TCF FINANCIAL CORP - FORM 8-K - EX-99.1 - October 25, 2010

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Exhibit 99.1

 

TCF Financial Corporation

2010 Third Quarter Investor Presentation

Built on convenience, stability and trust.

 

1.)                                  Corporate Profile

 

At September 30, 2010

 

·      $18.3 billion bank holding company headquartered in Minnesota

 

·      36th largest publicly traded U.S. based bank by asset size

 

·      440 bank branches in eight states, 69 branches opened since January 1, 2005

 

·      23rd largest U.S. branch network

 

·      Seven campus alliances; 5th largest in campus card banking relationships

 

·      983 ATMs free to TCF customers; 500 off-site

 

·      11th largest issuer of Visa® Classic debit cards

 

·      12th largest issuer of Visa Commercial debit cards

 

·      13th largest bank-affiliated leasing company in the U.S.

 

·      Total equity to total assets of  8.22%

 

·      Tangible realized common equity of 7.27% 1

 

·      62nd consecutive quarter of profitability

 

Branch Summary

 

Minnesota

 

110

 

Illinois

 

200

 

Michigan

 

55

 

Colorado

 

36

 

Wisconsin

 

26

 

Arizona

 

7

 

Indiana

 

5

 

South Dakota

 

1

 

Total

 

440

 

 

Well-Diversified Loan Portfolio

($ millions)

 

 

12/31/99

 

% of Total

 

9/30/10

 

% of Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Lending

 

$

5,978

 

76

%

$

7,280

 

49

%

 

 

Commercial Lending

 

1,425

 

18

 

3,663

 

25

 

 

 

Leasing

 

493

 

6

 

3,158

 

21

 

 

 

Inventory Finance

 

—

 

—

 

796

 

5

 

 

 

Total

 

$

7,896

 

100

%

$

14,897

 

100

%

 

 

 

1  See “Reconciliation of GAAP to Non-GAAP Measures - Tangible Realized Common Equity” slide

 

 


 

2.)                                  What Makes TCF Different

 

At September 30, 2010

 

·                  Convenience

TCF banks a large and diverse customer base by offering a host of convenient banking services:

·      Traditional, supermarket and campus branches open seven days a week

·      Free debit cards, free coin counting and 983 free ATMs

·      TCF Free Online banking

 

·                  Credit Quality

·      TCF is primarily a secured portfolio lender, emphasizing credit quality over asset growth

 

·                  Core deposit funding for national diverse lending platform

·                  Grew core deposits by $442.8 million year-over-year; decreased total certificate of deposit balances by $607.3 million year-over-year

·                  Increased nationally-oriented specialty finance businesses by $666.7 million year-over-year

 

 


 

3.)                                  What Makes TCF Different  (continued)

 

·                  No deficient foreclosure procedures

 

·                  No teaser rate or subprime lending programs

 

·                  No option ARM loans

 

·                  No mortgage repurchase risk

 

·                  No low-doc/no-doc loans

 

·                  No Freddie Mac or Fannie Mae preferred stock

 

·                  No non-agency mortgage-backed securities

 

·                  No off-balance-sheet funding or securitizations

 

·                  No bank-owned life insurance

 

·                  No mortgage servicing rights

 

 


 

4.)                                  Dodd-Frank Act Highlights

 

·                  Directs Federal Reserve to issue rules limiting debit card interchange fees (Durbin Amendment)

 

·                  Phases out trust preferred securities as a component of tier 1 capital beginning in 2013 (Collins Amendment)

 

·                  Creates a new consumer protection bureau that will have rulemaking authority for a wide range of consumer protection laws applying to all banks and other non-bank financial services companies

 

·                  Changes standards of Federal preemption of state laws related to federally chartered institutions and their subsidiaries

 

·                  Mortgage reform including a customer’s ability to repay

 

·                  Requires publicly-traded bank holding companies with $10 billion or more in total assets to establish a Board of Directors risk committee responsible for enterprise-wide risk management practices

 

 


 

5.)                                  Diversified Revenue Base

 

At September 30, 2010

 

Good Revenue Growth +8%*

($ millions)

 

 

12/06

 

12/07

 

12/08

 

12/09

 

9/10 (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

$

538

 

$

550

 

$

594

 

$

633

 

$

525

 

Non-interest Income

 

489

 

542

 

498

 

526

 

396

 

Total

 

$

1,027

 

$

1,092

 

$

1,092

 

$

1,159

 

$

921

 

 

Strong Net Interest Margin

(Percent)

 

 

2006

 

2007

 

2008

 

2009

 

2010

 

TCF, 4.12%

 

 

 

 

 

 

 

 

 

 

 

First Quarter

 

4.25

%

4.00

%

3.84

%

3.66

%

4.20

%

Second Quarter

 

4.22

 

4.02

 

4.00

 

3.80

 

4.18

 

Third Quarter

 

4.11

 

3.90

 

3.97

 

3.92

 

4.12

 

Fourth Quarter

 

4.07

 

3.83

 

3.84

 

4.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KBW Regional Banking

 

 

 

 

 

 

 

 

 

 

 

Index Median, 3.73% 2

 

 

 

 

 

 

 

 

 

 

 

First Quarter

 

3.79

%

3.66

%

3.61

%

3.49

%

3.71

%

Second Quarter

 

