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

Attached files

file	filename
8-K - 8-K - TCF FINANCIAL CORP	tcf93016form8-kearningsrel.htm
EX-99.2 - EXHIBIT 99.2 - TCF FINANCIAL CORP	a3q16earningspresentatio.htm

Exhibit 99.1

NEWS RELEASE

TCF Financial Corporation • 200 Lake Street East • Wayzata MN 55391

FOR IMMEDIATE RELEASE

Contact:

Mark Goldman (952) 475-7050 news@tcfbank.com (Media)

Jason Korstange (952) 745-2755 investor@tcfbank.com (Investors)

TCF REPORTS QUARTERLY NET INCOME OF $56.3 MILLION, OR 31 CENTS PER SHARE

THIRD QUARTER HIGHLIGHTS

- Revenue of $331.7 million, up 4.5 percent from the third quarter of 2015

- Non-interest expense of $228.9 million, up 3.0 percent from the third quarter of 2015

- Efficiency ratio of 69.0 percent, down 101 basis points from the third quarter of 2015

- Period-end loans and leases of $17.4 billion, up 1.1 percent from September 30, 2015

- Loan and lease originations of $4.2 billion, up 8.7 percent from the third quarter of 2015

- Average deposits of $17.1 billion, up 7.3 percent from the third quarter of 2015

- Non-accrual loans and leases of $190.0 million, down 7.8 percent from September 30, 2015

- Net charge-offs as a percentage of average loans and leases of 0.26 percent, up 3 basis points from the third quarter of 2015

- Earnings per share of 31 cents, up 6.9 percent from the third quarter of 2015



Summary of Financial Results																				Table 1
										Percent Change
(Dollars in thousands, except per-share data)	3Q			2Q			3Q			3Q16 vs		3Q16 vs		YTD			YTD			Percent
	2016			2016			2015			2Q16		3Q15		2016			2015			Change
Net income attributable to TCF	$	56,292		$	57,694		$	52,575		(2.4	)%	7.1	%	$	162,032		$	144,631		12.0	%
Net interest income	212,018			212,984			205,270			(0.5	)	3.3		636,660			614,719			3.6
Diluted earnings per common share	0.31			0.31			0.29			—		6.9		0.88			0.78			12.8

Financial Ratios⁽¹⁾
Return on average assets	1.12		%	1.14		%	1.10		%					1.07		%	1.02		%
Return on average common equity	9.59			10.09			9.76							9.39			9.07
Return on average tangible common equity⁽²⁾	10.78			11.38			11.12							10.58			10.37
Net interest margin	4.34			4.35			4.40							4.35			4.45
Net charge-offs as a percentage of average loans and leases	0.26			0.23			0.23							0.25			0.31

(1) Annualized.
(2) See "Reconciliation of GAAP to Non-GAAP Financial Measures" table.

WAYZATA, Minn. (October 21, 2016) - TCF Financial Corporation ("TCF" or the "Company") (NYSE: TCB) today reported net income of $56.3 million for the third quarter of 2016, compared with $52.6 million for the third quarter of 2015 and $57.7 million for the second quarter of 2016. Diluted earnings per common share was 31 cents for the third quarter of 2016, compared with 29 cents for the third quarter of 2015 and 31 cents for the second quarter of 2016.

TCF reported net income of $162.0 million for the first nine months of 2016, compared with $144.6 million for the same period in 2015. Diluted earnings per common share was 88 cents for the first nine months of 2016, compared with 78 cents for the same period in 2015.

"TCF reported another good quarter of financial results demonstrating consistent performance and revenue growth year-over-year," said Craig R. Dahl, president and chief executive officer. "During the third quarter, loan and lease originations remained strong, credit stabilization continued, deposit costs remained flat and capital levels increased – all of which position us for consistent profitability and continued value creation for shareholders.

"Despite a slow growth economy and persistent rate headwinds, we successfully achieved profitable growth and positive operating leverage, while at the same time reinvesting in our businesses to enhance our ability to meet the evolving needs of our customers. I am encouraged by the enterprise-wide commitment TCF has shown toward serving our customers while executing on our four strategic pillars of diversification, profitable growth, operating leverage and core funding."



Revenue

Total Revenue																				Table 2
										Percent Change
(Dollars in thousands)	3Q			2Q			3Q			3Q16 vs		3Q16 vs		YTD			YTD				Percent
	2016			2016			2015			2Q16		3Q15		2016			2015				Change
Net interest income	$	212,018		$	212,984		$	205,270		(0.5	)%	3.3	%	$	636,660		$	614,719			3.6	%
Non-interest income:
Fees and service charges	35,093			34,622			36,991			1.4		(5.1	)	102,532			107,258				(4.4	)
Card revenue	13,747			14,083			13,803			(2.4	)	(0.4	)	41,193			40,606				1.4
ATM revenue	5,330			5,288			5,739			0.8		(7.1	)	15,639			16,401				(4.6	)
Subtotal	54,170			53,993			56,533			0.3		(4.2	)	159,364			164,265				(3.0	)
Gains on sales of auto loans, net	11,624			10,143			10,423			14.6		11.5		33,687			27,444				22.7
Gains on sales of consumer real estate loans, net	13,528			10,839			7,143			24.8		89.4		33,751			27,860				21.1
Servicing fee income	10,393			9,502			8,049			9.4		29.1		28,778			22,607				27.3
Subtotal	35,545			30,484			25,615			16.6		38.8		96,216			77,911				23.5
Leasing and equipment finance	28,289			31,074			27,165			(9.0	)	4.1		87,850			75,774				15.9
Other	2,270			2,405			3,070			(5.6	)	(26.1	)	7,518			8,657				(13.2	)
Fees and other revenue	120,274			117,956			112,383			2.0		7.0		350,948			326,607				7.5
Gains (losses) on securities, net	(600		)	—			(131		)	N.M.		N.M.		(716		)	(268		)		(167.2	)
Total non-interest income	119,674			117,956			112,252			1.5		6.6		350,232			326,339				7.3
Total revenue	$	331,692		$	330,940		$	317,522		0.2		4.5		$	986,892		$	941,058			4.9

Net interest margin⁽¹⁾	4.34		%	4.35		%	4.40		%					4.35		%	4.45		%
Total non-interest income as a percentage of total revenue	36.1			35.6			35.4							35.5			34.7

N.M. Not Meaningful.
(1) Annualized.

Net Interest Income

•

Net interest income for the third quarter of 2016 increased $6.7 million, or 3.3 percent, compared with the third quarter of 2015. The increase was primarily due to higher interest income from inventory finance loans and higher average balances of loans and leases held for sale, securities available for sale, auto finance loans, and leasing and equipment finance loans and leases. These increases were partially offset by lower interest income from consumer real estate first mortgage lien loan balances and higher interest expense on certificates of deposit.


•	Net interest margin for the third quarter of 2016 was 4.34 percent, compared with 4.40 percent for the third quarter of 2015. The decrease was primarily due to higher average interest rates resulting from promotions for certificates of deposit.

Non-interest Income


•	Fees and service charges for the third quarter of 2016 were $35.1 million, down $1.9 million, or 5.1 percent, from the third quarter of 2015. The decrease was primarily due to ongoing consumer behavior changes, as well as higher average checking account balances per customer.


•	Gains on sales of auto loans, net for the third quarter of 2016 were $11.6 million, up $1.2 million, or 11.5 percent, from the third quarter of 2015 and up $1.5 million, or 14.6 percent, from the second quarter of 2016. TCF sold $614.9 million, $436.6 million and $533.4 million of auto loans during the third quarters of 2016 and 2015 and the second quarter of 2016, respectively.

•

Gains on sales of consumer real estate loans, net for the third quarter of 2016 were $13.5 million, up $6.4 million, or 89.4 percent, from the third quarter of 2015 and up $2.7 million, or 24.8 percent, from the second quarter of 2016. TCF sold $437.1 million, $246.0 million and $344.6 million of consumer real estate loans during the third quarters of 2016 and 2015 and the second quarter of 2016, respectively.

•

Servicing fee income was $10.4 million on $5.1 billion of average loans and leases serviced for others for the third quarter of 2016, compared with $8.0 million on $4.0 billion for the third quarter of 2015 and $9.5 million on $4.7 billion for the second quarter of 2016. The increases from both periods were primarily due to the cumulative effect of the increase in the portfolio of auto and consumer real estate loans sold with servicing retained by TCF.



