. (January 27, 2017) - TCF Financial Corporation ("TCF" or the "Company") (NYSE: TCB) today reported net income of $50.1 million for the fourth quarter of 2016, compared with $52.5 million for the fourth quarter of 2015 and $56.3 million for the third quarter of 2016. Diluted earnings per common share was 27 cents for the fourth quarter of 2016, compared with 29 cents for the fourth quarter of 2015 and 31 cents for the third quarter of 2016.

TCF reported net income of $212.1 million for the year ended December 31, 2016, compared with $197.1 million for the same period in 2015. Diluted earnings per common share was $1.15 for the year ended December 31, 2016, compared with $1.07 for the same period in 2015.

"I am proud of the progress we have made and the successes we have achieved during 2016," said Craig R. Dahl, president and chief executive officer. "We took significant strides toward driving the Company forward in ways that align with our four strategic pillars. Execution of our diversification philosophy has resulted in strong performance from a credit quality perspective. Our unique loan and lease origination capabilities allow us to grow profitably in a variety of markets. We generated positive operating leverage throughout the year as revenue growth steadily outpaced expense growth. We also continued to expand our deposit base which will be very beneficial should interest rates continue to increase.

"While our long term results will continue to be driven by these four strategic pillars, market volatility and softness in the auto lending industry provided some near term headwinds. As we move forward into 2017, there is much to be excited about. Our focus will be on taking the next step in creating superior and sustainable financial performance. We can do this by optimizing our diverse loan and lease origination platforms to grow in areas that will continue to drive profitability. In addition, we will look to create new efficiencies throughout the organization while offering product and service solutions that meet the financial needs of our customers."



Revenue

Total Revenue																				Table 2
										Percent Change
(Dollars in thousands)	4Q			3Q			4Q			4Q16 vs		4Q16 vs		YTD			YTD				Percent
	2016			2016			2015			3Q16		4Q15		2016			2015				Change
Net interest income	$	211,446		$	212,018		$	205,669		(0.3	)%	2.8	%	$	848,106		$	820,388			3.4	%
Non-interest income:
Fees and service charges	35,132			35,093			37,741			0.1		(6.9	)	137,664			144,999				(5.1	)
Card revenue	13,689			13,747			13,781			(0.4	)	(0.7	)	54,882			54,387				0.9
ATM revenue	4,806			5,330			5,143			(9.8	)	(6.6	)	20,445			21,544				(5.1	)
Subtotal	53,627			54,170			56,665			(1.0	)	(5.4	)	212,991			220,930				(3.6	)
Gains on sales of auto loans, net	1,145			11,624			3,136			(90.1	)	(63.5	)	34,832			30,580				13.9
Gains on sales of consumer real estate loans, net	16,676			13,528			13,104			23.3		27.3		50,427			40,964				23.1
Servicing fee income	11,404			10,393			8,622			9.7		32.3		40,182			31,229				28.7
Subtotal	29,225			35,545			24,862			(17.8	)	17.5		125,441			102,773				22.1
Leasing and equipment finance	31,316			28,289			32,355			10.7		(3.2	)	119,166			108,129				10.2
Other	1,365			2,270			1,806			(39.9	)	(24.4	)	8,883			10,463				(15.1	)
Fees and other revenue	115,533			120,274			115,688			(3.9	)	(0.1	)	466,481			442,295				5.5
Gains (losses) on securities, net	135			(600		)	(29		)	N.M.		N.M.		(581		)	(297		)		(95.6	)
Total non-interest income	115,668			119,674			115,659			(3.3	)	—		465,900			441,998				5.4
Total revenue	$	327,114		$	331,692		$	321,328		(1.4	)	1.8		$	1,314,006		$	1,262,386			4.1

Net interest margin⁽¹⁾	4.30		%	4.34		%	4.35		%					4.34		%	4.42		%
Total non-interest income as a percentage of total revenue	35.4			36.1			36.0							35.5			35.0

N.M. Not Meaningful.
(1) Annualized.

Net Interest Income

•

Net interest income for the fourth quarter of 2016 increased $5.8 million, or 2.8 percent, compared with the fourth quarter of 2015 and was consistent with the third quarter of 2016. The increase from the fourth quarter of 2015 was primarily due to higher average balances of loans and leases held for sale, leasing and equipment finance loans and leases, inventory finance loans and securities available for sale. These increases were partially offset by lower average consumer real estate loan balances and a lower average yield on the overall loan and lease portfolio. Net interest income for the fourth quarter of 2016 was consistent with the third quarter of 2016 due to growth in the inventory finance and leasing and equipment finance portfolios, offset by a lower average yield on the overall loan and lease portfolio.

•

Net interest margin for the fourth quarter of 2016 was 4.30 percent, compared with 4.35 percent for the fourth quarter of 2015 and 4.34 percent for the third quarter of 2016. The decrease from the fourth quarter of 2015 was primarily due to lower yields on commercial loans, leasing and equipment finance loans and leases, auto finance loans and loans and leases held for sale. The decrease from the third quarter of 2016 was primarily due to lower yields on inventory finance loans.

Non-interest Income


•	Fees and service charges for the fourth quarter of 2016 were $35.1 million, down $2.6 million, or 6.9 percent, from the fourth quarter of 2015 and consistent with the third quarter of 2016. The decrease from the fourth quarter of 2015 was primarily due to ongoing consumer behavior changes, as well as higher average checking account balances per customer.


•	TCF sold $516.0 million, $271.1 million and $614.9 million of auto loans during the fourth quarters of 2016 and 2015 and the third quarter of 2016, respectively, resulting in net gains in each respective period.


•	TCF sold $520.8 million, $389.1 million and $437.1 million of consumer real estate loans during the fourth quarters of 2016 and 2015 and the third quarter of 2016, respectively, resulting in net gains in each respective period.


•	Servicing fee income was $11.4 million on $5.5 billion of average loans and leases serviced for others for the fourth quarter of 2016, compared with $8.6 million on $4.2 billion for the fourth quarter of 2015 and $10.4 million on $5.1 billion for the third quarter of 2016.



Loans and Leases

Period-End and Average Loans and Leases															Table 3
							Percent Change
(Dollars in thousands)	4Q		3Q		4Q		4Q16 vs		4Q16 vs		YTD		YTD		Percent
	2016		2016		2015		3Q16		4Q15		2016		2015		Change
Period-End:
Consumer real estate:
First mortgage lien	$	2,292,596	$	2,313,044	$	2,624,956	(0.9	)%	(12.7	)%
Junior lien	2,791,756		2,674,280		2,839,316		4.4		(1.7	)
Total consumer real estate	5,084,352		4,987,324		5,464,272		1.9		(7.0	)
Commercial	3,286,478		3,150,199		3,145,832		4.3		4.5
Leasing and equipment finance	4,336,310		4,236,224		4,012,248		2.4		8.1
Inventory finance	2,470,175		2,261,086		2,146,754		9.2		15.1
Auto finance	2,647,741		2,731,900		2,647,596		(3.1	)	—
Other	18,771		17,886		19,297		4.9		(2.7	)
Total	$	17,843,827	$	17,384,619	$	17,435,999	2.6		2.3

