TCF Bank 2013 Annual Report Download

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Opportunity rising.
TCF Financial Corporation | 2013 Annual Report

Table of contents

  • Page 1
    Opportunity rising. TCF Financial Corporation | 2013 Annual Report

  • Page 2
    ... is rising at TCF. In 2012, TCF built a better way of banking by making several key investments in its business. In 2013, TCF successfully executed on these initiatives and began to see a positive impact company-wide. As a mid-size regional bank in today's environment, TCF believes it is now...

  • Page 3
    2013 Annual Report // TCF Financial Corporation and Subsidiaries 01 Financial Highlights At or For the Year Ended December 31, (Dollars in thousands, except per-share data) 2013 2012 % Change Operating Results: Net interest income Provision for credit losses Net interest income after ...

  • Page 4
    ... acquisition of Gateway One Lending & Finance, LLC (Gateway One), an indirect auto finance company; and the creation of TCF Capital Funding, an asset-based and cash ï¬,ow lending business. TCF also repositioned its balance sheet creating a more ï¬,exible funding structure. On the deposit side, TCF...

  • Page 5
    ... 2014 and beyond. As we move forward, we look for further improvements in credit quality driven by continued trends in home values and unemployment, new product and service offerings to our retail customers and a focus on leveraging the expense base as we bring our newer national lending businesses...

  • Page 6
    ... adopt risk management best practices in all aspects of the organization. TCF also hired a new Chief Credit Officer in December $295.8 million net after-tax charge related to the balance sheet repositioning. TCF also delivered a strong pre-tax pre-provision profit return on average assets in 2013...

  • Page 7
    2013 Annual Report // TCF Financial Corporation and Subsidiaries 05 (commercial, leasing and equipment finance and inventory finance). This nearly even mix between retail and wholesale is ideal for TCF as it demonstrates strong diversification across our loan and lease products. Prior to the ...

  • Page 8
    ... economic times have special implications for those who struggle to afford their mortgage and other loan payments. TCF seeks ways to help certain borrowers better manage their loan payments and stabilize their financial circumstances. This can be done by modifying the terms of the loan and making...

  • Page 9
    ... on a quarterly basis. TCF's home equity line of credit portfolio totaled $2.3 billion at December 31, 2013 with only 10.2 percent reaching maturity or draw period end prior to 2021. With increased competition in our banking footprint, commercial loan balances declined 7.5 percent during the...

  • Page 10
    ...checking account growth since the return to free checking. Also in 2013, TCF placed an emphasis on improving the customer experience through the introduction and upgrades of mobile apps, upgrades to web account openings and online banking, and improved online bill pay. While we will continue to make...

  • Page 11
    ... mentioned non-accrual policy change for consumer real estate loans. The leading credit indicator on the commercial side, accruing classified assets, showed similar improvement with a decrease of 30.7 percent to $156.3 million. Meanwhile, TCF's national lending businesses continue to produce...

  • Page 12
    ... mobile and online banking services. As a result, it is even more important today for us to look at opportunities to make our branch network more efficient for the organization. Improving the Customer Experience "TCF expects to further improve the branch customer experience in 2014 through product...

  • Page 13
    ... improve the customer experience. TCF expects to further improve the branch customer experience in 2014 through product, service and branding enhancements along with channel optimization initiatives in branch, ATM, online and mobile platforms. • Emphasize good corporate governance. Our customers...

  • Page 14
    ... risks that affect our business. • TCF's loan and lease growth is coming primarily from our national lending businesses. TCF has experienced management teams with track records of success in these businesses, but we must grow cautiously while actively managing risk. • Managing interest rate risk...

  • Page 15
    FORM 10-K TCF Financial Corporation For the fiscal year ended December 31, 2013

  • Page 16
    ... market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter as reported by the New York Stock Exchange...

  • Page 17
    .... Item 14. Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services 107...

  • Page 18
    ...of home improvements, autos and education. TCF's retail lending origination activity primarily consists of consumer real estate secured lending. It also includes originating loans secured by personal property and, to a limited extent, unsecured personal loans. Consumer loans are made on a fixed-term...

  • Page 19
    ...market conditions and other factors. Consumer, small business and commercial deposits are attracted from within TCF's primary banking markets through the offering of a broad selection of deposit products, including free checking accounts, money market accounts, regular savings accounts, certificates...

  • Page 20
    .... TCF offers retail checking account customers low-cost, convenient access to funds at local merchants and ATMs through its debit card programs. TCF's debit card programs are supported by interchange fees charged to retailers. Key drivers of banking fees and service charges are the number of deposit...