Loans and Leases

Period-End and Average Loans and Leases															Table 3
							Percent Change
(Dollars in thousands)	3Q		2Q		3Q		3Q16 vs		3Q16 vs		YTD		YTD		Percent
	2016		2016		2015		2Q16		3Q15		2016		2015		Change
Period-End:
Consumer real estate:
First mortgage lien	$	2,313,044	$	2,409,320	$	2,724,594	(4.0	)%	(15.1	)%
Junior lien	2,674,280		2,677,522		2,889,120		(0.1	)	(7.4	)
Total consumer real estate	4,987,324		5,086,842		5,613,714		(2.0	)	(11.2	)
Commercial	3,150,199		3,096,046		3,112,325		1.7		1.2
Leasing and equipment finance	4,236,224		4,120,359		3,873,581		2.8		9.4
Inventory finance	2,261,086		2,334,893		2,153,385		(3.2	)	5.0
Auto finance	2,731,900		2,812,807		2,427,367		(2.9	)	12.5
Other	17,886		20,890		20,674		(14.4	)	(13.5	)
Total	$	17,384,619	$	17,471,837	$	17,201,046	(0.5	)	1.1

Average:
Consumer real estate:
First mortgage lien	$	2,353,097	$	2,464,692	$	2,793,129	(4.5	)%	(15.8	)%	$	2,463,497	$	2,934,536	(16.1	)%
Junior lien	2,782,479		2,794,035		2,813,253		(0.4	)	(1.1	)	2,820,319		2,693,623		4.7
Total consumer real estate	5,135,576		5,258,727		5,606,382		(2.3	)	(8.4	)	5,283,816		5,628,159		(6.1	)
Commercial	3,092,115		3,109,946		3,118,024		(0.6	)	(0.8	)	3,119,952		3,139,969		(0.6	)
Leasing and equipment finance	4,147,488		4,032,112		3,821,590		2.9		8.5		4,057,755		3,767,954		7.7
Inventory finance	2,272,409		2,564,648		2,036,054		(11.4	)	11.6		2,422,979		2,145,535		12.9
Auto finance	2,670,272		2,751,679		2,361,057		(3.0	)	13.1		2,708,470		2,198,983		23.2
Other	9,252		9,585		9,833		(3.5	)	(5.9	)	9,617		10,721		(10.3	)
Total	$	17,327,112	$	17,726,697	$	16,952,940	(2.3	)	2.2		$	17,602,589	$	16,891,321	4.2

•

Period-end loans and leases were $17.4 billion at September 30, 2016, an increase of $0.2 billion, or 1.1 percent, compared with September 30, 2015 and a decrease of $0.1 billion, or 0.5 percent, compared with June 30, 2016. Average loans and leases were $17.3 billion for the third quarter of 2016, an increase of $0.4 billion, or 2.2 percent, compared with the third quarter of 2015 and a decrease of $0.4 billion, or 2.3 percent, compared with the second quarter of 2016.

The increases from September 30, 2015 were primarily due to an increase in the leasing and equipment finance portfolio due to strong originations, the maturation of the business model in auto finance and the expansion of the number of active dealers in inventory finance, partially offset by run-off in the consumer real estate first mortgage lien portfolio. The decrease from the second quarter of 2016 for average loans and leases was primarily due to the seasonal decrease in the inventory finance portfolio and run-off in the consumer real estate first mortgage lien portfolio, partially offset by an increase in the leasing and equipment finance portfolio due to strong originations.


•	Loan and lease originations were $4.2 billion for the third quarter of 2016, an increase of $0.3 billion, or 8.7 percent, compared with the third quarter of 2015 and consistent with the second quarter of 2016. The increase from the third quarter of 2015 was primarily due to increased originations in auto finance, inventory finance and consumer real estate.



Credit Quality

Credit Trends																	Table 4
																Change
(Dollars in thousands)	3Q			2Q			1Q			4Q			3Q			3Q16 vs	3Q16 vs
	2016			2016			2016			2015			2015			2Q16	3Q15
Over 60-day delinquencies as a percentage of period-end loans and leases⁽¹⁾	0.11		%	0.12		%	0.10		%	0.11		%	0.17		%	(1) bps	(6) bps
Net charge-offs as a percentage of average loans and leases⁽²⁾	0.26			0.23			0.27			0.29			0.23			3	3
Non-accrual loans and leases and other real estate owned	$	223,759		$	232,334		$	241,090		$	250,448		$	264,694		(3.7)%	(15.5)%
Provision for credit losses	13,894			13,250			18,842			17,607			10,018			4.9	38.7

(1) Excludes acquired portfolios and non-accrual loans and leases.
(2) Annualized.

•

The over 60-day delinquency rate, excluding acquired portfolios and non-accrual loans and leases, was 0.11 percent at September 30, 2016, down from 0.17 percent at September 30, 2015, and down from 0.12 percent at June 30, 2016. The decreases from both periods were primarily driven by improved delinquencies in the commercial real estate portfolio, partially offset by an increase in delinquencies in the auto finance portfolio.


•	The net charge-off rate was 0.26 percent for the third quarter of 2016, up from 0.23 percent for both the third quarter of 2015 and the second quarter of 2016. The increases from both periods were primarily due to increased net charge-offs in the auto finance portfolio, partially offset by improved credit quality in the consumer real estate portfolio.

•

Non-accrual loans and leases and other real estate owned was $223.8 million at September 30, 2016, a decrease of $40.9 million, or 15.5 percent, from September 30, 2015, and a decrease of $8.6 million, or 3.7 percent, from June 30, 2016. The decreases from both periods were primarily due to improving credit quality trends in the consumer and commercial real estate portfolios and sales of other real estate owned outpacing additions. Total non-accrual loans and leases and other real estate owned at September 30, 2016 was the lowest balance since the third quarter of 2008.

•

Provision for credit losses was $13.9 million for the third quarter of 2016, an increase of $3.9 million, or 38.7 percent, from the third quarter of 2015, and an increase of $0.6 million, or 4.9 percent, from the second quarter of 2016. The increase from the third quarter of 2015 was primarily due to increased reserve requirements related to growth and higher net charge-offs in the auto finance and leasing and equipment finance portfolios. The increase from the second quarter of 2016 was primarily due to higher net charge-offs and growth in the leasing and equipment finance portfolio.



Deposits

Average Deposits																				Table 5
										Percent Change
(Dollars in thousands)	3Q			2Q			3Q			3Q16 vs		3Q16 vs		YTD			YTD			Percent
	2016			2016			2015			2Q16		3Q15		2016			2015			Change

Checking	$	5,673,888		$	5,727,147		$	5,405,442		(0.9	)%	5.0	%	$	5,664,812		$	5,378,571		5.3	%
Savings	4,672,642			4,690,376			4,872,853			(0.4	)	(4.1	)	4,692,189			5,026,475			(6.7	)
Money market	2,496,590			2,557,897			2,297,893			(2.4	)	8.6		2,509,033			2,236,811			12.2
Certificates of deposit	4,304,990			4,308,367			3,400,282			(0.1	)	26.6		4,239,676			3,187,577			33.0
Total average deposits	$	17,148,110		$	17,283,787		$	15,976,470		(0.8	)	7.3		$	17,105,710		$	15,829,434		8.1

Average interest rate on deposits⁽¹⁾	0.37		%	0.37		%	0.31		%					0.36		%	0.29		%

(1) Annualized.


•	Total average deposits for the third quarter of 2016 increased $1.2 billion, or 7.3 percent, from the third quarter of 2015, primarily due to special campaigns for certificates of deposit as well as growth in checking and money market balances.


•	The average interest rate on deposits for the third quarter of 2016 was 0.37 percent, up 6 basis points from the third quarter of 2015, primarily due to higher average interest rates resulting from promotions for certificates of deposit.



Non-interest Expense

Non-interest Expense																				Table 6
										Change
(Dollars in thousands)	3Q			2Q			3Q			3Q16 vs		3Q16 vs		YTD			YTD			Percent
	2016			2016			2015			2Q16		3Q15		2016			2015			Change

Compensation and employee benefits	$	117,155		$	118,093		$	116,708		(0.8	)%	0.4	%	$	359,721		$	348,682		3.2	%
Occupancy and equipment	37,938			36,884			34,159			2.9		11.1		111,830			107,138			4.4
FDIC insurance	4,082			3,751			4,832			8.8		(15.5	)	11,946			15,089			(20.8	)
Advertising and marketing	5,488			5,678			5,793			(3.3	)	(5.3	)	17,053			17,466			(2.4	)
Other	49,851			49,987			45,750			(0.3	)	9.0		143,186			139,770			2.4
Subtotal	214,514			214,393			207,242			0.1		3.5		643,736			628,145			2.5
Operating lease depreciation	10,038			9,842			9,485			2.0		5.8		29,453			25,801			14.2
Foreclosed real estate and repossessed assets, net	4,243			3,135			5,680			35.3		(25.3	)	11,298			18,253			(38.1	)
Other credit costs, net	83			(54		)	(123		)	N.M.		N.M.		41			(39		)	N.M.
Total non-interest expense	$	228,878		$	227,316		$	222,284		0.7		3.0		$	684,528		$	672,160		1.8

Efficiency ratio	69.00		%	68.69		%	70.01		%	31 bps		(101) bps		69.36		%	71.43		%	(207) bps

N.M. Not Meaningful.

