TCF Reports Quarterly Net Income of $34.1 Million, or 21 Cents Per Share

TCF Reports Quarterly Net Income of $34.1 Million, or 21 Cents Per Share

WAYZATA, Minn.--(BUSINESS WIRE)-- TCF Financial Corporation (NYS: TCB) :

SECOND QUARTER HIGHLIGHTS


-Total revenue of $301.8 million, up 3.4 percent from the first quarter of 2013

-Pre-tax pre-provision profit of $93.3 million, up 6.3 percent from the first quarter of 2013

-Net interest margin maintained at 4.72 percent annualized

-Provision for credit losses of $32.6 million, down 15.1 percent from the first quarter of 2013

-Non-accrual loans and leases and other real estate owned decreased $70.4 million, or 17 percent, from the first quarter of 2013

-Announced common and preferred stock dividend payments payable August 30, 2013 and September 3, 2013, respectively

Summary of Financial Results

Table 1

(Dollars in thousands, except per-share data)

Percent Change

2Q

1Q

2Q

2Q13 vs

2Q13 vs

YTD

YTD

Percent

2013

2013

2012

1Q13

2Q12

2013

2012(1)

Change

Net income (loss)

$

34,057

$

25,450

$

31,531

33.8

%

8.0

%

$

59,507

$

(251,363

)

N.M.

%

Net interest income

202,044

199,091

198,224

1.5

1.9

401,135

378,397

6.0

Pre-tax pre-provision profit(2)

93,311

87,742

108,118

6.3

(13.7

)

181,053

178,696

1.3

Diluted earnings (loss) per common share

.21

.16

.20

31.3

5.0

.37

(1.58

)

N.M.

Financial Ratios(3)

Return on average assets

.90

%

.70

%

.76

%

.80

%

(2.71

)

%

Return on average common equity

8.39

6.36

8.13

7.39

(29.84

)

Net interest margin

4.72

4.72

4.86

4.72

4.49

Net charge-offs as a percentage of average loans and leases

.70

1.06

1.18

.88

1.12

(1) Includes a net, after-tax charge of $295.8 million, or $1.87 per common share, related to the balance sheet repositioning.

(2) Pre-tax pre-provision profit (''PTPP'') is calculated as total revenues less non-interest expense. Year-to-date 2012 PTPP excludes the non-recurring net loss of $473.8 million related to the balance sheet repositioning completed in the first quarter of 2012.

(3) Annualized.

N.M. Not Meaningful.

TCF Financial Corporation ("TCF" or the "Company") (NYS: TCB) today reported net income for the second quarter of 2013 of $34.1 million, compared with net income of $31.5 million for the second quarter of 2012 (inclusive of a net after-tax gain of $8.2 million from the sale of Visa® Class B stock), and compared with net income of $25.5 million for the first quarter of 2013. Diluted earnings per common share was 21 cents for the second quarter of 2013, compared with diluted earnings per common share of 20 cents for the second quarter of 2012 (inclusive of a net after-tax gain of 5 cents per common share related to the sale of Visa Class B stock) and diluted earnings per common share of 16 cents for the first quarter of 2013.

TCF reported net income for the first six months of 2013 of $59.5 million, compared with a net loss of $251.4 million for the same period in 2012 (inclusive of a net after-tax charge of $295.8 million, or $1.87 per common share, related to a balance sheet repositioning involving certain investments and borrowings in the first quarter of 2012 and a net after-tax gain of $8.2 million, or 5 cents per common share, related to the sale of Visa® Class B stock in the second quarter of 2012). Diluted earnings per common share was 37 cents for the first six months of 2013, compared with a diluted loss per common share of $1.58 for the same period in 2012 (earnings per common share of 23 cents before the balance sheet repositioning charge and the gain related to the sale of Visa® Class B stock).

Chairman's Statement
"During the second quarter, TCF experienced solid increases throughout its multiple core revenue sources and another quarter of solid improvement in credit trends," said William A. Cooper, Chairman and Chief Executive Officer. "Over the last three quarters, TCF has seen continued improvement in our credit metrics, particularly in the consumer real estate portfolio where home values have risen and consumer confidence has strengthened, and we have maintained strong performance in our national businesses.

"TCF made strategic investments in 2012 to position the Company for 2013 and beyond. The Company has made good progress in the first half of 2013 executing on these strategic initiatives, including disciplined loan and lease growth, diversifying our revenue sources, improving our credit performance, and expanding our deposit account base."

