(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
☑ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | Smaller reporting company | ||
Emerging growth company |
Description | Page |
Part I - Financial Information | |
Part II - Other Information | |
(Dollars in thousands, except per share data) | At September 30, 2019 | At December 31, 2018 | |||||
ASSETS | |||||||
Cash and cash equivalents: | |||||||
Cash and due from banks | $ | $ | |||||
Interest-bearing deposits with other banks | |||||||
Total cash and cash equivalents | |||||||
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost | |||||||
Investment securities: | |||||||
Available-for-sale, at fair value | |||||||
Held-to-maturity, at amortized cost (fair value of $149,928 and $149,267) | |||||||
Total investment securities | |||||||
Loans and leases held-for-sale (includes $114,831 and $18,070 at fair value) | |||||||
Loans and leases | |||||||
Allowance for loan and lease losses | ( | ) | ( | ) | |||
Loans and leases, net | |||||||
Premises and equipment, net | |||||||
Goodwill | |||||||
Other intangible assets, net | |||||||
Loan servicing rights | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND EQUITY | |||||||
Liabilities | |||||||
Deposits: | |||||||
Noninterest-bearing | $ | $ | |||||
Interest-bearing | |||||||
Total deposits | |||||||
Short-term borrowings | |||||||
Long-term borrowings | |||||||
Other liabilities | |||||||
Total liabilities | |||||||
Equity | |||||||
Preferred stock, $0.01 par value | |||||||
Authorized - 2,000,000 shares at September 30, 2019 and 30,000,000 shares at December 31, 2018 | |||||||
Issued and outstanding - 7,000 shares at both September 30, 2019 and December 31, 2018 | |||||||
Common stock, $1.00 par value at both September 30, 2019 and December 31, 2018 | |||||||
Authorized - 220,000,000 shares at September 30, 2019 and 142,268,000 shares at December 31, 2018 | |||||||
Issued and outstanding - 153,571,381 shares at September 30, 2019 and 88,198,460 shares at December 31, 2018 | |||||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Accumulated other comprehensive income (loss) | ( | ) | |||||
Treasury stock at cost and other (4,909,069 Treasury shares at December 31, 2018) | ( | ) | ( | ) | |||
Total TCF Financial Corporation shareholders' equity | |||||||
Non-controlling interest | |||||||
Total equity | |||||||
Total liabilities and equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Interest income | |||||||||||||||
Interest and fees on loans and leases | $ | $ | $ | $ | |||||||||||
Interest on investment securities: | |||||||||||||||
Taxable | |||||||||||||||
Tax-exempt | |||||||||||||||
Interest on loans held-for-sale | |||||||||||||||
Interest on other earning assets | |||||||||||||||
Total interest income | |||||||||||||||
Interest expense | |||||||||||||||
Interest on deposits | |||||||||||||||
Interest on borrowings | |||||||||||||||
Total interest expense | |||||||||||||||
Net interest income | |||||||||||||||
Provision for credit losses | |||||||||||||||
Net interest income after provision for credit losses | |||||||||||||||
Noninterest income | |||||||||||||||
Fees and service charges on deposit accounts | |||||||||||||||
Leasing revenue | |||||||||||||||
Wealth management revenue | |||||||||||||||
Card and ATM revenue | |||||||||||||||
Net (losses) gains on sales of loans and leases | ( | ) | |||||||||||||
Servicing fee revenue | |||||||||||||||
Net gains (losses) on investment securities | |||||||||||||||
Other | ( | ) | ( | ) | |||||||||||
Total noninterest income | |||||||||||||||
Noninterest expense | |||||||||||||||
Compensation and employee benefits | |||||||||||||||
Occupancy and equipment | |||||||||||||||
Lease financing equipment depreciation | |||||||||||||||
Net foreclosed real estate and repossessed assets | |||||||||||||||
Merger-related expenses | |||||||||||||||
Other | |||||||||||||||
Total noninterest expense | |||||||||||||||
Income before income tax expense | |||||||||||||||
Income tax (benefit) expense | ( | ) | |||||||||||||
Income after income tax (benefit) expense | |||||||||||||||
Income attributable to non-controlling interest | |||||||||||||||
Net income attributable to TCF Financial Corporation | |||||||||||||||
Preferred stock dividends | |||||||||||||||
Impact of preferred stock redemption | |||||||||||||||
Net income available to common shareholders | $ | $ | $ | $ | |||||||||||
Earnings per common share | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | |||||||||||||||
Weighted-average common shares outstanding | |||||||||||||||
Basic | |||||||||||||||
Diluted |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net income attributable to TCF Financial Corporation | $ | $ | $ | $ | |||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Net unrealized gains (losses) on available for sale investment securities and interest-only strips | ( | ) | ( | ) | |||||||||||
Net unrealized gains (losses) on net investment hedges | ( | ) | ( | ) | |||||||||||
Foreign currency translation adjustment | ( | ) | ( | ) | |||||||||||
Recognized postretirement prior service cost | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total other comprehensive income (loss), net of tax | ( | ) | ( | ) | |||||||||||
Comprehensive income | $ | $ | $ | $ |
TCF Financial Corporation | |||||||||||||||||||||||||||||||
Number of Shares Issued | Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock and Other | Total | Non- controlling Interest | Total Equity | ||||||||||||||||||||||
(Dollars in thousands) | Preferred | Common | |||||||||||||||||||||||||||||
Balance, June 30, 2019 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||
Reverse merger with Chemical Financial Corporation | — | — | — | — | — | ||||||||||||||||||||||||||
Net investment by (distribution to) non-controlling interest | — | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||
Repurchases of 780,716 shares of common stock | — | — | — | — | — | — | — | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||
Dividends on 5.70% Series C Preferred Stock | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Dividends on common stock of $0.35 per common share | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Stock compensation plans, net of tax | — | — | — | — | — | ||||||||||||||||||||||||||
Change in shares held in trust for deferred compensation plans, at cost | — | — | — | — | ( | ) | — | — | — | — | — | ||||||||||||||||||||
Balance, September 30, 2019 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ |
Balance, June 30, 2018 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||
Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | ( | ) | — | ( | ) | ( | ) | |||||||||||||||||||
Net investment by (distribution to) non-controlling interest | — | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||
Repurchases of 477,804 shares of common stock | — | — | — | — | — | — | — | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||
Dividends on 5.70% Series C Preferred Stock | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Dividends on common stock of $0.295 per common share | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Common stock warrants exercised | — | — | ( | ) | — | — | — | — | — | — | |||||||||||||||||||||
Stock compensation plans, net of tax | — | ( | ) | — | ( | ) | — | — | — | — | |||||||||||||||||||||
Change in shares held in trust for deferred compensation plans, at cost | — | — | — | — | — | — | ( | ) | — | — | — | ||||||||||||||||||||
Balance, September 30, 2018 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
TCF Financial Corporation | |||||||||||||||||||||||||||||||
Number of Shares Issued | Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock and Other | Total | Non- controlling Interest | Total Equity | ||||||||||||||||||||||
(Dollars in thousands) | Preferred | Common | |||||||||||||||||||||||||||||
Balance, December 31, 2018 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | ||||||||||||||||||||||||||
Reverse merger with Chemical Financial Corporation | — | — | — | — | — | ||||||||||||||||||||||||||
Net investment by (distribution to) non-controlling interest | — | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||
Repurchases of 1,453,908 shares of common stock | — | — | — | — | — | — | — | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||
Dividends on 5.70% Series C Preferred Stock | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Dividends on common stock of $0.94 per common share | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Stock compensation plans, net of tax | — | ( | ) | — | ( | ) | ( | ) | — | — | — | ||||||||||||||||||||
Change in shares held in trust for deferred compensation plans, at cost | — | — | — | — | ( | ) | — | — | — | — | — | ||||||||||||||||||||
Balance, September 30, 2019 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
Balance, December 31, 2017 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||
Change in accounting principle | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Balance, January 1, 2018 | ( | ) | ( | ) | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ( | ) | — | ( | ) | ( | ) | ||||||||||||||||||
Net investment by (distribution to) non-controlling interest | — | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||
Redemption of Series B Preferred Stock | ( | ) | — | ( | ) | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||
Repurchases of 3,195,126 shares of common stock | — | — | — | — | — | — | — | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||
Dividends on 6.45% Series B Preferred Stock | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Dividends on 5.70% Series C Preferred Stock | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Dividends on common stock of $0.885 per common share | — | — | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Common stock warrants exercised | — | — | ( | ) | — | — | — | — | — | — | |||||||||||||||||||||
Common shares purchased by TCF employee benefit plans | — | — | — | — | — | — | |||||||||||||||||||||||||
Stock compensation plans, net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||
Change in shares held in trust for deferred compensation plans, at cost | — | — | — | — | ( | ) | — | — | — | — | — | ||||||||||||||||||||
Balance, September 30, 2018 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
Nine Months Ended September 30, | |||||||
(In thousands) | 2019 | 2018 | |||||
Cash flows from operating activities | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Provision for credit losses | |||||||
Share-based compensation expense | |||||||
Depreciation and amortization | |||||||
Provision (benefit) for deferred income taxes | ( | ) | |||||
Net gains on sales of assets | ( | ) | ( | ) | |||
Proceeds from sales of loans and leases held-for-sale | |||||||
Originations of loans and leases held-for-sale, net of repayments | ( | ) | ( | ) | |||
Impairment of loan servicing rights | |||||||
Net change in other assets | ( | ) | |||||
Net change in other liabilities | ( | ) | |||||
Other, net | ( | ) | ( | ) | |||
Net cash provided by (used in) operating activities | |||||||
Cash flows from investing activities | |||||||
Proceeds from sales of investment securities available-for-sale | |||||||
Proceeds from maturities of and principal collected on investment securities available-for-sale | |||||||
Purchases of investment securities available-for-sale | ( | ) | ( | ) | |||
Proceeds from maturities of and principal collected on investment securities held-to-maturity | |||||||
Purchases of investment securities held-to-maturity | ( | ) | ( | ) | |||
Redemption of Federal Home Loan Bank stock | |||||||
Purchases of Federal Home Loan Bank stock | ( | ) | ( | ) | |||
Proceeds from sales of loans and leases | |||||||
Loan and lease originations and purchases, net of principal collected | ( | ) | |||||
Proceeds from sales of other assets | |||||||
Purchases of premises and equipment and lease equipment | ( | ) | ( | ) | |||
Net cash acquired (paid) in business combination | |||||||
Other, net | ( | ) | |||||
Net cash provided by (used in) investing activities | ( | ) | |||||
Cash flows from financing activities | |||||||
Net change in deposits | ( | ) | |||||
Net change in short-term borrowings | ( | ) | |||||
Proceeds from long-term borrowings | |||||||
Payments on long-term borrowings | ( | ) | ( | ) | |||
Payments on liabilities related to acquisition and portfolio purchase | ( | ) | |||||
Redemption of Series B preferred stock | ( | ) | |||||
Repurchases of common stock | ( | ) | ( | ) | |||
Common shares sold to TCF employee benefit plans | |||||||
Dividends paid on preferred stock | ( | ) | ( | ) | |||
Dividends paid on common stock | ( | ) | ( | ) | |||
Exercise of stock options | ( | ) | |||||
Payments related to tax-withholding upon conversion of share-based awards | ( | ) | ( | ) | |||
Net investment by (distribution to) non-controlling interest | ( | ) | ( | ) | |||
Net cash provided by (used in) financing activities | ( | ) | ( | ) | |||
Net change in cash and due from banks | ( | ) | |||||
Cash and cash equivalents at beginning of period | |||||||
