Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TCF FINANCIAL CORP | tcffinancial93017form8-kin.htm |
2017 Third Quarter Investor Presentation
Cautionary Statements for Purposes of the Safe
Harbor Provisions of the Securities Litigation
Reform Act
Any statements contained in this presentation regarding the outlook for the Company's businesses and their respective markets, such as projections of
future performance, targets, guidance, statements of the Company's plans and objectives, forecasts of market trends and other matters, are forward-
looking statements based on the Company's assumptions and beliefs. Such statements may be identified by such words or phrases as "will likely result,"
"are expected to," "will continue," "outlook," "will benefit," "is anticipated," "estimate," "project," "management believes" or similar expressions. These
forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such
statements and no assurance can be given that the results in any forward-looking statement will be achieved. For these statements, TCF claims the
protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any forward-looking statement
speaks only as of the date on which it is made, and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or
circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.
Certain factors could cause the Company's future results to differ materially from those expressed or implied in any forward-looking statements contained
herein. These factors include the factors discussed in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31,
2016 under the heading "Risk Factors", the factors discussed below and any other cautionary statements, written or oral, which may be made or referred
to in connection with any such forward-looking statements. Since it is not possible to foresee all such factors, these factors should not be considered as
complete or exhaustive.
Adverse Economic or Business Conditions; Competitive Conditions; Credit and Other Risks. Deterioration in general economic and banking industry
conditions, including those arising from government shutdowns, defaults, anticipated defaults or rating agency downgrades of sovereign debt (including
debt of the U.S.), or increases in unemployment; adverse economic, business and competitive developments such as shrinking interest margins, reduced
demand for financial services and loan and lease products, deposit outflows, increased deposit costs due to competition for deposit growth and evolving
payment system developments, deposit account attrition or an inability to increase the number of deposit accounts; customers completing financial
transactions without using a bank; adverse changes in credit quality and other risks posed by TCF's loan, lease, investment, securities held to maturity
and securities available for sale portfolios, including declines in commercial or residential real estate values, changes in the allowance for loan and lease
losses dictated by new market conditions or regulatory requirements, or the inability of home equity line borrowers to make increased payments caused
by increased interest rates or amortization of principal; deviations from estimates of prepayment rates and fluctuations in interest rates that result in
decreases in the value of assets such as interest-only strips that arise in connection with TCF's loan sales activity; interest rate risks resulting from
fluctuations in prevailing interest rates or other factors that result in a mismatch between yields earned on TCF's interest-earning assets and the rates
paid on its deposits and borrowings; foreign currency exchange risks; counterparty risk, including the risk of defaults by our counterparties or diminished
availability of counterparties who satisfy our credit quality requirements; decreases in demand for the types of equipment that TCF leases or finances;
the effect of any negative publicity; the effects of man-made and natural disasters, including fires, floods, tornadoes, hurricanes, acts of terrorism, civil
disturbances and environmental damage, which may negatively affect our operations and/or our customers.
Legislative and Regulatory Requirements. New consumer protection and supervisory requirements and regulations, including those resulting from action
by the Consumer Financial Protection Bureau ("CFPB") and changes in the scope of Federal preemption of state laws that could be applied to national
banks and their subsidiaries; the imposition of requirements that adversely impact TCF's deposit, lending, loan collection and other business activities
such as mortgage foreclosure moratorium laws, further regulation of financial institution campus banking programs, restrictions on arbitration, or new
restrictions on loan and lease products; changes affecting customer account charges and fee income, including changes to interchange rates; (continued)
2
Cautionary Statements for Purposes of the Safe
Harbor Provisions of the Securities Litigation
Reform Act (cont.)
regulatory actions or changes in customer opt-in preferences with respect to overdrafts, which may have an adverse impact on TCF; governmental regulations
or judicial actions affecting the security interests of creditors; deficiencies in TCF's compliance programs, including under the Bank Secrecy Act in past or
future periods, which may result in regulatory enforcement action including monetary penalties; increased health care costs including those resulting from
health care reform; regulatory criticism and resulting enforcement actions or other adverse consequences such as increased capital requirements, higher
deposit insurance assessments or monetary damages or penalties; heightened regulatory practices, requirements or expectations, including, but not limited
to, requirements related to enterprise risk management, the Bank Secrecy Act and anti-money laundering compliance activity.
Earnings/Capital Risks and Constraints, Liquidity Risks. Limitations on TCF's ability to pay dividends or to increase dividends because of financial performance
deterioration, regulatory restrictions or limitations; increased deposit insurance premiums, special assessments or other costs related to adverse conditions
in the banking industry; the impact on banks of regulatory reform, including additional capital, leverage, liquidity and risk management requirements or
changes in the composition of qualifying regulatory capital; adverse changes in securities markets directly or indirectly affecting TCF's ability to sell assets
or to fund its operations; diminished unsecured borrowing capacity resulting from TCF credit rating downgrades or unfavorable conditions in the credit
markets that restrict or limit various funding sources; costs associated with new regulatory requirements or interpretive guidance including those relating to
liquidity; uncertainties relating to future retail deposit account changes, including limitations on TCF's ability to predict customer behavior and the impact on
TCF's fee revenues.
