TCF Bank 2010 Annual Report Download - page 9

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We maintain a secured loan and lease portfolio that is
well-diversied, which both minimizes concentration
risk and helps mitigate losses.
company and find new opportunities
to grow assets. Our next step is to look
for additional niches and in 2011 we
expect to see significant returns on
our investments.
TCF has been focused on growing
its higher-yielding specialty finance
business within its wholesale loan
and lease portfolio. In just over a
decade, we have changed the mix on
the asset side of the balance sheet
from 76 percent retail loans outstand-
ing to an even mix between retail
loans and wholesale loans and leases.
We maintain a secured loan and lease
portfolio that is well-diversified, which
both minimizes concentration risk and
helps mitigate losses. In addition, our
conservative underwriting practices
result in lending and leasing to
high-quality customers and making
investments only in programs that
add value to the organization.
Credit Quality
Credit losses
—
while better than most
of our peers
—
remained an issue and
significantly impacted TCF’s results
in 2010. Net charge-offs increased
15 percent, or 13 basis points, from last
year as adverse economic conditions
continued to impact some of our
consumer and commercial customers.
Our secured lending philosophy and
conservative under writing practices,
however, have allowed us the ability
to mitigate losses in the depressed
economy.
During the year, non-performing
assets increased $84.3 million, or
21 percent. Unlike some other banks,
TCF’s non-performing asset category is
not necessarily a leading indicator of
future credit performance because
a significant amount of our credit
problems in this category have already
been addressed through charge-offs
or reserves. That being said, we were
pleased to see non-performing assets
decline nearly $20 million during the
fourth quarter of 2010, the first decline
in 18 quarters. We cautiously view
this as an early positive sign of credit
stabilization, which could be attribut-
able to our efforts to work out problem
loans and leases and perhaps to an
improving economy.
In 2010, TCF’s consumer real estate
delinquencies and net charge-offs
continued to increase, but at a slower
rate than in the previous two years
—
an early sign of stabilization for this
portfolio. High unemployment rates
and lower home values continued to
persist in 2010, which led to continued
losses for TCF. To help our customers
avoid home foreclosure, we developed
loan modification programs that extend
payment dates, reduce interest rates
and/or reduce payment amounts.
• 7 •
2010 Annual Report