Average:
Consumer real estate:
First mortgage lien	$	2,306,421	$	2,353,097	$	2,670,355	(2.0	)%	(13.6	)%	$	2,424,013	$	2,867,948	(15.5	)%
Junior lien	2,779,725		2,782,479		2,934,169		(0.1	)	(5.3	)	2,810,116		2,754,253		2.0
Total consumer real estate	5,086,146		5,135,576		5,604,524		(1.0	)	(9.2	)	5,234,129		5,622,201		(6.9	)
Commercial	3,147,517		3,092,115		3,117,983		1.8		0.9		3,126,881		3,134,428		(0.2	)
Leasing and equipment finance	4,252,543		4,147,488		3,911,025		2.5		8.7		4,106,718		3,804,015		8.0
Inventory finance	2,389,980		2,272,409		2,180,534		5.2		9.6		2,414,684		2,154,357		12.1
Auto finance	2,647,088		2,670,272		2,514,923		(0.9	)	5.3		2,693,041		2,278,617		18.2
Other	9,307		9,252		9,060		0.6		2.7		9,538		10,303		(7.4	)
Total	$	17,532,581	$	17,327,112	$	17,338,049	1.2		1.1		$	17,584,991	$	17,003,921	3.4

•

Period-end loans and leases were $17.8 billion at December 31, 2016, an increase of $0.4 billion, or 2.3 percent, compared with December 31, 2015 and an increase of $0.5 billion, or 2.6 percent, compared with September 30, 2016. Average loans and leases were $17.5 billion for the fourth quarter of 2016, an increase of $0.2 billion, or 1.1 percent, compared with the fourth quarter of 2015 and an increase of $0.2 billion, or 1.2 percent, compared with the third quarter of 2016.

The increases from December 31, 2015 were primarily due to increases in the leasing and equipment finance portfolio and in the inventory finance portfolio due to strong originations and the expansion of the number of active dealers, partially offset by run-off in the consumer real estate first mortgage lien portfolio. The increase from September 30, 2016 for period-end loans and leases was primarily due to increases in the inventory finance, commercial, consumer real estate junior lien, and leasing and equipment finance portfolios. The increase from the third quarter of 2016 for average loans and leases was primarily due to increases in the inventory finance and leasing and equipment finance portfolios.


•	Loan and lease originations were $4.3 billion for the fourth quarter of 2016, an increase of $0.4 billion, or 11.4 percent, compared with the fourth quarter of 2015 and consistent with the third quarter of 2016. The increase from the fourth quarter of 2015 was primarily due to increased originations in inventory finance and consumer real estate.



Credit Quality

Credit Trends																	Table 4
																Change
(Dollars in thousands)	4Q			3Q			2Q			1Q			4Q			4Q16 vs	4Q16 vs
	2016			2016			2016			2016			2015			3Q16	4Q15
Over 60-day delinquencies as a percentage of period-end loans and leases⁽¹⁾	0.12		%	0.12		%	0.12		%	0.10		%	0.11		%	— bps	1 bps
Net charge-offs as a percentage of average loans and leases⁽²⁾	0.27			0.26			0.23			0.27			0.29			1	(2	)
Non-accrual loans and leases and other real estate owned	$	228,242		$	223,759		$	232,334		$	241,090		$	250,448		2.0%	(8.9)%
Provision for credit losses	19,888			13,894			13,250			18,842			17,607			43.1	13.0

(1) Excludes portfolios acquired with deteriorated credit quality and non-accrual loans and leases.
(2) Annualized.

•

The net charge-off rate was 0.27 percent for the fourth quarter of 2016, down from 0.29 percent for the fourth quarter of 2015, and up from 0.26 percent for the third quarter of 2016. The decrease from the fourth quarter of 2015 was primarily due to improved credit quality in the consumer real estate portfolio, partially offset by increased net charge-offs in the auto finance portfolio. The increase from the third quarter of 2016 was primarily due to increased net charge-offs in the auto finance portfolio, partially offset by decreased net charge-offs in the leasing and equipment finance portfolio.

•

Non-accrual loans and leases and other real estate owned was $228.2 million at December 31, 2016, a decrease of $22.2 million, or 8.9 percent, from December 31, 2015, and an increase of $4.5 million, or 2.0 percent, from September 30, 2016. Non-accrual loans and leases were $181.4 million at December 31, 2016, a decrease of $19.0 million, or 9.5 percent, from December 31, 2015 and a decrease of $8.6 million, or 4.5 percent, from September 30, 2016. The decreases were primarily due to improving credit quality trends in the consumer real estate and commercial portfolios and lower non-accrual loans in the auto finance portfolio, partially offset by an increase in non-accrual loans in the inventory finance portfolio.

•

Provision for credit losses was $19.9 million for the fourth quarter of 2016, an increase of $2.3 million, or 13.0 percent, from the fourth quarter of 2015, and an increase of $6.0 million, or 43.1 percent, from the third quarter of 2016. The increase from the fourth quarter of 2015 was primarily due to growth in the overall loan and lease portfolio, partially offset by a decrease in net charge-offs. The increase from the third quarter of 2016 was primarily due to growth in the overall loan and lease portfolio.



Deposits

Average Deposits																				Table 5
										Percent Change
(Dollars in thousands)	4Q			3Q			4Q			4Q16 vs		4Q16 vs		YTD			YTD			Percent
	2016			2016			2015			3Q16		4Q15		2016			2015			Change

Checking	$	5,759,806		$	5,673,888		$	5,412,454		1.5	%	6.4	%	$	5,688,690		$	5,387,112		5.6	%
Savings	4,681,662			4,672,642			4,733,703			0.2		(1.1	)	4,689,543			4,952,680			(5.3	)
Money market	2,429,239			2,496,590			2,349,127			(2.7	)	3.4		2,488,977			2,265,121			9.9
Certificates of deposit	4,198,190			4,304,990			3,793,653			(2.5	)	10.7		4,229,247			3,340,341			26.6
Total average deposits	$	17,068,897		$	17,148,110		$	16,288,937		(0.5	)	4.8		$	17,096,457		$	15,945,254		7.2

Average interest rate on deposits⁽¹⁾	0.35		%	0.37		%	0.34		%					0.36		%	0.30		%

(1) Annualized.


•	Total average deposits for the fourth quarter of 2016 increased $0.8 billion, or 4.8 percent, from the fourth quarter of 2015 and were consistent with the third quarter of 2016. The increase from the fourth quarter of 2015 was primarily due to special campaigns for certificates of deposit during the first three quarters of 2016, as well as growth in checking and money market balances.