Branching Risk; Growth Risks. Adverse developments affecting TCF's supermarket banking relationships or either of the primary supermarket chains in
which TCF maintains supermarket branches; costs related to closing underperforming branches; inability to timely close underperforming branches due to
long-term lease obligations; slower than anticipated growth in existing or acquired businesses; inability to successfully execute on TCF's growth strategy
through acquisitions or expanding existing business relationships; failure to expand or diversify TCF's balance sheet through new or expanded programs
or opportunities; failure to effectuate, and risks of claims related to, sales and securitizations of loans; risks related to new product additions and addition of
distribution channels (or entry into new markets) for existing products.
Technological and Operational Matters. Technological or operational difficulties, loss or theft of information, cyber-attacks and other security breaches,
counterparty failures and the possibility that deposit account losses (fraudulent checks, etc.) may increase; failure to keep pace with technological change,
such as by failing to develop and maintain technology necessary to satisfy customer demands, costs and possible disruptions related to upgrading systems;
the failure to attract and retain key employees.
Litigation Risks. Results of litigation or government enforcement actions such as TCF's pending litigation with the CFPB and related matters, including class
action litigation or enforcement actions concerning TCF's lending or deposit activities, including account opening/origination, servicing practices, fees or
charges, employment practices, or checking account overdraft program "opt in" requirements; 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.
3
Who We Are – A Unique Regional Bank
LENDING
• Well-diversified portfolio by asset class,
geography, industry, loan and lease size
and collateral type
• Expertise in diverse lending businesses
• Proven loan and lease origination
platform allows for optimization of growth
and revenue
FUNDING
• Loan and lease growth funded primarily
by low cost, core deposit base
• High concentration of retail deposits that
provide a competitive pricing advantage
as rates have increased
• Convenience banking model based on
branch locations, hours of operation,
ATMs and enhanced digital channels
4
PROFITABILITY
• Strong growth in net interest income and net interest margin primarily due to our asset
sensitive balance sheet and continued pricing discipline as interest rates have increased
• Earnings predictability with reduced gains on sales revenue replaced with more
consistent interest income
• Stable credit quality performance due to execution of our diversification philosophy
Diversification – Focus on national versus footprint lending
increases quality and diversification of portfolio
Profitable Growth – Strong origination and loan sale capabilities
drive loan growth and revenue diversification with a continued high
net interest margin
Operating Leverage – Focus on improving operating leverage
following recent build-out of key functions
Core Funding – Maintain sufficient funding sources to support loan
and lease growth
Strategic Pillars
1
2
3
4
Execution under a strong enterprise risk management
and credit culture
5
Consumer real estate &
other (first mortgage lien)
Consumer real
estate (junior lien)
Auto finance
Leasing & equipment finance
Commercial
Inventory finance
Securities & other
Corporate Profile
Savings
Money market
Checking
Certificates of
deposit
• $23.0 billion national bank holding
company headquartered in Minnesota
• 46th largest publicly-traded U.S.
based bank holding company by
asset size1
• 321 bank branches in seven states
• Approximately 147,100 small business
banking relationships:
• 65,700 checking accounts
• 81,400 lending relationships
• Average loan and lease portfolio makes
up 84% of average total assets
• Common equity ratio of 10.04%
• Book value per common share of $13.45
• Return on average common equity of
8.69%2
(Average balances,
$ millions)
1 Source: SNL Financial (June 30, 2017)
2 YTD annualized
3 Annualized and presented on a fully tax equivalent basis
At September 30, 2017
3Q17 Yield
of 5.07%3
3Q17 Rate
of 0.38%3
$4,860
