Bulletin
Investor Alert

press release

Jan. 27, 2020, 4:10 p.m. EST

TCF Reports Fourth Quarter 2019 Results

TCF also announces quarterly cash dividends on common and preferred stock

TCF Financial Corporation /zigman2/quotes/202459217/composite TCF -1.77% :

Fourth Quarter Highlights

  • Quarterly net income of $112.4 million, or $0.72 per diluted share

  • Adjusted diluted earnings per common share of $1.04 [(1)] , excluding $49.2 million, or $0.32 per share, after-tax impact of merger-related expenses and notable items

  • Efficiency ratio of 73.49%; adjusted efficiency ratio of 58.51% [(1)]

  • Return on average common equity ("ROACE") of 8.00%; return on average tangible common equity ("ROATCE") of 11.35% [(1)] ; adjusted ROATCE of 16.25% [(1)]

  • Commercial loan and lease balances up $1.0 billion, or 4.5%, compared to September 30, 2019

  • Completed sale of $1.1 billion Legacy TCF auto finance portfolio

  • Net charge-off rate as a percentage of average loans and leases of 0.07%, annualized

  • Nonaccrual loans and leases of $169.7 million, or 0.49% of total loans and leases

  • Common equity Tier 1 capital ratio of 10.99%

  • Repurchased 657,817 common shares at a cost of $27.5 million

  • Declared quarterly cash dividends on common stock of $0.35 per share payable on March 2, 2020

Merger-related Expenses and Notable items in the Fourth Quarter(1)

  • Pre-tax merger-related expenses of $47.0 million, $36.1 million net of tax, or $0.24 per diluted common share for the fourth quarter

  • Pre-tax loss of $22.1 million, $13.1 million net of tax, or $0.08 per diluted common share related to notable items for the fourth quarter, see summary of notable items adjustments below

(1) Denotes a non-GAAP financial measure. See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables and the following table detailing merger-related expenses and notable items.

Note: TCF’s financial results for periods ended prior to August 1, 2019 reflect Legacy TCF financial results only on a standalone basis. In addition, TCF’s reported financial results for the third quarter of 2019 and the year ended December 31, 2019 reflect Legacy TCF financial results for the period before August 1, 2019 and the post-merger combined TCF financial results on and after August 1, 2019, with the fourth quarter of 2019 financial results being solely of the post-merger combined TCF. As a result, TCF’s financial results for the fourth quarter, third quarter and year ended December 31, 2019 may not be directly comparable to prior reported periods. The number of shares issued and outstanding, earnings per share, additional paid-in-capital, dividends paid and all references to share quantities of TCF have been retrospectively restated to reflect the equivalent number of shares issued in the Merger as the Merger was treated as a reverse merger.

Summary of Financial Results(1)                                  
  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) 2019   2019   2019   2019   2018   2019 2018
Financial Results                                      
Net income attributable to TCF $ 112,399     $ 22,148     $ 90,427     $ 70,494     $ 85,652     N.M. % 31.2   %
Net interest income   408,753       371,793       254,057       254,429       253,153     9.9   61.5    
Basic earnings per common share $ 0.72     $ 0.15     $ 1.07     $ 0.83     $ 1.00     N.M.   (28.0 )  
Diluted earnings per common share   0.72       0.15       1.07       0.83       1.00     N.M.   (28.0 )  
Return on average assets ("ROAA") [(3)]   0.99 %     0.26 %     1.54 %     1.22 %     1.52 %   73 bps (53 ) bps
ROACE [(3)]   8.00       1.75       14.27       11.40       14.30     625   (630 )  
ROATCE (non-GAAP) [(2)(3)]   11.35       2.68       15.46       12.42       15.58     867   (423 )  
Net interest margin   3.86       4.12       4.46       4.58       4.63     (26)   (77 )  
Net interest margin (FTE) [(2)(3)]   3.89       4.14       4.49       4.61       4.67     (25)   (78 )  
Net charge-offs as a percentage of average loans and leases [(3)]   0.07       0.39       0.29       0.39       0.46     (32)   (39 )  
Nonperforming assets as a percentage of total loans and leases and other real estate owned   0.59       0.62       0.62       0.63       0.65     (3)   (6 )  
Efficiency ratio   73.49       91.32       65.11       70.70       66.30     (1,783)   719    
Adjusted Financial Results (non-GAAP)                                      
Adjusted net income attributable to TCF [(2)] $ 161,581     $ 128,301     $ 93,650     $ 77,700     $ 85,652     25.9 % 88.6   %
Adjusted diluted earnings per common share [(2)] $ 1.04     $ 0.98     $ 1.11     $ 0.91     $ 1.00     6.1   4.0    
Adjusted ROAA [(2)(3)]   1.42 %     1.34 %     1.59 %     1.34 %     1.52 %   8 bps (10 ) bps
Adjusted ROACE [(2)(3)]   11.57       11.21       14.79       12.61       14.30     36   (273 )  
Adjusted ROATCE [(2)(3)]   16.25       14.96       16.02       13.72       15.58     129   67    
Adjusted efficiency ratio [(2)]   58.51       58.74       61.48       65.67       63.89     (23)   (538 )  

N.M. Not meaningful

(1) Financial results for any periods ended prior to August 1, 2019 reflect Legacy TCF financials on a standalone basis. Certain reclassifications have been made to prior period financial information to conform to the current period presentation.
(2) Denotes a non-GAAP financial measure. See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables.
(3) Annualized.