Non-interest Expense

Non-interest Expense																				Table 6
										Change
(Dollars in thousands)	4Q			3Q			4Q			4Q16 vs		4Q16 vs		YTD			YTD			Percent
	2016			2016			2015			3Q16		4Q15		2016			2015			Change

Compensation and employee benefits	$	115,001		$	117,155		$	109,061		(1.8	)%	5.4	%	$	474,722		$	457,743		3.7	%
Occupancy and equipment	38,150			37,938			37,824			0.6		0.9		149,980			144,962			3.5
Other	59,235			59,421			56,930			(0.3	)	4.0		231,420			229,255			0.9
Subtotal	212,386			214,514			203,815			(1.0	)	4.2		856,122			831,960			2.9
Operating lease depreciation	10,906			10,038			13,608			8.6		(19.9	)	40,359			39,409			2.4
Foreclosed real estate and repossessed assets, net	1,889			4,243			4,940			(55.5	)	(61.8	)	13,187			23,193			(43.1	)
Other credit costs, net	178			83			224			114.5		(20.5	)	219			185			18.4
Total non-interest expense	$	225,359		$	228,878		$	222,587		(1.5	)	1.2		$	909,887		$	894,747		1.7

Efficiency ratio	68.89		%	69.00		%	69.27		%	(11) bps		(38) bps		69.25		%	70.88		%	(163) bps

•

Compensation and employee benefits expense increased $5.9 million, or 5.4 percent, from the fourth quarter of 2015 and decreased $2.2 million, or 1.8 percent, from the third quarter of 2016. The increase from the fourth quarter of 2015 was primarily due to higher other compensation and health insurance expenses, partially offset by the annual pension plan valuation adjustment. The decrease from the third quarter of 2016 was primarily due to the annual pension plan valuation adjustment and lower salaries, partially offset by higher health insurance expenses.

•

Net expenses related to foreclosed real estate and repossessed assets decreased $3.1 million, or 61.8 percent, from the fourth quarter of 2015 and decreased $2.4 million, or 55.5 percent, from the third quarter of 2016. The decrease from the fourth quarter of 2015 was primarily due to higher gains on sales of commercial properties, lower write-downs on existing foreclosed consumer and commercial properties and lower operating costs associated with maintaining fewer consumer properties, partially offset by higher repossessed assets expense. The decrease from the third quarter of 2016 was primarily due to higher gains on sales of commercial properties and lower write-downs on existing foreclosed consumer properties, partially offset by higher repossessed assets expense.



Capital

Capital Information				Table 7
	At Dec. 31,			At Dec. 31,
(Dollars in thousands, except per-share data)	2016			2015
Total equity	$	2,444,645		$	2,306,917
Book value per common share	12.66			11.94
Tangible book value per common share⁽¹⁾	11.33			10.59
Common equity to assets	10.09		%	9.80		%
Tangible common equity to tangible assets⁽¹⁾	9.13			8.79
Capital accumulation rate⁽²⁾	8.59			10.44

	At Dec. 31,			At Dec. 31,
Regulatory Capital:	2016⁽³⁾			2015
Common equity Tier 1 capital	$	1,970,323		$	1,814,442
Tier 1 capital	2,248,221			2,092,195
Total capital	2,635,925			2,487,060

Regulatory Capital Ratios:
Common equity Tier 1 capital ratio	10.24		%	10.00		%
Tier 1 risk-based capital ratio	11.68			11.54
Total risk-based capital ratio	13.69			13.71
Tier 1 leverage ratio	10.73			10.46

(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 4Q 2016 are preliminary pending completion and filing of the Company's regulatory reports.


•	TCF maintained strong capital ratios as the Company accumulated capital through earnings.


•	TCF increased book value per common share 6.0 percent in 2016. TCF also increased tangible book value per common share 7.0 percent in 2016.

•

On January 25, 2017, TCF's Board of Directors declared a regular quarterly cash dividend of 7.5 cents per common share, payable on March 1, 2017, to stockholders of record at the close of business on February 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 March 1, 2017, to stockholders of record at the close of business on February 15, 2017.

Webcast Information

A live webcast of TCF's conference call to discuss the fourth quarter earnings will be hosted at TCF's website, http://ir.tcfbank.com, on January 27, 2017 at 9:00 a.m. CST. 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 December 31, 2016, TCF had $21.4 billion in total assets and 339 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, 2015 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 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, use by municipalities of eminent domain on property securing troubled residential mortgage loans, or imposition of underwriting or other limitations that impact the ability to offer certain variable-rate 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; changes to bankruptcy laws which would result in the loss of all or part of TCF's security interest due to collateral value declines; 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 resulting from Federal 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 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 any 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; failure to successfully attract and retain new customers, including the failure to attract and retain manufacturers and dealers to expand the inventory finance business; 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, including the failure to develop and maintain technology necessary to satisfy customer demands; ability to attract and retain employees given competitive conditions.

Litigation Risks. Results of litigation or government enforcement actions, 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 December 31,					Change
	2016		2015			$			%
Interest income:
Loans and leases	$	210,848	$	212,346		$	(1,498	)	(0.7	)%
Securities available for sale	7,553		4,864			2,689			55.3
Securities held to maturity	1,165		1,336			(171		)	(12.8	)
Loans held for sale and other	12,092		6,905			5,187			75.1
Total interest income	231,658		225,451			6,207			2.8
Interest expense:
Deposits	15,053		13,772			1,281			9.3
Borrowings	5,159		6,010			(851		)	(14.2	)
Total interest expense	20,212		19,782			430			2.2
Net interest income	211,446		205,669			5,777			2.8
Provision for credit losses	19,888		17,607			2,281			13.0
Net interest income after provision for credit losses	191,558		188,062			3,496			1.9
Non-interest income:
Fees and service charges	35,132		37,741			(2,609		)	(6.9	)
Card revenue	13,689		13,781			(92		)	(0.7	)
ATM revenue	4,806		5,143			(337		)	(6.6	)
Subtotal	53,627		56,665			(3,038		)	(5.4	)
Gains on sales of auto loans, net	1,145		3,136			(1,991		)	(63.5	)
Gains on sales of consumer real estate loans, net	16,676		13,104			3,572			27.3
Servicing fee income	11,404		8,622			2,782			32.3
Subtotal	29,225		24,862			4,363			17.5
Leasing and equipment finance	31,316		32,355			(1,039		)	(3.2	)
Other	1,365		1,806			(441		)	(24.4	)
Fees and other revenue	115,533		115,688			(155		)	(0.1	)
Gains (losses) on securities, net	135		(29		)	164			N.M.
Total non-interest income	115,668		115,659			9			—
Non-interest expense:
Compensation and employee benefits	115,001		109,061			5,940			5.4
Occupancy and equipment	38,150		37,824			326			0.9
Other	59,235		56,930			2,305			4.0
Subtotal	212,386		203,815			8,571			4.2
Operating lease depreciation	10,906		13,608			(2,702		)	(19.9	)
Foreclosed real estate and repossessed assets, net	1,889		4,940			(3,051		)	(61.8	)
Other credit costs, net	178		224			(46		)	(20.5	)
Total non-interest expense	225,359		222,587			2,772			1.2
Income before income tax expense	81,867		81,134			733			0.9
Income tax expense	29,762		26,614			3,148			11.8
Income after income tax expense	52,105		54,520			(2,415		)	(4.4	)
Income attributable to non-controlling interest	2,013		2,028			(15		)	(0.7	)
Net income attributable to TCF Financial Corporation	50,092		52,492			(2,400		)	(4.6	)
Preferred stock dividends	4,847		4,847			—			—
Net income available to common stockholders	$	45,245	$	47,645		$	(2,400	)	(5.0	)