•

Total non-interest expense for the third quarter of 2016 increased $6.6 million, or 3.0 percent, compared with the third quarter of 2015 and increased $1.6 million, or 0.7 percent compared with the second quarter of 2016. The increase from the third quarter of 2015 was primarily due to increases in other non-interest expense and occupancy and equipment expense, partially offset by a decrease in foreclosed real estate and repossessed assets, net expense. The increase from the second quarter of 2016 was primarily due to increases in foreclosed real estate and repossessed assets, net expense and occupancy and equipment expense, partially offset by a decrease in compensation and employee benefits expense.

•

Net expenses related to foreclosed real estate and repossessed assets decreased $1.4 million, or 25.3 percent, from the third quarter of 2015 and increased $1.1 million, or 35.3 percent, from the second quarter of 2016. The decrease from the third quarter of 2015 was primarily due to lower operating costs associated with maintaining fewer consumer and commercial properties and lower write-downs on existing foreclosed consumer properties, partially offset by lower gains on sales of consumer and commercial properties and higher repossessed asset expense. The increase from the second quarter of 2016 was primarily due to lower gains on sales of consumer and commercial properties.



Capital

Capital Information				Table 7

	At Sep. 30,			At Dec. 31,
(Dollars in thousands, except per-share data)	2016			2015
Total equity	$	2,452,380		$	2,306,917
Book value per common share	12.69			11.94
Tangible book value per common share⁽¹⁾	11.36			10.59
Common equity to assets	10.29		%	9.80		%
Tangible common equity to tangible assets⁽¹⁾	9.31			8.79
Capital accumulation rate⁽²⁾	8.93			10.44

	At Sep. 30,			At Dec. 31,
Regulatory Capital:	2016⁽³⁾			2015
Common equity Tier 1 capital	$	1,936,029		$	1,814,442
Tier 1 capital	2,215,312			2,092,195
Total capital	2,596,697			2,487,060

Regulatory Capital Ratios:
Common equity Tier 1 capital ratio	10.35		%	10.00		%
Tier 1 risk-based capital ratio	11.85			11.54
Total risk-based capital ratio	13.89			13.71
Tier 1 leverage ratio	10.66			10.46

(1) See "Reconciliation of GAAP to Non-GAAP Financial Measures" table.
(2) Calculated as the change in annualized year-to-date common equity Tier 1 capital as a percentage of prior year end common equity Tier 1 capital.
(3) The regulatory capital ratios for 3Q 2016 are preliminary pending completion and filing of the Company's regulatory reports.


•	TCF maintained strong capital ratios as the Company accumulates capital through earnings.

•

On October 19, 2016, TCF's Board of Directors declared a regular quarterly cash dividend of 7.5 cents per common share, payable on December 1, 2016, to stockholders of record at the close of business on November 15, 2016. TCF also declared dividends on the 7.50% Series A and 6.45% Series B Non-Cumulative Perpetual Preferred Stock, both payable on December 1, 2016, to stockholders of record at the close of business on November 15, 2016.

Webcast Information

A live webcast of TCF's conference call to discuss the third quarter earnings will be hosted at TCF's website, http://ir.tcfbank.com, on October 21, 2016 at 9:00 a.m. CDT. A slide presentation for the call will be available on the website prior to the call. Additionally, the webcast will be available for replay on TCF's website after the conference call. The website also includes free access to company news releases, TCF's annual report, investor presentations and SEC filings.

TCF is a Wayzata, Minnesota-based national bank holding company. As of September 30, 2016, TCF had $21.1 billion in total assets and 341 branches in Illinois, Minnesota, Michigan, Colorado, Wisconsin, Arizona and South Dakota providing retail and commercial banking services. TCF, through its subsidiaries, also conducts commercial leasing, equipment finance, and auto finance business in all 50 states and commercial inventory finance business in all 50 states and Canada. For more information about TCF, please visit http://ir.tcfbank.com.

Cautionary Statements for Purposes of the Safe Harbor Provisions of the Securities Litigation Reform Act

Any statements contained in this earnings release regarding the outlook for the Company's businesses and their respective markets, such as projections of future performance, guidance, statements of the Company's plans and objectives, forecasts of market trends and other matters, are forward-looking statements based on the Company's assumptions and beliefs. Such statements may be identified by such words or phrases as "will likely result," "are expected to," "will continue," "outlook," "will benefit," "is anticipated," "estimate," "project," "management believes" or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such statements and no assurance can be given that the results in any forward-looking statement will be achieved. For these statements, TCF claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.

Certain factors could cause the Company's future results to differ materially from those expressed or implied in any forward-looking statements contained herein. These factors include the factors discussed in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2015 under the heading "Risk Factors", the factors discussed below and any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statements. Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive.

Adverse Economic or Business Conditions; Competitive Conditions; Credit and Other Risks. Deterioration in general economic and banking industry conditions, including those arising from government shutdowns, defaults, anticipated defaults or rating agency downgrades of sovereign debt (including debt of the U.S.), or increases in unemployment; adverse economic, business and competitive developments such as shrinking interest margins, reduced demand for financial services and loan and lease products, deposit outflows, increased deposit costs due to competition for deposit growth and evolving payment system developments, deposit account attrition or an inability to increase the number of deposit accounts; customers completing financial transactions without using a bank; adverse changes in credit quality and other risks posed by TCF's loan, lease, investment, securities held to maturity and securities available for sale portfolios, including declines in commercial or residential real estate values, changes in the allowance for loan and lease losses dictated by new market conditions or regulatory requirements, or the inability of home equity line borrowers to make increased payments caused by increased interest rates or amortization of principal; deviations from estimates of prepayment rates and fluctuations in interest rates that result in decreases in the value of assets such as interest-only strips that arise in connection with TCF's loan sales activity; interest rate risks resulting from fluctuations in prevailing interest rates or other factors that result in a mismatch between yields earned on TCF's interest-earning assets and the rates paid on its deposits and borrowings; foreign currency exchange risks; counterparty risk, including the risk of defaults by our counterparties or diminished availability of counterparties who satisfy our credit quality requirements; decreases in demand for the types of equipment that TCF leases or finances; the effect of any negative publicity.

Legislative and Regulatory Requirements. New consumer protection and supervisory requirements and regulations, including those resulting from action by the Consumer Financial Protection Bureau and changes in the scope of Federal preemption of state laws that could be applied to national banks and their subsidiaries; the imposition of requirements that adversely impact TCF's deposit, lending, loan collection and other business activities such as mortgage foreclosure moratorium laws, further regulation of financial institution campus banking programs, use by municipalities of eminent domain on property securing troubled residential mortgage loans, or imposition of underwriting or other limitations that impact the ability to offer certain variable-rate products; changes affecting customer account charges and fee income, including changes to interchange rates; regulatory actions or changes in customer opt-in preferences with respect to overdrafts, which may have an adverse impact on TCF; changes to bankruptcy laws which would result in the loss of all or part of TCF's security interest due to collateral value declines; deficiencies in TCF's compliance under the Bank Secrecy Act in past or future periods, which may result in regulatory enforcement action including monetary penalties; increased health care costs resulting from Federal health care reform; regulatory criticism and resulting enforcement actions or other adverse consequences such as increased capital requirements, higher deposit insurance assessments or monetary damages or penalties; heightened regulatory practices, requirements or expectations, including, but not limited to, requirements related to enterprise risk management, the Bank Secrecy Act and anti-money laundering compliance activity.

Earnings/Capital Risks and Constraints, Liquidity Risks. Limitations on TCF's ability to pay dividends or to increase dividends because of financial performance deterioration, regulatory restrictions or limitations; increased deposit insurance premiums, special assessments or other costs related to adverse conditions in the banking industry; the impact on banks of regulatory reform, including additional capital, leverage, liquidity and risk management requirements or changes in the composition of qualifying regulatory capital; adverse changes in securities markets directly or indirectly affecting TCF's ability to sell assets or to fund its operations; diminished unsecured borrowing capacity resulting from TCF credit rating downgrades or unfavorable conditions in the credit markets that restrict or limit various funding sources; costs associated with new regulatory requirements or interpretive guidance relating to liquidity; uncertainties relating to future retail deposit account changes, including limitations on TCF's ability to predict customer behavior and the impact on TCF's fee revenues.

