TCF Bank 2010 Annual Report Download - page 7

In addition, we will soon be piloting a
change to the structure of our overdraft
services. The piloted product will result
in a daily fee if the account balance
is negative at the end of the day, not
a per item charge. The advantages
of this service are that it is simple to
understand and it eliminates a potential
pile-up of per item fees. We are being
proactive in the marketplace by
redesigning some of our product
structures to be even more reasonable
and equitable to our customers as they
will better understand the charges
they can expect on their accounts.
TCF branch banking has seen the most
change of our business lines over the
past year with the imposition of new
regulations and legislation. While the
dust has yet to settle, we continue
to stay innovative while providing
competitive products and services
to our customers.
Loan balances in our retail lending
division decreased slightly in 2010
as the portfolio totaled $7.2 billion at
year-end. With ongoing deterioration
in home values and reductions in
spending in the weakened economy,
we continued to reduce the consumer
real estate portfolio and made invest-
ments in other higher-yielding asset
categories. We also concentrated on
changing the mix of our assets to
emphasize variable-rate over fixed-rate
loans, contrary to the demand for
fixed-rate loans in the low interest rate
environment. While this effort reduces
the margin in the short-term, we
believe when interest rates rise — as
they have always done in the past —
the margin will benefit significantly.
At December 31, 2010, variable-rate
loans comprised 33 percent of total
consumer real estate loans, up from
27 percent at December 31, 2009.
Despite the current economic condi-
tions, TCF provided lending to credit-
worthy customers and funded $879.2
million of new consumer real estate
loans during 2010. These new loans
have thus far performed well with low
delinquencies and minimal charge-offs.
TCF Wholesale Banking
TCF’s Wholesale Banking division
consists of commercial banking and
specialty finance (TCF Equipment
Finance, Winthrop Resources
Corporation and TCF Inventory Finance).
Loan balances decreased slightly during
the year in our commercial portfolio,
which totaled $3.6 billion at year-end.
Overall demand for commercial loans
was tempered by the sluggish economy.
Even though the number of new
commercial projects was minimal in
the market during the year, we did see
quite a bit of movement within the
sector with an increase of lenders
competing for business. Unfortunately,
in this low-rate environment, some of
our competitors chose to ease their
underwriting standards and we saw
increased prepayments. Our yields
were squeezed somewhat by the
irrational pricing of some of these
competitors. Our commercial portfolio
is performing well under these tough
economic conditions and I attribute this
success to our conservative underwrit-
ing practices and our commitment to
relationship banking with long-term
customers. In 2011, we expect the
reorganization efforts in commercial
lending to produce both positive results
on the expense side and improved
prospecting efforts on the loan
production side.
Specialty finance, TCF’s nationally-
focused leasing, equipment and
From our long-time standard
of being open 7 days and longer
hours to new and enhanced
products and services such
as TCF Mobile Banking, we
continue to be at the forefront
of convenience banking.
Convenience
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2010 Annual Report