Earnings per common share:
Basic	$	0.27	$	0.29		$	(0.02	)	(6.9	)%
Diluted	0.27		0.29			(0.02		)	(6.9	)

Dividends declared per common share	$	0.075	$	0.075		$	—		—	%

Average common and common equivalent shares
outstanding (in thousands):
Basic	167,412		166,343			1,069			0.6	%
Diluted	168,049		166,942			1,107			0.7

N.M. Not Meaningful.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)

	Year Ended December 31,						Change
	2016			2015			$			%
Interest income:
Loans and leases	$	850,546		$	832,736		$	17,810		2.1	%
Securities available for sale	26,573			15,648			10,925			69.8
Securities held to maturity	4,649			5,486			(837		)	(15.3	)
Loans held for sale and other	48,962			38,060			10,902			28.6
Total interest income	930,730			891,930			38,800			4.4
Interest expense:
Deposits	61,788			48,226			13,562			28.1
Borrowings	20,836			23,316			(2,480		)	(10.6	)
Total interest expense	82,624			71,542			11,082			15.5
Net interest income	848,106			820,388			27,718			3.4
Provision for credit losses	65,874			52,944			12,930			24.4
Net interest income after provision for credit losses	782,232			767,444			14,788			1.9
Non-interest income:
Fees and service charges	137,664			144,999			(7,335		)	(5.1	)
Card revenue	54,882			54,387			495			0.9
ATM revenue	20,445			21,544			(1,099		)	(5.1	)
Subtotal	212,991			220,930			(7,939		)	(3.6	)
Gains on sales of auto loans, net	34,832			30,580			4,252			13.9
Gains on sales of consumer real estate loans, net	50,427			40,964			9,463			23.1
Servicing fee income	40,182			31,229			8,953			28.7
Subtotal	125,441			102,773			22,668			22.1
Leasing and equipment finance	119,166			108,129			11,037			10.2
Other	8,883			10,463			(1,580		)	(15.1	)
Fees and other revenue	466,481			442,295			24,186			5.5
Gains (losses) on securities, net	(581		)	(297		)	(284		)	(95.6	)
Total non-interest income	465,900			441,998			23,902			5.4
Non-interest expense:
Compensation and employee benefits	474,722			457,743			16,979			3.7
Occupancy and equipment	149,980			144,962			5,018			3.5
Other	231,420			229,255			2,165			0.9
Subtotal	856,122			831,960			24,162			2.9
Operating lease depreciation	40,359			39,409			950			2.4
Foreclosed real estate and repossessed assets, net	13,187			23,193			(10,006		)	(43.1	)
Other credit costs, net	219			185			34			18.4
Total non-interest expense	909,887			894,747			15,140			1.7
Income before income tax expense	338,245			314,695			23,550			7.5
Income tax expense	116,528			108,872			7,656			7.0
Income after income tax expense	221,717			205,823			15,894			7.7
Income attributable to non-controlling interest	9,593			8,700			893			10.3
Net income attributable to TCF Financial Corporation	212,124			197,123			15,001			7.6
Preferred stock dividends	19,388			19,388			—			—
Net income available to common stockholders	$	192,736		$	177,735		$	15,001		8.4

Earnings per common share:
Basic	$	1.15		$	1.07		$	0.08		7.5	%
Diluted	1.15			1.07			0.08			7.5

Dividends declared per common share	$	0.300		$	0.225		$	0.075		33.3	%

Average common and common equivalent shares
outstanding (in thousands):
Basic	167,220			165,697			1,523			0.9	%
Diluted	167,807			166,242			1,565			0.9



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)

	Three Months Ended December 31,						Change
	2016			2015			$			%
Net income attributable to TCF Financial Corporation	$	50,092		$	52,492		$	(2,400	)	(4.6	)%
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale and interest-only strips	(40,035		)	(3,207		)	(36,828		)	N.M.
Net unrealized gains (losses) on net investment hedges	913			1,121			(208		)	(18.6	)
Foreign currency translation adjustment	(1,491		)	(1,986		)	495			24.9
Recognized postretirement prior service cost	(7		)	(7		)	—			—
Total other comprehensive income (loss), net of tax	(40,620		)	(4,079		)	(36,541		)	N.M.
Comprehensive income	$	9,472		$	48,413		$	(38,941	)	(80.4	)


	Year Ended December 31,						Change
	2016			2015			$			%
Net income attributable to TCF Financial Corporation	$	212,124		$	197,123		$	15,001		7.6	%
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale and interest-only strips	(18,894		)	(816		)	(18,078		)	N.M.
Net unrealized gains (losses) on net investment hedges	(756		)	4,713			(5,469		)	N.M.
Foreign currency translation adjustment	1,300			(8,304		)	9,604			N.M.
Recognized postretirement prior service cost	(29		)	(29		)	—			—
Total other comprehensive income (loss), net of tax	(18,379		)	(4,436		)	(13,943		)	N.M.
Comprehensive income	$	193,745		$	192,687		$	1,058		0.5

N.M. Not Meaningful.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per-share data)
(Unaudited)

	At December 31,						Change
	2016			2015			$			%
ASSETS:
Cash and due from banks	$	609,603		$	889,337		$	(279,734	)	(31.5	)%
Investments	74,714			70,537			4,177			5.9
Securities held to maturity	181,314			201,920			(20,606		)	(10.2	)
Securities available for sale	1,423,435			888,885			534,550			60.1
Loans and leases held for sale	268,832			157,625			111,207			70.6
Loans and leases:
Consumer real estate:
First mortgage lien	2,292,596			2,624,956			(332,360		)	(12.7	)
Junior lien	2,791,756			2,839,316			(47,560		)	(1.7	)
Total consumer real estate	5,084,352			5,464,272			(379,920		)	(7.0	)
Commercial	3,286,478			3,145,832			140,646			4.5
Leasing and equipment finance	4,336,310			4,012,248			324,062			8.1
Inventory finance	2,470,175			2,146,754			323,421			15.1
Auto finance	2,647,741			2,647,596			145			—
Other	18,771			19,297			(526		)	(2.7	)
Total loans and leases	17,843,827			17,435,999			407,828			2.3
Allowance for loan and lease losses	(160,269		)	(156,054		)	(4,215		)	(2.7	)
Net loans and leases	17,683,558			17,279,945			403,613			2.3
Premises and equipment, net	418,372			445,934			(27,562		)	(6.2	)
Goodwill	225,640			225,640			—			—
Other assets	555,858			529,786			26,072			4.9
Total assets	$	21,441,326		$	20,689,609		$	751,717		3.6