Branching Risk; Growth Risks. Adverse developments affecting TCF's supermarket banking relationships or any of the supermarket chains in which TCF maintains supermarket branches; costs related to closing underperforming branches; inability to timely close underperforming branches due to long-term lease obligations; slower than anticipated growth in existing or acquired businesses; inability to successfully execute on TCF's growth strategy through acquisitions or cross-selling opportunities; failure to expand or diversify TCF's balance sheet through new or expanded programs or opportunities; failure to successfully attract and retain new customers, including the failure to attract and retain manufacturers and dealers to expand the inventory finance business; failure to effectuate, and risks of claims related to, sales and securitizations of loans; risks related to new product additions and addition of distribution channels (or entry into new markets) for existing products.

Technological and Operational Matters. Technological or operational difficulties, loss or theft of information, cyber-attacks and other security breaches, counterparty failures and the possibility that deposit account losses (fraudulent checks, etc.) may increase; failure to keep pace with technological change, including the failure to develop and maintain technology necessary to satisfy customer demands; ability to attract and retain employees given competitive conditions.

Litigation Risks. Results of litigation or government enforcement actions, including class action litigation or enforcement actions concerning TCF's lending or deposit activities, including account opening/origination, servicing practices, fees or charges, employment practices, or checking account overdraft program "opt in" requirements; and possible increases in indemnification obligations for certain litigation against Visa U.S.A.

Accounting, Audit, Tax and Insurance Matters. Changes in accounting standards or interpretations of existing standards; federal or state monetary, fiscal or tax policies, including adoption of state legislation that would increase state taxes; ineffective internal controls; adverse federal, state or foreign tax assessments or findings in tax audits; lack of or inadequate insurance coverage for claims against TCF; potential for claims and legal action related to TCF's fiduciary responsibilities.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)

	Three Months Ended September 30,						Change
	2016			2015			$			%
Interest income:
Loans and leases	$	210,765		$	207,250		$	3,515		1.7	%
Securities available for sale	7,126			4,161			2,965			71.3
Securities held to maturity	1,049			1,361			(312		)	(22.9	)
Investments and other	13,786			10,832			2,954			27.3
Total interest income	232,726			223,604			9,122			4.1
Interest expense:
Deposits	15,851			12,302			3,549			28.8
Borrowings	4,857			6,032			(1,175		)	(19.5	)
Total interest expense	20,708			18,334			2,374			12.9
Net interest income	212,018			205,270			6,748			3.3
Provision for credit losses	13,894			10,018			3,876			38.7
Net interest income after provision for credit losses	198,124			195,252			2,872			1.5
Non-interest income:
Fees and service charges	35,093			36,991			(1,898		)	(5.1	)
Card revenue	13,747			13,803			(56		)	(0.4	)
ATM revenue	5,330			5,739			(409		)	(7.1	)
Subtotal	54,170			56,533			(2,363		)	(4.2	)
Gains on sales of auto loans, net	11,624			10,423			1,201			11.5
Gains on sales of consumer real estate loans, net	13,528			7,143			6,385			89.4
Servicing fee income	10,393			8,049			2,344			29.1
Subtotal	35,545			25,615			9,930			38.8
Leasing and equipment finance	28,289			27,165			1,124			4.1
Other	2,270			3,070			(800		)	(26.1	)
Fees and other revenue	120,274			112,383			7,891			7.0
Gains (losses) on securities, net	(600		)	(131		)	(469		)	N.M.
Total non-interest income	119,674			112,252			7,422			6.6
Non-interest expense:
Compensation and employee benefits	117,155			116,708			447			0.4
Occupancy and equipment	37,938			34,159			3,779			11.1
FDIC insurance	4,082			4,832			(750		)	(15.5	)
Advertising and marketing	5,488			5,793			(305		)	(5.3	)
Other	49,851			45,750			4,101			9.0
Subtotal	214,514			207,242			7,272			3.5
Operating lease depreciation	10,038			9,485			553			5.8
Foreclosed real estate and repossessed assets, net	4,243			5,680			(1,437		)	(25.3	)
Other credit costs, net	83			(123		)	206			N.M.
Total non-interest expense	228,878			222,284			6,594			3.0
Income before income tax expense	88,920			85,220			3,700			4.3
Income tax expense	30,257			30,528			(271		)	(0.9	)
Income after income tax expense	58,663			54,692			3,971			7.3
Income attributable to non-controlling interest	2,371			2,117			254			12.0
Net income attributable to TCF Financial Corporation	56,292			52,575			3,717			7.1
Preferred stock dividends	4,847			4,847			—			—
Net income available to common stockholders	$	51,445		$	47,728		$	3,717		7.8

Net income per common share:
Basic	$	0.31		$	0.29		$	0.02		6.9	%
Diluted	0.31			0.29			0.02			6.9

Dividends declared per common share	$	0.075		$	0.05		$	0.025		50.0	%

Average common and common equivalent shares
outstanding (in thousands):
Basic	167,366			165,990			1,376			0.8	%
Diluted	167,968			166,556			1,412			0.8

N.M. Not Meaningful.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share data)
(Unaudited)

	Nine Months Ended September 30,						Change
	2016			2015			$			%
Interest income:
Loans and leases	$	639,698		$	620,390		$	19,308		3.1	%
Securities available for sale	19,020			10,784			8,236			76.4
Securities held to maturity	3,484			4,150			(666		)	(16.0	)
Investments and other	36,870			31,155			5,715			18.3
Total interest income	699,072			666,479			32,593			4.9
Interest expense:
Deposits	46,735			34,454			12,281			35.6
Borrowings	15,677			17,306			(1,629		)	(9.4	)
Total interest expense	62,412			51,760			10,652			20.6
Net interest income	636,660			614,719			21,941			3.6
Provision for credit losses	45,986			35,337			10,649			30.1
Net interest income after provision for credit losses	590,674			579,382			11,292			1.9
Non-interest income:
Fees and service charges	102,532			107,258			(4,726		)	(4.4	)
Card revenue	41,193			40,606			587			1.4
ATM revenue	15,639			16,401			(762		)	(4.6	)
Subtotal	159,364			164,265			(4,901		)	(3.0	)
Gains on sales of auto loans, net	33,687			27,444			6,243			22.7
Gains on sales of consumer real estate loans, net	33,751			27,860			5,891			21.1
Servicing fee income	28,778			22,607			6,171			27.3
Subtotal	96,216			77,911			18,305			23.5
Leasing and equipment finance	87,850			75,774			12,076			15.9
Other	7,518			8,657			(1,139		)	(13.2	)
Fees and other revenue	350,948			326,607			24,341			7.5
Gains (losses) on securities, net	(716		)	(268		)	(448		)	(167.2	)
Total non-interest income	350,232			326,339			23,893			7.3
Non-interest expense:
Compensation and employee benefits	359,721			348,682			11,039			3.2
Occupancy and equipment	111,830			107,138			4,692			4.4
FDIC insurance	11,946			15,089			(3,143		)	(20.8	)
Advertising and marketing	17,053			17,466			(413		)	(2.4	)
Other	143,186			139,770			3,416			2.4
Subtotal	643,736			628,145			15,591			2.5
Operating lease depreciation	29,453			25,801			3,652			14.2
Foreclosed real estate and repossessed assets, net	11,298			18,253			(6,955		)	(38.1	)
Other credit costs, net	41			(39		)	80			N.M.
Total non-interest expense	684,528			672,160			12,368			1.8
Income before income tax expense	256,378			233,561			22,817			9.8
Income tax expense	86,766			82,258			4,508			5.5
Income after income tax expense	169,612			151,303			18,309			12.1
Income attributable to non-controlling interest	7,580			6,672			908			13.6
Net income attributable to TCF Financial Corporation	162,032			144,631			17,401			12.0
Preferred stock dividends	14,541			14,541			—			—
Net income available to common stockholders	$	147,491		$	130,090		$	17,401		13.4

Net income per common share:
Basic	$	0.88		$	0.79		$	0.09		11.4	%
Diluted	0.88			0.78			0.10			12.8

Dividends declared per common share	$	0.225		$	0.15		$	0.075		50.0	%

Average common and common equivalent shares
outstanding (in thousands):
Basic	167,155			165,479			1,676			1.0	%
Diluted	167,708			166,013			1,695			1.0

N.M. Not Meaningful.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)

