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

Attached files

file	filename
EX-99.2 - EXHIBIT 99.2 - TCF FINANCIAL CORP	a4q18presentation1271844.htm
8-K - 8-K - TCF FINANCIAL CORP	tcf123118form8-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)
Timothy Sedabres	(952) 745-2766	investor@tcfbank.com	(Investors)

TCF REPORTS QUARTERLY NET INCOME OF $85.7 MILLION, OR $0.51 PER SHARE

AND ANNUAL NET INCOME OF $304.4 MILLION, OR $1.74 PER SHARE

Fourth Quarter Observations


•	Revenue of $377.0 million, up 3.9% from the fourth quarter of 2017


•	Improved efficiency ratio of 66.30%


•	Average interest-earning asset growth of 1.4% from the fourth quarter of 2017


•	Period-end loans and leases of $19.1 billion, down 0.2% from December 31, 2017; period-end loans and leases excluding auto finance up 7.5%⁽¹⁾ from December 31, 2017


•	Net charge-off rate of 0.46%, up 8 basis points from the fourth quarter of 2017; net charge-off rate excluding auto finance net charge-offs of 0.28%⁽²⁾, up 10 basis points from the fourth quarter of 2017


•	Return on average common equity ("ROACE") of 14.30%; return on average tangible common equity ("ROATCE") of 15.59%⁽²⁾

2018 Observations


•	Revenue of $1.5 billion, up 6.5% from 2017; net interest income of $992.0 million, up 7.2% from 2017


•	Reported efficiency ratio of 69.34%; adjusted efficiency ratio of 67.15%⁽²⁾


•	Net charge-off rate of 0.29%, up 5 basis points from 2017; net charge-off rate excluding auto finance net charge-offs and recoveries on consumer real estate loan sales of 0.14%⁽²⁾, down 1 basis point from 2017


•	ROACE of 12.42%; reported ROATCE of 13.56%⁽²⁾; adjusted ROATCE of 14.74%⁽²⁾



Summary of Financial Results
	At or For the Quarter Ended															Change From
	Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Dec. 31,
(Dollars in thousands, except per share data)	2018			2018			2018			2018			2017			2018			2017
Net income attributable to TCF	$	85,652		$	86,196		$	58,749		$	73,761		$	101,399		(0.6	)	%	(15.5	)	%
Net interest income	248,888			249,121			250,799			243,199			241,860			(0.1	)		2.9
Basic earnings per common share	0.51			0.51			0.34			0.39			0.58			—			(12.1	)
Diluted earnings per common share	0.51			0.51			0.34			0.39			0.57			—			(10.5	)
Adjusted diluted earnings per common share⁽²⁾	0.51			0.51			0.49			0.39			0.57			—			(10.5	)

Financial Ratios
Return on average assets⁽³⁾	1.52		%	1.55		%	1.08		%	1.33		%	1.82		%	(3	)	bps	(30	)	bps
ROACE⁽³⁾	14.30			14.44			9.72			11.23			16.95			(14	)		(265	)
Adjusted ROACE⁽²⁾⁽³⁾	14.30			14.44			14.11			11.23			16.95			(14	)		(265	)
ROATCE⁽²⁾⁽³⁾	15.59			15.76			10.65			12.26			32.87			(17	)		(1,728	)
Adjusted ROATCE⁽²⁾⁽³⁾	15.59			15.76			15.39			12.26			32.87			(17	)		(1,728	)
Net interest margin⁽³⁾	4.60			4.66			4.67			4.59			4.57			(6	)		3
Net charge-offs as a percentage of average loans and leases⁽³⁾	0.46			0.15			0.27			0.29			0.38			31			8
Non-performing assets as a percentage of total loans and leases and other real estate owned	0.65			0.59			0.54			0.74			0.72			6			(7	)
Efficiency ratio	66.30			67.41			74.55			69.21			95.88			(111	)		(2,958	)
Adjusted efficiency ratio⁽²⁾	66.30			67.41			65.78			69.21			95.88			(111	)		(2,958	)

(1) Calculated by subtracting auto finance loans of $2.0 billion and $3.2 billion at December 31, 2018 and 2017, respectively, from total loans and leases of $19.1 billion at December 31, 2018 and 2017.

(2) See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables.

(3) Annualized

WAYZATA, Minn. (January 28, 2019) - TCF Financial Corporation ("TCF" or the "Company") (NYSE: TCF) today reported net income of $85.7 million for the fourth quarter of 2018, compared with $101.4 million for the fourth quarter of 2017 and $86.2 million for the third quarter of 2018. Diluted earnings per common share was 51 cents for the fourth quarter of 2018, compared with 57 cents for the fourth quarter of 2017 and 51 cents for the third quarter of 2018.

"Our strong results in the fourth quarter capped off a successful year in which we remixed the balance sheet while we reduced our risk profile, improved efficiencies and enhanced return on capital, all of which drove record net income for the Company in 2018," said Craig R. Dahl, chairman and chief executive officer. "By continuing to build customer relationships, we drove growth in our core, retail deposit base and in our loan and lease portfolio excluding auto finance. Our improved capital efficiency, coupled with strong financial performance, allowed us to return over 100 percent of earnings to shareholders in the form of dividends and share repurchases throughout the year. Based on the execution of our business strategies and the investments we are making across the organization, I believe we are well-positioned to continue providing an exceptional customer experience while enhancing shareholder value."

Net Interest Income and Net Interest Margin

Net interest income was $248.9 million for the fourth quarter of 2018, an increase of $7.0 million, or 2.9%, from the fourth quarter of 2017 and a decrease of $0.2 million, or 0.1%, from the third quarter of 2018. Net interest margin was 4.60% for the fourth quarter of 2018, up 3 basis points from the fourth quarter of 2017 and down 6 basis points from the third quarter of 2018. The increases in net interest income and net interest margin from the fourth quarter of 2017 were primarily due to increased average yields and higher average loan balances in the variable- and adjustable-rate loan portfolios and higher average balances of debt securities available for sale, partially offset by increased cost of funds and decreased interest income on auto finance loans. The decrease in net interest margin from the third quarter of 2018 was primarily due to increased cost of funds, partially offset by increased average yields on variable- and adjustable-rate consumer real estate and commercial loans.

Non-interest Income

Non-interest income was $128.1 million for the fourth quarter of 2018, an increase of $7.2 million, or 6.0%, from the fourth quarter of 2017 and an increase of $11.7 million, or 10.0%, from the third quarter of 2018. The increases from both periods were primarily due to increased leasing and equipment finance non-interest income and increased fees and service charges. The increase from the fourth quarter of 2017 was partially offset by decreased gains on sales of loans and decreased servicing fee income.

Non-interest Expense

Non-interest expense was $250.0 million for the fourth quarter of 2018, a decrease of $97.8 million, or 28.1%, from the fourth quarter of 2017 and an increase of $3.5 million, or 1.4%, from the third quarter of 2018. The decrease from the fourth quarter of 2017 was primarily due to charges related to the discontinuation of auto finance loan originations in the fourth quarter of 2017. The increase from the third quarter of 2018 was primarily due to an increase in compensation and employee benefits expense impacted by a large medical claim of $6.8 million.

Income Tax Expense (Benefit)

Income tax expense was $20.0 million for the fourth quarter of 2018, compared with income tax benefit of $111.0 million for the fourth quarter of 2017 and income tax expense of $28.0 million for the third quarter of 2018. The Company's effective income tax rate was 18.5% for the fourth quarter of 2018, compared with 24.0% for the third quarter of 2018. The lower effective income tax rates in 2018 were primarily impacted by the change in the corporate statutory tax rate as a result of the Tax Cuts and Jobs Act. The lower effective income tax rate from the third quarter of 2018 was also impacted by a change in the state statutory tax rates. The income tax benefit for the fourth quarter of 2017 was impacted by the re-measurement of the Company's estimated net deferred tax liability as a result of the Tax Cuts and Jobs Act.