LIABILITIES AND EQUITY:
Deposits:
Checking	$	6,009,151		$	5,690,559		$	318,592		5.6	%
Savings	4,719,481			4,717,457			2,024			—
Money market	2,421,467			2,408,180			13,287			0.6
Certificates of deposit	4,092,423			3,903,793			188,630			4.8
Total deposits	17,242,522			16,719,989			522,533			3.1
Short-term borrowings	4,391			5,381			(990		)	(18.4	)
Long-term borrowings	1,073,181			1,034,557			38,624			3.7
Total borrowings	1,077,572			1,039,938			37,634			3.6
Accrued expenses and other liabilities	676,587			622,765			53,822			8.6
Total liabilities	18,996,681			18,382,692			613,989			3.3
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;
171,034,506 and 169,887,030 shares issued, respectively	1,710			1,699			11			0.6
Additional paid-in capital	862,776			851,836			10,940			1.3
Retained earnings, subject to certain restrictions	1,382,901			1,240,347			142,554			11.5
Accumulated other comprehensive income (loss)	(33,725		)	(15,346		)	(18,379		)	(119.8	)
Treasury stock at cost, 42,566 shares, and other	(49,419		)	(50,860		)	1,441			2.8
Total TCF Financial Corporation stockholders' equity	2,427,483			2,290,916			136,567			6.0
Non-controlling interest in subsidiaries	17,162			16,001			1,161			7.3
Total equity	2,444,645			2,306,917			137,728			6.0
Total liabilities and equity	$	21,441,326		$	20,689,609		$	751,717		3.6



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
	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30,			Dec. 31,
	2016		2016		2016		2016		2015		2016			2015
Consumer real estate:
First mortgage lien	0.40	%	0.36	%	0.36	%	0.39	%	0.46	%	4		bps	(6	)	bps
Junior lien	0.05		0.03		0.03		0.05		0.05		2			—
Total consumer real estate	0.21		0.18		0.18		0.21		0.25		3			(4	)
Commercial	—		0.01		0.11		—		—		(1	)		—
Leasing and equipment finance	0.10		0.14		0.13		0.12		0.06		(4	)		4
Inventory finance	—		0.01		—		—		0.01		(1	)		(1	)
Auto finance	0.23		0.20		0.13		0.09		0.14		3			9
Other	0.10		0.05		0.33		0.13		0.10		5			—
Subtotal	0.12		0.12		0.12		0.10		0.11		—			1
Portfolios acquired with deteriorated credit quality	—		3.06		0.02		1.51		0.43		(306	)		(43	)
Total delinquencies	0.12		0.12		0.12		0.10		0.11		—			1


(1)	Excludes non-accrual loans and leases.



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

	Quarter Ended⁽¹⁾										Change from
	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30,			Dec. 31,
	2016		2016		2016		2016		2015		2016			2015
Consumer real estate:
First mortgage lien	0.26	%	0.34	%	0.35	%	0.55	%	0.54	%	(8	)	bps	(28	)	bps
Junior lien	0.08		0.04		0.05		0.17		0.17		4			(9	)
Total consumer real estate	0.17		0.17		0.19		0.35		0.34		—			(17	)
Commercial	0.01		(0.01	)	0.08		(0.02	)	0.05		2			(4	)
Leasing and equipment finance	0.10		0.18		0.11		0.13		0.16		(8	)		(6	)
Inventory finance	0.07		0.10		0.09		0.04		0.05		(3	)		2
Auto finance	1.09		0.86		0.69		0.81		0.75		23			34
Other	N.M.		N.M.		N.M.		N.M.		N.M.		N.M.			N.M.
Total	0.27		0.26		0.23		0.27		0.29		1			(2	)

N.M. Not Meaningful.


(1)	Annualized.



Non-Accrual Loans and Leases Rollforward

	Quarter Ended															Change from
	Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Dec. 31,
	2016			2016			2016			2016			2015			2016			2015
Balance, beginning of period	$	190,047		$	195,542		$	198,649		$	200,466		$	206,110		$	(5,495	)	$	(16,063	)
Additions	32,398			28,697			35,280			38,029			44,387			3,701			(11,989		)
Charge-offs	(4,158		)	(5,670		)	(5,475		)	(7,436		)	(9,002		)	1,512			4,844
Transfers to other assets	(17,118		)	(11,687		)	(10,310		)	(12,342		)	(13,612		)	(5,431		)	(3,506		)
Return to accrual status	(4,546		)	(5,447		)	(6,687		)	(7,698		)	(9,282		)	901			4,736
Payments received	(14,351		)	(13,845		)	(17,774		)	(15,551		)	(20,103		)	(506		)	5,752
Sales	(2,764		)	—			(900		)	—			(775		)	(2,764		)	(1,989		)
Other, net	1,937			2,457			2,759			3,181			2,743			(520		)	(806		)
Balance, end of period	$	181,445		$	190,047		$	195,542		$	198,649		$	200,466		$	(8,602	)	$	(19,021	)



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)

Other Real Estate Owned Rollforward

	Quarter Ended															Change from
	Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Dec. 31,
	2016			2016			2016			2016			2015			2016			2015
Balance, beginning of period	$	33,712		$	36,792		$	42,441		$	49,982		$	58,584		$	(3,080	)	$	(24,872	)
Transferred in	13,865			10,124			9,661			10,575			12,626			3,741			1,239
Sales	(8,655		)	(12,997		)	(16,058		)	(18,885		)	(19,174		)	4,342			10,519
Writedowns	(1,281		)	(1,984		)	(2,027		)	(2,744		)	(2,130		)	703			849
Other, net⁽¹⁾	9,156			1,777			2,775			3,513			76			7,379			9,080
Balance, end of period	$	46,797		$	33,712		$	36,792		$	42,441		$	49,982		$	13,085		$	(3,185	)


(1)	Includes transfers from premises and equipment.



Allowance for Loan and Lease Losses

	At					At					At					At					At
	Dec. 31,					Sep. 30,					Jun. 30,					Mar. 31,					Dec. 31,
	2016					2016					2016					2016					2015
				% of					% of					% of					% of				% of
	Balance		Portfolio			Balance		Portfolio			Balance		Portfolio			Balance		Portfolio			Balance		Portfolio
Consumer real estate	$	59,448		1.17	%	$	62,092		1.24	%	$	64,765		1.27	%	$	66,728		1.27	%	$	67,992	1.24	%
Commercial	32,695			0.99		31,648			1.00		31,161			1.01		31,547			1.01		30,185		0.96
Leasing and equipment finance	21,350			0.49		20,649			0.49		20,124			0.49		19,454			0.49		19,018		0.47
Inventory finance	13,932			0.56		11,807			0.52		12,084			0.52		13,306			0.50		11,128		0.52
Auto finance	32,310			1.22		29,115			1.07		29,772			1.06		28,535			1.02		26,486		1.00
Other	534			2.84		530			2.96		666			3.19		504			2.66		1,245		6.45
Total	$	160,269		0.90		$	155,841		0.90		$	158,572		0.91		$	160,074		0.90		$	156,054	0.90



Changes in Allowance for Loan and Lease Losses

	Quarter Ended															Change from
	Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Dec. 31,
	2016			2016			2016			2016			2015			2016			2015
Balance, beginning of period	$	155,841		$	158,572		$	160,074		$	156,054		$	153,962		$	(2,731	)	$	1,879
Charge-offs	(16,451		)	(16,244		)	(14,723		)	(16,667		)	(18,101		)	(207		)	1,650
Recoveries	4,718			4,779			4,592			4,761			5,523			(61		)	(805		)
Net (charge-offs) recoveries	(11,733		)	(11,465		)	(10,131		)	(11,906		)	(12,578		)	(268		)	845
Provision for credit losses	19,888			13,894			13,250			18,842			17,607			5,994			2,281
Other	(3,727		)	(5,160		)	(4,621		)	(2,916		)	(2,937		)	1,433			(790		)
Balance, end of period	$	160,269		$	155,841		$	158,572		$	160,074		$	156,054		$	4,428		$	4,215