3.84

 

3.69

 

3.64

 

3.57

 

3.73

 

Third Quarter

 

3.81

 

3.68

 

3.64

 

3.64

 

 

 

Fourth Quarter

 

3.70

 

3.69

 

3.65

 

3.68

 

 

 

 

Strong Mix of Fee Revenues 1

($ millions)

 

 

9/10

 

% of Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Fees and Service Charges

 

$

212

 

54

%

 

 

 

 

 

 

Card Revenue

 

83

 

21

 

 

 

 

 

 

 

Specialty Finance

 

69

 

18

 

 

 

 

 

 

 

ATM Revenue

 

23

 

6

 

 

 

 

 

 

 

Other

 

2

 

1

 

 

 

 

 

 

 

Total

 

$

389

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-Year GAP Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

At 12/31/09

 

At 9/30/10

 

 

 

 

 

 

 

Asset (Liability) Sensitive

 

(6.6

)%

2.0

%

 

 

 

 

 

 

 

*                 Twelve-month growth rate

1                   Year-to-date

2                   QTD June 30, 2010


 

6.)                                  Capital Ratios
($ millions)

 

RECORD CAPITAL LEVELS!

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

9/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Realized Common Equity

 

$

915

 

$

964

 

$

996

 

$

1,040

 

$

1,320

 

Tangible Realized Common Equity Ratio

 

6.30

%

6.09

%

6.01

%

5.86

%

7.27

% 1

 

At September 30, 2010

 

·      Other Capital Ratios

·      Total equity to total assets — 8.22%

 

·      Total tier 1 common capital — 9.45%2

 

·      Total tier 1 risk-based capital — 10.35%

 

·      Total risk-based capital — 12.73%

 

·      Tangible realized common equality has increased six consecutive quarters

 

1                   See “Reconciliation of GAAP to Non-GAAP Measures - Tangible Realized Common Equity” slide

2                   See “Reconciliation of GAAP to Non-GAAP Measures - Total Tier 1 Common Capital Ratio” slide

 


 

7.)                                  Non-Interest Expense
($ millions)

 

 

 

 

 

 

 

Change

 

 

 

 

3Q10

 

3Q09

 

$

 

%

 

 

 

Compensation and employee benefits

 

$

90.3

 

$

90.7

 

$

(.4

)

(.4

)%

 

 

Occupancy and equipment

 

32.1

 

31.6

 

.5

 

1.5

 

 

 

FDIC premiums

 

5.5

 

5.1

 

.4

 

7.9

 

 

 

Advertising and marketing

 

3.4

 

4.8

 

(1.4

)

(29.6

)

 

 

Deposit account premiums

 

3.3

 

7.5

 

(4.2

)

(55.3

)

 

 

Other

 

39.4

 

34.7

 

4.7

 

13.7

 

 

 

Core operating expenses

 

174.0

 

174.4

 

(.4

) 1

(.2

) 1

 

 

Operating lease depreciation

 

9.0

 

3.7

 

5.3

 

140.1

 

 

 

Foreclosed real estate and repossessed assets, net

 

9.6

 

8.5

 

1.1

 

13.3

 

 

 

Other credit costs, net

 

(.8

)

3.7

 

(4.5

)

N.M.

 

 

 

Total non-interest expense

 

$

191.8

 

$

190.3

 

$

1.5

 

.8

%

 

 

 

1                   Reduction is net of a $3.8 million increase in core operating expenses due to continued expansion of TCF Inventory Finance.

N.M. - Not meaningful

 

 


 

8.)                                  Strong Deposit Franchise
Quarterly Average Balances
($ millions)

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

9/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

4,141

 

$

3,981

 

$

3,914

 

$

4,116

 

$

4,342

 

Savings

 

2,321

 

2,596

 

2,861

 

5,231

 

5,447

 

Money Market

 

594

 

598

 

625

 

672

 

654

 

Certificates of Deposit

 

2,471

 

2,307

 

2,449

 

1,367

 

1,006

 

Total

 

$

9,527

 

$

9,482

 

$

9,849

 

$

11,386

 

$

11,449

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rate 1:

 

2.33

%

2.29

%

1.51

%

.74

%

.48

%

 

1                   Quarter-to-date (annualized)

 


 

9.)                                  Deposit Strategies

 

·                  Earn a significant portion of our profits from the deposit side of the bank

 

·                  Emphasize great retail branch locations in densely populated suburban/metro markets

 

·                  Accumulate a large number of low-cost core accounts by offering convenient, competitive and diversified products and services

 

·                  Low-cost checking accounts are the anchor account used to build additional customer relationships

 

·                  Convenience oriented - open longer hours, 7 days a week

 


 

10.)                           Significant Liquidity & Borrowing Capacity

 

At September 30, 2010

 

·                  TCF has unused, secured borrowing capacity from the following sources:

 

·                  Federal Home Loan Bank of Des Moines - $2 billion

 

·                  Federal Reserve Discount Window - $529 million

 

·                  Balance of $109.6 million at the Federal Reserve (asset liquidity)

 


 

11.)                           Banking Fees & Other Revenue 1
($ millions)

 

 

 

2006

 

2007

 

2008

 

2009

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

 

$

92

 

$

94

 

$

96

 

$

90

 

$

100

 

Second Quarter

 

104

 

106

 

103

 