The following table includes merger-related expenses and notable items used to arrive at adjusted net income in the Adjusted Financial Results (non-GAAP) (see Reconciliation of Non-GAAP Financial Measures).

  For the Quarter Ended December 31, 2019
  Pre-tax income   After-tax benefit    
(Dollars in thousands, except per share data) (loss)   (loss)(1)   Per Share
Merger-related expenses $ (47,025 )   $ (36,059 )   $ (0.24 )
Notable items:          
Sale of Legacy TCF auto finance portfolio [(2)] (12,864 )   (9,865 )   (0.06 )
Branch exit costs [(3)] (3,494 )   (2,679 )   (0.02 )
Loan servicing rights impairment recovery [(4)] 638     490      
Pension fair valuation adjustment [(3)] (6,341 )   (4,862 )   (0.03 )
Tax basis adjustment benefit [(5)]     3,793     0.03  
Total notable items (22,061 )   (13,123 )   (0.08 )
Total merger-related and notable items $ (69,086 )   $ (49,182 )   $ (0.32 )

(1) Net of tax benefit at TCF's normal tax rate and other tax benefits.
(2) Included within net (loss) gain on sales of loans and leases ($8.2 million), other noninterest expense ($2.2 million), occupancy and equipment ($1.5 million) and compensation and employee benefits ($0.9 million).
(3) Included within Other noninterest expense.
(4) Included within Other noninterest income.
(5) Included within Income tax expense (benefit).

TCF Financial Corporation ("TCF" or the "Corporation") /zigman2/quotes/202459217/composite TCF -1.77% today reported net income of $112.4 million and diluted earnings per common share of $0.72 for the fourth quarter of 2019. Adjusted net income was $161.6 million, or $1.04 per diluted common share, for the fourth quarter of 2019, excluding merger-related expenses and notable items of $0.32 per common share (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

"We closed out the year with our first full quarter as a combined organization following our merger of equals and we produced strong business results, driven by robust loan growth led by our commercial businesses, strong credit quality, and continued progress on our integration roadmap," said Craig R. Dahl, president and chief executive officer. "We continued to execute on our business strategies, including completing the sale of the legacy auto finance portfolio, adding key talent to our commercial banking teams, and ensuring we maintain our business momentum as we go into 2020. We remained focused on executing on our targeted expense synergies and integration activities throughout the year. Our strong capital position allows us to continue to pursue organic growth opportunities and leverage our scale and product breadth created by our strategic partnership. I am confident in our opportunities in 2020, and we will continue to focus on our commitment to delivering value for our shareholders."

Net Interest Income and Net Interest Margin Net interest income was $408.8 million for the fourth quarter of 2019. Purchase accounting accretion and amortization included in net interest income was $30.5 million. Net interest income, excluding purchase accounting accretion and amortization, was $378.3 million. Net interest margin was 3.86% for the fourth quarter of 2019 while net interest margin on a fully tax-equivalent basis (FTE) was 3.89%. Net interest margin FTE, excluding purchase accounting accretion and amortization, was 3.60% (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

Noninterest Income Noninterest income was $158.1 million for the fourth quarter of 2019. Noninterest income included the following notable items: an $8.2 million loss related to the sale of the Legacy TCF auto finance portfolio, included in net gains (losses) on sales of loans and leases, and a $0.6 million recovery of prior loan servicing rights impairment, included in other noninterest income. Adjusted noninterest income for the fourth quarter of 2019 was $165.6 million (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables). The fourth quarter of 2019 also included a $3.7 million gain on sale of loans and leases related to a nonaccrual and TDR loan sale, included in net gains (losses) on sales of loans and leases and a $2.4 million favorable interest rate swap mark-to-market adjustment resulting from changes in the interest rate environment, included in other noninterest income.

