TCF Bank 2014 Annual Report Download - page 5

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It is hard to believe that it has been
30 years since I rst took over as
Chief Executive Ofcer at TCF. As I
begin my nal year leading the bank,
I often look back and nd myself
amazed at all the exceptional things
this company has accomplished. We
were the rst to launch totally free
checking, completed several
acquisitions and stock splits, acquired
new businesses, started businesses
from scratch, repositioned the
balance sheet and successfully
completed signicant business model
changes while reducing balance
sheet credit risk to meet a changing
regulatory landscape. These events
laid the groundwork for the success
we had in 2014 and have helped us
bring the future of TCF into focus.
A Look at 2014
2014 was a very good year for us
despite continued headwinds as
the economy showed little, if any,
improvement until late in the year
and interest rates remained at
historic lows. We earned net income
of $174.2 million, or 94 cents per
share, up 14.8 percent and 14.6
percent, respectively, from 2013.
Return on average tangible common
equity increased from 9.58 percent
to 10.08 percent during the year,
while tangible book value per share
increased 10.1 percent to $9.72. We
maintained an industry-leading net
interest margin in 2014 of 4.61
percent, over 100 basis points greater
than our peer average. Our stock
price closed the year at $15.89 with a
three-year total stockholder return of
61.02 percent.
A signicant factor in our success
in 2014 was our loan and lease
origination engine. We originated
$13.5 billion of loans and leases
in 2014, up 12.2 percent from 2013.
As a result, total assets now consist
of 85 percent loans and leases.
These originations have largely
been driven by our national lending
businesses, including Leasing and
Equipment Finance, Inventory
Finance, Gateway One Lending &
Finance and our national junior lien
mortgage business. We recognized
several years ago that the banking
industry and regulatory environment
in America were evolving. To
compete, we needed to not only
succeed in our footprint businesses,
such as branch banking, retail
lending and commercial lending, but
we needed to be successful lending
nationally as well. As a result, we
developed a unique mix of lending
platforms that have allowed us to
generate originations at an
extremely efcient level.
Our loan origination capacity is
signicant for a number of reasons.
First, it creates revenue through
interest income as our unique
portfolio mix allows us to put
high-yielding, high-quality earning
assets on our balance sheet. Second,
within our lending platforms, we
have a niche lending strategy which
allows our portfolio to be well
diversied by type of credit,
geography, industry, product and
collateral type. Finally, our core loan
sale capability allows us to reduce
risk by actively managing loan
concentrations as well as generating
gains on sales and servicing fees.
Given the growth of our national
lending platforms, investors, rating
agencies and regulators have all
expressed concern about the future
credit quality of these businesses.
We believe our experienced manage-
ment teams and effective risk
mitigation strategies within these
businesses provide for consistent
performance moving forward.
We entered the inventory nance
business in 2008 and it is led by a
management team that averages
over 30 years of experience speci-
cally in this industry. Business is
generated through program
relationships with strong
Dear Stockholders:
William A. Cooper, Chairman of the Board & Chief Executive Ofcer