TCF Bank 2000 Annual Report Download - page 29

Non-Interest Expense – Non-interest expense increased $9.7 million, or 2.1%, in 2000, and $24.1 million, or 5.6%, in 1999, com-
pared with the respective prior years. The following table presents the components of non-interest expense:
Year Ended December 31, Percentage Increase (Decrease)
(Dollars in thousands) 2000 1999 1998 2000/1999 1999/1998
Compensation and employee benefits . . . . . . . . . . . . . $ 239,544 $239,053 $217,401 .2% 10.0%
Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . 74,938 73,613 71,323 1.8 3.2
Advertising and promotions . . . . . . . . . . . . . . . . . . . . 19,181 16,981 19,544 13.0 (13.1)
Amortization of goodwill and other intangibles . . . . . . 10,001 10,689 11,399 (6.4) (6.2)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,864 112,462 109,033 5.7 3.1
Total non-interest expense . . . . . . . . . . . . . . . . . . $ 462,528 $452,798 $428,700 2.1 5.6
to $14.8 million in 1999. Annuity and mutual fund sales volumes
totaled $170.2 million for the year ended December 31, 2000, com-
pared with $230.5 million during 1999. The decreased volumes
during 2000 reflect the impact of lower yields offered by insurance
companies on annuity products, and the volatility of the stock mar-
ket. Sales of annuities and mutual funds may fluctuate from period
to period, and future sales levels will depend upon general economic
conditions and investor preferences. Sales of annuities will also
depend upon continued favorable tax treatment and may be nega-
tively impacted by the level of interest rates.
Gains on sales of loans held for sale decreased $735,000 in
2000, following a decrease of $2.8 million in 1999. Residential
mortgage loan sales volumes totaled $512.4 million for the year ended
December 31, 2000, compared with $360.3 million for the same
period of 1999. Education loan sales volumes totaled $100.9 mil-
lion for the year ended December 31, 2000, compared with $97.1
million for the same period of 1999. During 1999, TCF recognized
losses of $1.4 million on sales of $139.4 million of its consumer
finance automobile loan portfolio. See “Financial Condition – Loans
Held for Sale” and “Financial Condition – Loans and Leases.” Gains
or losses on sales of loans held for sale may fluctuate significantly
from period to period due to changes in interest rates and volumes,
and results in any period related to these transactions may not be
indicative of results which will be obtained in future periods.
Sales of securities available for sale produced gains of $3.2 mil-
lion and $2.2 million in 1999 and 1998, respectively. There were
no sales of securities available for sale in 2000. Gains of $3.1 mil-
lion and $2.4 million were recognized on the sales of $344.6 mil-
lion and $200.4 million of third-party loan servicing rights in
1999 and 1998, respectively. No similar activity occurred during
2000. TCF may, from time to time, sell securities available for
sale and loan servicing rights depending on market conditions.
During the 1999 fourth quarter, TCF sold its title insurance and
appraisal operations and recognized a gain of $5.5 million, and will
recognize a deferred gain of up to $15 million over the ensuing five
years based upon TCF’s use of services. During 2000, $4.5 mil-
lion of this deferred gain was earned and recognized in other non-
interest income. Title insurance revenues are no longer recognized
by TCF as a result of its sale of these operations. Title insurance rev-
enues totaled $15.4 million in 1999 and $20.2 million in 1998.
During 2000, TCF recognized gains of $12.8 million on the
sales of six branches with $95.7 million in deposits, compared with
gains of $12.2 million on the sales of eight branches with $116.7
million in deposits during 1999. TCF recognized gains of $18.6
million on the sales of 14 branches with $234 million in deposits
and $5.6 million on the sale of its joint venture interest in Burnet
Home Loans during 1998. TCF periodically sells branches that it
considers to be underperforming, or have limited growth poten-
tial, and may continue to do so in the future, including one
planned branch sale during the first quarter of 2001.
Compensation and employee benefits, representing 51.8% and
52.8% of total non-interest expense in 2000 and 1999, respec-
tively, increased $491,000, or .2%, in 2000, and $21.7 million,
or 10%, in 1999. The increases were primarily due to costs asso-
ciated with expanded retail banking and leasing activities, includ-
ing the opening of a total of 164 new branches in the past three
years, offset by cost savings from discontinued businesses.
Occupancy and equipment expenses increased $1.3 million in
2000 and $2.3 million in 1999. The increases were primarily due
to TCF’s expanded retail banking and leasing activities, offset by
branch sales.
Advertising and promotion expenses increased $2.2 million
in 2000 following a decrease of $2.6 million in 1999. The increase
in 2000 was primarily due to promotional expenses associated
with the TCF Express Phone Card, where customers earn free long
distance minutes for use of their debit cards. During 2000, TCF
awarded over 38.6 million minutes under this promotion. The
decrease in 1999 reflected a decrease in direct mail expenses relat-
ing to the promotion of consumer finance loan products. 27
TCF