Cash and cash equivalents at end of period | $ | $ | |||||
Supplemental disclosures of cash flow information | |||||||
Cash paid (received) for: | |||||||
Interest on deposits and borrowings | $ | $ | |||||
Income taxes, net | ( | ) | |||||
Noncash activities: | |||||||
Transfer of loans and leases to other assets | |||||||
Transfer of loans and leases from held for investment to held for sale, net |
(In thousands) | TCF Financial Ownership and Market Value Table | ||||||||
Number of Chemical Outstanding Shares | Percentage Ownership | Market Value at $42.04 Chemical Share Price | |||||||
Chemical shareholders | % | $ | |||||||
Legacy TCF shareholders | |||||||||
Total | $ |
(In thousands) | Hypothetical Legacy TCF Ownership | |||||
Number of Legacy TCF Outstanding Shares | Percentage Ownership | |||||
Chemical shareholders | % | |||||
Legacy TCF shareholders | ||||||
Total | % |
(In thousands, except per share data) | ||||
Number of hypothetical Legacy TCF shares issued to Chemical shareholders | ||||
Legacy TCF market price per share as of July 31, 2019 | $ | |||
Purchase price determination of hypothetical Legacy TCF shares issued to Chemical shareholders | ||||
Value of Chemical stock options hypothetically converted to options to acquire shares of Legacy TCF common stock | ||||
Cash in lieu of fractional shares | ||||
Purchase price consideration | $ |
(In thousands) | |||
Purchase price consideration: | |||
Stock | $ | ||
Fair value of assets acquired: | |||
Cash and cash equivalents | |||
Federal Home Loan Bank and Federal Reserve Bank stocks | |||
Investment securities | |||
Loans held-for-sale | |||
Loans and leases | |||
Premises and equipment | |||
Loan servicing rights | |||
Other intangible assets | |||
Net deferred tax asset(1) | |||
Other assets | |||
Total assets acquired | |||
Fair value of liabilities assumed: | |||
Deposits | |||
Short-term borrowings | |||
Long-term borrowings | |||
Other liabilities | |||
Total liabilities assumed | |||
Fair value of net identifiable assets | |||
Goodwill resulting from Merger(2) | $ |
(1) | Net deferred tax asset includes acquisition-related fair value adjustments, loss and tax credit carry forwards, mortgage servicing rights and core deposit and customer intangibles. |
(2) | The goodwill recorded was primarily attributable to the synergies and economies of scale expected from combining the operations of Legacy TCF and Chemical. |
(In thousands) | |||
PCI loans: | |||
Contractually required payments receivable | $ | ||
Nonaccretable difference | ( | ) | |
Expected cash flows | |||
Accretable yield | |||
Fair value of PCI loans | $ | ||
Purchased nonimpaired loans and leases: | |||
Unpaid principal balance | $ | ||
Fair value discount | ( | ) | |
Fair value at acquisition | |||
Total fair value at acquisition | $ |
(In thousands) | |||
Business combination | |||
Fair value of tangible assets acquired | $ | ||
Goodwill, loan servicing rights and other identifiable intangible assets acquired | |||
Liabilities assumed | |||
Common stock and stock options converted |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net interest income and other noninterest income | $ | $ | $ | $ | |||||||||||
Net income | |||||||||||||||
Net income available to common shareholders | |||||||||||||||
Earnings per share: | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted |
(In thousands) | At September 30, 2019 | At December 31, 2018 | |||||
FHLB stock, at cost | $ | $ | |||||
FRB stock, at cost |
Investment Securities Available-for-sale, At Fair Value | |||||||||||||||
(In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
At September 30, 2019 | |||||||||||||||
Debt securities: | |||||||||||||||
Government and government-sponsored enterprises | $ | $ | $ | $ | |||||||||||
Obligations of states and political subdivisions | |||||||||||||||
Mortgage-backed: | |||||||||||||||
Agency mortgage-backed securities | |||||||||||||||
Non-agency mortgage-backed securities | |||||||||||||||
Agency collateralized mortgage obligations | |||||||||||||||
Non-agency collateralized mortgage obligations | |||||||||||||||
Total mortgage-backed debt securities | |||||||||||||||
Corporate debt and trust preferred securities | |||||||||||||||
Total debt securities available-for-sale | |||||||||||||||
Total investment securities available-for-sale | $ | $ | $ | $ | |||||||||||
At December 31, 2018 | |||||||||||||||
Debt securities: | |||||||||||||||
Government and government-sponsored enterprises | $ | $ | $ | $ | |||||||||||
Obligations of states and political subdivisions | |||||||||||||||
Mortgage-backed: | |||||||||||||||
Agency mortgage-backed securities | |||||||||||||||
Non-agency mortgage-backed securities | |||||||||||||||
Agency collateralized mortgage obligations | |||||||||||||||
Non-agency collateralized mortgage obligations | |||||||||||||||
Total mortgage-backed debt securities | |||||||||||||||
Corporate debt and trust preferred securities | |||||||||||||||
Total debt securities available-for-sale | |||||||||||||||
Total investment securities available-for-sale | $ | $ | $ | $ |
Investment Securities Held-to-Maturity | |||||||||||||||
(In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
At September 30, 2019 | |||||||||||||||
Agency mortgage-backed securities | $ | $ | $ | $ | |||||||||||
Corporate debt and trust preferred securities | |||||||||||||||
Total investment securities held-to-maturity | $ | $ | $ | $ | |||||||||||
At December 31, 2018 | |||||||||||||||
Agency mortgage-backed securities | $ | $ | $ | $ | |||||||||||
Corporate debt and trust preferred securities | |||||||||||||||
Total investment securities held-to-maturity | $ | $ | $ | $ |
At September 30, 2019 | |||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
(In thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Investment securities available-for-sale | |||||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||
Government and government sponsored enterprises | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Obligations of states and political subdivisions | |||||||||||||||||||||||
Mortgage-backed: | |||||||||||||||||||||||
Agency mortgage-backed securities | |||||||||||||||||||||||
Agency collateralized mortgage obligations | |||||||||||||||||||||||
Non-agency collateralized mortgage obligations | |||||||||||||||||||||||
Total mortgage-backed debt securities | |||||||||||||||||||||||
Corporate debt and trust preferred securities | |||||||||||||||||||||||
Total debt securities available-for-sale | |||||||||||||||||||||||
Total investment securities available-for-sale | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Investment securities held-to-maturity | |||||||||||||||||||||||
Agency mortgage-backed securities | |||||||||||||||||||||||
Total investment securities held-to-maturity | $ | $ | $ | $ | $ | $ |
At December 31, 2018 | |||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
(In thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Investment securities carried at fair value | |||||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||
Obligations of states and political subdivisions | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Agency mortgage-backed securities | |||||||||||||||||||||||
Total debt securities available-for-sale | |||||||||||||||||||||||
Total investment securities available-for-sale | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Investment securities held-to-maturity | |||||||||||||||||||||||
Agency mortgage-backed securities | |||||||||||||||||||||||
Total investment securities held-to-maturity | $ | $ | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Gross realized gains | $ | $ | $ | $ | |||||||||||
Gross realized losses | |||||||||||||||
Recoveries on previously impaired investment securities held-to-maturity | |||||||||||||||
Net gains (losses) on investment securities | $ | $ | $ | $ |
At September 30, 2019 | At December 31, 2018 | ||||||||||||||
(In thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||
Investment Securities Available-for-Sale | |||||||||||||||
Due in one year or less | $ | $ | $ | $ | |||||||||||
Due in 1-5 years | |||||||||||||||
Due in 5-10 years | |||||||||||||||
Due after 10 years | |||||||||||||||
Total investment securities available-for-sale | $ | $ | $ | $ | |||||||||||
Investment Securities Held-to-Maturity | |||||||||||||||
Due in 1-5 years | $ | $ | $ | $ | |||||||||||
Due in 5-10 years | |||||||||||||||
Due after 10 years | |||||||||||||||
Total investment securities held-to-maturity | $ | $ | $ | $ |
(In thousands) | At September 30, 2019 | At December 31, 2018 | |||||
Commercial loan and lease portfolio: | |||||||
Commercial and industrial | $ | $ | |||||
Commercial real estate | |||||||
Lease financing | |||||||
Total commercial loan and lease portfolio | |||||||
Consumer loan portfolio: | |||||||
Residential mortgage | |||||||
Consumer installment | |||||||
Home equity | |||||||
Total consumer loan portfolio | |||||||
Total loans and leases(1) | $ | $ |
(1) | Loans and leases are reported at historical cost including net direct fees and costs associated with originating and acquiring loans and leases, lease residuals, unearned income and unamortized purchase premiums and discounts. The aggregate amount of loan and lease adjustments was a net deferred cost of $ |
At or For the Three Months Ended September 30, | At or For the Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Balance of PCI loans, beginning of period | $ | $ | $ | $ | |||||||||||
Accretable Yield | |||||||||||||||
Balance, beginning of period | $ | $ | $ | $ | |||||||||||
Addition attributable to the Merger | |||||||||||||||
Accretion recognized in interest income | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net reclassification (to) from nonaccretable difference | ( | ) | |||||||||||||
Payments received | ( | ) | ( | ) | ( | ) | |||||||||
Balance, end of period | $ | $ | $ | $ | |||||||||||
Balance of PCI loans, end of period | $ | $ | $ | $ |
(In thousands) | At September 30, 2019 | ||
Carrying amount | $ | ||
Unguaranteed residual assets | |||
Net direct fees and costs and unearned income | ( | ) | |
Total net investment in direct financing and sales-type leases | $ |
Three Months Ended | Nine Months Ended | ||||||
(In thousands) | September 30, 2019 | ||||||
Interest income - loans and leases: | |||||||
Interest income on net investment in direct financing and sales-type leases | $ | $ | |||||
Leasing revenue (noninterest income): | |||||||
Lease income from operating lease payments | |||||||
Profit (loss) recorded on commencement date on sales-type leases | |||||||
Gains (losses) on sales of leased equipment | |||||||
Leasing revenue | |||||||
Total lease income | $ | $ |
(In thousands) | |||
Remainder of 2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Equipment under leases not yet commenced | |||
Total undiscounted future minimum lease payments receivable for direct financing and sales-type leases | |||
Third-party residual value guarantees | |||
Total carrying amount of direct financing and sales-type leases | $ |
(In thousands) | |||
Remainder of 2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total undiscounted future minimum lease payments | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Sale proceeds, net | $ | $ | $ | $ | |||||||||||
Recorded investment in loans and leases sold, including accrued interest | |||||||||||||||
Interest-only strips at initial value and other | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net (losses) gains on sales of loans and leases | $ | ( | ) | $ | $ | $ |
(In thousands) | At September 30, 2019 | At December 31, 2018 | |||||
Interest-only strips | $ | $ |
(In thousands) | Consumer Loan Portfolio | Commercial Loan and Lease Portfolio | Total Loans and Leases | ||||||||
At or For the Three Months Ended September 30, 2019 | |||||||||||
Balance, beginning of period | $ | $ | $ | ||||||||
Charge-offs | ( | ) | ( | ) | ( | ) | |||||
Recoveries | |||||||||||
Net (charge-offs) recoveries | ( | ) | ( | ) | ( | ) | |||||
Provision for credit losses | |||||||||||
Other(1) | ( | ) | ( | ) | ( | ) | |||||
Balance, end of period | $ | $ | $ | ||||||||
At or For the Three Months Ended September 30, 2018 | |||||||||||
Balance, beginning of period | $ | $ | $ | ||||||||
Charge-offs | ( | ) | ( | ) | ( | ) | |||||
Recoveries | |||||||||||
Net (charge-offs) recoveries | ( | ) | ( | ) | ( | ) | |||||
Provision for credit losses | ( | ) | |||||||||
Other(1) | ( | ) | ( | ) | ( | ) | |||||
Balance, end of period | $ | $ | $ | ||||||||
(In thousands) | Consumer Loan Portfolio | Commercial Loan and Lease Portfolio | Total Loans and Leases | ||||||||
At or For the Nine Months Ended September 30, 2019 | |||||||||||
Balance, beginning of period | $ | $ | $ | ||||||||
Charge-offs | ( | ) | ( | ) | ( | ) | |||||
Recoveries | |||||||||||
Net (charge-offs) recoveries | ( | ) | ( | ) | ( | ) | |||||
Provision for credit losses | |||||||||||
Other(1) | ( | ) | ( | ) | ( | ) | |||||
Balance, end of period | $ | $ | $ | ||||||||
At or For the Nine Months Ended September 30, 2018 | |||||||||||