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)

	Three Months Ended December 31,
	2016						2015
	Average				Yields and		Average				Yields and
	Balance		Interest⁽¹⁾		Rates⁽¹⁾⁽²⁾		Balance		Interest⁽¹⁾		Rates⁽¹⁾⁽²⁾
ASSETS:
Investments and other	$	276,018	$	2,322	3.35	%	$	405,252	$	2,644	2.59	%
Securities held to maturity	182,177		1,165		2.56		201,944		1,336		2.64
Securities available for sale:⁽³⁾
Taxable	791,289		4,400		2.22		611,816		3,691		2.41
Tax-exempt⁽⁴⁾	610,070		4,851		3.18		221,113		1,804		3.26
Loans and leases held for sale	492,457		9,770		7.89		180,278		4,261		9.38
Loans and leases:⁽⁵⁾
Consumer real estate:
Fixed-rate	2,169,493		30,367		5.57		2,520,567		36,384		5.73
Variable- and adjustable-rate	2,916,653		39,294		5.36		3,083,957		40,294		5.18
Total consumer real estate	5,086,146		69,661		5.45		5,604,524		76,678		5.43
Commercial:
Fixed-rate	948,856		11,212		4.70		1,090,001		13,869		5.05
Variable- and adjustable-rate	2,198,661		22,395		4.05		2,027,982		20,705		4.05
Total commercial	3,147,517		33,607		4.25		3,117,983		34,574		4.40
Leasing and equipment finance	4,252,543		47,129		4.43		3,911,025		44,479		4.55
Inventory finance	2,389,980		34,820		5.80		2,180,534		31,128		5.66
Auto finance	2,647,088		26,903		4.04		2,514,923		26,422		4.17
Other	9,307		135		5.72		9,060		157		6.88
Total loans and leases	17,532,581		212,255		4.82		17,338,049		213,438		4.89
Total interest-earning assets	19,884,592		234,763		4.70		18,958,452		227,174		4.76
Other assets⁽⁶⁾	1,253,002						1,245,751
Total assets	$	21,137,594					$	20,204,203
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail	$	1,773,673					$	1,639,550
Small business	926,388						874,892
Commercial and custodial	615,686						525,692
Total non-interest bearing deposits	3,315,747						3,040,134
Interest-bearing deposits:
Checking	2,454,815		85		0.01		2,384,452		124		0.02
Savings	4,670,906		429		0.04		4,721,571		466		0.04
Money market	2,429,239		3,451		0.57		2,349,127		3,649		0.62
Certificates of deposit	4,198,190		11,088		1.05		3,793,653		9,533		1.00
Total interest-bearing deposits	13,753,150		15,053		0.44		13,248,803		13,772		0.41
Total deposits	17,068,897		15,053		0.35		16,288,937		13,772		0.34
Borrowings:
Short-term borrowings	5,063		9		0.77		28,364		6		0.09
Long-term borrowings	931,720		5,150		2.21		1,009,591		6,004		2.37
Total borrowings	936,783		5,159		2.20		1,037,955		6,010		2.31
Total interest-bearing liabilities	14,689,933		20,212		0.55		14,286,758		19,782		0.55
Total deposits and borrowings	18,005,680		20,212		0.45		17,326,892		19,782		0.45
Other liabilities	695,778						595,317
Total liabilities	18,701,458						17,922,209
Total TCF Financial Corp. stockholders' equity	2,417,222						2,263,018
Non-controlling interest in subsidiaries	18,914						18,976
Total equity	2,436,136						2,281,994
Total liabilities and equity	$	21,137,594					$	20,204,203
Net interest income and margin			$	214,551	4.30				$	207,392	4.35


(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 $157.2 million and $123.8 million for the fourth quarters of 2016 and 2015, respectively.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)

	Year Ended December 31,
	2016						2015
	Average				Yields and		Average				Yields and
	Balance		Interest⁽¹⁾		Rates⁽¹⁾		Balance		Interest⁽¹⁾		Rates⁽¹⁾
ASSETS:
Investments and other	$	319,582	$	9,314	2.91	%	$	520,577	$	12,294	2.36	%
Securities held to maturity	190,863		4,649		2.44		207,140		5,486		2.65
Securities available for sale:⁽²⁾
Taxable	719,743		16,238		2.26		564,205		13,930		2.47
Tax-exempt⁽³⁾	495,708		15,900		3.21		80,894		2,643		3.27
Loans and leases held for sale	479,401		39,648		8.27		286,295		25,766		9.00
Loans and leases:⁽⁴⁾
Consumer real estate:
Fixed-rate	2,285,647		130,753		5.72		2,710,512		157,428		5.81
Variable- and adjustable-rate	2,948,482		156,919		5.32		2,911,689		149,770		5.14
Total consumer real estate	5,234,129		287,672		5.50		5,622,201		307,198		5.46
Commercial:
Fixed-rate	972,107		47,445		4.88		1,173,039		59,037		5.03
Variable- and adjustable-rate	2,154,774		85,996		3.99		1,961,389		76,677		3.91
Total commercial	3,126,881		133,441		4.27		3,134,428		135,714		4.33
Leasing and equipment finance	4,106,718		183,029		4.46		3,804,015		175,565		4.62
Inventory finance	2,414,684		140,453		5.82		2,154,357		122,799		5.70
Auto finance	2,693,041		110,651		4.11		2,278,617		94,463		4.15
Other	9,538		548		5.74		10,303		712		6.91
Total loans and leases	17,584,991		855,794		4.87		17,003,921		836,451		4.92
Total interest-earning assets	19,790,288		941,543		4.76		18,663,032		896,570		4.80
Other assets⁽⁵⁾	1,285,127						1,226,645
Total assets	$	21,075,415					$	19,889,677
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail	$	1,778,707					$	1,658,951
Small business	884,192						838,758
Commercial and custodial	585,611						507,446
Total non-interest bearing deposits	3,248,510						3,005,155
Interest-bearing deposits:
Checking	2,452,206		346		0.01		2,396,334		547		0.02
Savings	4,677,517		1,510		0.03		4,938,303		3,005		0.06
Money market	2,488,977		15,114		0.61		2,265,121		14,237		0.63
Certificates of deposit	4,229,247		44,818		1.06		3,340,341		30,437		0.91
Total interest-bearing deposits	13,847,947		61,788		0.45		12,940,099		48,226		0.37
Total deposits	17,096,457		61,788		0.36		15,945,254		48,226		0.30
Borrowings:
Short-term borrowings	7,051		51		0.73		18,822		53		0.28
Long-term borrowings	890,846		20,785		2.33		1,119,175		23,263		2.08
Total borrowings	897,897		20,836		2.32		1,137,997		23,316		2.05
Total interest-bearing liabilities	14,745,844		82,624		0.56		14,078,096		71,542		0.51
Total deposits and borrowings	17,994,354		82,624		0.46		17,083,251		71,542		0.42
Other liabilities	686,360						589,222
Total liabilities	18,680,714						17,672,473
Total TCF Financial Corp. stockholders' equity	2,373,176						2,197,690
Non-controlling interest in subsidiaries	21,525						19,514
Total equity	2,394,701						2,217,204
Total liabilities and equity	$	21,075,415					$	19,889,677
Net interest income and margin			$	858,919	4.34				$	825,028	4.42


(1)	Interest and yields are presented on a fully tax-equivalent basis.