  • Page 21
    ... on Distributions TCF Financial's ability to pay dividends is subject to limitations imposed by the Federal Reserve. In general, Federal Reserve regulatory guidelines require the board of directors of a bank holding company to consider a number of factors when considering the payment of dividends...

  • Page 22
    ... rate for 2013 was 64 cents for each $100 of deposits. Financing Corporation assessments of $1.1 million, $1.1 million and $1.2 million were paid by TCF Bank in 2013, 2012 and 2011, respectively. The Dodd-Frank Act also gave the FDIC much greater discretion to manage the Deposit Insurance Fund...

  • Page 23
    ...Available Information TCF's website, http://ir.tcfbank.com, includes free access to Company news releases, investor presentations, conference calls to discuss published financial results, TCF's Annual Report and periodic filings required by the United States Securities and Exchange Commission (''SEC...

  • Page 24
    ... dividends from TCF Bank. These dividends, which are limited by various federal and state regulations, are the principal source of funds to pay dividends on its preferred and common stock and to meet its other cash needs. In the event TCF Bank is unable to pay dividends to it, TCF Financial may not...

  • Page 25
    ... bank branches may reduce activity in TCF's supermarket branches. Any of these could have a material adverse effect on TCF's financial condition and results of operations. New lines of business or new products and services may subject TCF to additional risk. From time to time, TCF may implement new...

  • Page 26
    ... auto lending, fair lending, account fees, loan servicing and other products and services provided to customers. Changes in regulations, regulatory policies and enforcement activity could subject TCF to reduced revenues, additional costs, limits on the types of financial services and products...

  • Page 27
    ..., report and analyze the types of risk to which TCF is subject, including liquidity, credit, market, interest rate, operational, foreign currency, legal and compliance and reputational risk. However, as with any risk management framework, there are inherent limitations to TCF's risk management...

  • Page 28
    ... as well as geographical and product diversity in its loan portfolio. For example, TCF sold $1.6 billion of loans from its auto and consumer real estate businesses for a pre-tax gain of $51.4 million in 2013. Disruptions in the financial markets, changes to regulations that reduce the attractiveness...

  • Page 29
    ..., cost savings, increases in geographic or product presence or other projected benefits; potential disruption to TCF's business; potential diversion of TCF management's time and attention; potential loss of key employees and customers of TCF or the target company; and potential changes in banking or...

  • Page 30
    ... adverse effect on TCF's financial condition and results of operations. In addition, customers may make claims and take legal action pertaining to TCF's sale or servicing of various types of loan, lease and deposit products. Whether customer claims and legal action related to TCF are founded or...

  • Page 31
    ... by both the Lending and Funding reportable segments. These branch offices are located in Illinois, Minnesota, Michigan, Colorado, Wisconsin, Indiana, Arizona and South Dakota. For more information on premises and equipment, see Note 7 of Notes to Consolidated Financial Statements. Item 3. Legal...

  • Page 32
    ....58 $10.45 9.59 10.43 10.04 $.05 .05 .05 .05 The Board of Directors of TCF Financial and TCF Bank have each adopted a Capital Plan and Dividend Policy. The policies define how enterprise risk related to capital will be managed, how the adequacy of capital will be measured and the process by which...

  • Page 33
    ...SNL's coverage universe (446 companies as of December 31, 2013). The TCF Peer Group consists of the publicly-traded banks and thrifts with total assets ranging from $10 billion to $50 billion as of September 30, 2012. The TCF Peer Group includes: New York Community Bancorp, Inc.; Hudson City Bancorp...

  • Page 34
    ... repurchase program(1) Employee transactions(2) Total Number of Shares Purchased - 2,405 - - - 3,024 - 5,429 Average Price Paid Per Share $ - $14.48 $ $ - - $ - $16.20 $ - $15.44 N.A. Not Applicable (1) The current share repurchase authorization was approved by the Board of Directors on April 14...

  • Page 35
    ... data) 2013 2012 2011 2010 2009 Loans and leases $15,846,939 $15,425,724 $14,150,255 $14,788,304 $14,590,744 Securities available for sale 551,064 712,091 2,324,038 1,931,174 1,910,476 Total assets 18,379,840 18,225,917 18,979,388 18,465,025 17,885,175 Checking, savings and money market deposits 12...

  • Page 36
    ... Taxes Consolidated Financial Condition Analysis Securities Available for Sale Loans and Leases Credit Quality Other Real Estate Owned and Repossessed and Returned Assets Liquidity Management Deposits Borrowings Contractual Obligations and Commitments Capital Management Critical Accounting Policies...