$6,046
$2,107
$4,636
$2,028
$3,473
$4,316
$3,281
$2,821 $2,479
$2,106
A WELL-DIVERSIFIED EARNING ASSET PORTFOLIO…
…FUNDED BY A LOW COST DEPOSIT BASE
10%
10%
14%
16%
21%
17%
12%
6
26%
34%
12%
28%
(Average balances,
$ millions)
Well Positioned vs. Peers
1 Annualized
2 All U.S. publicly-traded banks and thrifts, excluding TCF, with total assets between $10 and $50 billion (source: SNL Financial)
3 Excluding non-recurring items for revenue
4 Presented on a fully tax-equivalent basis
5 Peer Group yield includes loans and leases held for sale, while TCF yield excludes loans and leases held for sale
6 Estimated based on consolidated bank level deposit data
5
TCF
3Q171
Peer Group
2Q17
Average1,2,3 TCF BUSINESS MODEL ATTRIBUTES
Revenue as a % of
average assets 6.26% 4.33%
• Exceptional revenue generation capabilities through diverse revenue
streams
• Emphasis on generating profitable growth
Yield on loans and
leases4,5 5.31% 4.52%
• Asset sensitivity and continued pricing discipline resulting in strong
yield performance
Average loans and
leases as a % of
average assets
84% 68%
• Unique mix of loan and lease businesses provides ample and flexible
origination capabilities
• Organic loan and lease growth opportunities can be achieved while
maintaining discipline on price, structure and credit quality
Insured deposits as
a % of total
deposits6
93% 61%
• Relative value of retail deposits increasing as short-term rates rise
• Preferred deposit composition primarily made up of retail deposits
which have the highest liquidity value
Net charge-offs (%) 0.18% 0.25%
• Stable credit quality driven by execution of diversification model
• Excluding the $4.6 million recovery from the consumer real estate
non-accrual loan sale in 3Q17, total net charge-off ratio of 0.28%
• Total levels of net charge-offs remain in the low end of long-term
expectations
7
CONTINUED FOCUS ON EXECUTING ON OUR STRATEGIC PILLARS
IN 2017
• Net income of $60.5 million, up 7.5% year-over-year
• Issued $175.0 million of 5.70% Series C Non-Cumulative Perpetual Preferred Stock
("NCPPS") and announced redemption of all 7.50% Series A NCPPS, resulting in a one-
time reduction in net income available to common stockholders of $5.8 million and accrued
dividends payable of $1.6 million, or 4 cents per common share
• Net interest income growth and margin expansion to 4.61% primarily driven by higher
average loan yields on variable- and adjustable-rate loans as interest rates have increased
• Year-over-year improvement in efficiency ratio
• Acquired $445.5 million of leasing and equipment finance loans and leases at fair value
• Improved risk profile through a $21.8 million consumer real estate non-accrual loan sale
• United States District Court for the District of Minnesota dismissed the Consumer Financial
Protection Bureau's claims related to Regulation E and other claims prior
to July 21, 2011
Third Quarter Observations
Diversification 1 Profitable Growth 2 Operating Leverage 3 Core Funding 4
8
Investments and other
Consumer real estate & other
(first mortgage lien)
Consumer
real estate
(junior lien)
Auto financeLeasing &
equipment
finance
Commercial
Inventory
finance
Loans and leases held for sale
Securities
Other 3%
Fees and
service
charges 32%
ATM
revenue
5%
Card
revenue
13%
Leasing &
equipment
finance 31%
Gains on sales of consumer
real estate loans, net 7%
Servicing fee income 9%
NIM up 27 bps YoY
350
300
250
200
150
100
50
0
5.25%
5.00%
4.75%
4.50%
4.25%
4.00%
3Q16 4Q16 1Q17 2Q17 3Q17
$120
$332
$116
$327
$104
$326
$115
$342
$109
$343
4.34% 4.30%
4.46% 4.52%
4.61%
Net Interest Margin1
3Q17 vs. 3Q16 revenue and net interest
margin impacted by the following 3Q17 items:
• Higher net interest income driven by a combination
of higher variable- and adjustable-rate yields and
loan and lease growth
• Higher levels of leasing and equipment finance non-
interest income due to the second quarter of 2017
leasing and equipment finance acquisition
• Reduction in gains on sales and servicing fee
income
1 Annualized
Revenue Summary
REVENUE DIVERSIFICATION
$258 million
Non-interest Income
Interest Income
($ millions)
$212 $211 $222 $227 $234
Non-interest Income
Net Interest Income
$109 million
Strategic Pillars
Diversification 1
Profitable Growth 2
9
1%
10%
17%
17%
19%
15%
16%
1%
4%
