TCF Bank 2005 Annual Report Download - page 35

152005 Form 10-K
Item 7. Management’s Discussion
and Analysis of Financial Condition
and Results of Operations
Table of Contents Page
Overview 15
Results of Operations 16
Performance Summary 16
Operating Segment Results 17
Consolidated Income Statement Analysis 17
Net Interest Income 17
Provision for Credit Losses 21
Non-Interest Income 21
Non-Interest Expense 25
Income Taxes 26
Consolidated Financial Condition Analysis 26
Securities Available for Sale 26
Loans and Leases 27
Allowance for Loan and Lease Losses 30
Non-Performing Assets 33
Past Due Loans and Leases 33
Potential Problem Loans and Leases 34
Liquidity Management 34
Deposits 35
New Branch Expansion 35
Borrowings 36
Contractual Obligations and Commitments 36
Stockholders’ Equity 37
Summary of Critical Accounting Estimates 37
Recent Accounting Developments 37
Fourth Quarter Summary 38
Legislative, Legal and Regulatory Developments 38
Forward-Looking Information 38
Management’s discussion and analysis of the consolidated financial
condition and results of operations of TCF Financial Corporation
(“TCF” or the “Company”) should be read in conjunction with the
consolidated financial statements in Item 8 and selected financial
data in Item 6.
Overview
TCF is a Delaware national financial holding company based in
Wayzata, Minnesota. Its principal subsidiary, TCF Bank, is head-
quartered in Minnesota and had 453 banking offices in Minnesota,
Illinois, Michigan, Wisconsin, Colorado and Indiana at December
31, 2005.
TCF provides convenient financial services through multiple
channels to customers located primarily in the Midwest. TCF has
developed products and services designed to meet the needs of
all consumers. The Company focuses on attracting and retaining
customers through service and convenience, including branches
that are open seven days a week and on most holidays, extensive
full-service supermarket branches and automated teller machine
(“ATM”) networks, and telephone and internet banking. TCF’s
philosophy is to generate net interest income and fees and other
revenue growth through business lines that emphasize higher
yielding assets and lower or no interest-cost deposits. The
Company’s growth strategies include new branch expansion and
the development of new products and services. New products
and services are designed to build on existing businesses and
expand into complementary products and services through
strategic initiatives.
TCF’s core businesses include retail banking; commercial
banking; small business banking; consumer lending; leasing and
equipment finance; and investments, securities brokerage and
insurance services. The retail banking business includes tradi-
tional and supermarket branches, campus banking, Express Teller
ATMs and Visa U.S.A. Inc. (“Visa”) cards.
TCF emphasizes the checking account as its anchor account,
which provides opportunities to cross-sell other convenience
products and services and generate additional fee income. The
continued growth of checking accounts is a significant part of
TCF’s growth strategy. Total checking accounts were 1,603,173
at December 31, 2005, and increased 68,021 accounts from
December 31, 2004. The number of ATMs that are free to TCF cus-
tomers increased from 1,141 at December 31, 2004, to 1,735 at
December 31, 2005. The increase was primarily the result of an
ATM branding agreement with 7-Eleven® , Inc., which added 583
TCF branded ATMs during the third quarter of 2005, that are owned
and operated by 7-Eleven, Inc.