Noninterest Expense Noninterest expense was $416.6 million for the fourth quarter of 2019 and included $47.0 million of merger-related expenses. Noninterest expense also included the following notable items: $6.3 million of expense related to pension fair valuation adjustment on plans with previously announced terminations, included in other noninterest expense, $4.6 million of expense related to the sale of the Legacy TCF auto finance portfolio ($2.2 million in other noninterest expense, $1.5 million in occupancy and equipment expense and $0.9 million in compensation and employee benefits) and $3.5 million of expense related to branch exit costs, included in other noninterest expense. Excluding merger-related expenses and notable items, adjusted noninterest expense was $355.0 million (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables). The fourth quarter of 2019 also included $4.0 million of impairment related to federal historic tax credits placed into service, included in other noninterest expense, and a $1.3 million impairment charge recognized on a branch we intend to sell in the future, included within occupancy and equipment expense. The $4.0 million of impairment related to federal historic tax credits placed into service was more than offset by an income tax benefit of $3.6 million related to the same tax credits.

Income Tax Expense Income tax expense for the fourth quarter of 2019 was $21.4 million. In addition to the $3.6 million historic tax credit benefit noted above, the fourth quarter of 2019 also included a $3.8 million tax basis adjustment benefit.

Credit Quality Provision for credit losses Provision for credit losses was $14.4 million for the fourth quarter of 2019. Provision for credit losses for the fourth quarter of 2019 was reduced by $4.7 million of recoveries of previous charge-offs related to the sale of consumer nonaccrual and TDR loans.

Net charge-off rate The annualized net charge-offs as a percentage of average loans and leases was 0.07% for the fourth quarter of 2019. Net charge-offs for the fourth quarter of 2019 were reduced by $4.7 million of recoveries of previous charge-offs related to the sale of consumer nonaccrual and TDR loans. The annualized net charge-off rate excluding this recovery was 0.13% (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

Allowance for Loan and Lease Losses Allowance for loan and lease losses was $113.1 million, or 0.33% of total loans and leases, at December 31, 2019, down from $121.2 million, or 0.36%, at September 30, 2019.

Nonaccrual loans and leases Nonaccrual loans and leases were $169.7 million at December 31, 2019 and represented 0.49% of total loans and leases, compared to $181.8 million, or 0.54% of total loans and leases, at September 30, 2019. The decrease of nonaccrual loans and leases from September 30, 2019 was primarily due to $17.3 million of consumer nonaccrual loans sold in the fourth quarter of 2019.

Balance Sheet Loans and leases Loans and leases were $34.5 billion at December 31, 2019, an increase of $986.7 million compared to $33.5 billion at September 30, 2019. The increase from September 30, 2019 was primarily due to growth in the commercial and industrial and commercial real estate portfolios. During the fourth quarter of 2019, TCF completed the sale of the $1.1 billion Legacy TCF auto finance portfolio, which had been included within loans held-for-sale at September 30, 2019.

Investment securities The investment securities portfolio was $6.9 billion at December 31, 2019, compared to $5.7 billion at September 30, 2019. The increase from September 30, 2019 was primarily due to the continued reinvestment into the investment securities portfolio following repositioning actions taken in the third quarter of 2019.

Deposits Deposits were $34.5 billion at December 31, 2019, compared to $35.3 billion at September 30, 2019. The decrease from September 30, 2019 was primarily due to the run-off of $930.4 million of certificates of deposit, which included $402.3 million of brokered certificates of deposit.

Capital The common equity Tier 1 capital ratio was 10.99% at December 31, 2019.

TCF repurchased $27.5 million of its common stock during the fourth quarter of 2019 and had the authority to repurchase an additional $122.5 million in aggregate value of shares as of December 31, 2019 pursuant to its share repurchase program.

TCF's board of directors also declared a regular quarterly cash dividend of $0.35 per common share payable on March 2, 2020 to shareholders of record at the close of business on February 14, 2020. In addition, the board of directors declared a quarterly cash dividend of $0.35625 per depositary share payable on March 2, 2020 to shareholders of record of the depositary shares, representing a 1/1,000th interest in a share of the 5.70% Series C Non-Cumulative Perpetual Preferred Stock, at the close of business on February 14, 2020.

Conference Call Details TCF will host a conference call to discuss fourth quarter 2019 results on Tuesday, January 28, 2020 at 10:00 a.m. Eastern Time. The conference call will be available via a live webcast on the Investor Relations section of TCF's website, ir.tcfbank.com, and archived for replay. The conference call can also be accessed by dialing (844) 512-2926 and entering access code 7648346. To listen to the replay via phone, please dial (877) 344-7529 and enter access code 10138016. The replay begins approximately one hour after the call is completed on Tuesday, January 28, 2020 and will be available through Tuesday, February 4, 2020.