(2)	Average balances and yields of securities available for sale are based upon historical amortized cost and exclude equity securities.


(3)	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.


(4)	Average balances of loans and leases include non-accrual loans and leases and are presented net of unearned income.


(5)	Includes leased equipment and related initial direct costs under operating leases of $140.3 million and $104.1 million for the year ended December 31, 2016 and 2015, respectively.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per-share data)
(Unaudited)

	Three Months Ended
	Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,
	2016			2016			2016			2016			2015
Interest income:
Loans and leases	$	210,848		$	210,765		$	214,128		$	214,805		$	212,346
Securities available for sale	7,553			7,126			6,396			5,498			4,864
Securities held to maturity	1,165			1,049			1,116			1,319			1,336
Loans held for sale and other	12,092			13,786			12,364			10,720			6,905
Total interest income	231,658			232,726			234,004			232,342			225,451
Interest expense:
Deposits	15,053			15,851			15,893			14,991			13,772
Borrowings	5,159			4,857			5,127			5,693			6,010
Total interest expense	20,212			20,708			21,020			20,684			19,782
Net interest income	211,446			212,018			212,984			211,658			205,669
Provision for credit losses	19,888			13,894			13,250			18,842			17,607
Net interest income after provision for credit losses	191,558			198,124			199,734			192,816			188,062
Non-interest income:
Fees and service charges	35,132			35,093			34,622			32,817			37,741
Card revenue	13,689			13,747			14,083			13,363			13,781
ATM revenue	4,806			5,330			5,288			5,021			5,143
Subtotal	53,627			54,170			53,993			51,201			56,665
Gains on sales of auto loans, net	1,145			11,624			10,143			11,920			3,136
Gains on sales of consumer real estate loans, net	16,676			13,528			10,839			9,384			13,104
Servicing fee income	11,404			10,393			9,502			8,883			8,622
Subtotal	29,225			35,545			30,484			30,187			24,862
Leasing and equipment finance	31,316			28,289			31,074			28,487			32,355
Other	1,365			2,270			2,405			2,843			1,806
Fees and other revenue	115,533			120,274			117,956			112,718			115,688
Gains (losses) on securities, net	135			(600		)	—			(116		)	(29		)
Total non-interest income	115,668			119,674			117,956			112,602			115,659
Non-interest expense:
Compensation and employee benefits	115,001			117,155			118,093			124,473			109,061
Occupancy and equipment	38,150			37,938			36,884			37,008			37,824
Other	59,235			59,421			59,416			53,348			56,930
Subtotal	212,386			214,514			214,393			214,829			203,815
Operating lease depreciation	10,906			10,038			9,842			9,573			13,608
Foreclosed real estate and repossessed assets, net	1,889			4,243			3,135			3,920			4,940
Other credit costs, net	178			83			(54		)	12			224
Total non-interest expense	225,359			228,878			227,316			228,334			222,587
Income before income tax expense	81,867			88,920			90,374			77,084			81,134
Income tax expense	29,762			30,257			29,706			26,803			26,614
Income after income tax expense	52,105			58,663			60,668			50,281			54,520
Income attributable to non-controlling interest	2,013			2,371			2,974			2,235			2,028
Net income attributable to TCF Financial Corporation	50,092			56,292			57,694			48,046			52,492
Preferred stock dividends	4,847			4,847			4,847			4,847			4,847
Net income available to common stockholders	$	45,245		$	51,445		$	52,847		$	43,199		$	47,645

Earnings per common share:
Basic	$	0.27		$	0.31		$	0.32		$	0.26		$	0.29
Diluted	0.27			0.31			0.31			0.26			0.29

Dividends declared per common share	$	0.075		$	0.075		$	0.075		$	0.075		$	0.075

Financial highlights:⁽¹⁾
Return on average assets	0.99		%	1.12		%	1.14		%	0.96		%	1.08		%
Return on average common equity	8.40			9.59			10.09			8.45			9.53
Net interest margin	4.30			4.34			4.35			4.37			4.35


(1)	Annualized.



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

	Dec. 31, 2016		Sep. 30, 2016		Jun. 30, 2016		Mar. 31, 2016		Dec. 31, 2015
ASSETS:
Investments and other	$	276,018	$	331,107	$	322,477	$	349,079	$	405,252
Securities held to maturity	182,177		187,414		194,693		199,303		201,944
Securities available for sale:⁽¹⁾
Taxable	791,289		747,890		697,902		640,796		611,816
Tax-exempt	610,070		570,013		481,246		319,427		221,113
Loans and leases held for sale	492,457		558,649		497,797		367,686		180,278
Loans and leases:⁽²⁾
Consumer real estate:
Fixed-rate	2,169,493		2,216,945		2,327,409		2,430,773		2,520,567
Variable- and adjustable-rate	2,916,653		2,918,631		2,931,318		3,028,001		3,083,957
Total consumer real estate	5,086,146		5,135,576		5,258,727		5,458,774		5,604,524
Commercial:
Fixed-rate	948,856		944,347		982,914		1,012,870		1,090,001
Variable- and adjustable-rate	2,198,661		2,147,768		2,127,032		2,145,231		2,027,982
Total commercial	3,147,517		3,092,115		3,109,946		3,158,101		3,117,983
Leasing and equipment finance	4,252,543		4,147,488		4,032,112		3,992,678		3,911,025
Inventory finance	2,389,980		2,272,409		2,564,648		2,433,534		2,180,534
Auto finance	2,647,088		2,670,272		2,751,679		2,703,880		2,514,923
Other	9,307		9,252		9,585		10,018		9,060
Total loans and leases	17,532,581		17,327,112		17,726,697		17,756,985		17,338,049
Total interest-earning assets	19,884,592		19,722,185		19,920,812		19,633,276		18,958,452
Other assets⁽³⁾	1,253,002		1,303,670		1,286,506		1,297,479		1,245,751
Total assets	$	21,137,594	$	21,025,855	$	21,207,318	$	20,930,755	$	20,204,203