Credit Quality

Provision for credit losses The provision for credit losses was $18.9 million for the fourth quarter of 2018, a decrease of $3.4 million, or 15.1%, from the fourth quarter of 2017 and an increase of $16.6 million from the third quarter of 2018. The increase from the third quarter of 2018 was primarily due to the recovery of $6.6 million on previous charge-offs related to the consumer real estate non-accrual loan sale in third quarter of 2018 and an increase in the provision for credit losses attributable to the inventory finance and commercial portfolios.

Net charge-off rate The annualized net charge-off rate was 0.46% for the fourth quarter of 2018, up 8 basis points from the fourth quarter of 2017 and up 31 basis points from the third quarter of 2018. The increase from the fourth quarter of 2017 was primarily due to increased net charge-offs in the commercial and inventory finance portfolios, partially offset by decreased net-charge-offs in the leasing and equipment finance and auto finance portfolios. The increase from the third quarter of 2018 was primarily due to the recovery of $6.6 million on previous charge-offs related to the consumer real estate non-accrual loan sale in the third quarter of 2018. The increase from the third quarter of 2018 was also impacted by increased net charge-offs in the inventory finance portfolio and charge-offs related to one commercial customer. The annualized net charge-off rate excluding auto finance charge-offs and recoveries on previous charge-offs related to sales of consumer real estate non-accrual loans was 0.28% for the fourth quarter of 2018, up 10 basis points from the fourth quarter of 2017 and up 18 basis points from the third quarter of 2018 (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

Over 60-day delinquency rate The over 60-day delinquency rate, excluding non-accrual loans and leases, was 0.15% at December 31, 2018, up 3 basis points from both the December 31, 2017 and September 30, 2018 rates. The increase from both periods was primarily due to higher over 60-day delinquency rates for the auto finance and leasing and equipment finance portfolios.

Non-performing assets Non-performing assets, consisting of non-accrual loans and leases and other real estate owned, were $123.3 million at December 31, 2018, a decrease of $13.5 million, or 9.9%, from December 31, 2017 and an increase of $13.9 million, or 12.8%, from September 30, 2018. The decrease from December 31, 2017 was primarily due to the $34.7 million sale of consumer real estate non-accrual loans in the third quarter of 2018, partially offset by increases in commercial and inventory finance non-accrual loans. The increase from September 30, 2018 was primarily due to increases in inventory finance, commercial and consumer real estate non-accrual loans.

Balance Sheet

Average debt securities held to maturity and debt securities available for sale The total average debt securities portfolio was $2.7 billion for the fourth quarter of 2018, an increase of $944.3 million, or 53.2%, from the fourth quarter of 2017 and an increase of $215.3 million, or 8.6%, from the third quarter of 2018. The increases from both periods were primarily due to purchases of available for sale mortgage-backed debt securities.

Average loans and leases Average loans and leases were $18.6 billion for the fourth quarter of 2018, a decrease of $636.8 million, or 3.3%, from the fourth quarter of 2017 and an increase of $139.1 million, or 0.8%, from the third quarter of 2018. Average loans and leases excluding auto finance were $16.4 billion for the fourth quarter of 2018, an increase of $509.1 million, or 3.2%, from the fourth quarter of 2017 and an increase of $453.0 million, or 2.8%, from the third quarter of 2018.

Average deposits Average deposits were $18.5 billion for the fourth quarter of 2018, an increase of $327.6 million, or 1.8%, from the fourth quarter of 2017 and an increase of $180.5 million, or 1.0%, from the third quarter of 2018. The increases from both periods were primarily due to increases in savings accounts.

Capital TCF continues to maintain strong capital ratios, with a common equity Tier 1 capital ratio of 10.82%. TCF repurchased $63.0 million of common stock during the quarter and had the authority to repurchase an additional $78.1 million in aggregate value of shares as of December 31, 2018 pursuant to its share repurchase program.

TCF is a Wayzata, Minnesota-based national bank holding company. As of December 31, 2018, TCF had $23.7 billion in total assets and 314 bank 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 and equipment 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, 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, 2017 under the heading "Risk Factors" 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.

Use of Non-GAAP Financial Measures

Management uses the adjusted diluted earnings per common share, net charge-off rate excluding auto finance and recoveries from non-accrual loan sales, adjusted ROACE, ROATCE, adjusted ROATCE, adjusted efficiency ratio, tangible common equity ratio and tangible book value per common share internally to measure performance and believes that these financial measures not recognized under generally accepted accounting principles in the United States ("GAAP") (i.e. non-GAAP) provide meaningful information to investors that will permit them to assess the Company's capital and ability to withstand unexpected market or economic conditions and to assess the performance of the Company in relation to other banking institutions on the same basis as that applied by management, analysts and banking regulators. TCF adjusts certain results to exclude auto finance because TCF no longer originates auto finance loans, and therefore management believes it is useful to investors in understanding TCF's business and operating results.

These non-GAAP financial measures are not defined by GAAP and other entities may calculate them differently than TCF does. Non-GAAP financial measures have inherent limitations and are not required to be uniformly applied. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes selected items does not represent the amount that effectively accrues directly to stockholders.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition (Unaudited)