TCF Financial Corporation <SYMBOL COUNTRY="US" EXCHANGE="U.S.: Nasdaq" TICKER="TCF" ID="1183" COMPANY="TCF Financial Corp." MKTW-TICKER="US:TCF" /> is a Detroit, Michigan-based financial holding company with $47 billion in total assets at December 31, 2019 and a top 10 deposit market share in the Midwest. TCF’s primary banking subsidiary, TCF National Bank, is a premier Midwest bank offering consumer and commercial banking, trust and wealth management, and specialty leasing and lending products and services to consumers, small businesses and commercial clients. TCF has approximately 500 branches primarily located in Michigan, Illinois and Minnesota with additional locations in Arizona, Colorado, Ohio, South Dakota and Wisconsin. TCF also conducts business across all 50 states and Canada through its specialty lending and leasing businesses. To learn more about TCF, visit 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 Corporation's businesses and their respective markets, such as projections of future performance, targets, guidance, statements of the Corporation's plans and objectives, forecasts of market trends and other matters are forward-looking statements based on the Corporation'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 Corporation'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 Corporation's Annual Report on Form 10-K for the year ended December 31, 2018 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 net income, adjusted diluted earnings per common share, adjusted ROAA, adjusted ROACE, ROATCE, adjusted ROATCE, adjusted efficiency ratio, adjusted net interest income, net interest margin (FTE), adjusted net interest margin (FTE), adjusted noninterest income, adjusted noninterest expense, tangible book value per common share and tangible common equity to tangible assets 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 Corporation's capital and ability to withstand unexpected market or economic conditions and to assess the performance of the Corporation 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 merger-related expenses and notable items in addition to presenting net interest income and net interest margin (FTE) excluding purchase accounting accretion and amortization. Management believes these measures are 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 corporation, 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 shareholders.

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, 2019 12/31/2018
2019   2019   2019   2019   2018   $ % $ %
ASSETS:                                
Cash and cash equivalents:                                
Cash and due from banks $ 491,787     $ 586,060     $ 294,566     $ 283,659     $ 279,267     $ (94,273 ) (16.1 )% $ 212,520   76.1 %
Interest-bearing deposits with other banks   736,584       736,954       260,705       180,163       307,790       (370 ) (0.1 )   428,794   139.3  
Total cash and cash equivalents   1,228,371       1,323,014       555,271       463,822       587,057       (94,643 ) (7.2 )   641,314   109.2  
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost   442,440       290,238       105,659       103,644       91,654       152,202   52.4     350,786   N.M.  
Investment securities:                                
Available-for-sale, at fair value   6,720,001       5,579,835       3,109,803       2,945,342       2,470,065       1,140,166   20.4     4,249,936   172.1  
Held-to-maturity, at amortized cost   139,445       144,000       144,919       148,024       148,852       (4,555 ) (3.2 )   (9,407 ) (6.3 )
Total investment securities   6,859,446       5,723,835       3,254,722       3,093,366       2,618,917       1,135,611   19.8     4,240,529   161.9  
Loans and leases held-for-sale   199,786       1,436,069       74,410       64,468       90,664       (1,236,283 ) (86.1)     109,122   120.4  
Loans and leases   34,497,464       33,510,752       19,185,137       19,384,210       19,073,020       986,712   2.9     15,424,444   80.9  
Allowance for loan and lease losses   (113,052 )     (121,218 )     (146,503 )     (147,972 )     (157,446 )     8,166   6.7     44,394   28.2  
Loans and leases, net   34,384,412       33,389,534       19,038,634       19,236,238       18,915,574       994,878   3.0     15,468,838   81.8  
Premises and equipment, net   533,138       554,194       432,751       429,711       427,534       (21,056 ) (3.8 )   105,604   24.7  
Goodwill   1,299,878       1,265,111       154,757       154,757       154,757       34,767   2.7     1,145,121   N.M.  
Other intangible assets, net   168,368       215,910       18,885       19,684       20,496       (47,542 ) (22.0)     147,872   N.M.  
Loan servicing rights   56,313       55,301       19       20       23       1,012   1.8     56,290   N.M.  
Other assets   1,479,401       1,439,305       991,722       853,005       792,936       40,096   2.8     686,465   86.6  
Total assets $ 46,651,553     $ 45,692,511     $ 24,626,830     $ 24,418,715     $ 23,699,612     $ 959,042   2.1   $ 22,951,941   96.8  
LIABILITIES AND EQUITY:                              
Deposits:                                
Noninterest-bearing $ 7,970,590     $ 7,979,900     $ 4,062,912     $ 4,104,652     $ 3,936,155     $ (9,310 ) (0.1)%   $ 4,034,435   102.5 %
Interest-bearing   26,497,873       27,306,174       15,049,475       14,919,459       14,967,531       (808,301 ) (3.0)     11,530,342   77.0  
Total deposits   34,468,463       35,286,074       19,112,387       19,024,111       18,903,686       (817,611 ) (2.3)     15,564,777   82.3  
Short-term borrowings   2,669,145       2,607,300       350,764       355,992           61,845   2.4     2,669,145   N.M.  
Long-term borrowings   2,354,448       860,482       1,617,531       1,411,426       1,449,472       1,493,966   173.6     904,976   62.4  
Other liabilities   1,432,256       1,245,238       835,630       981,341       790,194       187,018   15.0     642,062   81.3  
Total liabilities   40,924,312       39,999,094       21,916,312       21,772,870       21,143,352       925,218   2.3     19,780,960   93.6  
Equity:                                
Preferred stock   169,302       169,302       169,302       169,302       169,302            
Common stock   152,966       153,571       87,944       88,063       88,198       (605 ) (0.4)     64,768   73.4  
Additional paid-in capital   3,462,080       3,478,159       781,788       789,467       798,627       (16,079 ) (0.5)     2,663,453   N.M.  
Retained earnings   1,896,427       1,840,214       1,874,308       1,810,701       1,766,994       56,213   3.1     129,433   7.3  
Accumulated other comprehensive income (loss)   54,277       56,228       37,334       5,481       (33,138 )     (1,951 ) (3.5)     87,415   N.M.  
Treasury stock at cost and other   (28,037 )     (27,370 )     (265,016 )     (246,621 )     (252,182 )     (667 ) (2.4)     224,145   88.9  
Total TCF Financial Corporation shareholders' equity   5,707,015       5,670,104       2,685,660       2,616,393       2,537,801       36,911   0.7     3,169,214   124.9  
Non-controlling interest   20,226       23,313       24,858       29,452       18,459       (3,087 ) (13.2)     1,767   9.6  
Total equity   5,727,241       5,693,417       2,710,518       2,645,845       2,556,260       33,824   0.6     3,170,981   124.0  
Total liabilities and equity $ 46,651,553     $ 45,692,511     $ 24,626,830     $ 24,418,715     $ 23,699,612     $ 959,042   2.1   $ 22,951,941   96.8  