• Operating lease depreciation year-over-
year increase offset by an increase in
leasing and equipment finance operating
lease revenue
• Compensation and employee benefits
expense and other non-interest expense
were stable versus prior year
• Efficiency ratio improved 54 basis points
year-over-year
• Completed a technology initiative with
successful conversion of retail customer
base to new digital platform
1 Includes Occupancy & Equipment, Other Non-interest Expense, Foreclosed Real Estate & Repossessed Assets and Other Credit Costs
Non-interest Expense
250
200
150
100
50
0
3Q16 4Q16 1Q17 2Q17 3Q17
$117 $115 $124 $116 $115
$102 $99
$109
$105 $104
$10
$229
$11
$225 $11
$244
$12
$233
$16
$235
Compensation & Employee Benefits
Foreclosed Real Estate and Other Credit Cost
Compensation & Employee Benefits
350
300
250
200
150
100
50
0
$
(M
ill
io
ns
)
6/14 9/14 12/14 3/15 6/15
($ millions)
Operating Lease Depreciation
Other 1
Compensation & Employee Benefits
Efficiency
Ratio:
Strategic Pillars
Profitable Growth 2
Operating Leverage 3
10
69.00% 68.89% 74.93% 68.19% 68.46%
4.65
4.55
4.45
4.35
4.25
1Q 2Q 3Q 4Q
4.37 4.35 4.34
4.30
4.46
4.52
4.61
Positive Impact of Rising
Interest Rates
• Strong yield expansion in variable- and
adjustable-rate portfolios due to rising interest
rates
• Inventory finance yields impacted by both
seasonality and rising interest rates
• Net interest margin increase of 27 basis points
year-over-year driven by yield expansion and
loan growth in variable- and adjustable-rate
portfolios
Strategic Pillars
Diversification 1
Profitable Growth 2
NET INTEREST MARGIN TRENDS1
FY16: 4.34% YTD 3Q17: 4.53%
11
7.20
6.80
6.40
6.00
5.60
5.20
1Q 2Q 3Q 4Q
5.61
5.83
5.665.68
5.74
6.07
5.80
5.93
6.71
INVENTORY FINANCE YIELD TRENDS1
6.22
5.71
(Percent)
IMPACT ON VARIABLE- AND
ADJUSTABLE-RATE PORTFOLIOS1
(Percent)
2015 2016 2017
2016 2017
Quarter ended
3Q16 3Q17 Change
Consumer Real Estate 5.29% 5.91% 62 bps
Commercial 3.91 4.76 85
Inventory Finance 6.07 6.71 64
1 Annualized and presented on a fully tax-equivalent basis
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
3Q16 4Q16 1Q17 2Q17 3Q17
$17,148 $17,069 $17,106 $17,323
$17,649
• Relative value of retail deposits
increasing as short-term interest
rates rise
• 88% of average deposit balances
are consumer
• Average checking balances
increased 6.6% year-over-year
• Average interest rate on deposits
up one basis point year-over-year
0.37% 0.35% 0.33% 0.33% 0.38%
Average
interest cost:
Deposit Generation
Average Balances
($ millions)
Certificates of Deposit
Money Market
Savings
Checking
Strategic Pillars
Profitable Growth 2
Core Funding 4
25%
15%
27%
33%
25%
14%
27%
34%
24%
14%
28%
34%
24%
13%
28%
35%
26%
12%
28%
34%
12
9/16 12/16 3/17 6/17 9/17
$17,384 $17,844
$17,975 $18,367
$18,988
16%
19%
24%
15%
14%
12%
14%
18%
24%
15%
16%
13%
14%
19%
23%
18%
15%
11%
• Year-over-year loan and lease growth
in wholesale businesses:
• Inventory Finance up 13.9%
• Leasing & Equipment Finance up
11.7%
• Commercial up 10.8%
• Acquired $445.5 million of leasing and
equipment finance loans and leases at
fair value
• Strong loan and lease diversification
by asset class, geography, rate,
average loan and lease size, estimated
weighted average life and collateral
type
Loan and Lease Portfolio
($ millions)
13%
18%
24%
16%
15%
14%
Inventory Finance
Leasing & Equipment Finance
Commercial
Auto Finance
Consumer Real Estate - Junior Lien
Consumer Real Estate & Other - First Mortgage Lien
14%
18%
25%
17%
16%
10%
Strategic Pillar
Diversification 1
Loan and lease growth of
9.2% YoY
13
$17,385
BALANCE SHEET ASSET SENSITIVITY AND CONTINUED PRICING
DISCIPLINE RESULTING IN STRONG YIELD PERFORMANCE
3Q16 4Q16 1Q17 2Q17 3Q17
Consumer Real Estate:
First Mortgage Lien 5.35% 5.22% 5.33% 5.35% 5.33%
Junior Lien 5.60 5.64 5.82 6.01 6.13
Commercial 4.22 4.25 4.43 4.50 4.72
Leasing & Equipment Finance 4.48 4.43 4.48 4.48 4.53
Inventory Finance 6.07 5.80 5.93 6.22 6.71
Auto Finance 4.06 4.04 4.15 5.01 5.17
Total Loans and Leases 4.88 4.82 4.95 5.15 5.31
Peer Group2 Average 4.39 4.41 4.41 4.52 N.A.
1 Annualized and presented on a fully tax-equivalent basis
2 All U.S. publicly-traded banks and thrifts, excluding TCF, with total assets between $10 and $50 billion as of June 30, 2017 that have