	Three Months Ended September 30,						Change
	2016			2015			$			%
Net income attributable to TCF Financial Corporation	$	56,292		$	52,575		$	3,717		7.1	%
Other comprehensive income (loss):
Securities available for sale and interest-only strips:
Unrealized gains (losses) arising during the period	(7,624		)	9,972			(17,596		)	N.M.
Reclassification of net (gains) losses to net income	425			281			144			51.2
Net investment hedges:
Unrealized gains (losses) arising during the period	904			2,858			(1,954		)	(68.4	)
Foreign currency translation adjustment:
Unrealized gains (losses) arising during the period	(957		)	(3,049		)	2,092			68.6
Recognized postretirement prior service cost:
Reclassification of net (gains) losses to net income	(12		)	(12		)	—			—
Income tax (expense) benefit	2,396			(4,947		)	7,343			N.M.
Total other comprehensive income (loss)	(4,868		)	5,103			(9,971		)	N.M.
Comprehensive income	$	51,424		$	57,678		$	(6,254	)	(10.8	)


	Nine Months Ended September 30,						Change
	2016			2015			$			%
Net income attributable to TCF Financial Corporation	$	162,032		$	144,631		$	17,401		12.0	%
Other comprehensive income (loss):
Securities available for sale and interest-only strips:
Unrealized gains (losses) arising during the period	32,639			2,971			29,668			N.M.
Reclassification of net (gains) losses to net income	1,448			871			577			66.2
Net investment hedges:
Unrealized gains (losses) arising during the period	(2,691		)	5,772			(8,463		)	N.M.
Foreign currency translation adjustment:
Unrealized gains (losses) arising during the period	2,791			(6,318		)	9,109			N.M.
Recognized postretirement prior service cost:
Reclassification of net (gains) losses to net income	(35		)	(35		)	—			—
Income tax (expense) benefit	(11,911		)	(3,618		)	(8,293		)	N.M.
Total other comprehensive income (loss)	22,241			(357		)	22,598			N.M.
Comprehensive income	$	184,273		$	144,274		$	39,999		27.7

N.M. Not Meaningful.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per-share data)
(Unaudited)

	At Sep. 30,			At Dec. 31,			Change
	2016			2015			$			%
ASSETS:
Cash and due from banks	$	656,481		$	889,337		$	(232,856	)	(26.2	)%
Investments	59,707			70,537			(10,830		)	(15.4	)
Securities held to maturity	185,230			201,920			(16,690		)	(8.3	)
Securities available for sale	1,419,821			888,885			530,936			59.7
Loans and leases held for sale	386,673			157,625			229,048			145.3
Loans and leases:
Consumer real estate:
First mortgage lien	2,313,044			2,624,956			(311,912		)	(11.9	)
Junior lien	2,674,280			2,839,316			(165,036		)	(5.8	)
Total consumer real estate	4,987,324			5,464,272			(476,948		)	(8.7	)
Commercial	3,150,199			3,145,832			4,367			0.1
Leasing and equipment finance	4,236,224			4,012,248			223,976			5.6
Inventory finance	2,261,086			2,146,754			114,332			5.3
Auto finance	2,731,900			2,647,596			84,304			3.2
Other	17,886			19,297			(1,411		)	(7.3	)
Total loans and leases	17,384,619			17,435,999			(51,380		)	(0.3	)
Allowance for loan and lease losses	(155,841		)	(156,054		)	213			0.1
Net loans and leases	17,228,778			17,279,945			(51,167		)	(0.3	)
Premises and equipment, net	424,456			445,934			(21,478		)	(4.8	)
Goodwill	225,640			225,640			—			—
Other assets	497,370			529,786			(32,416		)	(6.1	)
Total assets	$	21,084,156		$	20,689,609		$	394,547		1.9

LIABILITIES AND EQUITY:
Deposits:
Checking	$	5,830,057		$	5,690,559		$	139,498		2.5	%
Savings	4,670,281			4,717,457			(47,176		)	(1.0	)
Money market	2,450,576			2,408,180			42,396			1.8
Certificates of deposit	4,283,292			3,903,793			379,499			9.7
Total deposits	17,234,206			16,719,989			514,217			3.1
Short-term borrowings	1,514			5,381			(3,867		)	(71.9	)
Long-term borrowings	713,996			1,034,557			(320,561		)	(31.0	)
Total borrowings	715,510			1,039,938			(324,428		)	(31.2	)
Accrued expenses and other liabilities	682,060			622,765			59,295			9.5
Total liabilities	18,631,776			18,382,692			249,084			1.4
Equity:
Preferred stock, par value $0.01 per share, 30,000,000 shares authorized;
4,006,900 shares issued	263,240			263,240			—			—
Common stock, par value $0.01 per share, 280,000,000 shares authorized;
170,993,800 and 169,887,030 shares issued, respectively	1,710			1,699			11			0.6
Additional paid-in capital	860,487			851,836			8,651			1.0
Retained earnings, subject to certain restrictions	1,350,215			1,240,347			109,868			8.9
Accumulated other comprehensive income (loss)	6,895			(15,346		)	22,241			N.M.
Treasury stock at cost, 42,566 shares, and other	(49,093		)	(50,860		)	1,767			3.5
Total TCF Financial Corporation stockholders' equity	2,433,454			2,290,916			142,538			6.2
Non-controlling interest in subsidiaries	18,926			16,001			2,925			18.3
Total equity	2,452,380			2,306,917			145,463			6.3
Total liabilities and equity	$	21,084,156		$	20,689,609		$	394,547		1.9

N.M. Not Meaningful.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA
(Dollars in thousands)
(Unaudited)

Over 60-Day Delinquencies as a Percentage of Portfolio⁽¹⁾

	At		At		At		At		At		Change from
	Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,			Sep. 30,
	2016		2016		2016		2015		2015		2016			2015
Consumer real estate:
First mortgage lien	0.33	%	0.34	%	0.38	%	0.46	%	0.36	%	(1	)	bps	(3	)	bps
Junior lien	0.03		0.03		0.05		0.05		0.08		—			(5	)
Total consumer real estate	0.16		0.17		0.20		0.23		0.21		(1	)		(5	)
Commercial	0.01		0.11		—		—		0.25		(10	)		(24	)
Leasing and equipment finance	0.14		0.13		0.12		0.06		0.19		1			(5	)
Inventory finance	0.01		—		—		0.01		0.01		1			—
Auto finance	0.20		0.13		0.09		0.14		0.11		7			9
Other	0.06		0.40		0.16		0.13		0.17		(34	)		(11	)
Subtotal	0.11		0.12		0.10		0.11		0.17		(1	)		(6	)
Acquired portfolios	0.48		0.41		0.41		0.41		0.37		7			11
Total delinquencies	0.12		0.12		0.10		0.11		0.17		—			(5	)


(1)	Excludes non-accrual loans and leases.



Net Charge-Offs as a Percentage of Average Loans and Leases

	Quarter Ended⁽¹⁾										Change from
	Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,			Sep. 30,
	2016		2016		2016		2015		2015		2016			2015
Consumer real estate:
First mortgage lien	0.34	%	0.35	%	0.55	%	0.54	%	0.53	%	(1	)	bps	(19	)	bps
Junior lien	0.04		0.05		0.17		0.17		0.11		(1	)		(7	)
Total consumer real estate	0.17		0.19		0.35		0.34		0.32		(2	)		(15	)
Commercial	(0.01	)	0.08		(0.02	)	0.05		—		(9	)		(1	)
Leasing and equipment finance	0.18		0.11		0.13		0.16		0.09		7			9
Inventory finance	0.10		0.09		0.04		0.05		0.03		1			7
Auto finance	0.86		0.69		0.81		0.75		0.62		17			24
Other	N.M.		N.M.		N.M.		N.M.		N.M.		N.M.			N.M.
Total	0.26		0.23		0.27		0.29		0.23		3			3

N.M. Not Meaningful.


(1)	Annualized.