LIABILITIES AND EQUITY:
Non-interest-bearing deposits:
Retail	$	1,773,673	$	1,771,840	$	1,817,734	$	1,751,710	$	1,639,550
Small business	926,388		894,761		861,394		853,645		874,892
Commercial and custodial	615,686		583,430		582,041		560,983		525,692
Total non-interest bearing deposits	3,315,747		3,250,031		3,261,169		3,166,338		3,040,134
Interest-bearing deposits:
Checking	2,454,815		2,434,934		2,478,673		2,440,563		2,384,452
Savings	4,670,906		4,661,565		4,677,681		4,700,164		4,721,571
Money market	2,429,239		2,496,590		2,557,897		2,472,751		2,349,127
Certificates of deposit	4,198,190		4,304,990		4,308,367		4,104,951		3,793,653
Total interest-bearing deposits	13,753,150		13,898,079		14,022,618		13,718,429		13,248,803
Total deposits	17,068,897		17,148,110		17,283,787		16,884,767		16,288,937
Borrowings:
Short-term borrowings	5,063		8,485		9,100		5,562		28,364
Long-term borrowings	931,720		729,737		840,739		1,062,513		1,009,591
Total borrowings	936,783		738,222		849,839		1,068,075		1,037,955
Total interest-bearing liabilities	14,689,933		14,636,301		14,872,457		14,786,504		14,286,758
Total deposits and borrowings	18,005,680		17,886,332		18,133,626		17,952,842		17,326,892
Other liabilities	695,778		708,048		690,363		650,908		595,317
Total liabilities	18,701,458		18,594,380		18,823,989		18,603,750		17,922,209
Total TCF Financial Corporation stockholders' equity	2,417,222		2,409,312		2,357,509		2,307,781		2,263,018
Non-controlling interest in subsidiaries	18,914		22,163		25,820		19,224		18,976
Total equity	2,436,136		2,431,475		2,383,329		2,327,005		2,281,994
Total liabilities and equity	$	21,137,594	$	21,025,855	$	21,207,318	$	20,930,755	$	20,204,203


(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 $157.2 million, $138.2 million, $131.9 million, $133.6 million and $123.8 million for the fourth quarter, third quarter, second quarter and first quarter of 2016, and for the fourth quarter of 2015, respectively.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY YIELDS AND RATES⁽¹⁾⁽²⁾
(Unaudited)

	Dec. 31, 2016		Sep. 30, 2016		Jun. 30, 2016		Mar. 31, 2016		Dec. 31, 2015
ASSETS:
Investments and other	3.35	%	2.86	%	2.99	%	2.55	%	2.59	%
Securities held to maturity	2.56		2.24		2.29		2.65		2.64
Securities available for sale:⁽³⁾
Taxable	2.22		2.23		2.21		2.38		2.41
Tax-exempt⁽⁴⁾	3.18		3.19		3.25		3.24		3.26
Loans and leases held for sale	7.89		8.12		8.05		9.30		9.38
Loans and leases:
Consumer real estate:
Fixed-rate	5.57		5.75		5.73		5.82		5.73
Variable- and adjustable rate	5.36		5.29		5.32		5.32		5.18
Total consumer real estate	5.45		5.49		5.50		5.54		5.43
Commercial:
Fixed-rate	4.70		4.92		4.96		4.94		5.05
Variable- and adjustable-rate	4.05		3.91		4.00		4.00		4.05
Total commercial	4.25		4.22		4.30		4.30		4.40
Leasing and equipment finance	4.43		4.48		4.45		4.47		4.55
Inventory finance	5.80		6.07		5.74		5.68		5.66
Auto finance	4.04		4.06		4.19		4.14		4.17
Other	5.72		5.85		5.77		5.63		6.88
Total loans and leases	4.82		4.88		4.88		4.89		4.89

Total interest-earning assets	4.70		4.76		4.77		4.80		4.76

LIABILITIES:
Interest-bearing deposits:
Checking	0.01		0.01		0.02		0.01		0.02
Savings	0.04		0.03		0.03		0.03		0.04
Money market	0.57		0.61		0.63		0.62		0.62
Certificates of deposit	1.05		1.07		1.07		1.05		1.00
Total interest-bearing deposits	0.44		0.45		0.46		0.44		0.41
Total deposits	0.35		0.37		0.37		0.36		0.34
Borrowings:
Short-term borrowings	0.77		0.86		0.71		0.53		0.09
Long-term borrowings	2.21		2.65		2.43		2.14		2.37
Total borrowings	2.20		2.63		2.42		2.13		2.31

Total interest-bearing liabilities	0.55		0.56		0.57		0.56		0.55

Net interest margin	4.30		4.34		4.35		4.37		4.35


(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 Dec. 31,			At Dec. 31,
		2016			2015
Computation of tangible common equity to tangible assets and tangible book value per common share:
Total equity		$	2,444,645		$	2,306,917
Less: Non-controlling interest in subsidiaries		17,162			16,001
Total TCF Financial Corporation stockholders' equity		2,427,483			2,290,916
Less: Preferred stock		263,240			263,240
Total common stockholders' equity	(a)	2,164,243			2,027,676
Less:
Goodwill		225,640			225,640
Other intangibles		1,738			3,126
Tangible common equity	(b)	$	1,936,865		$	1,798,910

Total assets	(c)	$	21,441,326		$	20,689,609
Less:
Goodwill		225,640			225,640
Other intangibles		1,738			3,126
Tangible assets	(d)	$	21,213,948		$	20,460,843

Common stock shares outstanding	(e)	170,991,940			169,844,464

Common equity to assets	(a) / (c)	10.09		%	9.80		%
Tangible common equity to tangible assets	(b) / (d)	9.13		%	8.79		%

Book value per common share	(a) / (e)	$	12.66		$	11.94
Tangible book value per common share	(b) / (e)	$	11.33		$	10.59



		Three Months Ended									Year Ended
		Dec. 31,			Sep. 30,			Dec. 31,			Dec. 31,			Dec. 31,
		2016			2016			2015			2016			2015
Computation of return on average tangible common equity:
Net income available to common stockholders	(f)	$	45,245		$	51,445		$	47,645		$	192,736		$	177,735
Plus: Other intangibles amortization		290			366			392			1,388			1,562
Less: Income tax expense attributable to other intangibles amortization		103			128			141			493			562
Adjusted net income available to common stockholders	(g)	$	45,432		$	51,683		$	47,896		$	193,631		$	178,735

Average balances:
Total equity		$	2,436,136		$	2,431,475		$	2,281,994		$	2,394,701		$	2,217,204
Less: Non-controlling interest in subsidiaries		18,914			22,163			18,976			21,525			19,514
Total TCF Financial Corporation stockholders' equity		2,417,222			2,409,312			2,263,018			2,373,176			2,197,690
Less: Preferred stock		263,240			263,240			263,240			263,240			263,240
Average total common stockholders' equity	(h)	2,153,982			2,146,072			1,999,778			2,109,936			1,934,450
Less:
Goodwill		225,640			225,640			225,640			225,640			225,640
Other intangibles		1,872			2,233			3,342			2,414			3,913
Average tangible common equity	(i)	$	1,926,470		$	1,918,199		$	1,770,796		$	1,881,882		$	1,704,897

Return on average common equity⁽²⁾	(f) / (h)	8.40		%	9.59		%	9.53		%	9.13		%	9.19		%
Return on average tangible common equity⁽²⁾	(g) / (i)	9.43		%	10.78		%	10.82		%	10.29		%	10.48		%

(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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TCF FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 27, 2017

Attached files

TCF FINANCIAL CORP Reports