reported loan and lease yields for the past four quarters, includes loans held for sale (source: SNL Financial)
N.A. Not Available
Loan and Lease Yields1
Strategic Pillars
Diversification 1
Profitable Growth 2
14
PROVISION FOR CREDIT LOSSES
30
20
10
0
3Q16 4Q16 1Q17 2Q17 3Q17
$14
$20
$12
$19
$15
1 Excludes non-accrual loans and leases
2 Excluding the $8.7 million recovery from the consumer real estate non-accrual loan sale, provision for credit losses was $20.9 million, net charge-offs were $13.8
million and the net charge-off ratio was 0.31%
3 Excluding the $4.6 million recovery from the consumer real estate non-accrual loan sale, provision for credit losses was $19.1 million, net charge-offs were $12.8
million and the net charge-off ratio was 0.28%
4 Annualized
($ millions)
Credit Quality Trends
300
200
100
0
3.00%
2.00%
1.00%
0.00%
9/16 12/16 3/17 6/17 9/17
$224 $228
$171 $158 $146
1.28% 1.28%
0.95% 0.86% 0.77%
0.15%
0.12%
0.09%
0.06%
0.03%
0.00%
9/16 12/16 3/17 6/17 9/17
0.12% 0.12%
0.09%
0.11%
0.13%
($ millions)
60+ DAY DELINQUENCIES1
NET CHARGE-OFFSNON-PERFORMING ASSETS
Other Real Estate Owned
Non-accrual Loans & Leases
NPAs/Loans & Leases and Other Real Estate Owned
Strategic Pillar
Diversification 1
15
12
9
6
3
0
1.50%
1.20%
0.90%
0.60%
0.30%
0.00%
3Q16 4Q16 1Q17 2Q17 3Q17
$11 $12
$5
$13
$8
0.26% 0.27%
0.11%
0.28% 0.18%
2
Net Charge-offs
Net Charge-off Ratio4
15
($ millions)
3
2 3
Quarter Ended1
Change from
Quarter Ended
Sep. 30, 2016 Dec. 31, 2016 Mar. 31, 2017 Jun. 30, 2017 Sep. 30, 2017 Sep. 30, 2016
Consumer:
Consumer Real Estate:
First Mortgage Lien 0.34% 0.26% (0.18)% 0.15% (0.16)% (50) bps
Junior Lien 0.04 0.08 (0.89) 0.05 (0.38) (42)
Total Consumer Real Estate 0.17 0.17 (0.58) 0.09 (0.29) (46)
Auto Finance 0.86 1.09 1.12 0.83 1.13 27
Consumer 4 0.47 0.53 0.05 0.42 0.34 (13)
Wholesale:
Commercial (0.01) 0.01 0.32 0.29 (0.02) (1)
Leasing & Equipment Finance 0.18 0.10 0.13 0.14 0.10 (8)
Inventory Finance 0.10 0.07 0.01 0.09 0.08 (2)
Wholesale 0.10 0.06 0.16 0.18 0.05 (5)
Total 4 0.26 0.27 0.11 0.28 0.18 (8)
1 Annualized
2 Excluding the $8.7 million recovery from the consumer real estate non-accrual loan sale, consumer net charge-off ratio was 0.49% and total net charge-off ratio was 0.31%
3 Excluding the $4.6 million recovery from the consumer real estate non-accrual loan sale, consumer net charge-off ratio was 0.56% and total net charge-off ratio was 0.28%
4 Includes Other
Net Charge-off Ratio
Strategic Pillar
Diversification 1
16
2
• Net charge-off ratio decline of 8 basis points year-over-year impacted by the consumer real estate non-accrual loan sales
• Excluding the $4.6 million recovery from the consumer real estate non-accrual loan sale in 3Q17:
• Adjusted consumer net charge-off ratio of 0.56% compared to 0.47% in 3Q16 due to increased net charge-offs in the auto
finance portfolio
• Adjusted total net charge-off ratio of 0.28% remains in the low end of long-term expectations
3
Leasing & Equipment Finance
Update
CONTINUED FOCUS ON GENERATING PROFITABLE
GROWTH THROUGH EXECUTION OF A STRATEGIC
ACQUISITION AND PORTFOLIO PURCHASE
• On June 16, 2017, acquired a leasing company platform which provides
material handling equipment primarily to Fortune 500 companies
• Included $52.3 million portfolio of leases, primarily made up of operating
leases
• Impacted leasing and equipment finance non-interest income and operating
lease depreciation in 3Q17
• On September 29, 2017, completed a portfolio purchase of $445.5 million of
loans and leases and $12.8 million of operating leases
• Assets primarily in similar segments as existing portfolio
• Income statement impact to begin in 4Q17 due to timing of the purchase
17
Leasing &
Equipment Finance
$4.7 billion
(25% of total loans
and leases)
Leasing & Equipment Finance At September 30, 2017
5,250
4,500
3,750
3,000
2,250
1,500
750
0
12/13 12/14 12/15 12/16 9/17
$3,678
$3,994
$4,290
$4,636
$5,180
Specialty
Vehicles
29%
Manufacturing
10%
Medical
7%
Construction 11%
Golf Cart & Turf 9%
Technology & Data
Processing 6%
Furniture &
Fixtures 8%
Trucks &
Trailers 8%
Other
12%
Portfolio Loans and Leases
($ millions)
1 Includes operating leases
2 Source: The Monitor, 2017 Monitor Bank 50
3 Source: The Monitor, 2017 Monitor 100
• 15th largest bank-affiliated leasing company2 and
28th largest equipment finance/leasing company3
in the U.S.