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, 2019   Dec. 31, 2018
2019   2019   2019   2019   2018   $   %   $   %
Interest income:                                      
Interest and fees on loans and leases $ 446,738     $ 417,370     $ 283,282     $ 283,238     $ 275,200     $ 29,368     7.0 %   $ 171,538     62.3 %
Interest on investment securities:                                      
Taxable 36,282     31,038     22,041     16,666     13,915     5,244     16.9     22,367     160.7  
Tax-exempt 4,374     3,385     1,208     2,684     4,147     989     29.2     227     5.5  
Interest on loans held-for-sale 15,767     1,408     599     825     1,405     14,359     N.M.     14,362     N.M.  
Interest on other earning assets 6,617     6,607     3,651     3,481     3,242     10     0.2     3,375     104.1  
Total interest income 509,778     459,808     310,781     306,894     297,909     49,970     10.9     211,869     71.1  
Interest expense:                                      
Interest on deposits 77,003     70,900     40,646     37,608     33,462     6,103     8.6     43,541     130.1  
Interest on borrowings 24,022     17,115     16,078     14,857     11,294     6,907     40.4     12,728     112.7  
Total interest expense 101,025     88,015     56,724     52,465     44,756     13,010     14.8     56,269     125.7  
Net interest income 408,753     371,793     254,057     254,429     253,153     36,960     9.9     155,600     61.5  
Provision for credit losses 14,403     27,188     13,569     10,122     18,894     (12,785 )   (47.0 )   (4,491 )   (23.8 )
Net interest income after provision for credit losses 394,350     344,605     240,488     244,307     234,259     49,745     14.4     160,091     68.3  
Noninterest income:                                      
Fees and service charges on deposit accounts 39,356     34,384     27,842     26,278     29,539     4,972     14.5     9,817     33.2  
Leasing revenue 46,686     39,590     39,277     38,165     51,602     7,096     17.9     (4,916 )   (9.5 )
Wealth management revenue 6,172     4,241                 1,931     45.5     6,172     N.M.  
Card and ATM revenue 24,751     23,315     20,496     18,659     20,093     1,436     6.2     4,658     23.2  
Net gains (losses) on sales of loans and leases 12,934     (5,984 )   11,141     8,217     8,795     18,918     N.M.     4,139     47.1  
Servicing fee revenue 6,022     5,121     4,523     5,110     5,523     901     17.6     499     9.0  
Net gains on investment securities 8     5,900     1,066     451     167     (5,892 )   (99.9 )   (159 )   (95.2 )
Other 22,123     (12,309 )   5,373     6,624     8,149     34,432     N.M.     13,974     171.5  
Total noninterest income 158,052     94,258     109,718     103,504     123,868     63,794     67.7     34,184     27.6  
Noninterest expense:                                      
Compensation and employee benefits 180,969     155,745     116,266     123,942     130,022     25,224     16.2     50,947     39.2  
Occupancy and equipment 56,771     49,229     41,850     41,710     42,277     7,542     15.3     14,494     34.3  
Lease financing equipment depreciation 18,629     19,408     19,133     19,256     19,085     (779 )   (4.0 )   (456 )   (2.4 )
Net foreclosed real estate and repossessed assets 4,242     2,203     2,448     4,630     4,396     2,039     92.6     (154 )   (3.5 )
Merger-related expenses 47,025     111,259     4,226     9,458         (64,234 )   (57.7 )   47,025     N.M.  
Other 108,935     87,776     52,926     54,079     54,178     21,159     24.1     54,757     101.1  
Total noninterest expense 416,571     425,620     236,849     253,075     249,958     (9,049 )   (2.1 )   166,613     66.7  
Income before income tax expense 135,831     13,243     113,357     94,736     108,169     122,588     N.M.     27,662     25.6  
Income tax expense (benefit) 21,375     (11,735 )   19,314     21,287     20,013     33,110     N.M.     1,362     6.8  
Income after income tax expense (benefit) 114,456     24,978     94,043     73,449     88,156     89,478     N.M.     26,300     29.8  
Income attributable to non-controlling interest 2,057     2,830     3,616     2,955     2,504     (773 )   (27.3 )   (447 )   (17.9 )
Net income attributable to TCF Financial Corporation 112,399     22,148     90,427     70,494     85,652     90,251     N.M.     26,747     31.2  
Preferred stock dividends 2,494     2,494     2,494     2,493     2,494                  
Net income available to common shareholders $ 109,905     $ 19,654     $ 87,933     $ 68,001     $ 83,158     $ 90,251     N.M.     $ 26,747     32.2  