Revenue

Total Revenue

Table 2

Percent Change

2Q

1Q

2Q

2Q13 vs

2Q13 vs

YTD

YTD

Percent

(Dollars in thousands)

2013

2013

2012

1Q13

2Q12

2013

2012

Change

Net interest income

$

202,044

$

199,091

$

198,224

1.5

%

1.9

%

$

401,135

$

378,397

6.0

%

Fees and other revenue:

Fees and service charges

41,572

39,323

48,090

5.7

(13.6

)

80,895

89,946

(10.1

)

Card revenue

13,270

12,417

13,530

6.9

(1.9

)

25,687

26,737

(3.9

)

ATM revenue

5,828

5,505

6,276

5.9

(7.1

)

11,333

12,475

(9.2

)

Total banking fees

60,670

57,245

67,896

6.0

(10.6

)

117,915

129,158

(8.7

)

Leasing and equipment finance

22,874

16,460

23,207

39.0

(1.4

)

39,334

46,074

(14.6

)

Gains on sales of auto loans

8,135

7,146

5,496

13.8

48.0

15,281

7,746

97.3

Gains on sales of consumer real estate loans

4,069

8,126

-

(49.9

)

N.M.

12,195

-

N.M.

Other

4,035

3,726

3,168

8.3

27.4

7,761

5,523

40.5

Total fees and other revenue

99,783

92,703

99,767

7.6

-

192,486

188,501

2.1

Subtotal

301,827

291,794

297,991

3.4

1.3

593,621

566,898

4.7

Gains on securities, net

-

-

13,116

N.M.

(100.0

)

-

89,727

(100.0

)

Total revenue

$

301,827

$

291,794

$

311,107

3.4

(3.0

)

$

593,621

$

656,625

(9.6

)

Net interest margin (1)

4.72

%

4.72

%

4.86

%

4.72

%

4.49

%

Fees and other revenue as a % of total revenue

33.06

31.77

32.07

32.43

28.71

N.M. Not meaningful.

(1) Annualized.

Net Interest Income

  • Net interest income for the second quarter of 2013 increased $3.8 million, or 1.9 percent, compared with the second quarter of 2012. This increase was due to higher average loan balances primarily from the auto finance and inventory finance portfolios as a result of continued growth in those businesses, partially offset by lower average balances of consumer real estate loans due to various sales that occurred in the second half of 2012 and the first half of 2013. The increase was also due to a reduced cost of borrowings from the redemption of trust preferred securities in July 2012.

  • Net interest income for the second quarter of 2013 increased $3 million, or 1.5 percent, compared with the first quarter of 2013. The increase was primarily due to higher average loan balances primarily from continued growth in the auto finance portfolio and a seasonally high inventory finance portfolio. These increases were partially offset by reduced interest income from lower average balances of consumer real estate loans as a result of various loan sales that occurred during the second quarter of 2013 and the run-off of first mortgages, compared with the first quarter of 2013.

  • Net interest margin in the second quarter of 2013 was 4.72 percent, compared with 4.86 percent in the second quarter of 2012 and remained unchanged from the first quarter of 2013. The decrease from the second quarter of 2012 was primarily due to increased cash held at the Federal Reserve and lower yields as new originations in our lending business continued to be impacted by the low interest rate environment. These decreases were partially offset by the reduced cost of borrowings due to the redemption of trust preferred securities in July 2012.

Non-interest Income

  • Fees and service charges in the second quarter of 2013 were $41.6 million, down $6.5 million, or 13.6 percent, from the second quarter of 2012 and up $2.2 million, or 5.7 percent, from the first quarter of 2013. The decrease from the second quarter of 2012 was due to the elimination of the monthly maintenance fee on deposit products through the reintroduction of free checking, partially offset by a higher account base. The increase from the first quarter of 2013 was primarily due to higher seasonal transaction activity during the second quarter of 2013, as well as growth in the account base for the fourth consecutive quarter driven by the reintroduction of free checking.

  • Leasing and equipment finance revenue was $22.9 million during the second quarter of 2013, up $6.4 million, or 39 percent, from the first quarter of 2013. The increase was primarily due to higher sales-type lease revenue on the leasing and equipment finance portfolio as a result of customer-driven events.

  • TCF sold $196.9 million, $144.1 million and $179.8 million of auto loans during the second quarters of 2013 and 2012, and the first quarter of 2013, respectively, resulting in gains in the same respective periods.

  • TCF sold $139.2 million and $279.2 million of consumer real estate loans during the second quarter of 2013 and the first quarter of 2013, respectively, resulting in gains in the same respective periods. There were no sales of consumer real estate loans during the second quarter of 2012.

Loans and Leases

Period-End and Average Loans and Leases

Table 3