TCF Bank 2013 Annual Report Download - page 4

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agreement with Bombardier
Recreational Products, Inc. (BRP); the
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 flow lending
business. TCF also repositioned its
balance sheet creating a more flexible
funding structure. On the deposit side,
TCF completed a diversified and
stable deposit acquisition from
Prudential Bank & Trust, FSB while
also responding to our customers’
feedback by returning to our free
checking product. Finally, TCF
improved its capital position in 2012
through issuances of preferred stock,
subordinated debt and the redemption
of its trust preferred securities.
This restructuring has clearly been a
success. Continuing low interest rates
have demonstrated the wisdom of
our strategy. TCF’s 2013 net interest
margin of 4.68 percent is now one
of the strongest in the banking
business, 125 basis points higher
than our peer average.
With these 2012 investments providing
a sound foundation for the organization,
we looked to deliver solid returns to our
stockholders by successfully executing
on the strategies behind these invest-
ments. In the beginning of 2013, we
established two overarching strategies
to leverage the investments made in
the prior year: 1) maintain our strong
pre-tax pre-provision return on average
assets and 2) reduce the credit-related
costs associated with our in-footprint
consumer and commercial lending
businesses. I am proud to say that our
team has executed on these strategies
and the results have been very positive.
In order to maintain our strong pre-tax
pre-provision return on average assets,
we needed to diversify our revenue
sources and reduce our cost of funding.
Dear Stockholders:
William A. Cooper,
Chairman of the Board
& Chief Executive Ofcer
TCF’s focus in 2013 was to execute on
the investments we made in 2012 and
position the company to capitalize on
opportunities as we head into 2014.
The recent financial crisis significantly
impacted TCF, as well as the banking
industry as a whole. Elevated
unemployment levels and depressed
home values led to industry-wide
credit concerns while regulatory
changes, such as the Durbin
Amendment, have changed how
banks like TCF generate revenue.
Over the past two years, TCF has been
aggressive in addressing the various
challenges facing the current banking
environment and began to see
positive results in 2013.
Beginning in late 2011 and continuing
throughout 2012, TCF took a “building
and investing” approach to the
business. We started by expanding
our national lending platforms
with TCF Inventory Finance, Inc.’s
02