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) 2019   2018   $   %
Interest income:                
Interest and fees on loans and leases $ 1,430,628     $ 1,082,135     $ 348,493     32.2 %
Interest on investment securities:                
Taxable 106,027     41,406     64,621     156.1  
Tax-exempt 11,651     17,138     (5,487 )   (32.0 )
Interest on loans held-for-sale 18,599     6,686     11,913     178.2  
Interest on other earning assets 20,356     11,964     8,392     70.1  
Total interest income 1,587,261     1,159,329     427,932     36.9  
Interest expense:                
Interest on deposits 226,157     107,690     118,467     110.0  
Interest on borrowings 72,072     43,144     28,928     67.0  
Total interest expense 298,229     150,834     147,395     97.7  
Net interest income 1,289,032     1,008,495     280,537     27.8  
Provision for credit losses 65,282     46,768     18,514     39.6  
Net interest income after provision for credit losses 1,223,750     961,727     262,023     27.2  
Noninterest income:                
Fees and service charges on deposit accounts 127,860     113,242     14,618     12.9  
Leasing revenue 163,718     172,603     (8,885 )   (5.1 )
Wealth management revenue 10,413         10,413     N.M.  
Card and ATM revenue 87,221     78,406     8,815     11.2  
Net gains on sales of loans and leases 26,308     33,695     (7,387 )   (21.9 )
Servicing fee revenue 20,776     27,334     (6,558 )   (24.0 )
Net gains on investment securities 7,425     348     7,077     N.M.  
Other 21,811     28,769     (6,958 )   (24.2 )
Total noninterest income 465,532     454,397     11,135     2.5  
Noninterest expense:                
Compensation and employee benefits 576,922     502,196     74,726     14.9  
Occupancy and equipment 189,560     165,839     23,721     14.3  
Lease financing equipment depreciation 76,426     73,829     2,597     3.5  
Net foreclosed real estate and repossessed assets 13,523     17,050     (3,527 )   (20.7 )
Merger-related expenses 171,968         171,968     N.M.  
Other 303,716     255,486     48,230     18.9  
Total noninterest expense 1,332,115     1,014,400     317,715     31.3  
Income before income tax expense 357,167     401,724     (44,557 )   (11.1 )
Income tax expense 50,241     86,096     (35,855 )   (41.6 )
Income after income tax expense 306,926     315,628     (8,702 )   (2.8 )
Income attributable to non-controlling interest 11,458     11,270     188     1.7  
Net income attributable to TCF Financial Corporation 295,468     304,358     (8,890 )   (2.9 )
Preferred stock dividends 9,975     11,588     (1,613 )   (13.9 )
Impact of preferred stock redemption     3,481     (3,481 )   (100.0 )
Net income available to common shareholders $ 285,493     $ 289,289     $ (3,796 )   (1.3 )
                 
Earnings per common share:                
Basic $ 2.56     $ 3.44     $ (0.88 )   (25.6 )%
Diluted 2.55     3.43     (0.88 )   (25.7 )

