TCF Bank 2012 Annual Report Download - page 18

Commercial Real Estate and Business Lending
Commercial real estate loans are loans originated by TCF
that are secured by commercial real estate including retail
centers, multi-family housing, office buildings and, to a
lesser extent, commercial real estate construction loans,
mainly to borrowers based in its primary banking markets.
Commercial business loans are loans originated by TCF
that are generally secured by various types of business
assets including inventory, receivables, equipment or
financial instruments. In limited cases, loans may be
originated on an unsecured basis. Commercial business
loans are used for a variety of purposes including working
capital and financing the purchase of equipment. In 2012,
TCF developed a capital funding business specializing in
secured, asset-backed and cash flow lending to smaller
middle-market companies in the United States.
TCF concentrates on originating commercial business
loans to middle-market companies with borrowing
requirements of less than $25 million. Approximately
85% of TCF’s commercial business loans outstanding
at December 31, 2012, were to borrowers based in its
primary banking markets.
Leasing and Equipment Finance TCF provides a
broad range of comprehensive lease and equipment
finance products addressing the diverse financing needs
of small to large companies. TCF’s leasing and equipment
finance businesses, TCF Equipment Finance, Inc.
(“TCF Equipment Finance”) and Winthrop Resources
Corporation (“Winthrop”), finance equipment in all
50 states and, to a limited extent, in foreign countries.
TCF Equipment Finance delivers equipment finance
solutions primarily to small and mid-size companies in
various industries with significant diversity in the types
of underlying equipment. Winthrop focuses on providing
customized lease financing to meet the special needs of
mid-size and large companies and health care facilities
that procure high-tech business essential equipment
such as computers, servers, telecommunication and
other technology equipment.
Inventory Finance TCF Inventory Finance, Inc.
(“Inventory Finance”) originates commercial variable-
rate loans which are secured by the underlying floorplan
equipment and supported by repurchase agreements
from original equipment manufacturers. The operation
focuses on establishing relationships with distributors,
dealer buying groups and manufacturers, giving TCF
access to thousands of independent retailers in the areas
of powersports, lawn and garden, recreational vehicle,
marine, electronics and appliance, and specialty vehicles.
TCF Inventory Finance operates in the United States and
Canada and, to a limited extent, in other foreign countries.
TCF Inventory Finance’s portfolio outstandings are impacted
by seasonal shipment and sales activities as dealers receive
inventory shipments in anticipation of the upcoming selling
season while carrying current season product. In 2009,
TCF Inventory Finance formed a joint venture with The Toro
Company (“Toro”) called Red Iron Acceptance, LLC
(“Red Iron”). Red Iron provides U.S. distributors and dealers
and select Canadian distributors of the Toro® and Exmark®
brands with reliable, cost-effective sources of financing.
TCF and Toro maintain a 55% and 45% ownership interest,
respectively, in Red Iron.
Auto Finance On November 30, 2011, TCF entered the
indirect auto lending market through the acquisition of
Gateway One Lending & Finance, LLC (“Gateway One”).
Headquartered in Anaheim, California, Gateway One
originates and services loans on new and used autos to
customers through relationships established with nearly
6,200 franchised and independent dealers in over 40 states.
Gateway One’s business strategy is to maintain strong
relationships with key personnel at the dealerships. These
relationships are a significant driver in generating volume
and executing a high-touch underwriting approach to
minimize credit losses.
Funding
Branch Banking Deposits from consumers and small
businesses are a primary source of TCF’s funds for use in
lending and for other general business purposes. Deposit
inflows and outflows are significantly influenced by
economic and competitive conditions, interest rates,
market conditions and other factors. Consumer, small
business and commercial deposits are attracted from
within TCF’s primary banking markets through the offering
of a broad selection of deposit products, including free
checking accounts, money market accounts, regular
savings accounts, certificates of deposit and retirement
savings plans. TCF’s marketing strategy emphasizes
attracting deposits, primarily in checking accounts,
savings accounts and certificates of deposits. Such deposit
accounts are a source of low-cost funds and provide fee
income, including banking fees and service charges.
At December 31, 2012, TCF had 428 branches, consisting
of 192 traditional branches, 228 supermarket branches and
{ 2 } { TCF Financial Corporation and Subsidiaries }