TCF Bank 2015 Annual Report Download - page 4

their needs. During the year, we expanded our fleet of ATMs
by 28 percent through the addition of more than 200 ATMs
in Target® retail stores in Minnesota, Chicago and Michigan.
We introduced an entirely new website experience that
provides fingertip access to the information our customers
need the most. In addition, we introduced the latest mobile
payment solutions — Apple PayTM, Samsung PayTM and
Android PayTM — providing new and more secure ways to
pay for purchases. We also focused on enhancing our prod-
uct lineup to broaden our ability to support the financial
needs of our customers. We introduced a credit card and
made significant progress in supporting the introduction
of a suite of services to serve the needs of millennials and
those preferring nontraditional banking products. Our
customers have embraced these new product offerings and
the feedback we have received gives us confidence going
forward that we can gain a greater share of their wallet and
continue to grow our deposit funding base.
Our lending businesses had another strong year, with
originations of $15.3 billion, up 13.1 percent from 2014. This
marks our fourth consecutive year of double-digit loan
origination growth. Our diverse portfolio of loans and leases
finished the year at $17.4 billion, up 6.3 percent from 2014,
led by 38.3 percent growth in auto finance and 14.4 percent
growth in inventory finance. Our unique combination of
lending businesses gives us the ability to shift originations
in response to market conditions. We do not need to make
concessions on price or credit quality to obtain the growth
we want.
As our strong loan-origination engine delivered consistent
growth, we also continued to strengthen our ability to
generate incremental revenues through core loan sales and
securitizations. In 2015, we sold $2.7 billion of loans, primarily
composed of consumer auto loans and consumer real estate
loans, for a gain of $72.1 million. This included three auto
loan securitizations. Equally important, we continued to
service the loans we sold, which resulted in $31.2 million of
servicing fee income.
Anchored by a stable foundation of high quality loans in
diverse industries, our credit quality continued to stabilize in
2015. Following the sale of $405.9 million of consumer real
estate troubled debt restructuring loans in late 2014, non-
performing assets declined 11.3 percent in 2015. In addition,
net charge-offs as a percentage of average loans and leases
declined 19 basis points to 0.30 percent, a more normalized
level as we begin 2016. We have been vigilant in executing
our diversification strategy since the last recession. With new
economic concerns, such as China and the energy markets,
we believe we are now much better positioned for a potential
economic downturn.
The diversification of our revenue sources through loan
servicing and sales has made it possible to decrease our
reliance on banking fees to fuel our profitability. Banking fees
made up just 50 percent of non-interest income in 2015,
down from 77 percent in 2010. This change in revenue mix
has helped to reduce our exposure to increased regulatory
scrutiny of these fees through enforcement of Regulation E
and the Durbin Amendment as well as potential future
action by the Consumer Financial Protection Bureau on
industry-wide overdraft fee practices.
In December 2015, the Federal Reserve raised interest rates
for the first time since 2006. This was welcome news and
positions us well to increase shareholder value due to the ac-
tions we have taken over the past several years to make our
balance sheet more asset sensitive. We are more profitable
in a rising rate environment because 81 percent of our assets
are variable/adjustable rate or short/medium duration fixed
rate. As an asset-sensitive bank, we expect to benefit from
a rising rate environment; however, there are other factors
that can affect the margin, such as competition and portfolio
mix changes. As a result, we may see the benefit of a higher
interest rate environment in the form of higher net interest
income as opposed to a lift in the margin.
LOOKING AHEAD: CRAIG DAHL OUTLINES A
STRATEGIC VISION FOR 2016 AND BEYOND
Let me begin by saying that I’m honored and grateful to be
TCF’s new chief executive officer. I appreciate the support of
our chairman, Bill Cooper, and the entire board of directors
as we look to accelerate the momentum we have achieved
over the past several years. I am deeply committed to
continuing our focus on driving shareholder value. I believe
that we have significant opportunities to further scale our
businesses and create operating leverage that will achieve
consistent earnings growth. We believe we will be successful
by adhering to our conservative banking philosophy that has
made our company strong and focusing our organization
on a clear strategy. I am also fortunate to be surrounded by
a very talented team of senior executives who bring diverse
perspective, industry knowledge and a fundamental under-
standing of the unique cultural aspects of our company. Our
management team is poised to execute our strategy and
take full advantage of the marketplace opportunities that are
in front of us. I am optimistic about the journey ahead of us.
Nowhere is the future of our company more strongly on
display than in our new brand that was introduced last June.
I believe that presenting one message and image to the mar-
ket that connects all of the best elements of our businesses
together will strengthen our opportunities. For much of our
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