  • Page 37
    ... of TCF's business philosophy and a major strategy for generating non-interest income. Key drivers of bank fees and service charges are the number of deposit accounts and related transaction activity. The following portions of this Management's Discussion and Analysis of Financial Condition and...

  • Page 38
    ... quality customer relationships through free checking. Deposits are generated from consumers and small businesses providing a source of low-cost funds and fee income. Borrowings may be used to offset reductions in deposits or to support lending activities. Funding reported net income available to...

  • Page 39
    ... finance Auto finance Other Total loans and leases(2) Total interest-earning assets Other assets(3) Total assets Liabilities and Equity: Non-interest bearing deposits: Retail Small business Commercial and custodial Total non-interest bearing deposits Interest-bearing deposits: Checking Savings Money...

  • Page 40
    ... finance Auto finance Other Total loans and leases(2) Total interest-earning assets Other assets(3) Total assets Liabilities and Equity: Non-interest bearing deposits: Retail Small business Commercial and custodial Total non-interest bearing deposits Interest-bearing deposits: Checking Savings Money...

  • Page 41
    ... home equity: Fixed-rate Variable-rate Total consumer real estate Commercial: Fixed- and adjustable-rate Variable-rate Total commercial Leasing and equipment finance Inventory finance Auto finance Other Total loans and leases Total interest income Interest expense: Checking Savings Money market...

  • Page 42
    ... average loans and leases, in 2011. The 2013 decrease was primarily due to improved credit quality in the consumer real estate portfolio as home values increased and incidents of default decreased, as well as improved credit quality in the commercial portfolio and continued efforts to actively work...

  • Page 43
    ... of non-interest income. Year Ended December 31, (Dollars in thousands) Fees and service charges Card revenue ATM revenue Subtotal Leasing and equipment finance Gains on sales of auto loans Gains on sales of consumer real estate loans Other Fees and other revenue Gains on securities, net Total non...

  • Page 44
    ...Deposit account premiums Other Subtotal Loss on termination of debt Branch realignment Foreclosed real estate and repossessed assets, net FDIC special assessment Other credit costs, net Total non-interest expense N.M. Not meaningful. 2013 2012 2011 2010 Compound Annual Growth Rate 1-Year 5-Year...

  • Page 45
    ... average rate of .5%, terminated $1.5 billion of 4.2% weighted average fixed-rate borrowings under repurchase agreements, and sold $1.9 billion of mortgage-backed securities at a pre-tax gain of $77 million. Branch Realignment TCF executed a realignment of its retail banking system to support...

  • Page 46
    ... mortgage lien Junior lien Total consumer real estate Commercial: Commercial real estate Commercial business Total commercial Leasing and equipment finance(1) Inventory finance Auto finance Other Total loans and leases 2013 2012 2011 2010 Compound Annual Growth Rate 1-Year 5-Year 2009 2013/2012 2013...

  • Page 47
    ... estate loans were in TCF's primary banking markets. TCF's consumer real estate lines of credit require regular payments of interest and do not currently require regular payments of principal. The average Fair Isaac Corporation (''FICOா'') credit score at loan origination for the retail lending...

  • Page 48
    ... secured by properties located in its primary banking markets, compared with 90.8% as of December 31, 2012. The following table summarizes TCF's commercial real estate loan portfolio by property and loan type. At December 31, 2013 (Dollars in thousands) Multi-family housing Retail services(1) Office...

  • Page 49
    ...active dealers in 43 states as of December 31, 2012. The auto finance portfolio consisted of 23.3% new car loans and 76.7% used car loans at December 31, 2013. Auto finance also increased its portfolio of managed loans, which includes portfolio loans, loans held for sale, and loans sold and serviced...

  • Page 50
    ... loans entering non-accrual status due to a change in the non-accrual policy for consumer real estate loans during the third quarter of 2013. See Note 1 of Notes to the Consolidated Financial Statements - Summary of Significant Accounting Policies, for information on the non-accrual loans policy...

  • Page 51
    ... 6 of Notes to Consolidated Financial Statements, Allowance for Loan and Lease Losses and Credit Quality Information, for additional information. At December 31, 2011 2010 $ 45,531 72,105 $117,636 $ 55,618 59,425 $115,043 (Dollars in thousands) Principal balances: 60-89 days 90 days or more Total...

  • Page 52
    ...estate Commercial Leasing and equipment finance Auto finance Other Total non-accrual TDR loans Total TDR loans: Consumer real estate Commercial Leasing and equipment finance Inventory finance Auto finance Other Total TDR loans Over 60-day delinquency as a percentage of total accruing TDR loans 2013...

