TCF Bank 2014 Annual Report Download - page 45

At December 31, 2014 and 2013, $92.9 million and $68.5 million, respectively, of TCF’s lease portfolio was discounted with third-
party financial institutions on a non-recourse basis, which is recorded in long-term borrowings. The leasing and equipment
finance portfolio table above includes lease residuals, including those related to non-recourse debt. Lease residuals represent the
estimated fair value of the leased equipment at the expiration of the initial term of the transaction and are reviewed on an ongoing
basis. Any downward revisions in estimated fair value are recorded to expense in the periods in which they become known. At
December 31, 2014, lease residuals totaled $109.8 million, or 10.1% of original equipment value, including $14.2 million related
to non-recourse sales, compared with $108.2 million, or 9.1% of original equipment value, including $15.2 million related to
non-recourse sales at December 31, 2013.
TCF Inventory Finance The following table summarizes TCF’s inventory finance portfolio by marketing segment.
At December 31,
2014 2013
Percent Percent
(Dollars in thousands) Balance of Total Balance of Total
Marketing Segment:
Powersports $ 966,504 51.5% $ 929,111 55.8%
Lawn and garden 348,760 18.6 298,415 18.0
Electronics and appliances 58,842 3.1 57,264 3.4
Other 502,984 26.8 379,587 22.8
Total $1,877,090 100.0% $1,664,377 100.0%
Inventory finance continued to expand its core programs during 2014, with an increase in the total portfolio to $1.9 billion, or
11.4% of total loans and leases, at December 31, 2014, compared with $1.7 billion, or 10.5% of total loans and leases at
December 31, 2013. The increase was primarily due to continued growth in new dealer relationships within the other industries
segment. Inventory finance originations increased to $5.5 billion in 2014 compared to $5.1 billion in 2013.
Auto Finance TCF’s auto finance loan portfolio represented 11.7% of TCF’s total loan and lease portfolio at December 31, 2014,
compared with 7.8% at December 31, 2013. The auto finance portfolio increased significantly in 2014 to $1.9 billion from
$1.2 billion at December 31, 2013, due to continued growth as TCF expands the number of active dealers in its network by
expanding its sales force in existing territories. As of December 31, 2014, the auto finance network included more than 10,500
active dealers in 50 states, compared with about 8,500 active dealers in 45 states as of December 31, 2013. The auto finance
portfolio consisted of 25.4% new car loans and 74.6% used car loans at December 31, 2014, compared with 23.3% and 76.7%,
respectively, at December 31, 2013. The average FICO score for the auto finance portfolio was 724 at both December 31, 2014
and 2013.
Credit Quality The following sections summarize TCF’s loan and lease portfolio based on what TCF believes are the most
important credit quality data that should be used to understand the overall condition of the portfolio. The following items should
be considered throughout this section:
• Loans that are over 60-days delinquent have a higher potential to become non-performing and generally are a leading
indicator for future charge-off trends.
• TDR loans are loans to financially troubled borrowers that have been modified such that TCF has granted a concession in
terms to improve the likelihood of collection of all principal and modified interest owed.
• Non-accrual loans and leases have been charged down to the estimated fair value of the collateral less selling costs, or
reserved for expected loss upon workout.
• Within the performing loans and leases, TCF classifies customers within regulatory classification guidelines. Loans and
leases that are ‘‘classified’’ are loans or leases that management has concerns regarding the ability of the borrowers to
meet existing loan or lease terms and conditions, but may never become non-performing or result in a loss.
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