																Change From
(Dollars in thousands)	Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30, 2018					Dec. 31, 2017
(Dollars in thousands)	2018			2018			2018			2018			2017			$			%		$			%
ASSETS:
Cash and due from banks	$	587,057		$	569,968		$	581,876		$	588,893		$	621,782		$	17,089		3.0	%	$	(34,725	)	(5.6	)%
Investments	91,654			80,672			95,661			91,661			82,644			10,982			13.6		9,010			10.9
Debt securities held to maturity	148,852			152,881			155,962			158,099			161,576			(4,029		)	(2.6	)	(12,724		)	(7.9	)
Debt securities available for sale	2,470,065			2,379,546			2,249,784			1,954,246			1,709,018			90,519			3.8		761,047			44.5
Loans and leases held for sale	90,664			114,198			291,871			50,706			134,862			(23,534		)	(20.6	)	(44,198		)	(32.8	)
Loans and leases:
Consumer real estate:
First mortgage lien	2,444,380			1,960,756			1,800,885			1,878,441			1,959,387			483,624			24.7		484,993			24.8
Junior lien	2,965,960			2,940,701			2,830,029			2,843,221			2,860,309			25,259			0.9		105,651			3.7
Total consumer real estate	5,410,340			4,901,457			4,630,914			4,721,662			4,819,696			508,883			10.4		590,644			12.3
Commercial	3,851,303			3,741,164			3,706,401			3,678,181			3,561,193			110,139			2.9		290,110			8.1
Leasing and equipment finance	4,699,740			4,601,887			4,648,049			4,666,239			4,761,661			97,853			2.1		(61,921		)	(1.3	)
Inventory finance	3,107,356			2,880,404			3,005,165			3,457,855			2,739,754			226,952			7.9		367,602			13.4
Auto finance	1,982,277			2,275,134			2,603,260			2,839,363			3,199,639			(292,857		)	(12.9	)	(1,217,362		)	(38.0	)
Other	21,295			21,107			20,957			19,854			22,517			188			0.9		(1,222		)	(5.4	)
Total loans and leases	19,072,311			18,421,153			18,614,746			19,383,154			19,104,460			651,158			3.5		(32,149		)	(0.2	)
Allowance for loan and lease losses	(157,446		)	(160,621		)	(165,619		)	(167,703		)	(171,041		)	3,175			2.0		13,595			7.9
Net loans and leases	18,914,865			18,260,532			18,449,127			19,215,451			18,933,419			654,333			3.6		(18,554		)	(0.1	)
Premises and equipment, net	427,534			429,648			430,956			427,497			421,549			(2,114		)	(0.5	)	5,985			1.4
Goodwill, net	154,757			154,757			154,757			154,757			154,757			—			—		—			—
Other assets	814,164			762,583			774,468			743,742			782,552			51,581			6.8		31,612			4.0
Total assets	$	23,699,612		$	22,904,785		$	23,184,462		$	23,385,052		$	23,002,159		$	794,827		3.5		$	697,453		3.0
LIABILITIES AND EQUITY:
Deposits:
Checking	$	6,381,327		$	6,382,667		$	6,408,174		$	6,541,409		$	6,300,127		$	(1,340	)	—	%	$	81,200		1.3	%
Savings	6,122,257			5,737,144			5,570,979			5,551,155			5,287,606			385,113			6.7		834,651			15.8
Money market	1,609,422			1,504,952			1,562,008			1,609,472			1,764,998			104,470			6.9		(155,576		)	(8.8	)
Certificates of deposit	4,790,680			4,871,748			4,822,112			4,995,636			4,982,271			(81,068		)	(1.7	)	(191,591		)	(3.8	)
Total deposits	18,903,686			18,496,511			18,363,273			18,697,672			18,335,002			407,175			2.2		568,684			3.1
Short-term borrowings	—			2,324			761			775			—			(2,324		)	(100.0	)	—			—
Long-term borrowings	1,449,472			1,168,400			1,554,569			1,457,976			1,249,449			281,072			24.1		200,023			16.0
Total borrowings	1,449,472			1,170,724			1,555,330			1,458,751			1,249,449			278,748			23.8		200,023			16.0
Accrued expenses and other liabilities	790,194			709,538			761,281			677,679			737,124			80,656			11.4		53,070			7.2
Total liabilities	21,143,352			20,376,773			20,679,884			20,834,102			20,321,575			766,579			3.8		821,777			4.0
Equity:
Preferred stock	169,302			169,302			169,302			169,302			265,821			—			—		(96,519		)	(36.3	)
Common stock	1,736			1,736			1,735			1,725			1,722			—			—		14			0.8
Additional paid-in capital	885,089			882,321			877,364			878,096			877,217			2,768			0.3		7,872			0.9
Retained earnings, subject to certain restrictions	1,766,994			1,708,410			1,649,449			1,618,041			1,577,311			58,584			3.4		189,683			12.0
Accumulated other comprehensive income (loss)	(33,138		)	(65,259		)	(52,811		)	(46,851		)	(18,517		)	32,121			49.2		(14,621		)	(79.0	)
Treasury stock at cost and other	(252,182		)	(189,652		)	(164,107		)	(97,800		)	(40,797		)	(62,530		)	(33.0	)	(211,385		)	N.M.
Total TCF Financial Corporation stockholders' equity	2,537,801			2,506,858			2,480,932			2,522,513			2,662,757			30,943			1.2		(124,956		)	(4.7	)
Non-controlling interest in subsidiaries	18,459			21,154			23,646			28,437			17,827			(2,695		)	(12.7	)	632			3.5
Total equity	2,556,260			2,528,012			2,504,578			2,550,950			2,680,584			28,248			1.1		(124,324		)	(4.6	)
Total liabilities and equity	$	23,699,612		$	22,904,785		$	23,184,462		$	23,385,052		$	23,002,159		$	794,827		3.5		$	697,453		3.0

N.M. Not Meaningful



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)

	Quarter Ended											Change From
(Dollars in thousands)	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,			Sep. 30, 2018					Dec. 31, 2017
(Dollars in thousands)	2018		2018		2018		2018		2017			$			%		$			%
Interest income:
Loans and leases	$	270,804	$	264,678	$	269,280	$	260,375	$	256,633		$	6,126		2.3	%	$	14,171		5.5	%
Debt securities available for sale	17,097		14,838		12,516		10,123		8,760			2,259			15.2		8,337			95.2
Debt securities held to maturity	965		988		998		1,019		1,048			(23		)	(2.3	)	(83		)	(7.9	)
Loans held for sale and other	4,631		6,678		3,529		3,745		4,187			(2,047		)	(30.7	)	444			10.6
Total interest income	293,497		287,182		286,323		275,262		270,628			6,315			2.2		22,869			8.5
Interest expense:
Deposits	33,315		27,335		23,953		22,510		20,846			5,980			21.9		12,469			59.8
Borrowings	11,294		10,726		11,571		9,553		7,922			568			5.3		3,372			42.6
Total interest expense	44,609		38,061		35,524		32,063		28,768			6,548			17.2		15,841			55.1
Net interest income	248,888		249,121		250,799		243,199		241,860			(233		)	(0.1	)	7,028			2.9
Provision for credit losses	18,894		2,270		14,236		11,368		22,259			16,624			N.M.		(3,365		)	(15.1	)
Net interest income after provision for credit losses	229,994		246,851		236,563		231,831		219,601			(16,857		)	(6.8	)	10,393			4.7
Non-interest income:
Leasing and equipment finance	55,311		45,045		42,904		41,847		42,831			10,266			22.8		12,480			29.1
Fees and service charges	36,206		32,574		32,670		30,751		33,267			3,632			11.1		2,939			8.8
Card revenue	15,078		15,065		14,962		13,759		14,251			13			0.1		827			5.8
ATM revenue	5,054		5,053		4,933		4,650		4,654			1			—		400			8.6
Gains on sales of loans, net	8,419		8,764		7,192		9,123		13,623			(345		)	(3.9	)	(5,204		)	(38.2	)
Servicing fee income	5,523		6,032		7,484		8,295		9,000			(509		)	(8.4	)	(3,477		)	(38.6	)
Gains (losses) on debt securities, net	167		94		24		63		48			73			77.7		119			N.M.
Other	2,375		3,818		3,934		3,716		3,218			(1,443		)	(37.8	)	(843		)	(26.2	)
Total non-interest income	128,133		116,445		114,103		112,204		120,892			11,688			10.0		7,241			6.0
Non-interest expense:
Compensation and employee benefits	129,521		123,127		120,575		123,840		127,630			6,394			5.2		1,891			1.5
Occupancy and equipment	42,250		42,337		40,711		40,514		39,578			(87		)	(0.2	)	2,672			6.8
Operating lease depreciation	19,085		19,525		17,945		17,274		16,497			(440		)	(2.3	)	2,588			15.7
Foreclosed real estate and repossessed assets, net	4,396		3,881		3,857		4,916		4,739			515			13.3		(343		)	(7.2	)
Other	54,706		57,553		88,951		59,436		159,362			(2,847		)	(4.9	)	(104,656		)	(65.7	)
Total non-interest expense	249,958		246,423		272,039		245,980		347,806			3,535			1.4		(97,848		)	(28.1	)
Income (loss) before income tax expense (benefit)	108,169		116,873		78,627		98,055		(7,313		)	(8,704		)	(7.4	)	115,482			N.M.
Income tax expense (benefit)	20,013		28,034		16,418		21,631		(110,965		)	(8,021		)	(28.6	)	130,978			N.M.
Income after income tax expense (benefit)	88,156		88,839		62,209		76,424		103,652			(683		)	(0.8	)	(15,496		)	(15.0	)
Income attributable to non-controlling interest	2,504		2,643		3,460		2,663		2,253			(139		)	(5.3	)	251			11.1
Net income attributable to TCF Financial Corporation	85,652		86,196		58,749		73,761		101,399			(544		)	(0.6	)	(15,747		)	(15.5	)
Preferred stock dividends	2,494		2,494		2,494		4,106		3,746			—			—		(1,252		)	(33.4	)
Impact of preferred stock redemption	—		—		—		3,481		—			—			—		—			—
Net income available to common stockholders	$	83,158	$	83,702	$	56,255	$	66,174	$	97,653		$	(544	)	(0.6	)	$	(14,495	)	(14.8	)