  • Page 53
    ... it becomes 90 or more days delinquent under the modified terms, has been transferred to non-accrual status subsequent to the modification or has been transferred to other real estate owned. Commercial loans that are 90 or more days past due and not well secured at the time of modification remain on...

  • Page 54
    ..., property sale and, if applicable, mortgage insurance claims processes, it can take 18 months or longer for a loan to migrate from initial delinquency to final disposition. This resolution process generally takes much longer for loans secured by real estate than for unsecured loans or loans secured...

  • Page 55
    ...Transfers to other assets Return to accrual status Payments received Other, net Balance, end of period Consumer Real Estate $149,371 340,359 (62,591) (82,632) (96,137) (12,827) (643) $234,900 At or for the Year Ended December 31, 2012 Leasing and Equipment Inventory Auto Commercial Finance Finance...

  • Page 56
    ... real estate Commercial real estate Commercial business Total commercial Leasing and equipment finance Inventory finance Auto finance Other Total allowance for loan and lease losses Other credit loss reserves: Reserves for unfunded commitments Total credit loss reserves N.A. Not Applicable. 2013...

  • Page 57
    ... loan and lease losses. Year Ended December 31, 2012 2011 2010 $ 255,672 $ 265,819 $ 244,471 (Dollars in thousands) Balance at beginning of year Charge-offs: Consumer real estate: First mortgage lien Junior lien Total consumer real estate Commercial real estate Commercial business Total commercial...

  • Page 58
    .... The TCF Asset/Liability Management Committee (''ALCO'') and the Finance Committee of the TCF Financial Board of Directors have each adopted a Liquidity Management Policy to direct management of the Company's liquidity risk, see ''Item 7A. Quantitative and Qualitative Disclosures about Market Risk...

  • Page 59
    ... Finance Committee of the TCF Financial Board of Directors have adopted a Holding Company Investment and Liquidity Management Policy, which establishes the minimum amount of cash or liquid investments TCF Financial will hold, see ''Item 7A. Quantitative and Qualitative Disclosures about Market Risk...

  • Page 60
    ... element of TCF's campus banking strategy. Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition in the contract. These commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since...

  • Page 61
    ...unexpected market or economic conditions, and also provide investors, regulators, and other users with information to be viewed in relation to other banking institutions. The following table is a reconciliation of the non-GAAP financial measures of tangible realized common equity and tangible assets...

  • Page 62
    ...the allowance for loan and lease losses, lease financings and income taxes. See Note 1 of Notes to Consolidated Financial Statements for further discussion of critical accounting policies. Recent Accounting Developments On January 17, 2014, the Financial Accounting Standards Board (''FASB'') issued...

  • Page 63
    ... holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The adoption of this ASU will be required on a prospective basis beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2014...

  • Page 64
    ...and securities available for sale portfolios, including declines in commercial or residential real estate values, changes in the allowance for loan and lease losses dictated by new market conditions or regulatory requirements, or the inability of home equity line borrowers to make increased payments...

  • Page 65
    ..., including class action litigation concerning TCF's lending or deposit activities including account servicing processes or fees or charges, or employment practices; the effect of interchange rate litigation against the Federal Reserve on debit card interchange fees; and possible increases in...

  • Page 66
    ... the balance sheet. Since TCF does not hold a trading portfolio, the Company is not exposed to market risk from trading activities. As such, the major sources of the Company's interest rate risk are timing differences in the maturity and re-pricing characteristics of assets and liabilities, changes...

  • Page 67
    ... or net interest margin in the future. TCF estimates that an immediate 50 basis point decrease in current mortgage loan interest rates would increase prepayments on the fixed-rate mortgage-backed securities and consumer real estate loans at December 31, 2013, by approximately $22 million, or 7%, in...

  • Page 68
    ...). ALCO and the Finance Committee of TCF Financial's Board of Directors have adopted a Liquidity Management Policy for the Bank to direct management of the Company's liquidity risk. The objective of the Liquidity Management Policy is to ensure that TCF meets its cash and collateral obligations...

  • Page 69
    ... to foreign currency risk as changes in foreign exchange rates may impact the Company's investment in TCF Commercial Finance Canada, Inc. or results of other transactions in countries outside of the United States. Beginning in 2011, TCF entered into forward foreign exchange contracts in order to...

  • Page 70
    ... three-year period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), TCF Financial Corporation's internal control over financial reporting...