• Uninstalled backlog of $517.5 million, up from
$453.6 million at December 31, 2016
• Focus on financing business-essential equipment
• Experienced management team
• 4.53% quarterly average yield4
• Over 60-days delinquency rate of 0.18%5
• Net charge-off (%): 2015 2016 YTD 3Q176
0.13% 0.13% 0.12%
• 3Q17 fee revenue of $34.2 million, 31% of TCF total
fees and other revenue
4 Annualized and presented on a fully tax-equivalent basis
5 Excludes non-accrual loans and leases; includes portfolios acquired with deteriorated credit quality
6 YTD Annualized
1
Serviced for Others
YTD
Originations1 $1,730 $1,874 $1,969 $2,137 $1,381
$3,679
18
($ millions)
1 Annualized and presented on a fully tax-equivalent basis
2 Excludes non-accrual loans
3 YTD Annualized
3,000
2,500
2,000
1,500
1,000
500
0
9/13 9/14 9/15 9/16 9/17
$1,766 $1,884
$2,188 $2,296
$2,608
Powersports
48%
Lawn &
Garden
25%
Other
27%
• Quarterly average yield of 6.71%1, up 64 basis
points from 3Q16
• Over 60-day delinquency rate of 0.01% 2
• Net charge-off (%): 2015 2016 YTD 3Q173
0.07% 0.07% 0.06%
• Credit risk spread across more than 10,800 active
dealers
• High yielding, high return business with a high
barrier to entry and strong credit performance
• Operates in the U.S. and Canada
• 100% variable-rate receivables
• High loan yields driven by the high operating
costs of the business, not increased credit risk
• Experienced management team
Inventory
Finance
$2.6 billion
(14% of total
loans and
leases)
YTD Originations $3,942 $4,126 $4,493 $5,027 $5,568
Serviced for Others
Portfolio Loans
Inventory Finance At September 30, 2017
19
Multi-Family
Housing 26%
Health Care
Facilities
10%
Office
Buildings
10%
Industrial
Buildings
10%
Business
22%
Other
22%
3,500
3,000
2,500
2,000
12/13 12/14 12/15 12/16 9/17
$3,165 $3,205 $3,225
$3,398
($ millions)
• 28% fixed-rate, 72% variable- and adjustable-
rate
• CRE location mix: 74% located in TCF banking
markets, 26% outside (following strong, proven
sponsors)
• Continue to look for strategic expansion
opportunities that fit TCF's profile
Commercial
$3.5 billion
(18% of total
loans and
leases)
Commercial At September 30, 2017
YTD Originations $1,558 $1,596 $1,875 $1,883 $1,412
Portfolio Loans
Serviced for Others
$3,204
$3,663
1 Annualized and presented on a fully tax-equivalent basis
2 Excludes non-accrual loans
3 YTD Annualized
• Quarterly average yields:1 4.62% fixed rate, 4.76%
variable- and adjustable-rate
• Variable- and adjustable-rate yields up 85
basis points from 3Q16
• No loans over 60 days delinquent2
• Net charge-off (%): 2015 2016 YTD 3Q173
0.05% 0.01% 0.20%
• Loans with classified risk ratings have remained low
at 2.0% in 3Q17
20
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1,500
1,250
1,000
750
500
250
0
9/16 12/16 3/17 6/17 9/17
$2,732 $2,648
$2,780
$3,243 $3,240
$881 $860 $863
$525
$489
8.00%
6.00%
4.00%
2.00%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
4.14% 4.19% 4.06% 4.04% 4.15%
5.01% 5.17%
NET CHARGE-OFF RATIO2
1 Annualized and presented on a fully tax-equivalent basis
2 Annualized
3 Excludes non-accrual loans
($ millions)
Auto Finance Update
0.50%
0.40%
0.30%
0.20%
0.10%
0.00%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
0.09% 0.13%
0.20% 0.23%
0.13%
0.20% 0.25%
1.50%
1.20%
0.90%
0.60%
0.30%
0.00%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
0.81% 0.69% 0.86%
1.09% 1.12%
0.83%
1.13%
21
60+ DAY DELINQUENCIES3
LOAN YIELD1
AUTO FINANCE LOAN PORTFOLIO
• Year-over-year auto finance originations down
$392 million, or 44.5%
($ millions)
Loans Held for Investment (left axis)
Originations (right axis)
6,000
4,000
2,000
0
12/13 12/14 12/15 12/16 9/17
$1,319 $2,044
$2,794 $2,902 $3,377
$1,104
$2,423 $1,785
$3,829 $2,187
$4,981
$3,079
$5,981
$2,163
$5,540
Auto Finance At September 30, 2017
• Performance continues to meet expectations following
business transition from a reliance on gains on sales
revenue to an 'originate-to-hold' model
• More than 6,600 active dealer relationships
• Experienced management team
Auto Finance
$3.2 billion
(17% of total loans
and leases)
• 5.17% quarterly average yield1
• Over 60-days delinquency rate of 0.25%2
• Net charge-off (%): 2015 2016 YTD 3Q173
0.68% 0.86% 1.02%
• Average held for investment portfolio FICO score of 716 at
origination
($ millions)
Used Auto
80%
New Auto
20%
YTD Originations $1,947 $2,796 $3,156 $3,560 $1,877
# of employees 623 797 966 993 761
Serviced for Others Portfolio
Portfolio Loans and HFS
1 Annualized and presented on a fully tax-equivalent basis
2 Excludes non-accrual loans
3 YTD Annualized
22
First
Mortgage
Liens 40%Junior
