TCF Bank 2014 Annual Report Download - page 7

0.00%
1.00%
2.00%
3.00%
2010 2011 2012 2013 2014
Consumer Real Estate
Commerical
Leasing and Equipment Finance
Inventory Finance
Auto Finance
Net Charge-offs by Business
Percent
reduce inows into non-performing
assets. Our remaining accruing
TDR consumer portfolio totaled
$111.9 million with reserves of
23 percent at December 31, 2014.
We created these TDRs by rewriting
mortgage loans at lower interest
rates for troubled borrowers, helping
to keep thousands of TCF customers
in their homes. This program, of
which we are very proud, was a huge
success beneting both TCF and our
customers. This portfolio sale allows
us to diversify further away from our
legacy consumer real estate portfolio,
while providing a fresh start as we
move into 2015.
A Look Ahead
Executing on the investments we
have made in the business over the
past few years has brought the future
into focus at TCF. We are no longer
a bank which simply gathers
deposits and makes loans in our
footprint. As we look ahead, we are
now a company that uses our
high-quality deposit base to fund
loan and lease originations not only
in our markets, but also through
unique and diverse national lending
platforms. This strategy, with a
focus on strong enterprise risk
management, will carry us into
2015 and beyond.
With the overhang of our legacy
consumer real estate portfolio
decreased due to the TDR sale,
I am excited to begin 2015. A key
area where the TDR sale will help
us in 2015 is through a reduction in
regulatory and operational costs.
During the rst quarter of 2014, we
consolidated 46 underperforming
branches to further improve
efciencies as branch trafc has
slowed due to increased use of
online and mobile banking. Expense
efciencies will continue to be a key
focus in 2015.
We fund our asset growth primarily
with low-cost, core deposits. This is
a key part of our strategy we expect
to continue in 2015 and beyond.
Average total deposits have
increased for 17 consecutive quarters
at TCF and had an average interest
cost of just 0.26 percent in 2014. All
in all, the total cost for us to acquire
deposits is our fee income less
interest and operating expenses,
which was 1.71 percent in 2014, lower
than a ve-year FHLB borrowing rate.
In addition, 89 percent of our
deposits are FDIC-insured, making
them very sticky even in an economic
downturn. We have a track record
of being able to raise deposits as
needed to fund our ongoing loan and
lease originations.
For us to continue to attract high-
quality deposits, we must remain
competitive from a product and
service standpoint. We have made
several enhancements and will
continue to do so moving forward.
These have included image-enabled
ATMs, upgrades to our online and
mobile channels and participation in
Apple PayTM. We also began offering
rst lien mortgages again in the
branches on a correspondent basis.
We are reviewing additional product
and service opportunities, including
offering auto loans in the branches,
credit cards, and additional online and
mobile upgrades. These efforts are
aimed at creating new and enhanced
touch points with customers to ensure
a long relationship with the bank.
Banking regulation will continue
to be a focus in 2015. While it is
too early to predict the impact of
new rules, we have been proactive
in taking steps to align our products
with industry best practices. We
were one of the rst banks to adopt
deposit account disclosures based
on the Pew Charitable Trust Model
and eliminated high-to-low sort
order years ago. In addition, the
diversication of our revenue away
from banking fees will help to
minimize the impact we see from
future regulatory changes related to
fees. With the increase in gains on
loan sales and servicing revenue,
banking fees made up just 53
percent of total non-interest income
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2014 Annual Report