Balance, beginning of period | $ | $ | $ | ||||||||
Charge-offs | ( | ) | ( | ) | ( | ) | |||||
Recoveries | |||||||||||
Net (charge-offs) recoveries | ( | ) | ( | ) | ( | ) | |||||
Provision for credit losses | |||||||||||
Other(1) | ( | ) | ( | ) | ( | ) | |||||
Balance, end of period | $ | $ | $ |
(1) | Includes the transfer of the allowance for loan and lease losses to loans and leases held-for-sale (inclusive of the transfer of Legacy TCF auto loan portfolio for the three and nine months ended September 30, 2019). |
At September 30, 2019 | |||||||||||
(In thousands) | Consumer Loan Portfolio | Commercial Loan and Lease Portfolio | Total Loans and Leases | ||||||||
Allowance for loan and lease losses | |||||||||||
Collectively evaluated for impairment | $ | $ | $ | ||||||||
Individually evaluated for impairment | |||||||||||
Total | $ | $ | $ | ||||||||
Loans and leases outstanding | |||||||||||
Collectively evaluated for impairment | $ | $ | $ | ||||||||
Individually evaluated for impairment | |||||||||||
PCI loans | |||||||||||
Total | $ | $ | $ |
At December 31, 2018 | |||||||||||
(In thousands) | Consumer Loan Portfolio | Commercial Loan and Lease Portfolio | Total Loans and Leases | ||||||||
Allowance for loan and lease losses | |||||||||||
Collectively evaluated for impairment | $ | $ | $ | ||||||||
Individually evaluated for impairment | |||||||||||
Total | $ | $ | $ | ||||||||
Loans and leases outstanding | |||||||||||
Collectively evaluated for impairment | $ | $ | $ | ||||||||
Individually evaluated for impairment | |||||||||||
PCI loans | |||||||||||
Total | $ | $ | $ |
(In thousands) | Current | 30-89 Days Delinquent and Accruing | 90 Days or More Delinquent and Accruing | Total Accruing | Nonaccrual | Total | |||||||||||||||||
At September 30, 2019 | |||||||||||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
Lease financing | |||||||||||||||||||||||
Total commercial loan and lease portfolio | |||||||||||||||||||||||
Consumer loan portfolio: | |||||||||||||||||||||||
Residential mortgage | |||||||||||||||||||||||
Consumer installment | |||||||||||||||||||||||
Home equity | |||||||||||||||||||||||
Total consumer loan portfolio | |||||||||||||||||||||||
PCI loans(1) | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||
At December 31, 2018 | |||||||||||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
Lease financing | |||||||||||||||||||||||
Total commercial loan and lease portfolio | |||||||||||||||||||||||
Consumer loan portfolio: | |||||||||||||||||||||||
Residential mortgage | |||||||||||||||||||||||
Consumer installment | |||||||||||||||||||||||
Home equity | |||||||||||||||||||||||
Total consumer loan portfolio | |||||||||||||||||||||||
PCI loans(1) | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
(1) | PCI loans that are not performing in accordance with contractual terms are not reported as nonaccrual because these loans were recorded at their net realizable value based on the principal and interest TCF expects to collect on these loans. |
(In thousands) | Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||
At September 30, 2019 | |||||||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | ||||||||||||||
Commercial real estate | |||||||||||||||||||
Lease financing | |||||||||||||||||||
Total commercial loan and lease portfolio | |||||||||||||||||||
Consumer loan portfolio: | |||||||||||||||||||
Residential mortgage | |||||||||||||||||||
Consumer installment | |||||||||||||||||||
Home equity | |||||||||||||||||||
Total consumer loan portfolio | |||||||||||||||||||
Total loans and leases | $ | $ | $ | $ | $ | ||||||||||||||
At December 31, 2018 | |||||||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | ||||||||||||||
Commercial real estate | |||||||||||||||||||
Lease financing | |||||||||||||||||||
Total commercial loan and lease portfolio | |||||||||||||||||||
Consumer loan portfolio: | |||||||||||||||||||
Residential mortgage | |||||||||||||||||||
Consumer installment | |||||||||||||||||||
Home equity | |||||||||||||||||||
Total consumer loan portfolio | |||||||||||||||||||
Total loans and leases | $ | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||
(In thousands) | Pre-modification Investment | Post-modification Investment | Pre-modification Investment | Post-modification Investment | Pre-modification Investment | Post-modification Investment | Pre-modification Investment | Post-modification Investment | |||||||||||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||||||
Total commercial loan and lease portfolio | |||||||||||||||||||||||||||||||
Consumer loan portfolio: | |||||||||||||||||||||||||||||||
Residential mortgage | |||||||||||||||||||||||||||||||
Home equity | |||||||||||||||||||||||||||||||
Total consumer loan portfolio | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
At September 30, 2019 | At December 31, 2018 | ||||||||||||||||||||||
(In thousands) | Accruing TDR Loans | Nonaccrual TDR Loans | Total TDR Loans | Accruing TDR Loans | Nonaccrual TDR Loans | Total TDR Loans | |||||||||||||||||
Commercial loan and lease portfolio | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Consumer loan portfolio | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Defaulted TDR loan balances modified during the applicable period | |||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||
Commercial and industrial | $ | $ | $ | $ | |||||||||||
Total commercial loan and lease portfolio | |||||||||||||||
Consumer loan portfolio: | |||||||||||||||
Residential mortgage | |||||||||||||||
Consumer installment | |||||||||||||||
Home equity | |||||||||||||||
Total consumer loan portfolio | |||||||||||||||
Defaulted TDR loan balances | $ | $ | $ | $ |
At September 30, 2019 | At December 31, 2018 | ||||||||||||||||||||||
(In thousands) | Unpaid Contractual Balance | Loan and Lease Balance | Related Allowance Recorded | Unpaid Contractual Balance | Loan Balance | Related Allowance Recorded | |||||||||||||||||
Impaired loans and leases with an allowance recorded: | |||||||||||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
Lease financing | |||||||||||||||||||||||
Total commercial loan and lease portfolio | |||||||||||||||||||||||
Consumer loan portfolio: | |||||||||||||||||||||||
Residential mortgage | |||||||||||||||||||||||
Consumer installment | |||||||||||||||||||||||
Home equity | |||||||||||||||||||||||
Total consumer loan portfolio | |||||||||||||||||||||||
Total impaired loans and leases with an allowance recorded | |||||||||||||||||||||||
Impaired loans and leases without an allowance recorded: | |||||||||||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
Total commercial loan and lease portfolio | |||||||||||||||||||||||
Consumer loan portfolio: | |||||||||||||||||||||||
Residential mortgage | |||||||||||||||||||||||
Consumer installment | |||||||||||||||||||||||
Home equity | |||||||||||||||||||||||
Total consumer loan portfolio | |||||||||||||||||||||||
Total impaired loans and leases without an allowance recorded | |||||||||||||||||||||||
Total impaired loans and leases | $ | $ | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||
(In thousands) | Average Loan and Lease Balance | Interest Income Recognized | Average Loan Balance | Interest Income Recognized | Average Loan and Lease Balance | Interest Income Recognized | Average Loan Balance | Interest Income Recognized | |||||||||||||||||||||||
Impaired loans and leases with an allowance recorded | |||||||||||||||||||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||||||
Lease financing | |||||||||||||||||||||||||||||||
Total commercial loan and lease portfolio | |||||||||||||||||||||||||||||||
Consumer loan portfolio: | |||||||||||||||||||||||||||||||
Residential mortgage | |||||||||||||||||||||||||||||||
Consumer installment | |||||||||||||||||||||||||||||||
Home equity | |||||||||||||||||||||||||||||||
Total consumer loan portfolio | |||||||||||||||||||||||||||||||
Total impaired loans and leases with an allowance recorded | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Impaired loans and leases without an allowance recorded | |||||||||||||||||||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||||||
Lease financing | |||||||||||||||||||||||||||||||
Total commercial loan and lease portfolio | |||||||||||||||||||||||||||||||
Consumer loan portfolio: | |||||||||||||||||||||||||||||||
Residential mortgage | |||||||||||||||||||||||||||||||
Consumer installment | |||||||||||||||||||||||||||||||
Home equity | |||||||||||||||||||||||||||||||
Total consumer loan portfolio | |||||||||||||||||||||||||||||||
Total impaired loans and leases without an allowance recorded | |||||||||||||||||||||||||||||||
Total impaired loans and leases | $ | $ | $ | $ | $ | $ | $ | $ |
(In thousands) | At September 30, 2019 | At December 31, 2018 | |||||
Other real estate owned | $ | $ | |||||
Repossessed and returned assets | |||||||
Consumer loans in process of foreclosure |
(In thousands) | At September 30, 2019 | At December 31, 2018 | |||||
Land | $ | $ | |||||
Office buildings | |||||||
Leasehold improvements | |||||||
Furniture, equipment and computer software | |||||||
Premises and equipment leased under capital leases | |||||||
Subtotal | |||||||
Less: Accumulated depreciation and amortization | ( | ) | ( | ) | |||
Premises and equipment, net | $ | $ |
(In thousands) | Core deposit intangibles | Program agreements | Non-compete agreements | Customer relationships | Total | |||||||||||||||
At September 30, 2019 | ||||||||||||||||||||
Gross carrying value | $ | $ | $ | $ | $ | |||||||||||||||
Accumulated amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Net carrying amount | $ | $ | $ | $ | $ | |||||||||||||||
At December 31, 2018 | ||||||||||||||||||||
Gross carrying value | $ | $ | $ | $ | $ | |||||||||||||||
Accumulated amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Net carrying amount | $ | $ | $ | $ | $ |
(In thousands) | Total | |||
Remainder of 2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 |
(Dollars in thousands) | At or For the Three Months Ended September 30, 2019 | At or For the Nine Months Ended September 30, 2019 | |||||
Balance, beginning of period | $ | $ | |||||
Acquired in the Merger | |||||||
New servicing assets created | |||||||
Impairment (charge) recovery | ( | ) | ( | ) | |||
Amortization | ( | ) | ( | ) | |||
Balance, end of period | $ | $ | |||||
Valuation allowance, end of period | $ | ( | ) | $ | ( | ) | |
Loans serviced for others that have servicing rights capitalized, end of period | $ | $ |
(In thousands) | |||
Remainder of 2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total undiscounted future minimum operating lease payments | |||
Discount | ( | ) | |
Total operating lease liabilities | $ |
At September 30, 2019 | ||
Weighted-average discount rate | % | |
Weighted-average remaining lease term (years) |
Three Months Ended | Nine Months Ended | ||||||
(In thousands) | September 30, 2019 | ||||||
Lease expense | $ | $ | |||||
Short-term and variable lease cost | |||||||
Sublease income | ( | ) | ( | ) | |||
Total lease cost for operating leases | $ | $ |
Three Months Ended | Nine Months Ended | ||||||
(In thousands) | September 30, 2019 | ||||||
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | |||||
Cash paid for amounts included in the measurement of lease liabilities - operating |
(In thousands) | At September 30, 2019 | At December 31, 2018 | |||||
Checking: | |||||||
Noninterest-bearing | $ | $ | |||||
Interest-bearing | |||||||
Total checking | |||||||
Savings | |||||||
Money market | |||||||
Certificates of deposit | |||||||
Brokered deposits | |||||||
Total deposits | $ | $ |
(In thousands) | ||||
Remainder of 2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Thereafter |
At September 30, 2019 | At December 31, 2018 | ||||||||||||
(Dollars in thousands) | Amount | Weighted-average Rate | Amount | Weighted-average Rate | |||||||||
FHLB advances | $ | % | $ | % | |||||||||
Collateralized Deposits | |||||||||||||
Total short-term borrowings | $ | $ |
(In thousands) | At September 30, 2019 | At December 31, 2018 | |||||
FHLB advances | $ | $ | |||||
Subordinated debt obligations | |||||||
Discounted lease rentals | |||||||
Capital lease obligation | |||||||
Total long-term borrowings | $ | $ |
(In thousands) | |||
Remainder of 2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total long-term borrowings | $ |
Three Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
(In thousands) | Before Tax | Tax Effect | Net of Tax | Before Tax | Tax Effect | Net of Tax | |||||||||||||||||
Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips: | |||||||||||||||||||||||
Net unrealized gains (losses) arising during the period | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Reclassification of net (gains) losses from accumulated other comprehensive income (loss) to: | |||||||||||||||||||||||
Total interest income | ( | ) | ( | ) | |||||||||||||||||||
Net gains (losses) on investment securities | |||||||||||||||||||||||
Other noninterest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||||||||||
Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Recognized postretirement prior service cost: | |||||||||||||||||||||||
Reclassification of amortization of prior service cost to other noninterest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Foreign currency translation adjustment(1) | ( | ) | ( | ) | |||||||||||||||||||
Net unrealized gains (losses) on net investment hedges | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||||
Total other comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
(In thousands) | Before Tax | Tax Effect | Net of Tax | Before Tax | Tax Effect | Net of Tax | |||||||||||||||||
Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips: | |||||||||||||||||||||||
Net unrealized gains (losses) arising during the period | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Reclassification of net (gains) losses from accumulated other comprehensive income (loss) to: | |||||||||||||||||||||||
Total interest income | ( | ) | ( | ) | |||||||||||||||||||
Net gains (losses) on investment securities | ( | ) | ( | ) | |||||||||||||||||||
Other noninterest expense | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||||||||||
Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Recognized postretirement prior service cost: | |||||||||||||||||||||||
Reclassification of amortization of prior service cost to other noninterest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Foreign currency translation adjustment(1) | ( | ) | ( | ) | |||||||||||||||||||
Net unrealized gains (losses) on net investment hedges | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Total other comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
(1) | Foreign investments are deemed to be permanent in nature and, therefore, TCF does not provide for taxes on foreign currency translation adjustments. |
(In thousands) | Net Unrealized Gains (Losses) on Available-for-Sale Investment Securities and Interest-only Strips | Net Unrealized Gains (Losses) on Net Investment Hedges | Foreign Currency Translation Adjustment | Recognized Postretirement Prior Service Cost | Total | ||||||||||||||
At or For the Three Months Ended September 30, 2019 | |||||||||||||||||||
Balance, beginning of period | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Other comprehensive income (loss) | ( | ) | |||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ( | ) | |||||||||||||||||
Net other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||||||
Balance, end of period | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
At or For the Three Months Ended September 30, 2018 | |||||||||||||||||||
Balance, beginning of period | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ( | ) | |||||||||||||||||
Net other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Balance, end of period | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
At or For the Nine Months Ended September 30, 2019 | |||||||||||||||||||
Balance, beginning of period | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
Other comprehensive income (loss) | ( | ) | |||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ( | ) | |||||||||||||||||
Net other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||||||
Balance, end of period | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
At or For the Nine Months Ended September 30, 2018 | |||||||||||||||||||
Balance, beginning of period | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ( | ) | |||||||||||||||||
Net other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Balance, end of period | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
TCF | TCF Bank | |||||||||||||||||||
At September 30, | At December 31, | At September 30, | At December 31, | Well-capitalized Standard under Prompt Corrective Action Provisions | Minimum Capital Requirement for Capital Adequacy Plus Conservation Buffer | |||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||
Regulatory Capital: | ||||||||||||||||||||
Common equity Tier 1 capital | $ | $ | $ | $ | ||||||||||||||||
Tier 1 capital | ||||||||||||||||||||
Total capital | ||||||||||||||||||||
Regulatory Capital Ratios: | ||||||||||||||||||||
Common equity Tier 1 capital ratio | % | % | % | % | % | % | ||||||||||||||
Tier 1 risk-based capital ratio | ||||||||||||||||||||
Total risk-based capital ratio | ||||||||||||||||||||
Tier 1 leverage ratio |
At September 30, 2019 | |||||||||||
Fair Value | |||||||||||
(In thousands) | Notional Amount(1) | Derivative Assets | Derivative Liabilities | ||||||||
Derivatives designated as hedging instruments | |||||||||||
Interest rate contract | $ | $ | $ | ||||||||
Forward foreign exchange contracts | |||||||||||
Total derivatives designated as hedging instruments | $ | $ | $ | ||||||||
Derivatives not designated as hedging instruments | |||||||||||
Interest rate contracts | $ | $ | $ | ||||||||
Forward foreign exchange contracts | |||||||||||
Interest rate lock commitments | |||||||||||
Forward loan sales commitments | |||||||||||
Power Equity CDs | |||||||||||
Swap agreement | |||||||||||
Total derivatives not designated as hedging instruments | $ | $ | $ | ||||||||
Total derivatives before netting | $ | ||||||||||
Netting(2) | ( | ) | ( | ) | |||||||
Total derivatives, net | $ | $ |
At December 31, 2018 | |||||||||||
Fair Value | |||||||||||
(In thousands) | Notional Amount(1) | Derivative Assets | Derivative Liabilities | ||||||||
Derivatives designated as hedging instruments | |||||||||||
Interest rate contract | $ | $ | $ | ||||||||
Forward foreign exchange contracts | |||||||||||
Total derivatives designated as hedging instruments | $ | $ | $ | ||||||||
Derivatives not designated as hedging instruments | |||||||||||
Interest rate contracts | $ | $ | $ | ||||||||
Forward foreign exchange contracts | |||||||||||
Interest rate lock commitments | |||||||||||
Swap agreement | |||||||||||
Total derivatives not designated as hedging instruments | $ | $ | $ | ||||||||
Total derivatives before netting | |||||||||||
Netting(2) | ( | ) | ( | ) | |||||||
Total derivatives, net | $ | $ |
(1) | Notional or contract amounts, which represent the extent of involvement in the derivatives market, are used to determine the contractual cash flows required in accordance with the terms of the agreement. These amounts are typically not exchanged, significantly exceed amounts subject to credit or market risk and are not reflected in the Consolidated Statements of Financial Condition. |
(2) | Includes netting of derivative asset and liability balances and related cash collateral, where counterparty netting agreements are in place. |
At September 30, 2019 | |||||||||||
(In thousands) | Gross Amounts Recognized | Gross Amounts Offset(1) | Net Amount Presented | ||||||||
Derivative assets | |||||||||||
Interest rate contracts | $ | $ | ( | ) | $ | ||||||
Forward foreign exchange contracts | ( | ) | |||||||||
Interest rate lock commitments | ( | ) | |||||||||
Forward loan sales commitments | ( | ) | |||||||||
Power Equity CDs | |||||||||||
Total derivative assets | $ | $ | ( | ) | $ | ||||||
Derivative liabilities | |||||||||||
Interest rate contracts | $ | $ | ( | ) | $ | ||||||
Forward foreign exchange contracts | ( | ) | |||||||||
Interest rate lock commitments | ( | ) | |||||||||
Forward loan sales commitments | ( | ) | |||||||||
Power Equity CDs | |||||||||||
Other contracts | ( | ) | |||||||||
Total derivative liabilities | $ | $ | ( | ) | $ |
At December 31, 2018 | |||||||||||
(In thousands) | Gross Amounts Recognized | Gross Amounts Offset(1) | Net Amount Presented | ||||||||
Derivative assets | |||||||||||
Interest rate contracts | $ | $ | ( | ) | $ | ||||||
Forward foreign exchange contracts | ( | ) | |||||||||
Interest rate lock commitments | |||||||||||
Total derivative assets | $ | $ | ( | ) | $ | ||||||
Derivative liabilities | |||||||||||
Interest rate contracts | $ | $ | ( | ) | $ | ||||||
Forward foreign exchange contracts | ( | ) | |||||||||
Interest rate lock commitments | |||||||||||
Swap agreement | ( | ) | |||||||||
Total derivative liabilities | $ | $ | ( | ) | $ |
(1) | Includes the amounts with counterparties subject to enforceable master netting arrangements that have been offset in the Consolidated Statements of Financial Condition. |
Carrying Amount of the Hedged Liability | Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Liability | ||||||||||||||
(In thousands) | At September 30, 2019 | At December 31, 2018 | At September 30, 2019 | At December 31, 2018 | |||||||||||
Subordinated bank note - 2025 | $ | $ | $ | $ | ( | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Statement of income line where the gain (loss) on the fair value hedge was recorded: | |||||||||||||||
Interest expense on borrowings | $ | $ | $ | $ | |||||||||||
Gain (loss) on interest rate contract (fair value hedge) | |||||||||||||||
Hedged item | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Derivative designated as a hedging instrument | ( | ) | ( | ) | |||||||||||
Net income (expense) recognized on fair value hedge in interest expense on borrowings | $ | $ | $ | $ | ( | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Forward foreign exchange contracts | $ | $ | ( | ) | $ | ( | ) | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | Location of Gain (Loss) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Interest rate contracts(1) | Other noninterest income | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Forward foreign exchange contracts | Other noninterest expense | ( | ) | ( | ) | |||||||||||
Interest rate lock commitments | Net (losses) gains on sales of loans and leases | ( | ) | |||||||||||||
Forward loan sales commitments | Net (losses) gains on sales of loans and leases | ( | ) | ( | ) | |||||||||||
Swap agreement | Other noninterest income | ( | ) | ( | ) | |||||||||||
Net gain (loss) recognized | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
(1) | Included in both the three and nine months ended September 30, 2019 is a loss of $ |
Level 1 | Valuations that are based on prices obtained from independent pricing sources for the same instruments traded in active markets. |
Level 2 | Valuations that are based on prices obtained from independent pricing sources that are based on observable transactions of similar instruments, but not quoted markets. |
Level 3 | Valuations generated from Corporation model-based techniques that use at least one significant unobservable inputs. Such unobservable inputs reflect estimates of assumptions that market participants would use in pricing the asset or liability. |
September 30, 2019 | ||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||
Assets | ||||||||||||
Investment securities carried at fair value | $ | $ | $ | $ | ||||||||
Loans held-for-sale | ||||||||||||
Interest-only strips | ||||||||||||
Derivative assets:(1) | ||||||||||||
Interest rate contracts | ||||||||||||
Forward foreign exchange contracts | ||||||||||||
Interest rate lock commitments | ||||||||||||
Forward loan sales commitments | ||||||||||||
Power Equity CDs | ||||||||||||
Total derivative assets | ||||||||||||
Forward loan sales commitments | ||||||||||||
Assets held in trust for deferred compensation plans | ||||||||||||
Total assets at fair value | $ | $ | $ | $ | ||||||||
Liabilities | ||||||||||||
Derivative liabilities:(1) | ||||||||||||
Interest rate contracts | $ | $ | $ | $ | ||||||||
Forward foreign exchange contracts | ||||||||||||
Interest rate lock commitments | ||||||||||||
Forward loan sales commitments | ||||||||||||
Power Equity CDs | ||||||||||||
Swap agreement | ||||||||||||
Total derivative liabilities | ||||||||||||
Forward loan sales commitments | ||||||||||||
Liabilities held in trust for deferred compensation plans | ||||||||||||
Total liabilities at fair value | $ | $ | $ | $ |
(1) | As permitted under GAAP, TCF has elected to net derivative assets and derivative liabilities when a legally enforceable master netting agreement exists as well as the related cash collateral received and paid. For purposes of this table, the derivative assets and derivative liabilities are presented gross of this netting adjustment. |
December 31, 2018 | |||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets | |||||||||||||||
Investment securities carried at fair value | $ | $ | $ | $ | |||||||||||
Loans held-for-sale | |||||||||||||||
Interest-only strips | |||||||||||||||
Derivative assets:(1) | |||||||||||||||
Interest rate contracts | |||||||||||||||
Forward foreign exchange contracts | |||||||||||||||
Interest rate lock commitments | |||||||||||||||
Total derivative assets | |||||||||||||||
Forward loan sales commitments | |||||||||||||||
Assets held in trust for deferred compensation plans | |||||||||||||||
Total assets at fair value | $ | $ | $ | $ | |||||||||||
Liabilities | |||||||||||||||
Derivative liabilities:(1) | |||||||||||||||
Interest rate contracts | $ | $ | $ | $ | |||||||||||
Forward foreign exchange contracts | |||||||||||||||
Interest rate lock commitments | |||||||||||||||
Swap agreement | |||||||||||||||
Total derivative liabilities | |||||||||||||||
Forward loan sales commitments | |||||||||||||||
