TCF Bank 2014 Annual Report Download - page 15

Commercial business loans are loans originated by TCF that are secured by various types of business assets including inventory,
receivables, equipment or financial instruments. In limited cases, loans may be originated on an unsecured basis. Commercial
business loans are used for a variety of purposes, including working capital and financing the purchase of equipment. TCF
continues to develop its capital funding business that began in 2012 specializing in secured, asset-backed and cash flow lending
to smaller middle-market companies in the U.S. Approximately 67% of TCF’s commercial business loans outstanding at
December 31, 2014 were to borrowers based in its primary banking markets.
Leasing and Equipment Finance TCF provides a broad range of comprehensive lease and equipment finance products
addressing the diverse financing needs of small to large companies in a growing number of select market segments including
specialty vehicles, manufacturing, construction, medical, golf cart and turf, and technology and data processing. TCF’s leasing
and equipment finance businesses, TCF Equipment Finance, a division of TCF Bank, and Winthrop Resources Corporation
(‘‘Winthrop’’), finance equipment in all 50 states and, to a limited extent, in foreign countries. TCF Equipment Finance delivers
equipment finance solutions primarily to small and mid-size companies in various industries with significant diversity in the types
of underlying equipment. Winthrop focuses on providing customized lease financing to meet the special needs of mid-size and
large companies and health care facilities that procure high-tech essential business equipment such as computers, servers,
telecommunication equipment, medical equipment and other technology equipment.
Inventory Finance TCF Inventory Finance, Inc. (‘‘TCF Inventory Finance’’) originates commercial variable-rate loans which are
secured by the underlying floorplan equipment and supported by repurchase agreements from original equipment
manufacturers. The operation focuses on establishing relationships with distributors, dealer buying groups and manufacturers,
giving TCF access to thousands of independent retailers in the areas of powersports, lawn and garden, electronics and
appliances, recreational vehicles, marine and specialty vehicles. TCF Inventory Finance operates in all 50 states and Canada and,
to a limited extent, in other foreign countries. TCF Inventory Finance’s portfolio balances are impacted by seasonal shipments
and sales activities as dealers receive inventory shipments in anticipation of the upcoming selling season while carrying current
season product. In 2009, TCF Inventory Finance formed a joint venture with The Toro Company (‘‘Toro’’) called Red Iron
Acceptance, LLC (‘‘Red Iron’’). Red Iron provides U.S. distributors and dealers and select Canadian distributors of the Toro and
Exmark brands with reliable, cost-effective sources of financing. TCF maintains a 55% ownership interest in Red Iron, with Toro
owning the other 45%.
Auto Finance On November 30, 2011, TCF entered the indirect auto lending market through the acquisition of Gateway One
Lending & Finance, LLC (‘‘Gateway One’’). Headquartered in Anaheim, California, Gateway One originates and services loans on
new and used autos to customers through relationships established with more than 10,500 franchised and independent dealers
in all 50 states. Loans are originated for investment and for sale. Gateway One’s business strategy is to maintain strong
relationships with key personnel at the dealerships. These relationships are a significant driver in generating volume and
executing a high-touch underwriting approach to minimize credit losses.
Funding
Branch Banking Deposits from consumers and small businesses are a primary source of TCF’s funds for use in lending and for
other general business purposes. Deposit inflows and outflows are significantly influenced by economic and competitive
conditions, interest rates, 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 of deposit and retirement savings plan accounts. TCF’s
marketing strategy emphasizes attracting deposits, primarily in checking accounts, savings accounts, money market accounts
and certificates of deposit. Such deposit accounts are a source of low cost funds and provide fee income, including banking fees
and service charges.
At December 31, 2014, TCF had 379 branches, consisting of 193 traditional branches, 178 supermarket branches and eight
campus branches. TCF operates 158 branches in Illinois, 99 in Minnesota, 53 in Michigan, 35 in Colorado, 24 in Wisconsin, seven
in Arizona, two in South Dakota and one in Indiana. Of its 178 supermarket branches, TCF had 118 branches in Jewel-Osco
stores at December 31, 2014. In March 2014, TCF consolidated 37 in-store branches in Illinois and nine in Minnesota as a result
of its retail banking system realignment that was announced in December 2013 to support its strategic initiatives. See
‘‘Item 1A. Risk Factors’’ for additional information regarding the risks related to TCF’s supermarket branch relationships.
Non-interest income is a significant source of revenue for TCF and an important factor in TCF’s results of operations. In recent
years, maintaining fee and service charge revenue has been challenging as a result of economic conditions, changing customer
behavior and the impact of regulations. Providing a wide range of branch banking services is an integral component of TCF’s
business philosophy and a major strategy for generating additional non-interest income. 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
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