  • Page 71
    ...finance Inventory finance Auto finance Other Total loans and leases Allowance for loan and lease losses Net loans and leases Premises and equipment, net Goodwill Other assets Total assets Liabilities and Equity Deposits: Checking Savings Money market Certificates of deposit Total deposits Short-term...

  • Page 72
    ... Fees and service charges Card revenue ATM revenue Subtotal Leasing and equipment finance Gains on sales of auto loans Gains on sales of consumer real estate loans Other Fees and other revenue Gains on securities, net Total non-interest income Non-interest expense: Compensation and employee benefits...

  • Page 73
    ...thousands) Net income (loss) attributable to TCF Financial Corporation Other comprehensive (loss) income: Securities available for sale: Unrealized (losses) gains arising during the period Reclassification of gains to net income (loss) Foreign currency hedge: Unrealized gains (losses) arising during...

  • Page 74
    ... 31, 2010 Net income attributable to TCF Financial Corporation Other comprehensive income Public offering of preferred stock Net distribution to non-controlling interest Dividends on common stock Grants of restricted stock, 1,256,094 shares Common shares purchased by TCF employee benefit plans...

  • Page 75
    ... sold to TCF employee benefit plans Net cash (used in) provided by financing activities Net (decrease) increase in cash and due from banks Cash and due from banks at beginning of period Cash and due from banks at end of period Supplemental disclosures of cash flow information: Cash paid (received...

  • Page 76
    ... to conform to the current year presentation. The preparation of financial statements in conformity with United States Generally Accepted Accounting Principles (''GAAP'') requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of...

  • Page 77
    ... known. TCF occasionally sells minimum lease payments, as a credit risk reduction tool, to third-party financial institutions at fixed rates on a non-recourse basis with its underlying equipment as collateral. For those transactions which achieve sale treatment, the related lease cash flow stream...

  • Page 78
    ... consumer real estate lines of credit are amortized to service fee income. Non-accrual Loans and Leases Loans and leases are generally placed on non-accrual status when the collection of interest and principal is 90 days or more past due unless, in the case of commercial loans, they are well-secured...

  • Page 79
    ...fixed or variable rates. For those transactions which achieve sale treatment, the underlying loan is not recognized on TCF's Consolidated Statements of Financial Condition. The Company sells these loans at par value and generally retains an interest in the future cash flows of borrower loan payments...

  • Page 80
    ...primarily related to the sale and servicing of auto loans and consumer real estate loans. Cash payments received on loans serviced for third parties are held in separate accounts until remitted. TCF also retains cash balances for potential loss recourse on certain sold auto loans as well as cash for...

  • Page 81
    ...) on available for sale securities, and foreign currency translation adjustments as of the current period end. Mortgage-backed securities primarily consist of U.S. Government sponsored enterprises and federal agencies. During 2013, TCF transferred $9.3 million of available for sale mortgage-backed...

  • Page 82
    ... 2013. During 2012 and 2011, TCF recorded impairment charges of $225 thousand and $768 thousand, respectively, on other securities as full recovery was not expected. Unrealized losses on securities available for sale are due to lower values for equity securities or changes in interest rates. TCF...

  • Page 83
    ... Financial Condition. At December 31, 2013 and 2012, the consumer real estate junior lien portfolio was comprised of $2.1 billion and $1.9 billion, respectively, of home equity lines of credit (''HELOCs'') and $505.5 million and $577.8 million, respectively, of amortizing junior lien mortgage loans...

  • Page 84
    ..., 2013 and had no impairment charges recorded during the year ended December 31, 2012. No servicing assets or liabilities related to consumer real estate loans were recorded within TCF's Consolidated Statements of Financial Condition, as the contractual servicing fees are adequate to compensate TCF...

  • Page 85
    ... for loan and lease losses and balances by type of allowance methodology. TCF's key credit quality indicator is the receivable's payment performance status, defined as accruing or non-accruing. At or For the Year Ended December 31, 2013 Leasing and Equipment Inventory Auto Commercial Finance Finance...

  • Page 86
    ... real estate: First mortgage lien Junior lien Total consumer real estate Commercial: Commercial real estate Commercial business Total commercial Leasing and equipment finance Inventory finance Auto finance Other Subtotal Portfolios acquired with deteriorated credit quality Total Current-59 Days...

  • Page 87
    ..., 2013 and 2012, no additional funds were committed to leasing and equipment finance, inventory finance or auto finance borrowers in TDR status. When a loan is modified as a TDR, principal balances are generally not forgiven. Loan modifications to troubled borrowers are not reported as TDR loans in...