Liabilities held in trust for deferred compensation plans | |||||||||||||||
Total liabilities at fair value | $ | $ | $ | $ |
(1) | As permitted under GAAP, TCF has elected to net derivative assets and derivative liabilities when a legally enforceable master netting agreement exists as well as the related cash collateral received and paid. For purposes of this table, the derivative assets and derivative liabilities are presented gross of this netting adjustment. |
(In thousands) | Investment securities carried at fair value | Loans held-for-sale | Interest-only strips | Interest rate lock commitments | Other derivative contracts | Forward loan sales commitments | |||||||||||||||||
At or For the Three Months Ended September 30, 2019 | |||||||||||||||||||||||
Asset (liability) balance, beginning of period | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
Transfers out of Level 3 (1) | ( | ) | ( | ) | |||||||||||||||||||
Acquired through the Merger | |||||||||||||||||||||||
Total net gains (losses) included in: | |||||||||||||||||||||||
Net income | |||||||||||||||||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||||||||||
Acquired | |||||||||||||||||||||||
Originations | |||||||||||||||||||||||
Principal paydowns / settlements | ( | ) | |||||||||||||||||||||
Asset (liability) balance, end of period | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
At or For the Three Months Ended September 30, 2018 | |||||||||||||||||||||||
Asset (liability) balance, beginning of period | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Total net gains (losses) included in: | |||||||||||||||||||||||
Net income | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Other comprehensive income (loss) | |||||||||||||||||||||||
Sales | ( | ) | |||||||||||||||||||||
Originations | |||||||||||||||||||||||
Principal paydowns / settlements | ( | ) | ( | ) | |||||||||||||||||||
Asset (liability) balance, end of period | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
At or For the Nine Months Ended September 30, 2019 | |||||||||||||||||||||||
Asset (liability) balance, beginning of period | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
Total net gains (losses) included in: | |||||||||||||||||||||||
Acquired through the Merger | |||||||||||||||||||||||
Net income | ( | ) | |||||||||||||||||||||
Other comprehensive income (loss) | ( | ) | |||||||||||||||||||||
Sales | ( | ) | |||||||||||||||||||||
Originations | |||||||||||||||||||||||
Principal paydowns / settlements | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Transfers out of Level 3 (1) | ( | ) | ( | ) | |||||||||||||||||||
Asset (liability) balance, end of period | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
At or For the Nine Months Ended September 30, 2018 | |||||||||||||||||||||||
Asset (liability) balance, beginning of period | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Total net gains (losses) included in: | |||||||||||||||||||||||
Net income | ( | ) | |||||||||||||||||||||
Other comprehensive income (loss) | |||||||||||||||||||||||
Sales | ( | ) | |||||||||||||||||||||
Originations | |||||||||||||||||||||||
Principal paydowns / settlements | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Asset (liability) balance, end of period | $ | $ | $ | $ | $ | ( | ) | $ |
(1) | Certain assets (liabilities) previously classified as Level 3 were transferred to Level 2 because current period prices are derived from Level 2 observable market data. |
(In thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
At September 30, 2019 | |||||||||||||||
Loans held-for-sale | $ | $ | $ | $ | |||||||||||
Loans and leases | |||||||||||||||
Other real estate owned | |||||||||||||||
Repossessed and returned assets | |||||||||||||||
Total non-recurring fair value measurements | $ | $ | $ | $ | |||||||||||
At December 31, 2018 | |||||||||||||||
Loans | $ | $ | $ | $ | |||||||||||
Other real estate owned | |||||||||||||||
Repossessed and returned assets | |||||||||||||||
Total non-recurring fair value measurements | $ | $ | $ | $ |
(In thousands) | September 30, 2019 | December 31, 2018 | |||||
Fair value carrying amount | $ | $ | |||||
Aggregate unpaid principal amount | |||||||
Fair value carrying amount less aggregate unpaid principal | $ | $ |
At September 30, 2019 | |||||||||||||||||||
Carrying | Estimated Fair Value | ||||||||||||||||||
(In thousands) | Amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Financial instrument assets | |||||||||||||||||||
FHLB and FRB stocks | $ | $ | $ | $ | $ | ||||||||||||||
Investment securities held-to-maturity | |||||||||||||||||||
Loans and leases held-for-sale | |||||||||||||||||||
Net loans(1) | |||||||||||||||||||
Loan servicing rights | |||||||||||||||||||
Securitization receivable(2) | |||||||||||||||||||
Deferred fees on commitments to extend credit | |||||||||||||||||||
Total financial instrument assets | $ | $ | $ | $ | $ | ||||||||||||||
Financial instrument liabilities | |||||||||||||||||||
Certificates of deposits | $ | $ | $ | $ | $ | ||||||||||||||
Long-term borrowings | |||||||||||||||||||
Deferred fees on standby letters of credit | |||||||||||||||||||
Total financial instrument liabilities | $ | $ | $ | $ | $ |
At December 31, 2018 | |||||||||||||||||||
Carrying | Estimated Fair Value | ||||||||||||||||||
(In thousands) | Amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Financial instrument assets | |||||||||||||||||||
FHLB and FRB stocks | $ | $ | $ | $ | $ | ||||||||||||||
Investment securities held-to-maturity | |||||||||||||||||||
Loans held-for-sale | |||||||||||||||||||
Net loans(1) | |||||||||||||||||||
Securitization receivable(2) | |||||||||||||||||||
Deferred fees on commitments to extend credit | |||||||||||||||||||
Total financial instrument assets | $ | $ | $ | $ | $ | ||||||||||||||
Financial instrument liabilities | |||||||||||||||||||
Certificates of deposits | $ | $ | $ | $ | $ | ||||||||||||||
Long-term borrowings | |||||||||||||||||||
Deferred fees on standby letters of credit | |||||||||||||||||||
Total financial instrument liabilities | $ | $ | $ | $ | $ |
(1) | Expected credit losses are included in the estimated fair values. |
(2) | Carrying amounts are included in other assets. |
• | Fees and Service Charges on Deposit Accounts Fees and service charges on deposit accounts includes fees and other charges TCF receives to provide various services, including but not limited to, service charges on deposit accounts and other fees including account analysis fees, monthly service fees, overdraft services, transferring funds, and accepting and executing stop-payment orders. TCF's performance obligation for account analysis fees and monthly service fees are generally satisfied and, therefore, revenue is recognized over the period in which the service is provided. Deposit account related fees are largely transactional based, and therefore, the performance obligation is satisfied and the related revenue is recognized at the point in time when the transaction occurs. |
• | Wealth Management Revenue Wealth management revenue includes fee income generated from personal and institutional customers. TCF also provides investment management services. Revenue is recognized over the period of time the services are rendered. Wealth management revenue also includes commissions that are earned for placing a brokerage transaction for execution. Revenue is recognized once the transaction is completed and TCF is entitled to receive consideration. |
• | Card and ATM Revenue Card and ATM revenue includes ATM surcharges and debit card related revenue. ATM surcharges and certain debit card fees are transactional based and, therefore, the performance obligation is satisfied and the related revenue is recognized at the point in time when the transaction occurs. Other debit card fees satisfied over a period of time are recognized over the period in which the service is provided. |
• | Other Noninterest Income Other noninterest income includes wire transfer fees, safe deposit box income and check orders. The consideration includes both fixed (e.g., safe deposit box fees) and transaction (i.e., wire-transfer fee and check orders) fees. Fixed fees are recognized over the period of time the service is provided, while transaction fees are recognized when a specific service is rendered to the customer. |
• | Net Foreclosed Real Estate and Repossessed Assets Expense Net foreclosed real estate and repossessed assets expense includes net gain or loss on sales of other real estate owned and repossessed assets. Revenue is recognized at the time the sale is complete and TCF is entitled to receive consideration, including sales that are seller financed as receipt of all payment is expected. |
Three Months Ended September 30, 2019 | |||||||||||||||||||
Within the scope of ASC 606 | Out of scope of ASC 606 | Total | |||||||||||||||||
(In thousands) | Consumer Banking | Commercial Banking | Enterprise Services | ||||||||||||||||
Noninterest income | |||||||||||||||||||
Fees and service charges on deposit accounts | $ | $ | $ | $ | $ | ||||||||||||||
Wealth management revenue | $ | ||||||||||||||||||
Card and ATM revenue | $ | ||||||||||||||||||
Other noninterest income | ( | ) | ( | ) | $ | ( | ) | ||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||
Noninterest expense | |||||||||||||||||||
Net foreclosed real estate and repossessed assets | $ | ( | ) | $ | $ | $ | $ |
Three Months Ended September 30, 2018 | |||||||||||||||||||
Within the scope of ASC 606 | Out of scope of ASC 606 | Total | |||||||||||||||||
(In thousands) | Consumer Banking | Commercial Banking | Enterprise Services | ||||||||||||||||
Noninterest income | |||||||||||||||||||
Fees and service charges on deposit accounts | $ | $ | $ | $ | $ | ||||||||||||||
Wealth management revenue | $ | ||||||||||||||||||
Card and ATM revenue | $ | ||||||||||||||||||
Other noninterest income | ( | ) | ( | ) | $ | ||||||||||||||
Total | $ | $ | ( | ) | $ | $ | $ | ||||||||||||
Noninterest expense | |||||||||||||||||||
Net foreclosed real estate and repossessed assets | $ | $ | ( | ) | $ | $ | $ |
Nine Months Ended September 30, 2019 | |||||||||||||||||||
Within the scope of ASC 606 | Out of scope of ASC 606 | Total | |||||||||||||||||
(In thousands) | Consumer Banking | Commercial Banking | Enterprise Services | ||||||||||||||||
Noninterest income | |||||||||||||||||||
Fees and service charges on deposit accounts | $ | $ | $ | $ | $ | ||||||||||||||
Wealth management revenue | $ | ||||||||||||||||||
Card and ATM revenue | $ | ||||||||||||||||||
Other noninterest income | ( | ) | ( | ) | $ | ( | ) | ||||||||||||
Total | $ | $ | ( | ) | $ | $ | $ | ||||||||||||
Noninterest expense | |||||||||||||||||||
Net foreclosed real estate and repossessed assets | $ | ( | ) | $ | $ | $ | $ |
Nine Months Ended September 30, 2018 | |||||||||||||||||||
Within the scope of ASC 606 | Out of scope of ASC 606 | Total | |||||||||||||||||
(In thousands) | Consumer Banking | Commercial Banking | Enterprise Services | ||||||||||||||||
Noninterest income | |||||||||||||||||||
Fees and service charges on deposit accounts | $ | $ | $ | $ | $ | ||||||||||||||
Wealth management revenue | $ | ||||||||||||||||||
Card and ATM revenue | $ | ||||||||||||||||||
Other noninterest income | ( | ) | ( | ) | $ | ||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||
Noninterest expense | |||||||||||||||||||
Net foreclosed real estate and repossessed assets | $ | $ | ( | ) | $ | $ | $ |
Number of Units | Weighted-average Grant Date Fair Value Per Unit | |||||
Outstanding at December 31, 2018 | $ | |||||
Outstanding at December 31, 2018 as adjusted for conversion | ||||||
Granted | ||||||
Converted in the Merger(1) | ||||||
Acquired in the Merger | ||||||
Forfeited/canceled | ( | ) | ||||
Vested | ( | ) | ||||
Outstanding at September 30, 2019 | $ |
(1) | In connection with the Merger, certain Legacy TCF PRSUs were converted at their maximum payout into |
Number of Awards | Weighted-Average Grant Date Fair Value Per Award | |||||
Outstanding at December 31, 2018 | $ | |||||
Outstanding at December 31, 2018 as adjusted for conversion | ||||||
Granted | ||||||
Forfeited/canceled | ( | ) | ||||
Vested | ( | ) | ||||
Outstanding at September 30, 2019 | $ |
Non-Vested Stock Options Outstanding | Stock Options Outstanding | ||||||||||||
Number of Options | Weighted-average Exercise Price | Number of Options | Weighted- average Exercise Price | ||||||||||
Outstanding at December 31, 2018 | $ | $ | |||||||||||
Acquired(1) | |||||||||||||
Forfeited/canceled | ( | ) | |||||||||||
Expired | ( | ) | |||||||||||
Vested | ( | ) | |||||||||||
Outstanding at September 30, 2019 | $ | $ | |||||||||||
Exercisable/vested at September 30, 2019 | $ |
(1) |
Defined Benefit Pension Plans | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Interest cost | $ | $ | $ | $ | |||||||||||
Service cost | |||||||||||||||
Contractual termination cost | |||||||||||||||
Return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of prior service credit | |||||||||||||||
Amortization of unrecognized net loss | |||||||||||||||