112

 

115

 

Third Quarter

 

105

 

107

 

107

 

111

 

103

 

Fourth Quarter

 

99

 

106

 

100

 

109

 

—

 

Total

 

$

400

 

$

413

 

$

406

 

$

422

 

$

318

 

 

1                   Consisting of fees and service charges, card revenue and ATM revenue

 


 

12.)                           Card Revenue +5%*
($ millions)

 

 

 

2006

 

2007

 

2008

 

2009

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

 

$

21

 

$

23

 

$

25

 

$

25

 

$

27

 

Second Quarter

 

23

 

25

 

27

 

27

 

29

 

Third Quarter

 

24

 

26

 

26

 

26

 

27

 

Fourth Quarter

 

24

 

25

 

25

 

27

 

—

 

Total

 

$

92

 

$

99

 

$

103

 

$

105

 

$

83

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Volume:

 

$

6,465

 

$

6,949

 

$

7,280

 

$

7,308

 

$

5,721

   1

Average Interchange Rate:

 

1.36

%

1.35

%

1.34

%

1.34

%

1.38

%1

 

At September 30, 2010

 

·      11th largest issuer of Visa Classic debit cards

 

·      12th largest issuer of Visa Commercial debit cards

 

·      $5.7 billion in sales volume, up 5.5% 1

 

·      21.9 transactions per month on active cards, up 6.3% 1

 

·      Interchange fees paid by merchants

 

*                 Twelve-month growth rate

1                   Year-to-date

 


 

13.)                           Durbin Amendment Lawsuit

 

·                  On October 12, 2010, TCF filed a lawsuit challenging the constitutionality of the Durbin Amendment of the Dodd-Frank Act

 

·                  Amendment orders Federal Reserve to enact regulations that strictly limit the amount of interchange fees banks can charge retailers on debit card transactions

·                  TCF’s current average interchange rate is 1.38%

·                  Federal Reserve to set rate based only on incremental processing fees and specifically excludes other costs

 

·                  Challenge of constitutionality:

·                  Due Process - price cap prevents TCF from earning a fair rate of return on its invested capital

·                  Equal Protection - only applies to banks with $10 billion or more in total assets; 99% of all U.S. banks and 48% of U.S. branches are exempt

·                  Takings Clause - taking of TCF property without just compensation

 


 

14.)                           Stable Loan Growth

($ millions)

 

 

 

Diverse Products and Geographies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

9/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Lending

 

$

6,717

 

$

7,274

 

$

7,364

 

$

7,332

 

$

7,280

 

Commercial Lending

 

2,943

 

3,116

 

3,491

 

3,719

 

3,663

 

Leasing and Equipment Finance

 

1,818

 

2,104

 

2,486

 

3,071

 

3,158

 

Inventory Finance

 

—

 

—

 

5

 

469

 

796

 

Total

 

$

11,478

 

$

12,494

 

$

13,346

 

$

14,591

 

$

14,897

 

 


 

15.)                           Commercial Lending

($ millions)

 

 

 

Secured Lending Philosophy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

9/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate

 

$

2,391

 

$

2,558

 

$

2,984

 

$

3,269

 

$

3,323

 

Commercial Business

 

552

 

558

 

507

 

450

 

340

 

Total

 

$

2,943

 

$

3,116

 

$

3,491

 

$

3,719

 

$

3,663

 

 

At September 30, 2010

·                  Commercial real estate — $3.3 billion

·                  26% retail services

·                  20% apartment loans

·                  19% office buildings

·                  14% industrial buildings

·                  7% hotels and motels

·                  2% residential home builders

 

·                  Commercial business — $340 million

 

·                  Commercial highlights

·                  5.58% average yield

·                  86% fixed rate, 14% variable rate

·                  Over 60-day delinquency rate .04% 1

·      Net charge-offs:

 

2010

 

2009

 

2008

 

 

 

 

 

1.07% 2

 

1.24%

 

.54%

 

 

 

·                  Approximately 99% of all commercial loans secured

·                  CRE location mix: 93% TCF Banking Markets, 7% Other

·                  Michigan exposure is $778 million, down 8.4% from September 30, 2009

 

1                   Excludes non-accrual loans

2                   Annualized

 


 

16.)                           Leasing & Equipment Finance 1
($ millions)

 

 

 

Growth Opportunities Still Exist

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

9/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing and Equipment Finance

 

$

1,899

 

$

2,175

 

$

2,545

 

$

3,177

 

$

3,240

 

 

At September 30, 2010

 

·                  13th largest bank-affiliated leasing company and 29th largest equipment finance/leasing company in the U.S.