Liens
60%
8,000
6,000
4,000
2,000
0
12/13 12/14 12/15 12/16 9/17
$3,766 $3,143 $2,636 $2,299 $1,958
$2,573
$2,543 $2,839 $2,798 $3,090
$625
$6,964
$1,401
$7,087
$1,816
$7,291
$2,316
$7,413
$2,273
$7,321
• 37% fixed-rate, 63% variable- and adjustable-rate
• Average FICO score of the consumer real estate
portfolio: at origination – 739; updated 3Q17 – 737
• Sold $291.0 million of consumer real estate loans in
3Q17 resulting in a gain of $8.3 million1
• Loan servicing fees of $1.6 million in 3Q17
• $423.9 million in junior lien HELOCs with interest-only
revolving draws and no defined amortization period,
17% mature prior to 2021
Consumer Real
Estate
$4.9 billion
(Junior liens and
First mortgage liens
are 16% and 10% of
total loans and
leases, respectively)
($ millions)
Consumer Real Estate At September 30, 2017
Total Portfolio
Loans and HFS $6,339 $5,686 $5,475 $5,097 $5,048
YTD Originations $1,676 $1,770 $2,437 $2,588 $1,745
First Mortgage Liens (Portfolio Loans and HFS)
Junior Liens (Portfolio Loans and HFS)
Serviced for Others Portfolio
• Quarterly average yields:2 5.61% fixed-rate, 5.91%
variable- and adjustable-rate
• Variable- and adjustable-rate yields up 62
basis points from 3Q16
• Over 60-days delinquency rate of 0.15%3
• Net charge-off (%): 2015 2016 YTD 3Q174, 5
0.47% 0.22% (0.26)%
1 Excludes subsequent adjustments and valuation adjustments while held for sale
2 Annualized and presented on a fully tax-equivalent basis
3 Excludes non-accrual loans
4 YTD annualized
5 Excluding the $8.7 million and $4.6 million recovery from the consumer
real estate non-accrual loan sales in the first and third quarter of 2017,
respectively, the net charge-off ratio was 0.10%23
4Q16 3Q17
Common equity Tier 1 capital ratio1 10.24% 10.05%
Tier 1 risk-based capital ratio1 11.68% 11.41%
Total risk-based capital ratio1 13.69% 13.21%
Tier 1 leverage ratio1 10.73% 10.88%
Common equity ratio 10.09% 10.04%
Tangible common equity ratio2 9.13% 9.06%
Book value per common share $ 12.66 $ 13.45
Tangible book value per common
share2 $ 11.33 $ 11.99
Return on average common equity3 8.40% 8.44%
Return on average tangible common
equity3, 4 9.43% 9.57%
• Maintained strong capital
ratios with earnings
accumulation
• Common stock dividend of
7.5 cents per share declared
on October 18, 2017
• Issued $175.0 million of 5.70%
Series C Non-Cumulative
Perpetual Preferred Stock
• Completed redemption of all
Series A Non-Cumulative
Perpetual Preferred Stock on
October 16, 2017
• Refinance of preferred stock
expected to result in annual
expense savings of
$3.0 million
Capital and Return
1 The regulatory capital ratios for 3Q17 are preliminary, pending completion and filing of the Company’s regulatory reports
2 See “Reconciliation of GAAP to Non-GAAP Financial Measures – Tangible Common Equity Ratio and Tangible Book Value Per Common Share” slide
3 Annualized
4 See “Reconciliation of GAAP to Non-GAAP Financial Measures – Return on Average Tangible Common Equity” slide
24
Strategic Pillar Summary
STRATEGIC PILLARS UPDATE
DIVERSIFICATION
• Continued stable credit quality driven by
diversification philosophy
• Origination opportunities in multiple asset classes
provide flexibility to adjust asset composition based
on market conditions
PROFITABLE GROWTH
• Increased earnings predictability with reduction in
gains on sales replaced with more consistent interest
income driven by continued pricing discipline
• Balance sheet composition provides a competitive
advantage in the current rising rate environment
OPERATING LEVERAGE
• Expense growth related to strategic investments in
technology capabilities, including enhancing digital
channels and other efficiency initiatives
• Remain focused on revenue growth exceeding
expense growth
CORE FUNDING
• Retail deposits provide a competitive pricing
advantage in a rising rate environment
• Completed digital platform conversion
1
2
3
4
25
Appendix
TCF MAINTAINS A WELL-DIVERSIFIED LOAN AND LEASE PORTFOLIO
Business Unit Consumer Commercial
Leasing & Equipment
Finance Inventory Finance Auto Finance
Type /
Segment
Consumer real estate Multi-family housing Specialty vehicles Powersports On balance sheet
portfolio:Business Construction Lawn & Garden
Health care facilities Golf cart & Turf Other 80% used
Industrial buildings Furniture & Fixtures 20% new
Office buildings Medical
Other Technology & Data
processing
Manufacturing
Trucks & Trailers
Other
Geography Local1
National
Local1 National National
Canada
National
Rate Variable- and
adjustable-rate
Fixed-rate
Variable- and
adjustable-rate
Fixed-rate
Fixed-rate Variable-rate Fixed-rate