Recognized actuarial (gain) loss | |||||||||||||||
Net periodic benefit plan (income) cost | $ | $ | $ | $ |
Postretirement Benefit Plans | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Interest cost | $ | $ | $ | $ | |||||||||||
Service cost | |||||||||||||||
Recognized actuarial (gain) loss | |||||||||||||||
Amortization of prior service cost | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of unrecognized net loss | |||||||||||||||
Net periodic benefit plan (income) cost | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Basic earnings per common share | |||||||||||||||
Net income attributable to TCF Financial Corporation | $ | $ | $ | $ | |||||||||||
Preferred stock dividends | |||||||||||||||
Impact of preferred stock redemption(1) | |||||||||||||||
Net income available to common shareholders | |||||||||||||||
Less: Earnings allocated to participating securities | |||||||||||||||
Earnings allocated to common stock | $ | $ | $ | $ | |||||||||||
Weighted-average common shares outstanding used in basic earnings per common share calculation | |||||||||||||||
Basic earnings per common share | $ | $ | $ | $ | |||||||||||
Diluted earnings per common share | |||||||||||||||
Earnings allocated to common stock | $ | $ | $ | $ | |||||||||||
Weighted-average common shares outstanding used in basic earnings per common share calculation | |||||||||||||||
Net dilutive effect of: | |||||||||||||||
Non-participating restricted stock | |||||||||||||||
Stock options | |||||||||||||||
Warrants | |||||||||||||||
Weighted-average common shares outstanding used in diluted earnings per common share calculation | |||||||||||||||
Diluted earnings per common share | $ | $ | $ | $ | |||||||||||
Anti-dilutive shares outstanding not included in the computation of diluted earnings per common share | |||||||||||||||
Non-participating restricted stock |
(1) | Represents the amount of deferred stock issuance costs originally recorded in preferred stock that were reclassified to retained earnings. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Outside processing | $ | $ | $ | $ | |||||||||||
Loan and lease expense | |||||||||||||||
Professional fees | |||||||||||||||
Advertising and marketing | |||||||||||||||
FDIC insurance | |||||||||||||||
Card processing and issuance costs | |||||||||||||||
Consumer Financial Protection Bureau and OCC settlement charge | |||||||||||||||
Other | |||||||||||||||
Total other noninterest expense | $ | $ | $ | $ |
(In thousands) | Consumer Banking | Commercial Banking | Enterprise Services | Consolidated | |||||||||||
At or For the Three Months Ended September 30, 2019 | |||||||||||||||
Net interest income (expense) | $ | $ | $ | $ | |||||||||||
Provision for credit losses | |||||||||||||||
Net interest income (expense) after provision for credit losses | |||||||||||||||
Noninterest income | ( | ) | |||||||||||||
Noninterest expense | |||||||||||||||
Income tax expense (benefit) | ( | ) | ( | ) | |||||||||||
Income (loss) after income tax expense (benefit) | ( | ) | |||||||||||||
Income attributable to non-controlling interest | |||||||||||||||
Preferred stock dividends | |||||||||||||||
Net income (loss) available to common shareholders | $ | $ | $ | ( | ) | $ | |||||||||
Total assets(1) | $ | $ | $ | $ | |||||||||||
At or For the Three Months Ended September 30, 2018 | |||||||||||||||
Net interest income (expense) | $ | $ | $ | $ | |||||||||||
Provision (benefit) for credit losses | ( | ) | |||||||||||||
Net interest income (expense) after provision for credit losses | |||||||||||||||
Noninterest income | |||||||||||||||
Noninterest expense | |||||||||||||||
Income tax expense (benefit) | |||||||||||||||
Income (loss) after income tax expense (benefit) | |||||||||||||||
Income attributable to non-controlling interest | |||||||||||||||
Preferred stock dividends | |||||||||||||||
Net income (loss) available to common shareholders | $ | $ | $ | $ | |||||||||||
Total assets | $ | $ | $ | $ |
(1) | As a result of the Merger, we recorded $ |
(In thousands) | Consumer Banking | Commercial Banking | Enterprise Services | Consolidated | |||||||||||
At or For the Nine Months Ended September 30, 2019 | |||||||||||||||
Net interest income (expense) | $ | $ | $ | $ | |||||||||||
Provision for credit losses | |||||||||||||||
Net interest income (expense) after provision for credit losses | |||||||||||||||
Noninterest income | ( | ) | |||||||||||||
Noninterest expense | |||||||||||||||
Income tax expense (benefit) | ( | ) | |||||||||||||
Income (loss) after income tax expense (benefit) | ( | ) | |||||||||||||
Income attributable to non-controlling interest | |||||||||||||||
Preferred stock dividends | |||||||||||||||
Net income (loss) available to common shareholders | $ | $ | $ | ( | ) | $ | |||||||||
Total assets | $ | $ | $ | $ | |||||||||||
At or For the Nine Months Ended September 30, 2018 | |||||||||||||||
Net interest income (expense) | $ | $ | $ | $ | |||||||||||
Provision for credit losses | |||||||||||||||
Net interest income (expense) after provision for credit losses | |||||||||||||||
Total noninterest income | |||||||||||||||
Total noninterest expense | |||||||||||||||
Income tax expense (benefit) | |||||||||||||||
Income (loss) after income tax expense (benefit) | |||||||||||||||
Income attributable to non-controlling interest | |||||||||||||||
Preferred stock dividends | |||||||||||||||
Impact of preferred stock redemption | |||||||||||||||
Net income (loss) available to common shareholders | $ | $ | $ | ( | ) | $ | |||||||||
Total assets | $ | $ | $ | $ |
(In thousands) | At September 30, 2019 | At December 31, 2018 | |||||
Commitments to extend credit: | |||||||
Commercial | $ | $ | |||||
Consumer | |||||||
Total commitments to extend credit | |||||||
Standby letters of credit and guarantees on industrial revenue bonds | |||||||
Total | $ | $ |
(In thousands) | September 30, 2019 | December 31, 2018 | |||||
Assets | |||||||
Cash and cash equivalents | $ | $ | |||||
Premises and equipment, net | |||||||
Deferred tax asset | |||||||
Investment in TCF Bank | |||||||
Accounts receivable from TCF Bank | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
Liabilities and Equity | |||||||
Long term borrowings | $ | $ | |||||
Other liabilities | |||||||
Total liabilities | |||||||
Equity | |||||||
Total liabilities and equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Interest income | $ | $ | $ | ||||||||||||
Interest expense | |||||||||||||||
Net interest income | ( | ) | ( | ) | |||||||||||
Noninterest income | |||||||||||||||
Dividends from TCF Bank | |||||||||||||||
Management fees | |||||||||||||||
Other | |||||||||||||||
Total noninterest income | |||||||||||||||
Noninterest expense | |||||||||||||||
Compensation and employee benefits | |||||||||||||||
Occupancy and equipment | |||||||||||||||
Other | |||||||||||||||
Total noninterest expense | |||||||||||||||
Income (loss) before income tax benefit and equity in undistributed earnings (loss) of TCF Bank | ( | ) | |||||||||||||
Income tax benefit | |||||||||||||||
Income before equity in undistributed earnings (loss) of TCF Bank | ( | ) | |||||||||||||
Equity in undistributed earnings (loss) of TCF Bank | ( | ) | |||||||||||||
Net income | |||||||||||||||
Preferred stock dividends | |||||||||||||||
Impact of preferred stock redemption | |||||||||||||||
Net income available to common shareholders | $ | $ | $ | $ |
Nine Months Ended September 30, | |||||||
(In thousands) | 2019 | 2018 | |||||
Cash flows from operating activities | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Equity in undistributed (earnings) loss of TCF Bank | ( | ) | |||||
Share-based compensation expense | |||||||
Depreciation and amortization | |||||||
Provision (benefit) for deferred income taxes | |||||||
Net (losses) gains on sales of assets | ( | ) | ( | ) | |||
Net change in other assets | ( | ) | |||||
Net change in other liabilities | ( | ) | ( | ) | |||
Other, net | ( | ) | ( | ) | |||
Net cash provided by (used in) operating activities | |||||||
Cash flows from investing activities | |||||||
Purchases of premises and equipment and lease equipment | ( | ) | ( | ) | |||
Proceeds from sales of premises and equipment | |||||||
Net cash acquired in business combination | |||||||
Other, net | |||||||
Net cash provided by (used in) investing activities | |||||||
Cash flows from financing activities | |||||||
Redemption of Series B preferred stock | ( | ) | |||||
Repurchases of common stock | ( | ) | ( | ) | |||
Common shares sold to TCF employee benefit plans | |||||||
Dividends paid on preferred stock | ( | ) | ( | ) | |||
Dividends paid on common stock | ( | ) | ( | ) | |||
Payments related to tax-withholding upon conversion of share-based awards | ( | ) | ( | ) | |||
Exercise of stock options | ( | ) | |||||
Net cash provided by (used in) financing activities | ( | ) | ( | ) | |||
Net change in cash and cash equivalents | |||||||
Cash and cash equivalents at beginning of period | |||||||
Cash and cash equivalents at end of period | $ | $ |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
(Dollars in thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Consolidated Income: | ||||||||||||||||
Interest income | $ | 459,808 | $ | 291,707 | $ | 1,077,483 | $ | 861,420 | ||||||||
Interest expense | 88,015 | 38,205 | 197,204 | 106,078 | ||||||||||||
Net interest income | 371,793 | 253,502 | 880,279 | 755,342 | ||||||||||||
Noninterest income | 94,258 | 112,064 | 307,480 | 330,529 | ||||||||||||
Total revenue | 466,051 | 365,566 | 1,187,759 | 1,085,871 | ||||||||||||
Provision for credit losses | 27,188 | 2,270 | 50,879 | 27,874 | ||||||||||||
Noninterest expense | 425,620 | 246,423 | 915,544 | 764,442 | ||||||||||||
Income before income tax expense | 13,243 | 116,873 | 221,336 | 293,555 | ||||||||||||
Income tax (benefit) expense | (11,735 | ) | 28,034 | 28,866 | 66,083 | |||||||||||
Income attributable to non-controlling interest | 2,830 | 2,643 | 9,401 | 8,766 | ||||||||||||
Net income attributable to TCF | 22,148 | 86,196 | 183,069 | 218,706 | ||||||||||||
Preferred stock dividends | 2,494 | 2,494 | 7,481 | 9,094 | ||||||||||||
Impact of preferred stock redemption | — | — | — | 3,481 | ||||||||||||
Net income available to common shareholders | $ | 19,654 | $ | 83,702 | $ | 175,588 | $ | 206,131 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.15 | $ | 1.00 | $ | 1.79 | $ | 2.44 | ||||||||
Diluted | 0.15 | 1.00 | 1.79 | 2.43 | ||||||||||||
Financial Ratios: | ||||||||||||||||
Return on average assets ("ROAA")(1) | 0.26 | % | 1.55 | % | 0.88 | % | 1.32 | % | ||||||||
Return on average common equity ("ROACE")(1) | 1.75 | 14.44 | 7.50 | 11.80 | ||||||||||||
Return on average tangible common equity ("ROATCE")(1)(2) | 2.68 | 15.76 | 9.05 | 12.89 | ||||||||||||
Net interest margin (FTE)(1)(3)(4) | 4.14 | 4.73 | 4.36 | 4.70 | ||||||||||||
Dividend payout ratio | 233.33 | 29.41 | 52.54 | 36.59 | ||||||||||||
Efficiency ratio | 91.32 | 67.41 | 77.08 | 70.40 | ||||||||||||
Credit Quality Ratios: | ||||||||||||||||
Net charge-offs as a percentage of average loans and leases(1) | 0.39 | 0.15 | 0.36 | 0.24 | ||||||||||||
Adjusted Financial Results (non-GAAP): | ||||||||||||||||
Adjusted net income attributable to TCF(2) | $ | 128,301 | $ | 86,196 | $ | 299,638 | $ | 244,215 | ||||||||
Adjusted diluted earnings per common share(2) | $ | 0.98 | $ | 1.00 | $ | 2.98 | $ | 2.73 | ||||||||
Adjusted ROAA(1)(2) | 1.34 | % | 1.55 | % | 1.41 | % | 1.46 | % | ||||||||
Adjusted ROACE(1)(2) | 11.21 | 14.44 | 12.48 | 13.26 | ||||||||||||
Adjusted ROATCE(1)(2) | 14.96 | 15.76 | 14.90 | 14.47 | ||||||||||||
Adjusted efficiency ratio (non-GAAP)(2) | 58.74 | 64.91 | 61.57 | 65.08 |
(1) | Annualized. |
(2) | See section entitled "Non-GAAP Financial Measures" for further information. |
(3) | Net interest income on a fully tax-equivalent ("FTE") basis divided by average interest-earning assets. |
(4) | Presented on a tax-equivalent basis using a 21% tax rate for each period presented. |
(Dollars in thousands) | At September 30, 2019 | At December 31, 2018 | ||||||
Consolidated Financial Condition: | ||||||||
Loans and leases | $ | 33,510,752 | $ | 19,073,020 | ||||
Total assets | 45,692,511 | 23,699,612 | ||||||
Deposits | 35,286,074 | 18,903,686 | ||||||
Borrowings | 3,467,782 | 1,449,472 | ||||||
Total equity | 5,693,417 | 2,556,260 | ||||||
Financial Ratios: | ||||||||
Common equity to assets | 12.04 | % | 9.99 | % | ||||
Tangible common equity as a percent of tangible assets (non-GAAP)(1) | 9.09 | % | 9.32 | % | ||||
Total risk-based capital ratio | 12.63 | % | 13.38 | % | ||||
Book value per common share | $ | 35.82 | $ | 26.85 | ||||
Tangible book value per common share (non-GAAP)(1) | 26.18 | 24.87 | ||||||
Credit Quality Ratios: | ||||||||
Nonaccrual loans and leases as a percentage of total loans and leases | 0.54 | % | 0.56 | % | ||||
Nonperforming assets as a percentage of total loans and leases and other real estate owned | 0.62 | % | 0.65 | % | ||||
Allowance for loan and lease losses as a percentage of total nonaccrual loans and leases | 66.67 | % | 148.65 | % |
(1) | See section entitled "Non-GAAP Financial Measures" for further information. |