 

·                  Diverse equipment types

·                  19% specialty vehicles, 19% manufacturing, 14% medical, 11% construction

 

·                  6.50% average yield

 

·                  Over 60-day delinquency rate .17% 2

 

·                  Delinquencies have decreased five consecutive quarters

 

·                  Non-accrual loans and leases have decreased two consecutive quarters

 

·      Net charge-offs:

 

2010

 

2009

 

2008

 

 

 

 

 

1.01% 3

 

.97%

 

.50%

 

 

 

 

·                  Uninstalled backlog of $359.7 million

 

·                  Unguaranteed residuals of only $109.4 million, or 3.5% of loans and leases

 

1                   Includes operating leases ($82.2 million at September 30, 2010)

2                   Excludes non-accrual loans and leases and acquired portfolios

3                   Annualized

 


 

17.)         TCF Inventory Finance

($ millions)

 

 

 

Experienced and Seasoned
Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/09

 

12/09

 

3/10

 

6/10

 

9/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronics & Appliances

 

  $

128.4

 

$

122.3

 

$

119.6

 

$

122.4

 

$

120.1

 

Lawn & Garden

 

96.4

 

346.5

 

580.8

 

521.8

 

462.9

 

Power Sports

 

—

 

—

 

—

 

—

 

169.8

 

Other

 

—

 

—

 

—

 

—

 

42.8

 

Total

 

  $

224.8

 

$

468.8

 

$

700.4

 

$

644.2

 

$

795.6

 

 

At September 30, 2010

 

·                  Inventory floorplan finance business with a focus on lawn and garden products, consumer electronics, household appliances and power sports

 

·                  Operates in the U.S. and Canada

 

·                  229 employees

 

·                  100% variable rate receivables

 

·                  Average yield 7.45%

 

 

·

Net charge-offs:

2010

 

2009

 

 

 

 

 

 

.12% 1

 

.10%

 

 

 

 

·                  Credit support from equipment manufacturers

 

·                  Credit risk spread across 8,846 active dealers

 

1    Annualized

 


 

18.)         TCF Inventory Finance Opportunities

 

GRAPHIC

 

·         Continued growth through recent acquisitions:

·                  August 2010 - Assumed Arctic Cat Canadian floorplan financing program

·                  August 2010 - Assumed E-Z-GO floorplan financing program

·                  August 2009 - Created Red Iron Acceptance LLC, a joint venture with The Toro Company

 


 

19.)         Wholesale Banking 1 Credit Quality

Quarter-to-Date

($ millions)

 

 

 

12/09

 

3/10

 

6/10

 

9/10

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs 2:

 

 

 

 

 

 

 

 

 

Commercial

 

.79

%

.85

%

.98

%

1.40

%

Specialty finance

 

.91

%

.79

%

.82

%

.96

%

Total wholesale banking

 

.84

%

.82

%

.90

%

1.18

%

Over 60-day delinquencies 3

 

 

 

 

 

 

 

 

 

Commercial

 

—

%

—

%

.22

%

.04

%

Specialty finance

 

.65

%

.54

%

.39

%

.26

%

Total wholesale banking

 

.32

%

.27

%

.31

%

.15

%

Non-accrual loans and leases

 

$

157.0

 

$

157.4

 

$

179.1

 

$

203.2

 

Other real estate owned and repossessed assets

 

$

 56.0

 

$

 51.7

 

$

 48.3

 

$

 60.1

 

 

1                   Includes commercial banking and specialty finance

2                   Annualized

3                   Excludes non-accrual loans and leases

 


 

20.)         Classified Wholesale Loans & Leases 1

($ millions)

 

 

 

9/09

 

12/09

 

3/10

 

6/10

 

9/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified Wholesale Loans and Leases

 

$

329

 

$

370

 

$

435

 

$

439

 

$

429

 

 

At September 30, 2010

 

·       By type

·        Commercial real estate — $354.3 million

·      Up 22.7% from December 31, 2009

·        Commercial business — $29.8 million

·      Down 29.9% from December 31, 2009

·        Leasing and equipment finance — $38.1 million

·      Down 2.4% from December 31, 2009

·        Inventory finance — $6.5 million

 

·       Over 60-day delinquency rate 1.29% 2, down from 2.15% 2 at June 30, 2010

 

1    See “Source References & Footnotes” slide for a detailed description of classified wholesale loans and leases

2    As a percent of classified wholesale loans and leases


 

21.)         Consumer Real Estate

($ millions)

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

9/10

 

 

 

 

 

 

 

 

 

 

 

 

 

First Mortgages

 

$

4,409

 

$

4,707

 

$

4,882

 

$

4,962

 

$

4,952

 

Junior Liens

 

2,101

 

2,344

 

2,420

 

2,319

 

2,285

 

Total

 

$

6,510

 

$

7,051

 

$

7,302

 

$

7,281

 

$

7,237

 

 

At September 30, 2010

 

·   74% first lien positions, average loan amount of $123,499

 

·   26% junior lien positions, average loan amount of $40,747

 

·   68% fixed rate, 32% variable rate

 

·    $2 billion, or 89%, of variable-rate consumer real estate loans were at their contractual interest rate floor at October 1, 2010

 

·   Average home value of $254,056 1

 

·   5.99% average yield

 

·   Over 60-day delinquency rate 1.43% 2

 

·

Net charge-offs:

 

2010

 

2009

 

2008

 

 

 

 

1.72%3

 

1.46%

 

.86%

 

 

·   Average FICO score of the retail lending operation at origination — 726

 

·   Average updated FICO score of the retail lending operation — 725

 

·   Michigan exposure is $1.1 billion

 

·   $2.2 billion of loans originated since January 1, 2008 with 2010 net charge-offs of .41%3

 

1    Based on value at origination

2    Excludes non-accrual loans

3    Annualized


 

22.)                           Consumer Real Estate Credit Quality
Quarter-to-Date
($ millions)

 

 

 

12/09

 

3/10

 

6/10

 

9/10

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs 1:

 