N.M. Not Meaningful



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)

	Year Ended December 31,					Change
(Dollars in thousands, except per share data)	2018		2017			$			%
Interest income:
Loans and leases	$	1,065,137	$	954,246		$	110,891		11.6		%
Debt securities available for sale	54,574		33,278			21,296			64.0
Debt securities held to maturity	3,970		4,436			(466		)	(10.5	)
Loans held for sale and other	18,583		27,097			(8,514		)	(31.4	)
Total interest income	1,142,264		1,019,057			123,207			12.1
Interest expense:
Deposits	107,113		66,012			41,101			62.3
Borrowings	43,144		27,807			15,337			55.2
Total interest expense	150,257		93,819			56,438			60.2
Net interest income	992,007		925,238			66,769			7.2
Provision for credit losses	46,768		68,443			(21,675		)	(31.7	)
Net interest income after provision for credit losses	945,239		856,795			88,444			10.3
Non-interest income:
Leasing and equipment finance	185,107		145,039			40,068			27.6
Fees and service charges	132,201		131,887			314			0.2
Card revenue	58,864		55,732			3,132			5.6
ATM revenue	19,690		19,624			66			0.3
Gains on sales of loans, net	33,498		42,787			(9,289		)	(21.7	)
Servicing fee income	27,334		41,347			(14,013		)	(33.9	)
Gains (losses) on debt securities, net	348		237			111			46.8
Other	13,843		11,646			2,197			18.9
Total non-interest income	470,885		448,299			22,586			5.0
Non-interest expense:
Compensation and employee benefits	497,063		482,512			14,551			3.0
Occupancy and equipment	165,812		156,909			8,903			5.7
Operating lease depreciation	73,829		55,901			17,928			32.1
Foreclosed real estate and repossessed assets, net	17,050		17,756			(706		)	(4.0	)
Other	260,646		346,856			(86,210		)	(24.9	)
Total non-interest expense	1,014,400		1,059,934			(45,534		)	(4.3	)
Income before income tax expense (benefit)	401,724		245,160			156,564			63.9
Income tax expense (benefit)	86,096		(33,624		)	119,720			N.M.
Income after income tax expense (benefit)	315,628		278,784			36,844			13.2
Income attributable to non-controlling interest	11,270		10,147			1,123			11.1
Net income attributable to TCF Financial Corporation	304,358		268,637			35,721			13.3
Preferred stock dividends	11,588		19,904			(8,316		)	(41.8	)
Impact of preferred stock redemption	3,481		5,779			(2,298		)	(39.8	)
Net income available to common stockholders	$	289,289	$	242,954		$	46,335		19.1

Earnings per common share:
Basic	$	1.75	$	1.44		$	0.31		21.5		%
Diluted	1.74		1.44			0.30			20.8

Dividends declared per common share	$	0.60	$	0.30		$	0.30		100.0		%

N.M. Not Meaningful



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)

	Quarter Ended December 31,
	2018						2017
	Average				Yields and		Average				Yields and
(Dollars in thousands)	Balance		Interest⁽¹⁾		Rates⁽¹⁾⁽²⁾		Balance		Interest⁽¹⁾		Rates⁽¹⁾⁽²⁾
ASSETS:
Investments and other	$	330,359	$	3,242	3.90	%	$	303,958	$	2,349	3.07	%
Debt securities held to maturity	150,016		965		2.58		163,080		1,048		2.57
Debt securities available for sale:
Taxable	1,779,654		12,949		2.91		831,113		4,675		2.25
Tax-exempt⁽³⁾	788,806		5,250		2.66		779,964		6,284		3.22
Loans and leases held for sale	86,169		1,389		6.40		113,501		1,838		6.43
Loans and leases:⁽⁴⁾
Consumer real estate:
Fixed-rate	1,962,804		26,309		5.33		1,821,240		25,729		5.61
Variable- and adjustable-rate	3,067,216		52,360		6.77		3,151,183		47,290		5.95
Total consumer real estate	5,030,020		78,669		6.21		4,972,423		73,019		5.83
Commercial:
Fixed-rate	815,626		9,275		4.51		963,703		13,337		5.49
Variable- and adjustable-rate	2,932,739		41,730		5.65		2,573,022		30,382		4.68
Total commercial	3,748,365		51,005		5.40		3,536,725		43,719		4.90
Leasing and equipment finance	4,616,715		58,931		5.11		4,713,015		57,722		4.90
Inventory finance	3,024,961		54,215		7.11		2,688,387		40,753		6.01
Auto finance	2,121,969		28,835		5.39		3,267,855		43,109		5.23
Other	12,599		145		4.55		13,007		157		4.75
Total loans and leases	18,554,629		271,800		5.82		19,191,412		258,479		5.35
Total interest-earning assets	21,689,633		295,595		5.42		21,383,028		274,673		5.11
Other assets⁽⁵⁾	1,464,620						1,437,126
Total assets	$	23,154,253					$	22,820,154
LIABILITIES AND EQUITY:
Non-interest bearing deposits	$	3,873,023					$	3,570,846
Interest-bearing deposits:
Checking	2,403,370		248		0.04		2,541,475		114		0.02
Savings	5,922,724		8,114		0.54		5,140,417		2,284		0.18
Money market	1,449,531		3,612		0.99		1,854,442		2,242		0.48
Certificates of deposit	4,818,211		21,341		1.76		5,032,085		16,206		1.28
Total interest-bearing deposits	14,593,836		33,315		0.91		14,568,419		20,846		0.57
Total deposits	18,466,859		33,315		0.72		18,139,265		20,846		0.46
Borrowings:
Short-term borrowings	2,738		19		2.76		3,759		17		1.75
Long-term borrowings	1,344,228		11,275		3.34		1,295,268		7,905		2.43
Total borrowings	1,346,966		11,294		3.34		1,299,027		7,922		2.43
Total interest-bearing liabilities	15,940,802		44,609		1.11		15,867,446		28,768		0.72
Total deposits and borrowings	19,813,825		44,609		0.89		19,438,292		28,768		0.59
Accrued expenses and other liabilities	822,558						790,850
Total liabilities	20,636,383						20,229,142
Total TCF Financial Corp. stockholders' equity	2,495,952						2,570,613
Non-controlling interest in subsidiaries	21,918						20,399
Total equity	2,517,870						2,591,012
Total liabilities and equity	$	23,154,253					$	22,820,154
Net interest income and margin			$	250,986	4.60				$	245,905	4.57


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


(2)	Annualized


(3)	The yield on tax-exempt debt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 21% and 35% for the quarters ended December 31, 2018 and 2017, respectively.