Non-Accrual Loans and Leases Rollforward

	Quarter Ended															Change from
	Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Sep. 30,
	2016			2016			2016			2015			2015			2016			2015
Balance, beginning of period	$	195,542		$	198,649		$	200,466		$	206,110		$	205,710		$	(3,107	)	$	(10,168	)
Additions	28,697			35,280			38,029			44,387			48,505			(6,583		)	(19,808		)
Charge-offs	(5,670		)	(5,475		)	(7,436		)	(9,002		)	(7,055		)	(195		)	1,385
Transfers to other assets	(11,687		)	(10,310		)	(12,342		)	(13,612		)	(16,400		)	(1,377		)	4,713
Return to accrual status	(5,447		)	(6,687		)	(7,698		)	(9,282		)	(10,190		)	1,240			4,743
Payments received	(13,845		)	(17,774		)	(15,551		)	(20,103		)	(14,721		)	3,929			876
Sales	—			(900		)	—			(775		)	(705		)	900			705
Other, net	2,457			2,759			3,181			2,743			966			(302		)	1,491
Balance, end of period	$	190,047		$	195,542		$	198,649		$	200,466		$	206,110		$	(5,495	)	$	(16,063	)



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY DATA, CONTINUED
(Dollars in thousands)
(Unaudited)

Other Real Estate Owned Rollforward

	Quarter Ended															Change from
	Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Sep. 30,
	2016			2016			2016			2015			2015			2016			2015
Balance, beginning of period	$	36,792		$	42,441		$	49,982		$	58,584		$	58,007		$	(5,649	)	$	(21,215	)
Transferred in	10,124			9,661			10,575			12,626			15,087			463			(4,963		)
Sales	(12,997		)	(16,058		)	(18,885		)	(19,174		)	(13,442		)	3,061			445
Writedowns	(1,984		)	(2,027		)	(2,744		)	(2,130		)	(2,868		)	43			884
Other, net	1,777			2,775			3,513			76			1,800			(998		)	(23		)
Balance, end of period	$	33,712		$	36,792		$	42,441		$	49,982		$	58,584		$	(3,080	)	$	(24,872	)



Allowance for Loan and Lease Losses

	At					At					At					At					At
	Sep. 30,					Jun. 30,					Mar. 31,					Dec. 31,					Sep. 30,
	2016					2016					2016					2015					2015
				% of					% of					% of					% of				% of
	Balance		Portfolio			Balance		Portfolio			Balance		Portfolio			Balance		Portfolio			Balance		Portfolio
Consumer real estate	$	62,092		1.24	%	$	64,765		1.27	%	$	66,728		1.27	%	$	67,992		1.24	%	$	70,329	1.25	%
Commercial	31,648			1.00		31,161			1.01		31,547			1.01		30,185			0.96		30,006		0.96
Leasing and equipment finance	20,649			0.49		20,124			0.49		19,454			0.49		19,018			0.47		18,177		0.47
Inventory finance	11,807			0.52		12,084			0.52		13,306			0.50		11,128			0.52		11,121		0.52
Auto finance	29,115			1.07		29,772			1.06		28,535			1.02		26,486			1.00		23,722		0.98
Other	530			2.96		666			3.19		504			2.66		1,245			6.45		607		2.94
Total	$	155,841		0.90		$	158,572		0.91		$	160,074		0.90		$	156,054		0.90		$	153,962	0.90



Changes in Allowance for Loan and Lease Losses

	Quarter Ended															Change from
	Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Sep. 30,
	2016			2016			2016			2015			2015			2016			2015
Balance, beginning of period	$	158,572		$	160,074		$	156,054		$	153,962		$	156,115		$	(1,502	)	$	2,457
Charge-offs	(16,244		)	(14,723		)	(16,667		)	(18,101		)	(15,338		)	(1,521		)	(906		)
Recoveries	4,779			4,592			4,761			5,523			5,397			187			(618		)
Net (charge-offs) recoveries	(11,465		)	(10,131		)	(11,906		)	(12,578		)	(9,941		)	(1,334		)	(1,524		)
Provision for credit losses	13,894			13,250			18,842			17,607			10,018			644			3,876
Other	(5,160		)	(4,621		)	(2,916		)	(2,937		)	(2,230		)	(539		)	(2,930		)
Balance, end of period	$	155,841		$	158,572		$	160,074		$	156,054		$	153,962		$	(2,731	)	$	1,879



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)

	Three Months Ended September 30,
	2016						2015
	Average				Yields and		Average				Yields and
	Balance		Interest⁽¹⁾		Rates⁽¹⁾⁽²⁾		Balance		Interest⁽¹⁾		Rates⁽¹⁾⁽²⁾
ASSETS:
Investments and other	$	331,107	$	2,380	2.86	%	$	463,312	$	2,937	2.52	%
Securities held to maturity	187,414		1,049		2.24		205,264		1,361		2.65
Securities available for sale:⁽³⁾
Taxable	747,890		4,167		2.23		601,889		3,658		2.43
Tax-exempt⁽⁴⁾	570,013		4,553		3.19		92,484		774		3.35
Loans and leases held for sale	558,649		11,406		8.12		348,215		7,895		9.00
Loans and leases:⁽⁵⁾
Consumer real estate:
Fixed-rate	2,216,945		32,041		5.75		2,637,875		37,988		5.72
Variable-rate	2,918,631		38,796		5.29		2,968,507		38,287		5.12
Total consumer real estate	5,135,576		70,837		5.49		5,606,382		76,275		5.40
Commercial:
Fixed-rate	944,347		11,675		4.92		1,137,744		14,484		5.05
Variable- and adjustable-rate	2,147,768		21,121		3.91		1,980,280		18,958		3.80
Total commercial	3,092,115		32,796		4.22		3,118,024		33,442		4.26
Leasing and equipment finance	4,147,488		46,422		4.48		3,821,590		43,863		4.59
Inventory finance	2,272,409		34,665		6.07		2,036,054		29,915		5.83
Auto finance	2,670,272		27,251		4.06		2,361,057		24,557		4.13
Other	9,252		136		5.85		9,833		157		6.31
Total loans and leases	17,327,112		212,107		4.88		16,952,940		208,209		4.88
Total interest-earning assets	19,722,185		235,662		4.76		18,664,104		224,834		4.79
Other assets⁽⁶⁾	1,303,670						1,217,396
Total assets	$	21,025,855					$	19,881,500
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail	$	1,771,840					$	1,649,995
Small business	894,761						852,211
Commercial and custodial	583,430						516,461
Total non-interest bearing deposits	3,250,031						3,018,667
Interest-bearing deposits:
Checking	2,434,934		88		0.01		2,399,119		135		0.02
Savings	4,661,565		399		0.03		4,860,509		638		0.05
Money market	2,496,590		3,823		0.61		2,297,893		3,571		0.62
Certificates of deposit	4,304,990		11,541		1.07		3,400,282		7,958		0.93
Total interest-bearing deposits	13,898,079		15,851		0.45		12,957,803		12,302		0.38
Total deposits	17,148,110		15,851		0.37		15,976,470		12,302		0.31
Borrowings:
Short-term borrowings	8,485		19		0.86		30,326		17		0.22
Long-term borrowings	729,737		4,838		2.65		1,057,903		6,015		2.27
Total borrowings	738,222		4,857		2.63		1,088,229		6,032		2.21
Total interest-bearing liabilities	14,636,301		20,708		0.56		14,046,032		18,334		0.52
Total deposits and borrowings	17,886,332		20,708		0.46		17,064,699		18,334		0.43
Other liabilities	708,048						578,718
Total liabilities	18,594,380						17,643,417
Total TCF Financial Corp. stockholders' equity	2,409,312						2,218,614
Non-controlling interest in subsidiaries	22,163						19,469
Total equity	2,431,475						2,238,083
Total liabilities and equity	$	21,025,855					$	19,881,500
Net interest income and margin			$	214,954	4.34				$	206,500	4.40


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


(2)	Annualized.


(3)	Average balances and yields of securities available for sale are based upon historical amortized cost and exclude equity securities.


(4)	The yield on tax-exempt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 35% for all periods presented.


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


(6)	Includes leased equipment and related initial direct costs under operating leases of $138.2 million and $107.5 million for the third quarters of 2016 and 2015, respectively.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
(Dollars in thousands)
(Unaudited)