 

 

 

 

 

 

 

 

First mortgage lien

 

1.34

%

1.32

%

1.36

%

1.63

%

Junior lien

 

2.54

%

2.25

%

2.20

%

2.50

%

Total

 

1.73

%

1.61

%

1.63

%

1.91

%

Over 60-day delinquencies2

 

1.16

%

1.45

%

1.51

%

1.43

%

Non-accrual loans

 

$

139.2

 

$

147.9

 

$

151.0

 

$

166.5

 

Other real estate owned

 

$

67.0

 

$

65.3

 

$

81.9

 

$

88.3

 

Accruing restructured loans

 

$

252.5

 

$

285.6

 

$

297.1

 

$

315.6

 

 

1      Annualized

2      Excludes non-accrual loans

 


 

23.)                           Restructured Consumer Real Estate Loans

 

·                  Loans modified to assist customers with their financial hardship by lowering their monthly loan payments for up to 18 months

 

·                  In the third quarter of 2010, modified $28.7 million of consumer real estate loans that are considered restructured loans and continue to accrue interest

 

·                  Reserved for based on present value of expected cash flows - $34 million, or 10.8% at September 30, 2010

 

·                  The over 60-day delinquency rate was 5.5% at September 30, 2010

 

·                  TCF’s current modification program started in August 2009 and represents 80.1% of the September 30, 2010 balance of accruing restructured loans

 


 

24.)                           Home Price Trends

 

 

 

S&P/Case-Shiller® Home Price Index1

 

 

 

 

 

July

 

July

 

July

 

July

 

Last Year

 

 

 

2007

 

2008

 

2009

 

2010

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Minneapolis

 

163.6

 

141.9

 

117.9

 

125.3

 

6.3

%

Chicago

 

165.3

 

148.6

 

127.4

 

125.1

 

(1.7

)

Detroit

 

111.4

 

92.7

 

69.8

 

70.7

 

1.3

 

Denver

 

137.2

 

130.5

 

126.6

 

126.5

 

(.1

)

Phoenix

 

209.7

 

148.4

 

106.2

 

109.8

 

3.4

 

 

1 The S&P/Case-Shiller Home Price Indices track the price path of typical single-family homes located in various metropolitan areas. Each index combines matched price pairs for thousands of individual houses from the available universe of arms-length sales data. The indices have a base value of 100 in January 2000; thus, for example, a current index value of 150 translates to a 50% appreciation rate since January 2000 for a typical home located in the given market.  Data is seasonally adjusted. Source: Standard & Poor’s

 


 

25.)                           Loan & Lease Geographic Diversification
($000s)

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

Consumer

 

Real Estate

 

Leasing and

 

 

 

 

 

 

 

Real Estate

 

and Commercial

 

Equipment

 

Inventory

 

 

 

At Sept. 30, 2010:

 

and Other

 

Business

 

Finance

 

Finance

 

Total

 

Minnesota

 

$

2,845,194

 

$

890,673

 

$

80,255

 

$

14,444

 

$

3,830,566

 

Illinois

 

2,202,807

 

910,979

 

107,828

 

25,297

 

3,246,911

 

Michigan

 

1,072,748

 

777,694

 

113,759

 

25,061

 

1,989,262

 

Wisconsin

 

484,230

 

562,196

 

54,737

 

23,138

 

1,124,301

 

Colorado

 

563,349

 

134,180

 

47,321

 

5,387

 

750,237

 

California

 

2,928

 

18,284

 

404,234

 

19,346

 

444,792

 

Texas

 

1,802

 

2,782

 

252,850

 

37,631

 

295,065

 

Florida

 

3,706

 

58,475

 

183,748

 

34,090

 

280,019

 

Ohio

 

3,461

 

53,740

 

128,457

 

33,314

 

218,972

 

New York

 

3,555

 

3,881

 

173,411

 

28,603

 

209,450

 

Canada

 

—

 

—

 

4,263

 

191,439

 

195,702

 

Indiana

 

24,362

 

68,005

 

60,658

 

21,249

 

174,274

 

Arizona

 

54,426

 

36,165

 

71,885

 

6,892

 

169,368

 

Other

 

17,886

 

145,999

 

1,474,066

 

329,731

 

1,967,682

 

Total

 

$

7,280,454

 

$

3,663,053

 

$

3,157,472

 

$

795,622

 

$

14,896,601

 

 


 

26.)                           Allowance for Loans and Leases
($ millions)

 

 

 

12/06

 

12/07

 

12/08

 

12/09

 

9/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Loan & Lease Losses

 

$

58.5

 

$

80.9

 

$

172.4

 

$

244.5

 

$

253.1

 

Net Charge-offs

 

.16

%

.29

%

.78

%

1.34

%

1.37

% 1

 

 

 

 

 

 

 

 

 

 

 

 

Allowance as a % of
period end loans & leases:

 

.51

%

.65

%

1.29

%

1.68

%

1.70

%

Coverage ratio:

 

3.3

X

2.3

X

1.7

X

1.3

X

1.3

X 1

 

1      Annualized


 

27.)                           Credit Trends
(Percent)

 

 

 

12/08

 

3/09

 

6/09

 

9/09

 

12/09

 

3/10

 

6/10

 

9/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Charge-offs 1

 