(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 $292.0 million and $267.8 million for the quarters ended December 31, 2018 and 2017, respectively.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)

	Year Ended December 31,
	2018						2017
	Average				Yields and		Average				Yields and
(Dollars in thousands)	Balance		Interest⁽¹⁾		Rates⁽¹⁾		Balance		Interest⁽¹⁾		Rates⁽¹⁾
ASSETS:
Investments and other	$	319,472	$	11,964	3.74	%	$	282,507	$	10,491	3.71	%
Debt securities held to maturity	154,619		3,970		2.57		170,006		4,436		2.61
Debt securities available for sale:
Taxable	1,390,016		37,436		2.69		823,526		18,382		2.23
Tax-exempt⁽²⁾	815,540		21,694		2.66		712,530		22,916		3.22
Loans and leases held for sale	103,240		6,619		6.41		208,678		16,606		7.96
Loans and leases:⁽³⁾
Consumer real estate:
Fixed-rate	1,790,069		97,850		5.47		1,934,395		109,185		5.64
Variable- and adjustable-rate	3,027,030		196,291		6.48		2,961,449		171,671		5.80
Total consumer real estate	4,817,099		294,141		6.11		4,895,844		280,856		5.74
Commercial:
Fixed-rate	875,551		39,789		4.54		977,698		47,587		4.87
Variable- and adjustable-rate	2,832,471		153,068		5.40		2,455,578		111,886		4.56
Total commercial	3,708,022		192,857		5.20		3,433,276		159,473		4.64
Leasing and equipment finance	4,642,811		230,418		4.96		4,399,138		202,508		4.60
Inventory finance	3,079,059		214,262		6.96		2,646,500		164,386		6.21
Auto finance	2,565,668		136,692		5.33		3,105,326		152,974		4.93
Other	13,603		579		4.26		11,149		571		5.11
Total loans and leases	18,826,262		1,068,949		5.68		18,491,233		960,768		5.20
Total interest-earning assets	21,609,149		1,150,632		5.32		20,688,480		1,033,599		5.00
Other assets⁽⁴⁾	1,452,999						1,363,487
Total assets	$	23,062,148					$	22,051,967
LIABILITIES AND EQUITY:
Non-interest bearing deposits	$	3,843,494					$	3,492,233
Interest-bearing deposits:
Checking	2,438,040		714		0.03		2,541,407		379		0.01
Savings	5,621,723		20,009		0.36		4,888,280		4,255		0.09
Money market	1,553,255		11,582		0.75		2,140,553		10,139		0.47
Certificates of deposit	4,897,937		74,808		1.53		4,495,062		51,239		1.14
Total interest-bearing deposits	14,510,955		107,113		0.74		14,065,302		66,012		0.47
Total deposits	18,354,449		107,113		0.58		17,557,535		66,012		0.38
Borrowings:
Short-term borrowings	3,288		77		2.35		5,267		58		1.10
Long-term borrowings	1,412,186		43,067		3.05		1,239,433		27,749		2.24
Total borrowings	1,415,474		43,144		3.05		1,244,700		27,807		2.23
Total interest-bearing liabilities	15,926,429		150,257		0.94		15,310,002		93,819		0.61
Total deposits and borrowings	19,769,923		150,257		0.76		18,802,235		93,819		0.50
Accrued expenses and other liabilities	761,723						713,794
Total liabilities	20,531,646						19,516,029
Total TCF Financial Corp. stockholders' equity	2,506,179						2,513,424
Non-controlling interest in subsidiaries	24,323						22,514
Total equity	2,530,502						2,535,938
Total liabilities and equity	$	23,062,148					$	22,051,967
Net interest income and margin			$	1,000,375	4.63				$	939,780	4.54


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


(2)	The yield on tax-exempt debt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 21% and 35% for the years ended December 31, 2018 and 2017, respectively.


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


(4)	Includes leased equipment and related initial direct costs under operating leases of $288.4 million and $224.7 million for the years ended December 31, 2018 and 2017, respectively.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Quarterly Average Balance Sheets (Unaudited)

	Quarter Ended										Change From
	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30, 2018					Dec. 31, 2017
(Dollars in thousands)	2018		2018		2018		2018		2017		$			%		$			%
ASSETS:
Investments and other	$	330,359	$	306,257	$	309,120	$	332,319	$	303,958	$	24,102		7.9	%	$	26,401		8.7	%
Debt securities held to maturity	150,016		153,652		155,779		159,139		163,080		(3,636		)	(2.4	)	(13,064		)	(8.0	)
Debt securities available for sale:
Taxable	1,779,654		1,525,665		1,262,642		981,843		831,113		253,989			16.6		948,541			114.1
Tax-exempt	788,806		823,854		828,131		821,642		779,964		(35,048		)	(4.3	)	8,842			1.1
Loans and leases held for sale	86,169		216,669		45,525		63,095		113,501		(130,500		)	(60.2	)	(27,332		)	(24.1	)
Loans and leases:⁽¹⁾
Consumer real estate:
Fixed-rate	1,962,804		1,694,661		1,715,289		1,786,636		1,821,240		268,143			15.8		141,564			7.8
Variable- and adjustable-rate	3,067,216		3,002,225		3,026,310		3,012,036		3,151,183		64,991			2.2		(83,967		)	(2.7	)
Total consumer real estate	5,030,020		4,696,886		4,741,599		4,798,672		4,972,423		333,134			7.1		57,597			1.2
Commercial:
Fixed-rate	815,626		856,324		900,462		931,275		963,703		(40,698		)	(4.8	)	(148,077		)	(15.4	)
Variable- and adjustable-rate	2,932,739		2,921,471		2,802,059		2,669,745		2,573,022		11,268			0.4		359,717			14.0
Total commercial	3,748,365		3,777,795		3,702,521		3,601,020		3,536,725		(29,430		)	(0.8	)	211,640			6.0
Leasing and equipment finance	4,616,715		4,624,968		4,639,703		4,690,868		4,713,015		(8,253		)	(0.2	)	(96,300		)	(2.0	)
Inventory finance	3,024,961		2,866,460		3,299,996		3,128,290		2,688,387		158,501			5.5		336,574			12.5
Auto finance	2,121,969		2,435,868		2,695,943		3,020,187		3,267,855		(313,899		)	(12.9	)	(1,145,886		)	(35.1	)
Other	12,599		13,547		13,845		14,446		13,007		(948		)	(7.0	)	(408		)	(3.1	)
Total loans and leases	18,554,629		18,415,524		19,093,607		19,253,483		19,191,412		139,105			0.8		(636,783		)	(3.3	)
Total interest-earning assets	21,689,633		21,441,621		21,694,804		21,611,521		21,383,028		248,012			1.2		306,605			1.4
Other assets⁽²⁾	1,464,620		1,462,783		1,430,621		1,453,742		1,437,126		1,837			0.1		27,494			1.9
Total assets	$	23,154,253	$	22,904,404	$	23,125,425	$	23,065,263	$	22,820,154	$	249,849		1.1		$	334,099		1.5
LIABILITIES AND EQUITY:
Non-interest bearing deposits	$	3,873,023	$	3,874,421	$	3,879,048	$	3,745,745	$	3,570,846	$	(1,398	)	—	%	$	302,177		8.5	%
Interest-bearing deposits:
Checking	2,403,370		2,427,288		2,460,709		2,461,548		2,541,475		(23,918		)	(1.0	)	(138,105		)	(5.4	)
Savings	5,922,724		5,620,161		5,542,565		5,395,669		5,140,417		302,563			5.4		782,307			15.2
Money market	1,449,531		1,496,223		1,572,560		1,698,064		1,854,442		(46,692		)	(3.1	)	(404,911		)	(21.8	)
Certificates of deposit	4,818,211		4,868,286		4,909,422		4,998,133		5,032,085		(50,075		)	(1.0	)	(213,874		)	(4.3	)
Total interest-bearing deposits	14,593,836		14,411,958		14,485,256		14,553,414		14,568,419		181,878			1.3		25,417			0.2
Total deposits	18,466,859		18,286,379		18,364,304		18,299,159		18,139,265		180,480			1.0		327,594			1.8
Borrowings:
Short-term borrowings	2,738		3,357		3,116		3,952		3,759		(619		)	(18.4	)	(1,021		)	(27.2	)
Long-term borrowings	1,344,228		1,351,585		1,531,389		1,423,075		1,295,268		(7,357		)	(0.5	)	48,960			3.8
Total borrowings	1,346,966		1,354,942		1,534,505		1,427,027		1,299,027		(7,976		)	(0.6	)	47,939			3.7
Total interest-bearing liabilities	15,940,802		15,766,900		16,019,761		15,980,441		15,867,446		173,902			1.1		73,356			0.5
Total deposits and borrowings	19,813,825		19,641,321		19,898,809		19,726,186		19,438,292		172,504			0.9		375,533			1.9
Accrued expenses and other liabilities	822,558		751,100		714,488		758,157		790,850		71,458			9.5		31,708			4.0
Total liabilities	20,636,383		20,392,421		20,613,297		20,484,343		20,229,142		243,962			1.2		407,241			2.0
Total TCF Financial Corporation stockholders' equity	2,495,952		2,488,435		2,483,474		2,557,729		2,570,613		7,517			0.3		(74,661		)	(2.9	)
Non-controlling interest in subsidiaries	21,918		23,548		28,654		23,191		20,399		(1,630		)	(6.9	)	1,519			7.4
Total equity	2,517,870		2,511,983		2,512,128		2,580,920		2,591,012		5,887			0.2		(73,142		)	(2.8	)
Total liabilities and equity	$	23,154,253	$	22,904,404	$	23,125,425	$	23,065,263	$	22,820,154	$	249,849		1.1		$	334,099		1.5