Summary of Financial Ratios | ||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | Change From | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
(Dollars in thousands, except per share data) | 2018 | 2018 | ||||||||||||||||
Return on average assets ("ROAA")(1) | 0.26 | % | 1.55 | % | 0.88 | % | 1.32 | % | (129 | ) | bps | (44 | ) | bps | ||||
ROACE(1) | 1.75 | 14.44 | 7.50 | 11.80 | (1,269 | ) | (430 | ) | ||||||||||
ROATCE (non-GAAP)(1)(2) | 2.68 | 15.76 | 9.05 | 12.89 | (1,308 | ) | (384 | ) | ||||||||||
Adjusted Financial Results (non-GAAP) | ||||||||||||||||||
Adjusted ROAA(1)(2) | 1.34 | % | 1.55 | % | 1.41 | % | 1.46 | % | (21 | ) | bps | (5 | ) | bps | ||||
Adjusted ROACE(1)(2) | 11.21 | 14.44 | 12.48 | 13.26 | (323 | ) | (78 | ) | ||||||||||
Adjusted ROATCE(1)(2) | 14.96 | 15.76 | 14.90 | 14.47 | (80 | ) | 43 |
(1) | Annualized. |
(2) | See section entitled "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information. |
Three Months Ended September 30, | |||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest(1) | Yields and Rates(1)(2) | Average Balance | Interest(1) | Yields and Rates(1)(2) | |||||||||||||||
Assets: | |||||||||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stocks | $ | 230,767 | $ | 806 | 1.39 | % | $ | 87,485 | $ | 1,057 | 4.81 | % | |||||||||
Investment securities held-to-maturity | 143,078 | 602 | 1.68 | 153,652 | 988 | 2.57 | |||||||||||||||
Investment securities available-for-sale: | |||||||||||||||||||||
Taxable | 4,232,878 | 30,436 | 2.88 | 1,525,665 | 10,511 | 2.76 | |||||||||||||||
Tax-exempt(3) | 643,576 | 4,283 | 2.66 | 823,854 | 5,478 | 2.66 | |||||||||||||||
Loans and leases held-for-sale | 118,482 | 1,408 | 4.74 | 216,669 | 3,625 | 6.64 | |||||||||||||||
Loans and leases(1)(3)(4) | 29,503,475 | 418,960 | 5.62 | 18,416,310 | 270,129 | 5.82 | |||||||||||||||
Interest-bearing deposits with banks and other | 933,014 | 5,800 | 2.44 | 218,771 | 2,031 | 3.69 | |||||||||||||||
Total interest-earning assets | 35,805,270 | 462,295 | 5.11 | 21,442,406 | 293,819 | 5.44 | |||||||||||||||
Other assets | 3,289,096 | 1,461,998 | |||||||||||||||||||
Total assets | $ | 39,094,366 | $ | 22,904,404 | |||||||||||||||||
Liabilities and Equity: | |||||||||||||||||||||
Noninterest-bearing deposits | $ | 6,564,195 | $ | 3,874,421 | |||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||
Checking | 4,805,843 | 5,520 | 0.46 | 2,427,288 | 234 | 0.04 | |||||||||||||||
Savings | 7,676,165 | 14,110 | 0.73 | 5,620,161 | 4,994 | 0.35 | |||||||||||||||
Money market | 3,490,922 | 13,037 | 1.48 | 1,496,223 | 2,941 | 0.78 | |||||||||||||||
Certificates of deposit | 7,320,720 | 38,233 | 2.07 | 4,868,286 | 19,310 | 1.57 | |||||||||||||||
Total interest-bearing deposits | 23,293,650 | 70,900 | 1.21 | 14,411,958 | 27,479 | 0.76 | |||||||||||||||
Total deposits | 29,857,845 | 70,900 | 0.94 | 18,286,379 | 27,479 | 0.60 | |||||||||||||||
Borrowings: | |||||||||||||||||||||
Short-term borrowings | 1,884,228 | 5,345 | 1.11 | 3,357 | 21 | 2.44 | |||||||||||||||
Long-term borrowings | 1,472,150 | 11,769 | 3.17 | 1,351,585 | 10,705 | 3.13 | |||||||||||||||
Total borrowings | 3,356,378 | 17,114 | 2.01 | 1,354,942 | 10,726 | 3.13 | |||||||||||||||
Total interest-bearing liabilities | 26,650,028 | 88,014 | 1.31 | 15,766,900 | 38,205 | 0.96 | |||||||||||||||
Total deposits and borrowings | 33,214,223 | 88,014 | 1.05 | 19,641,321 | 38,205 | 0.77 | |||||||||||||||
Accrued expenses and other liabilities | 1,197,014 | 751,100 | |||||||||||||||||||
Total liabilities | 34,411,237 | 20,392,421 | |||||||||||||||||||
Total TCF Financial Corporation shareholders' equity | 4,657,613 | 2,488,435 | |||||||||||||||||||
Non-controlling interest in subsidiaries | 25,516 | 23,548 | |||||||||||||||||||
Total equity | 4,683,129 | 2,511,983 | |||||||||||||||||||
Total liabilities and equity | $ | 39,094,366 | $ | 22,904,404 | |||||||||||||||||
Net interest spread (FTE) | 4.06 | 4.67 | |||||||||||||||||||
Net interest income (FTE) and net interest margin (FTE) | $ | 374,281 | 4.14 | $ | 255,614 | 4.73 | |||||||||||||||
Reconciliation to Reported Net Interest Income | |||||||||||||||||||||
Net interest income (FTE) | $ | 374,281 | $ | 255,614 | |||||||||||||||||
Adjustments for taxable equivalent interest(1)(3) | |||||||||||||||||||||
Loans and leases | $ | (1,590 | ) | $ | (962 | ) | |||||||||||||||
Tax-exempt investment securities | (898 | ) | (1,150 | ) | |||||||||||||||||
Total FTE adjustments | (2,488 | ) | (2,112 | ) | |||||||||||||||||
Net interest income (GAAP) | $ | 371,793 | $ | 253,502 | |||||||||||||||||
Net interest margin (GAAP) | 4.12 | % | 4.69 | % |
(1) | Interest and yields are presented on a FTE basis. |
(2) | Annualized. |
(3) | The yield on tax-exempt loans, leases and investment securities available-for-sale is computed on a FTE basis using a statutory federal income tax rate of 21%. |
(4) | Average balances of loans and leases include nonaccrual loans and leases and are presented net of unearned income. |
Nine Months Ended September 30, | |||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest(1) | Yields and Rates(1)(2) | Average Balance | Interest(1) | Yields and Rates(1)(2) | |||||||||||||||
Assets: | |||||||||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stocks | $ | 149,801 | $ | 2,860 | 2.55 | % | $ | 90,600 | $ | 2,698 | 3.98 | % | |||||||||
Investment securities held-to-maturity | 145,627 | 2,061 | 1.89 | 156,170 | 3,005 | 2.57 | |||||||||||||||
Investment securities available-for-sale: | |||||||||||||||||||||
Taxable | 3,029,754 | 67,684 | 2.98 | 1,258,708 | 24,487 | 2.59 | |||||||||||||||
Tax-exempt(3) | 461,499 | 9,210 | 2.66 | 824,551 | 16,444 | 2.66 | |||||||||||||||
Loans and leases held-for-sale | 71,739 | 2,832 | 5.27 | 108,992 | 5,281 | 6.48 | |||||||||||||||
Loans and leases(1)(3)(4) | 22,681,170 | 987,504 | 5.80 | 18,918,591 | 809,751 | 5.71 | |||||||||||||||
Interest-bearing deposits with banks and other | 494,007 | 10,878 | 2.92 | 225,203 | 6,023 | 3.58 | |||||||||||||||
Total interest-earning assets | 27,033,597 | 1,083,029 | 5.33 | 21,582,815 | 867,689 | 5.36 | |||||||||||||||
Other assets | 2,249,678 | 1,448,293 | |||||||||||||||||||
Total assets | $ | 29,283,275 | $ | 23,031,108 | |||||||||||||||||
Liabilities and Equity: | |||||||||||||||||||||
Noninterest-bearing deposits | $ | 4,831,271 | $ | 3,833,543 | |||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||
Checking | 3,256,409 | 6,347 | 0.26 | 2,449,723 | 466 | 0.03 | |||||||||||||||
Savings | 6,799,432 | 37,094 | 0.73 | 5,520,287 | 11,895 | 0.29 | |||||||||||||||
Money market | 2,144,697 | 22,078 | 1.38 | 1,588,210 | 7,970 | 0.67 | |||||||||||||||
Certificates of deposit | 5,500,105 | 83,635 | 2.03 | 4,924,804 | 53,897 | 1.46 | |||||||||||||||
Total interest-bearing deposits | 17,700,643 | 149,154 | 1.13 | 14,483,024 | 74,228 | 0.69 | |||||||||||||||
Total deposits | 22,531,914 | 149,154 | 0.88 | 18,316,567 | 74,228 | 0.54 | |||||||||||||||
Borrowings: | |||||||||||||||||||||
Short-term borrowings | 838,750 | 9,433 | 1.48 | 3,473 | 58 | 2.23 | |||||||||||||||
Long-term borrowings | 1,543,398 | 38,616 | 3.32 | 1,435,088 | 31,792 | 2.94 | |||||||||||||||
Total borrowings | 2,382,148 | 48,049 | 2.67 | 1,438,561 | 31,850 | 2.93 | |||||||||||||||
Total interest-bearing liabilities | 20,082,791 | 197,203 | 1.31 | 15,921,585 | 106,078 | 0.89 | |||||||||||||||
Total deposits and borrowings | 24,914,062 | 197,203 | 1.06 | 19,755,128 | 106,078 | 0.72 | |||||||||||||||
Accrued expenses and other liabilities | 1,052,709 | 741,222 | |||||||||||||||||||
Total liabilities | 25,966,771 | 20,496,350 | |||||||||||||||||||
Total TCF Financial Corp. shareholders' equity | 3,289,946 | 2,509,625 | |||||||||||||||||||
Non-controlling interest in subsidiaries | 26,558 | 25,133 | |||||||||||||||||||
Total equity | 3,316,504 | 2,534,758 | |||||||||||||||||||
Total liabilities and equity | $ | 29,283,275 | $ | 23,031,108 | |||||||||||||||||
Net interest spread (FTE) | 4.27 | 4.64 | |||||||||||||||||||
Net interest income (FTE) and net interest margin (FTE) | $ | 885,826 | 4.36 | $ | 761,611 | 4.70 | |||||||||||||||
Reconciliation to Reported Net Interest Income | |||||||||||||||||||||
Net interest income (FTE) | $ | 885,826 | $ | 761,611 | |||||||||||||||||
Adjustments for taxable equivalent interest(1)(3) | |||||||||||||||||||||
Loans | (3,614 | ) | (2,816 | ) | |||||||||||||||||
Tax-exempt investment securities | (1,933 | ) | (3,453 | ) | |||||||||||||||||
Total FTE adjustments | (5,547 | ) | (6,269 | ) | |||||||||||||||||
Net interest income (GAAP) | $ | 880,279 | $ | 755,342 | |||||||||||||||||
Net interest margin (GAAP) | 4.35 | % | 4.68 | % |
(1) | Interest and yields are presented on a FTE basis. |
(2) | Annualized. |
(3) | The yield on tax-exempt loans, leases and investment securities available-for-sale is computed on a FTE basis using a statutory federal income tax rate of 21%. |
(4) | Average balances of loans and leases include nonaccrual loans and leases and are presented net of unearned income. |
Three Months Ended September 30, 2019 vs. 2018 | Nine Months Ended September 30, 2019 vs. 2018 | ||||||||||||||||||||||
Increase (Decrease) Due to Changes in | Increase (Decrease) Due to Changes in | ||||||||||||||||||||||
(Dollars in thousands) | Average Volume(1) | Average Yield/Rate(1) | Total Change | Average Volume(1) | Average Yield/Rate(1) | Total Change | |||||||||||||||||
Changes in Interest Income on Interest-Earning Assets: | |||||||||||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stocks | $ | 873 | $ | (1,124 | ) | $ | (251 | ) | $ | 1,355 | $ | (1,193 | ) | $ | 162 | ||||||||
Investment securities held to maturity | (64 | ) | (322 | ) | (386 | ) | (192 | ) | (752 | ) | (944 | ) | |||||||||||
Investment securities available for sale: | |||||||||||||||||||||||
Taxable | 19,446 | 479 | 19,925 | 39,077 | 4,120 | 43,197 | |||||||||||||||||
Tax-exempt | (1,200 | ) | 5 | (1,195 | ) | (7,246 | ) | 12 | (7,234 | ) | |||||||||||||
Loans and leases held for sale | (1,358 | ) | (859 | ) | (2,217 | ) | (1,586 | ) | (863 | ) | (2,449 | ) | |||||||||||
Loans and leases | 158,371 | (9,540 | ) | 148,831 | 164,581 | 13,172 | 177,753 | ||||||||||||||||
Interest-bearing deposits with banks and other | 4,670 | (901 | ) | 3,769 | 6,149 | (1,294 | ) | 4,855 | |||||||||||||||
Total interest-earning assets | $ | 180,738 | $ | (12,262 | ) | $ | 168,476 | $ | 202,138 | $ | 13,202 | $ | 215,340 | ||||||||||
Changes in Interest Expense on Interest-Bearing Liabilities: | |||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||
Checking | $ | 435 | $ | 4,851 | $ | 5,286 | $ | 202 | $ | 5,679 | $ | 5,881 | |||||||||||
Savings | 2,325 | 6,791 | 9,116 | 3,311 | 21,888 | 25,199 | |||||||||||||||||
Money market | 6,028 | 4,068 | 10,096 | 3,527 | 10,581 | 14,108 | |||||||||||||||||
Certificates of deposit | 11,616 | 7,307 | 18,923 | 6,865 | 22,873 | 29,738 | |||||||||||||||||
Interest-bearing deposits | 20,404 | 23,017 | 43,421 | 13,905 | 61,021 | 74,926 | |||||||||||||||||
Short-term borrowings | 5,342 | (18 | ) | 5,324 | 9,401 | (26 | ) | 9,375 | |||||||||||||||
Long-term borrowings | 940 | 124 | 1,064 | 2,516 | 4,308 | 6,824 | |||||||||||||||||
Total interest-bearing liabilities | $ | 26,686 | $ | 23,123 | $ | 49,809 | $ | 25,822 | $ | 65,303 | $ | 91,125 | |||||||||||
Total change in net interest income (FTE)(2) | $ | 154,052 | $ | (35,385 | ) | $ | 118,667 | $ | 176,316 | $ | (52,101 | ) | $ | 124,215 |
(1) | Changes attributable to the combined impact of volume and rate have been allocated proportionately to the change due to volume and the change due to rate. |
(2) | FTE basis using a federal income tax rate of 21% for the three and nine months ended September 30, 2019 and 2018. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry. |
Three Months Ended September 30, | Change | |||||||||||||
(Dollars in thousands) | 2019 | 2018 | $ | % / bps | ||||||||||
Fees and service charges on deposit accounts | $ | 34,384 | $ | 29,175 | $ | 5,209 | 17.9 | % | ||||||
Leasing revenue | 39,590 | 41,944 | (2,354 | ) | (5.6 | ) | ||||||||
Wealth management revenue | 4,241 | — | 4,241 | N.M. | ||||||||||
Card and ATM revenue | 23,315 | 20,074 | 3,241 | 16.1 | ||||||||||
Net (losses) gains on sales of loans and leases | (5,984 | ) | 8,502 | (14,486 | ) | N.M. | ||||||||
Servicing fee revenue | 5,121 | 6,032 | (911 | ) | (15.1 | ) | ||||||||
Net gains (losses) on investment securities | 5,900 | 94 | 5,806 | N.M. | ||||||||||
Other | (12,309 | ) | 6,243 | (18,552 | ) | N.M. | ||||||||
Total noninterest income | $ | 94,258 | $ | 112,064 | $ | (17,806 | ) | (15.9 | ) | |||||
Total noninterest income as a percentage of total revenue | 20.2 | % | 30.7 | % | (1,050) bps | |||||||||
Nine Months Ended September 30, | Change | |||||||||||||
(Dollars in thousands) | 2019 | 2018 | $ | % | ||||||||||
Fees and service charges on deposit accounts | $ | 88,504 | $ | 83,703 | $ | 4,801 | 5.7 | % | ||||||
Leasing revenue | 117,032 | 121,001 | (3,969 | ) | (3.3 | ) | ||||||||
Wealth management revenue | 4,241 | — | 4,241 | N.M. | ||||||||||