1.02

%

1.04

%

1.43

%

1.52

%

1.35

%

1.22

%

1.30

%

1.58

%

Over 60-day Delinquencies 2

 

.60

%

.60

%

.72

%

.81

%

.69

%

.82

%

.87

%

.78

%

 

1      Annualized

2      Excludes acquired portfolios

 


 

28.)                           Non-Performing Assets
($ millions)

 

 

 

9/09

 

12/09

 

3/10

 

6/10

 

9/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual Loans & Leases

 

$

268.8

 

$

296.3

 

$

305.4

 

$

330.2

 

$

369.8

 

Properties in Foreclosure

 

41.5

 

59.4

 

56.9

 

64.4

 

76.0

 

Properties Owned

 

52.7

 

46.3

 

44.5

 

53.5

 

60.2

 

Total

 

$

363.0

 

$

402.0

 

$

406.8

 

$

448.1

 

$

506.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential properties owned
Number:

 

298

 

298

 

350

 

410

 

480

 

 

 


 

29).                           Net Charge-offs 1 vs. Other Banks
(Percent)

 

 

 

2006

 

2007

 

2008

 

2009

 

2010 2

 

 

 

 

 

 

 

 

 

 

 

 

 

TCF

 

.16

%

.29

%

.78

%

1.34

%

1.37

%

Bank of America

 

.68

 

.81

 

1.72

 

3.42

 

3.66

 

US Bancorp

 

.38

 

.52

 

1.07

 

2.02

 

2.20

 

Wells Fargo

 

.64

 

.93

 

1.84

 

2.10

 

2.28

 

JPMorgan Chase

 

.67

 

.95

 

1.67

 

3.36

 

3.50

 

Fifth Third

 

.43

 

.59

 

3.16

 

3.10

 

3.32

 

PNC

 

.27

 

.31

 

.72

 

1.60

 

1.81

 

 

1      As a percent of average loans & leases

2      YTD as of September 30, 2010 (annualized)

 


 

30.)                           Non-Accrual Loans & Leases
($ millions)

 

 

 

 

 

 

 

Leasing and

 

 

 

 

 

 

 

 

 

 

 

Equipment

 

Inventory

 

 

 

 

 

Consumer

 

Commercial

 

Finance

 

Finance

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2010

 

$

151.1

 

$

129.3

 

$

48.8

 

$

1.0

 

$

330.2

 

Additions

 

70.2

 

62.4

 

10.1

 

1.2

 

143.9

 

Charge-offs

 

(15.1

)

(13.1

)

(7.8

)

—

 

(36.0

)

Transfers to other assets

 

(21.7

)

(13.8

)

(3.9

)

(.1

)

(39.5

)

Return to accrual status

 

(14.7

)

—

 

(.3

)

(.8

)

(15.8

)

Payments received

 

(2.6

)

(6.2

)

(6.5

)

(.4

)

(15.7

)

Other, net

 

(.6

)

3.3

 

—

 

—

 

2.7

 

Balance at September 30, 2010

 

$

166.6

 

$

161.9

 

$

40.4

 

$

.9

 

$

369.8

 

Net change

 

$

15.5

 

$

32.6

 

$

(8.4

)

$

(.1

)

$

39.6

 

 


 

31.)                           Summary of Non-Accrual Loans
($ millions)

 

 

 

 

 

Charge-offs and

 

 

 

 

 

 

 

Contractual

 

Allowance

 

Net

 

 

 

At Sept. 30, 2010:

 

Balance

 

Recorded

 

Exposure

 

Impairment 1

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

$

208.4

 

$

43.1

 

$

165.3

 

   20.7%

 

Commercial

 

202.4

 

56.8

 

145.6

 

28.1

 

Leasing and equipment finance

 

40.5

 

11.6

 

28.9

 

28.6

 

Inventory finance

 

.8

 

.2

 

.6

 

19.5

 

Total

 

$

452.1

 

$

111.7

 

$

340.4

 

24.7

 

 

1      Represents the ratio of charge-offs and allowance recorded to the contractual loan balances prior to non-accrual status


 

32.)                           Summary of Real Estate Owned
($ millions)

 

 

 

Contractual Loan

 

 

 

 

 

 

 

 

 

Balance Prior to

 

Charge-offs and

 

 

 

 

 

 

 

Non-performing

 

Writedowns

 

Other Real Estate

 

 

 

At Sept. 30, 2010:

 

Status

 

Recorded

 

Owned Balance

 

Impairment 1

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

$

120.2

 

$

31.9

 

$

88.3

 

   26.5%

 

Commercial

 

76.9

 

29.1

 

47.8

 

37.8

 

Total

 

$

197.1

 

$

61.0

 

$

136.1

 

30.9

 

 

1                   Represents the ratio of charge-offs and writedowns recorded to the contractual loan balances prior to non-performing status

 


 

33.)                           Real Estate Owned
($ millions)

 

 

 

Consumer

 

Commercial

 

Total

 

 

 

 

 

 

 

 

 

Balance at June 30, 2010

 

$

81.9

 

$

36.0

 

$

117.9

 

Transferred in

 

27.7

 

13.8

 

41.5

 

Sales

 

(17.4

)

(1.3

)

(18.7

)

Writedowns

 

(3.2

)

(.6

)

(3.8

)

Other, net

 

(.7

)

(.1

)

(.8

)