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


(2)	Includes leased equipment and related initial direct costs under operating leases of $292.0 million, $290.9 million, $288.4 million, $281.9 million and $267.8 million for the fourth, third, second and first quarters of 2018 and the fourth quarter of 2017, respectively.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Quarterly Yields and Rates⁽¹⁾⁽²⁾ (Unaudited)

	Quarter Ended										Change From
	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30,			Dec. 31,
	2018		2018		2018		2018		2017		2018			2017
ASSETS:
Investments and other	3.90	%	4.01	%	3.71	%	3.38	%	3.07	%	(11	)	bps	83		bps
Debt securities held to maturity	2.58		2.57		2.56		2.56		2.57		1			1
Debt securities available for sale:
Taxable	2.91		2.76		2.59		2.37		2.25		15			66
Tax-exempt⁽³⁾	2.66		2.66		2.66		2.66		3.22		—			(56	)
Loans and leases held for sale	6.40		6.57		5.93		6.22		6.43		(17	)		(3	)
Loans and leases:
Consumer real estate:
Fixed-rate	5.33		5.46		5.52		5.58		5.61		(13	)		(28	)
Variable- and adjustable-rate	6.77		6.57		6.41		6.18		5.95		20			82
Total consumer real estate	6.21		6.17		6.09		5.96		5.83		4			38
Commercial:
Fixed-rate	4.51		4.55		4.49		4.61		5.49		(4	)		(98	)
Variable- and adjustable-rate	5.65		5.45		5.45		5.04		4.68		20			97
Total commercial	5.40		5.25		5.21		4.93		4.90		15			50
Leasing and equipment finance	5.11		5.00		4.93		4.81		4.90		11			21
Inventory finance	7.11		7.16		6.94		6.64		6.01		(5	)		110
Auto finance	5.39		5.36		5.30		5.28		5.23		3			16
Other	4.55		4.25		4.10		4.16		4.75		30			(20	)
Total loans and leases	5.82		5.73		5.67		5.49		5.35		9			47

Total interest-earning assets	5.42		5.36		5.33		5.19		5.11		6			31

LIABILITIES:
Interest-bearing deposits:
Checking	0.04		0.04		0.02		0.02		0.02		—			2
Savings	0.54		0.35		0.27		0.24		0.18		19			36
Money market	0.99		0.78		0.67		0.58		0.48		21			51
Certificates of deposit	1.76		1.56		1.43		1.36		1.28		20			48
Total interest-bearing deposits	0.91		0.75		0.66		0.63		0.57		16			34
Total deposits	0.72		0.59		0.52		0.50		0.46		13			26
Borrowings:
Short-term borrowings	2.76		2.46		2.33		1.99		1.75		30			101
Long-term borrowings	3.34		3.15		3.02		2.70		2.43		19			91
Total borrowings	3.34		3.15		3.02		2.70		2.43		19			91

Total interest-bearing liabilities	1.11		0.96		0.89		0.81		0.72		15			39

Net interest margin	4.60		4.66		4.67		4.59		4.57		(6	)		3


(1)	Annualized


(2)	Yields are presented on a fully tax-equivalent basis.


(3)	The yield on tax-exempt debt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 21% beginning in the first quarter of 2018 and 35% for the fourth quarter of 2017.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Summary of Credit Quality Data (Unaudited)


Allowance for Loan and Lease Losses

	At Dec. 31,					At Sep. 30,					At Jun. 30,					At Mar. 31,					At Dec. 31,
	2018					2018					2018					2018					2017
				% of					% of					% of					% of				% of
(Dollars in thousands)	Balance		Portfolio			Balance		Portfolio			Balance		Portfolio			Balance		Portfolio			Balance		Portfolio
Consumer real estate	$	44,866		0.83	%	$	45,258		0.92	%	$	43,954		0.95	%	$	47,685		1.01	%	$	47,168	0.98	%
Commercial	41,182			1.07		40,470			1.08		40,291			1.09		37,198			1.01		37,195		1.04
Leasing and equipment finance	23,791			0.51		22,926			0.50		22,247			0.48		23,182			0.50		22,528		0.47
Inventory finance	12,456			0.40		11,361			0.39		11,840			0.39		13,253			0.38		13,233		0.48
Auto finance	34,329			1.73		39,852			1.75		46,608			1.79		45,822			1.61		50,225		1.57
Other	822			3.86		754			3.57		679			3.24		563			2.84		692		3.07
Total	$	157,446		0.83		$	160,621		0.87		$	165,619		0.89		$	167,703		0.87		$	171,041	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,
(In thousands)	2018			2018			2018			2018			2017			2018			2017
Balance, beginning of period	$	160,621		$	165,619		$	167,703		$	171,041		$	168,244		$	(4,998	)	$	(7,623	)
Charge-offs	(27,227		)	(19,448		)	(18,188		)	(19,865		)	(23,865		)	(7,779		)	(3,362		)
Recoveries	5,913			12,658			5,418			5,714			5,580			(6,745		)	333
Net (charge-offs) recoveries	(21,314		)	(6,790		)	(12,770		)	(14,151		)	(18,285		)	(14,524		)	(3,029		)
Provision for credit losses	18,894			2,270			14,236			11,368			22,259			16,624			(3,365		)
Other	(755		)	(478		)	(3,550		)	(555		)	(1,177		)	(277		)	422
Balance, end of period	$	157,446		$	160,621		$	165,619		$	167,703		$	171,041		$	(3,175	)	$	(13,595	)



Net Charge-offs

	Quarter Ended
	Dec. 31,					Sep. 30,					Jun. 30,					Mar. 31,					Dec. 31,
	2018					2018					2018					2018					2017
(Dollars in thousands)	Balance			Rate⁽¹⁾		Balance			Rate⁽¹⁾		Balance			Rate⁽¹⁾		Balance			Rate⁽¹⁾		Balance			Rate⁽¹⁾
Consumer real estate:
First mortgage lien	$	123		0.02	%	$	(3,721	)	(0.82	)%	$	714		0.16	%	$	790		0.16	%	$	876		0.18	%
Junior lien	(210		)	(0.03	)	(2,709		)	(0.37	)	64			0.01		327			0.05		(218		)	(0.03	)
Total consumer real estate	(87		)	(0.01	)	(6,430		)	(0.55	)	778			0.07		1,117			0.09		658			0.05
Commercial	3,406			0.36		(8		)	—		(27		)	—		(14		)	—		(378		)	(0.04	)
Leasing and equipment finance	2,067			0.18		1,930			0.17		2,106			0.18		1,340			0.11		4,775			0.41
Inventory finance	4,629			0.61		637			0.09		517			0.06		409			0.05		995			0.15
Auto finance	9,887			1.86		9,485			1.56		8,516			1.26		10,656			1.41		11,111			1.36
Other	1,412			N.M.		1,176			N.M.		880			N.M.		643			N.M.		1,124			N.M.
Total	$	21,314		0.46		$	6,790		0.15		$	12,770		0.27		$	14,151		0.29		$	18,285		0.38