Average Loan &
Lease Size
First Mortgage Liens:
$3.3 million $77,000 $238,000 $14,000
$98,000
Junior Liens:
$50,000
Estimated
Weighted Average
Life2
51 months 23 months 21 months 4 months 19 months
Collateral Real estate Real estate
Other non-real estate
assets
Equipment Inventory Vehicle
Loan and Lease Diversification
1 TCF’s branch footprint (IL, MN, MI, CO, WI, AZ, SD)
2 As of September 30, 2017; estimated weighted average life represents how many months it is expected to take to collect half of the outstanding principal
27
Loan and Lease
Geographic Diversification
At September 30, 2017
($ thousands)
Consumer Real
Estate Commercial
Leasing &
Equipment
Finance
Inventory
Finance Auto Finance Other Total
California $ 1,042,338 $ 183,741 $ 646,644 $ 101,429 $ 515,213 $ 3 $ 2,489,368
Minnesota 1,033,669 793,081 108,912 89,510 49,575 5,354 2,080,101
Illinois 1,048,026 418,391 200,159 60,481 118,879 5,306 1,851,242
Michigan 412,836 554,828 162,030 110,831 53,496 4,618 1,298,639
Texas — 76,193 424,925 142,960 296,750 10 940,838
Florida 158,117 149,615 240,566 123,972 195,814 38 868,122
Wisconsin 193,497 399,662 68,731 89,264 26,924 955 779,033
New York 41,869 28,564 262,306 95,695 185,763 44 614,241
Colorado 225,944 206,533 84,220 35,286 50,819 3,604 606,406
Canada — — 1,120 495,513 — — 496,633
Ohio 8,563 77,394 170,077 97,413 98,739 — 452,186
Georgia 47,801 77,312 133,265 54,727 111,914 1 425,020
Pennsylvania 46,022 21,594 164,128 71,529 115,044 68 418,385
Arizona 106,787 30,932 140,723 28,413 94,554 306 401,715
North Carolina 8,583 8,873 162,494 64,705 122,476 1 367,132
New Jersey 54,578 9,570 173,014 24,709 101,222 2 363,095
Washington 128,597 9,815 90,284 36,676 33,474 4 298,850
Massachusetts 41,995 14,258 120,846 20,220 71,481 — 268,800
Indiana 17,602 56,207 92,729 55,312 42,507 9 264,366
Oregon 95,038 50,182 53,554 36,895 23,467 1 259,137
Virginia 26,300 2,273 95,453 34,139 86,474 1 244,640
Tennessee 2,913 30,734 89,638 46,451 67,766 — 237,502
Other 189,737 289,928 1,045,113 659,947 778,062 114 2,962,901
Total $ 4,930,812 $ 3,489,680 $ 4,730,931 $ 2,576,077 $ 3,240,413 $ 20,439 $ 18,988,352
28
Reconciliation of GAAP to Non-GAAP Financial
Measures – Tangible Common Equity Ratio and
Tangible Book Value Per Common Share1
At At
Dec. 31, 2016 Sep. 30, 2017
Total equity $ 2,444,645 $ 2,596,514
Less: Non-controlling interest in subsidiaries 17,162 19,906
Total TCF Financial Corporation stockholders' equity 2,427,483 2,576,608
Less: Preferred stock 263,240 265,967
Total common stockholders' equity (a) 2,164,243 2,310,641
Less:
Goodwill 225,640 227,798
Other intangibles 1,738 21,874
Tangible common equity (b) $ 1,936,865 $ 2,060,969
Total assets (c) $ 21,441,326 $ 23,005,038
Less:
Goodwill 225,640 227,798
Other intangibles 1,738 21,874
Tangible assets (d) $ 21,213,948 $ 22,755,366
Common stock shares outstanding (e) 170,991,940 171,833,926
Common equity ratio (a) / (c) 10.09% 10.04%
Tangible common equity ratio (b) / (d) 9.13% 9.06%
Book value per common share (a) / (e) $ 12.66 $ 13.45
Tangible book value per common share (b) / (e) $ 11.33 $ 11.99
1 When evaluating capital adequacy and utilization, management considers financial measures such as the tangible common equity ratio and tangible
book value per common share. 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.
($ thousands, except per share data)
29
Reconciliation of GAAP to Non-GAAP Financial
Measures – Return on Average Tangible Common
Equity1
QTD QTD
Dec. 31, 2016 Sep. 30, 2017
Net income available to common stockholders (a) $ 45,245 $ 48,285
Plus: Other intangibles amortization 290 806
Less: Income tax expense attributable to other intangibles amortization 103 277
Adjusted net income available to common stockholders (b) $ 45,432 $ 48,814
Average balances:
Total equity $ 2,436,136 $ 2,577,017
Less: Non-controlling interest in subsidiaries 18,914 22,350
Total TCF Financial Corporation stockholders' equity 2,417,222 2,554,667
Less: Preferred stock 263,240 265,556
Average total common stockholders' equity (c) 2,153,982 2,289,111
Less:
Goodwill 225,640 227,539
Other intangibles 1,872 22,279
Average tangible common equity (d) $ 1,926,470 $ 2,039,293
Return on average common equity2 (a) / (c) 8.40% 8.44%
Return on average tangible common equity2 (b) / (d) 9.43% 9.57%
($ thousands)
1 When evaluating capital adequacy and utilization, management considers financial measures such as return on average tangible common equity. This
measure is a non-GAAP financial measure and is viewed by management as a useful indicator 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
30