TCF Bank 2010 Annual Report Download - page 62

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• 46 • TCF Financial Corporation and Subsidiaries
Recent Accounting Developments
On July 21, 2010, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update (“ASU”)
No. 2010-20, Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses,
which requires significant new disclosures about the
allowance for credit losses and the credit quality of
financing receivables. The FASB has elected to defer
the disclosures related to TDRs included within ASU No.
2010-20. The disclosures related to TDRs are expected to
be effective for the second quarter 2011. The remaining
disclosures under ASU No. 2010-20 were not deferred and
are included in Note 6 of Notes to Consolidated Financial
Statements, “Allowance for Loan and Lease Losses and
Credit Quality Information”.
Fourth Quarter Summary
In the fourth quarter of 2010, TCF reported net income of
$30.7 million, compared with $19.5 million in the fourth
quarter of 2009. Diluted earnings per common share was
22 cents for the fourth quarter of 2010, compared with 15
cents for the same 2009 period.
Net interest income was $174.3 million for the quarter
ended December 31, 2010, up $4.6 million, or 2.7%, from
the quarter ended December 31, 2009. The increase in net
interest income was primarily due to decreased rates paid
on deposits and increases in Specialty Finance loans and
leases, partially offset by the impact of increased asset
liquidity and decreased income from consumer loans. The
net interest margin was 4.04% and 4.07% for the fourth
quarter of 2010 and 2009, respectively.
TCF provided $77.6 million for credit losses in the fourth
quarter of 2010, compared with $77.4 million in the fourth
quarter of 2009. The net increase was primarily due to
increased reserves and charge-offs in the commercial real
estate portfolio partially offset by decreased levels of
provision in excess of net charge-offs in the consumer real
estate portfolio. For the fourth quarter of 2010, net loan
and lease charge-offs were $64.9 million, or 1.75% of aver-
age loans and leases outstanding, compared with $48.7
million, or 1.35% of average loans and leases outstanding
during the same 2009 period. The increase was primarily
due to in commercial loan and consumer real estate net
charge-offs.
Total non-interest income in the fourth quarter of
2010 was $141.5 million, compared with $143.1 million in
the fourth quarter of 2009. The decrease in non-interest
income was primarily due to a decrease in leasing revenues
and fees and service charges. Fees and service charges were
$61.5 million, down 17.9% from the fourth quarter of 2009,
primarily due to a decrease in activity-based fee revenue
as a result of the implementation of recent overdraft fee
regulations, partially offset by increased monthly
maintenance fee income. Card revenues totaled $27.6
million for the fourth quarter of 2010, up 3% over the same
2009 period. Leasing and equipment finance revenues were
$23.4 million for the fourth quarter of 2010, down $1 million
from the fourth quarter of 2009 primarily due to decreased
operating lease revenue as a result of operating lease
runoff from the FNCI acquisition that occurred during 2009,
which was partially offset by a corresponding decrease in
operating lease depreciation.
Non-interest expense totaled $190.5 million for the 2010
fourth quarter, a decrease of $16.3 million, or 7.9%, from
$206.8 million for the 2009 fourth quarter. Compensation
and employee benefits decreased $2 million, or 2.2%, from
the fourth quarter of 2009, primarily due to headcount
reductions and decreased employee medical plan expenses,
partially offset by increased costs in the Specialty Finance
businesses as a result of expansion and growth. Deposit
account premium expense decreased $7.7 million from the
fourth quarter of 2009, primarily due to revised marketing
strategies and lower checking account production. Other
expense in the fourth quarter of 2010 decreased $2.9 million,
or 7.2%, from the fourth quarter of 2009 primarily attribut-
able to a decrease in severance costs, as a result of the reor-
ganization of the company’s structure and business segments
in the fourth quarter of 2009. Other credit costs, net in the
fourth quarter of 2010 decreased $2.8 million, or 64.8%, from
the fourth quarter of 2009 primarily due to the reversal of
reserves on several unfunded commitments that were closed
and lower costs of consumer real estate loan pool insurance.
In the fourth quarter of 2010, the effective income tax
rate was 33.61% of income before tax expense, up from
32.77% for the fourth quarter of 2009. The effective tax rate
for the fourth quarter of both 2010 and 2009 included the
effects of year-to-date changes in the estimated annual
effective tax rate of approximately $1 million.