N.M. Not Meaningful

(1) Annualized net charge-off rate based on average loans and leases



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Summary of Credit Quality Data (Unaudited), Continued


Over 60-Day Delinquencies as a Percentage of Portfolio⁽¹⁾
											Change From
	At Dec. 31,		At Sep. 30,		At Jun. 30,		At Mar. 31,		At Dec. 31,		Sep. 30,			Dec. 31,
	2018		2018		2018		2018		2017		2018			2017
Consumer real estate:
First mortgage lien	0.19	%	0.18	%	0.20	%	0.23	%	0.25	%	1		bps	(6	)	bps
Junior lien	0.04		0.04		0.07		0.06		0.04		—			—
Total consumer real estate	0.11		0.10		0.12		0.13		0.13		1			(2	)
Commercial	—		—		—		—		—		—			—
Leasing and equipment finance	0.23		0.15		0.11		0.11		0.14		8			9
Inventory finance	0.01		—		—		—		0.01		1			—
Auto finance	0.59		0.41		0.33		0.24		0.28		18			31
Other	0.14		0.30		0.16		0.24		0.04		(16	)		10
Subtotal	0.15		0.11		0.11		0.09		0.11		4			4
Portfolios acquired with deteriorated credit quality	4.65		16.70		13.48		12.95		13.18		(1,205	)		(853	)
Total delinquencies	0.15		0.12		0.11		0.10		0.12		3			3


(1)	Excludes non-accrual loans and leases



Non-performing Assets
																Change From
	At Dec. 31,			At Sep. 30,			At Jun. 30,			At Mar. 31,			At Dec. 31,			Sep. 30,				Dec. 31,
(Dollars in thousands)	2018			2018			2018			2018			2017			2018				2017
Non-accrual loans and leases:
Consumer real estate	$	58,765		$	55,092		$	49,155		$	84,237		$	83,224		$	3,673			$	(24,459	)
Commercial	15,025			9,888			9,978			11,401			6,785			5,137				8,240
Leasing and equipment finance	15,264			16,061			16,300			19,968			17,089			(797		)		(1,825		)
Inventory finance	8,283			1,640			2,093			3,621			4,116			6,643				4,167
Auto finance	8,578			7,613			7,312			7,199			7,366			965				1,212
Other	3			2			21			2			2			1				1
Total non-accrual loans and leases	105,918			90,296			84,859			126,428			118,582			15,622				(12,664		)
Other real estate owned	17,403			19,079			16,266			17,179			18,225			(1,676		)		(822		)
Total non-performing assets	$	123,321		$	109,375		$	101,125		$	143,607		$	136,807		$	13,946			$	(13,486	)

Non-accrual loans and leases as a percentage of total loans and leases	0.56		%	0.49		%	0.46		%	0.65		%	0.62		%	7			bps	(6		)	bps
Non-performing assets as a percentage of total loans and leases and other real estate owned	0.65			0.59			0.54			0.74			0.72			6				(7		)
Allowance for loan and lease losses as a percentage of non-accrual loans and leases	148.65			177.88			195.17			132.65			144.24			(2,923		)		441



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Capital Information (Unaudited)

	At or For the Quarter Ended															Change From
(Dollars in thousands, except per share data)	Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Dec. 31,
(Dollars in thousands, except per share data)	2018			2018			2018			2018			2017			2018			2017
Dividends declared per common share	$	0.15		$	0.15		$	0.15		$	0.15		$	0.075		—		%	100.0		%
Book value per common share	14.45			14.01			13.79			13.89			13.96			3.1			3.5
Tangible book value per common share⁽¹⁾	13.38			12.96			12.73			12.84			12.92			3.2			3.6
Common equity ratio	9.99		%	10.21		%	9.97		%	10.06		%	10.42		%	(22	)	bps	(43	)	bps
Tangible common equity ratio⁽¹⁾	9.32			9.51			9.28			9.37			9.72			(19	)		(40	)

Regulatory Capital:⁽²⁾
Common equity Tier 1 capital	$	2,224,183		$	2,226,820		$	2,186,528		$	2,222,390		$	2,242,410		(0.1	)	%	(0.8	)	%
Tier 1 capital	2,408,393			2,412,869			2,375,210			2,414,838			2,522,178			(0.2	)		(4.5	)
Total capital	2,750,581			2,754,615			2,728,076			2,786,637			2,889,323			(0.1	)		(4.8	)

Common equity Tier 1 capital ratio	10.82		%	11.04		%	10.60		%	10.57		%	10.79		%	(22	)	bps	3		bps
Tier 1 risk-based capital ratio	11.72			11.96			11.51			11.49			12.14			(24	)		(42	)
Total risk-based capital ratio	13.38			13.66			13.22			13.26			13.90			(28	)		(52	)
Tier 1 leverage ratio	10.44			10.58			10.31			10.52			11.12			(14	)		(68	)


(1)	See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables


(2)	December 31, 2018 amounts are preliminary pending completion and filing of the Company's regulatory reports



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)

Computation of adjusted diluted earnings per common share:

		Quarter Ended
		Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,
(Dollars in thousands, except per share data)		2018		2018		2018		2018		2017
Net income available to common stockholders		$	83,158	$	83,702	$	56,255	$	66,174	$	97,653
Less: Earnings allocated to participating securities		12		13		8		9		17
Earnings allocated to common stock	(a)	83,146		83,689		56,247		66,165		97,636
Plus: Consumer Financial Protection Bureau ("CFPB")/Office of the Comptroller of the Currency ("OCC") settlement adjustment		—		—		32,000		—		—
Less: Income tax expense attributable to CFPB/OCC settlement adjustment		—		—		6,491		—		—
Adjusted earnings allocated to common stock	(b)	$	83,146	$	83,689	$	81,756	$	66,165	$	97,636

Weighted-average common shares outstanding for diluted earnings per common share	(c)	163,878,805		165,533,225		166,857,640		169,997,146		170,068,986

Diluted earnings per common share	(a) / (c)	$	0.51	$	0.51	$	0.34	$	0.39	$	0.57
Adjusted diluted earnings per common share	(b) / (c)	0.51		0.51		0.49		0.39		0.57



Computation of net charge-off rate excluding auto finance and recoveries from non-accrual loan sales:

		Quarter Ended															Year Ended
		Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Dec. 31,			Dec. 31,
(Dollars in thousands)		2018			2018			2018			2018			2017			2018			2017
Net charge-offs	(d)	$	21,314		$	6,790		$	12,770		$	14,151		$	18,285		$	55,025		$	44,440
Less: Auto finance net charge-offs		9,887			9,485			8,516			10,656			11,111			38,544			34,476
Total net charge-offs excluding auto finance net charge-offs	(e)	11,427			(2,695		)	4,254			3,495			7,174			16,481			9,964
Plus: Recoveries from consumer real estate non-accrual loan sales		—			6,626			—			—			—			6,626			13,289
Total net charge-offs excluding auto finance net charge-offs and recoveries from consumer real estate non-accrual loan sales	(f)	$	11,427		$	3,931		$	4,254		$	3,495		$	7,174		$	23,107		$	23,253

Average total loans and leases	(g)	$	18,554,629		$	18,415,524		$	19,093,607		$	19,253,483		$	19,191,412		$	18,826,262		$	18,491,233
Less: Average auto finance loans		2,121,969			2,435,868			2,695,943			3,020,187			3,267,855			2,565,668			3,105,326
Average total loans and leases excluding auto finance loans	(h)	$	16,432,660		$	15,979,656		$	16,397,664		$	16,233,296		$	15,923,557		$	16,260,594		$	15,385,907