	Nine Months Ended September 30,
	2016						2015
	Average				Yields and		Average				Yields and
	Balance		Interest⁽¹⁾		Rates⁽¹⁾⁽²⁾		Balance		Interest⁽¹⁾		Rates⁽¹⁾⁽²⁾
ASSETS:
Investments and other	$	334,210	$	6,992	2.79	%	$	559,443	$	9,650	2.31	%
Securities held to maturity	193,780		3,484		2.40		208,891		4,150		2.65
Securities available for sale:⁽³⁾
Taxable	695,721		11,838		2.27		548,161		10,239		2.49
Tax-exempt⁽⁴⁾	457,308		11,049		3.22		33,640		839		3.33
Loans and leases held for sale	475,017		29,878		8.40		322,022		21,505		8.93
Loans and leases:⁽⁵⁾
Consumer real estate:
Fixed-rate	2,324,648		100,386		5.77		2,774,523		121,044		5.83
Variable-rate	2,959,168		117,625		5.31		2,853,636		109,476		5.13
Total consumer real estate	5,283,816		218,011		5.51		5,628,159		230,520		5.48
Commercial:
Fixed-rate	979,913		36,233		4.94		1,201,022		45,168		5.03
Variable- and adjustable-rate	2,140,039		63,601		3.97		1,938,947		55,972		3.86
Total commercial	3,119,952		99,834		4.27		3,139,969		101,140		4.31
Leasing and equipment finance	4,057,755		135,900		4.47		3,767,954		131,086		4.64
Inventory finance	2,422,979		105,633		5.82		2,145,535		91,671		5.71
Auto finance	2,708,470		83,748		4.13		2,198,983		68,041		4.14
Other	9,617		413		5.75		10,721		555		6.92
Total loans and leases	17,602,589		643,539		4.88		16,891,321		623,013		4.93
Total interest-earning assets	19,758,625		706,780		4.78		18,563,478		669,396		4.82
Other assets⁽⁶⁾	1,295,913						1,220,205
Total assets	$	21,054,538					$	19,783,683
LIABILITIES AND EQUITY:
Non-interest bearing deposits:
Retail	$	1,780,397					$	1,665,489
Small business	870,024						826,581
Commercial and custodial	575,513						501,297
Total non-interest bearing deposits	3,225,934						2,993,367
Interest-bearing deposits:
Checking	2,451,330		261		0.01		2,400,338		423		0.02
Savings	4,679,737		1,081		0.03		5,011,341		2,539		0.07
Money market	2,509,033		11,663		0.62		2,236,811		10,588		0.63
Certificates of deposit	4,239,676		33,730		1.06		3,187,577		20,904		0.88
Total interest-bearing deposits	13,879,776		46,735		0.45		12,836,067		34,454		0.36
Total deposits	17,105,710		46,735		0.36		15,829,434		34,454		0.29
Borrowings:
Short-term borrowings	7,718		42		0.72		15,606		47		0.40
Long-term borrowings	877,123		15,635		2.38		1,156,104		17,259		1.99
Total borrowings	884,841		15,677		2.36		1,171,710		17,306		1.97
Total interest-bearing liabilities	14,764,617		62,412		0.56		14,007,777		51,760		0.49
Total deposits and borrowings	17,990,551		62,412		0.46		17,001,144		51,760		0.41
Other liabilities	683,198						587,168
Total liabilities	18,673,749						17,588,312
Total TCF Financial Corp. stockholders' equity	2,358,387						2,175,676
Non-controlling interest in subsidiaries	22,402						19,695
Total equity	2,380,789						2,195,371
Total liabilities and equity	$	21,054,538					$	19,783,683
Net interest income and margin			$	644,368	4.35				$	617,636	4.45


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


(2)	Annualized.


(3)	Average balances and yields of securities available for sale are based upon historical amortized cost and exclude equity securities.


(4)	The yield on tax-exempt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 35% for all periods presented.


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


(6)	Includes leased equipment and related initial direct costs under operating leases of $134.6 million and $97.5 million for the nine months ended September 30, 2016 and 2015, respectively.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per-share data)
(Unaudited)

	Three Months Ended
	Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,
	2016			2016			2016			2015			2015
Interest income:
Loans and leases	$	210,765		$	214,128		$	214,805		$	212,346		$	207,250
Securities available for sale	7,126			6,396			5,498			4,864			4,161
Securities held to maturity	1,049			1,116			1,319			1,336			1,361
Investments and other	13,786			12,364			10,720			6,905			10,832
Total interest income	232,726			234,004			232,342			225,451			223,604
Interest expense:
Deposits	15,851			15,893			14,991			13,772			12,302
Borrowings	4,857			5,127			5,693			6,010			6,032
Total interest expense	20,708			21,020			20,684			19,782			18,334
Net interest income	212,018			212,984			211,658			205,669			205,270
Provision for credit losses	13,894			13,250			18,842			17,607			10,018
Net interest income after provision for credit losses	198,124			199,734			192,816			188,062			195,252
Non-interest income:
Fees and service charges	35,093			34,622			32,817			37,741			36,991
Card revenue	13,747			14,083			13,363			13,781			13,803
ATM revenue	5,330			5,288			5,021			5,143			5,739
Subtotal	54,170			53,993			51,201			56,665			56,533
Gains on sales of auto loans, net	11,624			10,143			11,920			3,136			10,423
Gains on sales of consumer real estate loans, net	13,528			10,839			9,384			13,104			7,143
Servicing fee income	10,393			9,502			8,883			8,622			8,049
Subtotal	35,545			30,484			30,187			24,862			25,615
Leasing and equipment finance	28,289			31,074			28,487			32,355			27,165
Other	2,270			2,405			2,843			1,806			3,070
Fees and other revenue	120,274			117,956			112,718			115,688			112,383
Gains (losses) on securities, net	(600		)	—			(116		)	(29		)	(131		)
Total non-interest income	119,674			117,956			112,602			115,659			112,252
Non-interest expense:
Compensation and employee benefits	117,155			118,093			124,473			109,061			116,708
Occupancy and equipment	37,938			36,884			37,008			37,824			34,159
FDIC insurance	4,082			3,751			4,113			5,173			4,832
Advertising and marketing	5,488			5,678			5,887			5,316			5,793
Other	49,851			49,987			43,348			46,441			45,750
Subtotal	214,514			214,393			214,829			203,815			207,242
Operating lease depreciation	10,038			9,842			9,573			13,608			9,485
Foreclosed real estate and repossessed assets, net	4,243			3,135			3,920			4,940			5,680
Other credit costs, net	83			(54		)	12			224			(123		)
Total non-interest expense	228,878			227,316			228,334			222,587			222,284
Income before income tax expense	88,920			90,374			77,084			81,134			85,220
Income tax expense	30,257			29,706			26,803			26,614			30,528
Income after income tax expense	58,663			60,668			50,281			54,520			54,692
Income attributable to non-controlling interest	2,371			2,974			2,235			2,028			2,117
Net income attributable to TCF Financial Corporation	56,292			57,694			48,046			52,492			52,575
Preferred stock dividends	4,847			4,847			4,847			4,847			4,847
Net income available to common stockholders	$	51,445		$	52,847		$	43,199		$	47,645		$	47,728

Net income per common share:
Basic	$	0.31		$	0.32		$	0.26		$	0.29		$	0.29
Diluted	0.31			0.31			0.26			0.29			0.29

Dividends declared per common share	$	0.075		$	0.075		$	0.075		$	0.075		$	0.05

Financial highlights:
Pre-tax pre-provision profit⁽¹⁾	$	102,814		$	103,624		$	95,926		$	98,741		$	95,238
Return on average assets⁽²⁾	1.12		%	1.14		%	0.96		%	1.08		%	1.10		%
Return on average common equity⁽²⁾	9.59			10.09			8.45			9.53			9.76
Net interest margin⁽²⁾	4.34			4.35			4.37			4.35			4.40


(1)	Pre-tax pre-provision profit is calculated as total revenues less non-interest expense.


(2)	Annualized.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS
(In thousands)
(Unaudited)

	Sep. 30, 2016		Jun. 30, 2016		Mar. 31, 2016		Dec. 31, 2015		Sep. 30, 2015
ASSETS:
Investments and other	$	331,107	$	322,477	$	349,079	$	405,252	$	463,312
Securities held to maturity	187,414		194,693		199,303		201,944		205,264
Securities available for sale:⁽¹⁾
Taxable	747,890		697,902		640,796		611,816		601,889
Tax-exempt	570,013		481,246		319,427		221,113		92,484
Loans and leases held for sale	558,649		497,797		367,686		180,278		348,215
Loans and leases:⁽²⁾
Consumer real estate:
Fixed-rate	2,216,945		2,327,409		2,430,773		2,520,567		2,637,875
Variable-rate	2,918,631		2,931,318		3,028,001		3,083,957		2,968,507
Total consumer real estate	5,135,576		5,258,727		5,458,774		5,604,524		5,606,382
Commercial:
Fixed-rate	944,347		982,914		1,012,870		1,090,001		1,137,744
Variable- and adjustable-rate	2,147,768		2,127,032		2,145,231		2,027,982		1,980,280
Total commercial	3,092,115		3,109,946		3,158,101		3,117,983		3,118,024
Leasing and equipment finance	4,147,488		4,032,112		3,992,678		3,911,025		3,821,590
Inventory finance	2,272,409		2,564,648		2,433,534		2,180,534		2,036,054
Auto finance	2,670,272		2,751,679		2,703,880		2,514,923		2,361,057
Other	9,252		9,585		10,018		9,060		9,833
Total loans and leases	17,327,112		17,726,697		17,756,985		17,338,049		16,952,940
Total interest-earning assets	19,722,185		19,920,812		19,633,276		18,958,452		18,664,104
Other assets⁽³⁾	1,303,670		1,286,506		1,297,479		1,245,751		1,217,396
Total assets	$	21,025,855	$	21,207,318	$	20,930,755	$	20,204,203	$	19,881,500

