TCF Bank 2001 Annual Report Download - page 32

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Compensation and employee benefits, representing 53.3% and
52.4% of total non-interest expense in 2001 and 2000, respec-
tively, increased $28.2 million, or 11.8%, in 2001, and $491,000,
or .2%, in 2000. The 2001 increase of 11.8% was primarily due to
costs associated with expanded retail banking and leasing activities.
Also contributing to the increase during 2001 is the increase in
compensation and benefits resulting from the significant increase
in mortgage banking activities. The slight increase in 2000 is the
result of increases in expanded retail and leasing activities offset by
the cost savings from the sale of TCF’s title insurance and appraisal
operations during the fourth quarter of 1999.
Occupancy and equipment expenses increased $3.8 million in
2001 and $1.3 million in 2000. The increases were primarily due
to TCF’s expanded retail banking and leasing activities, partially off-
set by branch sales.
Advertising and promotion expenses increased $1.7 million in
2001 following an increase of $2.2 million in 2000. These increases
are primarily due to retail banking activities and promotional expenses
associated with the TCF Express Phone Card, where customers earn
free long distance phone minutes for use of their Express Cards. TCF
awarded over 67 million and 38 million phone minutes during 2001
and 2000, respectively, under this promotion.
Other non-interest expense increased $11 million, or 9.5%, in
2001, primarily the result of increased expenses associated with higher
levels of activity in mortgage banking and expanded retail banking
and leasing operations. In 2000, other non-interest expense
Investments and insurance income, consisting principally of com-
missions on sales of annuities and mutual funds, decreased $731,000
to $11.5 million in 2001, following a decrease of $2.6 million to
$12.3 million in 2000. Annuity and mutual fund sales volumes
totaled $165 million for the year ended December 31, 2001, com-
pared with $170.2 million during 2000. The decreased sales vol-
umes during 2001 reflect the impact of lower yields offered by
insurance companies on annuity products, and the volatility of the
stock market affecting sales of mutual funds. Sales of insurance and
investments 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 favor-
able tax treatment and may be negatively impacted by the level of inter-
est rates.
During 2001, TCF recognized a gain of $3.3 million on the sale
of a branch with $30 million in deposits, compared with gains of
$12.8 million on the sales of six branches with $95.7 million in
deposits during 2000. TCF recognized gains of $12.2 million on
the sales of eight branches with $116.7 million in deposits in 1999.
TCF periodically sells branches that it considers to be underper-
forming, or have limited growth potential, and may continue to do
so in the future, including one planned branch sale during the first
quarter of 2002.
Gains on sales of securities available for sale totaled $863,000 in
2001. There were no sales of securities available for sale during 2000.
Sales of securities available for sale produced gains of $3.2 million
in 1999. In 1999, TCF recognized $3.1 million in gains on sales of
$344.6 million of third-party loan servicing rights. No sales of third-
party loan servicing rights occurred during 2000 and 2001. TCF
may, from time to time, sell securities available for sale and loan ser-
vicing 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. TCF earned and recognized
in other non-interest income $5.2 million and $4.5 million during
2001 and 2000, respectively. Title insurance revenues are no longer
recognized by TCF as a result of its sale of these operations. Title
insurance revenues totaled $15.4 million in 1999.
NON-INTEREST EXPENSE – Non-interest expense increased $44.8 million, or 9.8%, in 2001, and $9.3 million, or 2.1%, in 2000,
compared with the respective prior years. The following table presents the components of non-interest expense:
Percentage
Year Ended December 31, Increase (Decrease)
(Dollars in thousands) 2001 2000 1999 1998 1997 2001/2000 2000/1999
Compensation and
employee benefits. . . . . . . . . . $267,716 $239,544 $239,053 $217,401 $180,482 11.8% .2%
Occupancy and equipment . . . . . . . 78,774 74,938 73,613 71,323 58,352 5.1 1.8
Advertising and promotions. . . . . 20,909 19,181 16,981 19,544 19,157 9.0 13.0
Amortization of goodwill . . . . . . . 7,777 7,706 7,713 7,816 4,069 .9 (.1)
Other. . . . . . . . . . . . . . . . . . . . . 126,820 115,833 110,532 105,802 94,449 9.5 4.8
Total non-interest
expense . . . . . . . . . . . . $501,996 $457,202 $447,892 $421,886 $356,509 9.8 2.1