Net charge-off rate⁽¹⁾	(d) / (g)	0.46		%	0.15		%	0.27		%	0.29		%	0.38		%	0.29		%	0.24		%
Net charge-off rate excluding auto finance net charge-offs⁽¹⁾	(e) / (h)	0.28			(0.07		)	0.10			0.09			0.18			0.10			0.06
Net charge-off rate excluding auto finance net charge-offs and recoveries from consumer real estate non-accrual loan sales⁽¹⁾	(f) / (h)	0.28			0.10			0.10			0.09			0.18			0.14			0.15


(1)	QTD ratios are annualized



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited), Continued

Computation of adjusted return on average common equity, return on average tangible common equity and adjusted return on average tangible common equity:

		Quarter Ended															Year Ended
		Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Dec. 31,
(Dollars in thousands)		2018			2018			2018			2018			2017			2018
Net income available to common stockholders	(a)	$	83,158		$	83,702		$	56,255		$	66,174		$	97,653		$	289,289
Plus: Goodwill impairment		—			—			—			—			73,041			—
Plus: Other intangibles amortization and impairment		847			913			835			831			1,187			3,426
Less: Income tax expense attributable to other intangibles amortization and impairment		198			220			201			199			530			801
Adjusted net income available to common stockholders	(b)	$	83,807		$	84,395		$	56,889		$	66,806		$	171,351		$	291,914

Net income available to common stockholders adjusted for CFPB/OCC settlement:
Net income available to common stockholders		$	83,158		$	83,702		$	56,255		$	66,174		$	97,653		$	289,289
Plus: CFPB/OCC settlement adjustment		—			—			32,000			—			—			32,000
Less: Income tax expense attributable to CFPB/OCC settlement adjustment		—			—			6,491			—			—			6,491
Net income available to common stockholders adjusted for CFPB/OCC settlement	(c)	83,158			83,702			81,764			66,174			97,653			314,798
Plus: Goodwill impairment		—			—			—			—			73,041			—
Plus: Other intangibles amortization and impairment		847			913			835			831			1,187			3,426
Less: Income tax expense attributable to other intangibles amortization and impairment		198			220			201			199			530			801
Adjusted net income available to common stockholders adjusted for CFPB/OCC settlement	(d)	$	83,807		$	84,395		$	82,398		$	66,806		$	171,351		$	317,423

Average balances:
Total equity		$	2,517,870		$	2,511,983		$	2,512,128		$	2,580,920		$	2,591,012		$	2,530,502
Less: Non-controlling interest in subsidiaries		21,918			23,548			28,654			23,191			20,399			24,323
Total TCF Financial Corporation stockholders' equity		2,495,952			2,488,435			2,483,474			2,557,729			2,570,613			2,506,179
Less: Preferred stock		169,302			169,302			169,302			200,404			265,821			176,971
Average total common stockholders' equity	(e)	2,326,650			2,319,133			2,314,172			2,357,325			2,304,792			2,329,208
Less:
Goodwill, net		154,757			154,757			154,757			154,757			197,734			154,757
Other intangibles, net		20,931			21,798			22,672			23,274			21,901			22,162
Average tangible common stockholders' equity	(f)	$	2,150,962		$	2,142,578		$	2,136,743		$	2,179,294		$	2,085,157		$	2,152,289

Average total common stockholders' equity adjusted for CFPB/OCC settlement:
Average total common stockholders' equity		$	2,326,650		$	2,319,133		$	2,314,172		$	2,357,325		$	2,304,792		$	2,329,208
Plus: CFPB/OCC settlement adjustment to average total common stockholders' equity		—			—			4,205			—			—			1,048
Average total common stockholders' equity adjusted for CFPB/OCC settlement	(g)	2,326,650			2,319,133			2,318,377			2,357,325			2,304,792			2,330,256
Less:
Goodwill, net		154,757			154,757			154,757			154,757			197,734			154,757
Other intangibles, net		20,931			21,798			22,672			23,274			21,901			22,162
Adjusted average tangible common stockholders' equity	(h)	$	2,150,962		$	2,142,578		$	2,140,948		$	2,179,294		$	2,085,157		$	2,153,337

ROACE⁽¹⁾	(a) / (e)	14.30		%	14.44		%	9.72		%	11.23		%	16.95		%	12.42		%
Adjusted ROACE⁽¹⁾	(c) / (g)	14.30			14.44			14.11			11.23			16.95			13.51
ROATCE⁽¹⁾	(b) / (f)	15.59			15.76			10.65			12.26			32.87			13.56
Adjusted ROATCE⁽¹⁾	(d) / (h)	15.59			15.76			15.39			12.26			32.87			14.74


(1)	QTD ratios are annualized



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited), Continued

Computation of adjusted efficiency ratio:

		Quarter Ended															Year Ended
		Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Dec. 31,
(Dollars in thousands)		2018			2018			2018			2018			2017			2018
Non-interest expense	(a)	$	249,958		$	246,423		$	272,039		$	245,980		$	347,806		$	1,014,400
Less: CFPB/OCC settlement adjustment		—			—			32,000			—			—			32,000
Adjusted non-interest expense	(b)	249,958			246,423			240,039			245,980			347,806			982,400

Net interest income		$	248,888		$	249,121		$	250,799		$	243,199		$	241,860		$	992,007
Non-interest income		128,133			116,445			114,103			112,204			120,892			470,885
Total revenue	(c)	377,021			365,566			364,902			355,403			362,752			1,462,892

Efficiency ratio	(a) / (c)	66.30		%	67.41		%	74.55		%	69.21		%	95.88		%	69.34		%
Adjusted efficiency ratio	(b) / (c)	66.30			67.41			65.78			69.21			95.88			67.15



Computation of tangible common equity ratio and tangible book value per common share:

		At Dec. 31,			At Sep. 30,			At Jun. 30,			At Mar. 31,			At Dec. 31,
(Dollars in thousands, except per share data)		2018			2018			2018			2018			2017
Total equity		$	2,556,260		$	2,528,012		$	2,504,578		$	2,550,950		$	2,680,584
Less: Non-controlling interest in subsidiaries		18,459			21,154			23,646			28,437			17,827
Total TCF Financial Corporation stockholders' equity		2,537,801			2,506,858			2,480,932			2,522,513			2,662,757
Less: Preferred stock		169,302			169,302			169,302			169,302			265,821
Total common stockholders' equity	(d)	2,368,499			2,337,556			2,311,630			2,353,211			2,396,936
Less:
Goodwill, net		154,757			154,757			154,757			154,757			154,757
Other intangibles, net		20,518			21,364			22,247			23,112			23,687
Tangible common stockholders' equity	(e)	$	2,193,224		$	2,161,435		$	2,134,626		$	2,175,342		$	2,218,492

Total assets	(f)	$	23,699,612		$	22,904,785		$	23,184,462		$	23,385,052		$	23,002,159
Less:
Goodwill, net		154,757			154,757			154,757			154,757			154,757
Other intangibles, net		20,518			21,364			22,247			23,112			23,687
Tangible assets	(g)	$	23,524,337		$	22,728,664		$	23,007,458		$	23,207,183		$	22,823,715

Common stock shares outstanding	(h)	163,923,227			166,812,524			167,684,971			169,415,834			171,669,419

Common equity ratio	(d) / (f)	9.99		%	10.21		%	9.97		%	10.06		%	10.42		%
Tangible common equity ratio	(e) / (g)	9.32			9.51			9.28			9.37			9.72

Book value per common share	(d) / (h)	$	14.45		$	14.01		$	13.79		$	13.89		$	13.96
Tangible book value per common share	(e) / (h)	13.38			12.96			12.73			12.84			12.92

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TCF FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 28, 2019

Attached files

TCF FINANCIAL CORP Reports