  • Page 88
    ... real estate: First mortgage lien Junior lien Total consumer real estate Commercial: Commercial real estate Commercial business Total commercial Leasing and equipment finance Total Year Ended December 31, 2011 Original Contractual Interest Income Interest Due on Recognized on Accruing TDR Loans...

  • Page 89
    ... when it becomes 90 or more days delinquent under the modified terms, has been transferred to non-accrual status subsequent to the modification or has been transferred to other real estate owned. Year Ended December 31, 2012 Number Loan Balance(1) of Loans Loan Balance(1) $ 12,511 2,479 14,990 5,561...

  • Page 90
    ... 31, 2013 Unpaid Related Contractual Loan Allowance Balance Balance Recorded (In thousands) Impaired loans with an allowance recorded: Consumer real estate: First mortgage lien Junior lien Total consumer real estate Commercial: Commercial real estate Commercial business Total commercial Leasing and...

  • Page 91
    ...real estate: First mortgage lien Junior lien Total consumer real estate Commercial: Commercial real estate Commercial business Total commercial Auto finance Total impaired loans without an allowance recorded Total impaired loans At December 31, 2012 Unpaid Related Contractual Loan Allowance Balance...

  • Page 92
    ... Balance Recognized (In thousands) Impaired loans with an allowance recorded: Consumer real estate: First mortgage lien Junior lien Total consumer real estate Commercial: Commercial real estate Commercial business Total commercial Leasing and equipment finance Inventory finance Auto finance...

  • Page 93
    ... assets for the years ended December 31, 2013, 2012, or 2011. Note 9. Deposits Deposits are summarized as follows. At December 31, 2013 (Dollars in thousands) Checking: Non-interest bearing Interest bearing Total checking Savings Money market Total checking, savings and money market Certificates...

  • Page 94
    ... repurchase agreements Line of Credit - TCF Commercial Finance Canada, Inc. Total Maximum month-end balance Federal Home Loan Bank advances Federal funds purchased Securities sold under repurchase agreements Line of Credit - TCF Commercial Finance Canada, Inc. N.A. Not Applicable. Rate .10% .10...

  • Page 95
    ... 2017 2018 2019 2013 2014 2015 2016 2017 Subtotal Subordinated bank notes Subtotal Discounted lease rentals Subtotal Other long-term Subtotal Total long-term borrowings At December 31, 2013, TCF Bank had pledged loans secured by residential real estate and commercial real estate loans with an...

  • Page 96
    ... Increases for tax positions related to the current year Increases for tax positions related to prior years Decreases for tax positions related to prior years Settlements with taxing authorities Decreases related to lapses of applicable statutes of limitation Balance, end of year 2013 $4,230 394 362...

  • Page 97
    ... 31, 2013 and 2012, respectively. TCF's federal income tax returns are open and subject to examination for 2012 and later tax return years. TCF's various state income tax returns are generally open for the 2009 and later tax return years based on individual state statutes of limitation. Changes in...

  • Page 98
    ... rate of 6.45%. TCF paid $6.1 million in cash dividends to holders of Series B Preferred stock during 2013 and no cash dividends were paid to holders of Series B Preferred Stock in 2012. Shares Held in Trust for Deferred Compensation Plans Executive, Senior Officer, Winthrop and Directors Deferred...

  • Page 99
    ... Federal Deposit Insurance Corporation Improvement Act of 1991. (2) The minimum Tier 1 leverage ratio for bank holding companies and banks is 3.0 or 4.0 percent, depending on factors specified in regulations issued by federal banking agencies. Note 15. Stock Compensation The TCF Financial Incentive...

  • Page 100
    ... Expected term (in years) Risk-free interest rate 28.5% 28.5% 3.5% 6.25 - 6.75 2.58 - 2.91% Note 16. Employee Benefit Plans Employees Stock Purchase Plan The TCF Employees Stock Purchase Plan (the ''ESPP''), a qualified 401(k) and employee stock ownership plan, generally allows participants to make...

  • Page 101
    ...Plan. Each month TCF credits participants' accounts with interest on the account balance based on the five-year Treasury rate plus 25 basis points determined at the beginning of each year. All participant accounts are vested. The measurement of the projected benefit obligation, prepaid pension asset...

  • Page 102
    ... the year ended December 31, 2012. The discount rate and expected long-term rate of return on plan assets used to determine the estimated net benefit plan cost were as follows. Pension Plan Year Ended December 2013 2012 3.00% 4.00% 1.50 1.50 Postretirement Plan Year Ended December 31 2013 2012 2011...