Balance at September 30, 2010

 

$

88.3

 

$

47.8

 

$

136.1

 

Net change

 

$

6.4

 

$

11.8

 

$

18.2

 

 


 

34.)           Well-Positioned for Future Success

 

·                  Experienced and tenured management team

 

·                  “New” industry approach of portfolio lending funded with retail deposits has been a part of TCF’s business philosophy for many years

 

·                  New management structure (Wholesale, Retail and Treasury & Support Services) improves execution, reduces overhead and increases our ability to quickly react to changes and new opportunities

 

·                  Strong wholesale banking management team will enable profitable growth

 

·                  Core profitability is still very high when credit costs normalize


 

35.)                           Cautionary Statement

 

This presentation and other reports issued by the Company, including reports filed with the SEC, contain “forward-looking” statements that deal with future results, plans or performance. In addition, TCF’s management may make such statements orally to the media, or to securities analysts, investors or others. Forward-looking statements deal with matters that do not relate strictly to historical facts. TCF’s future results may differ materially from historical performance and forward-looking statements about TCF’s expected financial results or other plans and are subject to a number of risks and uncertainties. These include, but are not limited to the following:

 

* Adverse Economic or Business Conditions, Credit and Other Risks.  Continued or deepening deterioration in general economic and banking industry conditions, or continued increases in unemployment in TCF’s primary banking markets; adverse economic, business and competitive developments such as shrinking interest margins, deposit outflows, deposit account attrition, or an inability to increase the number of deposit accounts; adverse changes in credit and other risks posed by TCF’s loan, lease, investment, and securities available for sale portfolios, including continuing declines in commercial or residential real estate values or changes in the allowance for loan and lease losses dictated by new market conditions or regulatory requirements; interest rate risks resulting from fluctuations in prevailing interest rates or other factors that result in a mismatch between yields earned on TCF’s interest-earning assets and the rates paid on its deposits and borrowings; foreign currency exchange risks.

* Earnings/Capital Constraints, Liquidity Risks.  Limitations on TCF’s ability to pay dividends or to increase dividends in the future because of financial performance deterioration, regulatory restrictions or limitations; increased deposit insurance premiums, special assessments or other costs related to deteriorating conditions in the banking industry,  the economic impact on banks of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Act”) and Emergency Economic Stabilization Act of 2008, as amended (“EESA”), and other regulatory reform legislation; the impact of financial regulatory reform, including the phase out of trust preferred securities in Tier 1 capital called for by the Act, or additional capital, leverage, liquidity and risk management requirements or changes in the composition of qualifying regulatory capital; adverse changes in securities markets directly or indirectly affecting TCF’s ability to sell assets or to fund its operations; diminished unsecured borrowing capacity resulting from TCF credit rating downgrades and unfavorable conditions in the credit markets that restrict or limit various funding sources; costs associated with new regulatory requirements or interpretive guidance relating to liquidity.

* Legislative and Regulatory Requirements.  New consumer protection and supervisory requirements, including the Act’s creation of a new consumer protection bureau and limits on Federal preemption for state laws that could be applied to national banks; the imposition of requirements with an adverse impact relating to TCF’s lending, loan collection and other business activities as a result of the EESA and the Act,  or other legislative or regulatory developments such as mortgage foreclosure moratorium laws or imposition of underwriting or other limitations that impact the ability to use certain variable-rate products; reduction of interchange revenue from debit card transactions resulting from the so-called Durbin Amendment (the “Amendment”) to the Act, which limits debit card interchange fees to amounts that will only allow issuers to recover incremental costs of authorization, clearance and settlement of (continued)

 


 

36.)                           Cautionary Statement (continued)

 

debit card transactions, plus possibly some costs relating to fraud prevention; impact of legislative, regulatory or other changes affecting customer account charges and fee income; changes to bankruptcy laws which would result in the loss of all or part of TCF’s security interest due to collateral value declines (so-called “cramdown” provisions); any material failure of TCF to comply with the terms of its Consent Order with the Office of the Comptroller of the Currency relating to TCF’s Bank Secrecy Act compliance, which may result in regulatory enforcement action including monetary penalties; increased health care costs resulting from recently enacted Federal health care reform legislation; adverse regulatory examinations and resulting enforcement actions or other adverse consequences such as incremental capital requirements or higher deposit insurance assessments; heightened regulatory practices, requirements or expectations, including, but not limited to, requirements related to the Bank Secrecy Act and anti-money laundering compliance activity.

* Risks Relating to New Product Introduction.  TCF has introduced a new anchor retail deposit account product that replaces TCF Totally Free Checking, and that calls for a monthly maintenance fee on accounts not meeting certain specific requirements. TCF has also implemented new regulatory requirements that prohibit financial institutions from charging NSF fees on point-of-sale and ATM transactions unless customers opt-in.  Customer acceptance of the new product changes and regulatory requirements cannot be predicted with certainty, and these changes may have an adverse impact on TCF’s ability to generate and retain accounts and on its fee revenue.

* Litigation Risks.  Results of litigation, including class action litigation concerning TCF’s lending or deposit activities including account servicing processes or fees or charges, or employment practices, and possible increases in indemnification obligations for certain litigation against Visa U.S.A. (“covered litigation”) and potential reductions in card revenues resulting from covered litigation or other litigation against Visa.