N.M. Not Meaningful

TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
  Quarter Ended
  Dec. 31, 2019   Sep. 30, 2019   Dec. 31, 2018
  Average   Yields &   Average   Yields &   Average   Yields &
(Dollars in thousands) Balance Interest(1) Rates(1)(2)   Balance Interest(1) Rates(1)(2)   Balance Interest(1) Rates(1)(2)
ASSETS:                      
Federal Home Loan Bank and Federal Reserve Bank stocks $ 388,640   $ 3,170   3.24 %   $ 230,767   $ 806   1.39 %   $ 87,321   $ 920   4.19 %
Investment securities held-to-maturity   140,434     889   2.53       143,078     602   1.68       150,016     965   2.58  
Investment securities available-for-sale:                      
Taxable   4,960,520     35,393   2.85       4,232,878     30,436   2.88       1,779,654     12,949   2.91  
Tax-exempt [(3)]   778,994     5,536   2.84       643,576     4,283   2.66       788,806     5,250   2.66  
Loans and leases held-for-sale   1,121,326     15,767   5.58       118,482     1,408   4.74       86,169     1,405   6.48  
Loans and leases [(3)(4)]                      
Commercial and industrial   10,955,937     156,246   5.63       9,290,978     146,865   6.25       6,116,369     98,019   6.36  
Commercial real estate   9,057,834     124,431   5.38       6,964,643     97,042   5.45       2,795,403     35,851   5.02  
Lease financing   2,616,360     33,431   5.11       2,570,567     32,833   5.11       2,479,045     32,984   5.32  
Residential mortgage   6,023,647     61,072   4.05       4,853,627     51,511   4.23       1,957,323     25,951   5.27  
Consumer installment   1,546,952     19,382   4.97       2,389,830     34,543   5.73       2,134,568     30,246   5.62  
Home equity   3,604,153     53,910   5.93       3,433,830     56,166   6.49       3,072,697     53,146   6.86  
Total loans and leases [(3)(4)]   33,804,883     448,472   5.24       29,503,475     418,960   5.62       18,555,405     276,197   5.90  
Interest-bearing deposits with banks and other   656,555     3,448   2.07       933,014     5,800   2.44       243,038     2,322   3.79  
Total interest-earning assets   41,851,352     512,675   4.85       35,805,270     462,295   5.11       21,690,409     300,008   5.49  
Other assets   4,268,162           3,289,096           1,463,844      
Total assets $ 46,119,514         $ 39,094,366         $ 23,154,253      
LIABILITIES AND EQUITY:                      
Noninterest-bearing deposits $ 7,968,769         $ 6,564,195         $ 3,873,023      
Interest-bearing deposits:                      
Checking   5,891,566     7,614   0.51 %     4,805,843     5,520   0.46 %     2,403,370     248   0.04 %
Savings   8,404,460     14,993   0.71       7,676,165     14,110   0.73       5,922,724     8,114   0.54  
Money market   4,463,476     15,537   1.38       3,490,922     13,037   1.48       1,449,531     3,612   0.99  
Certificates of deposit   7,825,573     38,859   1.97       7,320,720     38,233   2.07       4,818,211     21,487   1.77  
Total interest-bearing deposits   26,585,075     77,003   1.15       23,293,650     70,900   1.21       14,593,836     33,461   0.91  
Total deposits   34,553,844     77,003   0.88       29,857,845     70,900   0.94       18,466,859     33,461   0.72  
Borrowings:                      
Short-term borrowings   2,585,682     11,403   1.73       1,884,228     5,345   1.11       2,738     19   2.74  
Long-term borrowings   1,739,852     12,620   2.87       1,472,150     11,769   3.17       1,344,228     11,275   3.31  
Total borrowings   4,325,534     24,023   2.19       3,356,378     17,114   2.01       1,346,966     11,294   3.31  
Total interest-bearing liabilities   30,910,609     101,026   1.29       26,650,028     88,014   1.31       15,940,802     44,755   1.11  
Total deposits and borrowings   38,879,378     101,026   1.03       33,214,223     88,014   1.05       19,813,825     44,755   0.89  
Accrued expenses and other liabilities   1,549,017           1,197,014           822,558      
Total liabilities   40,428,395           34,411,237           20,636,383      
Total TCF Financial Corporation shareholders' equity   5,667,436           4,657,613           2,495,952      
Non-controlling interest in subsidiaries   23,683           25,516           21,918      
Total equity   5,691,119           4,683,129           2,517,870      
Total liabilities and equity $ 46,119,514         $ 39,094,366         $ 23,154,253      
Net interest spread (FTE)     3.82 %       4.06 %       4.60 %
Net interest income(FTE) and net interest margin(FTE)   $ 411,649   3.89 %     $ 374,281   4.14 %     $ 255,253   4.67 %
Reconciliation to Reported Net Interest Income                    
Net interest income (FTE)   $ 411,649         $ 374,281         $ 255,253    
Adjustments for taxable equivalent interest [(1)(3)]                      
Loans and leases     (1,734 )         (1,590 )         (997 )  
Tax-exempt investment securities     (1,162 )         (898 )         (1,103 )  
Total FTE adjustments     (2,896 )         (2,488 )         (2,100 )  
Net interest income (GAAP)   $ 408,753         $ 371,793         $ 253,153    
Net interest margin (GAAP)     3.86 %         4.12 %         4.63 %  

(1) Interest and yields are presented on a fully tax-equivalent basis.
(2) Annualized.
(3)The yield on tax-exempt loans and investment securities available-for-sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 21%.
(4)Average balances of loans and leases include nonaccrual loans and leases and are presented net of unearned income. 

TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields and Rates (Unaudited)
                       
  Year Ended December 31,
  2019   2018
  Average       Yields &   Average       Yields &
(Dollars in thousands) Balance   Interest(1)   Rates(1)   Balance   Interest(1)   Rates(1)
ASSETS:                      
Federal Home Loan Bank and Federal Reserve Bank stocks $ 210,001     $ 6,030     2.87 %   $ 89,774     $ 3,618     4.03 %
Investment securities held-to-maturity   144,318       2,950     2.04       154,619       3,970     2.57  
Investment securities available-for-sale:                      
Taxable   3,516,413       103,077     2.93       1,390,016       37,436     2.69  
Tax-exempt [(3)]   541,525       14,746     2.72       815,540       21,694     2.66  
Loans and leases held-for-sale   336,292       18,599     5.53       103,240       6,686     6.48  
Loans and leases [(2)(3)]                      
Commercial and industrial   8,371,066       519,506     6.18       6,171,331       386,541     6.25  
Commercial real estate   5,523,347       298,414     5.33       2,799,523       135,791     4.78  
Lease financing   2,570,109       131,547     5.12       2,459,823       125,185     5.09  
Residential mortgage   3,902,959       170,706     4.37       1,788,729       95,375     5.33  
Consumer installment   1,844,714       101,687     5.51       2,579,271       142,700     5.53  
Home equity   3,272,760       214,116     6.54       3,028,370       200,356     6.62  
Total loans and leases [(2)(3)]   25,484,955       1,435,976     5.61       18,827,047       1,085,948     5.75  
Interest-bearing deposits with banks and other   534,979       14,326     2.66       229,698       8,346     3.63  
Total interest-earning assets   30,768,483       1,595,704     5.17       21,609,934       1,167,698     5.39  
Other assets   2,758,447               1,452,214          
Total assets $ 33,526,930             $ 23,062,148          
LIABILITIES AND EQUITY:                      
Noninterest-bearing deposits $ 5,622,092             $ 3,843,494          
Interest-bearing deposits:                      
Checking   3,920,613       13,961     0.36       2,438,040       714     0.03  
Savings   7,203,987       52,087     0.72       5,621,723       20,009     0.36  
Money market   2,729,156       37,615     1.38       1,553,255       11,582     0.75  
Certificates of deposit   6,086,251       122,494     2.01       4,897,937       75,385     1.54  
Total interest-bearing deposits   19,940,007       226,157     1.13       14,510,955       107,690     0.74  
Total deposits   25,562,099       226,157     0.88       18,354,449       107,690     0.59  
Borrowings:                      
Short-term borrowings   1,279,073       20,836     1.61       3,288       77     2.33  
Long-term borrowings   1,592,915       51,236     3.19       1,412,186       43,067     3.03  
Total borrowings   2,871,988       72,072     2.49       1,415,474       43,144     3.02  
Total interest-bearing liabilities   22,811,995       298,229     1.30       15,926,429       150,834     0.94  
Total deposits and borrowings   28,434,087       298,229     1.05       19,769,923       150,834     0.76  
Accrued expenses and other liabilities   1,177,805               761,723          
Total liabilities   29,611,892               20,531,646          
Total TCF Financial Corporation shareholders' equity   3,889,204               2,506,179          
Non-controlling interest in subsidiaries   25,834               24,323          
Total equity   3,915,038               2,530,502          
Total liabilities and equity $ 33,526,930             $ 23,062,148          
Net interest spread (FTE)         4.12 %           4.63 %
Net interest income (FTE) and net interest margin (FTE)     $ 1,297,475     4.20 %       $ 1,016,864     4.69 %
Reconciliation to Reported Net Interest Income                    
Net interest income (FTE)     $ 1,297,475             $ 1,016,864      
Adjustments for taxable equivalent interest [(1)(2)]                      
Loans       (5,348 )             (3,813 )    
Tax-exempt investment securities       (3,095 )             (4,556 )    
Total FTE adjustments       (8,443 )             (8,369 )    
Net interest income (GAAP)     $ 1,289,032             $ 1,008,495      
Net interest margin (GAAP)       4.17 %             4.66 %    

(1) Interest and yields are presented on a fully tax-equivalent basis.
(2) The yield on tax-exempt loans and investment securities available-for-sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 21%.
(3) Average balances of loans and leases include nonaccrual loans and leases and are presented net of unearned income. 

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