  • Page 103
    ... of net periodic benefit cost during 2014. The actuarial assumptions used in the Pension Plan valuation are reviewed annually. The expected long-term rate of return on plan assets is determined by reference to historical market returns and future expectations. The 10-year average return of the index...

  • Page 104
    ... the same credit policies in making these commitments as it does for making direct loans. TCF evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained is based on a credit evaluation of the customer. Financial instruments with off-balance sheet risk are...

  • Page 105
    ... include forward contracts, are used to manage the foreign exchange risk associated with the Company's net investment in TCF Commercial Finance Canada, Inc., a wholly-owned indirect Canadian subsidiary of TCF Bank, along with certain assets, liabilities and forecasted transactions of that subsidiary...

  • Page 106
    ... upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Securities available for sale, derivatives (forward foreign exchange contracts and swap agreements), and assets held in trust for deferred compensation plans are...

  • Page 107
    ...: Securities available for sale: Mortgage-backed securities: U.S. Government sponsored enterprises and federal agencies Other Other securities Forward foreign exchange contracts Swap agreements Assets held in trust for deferred compensation plans Total assets Forward foreign exchange contracts...

  • Page 108
    ... Measurements: Securities available for sale: Mortgage-backed securities: U.S. Government sponsored enterprises and federal agencies Other Other securities Forward foreign exchange contracts Assets held in trust for deferred compensation plans Total assets Forward foreign exchange contracts Swap...

  • Page 109
    ... securities are categorized as Level 1 assets and the fair value is determined using quoted prices from the New York Stock Exchange. Forward Foreign Exchange Contracts TCF's forward foreign exchange contracts are currency contracts executed in over-the-counter markets and are valued using a cash...

  • Page 110
    ... real estate Commercial real estate Commercial business Equipment finance loans Inventory finance loans Auto finance Other Allowance for loan losses(3) Total financial instrument assets Financial instrument liabilities: Checking, savings and money market deposits Certificates of deposit Short-term...

  • Page 111
    ... loans. Deposits The fair value of checking, savings and money market deposits is deemed equal to the amount payable on demand. The fair value of certificates of deposit is estimated based on discounted cash flows using currently offered market rates. The intangible value of long-term relationships...

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    ...Common Share Net income (loss) attributable to TCF Financial Corporation Preferred stock dividends Net income (loss) available to common stockholders Earnings allocated to participating securities Earnings (loss) allocated to common stock Weighted-average shares outstanding Restricted stock Weighted...

  • Page 113
    ...identified as reportable segments. Lending includes retail lending, commercial real estate and business lending, leasing and equipment finance, inventory finance and auto finance. Funding includes branch banking and treasury services. Support Services includes holding company and corporate functions...

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    (Dollars in thousands) At or For the Year Ended December 31, 2011: Revenues from external customers: Interest income Non-interest income (expense) Total Net interest income Provision for credit losses Non-interest income Non-interest expense Income tax expense (benefit) Income (loss) after income ...

  • Page 115
    Note 24. Parent Company Financial Information TCF Financial's (parent company only) condensed statements of financial condition as of December 31, 2013 and 2012, and the condensed statements of income and cash flows for the years ended December 31, 2013, 2012 and 2011 are as follows. Condensed ...

  • Page 116
    ... preferred securities Shares sold to TCF employee benefit plans Stock compensation tax (expense) benefit Repayments of senior unsecured term note Net cash (used in) provided by financing activities Net (decrease) increase in cash and due from banks Cash and due from banks at beginning of period Cash...

  • Page 117
    ... income and the related tax effects are presented in the tables below. (In thousands) Year Ended December 31, 2013 Securities available for sale: Unrealized losses arising during the period Reclassification of gains to net income Net unrealized losses Foreign currency hedge: Unrealized gains...

  • Page 118
    ... and related notes. SELECTED QUARTERLY FINANCIAL DATA (Unaudited) At (In thousands) SELECTED FINANCIAL CONDITION DATA: Total loans and leases Securities available for sale Goodwill Total assets Deposits Short-term borrowings Long-term borrowings Total equity Dec. 31, 2013 Sep. 30, 2013 Jun. 30, 2013...

  • Page 119
    ... FINANCIAL RATIOS: Return on average assets(1) Return on average common equity(1) Net interest margin(1) Net charge-off as a percentage of average loans and leases(1) Average total equity to average total assets Dividend payout ratio (1) Dec. 31, 2013 Sep. 30, 2013 Jun. 30, 2013 Three Months...

  • Page 120
    ... time periods specified in the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to the Company's management, including the Chief Executive Officer (Principal Executive Officer), Chief Financial Officer...