LIABILITIES AND EQUITY:
Non-interest-bearing deposits:
Retail	$	1,771,840	$	1,817,734	$	1,751,710	$	1,639,550	$	1,649,995
Small business	894,761		861,394		853,645		874,892		852,211
Commercial and custodial	583,430		582,041		560,983		525,692		516,461
Total non-interest bearing deposits	3,250,031		3,261,169		3,166,338		3,040,134		3,018,667
Interest-bearing deposits:
Checking	2,434,934		2,478,673		2,440,563		2,384,452		2,399,119
Savings	4,661,565		4,677,681		4,700,164		4,721,571		4,860,509
Money market	2,496,590		2,557,897		2,472,751		2,349,127		2,297,893
Certificates of deposit	4,304,990		4,308,367		4,104,951		3,793,653		3,400,282
Total interest-bearing deposits	13,898,079		14,022,618		13,718,429		13,248,803		12,957,803
Total deposits	17,148,110		17,283,787		16,884,767		16,288,937		15,976,470
Borrowings:
Short-term borrowings	8,485		9,100		5,562		28,364		30,326
Long-term borrowings	729,737		840,739		1,062,513		1,009,591		1,057,903
Total borrowings	738,222		849,839		1,068,075		1,037,955		1,088,229
Total interest-bearing liabilities	14,636,301		14,872,457		14,786,504		14,286,758		14,046,032
Total deposits and borrowings	17,886,332		18,133,626		17,952,842		17,326,892		17,064,699
Other liabilities	708,048		690,363		650,908		595,317		578,718
Total liabilities	18,594,380		18,823,989		18,603,750		17,922,209		17,643,417
Total TCF Financial Corporation stockholders' equity	2,409,312		2,357,509		2,307,781		2,263,018		2,218,614
Non-controlling interest in subsidiaries	22,163		25,820		19,224		18,976		19,469
Total equity	2,431,475		2,383,329		2,327,005		2,281,994		2,238,083
Total liabilities and equity	$	21,025,855	$	21,207,318	$	20,930,755	$	20,204,203	$	19,881,500


(1)	Average balances of securities available for sale are based upon historical amortized cost and exclude equity securities.


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


(3)	Includes leased equipment and related initial direct costs under operating leases of $138.2 million, $131.9 million, $133.6 million, $123.8 million and $107.5 million for the third quarter, second quarter and first quarter of 2016, and for the fourth quarter and third quarter of 2015, respectively.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED QUARTERLY YIELDS AND RATES⁽¹⁾⁽²⁾
(Unaudited)

	Sep. 30, 2016		Jun. 30, 2016		Mar. 31, 2016		Dec. 31, 2015		Sep. 30, 2015
ASSETS:
Investments and other	2.86	%	2.99	%	2.55	%	2.59	%	2.52	%
Securities held to maturity	2.24		2.29		2.65		2.64		2.65
Securities available for sale:⁽³⁾
Taxable	2.23		2.21		2.38		2.41		2.43
Tax-exempt⁽⁴⁾	3.19		3.25		3.24		3.26		3.35
Loans and leases held for sale	8.12		8.05		9.30		9.38		9.00
Loans and leases:
Consumer real estate:
Fixed-rate	5.75		5.73		5.82		5.73		5.72
Variable-rate	5.29		5.32		5.32		5.18		5.12
Total consumer real estate	5.49		5.50		5.54		5.43		5.40
Commercial:
Fixed-rate	4.92		4.96		4.94		5.05		5.05
Variable- and adjustable-rate	3.91		4.00		4.00		4.05		3.80
Total commercial	4.22		4.30		4.30		4.40		4.26
Leasing and equipment finance	4.48		4.45		4.47		4.55		4.59
Inventory finance	6.07		5.74		5.68		5.66		5.83
Auto finance	4.06		4.19		4.14		4.17		4.13
Other	5.85		5.77		5.63		6.88		6.31
Total loans and leases	4.88		4.88		4.89		4.89		4.88

Total interest-earning assets	4.76		4.77		4.80		4.76		4.79

LIABILITIES:
Interest-bearing deposits:
Checking	0.01		0.02		0.01		0.02		0.02
Savings	0.03		0.03		0.03		0.04		0.05
Money market	0.61		0.63		0.62		0.62		0.62
Certificates of deposit	1.07		1.07		1.05		1.00		0.93
Total interest-bearing deposits	0.45		0.46		0.44		0.41		0.38
Total deposits	0.37		0.37		0.36		0.34		0.31
Borrowings:
Short-term borrowings	0.86		0.71		0.53		0.09		0.22
Long-term borrowings	2.65		2.43		2.14		2.37		2.27
Total borrowings	2.63		2.42		2.13		2.31		2.21

Total interest-bearing liabilities	0.56		0.57		0.56		0.55		0.52

Net interest margin	4.34		4.35		4.37		4.35		4.40


(1)	Annualized.


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


(3)	Average yields of securities available for sale are based upon historical amortized cost and exclude equity securities.


(4)	The yield on tax-exempt securities available for sale is computed on a tax-equivalent basis using a statutory federal income tax rate of 35% for all periods presented.



TCF FINANCIAL CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES⁽¹⁾
(Dollars in thousands)
(Unaudited)
		At Sep. 30,			At Dec. 31,
		2016			2015
Computation of tangible common equity to tangible assets and tangible book value per common share:
Total equity		$	2,452,380		$	2,306,917
Less: Non-controlling interest in subsidiaries		18,926			16,001
Total TCF Financial Corporation stockholders' equity		2,433,454			2,290,916
Less: Preferred stock		263,240			263,240
Total common stockholders' equity	(a)	2,170,214			2,027,676
Less:
Goodwill		225,640			225,640
Other intangibles		2,028			3,126
Tangible common equity	(b)	$	1,942,546		$	1,798,910

Total assets	(c)	$	21,084,156		$	20,689,609
Less:
Goodwill		225,640			225,640
Other intangibles		2,028			3,126
Tangible assets	(d)	$	20,856,488		$	20,460,843

Common stock shares outstanding	(e)	170,951,234			169,844,464

Common equity to assets	(a) / (c)	10.29		%	9.80		%
Tangible common equity to tangible assets	(b) / (d)	9.31		%	8.79		%

Book value per common share	(a) / (e)	$	12.69		$	11.94
Tangible book value per common share	(b) / (e)	$	11.36		$	10.59



		Three Months Ended									Nine Months Ended
		Sep. 30,			Jun. 30,			Sep. 30,			Sep. 30,			Sep. 30,
		2016			2016			2015			2016			2015
Computation of return on average tangible common equity:
Net income available to common stockholders	(f)	$	51,445		$	52,847		$	47,728		$	147,491		$	130,090
Plus: Other intangibles amortization		366			366			392			1,098			1,170
Less: Income tax expense attributable to other intangibles amortization		128			129			144			385			431
Adjusted net income available to common stockholders	(g)	$	51,683		$	53,084		$	47,976		$	148,204		$	130,829

Average balances:
Total equity		$	2,431,475		$	2,383,329		$	2,238,083		$	2,380,789		$	2,195,371
Less: Non-controlling interest in subsidiaries		22,163			25,820			19,469			22,402			19,695
Total TCF Financial Corporation stockholders' equity		2,409,312			2,357,509			2,218,614			2,358,387			2,175,676
Less: Preferred stock		263,240			263,240			263,240			263,240			263,240
Average total common stockholders' equity	(h)	2,146,072			2,094,269			1,955,374			2,095,147			1,912,436
Less:
Goodwill		225,640			225,640			225,640			225,640			225,640
Other intangibles		2,233			2,596			3,738			2,597			4,104
Average tangible common equity	(i)	$	1,918,199		$	1,866,033		$	1,725,996		$	1,866,910		$	1,682,692

Return on average common equity⁽²⁾	(f) / (h)	9.59		%	10.09		%	9.76		%	9.39		%	9.07		%
Return on average tangible common equity⁽²⁾	(g) / (i)	10.78		%	11.38		%	11.12		%	10.58		%	10.37		%

(1)

When evaluating capital adequacy and utilization, management considers financial measures such as tangible common equity to tangible assets, tangible book value per common share and return on average tangible common equity. These measures are non-GAAP financial measures and are viewed by management as useful indicators of capital levels available to withstand unexpected market or economic conditions and also provide investors, regulators and other users with information to be viewed in relation to other banking institutions.


(2)	Annualized.

###

TCF FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 21, 2016

Attached files

TCF FINANCIAL CORP Reports