* Competitive Conditions; Supermarket Branching Risk.  Reduced demand for financial services and loan and lease products; adverse developments affecting TCF’s supermarket banking relationships or any of the supermarket chains in which TCF maintains supermarket branches. 

* Accounting, Audit, Tax and Insurance Matters.  Changes in accounting standards or interpretations of existing standards; monetary, fiscal or tax policies of the federal or state governments, including adoption of state legislation that would increase state taxes; adverse state or Federal tax assessments or findings in tax audits; lack of or inadequate insurance coverage for claims against TCF.

* Technological and Operational Matters.  Technological, computer-related or operational difficulties or loss or theft of information and the possibility that deposit account losses (fraudulent checks, etc.) may increase.

Investors should consult TCF’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K for additional important information about the Company.

 


 

37.)                           Reconciliation of GAAP to Non-GAAP Measures - Tangible Realized Common Equity1
($000s)

 

 

 

September 30, 2010

Computation of total equity to total assets:

 

 

 

Total equity

 

$

1,505,962

 

Total assets

 

$

18,313,608

 

Total equity to total assets

 

8.22

%

 

 

 

 

Computation of tangible realized common equity to tangible assets:

 

 

 

Total equity

 

$

1,505,962

 

Less: Non-controlling interest in subsidiaries

 

10,007

 

Total TCF stockholders’ equity

 

1,495,955

 

Less:

 

 

 

Accumulated other comprehensive income

 

22,458

 

Goodwill

 

152,599

 

Other intangibles

 

1,275

 

Tangible realized common equity

 

$

1,319,623

 

 

 

 

 

Total assets

 

$

18,313,608

 

Less:

 

 

 

Goodwill

 

152,599

 

Other intangibles

 

1,275

 

Tangible assets

 

$

18,159,734

 

 

 

 

 

Tangible realized common equity to tangible assets

 

7.27

%

 

1                  In contrast to GAAP-basis measures, tangible realized common equity excludes the effect of goodwill, other intangibles and accumulated other comprehensive income (loss). Management reviews tangible realized common equity as an ongoing measure and has included this information because of current interest in the industry.  The methodology for calculating tangible realized common equity may vary between companies.

 


 

 

38.)                           Reconciliation of GAAP to Non-GAAP Measures - Total Tier 1 Common Capital Ratio1
($000s)

 

 

 

September 30, 2010

Total Tier 1 risk-based capital ratio

 

 

 

Total tier 1 capital

 

$

1,447,070

 

Total risk-weighted assets

 

$

13,984,181

 

Total tier 1 risk-based capital ratio

 

10.35

%

 

 

 

 

Computation of tier 1 common capital ratio:

 

 

 

Total tier 1 capital

 

$

1,447,070

 

Less:

 

 

 

Qualifying trust preferred securities

 

115,000

 

Qualifying non-controlling interest in subsidiaries

 

10,007

 

Total tier 1 common capital

 

$

1,322,063

 

 

 

 

 

Total risk-weighted assets

 

$

13,984,181

 

Total tier 1 common capital ratio

 

9.45

%

 

1                   In contrast to GAAP-basis measures, the total tier 1 common capital ratio excludes the effect of qualifying trust preferred securities and qualifying  non-controlling interest in subsidiaries. Management reviews the total tier 1 common capital ratio as an ongoing measure and has included this information because of current interest in the industry.  The methodology for calculating total tier 1 common capital may vary between companies.

 

 


 

39.)                           Source References & Footnotes

 

Slide: Corporate Profile

36th largest U.S. bank - Ipreo; 6/30/10

23th largest branch network - SNL Financial, LC; 3Q10

5th largest in campus card relationships - CR80News; Spring 2010

11th largest issuer of Visa Classic - Visa; 2Q10; ranked by sales volume

12th largest issuer of Visa Commercial - Visa; 2Q10; ranked by sales volume

13th largest bank affiliated leasing company - The Monitor; 2010 Monitor 100

 

Slide: Diversified Revenue Base

KBW Regional Banking Index net interest margin data - KBW & SNL Financial LC; 6/30/10

 

Slide: Card Revenue

11th largest issuer of Visa Classic - Visa; 2Q10; ranked by sales volume

12th largest issuer of Visa Commercial - Visa; 2Q10; ranked by sales volume

 

Slide: Durbin Amendment Lawsuit

99% of all banks and 48% of branches are exempt - SNL Financial, LC; 6/30/10

 

Slide: Leasing and Equipment Finance

13th largest bank-affiliated leasing company - The Monitor; 2010 Monitor Bank 40

29th largest equipment finance/leasing company - The Monitor; 2010 Monitor 100

 

Slide: Classified Wholesale Loans & Leases

Classified wholesale loans and leases excludes non-accrual loans and leases, over 90-day delinquent loans and leases, real estate owned, and repossessed assets and includes commercial loans and leases primarily classified for regulatory purposes as substandard and reflect the distinct possibility, but not probability, that they will become non-performing or that TCF will not be able to collect all amounts due according to the contractual terms of the loan or lease agreement

 

Slide: Home Price Trends

Home price data - S&P/Case-Shiller Home Price Index

 

Slide: Net Charge-offs vs. Other Banks

Net charge-off data - SNL Financial LC; 9/30/10

 

TCF FINANCIAL CORP Reports