TCF Bank 2009 Annual Report Download - page 6

4 : TCF Financial Corporation and Subsidiaries
the United States, and is the 15th largest bank affiliated
leasing company in the United States. In 2009, we saw
some large competitors leave the market which offered
us the opportunity to take advantage of several portfolio
purchases. In September, Winthrop Resources
Corporation, our technology-oriented leasing company,
acquired Fidelity National Capital, Inc., from Fidelity
National Financial, Inc., that included a portfolio of
approximately $250 million in leases funded by $215
million of non-recourse discounted lease rentals. The
purchased portfolio is comprised primarily of fair market
value tax leases on technology equipment. As part of
the acquisition, Winthrop Resources hired certain sales
representatives and operational staff to support the
business on an ongoing basis as Winthrop Resources
intends to promote this new business through existing
channels. TCF Equipment Finance also acquired portfolios
during the year adding $340 million, or 11 percent, to its
total portfolio. We expect these investments to continue
to yield good returns for us in the future.
TCF’s newest business, TCF Inventory Finance, Inc.,
has been in operation for just over a year now, specializing
in inventory floorplan financing principally for dealers of
consumer products in the United States and Canada.
We started the business by entering the consumer
electronics and household appliances industries and
expanded into the lawn and garden industry in 2009.
Our strategy for this business is to align ourselves with
leaders in the industries we serve. Thus our partnership
with The Toro Company, a leader in the lawn and garden
industry based in Minneapolis, Minnesota, was a very
good fit. Red Iron Acceptance, LLC, was created as
a joint venture between TCF Inventory Finance®
and
The Toro Company to provide floorplan and open account
financing to dealers and distributors of the Toro®
and
Exmark®
brands. At year-end, the TCF Inventory Finance
portfolio balance was $469 million, an increase from
virtually nothing at the end of 2008. This team has worked
hard in 2009 to position the company and we expect to
see a significant return on our investment in 2010.
Credit Quality:
Credit losses continued to significantly impact TCF’s
results in 2009. Although we fared better than most of
our peers, we felt the results were unacceptable based
on our own historical standards. Net charge-offs increased
95 percent, or 57 basis points, from last year primarily
from increases in consumer real estate and leasing and
equipment finance which resulted from economic
conditions. While disappointed, we remained profitable
in most of our major business lines.
In 2009, TCF’s consumer real estate delinquencies
and net charge-offs continued to increase as credit
deterioration spread from subprime to prime mortgages.
Lower home values, reduced availability of equity and
increased unemployment led to continued losses for TCF
in 2009. To help our customers avoid home foreclosure,
we developed several loan restructuring programs that
extend payment dates, reduce interest rates and/or reduce
payment amounts. In 2009, TCF restructured loans totaling
TCF is nancially strong; we focus on
prudent capital and liquidity management.
Making wise investments, like our newest
business in inventory nance, is a top
priority. We invest only in programs that
add value to the organization and yield
solid returns.
stability