  • Page 121
    ...or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements. Management, with the participation of the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial...

  • Page 122
    ... of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial condition of TCF Financial Corporation and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, equity, and cash flows for...

  • Page 123
    ... Executive Officer (''PEO''), Principal Financial Officer (''PFO'') and Principal Accounting Officer (''PAO'') (the ''Senior Financial Management Code of Ethics'') as well as a code of ethics generally applicable to all officers (including the PEO, PFO and PAO), directors and employees of TCF...

  • Page 124
    ... in the section entitled Corporate Governance - Director Independence and Related Person Transactions of TCF's 2014 Proxy, and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services Information regarding principal accountant fees and services and the Audit Committee...

  • Page 125
    ... of Equity for each of the years in the three-year period ended December 31, 2013 Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2013 Notes to Consolidated Financial Statements Other Financial Data Management's Report on Internal Control...

  • Page 126
    ... duly authorized. TCF Financial Corporation Registrant By: /s/ WILLIAM A. COOPER William A. Cooper Chairman and Chief Executive Officer Dated: February 25, 2014 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf...

  • Page 127
    ... Certificate for 6.45% Series B Non-Cumulative Perpetual Preferred Stock [incorporated by reference to Exhibit 4.1 to TCF Financial Corporation's Current Report on Form 8-K filed December 18, 2012] Copies of instruments with respect to long-term debt will be furnished to the Securities and Exchange...

  • Page 128
    ... TCF Performance-Based Compensation Policy for Covered Executive Officers, as approved effective January 1, 2013 [incorporated by reference to Exhibit 10.2 to TCF Financial Corporation's Current Report on Form 8-K filed April 30, 2013] Form of 2013 Management Incentive Plan - Executive, as executed...

  • Page 129
    ... of Earnings to Fixed Charges and Preferred Stock Dividends for years ended December 31, 2013, 2012, 2011, 2010, and 2009 Subsidiaries of TCF Financial Corporation (as of December 31, 2013) Consent of KPMG LLP dated February 25, 2014 Certification of the Chief Executive Officer Pursuant to Section...

  • Page 130
    ...Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Financial Statements of the Company for the period ended December 31, 2013, formatted in XBRL: (i) the Consolidated...

  • Page 131
    Corporate Information

  • Page 132
    2013 Annual Report // TCF Financial Corporation and Subsidiaries A-01 Board of Directors William A. Cooper 5 Chairman of the Board and Chief Executive Officer, TCF Financial Corporation Chairman since 1987 Raymond L. Barton 5,6,7 Chairman, Great Clips, Inc. Director since 2011 Peter Bell 3,6,7 ...

  • Page 133
    ... Senior Vice President and Director of Talent Management Gloria J. Charley TCF Commercial Finance Canada, Inc. President Peter D. Kelley Retail Lending Managing Director Mark W. Rohde TCF Equipment Finance, Inc. President and Chief Executive Officer William S. Henak Executive Vice Presidents...

  • Page 134
    ...Finance/Treasury Executive Vice President and Chief Financial Officer Michael S. Jones Legal Executive Vice President, General Counsel and Secretary, TCF National Bank Joseph T. Green Executive Vice President and Chief Lending Officer Mark D. Nyquist Executive Vice President and Chief Accounting...

  • Page 135
    ... 31, 2013) Executive Offices TCF Financial Corporation 200 Lake Street East Mail Code: EX0-03-A Wayzata, MN 55391-1693 (952) 745-2760 Minnesota/South Dakota Traditional Branches Minneapolis/St. Paul Area (44) Greater Minnesota (2) South Dakota (2) TCF Equipment Finance, Inc. Headquarters 11100...

  • Page 136
    ... (800) 443-6852 www.computershare.com/investor Note to Stockholders It is important for registered stockholders to keep the transfer agent informed of their current address and to cash their dividend payments; otherwise, TCF may be required by state law to report and deliver (or "escheat") these...

  • Page 137
    ... Media Contact Mark Goldman Senior Vice President Corporate Communications (952) 475-7050 Available Information Please visit our website at http://ir.tcfbank.com for free access to TCF investor information, news releases, investor presentations, quarterly conference calls, annual reports and SEC...

  • Page 138
    ..., debit cards, phone banking, online banking and mobile banking. Retail Deposit Focused. TCF earns a significant portion of its profits from the deposit side of the bank. We accumulate a large number of low-cost accounts through convenient services and products targeted to a broad range of customers...

  • Page 139
    TCFIR9356 TCF Financial Corporation | 200 Lake Street East, Wayzata, MN 55391-1693 | tcfbank.com