TCF Bank 2007 Annual Report Download - page 37

2007 Form 10-K | 17
Item 7. Management’s Discussion
and Analysis of Financial Condition
and Results of Operations
Table of Contents Page
Overview 17
Results of Operations 18
Performance Summary 18
Operating Segment Results 18
Consolidated Income Statement Analysis 19
Net Interest Income 19
Provision for Credit Losses 23
Non-Interest Income 23
Non-Interest Expense 25
Income Taxes 26
Consolidated Financial Condition Analysis 27
Securities Available for Sale 27
Loans and Leases 27
Allowance for Loan and Lease Losses 31
Non-Performing Assets 34
Past Due Loans and Leases 35
Potential Problem Loans and Leases 35
Liquidity Management 36
Deposits 36
Branches 36
Borrowings 37
Contractual Obligations and Commitments 38
Stockholders’ Equity 39
Summary of Critical Accounting Estimates 39
Recent Accounting Developments 39
Fourth Quarter Summary 40
Legislative, Legal and Regulatory Developments 41
Forward-Looking Information 41
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, a Delaware corporation, is a financial holding company
based in Wayzata, Minnesota. Its principal subsidiaries, TCF
National Bank and TCF National Bank Arizona (“TCF Bank”),
are headquartered in Minnesota and Arizona, respectively,
and had 453 banking offices in Minnesota, Illinois,
Michigan, Colorado, Wisconsin, Indiana and Arizona at
December 31, 2007.
TCF provides convenient financial services through
multiple channels in its primary banking markets. 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, includ-
ing branches that are open seven days a week and on most
holidays, extensive full-service supermarket branches, auto-
mated teller machine (“ATM”) networks and telephone and
internet banking. TCF’s philosophy is to generate interest
income, fees and other revenue growth through business lines
that emphasize higher yielding assets and low 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 and small business
banking, commercial banking, consumer lending, leasing
and equipment finance and investments and insurance serv-
ices. The retail banking business includes traditional and
supermarket branches, campus banking, EXPRESS TELLER®
ATMs and Visa®cards.
Targeted new branch expansion is an integral part of
TCF’s growth strategy for generating new deposit accounts
and the related revenue that is associated with the accounts
and other products. New branches typically produce net
losses during the first two to three years of operations
before they become profitable, and therefore the level and
timing of new branch expansion can have a significant
impact on TCF’s profitability.
TCF’s lending strategy is to originate high credit quality,
primarily secured, loans and leases. TCF’s largest core
lending business is its consumer home equity loan operation,
which offers fixed- and variable-rate loans and lines of credit
secured by residential real estate properties. Commercial
loans are generally made on local properties or to local
customers. The leasing and equipment finance businesses
consist of TCF Equipment Finance, a company that delivers
equipment finance solutions to businesses in select markets,
and Winthrop Resources, a company that primarily leases
technology and data processing equipment. TCF’s leasing