Card and ATM revenue | 62,470 | 58,313 | 4,157 | 7.1 | ||||||||||
Net (losses) gains on sales of loans and leases | 13,374 | 24,900 | (11,526 | ) | (46.3 | ) | ||||||||
Servicing fee revenue | 14,754 | 21,811 | (7,057 | ) | (32.4 | ) | ||||||||
Net gains (losses) on investment securities | 7,417 | 181 | 7,236 | N.M. | ||||||||||
Other | (312 | ) | 20,620 | (20,932 | ) | N.M. | ||||||||
Total noninterest income | $ | 307,480 | $ | 330,529 | $ | (23,049 | ) | (7.0 | ) | |||||
Total noninterest income as a percentage of total revenue | 25.9 | % | 30.4 | % | (450) bps |
Three Months Ended September 30, | Change | |||||||||||||
(Dollars in thousands) | 2019 | 2018 | $ | % / bps | ||||||||||
Compensation and employee benefits | $ | 155,745 | $ | 124,996 | $ | 30,749 | 24.6 | % | ||||||
Occupancy and equipment | 49,229 | 42,337 | 6,892 | 16.3 | ||||||||||
Lease financing equipment depreciation | 19,408 | 19,525 | (117 | ) | (0.6 | ) | ||||||||
Net foreclosed real estate and repossessed assets | 2,203 | 3,880 | (1,677 | ) | (43.2 | ) | ||||||||
Merger-related expenses | 111,259 | — | 111,259 | N.M. | ||||||||||
Other | 87,776 | 55,685 | 32,091 | 57.6 | ||||||||||
Total noninterest expense | $ | 425,620 | $ | 246,423 | $ | 179,197 | 72.7 | |||||||
Full-time equivalent staff (at period end) | 7,374 | 4,872 | 2,502 | 51.4 | ||||||||||
Efficiency ratio | 91.32 | % | 67.41 | % | 2,391 | bps | ||||||||
Adjusted efficiency ratio, Non-GAAP(1) | 58.74 | 64.91 | (617 | ) | ||||||||||
Nine Months Ended September 30, | Change | |||||||||||||
(Dollars in thousands) | 2019 | 2018 | $ | % | ||||||||||
Compensation and employee benefits | $ | 395,953 | $ | 372,174 | $ | 23,779 | 6.4 | % | ||||||
Occupancy and equipment | 132,789 | 123,562 | 9,227 | 7.5 | ||||||||||
Lease financing equipment depreciation | 57,797 | 54,744 | 3,053 | 5.6 | ||||||||||
Net foreclosed real estate and repossessed assets | 9,281 | 12,654 | (3,373 | ) | (26.7 | ) | ||||||||
Merger-related expenses | 124,943 | — | 124,943 | N.M. | ||||||||||
Other | 194,781 | 201,308 | (6,527 | ) | (3.2 | ) | ||||||||
Total noninterest expense | $ | 915,544 | $ | 764,442 | $ | 151,102 | 19.8 | |||||||
Efficiency ratio | 77.08 | % | 70.40 | % | 668 | bps | ||||||||
Adjusted efficiency ratio, Non-GAAP(1) | 61.57 | 65.08 | (351 | ) |
(1) | See "Consolidated Financial Condition Analysis - Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information. |
(In thousands) | At September 30, 2019 | At December 31, 2018 | |||||
Investment securities available-for-sale, at fair value | |||||||
Debt securities: | |||||||
Government and government-sponsored enterprises | $ | 247,147 | $ | — | |||
Obligations of states and political subdivisions | 789,671 | 556,871 | |||||
Mortgage-backed securities | 4,542,592 | 1,913,194 | |||||
Corporate debt and trust preferred securities | 425 | — | |||||
Total debt securities available-for-sale | 5,579,835 | 2,470,065 | |||||
Total investment securities available-for-sale | 5,579,835 | 2,470,065 | |||||
Investment securities held-to-maturity | |||||||
Mortgage-backed securities | 140,324 | 146,052 | |||||
Corporate debt and trust preferred securities | 3,676 | 2,800 | |||||
Total investment securities held-to-maturity | 144,000 | 148,852 | |||||
Total investment securities | $ | 5,723,835 | $ | 2,618,917 |
At September 30, 2019 | ||||||||||||||||||||||||||||||||||
Government and Government-sponsored Enterprises | Obligations of States and Political Subdivisions | Mortgage-backed Securities | Corporate Debt And Trust Preferred Securities | Total | ||||||||||||||||||||||||||||||
(Dollars in thousands) | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | ||||||||||||||||||||||||
Investment securities available-for-sale | ||||||||||||||||||||||||||||||||||
Due in one year or less | $ | — | — | % | $ | 60,652 | 2.23 | % | $ | — | — | % | $ | — | — | % | $ | 60,652 | 2.23 | % | ||||||||||||||
Due in 1-5 years | — | — | 169,736 | 2.61 | 29,663 | 1.93 | — | — | 199,399 | 2.51 | ||||||||||||||||||||||||
Due in 5-10 years | 27,186 | 3.60 | 161,469 | 2.76 | 304,100 | 2.60 | — | — | 492,755 | 2.71 | ||||||||||||||||||||||||
Due after 10 years | 219,961 | 3.44 | 397,814 | 2.89 | 4,208,829 | 2.95 | 425 | 6.87 | 4,827,029 | 2.97 | ||||||||||||||||||||||||
Total | $ | 247,147 | 3.46 | $ | 789,671 | 2.75 | $ | 4,542,592 | 2.92 | $ | 425 | 6.87 | $ | 5,579,835 | 2.92 | |||||||||||||||||||
Investment securities held-to-maturity | ||||||||||||||||||||||||||||||||||
Due in one year or less | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | — | — | % | ||||||||||||||
Due in 1-5 years | — | — | — | — | — | — | 3,150 | 2.82 | 3,150 | 2.82 | ||||||||||||||||||||||||
Due in 5-10 years | — | — | — | — | 60 | 6.50 | 400 | 3.00 | 460 | 3.46 | ||||||||||||||||||||||||
Due after 10 years | — | — | — | — | 140,264 | 2.47 | 126 | 6.00 | 140,390 | 2.47 | ||||||||||||||||||||||||
Total | $ | — | — | $ | — | — | $ | 140,324 | 2.47 | $ | 3,676 | 2.95 | $ | 144,000 | 2.48 |
At September 30, 2019 | At December 31, 2018 | Change | ||||||||||||||||||
(Dollars in thousands) | Amount | % of Total | Amount | % of Total | $ | % | ||||||||||||||
Commercial loan and lease portfolio: | ||||||||||||||||||||
Commercial and industrial | $ | 10,810,534 | 32.3 | % | $ | 6,220,632 | 32.6 | % | $ | 4,589,902 | 73.8 | % | ||||||||
Commercial real estate | 8,876,779 | 26.5 | 2,908,313 | 15.2 | 5,968,466 | 205.2 | ||||||||||||||
Lease financing | 2,594,373 | 7.7 | 2,530,163 | 13.3 | 64,210 | 2.5 | ||||||||||||||
Total commercial loan and lease portfolio | 22,281,686 | 66.5 | 11,659,108 | 61.1 | 10,622,578 | 91.1 | ||||||||||||||
Consumer loan portfolio: | ||||||||||||||||||||
Residential mortgage | 6,057,404 | 18.0 | 2,335,835 | 12.2 | 3,721,569 | 159.3 | ||||||||||||||
Consumer installment | 1,562,252 | 4.7 | 2,003,572 | 10.5 | (441,320 | ) | (22.0 | ) | ||||||||||||
Home equity | 3,609,410 | 10.8 | 3,074,505 | 16.2 | 534,905 | 17.4 | ||||||||||||||
Total consumer loan portfolio | 11,229,066 | 33.5 | 7,413,912 | 38.9 | 3,815,154 | 51.5 | ||||||||||||||
Total loans and leases | $ | 33,510,752 | 100.0 | % | $ | 19,073,020 | 100.0 | % | $ | 14,437,732 | 75.7 | % |
At September 30, 2019 | At December 31, 2018 | ||||||||||||
(Dollars in thousands) | 90 Days or More Delinquent and Accruing(1) | Percentage of Period-end Loans and Leases | 90 Days or More Delinquent and Accruing(1) | Percentage of Period-end Loans and Leases | |||||||||
Commercial loan and lease portfolio: | |||||||||||||
Commercial and industrial | $ | 2,241 | 0.02 | % | $ | 760 | 0.01 | % | |||||
Commercial real estate | 8,054 | 0.09 | — | — | |||||||||
Lease financing | 2,421 | 0.09 | 1,882 | 0.07 | |||||||||
Total commercial loan and lease portfolio | 12,716 | 0.06 | 2,642 | 0.02 | |||||||||
Consumer loan portfolio: | |||||||||||||
Residential mortgage | 886 | 0.01 | 1,275 | 0.06 | |||||||||
Consumer installment | 6 | — | 3,349 | 0.17 | |||||||||
Total consumer loan portfolio | 892 | 0.01 | 4,624 | 0.06 | |||||||||
Portfolios acquired with deteriorated credit quality | 16,052 | 5.47 | 178 | 4.65 | |||||||||
Total | $ | 29,660 | 0.09 | % | $ | 7,444 | 0.04 | % |
(1) | Excludes nonaccrual loans and leases |
At September 30, 2019 | At December 31, 2018 | ||||||||||||||||||||||
(Dollars in thousands) | Accruing TDR Loans | Nonaccrual TDR Loans | Total TDR Loans | Accruing TDR Loans | Nonaccrual TDR Loans | Total TDR Loans | |||||||||||||||||
Commercial loan and lease portfolio | $ | 10,068 | $ | 1,953 | $ | 12,021 | $ | 12,665 | $ | 6,153 | $ | 18,818 | |||||||||||
Consumer loan portfolio | 75,836 | 19,284 | 95,120 | 85,794 | 22,554 | 108,348 | |||||||||||||||||
Total | $ | 85,904 | $ | 21,237 | $ | 107,141 | $ | 98,459 | $ | 28,707 | $ | 127,166 | |||||||||||
Over 90-day delinquency as a percentage of total accruing TDR loans | 34.53 | % | N.A. | N.A. | 7.56 | % | N.A. | N.A. |
(Dollars in thousands) | At September 30, 2019 | At December 31, 2018 | |||||
Commercial loan and lease portfolio: | |||||||
Commercial and industrial | $ | 55,039 | $ | 26,061 | |||
Commercial real estate | 26,518 | 4,518 | |||||
Lease financing | 11,503 | 7,993 | |||||
Total commercial loan and lease portfolio | 93,060 | 38,572 | |||||
Consumer loan portfolio: | |||||||
Residential mortgage | 48,816 | 33,111 | |||||
Consumer installment | 636 | 8,581 | |||||
Home equity | 39,296 | 25,654 | |||||
Total consumer loan portfolio | 88,748 | 67,346 | |||||
Nonaccrual loans and leases | 181,808 | 105,918 | |||||
Other real estate owned | 27,638 | 17,403 | |||||
Total nonperforming assets | $ | 209,446 | $ | 123,321 | |||
Nonaccrual loans and leases as a percentage of total loans and leases | 0.54 | % | 0.56 | % | |||
Nonperforming assets as a percentage of total loans and leases and other real estate owned | 0.62 | 0.65 | |||||
Allowance for loan and lease losses as a percentage of nonaccrual loans and leases | 66.67 | 148.65 |
At or For the Three Months Ended September 30, 2019 | |||||||||||
(In thousands) | Consumer Loan Portfolio | Commercial Loan and Lease Portfolio | Total | ||||||||
Balance, beginning of period | $ | 76,079 | $ | 31,914 | $ | 107,993 | |||||
Acquired | 16,414 | 64,830 | 81,244 | ||||||||
Additions | 24,592 | 54,059 | 78,651 | ||||||||
Charge-offs | (2,020 | ) | (18,257 | ) | (20,277 | ) | |||||
Transfers to other assets | (5,227 | ) | (4,294 | ) | (9,521 | ) | |||||
Transfers (to) from loans and leases held for sale | (9,454 | ) | — | (9,454 | ) | ||||||
Return to accrual status | (3,048 | ) | (10,419 | ) | (13,467 | ) | |||||
Payments received | (8,597 | ) | (25,274 | ) | (33,871 | ) | |||||
Other, net | 9 | 501 | 510 | ||||||||
Balance, end of period | $ | 88,748 | $ | 93,060 | $ | 181,808 | |||||
At or For the Nine Months Ended September 30, 2019 | |||||||||||
(In thousands) | Consumer Loan Portfolio | Commercial Loan and Lease Portfolio | Total | ||||||||
Balance, beginning of period | $ | 67,346 | $ | 38,572 | $ | 105,918 | |||||
Acquired | 16,414 | 64,830 | 81,244 | ||||||||
Additions | 60,875 | 94,190 | 155,065 | ||||||||
Charge-offs | (6,407 | ) | (29,693 | ) | (36,100 | ) | |||||
Transfers to other assets | (14,530 | ) | (12,174 | ) | (26,704 | ) | |||||
Transfers (to) from loans and leases held-for-sale | (9,454 | ) | — | (9,454 | ) | ||||||
Return to accrual status | (6,443 | ) | (17,636 | ) | (24,079 | ) | |||||
Payments received | (18,676 | ) | (48,000 | ) | (66,676 | ) | |||||
Other, net | (377 | ) | 2,971 | 2,594 | |||||||
Balance, end of period | $ | 88,748 | $ | 93,060 | $ | 181,808 |
At September 30, 2019 | |||||||||||||||||||
Non-classified | Classified | Total | |||||||||||||||||
(In thousands) | Pass | Special Mention | Substandard | Doubtful | |||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||||||
Commercial and industrial | $ | 10,307,229 | $ | 309,440 | $ | 193,865 | $ | — | $ | 10,810,534 | |||||||||
Commercial real estate | 8,645,910 | 150,132 | 80,737 | — | 8,876,779 | ||||||||||||||
Lease financing | 2,540,637 | 27,007 | 26,729 | — | 2,594,373 | ||||||||||||||
Total commercial loan and lease portfolio | 21,493,776 | 486,579 | 301,331 | — | 22,281,686 | ||||||||||||||
Consumer loan portfolio: | |||||||||||||||||||
Residential mortgage | 6,001,380 | 1,543 | 54,481 | — | 6,057,404 | ||||||||||||||
Consumer installment | 1,561,506 | — | 746 | — | 1,562,252 | ||||||||||||||
Home equity | 3,565,763 | 1,284 | 42,363 | — | 3,609,410 | ||||||||||||||
Total consumer loan portfolio | 11,128,649 | 2,827 | 97,590 | — | 11,229,066 | ||||||||||||||
Total loans and leases | $ | 32,622,425 | $ | 489,406 | $ | 398,921 | $ | — | $ | 33,510,752 |
At December 31, 2018 | |||||||||||||||||||
Non-classified | Classified | Total | |||||||||||||||||
(In thousands) | Pass | Special Mention | Substandard | Doubtful | |||||||||||||||
Commercial loan and lease portfolio: | |||||||||||||||||||
Commercial and industrial | $ | 5,955,713 | $ | 158,296 | $ | 106,623 | $ | — | 6,220,632 | ||||||||||
Commercial real estate | 2,869,711 | 12,864 | 25,738 | — | 2,908,313 | ||||||||||||||
Lease financing | 2,480,964 | 25,195 | 24,004 | — | 2,530,163 | ||||||||||||||
Total commercial loan and lease portfolio | 11,306,388 | 196,355 | 156,365 | — | 11,659,108 | ||||||||||||||
Consumer loan portfolio: | |||||||||||||||||||
Residential mortgage | 2,294,740 | 3,606 | 37,489 | — | 2,335,835 | ||||||||||||||
Consumer installment | 1,981,844 | 1,302 | 20,426 | — | 2,003,572 | ||||||||||||||
Home equity | 3,043,296 | 3,747 | 27,462 | — | 3,074,505 | ||||||||||||||
Total consumer loan portfolio | 7,319,880 | 8,655 | 85,377 | — | 7,413,912 | ||||||||||||||
Total loans and leases | $ | 18,626,268 | $ | 205,010 | $ | 241,742 | $ | — | $ | 19,073,020 |
At September 30, 2019 | At December 31, 2018 | ||||||||||||
Credit Loss Reserves | Credit Loss Reserves | ||||||||||||
(Dollars in thousands) | Amount | As a Percentage of Portfolio | Amount | As a Percentage of Portfolio | |||||||||
Commercial loan and lease portfolio: | |||||||||||||
Commercial and industrial | $ | 39,974 | 0.37 | % | $ | 41,103 | 0.66 | % | |||||
Commercial real estate | 24,090 | 0.27 | 22,877 | 0.79 | |||||||||
Lease financing | 14,367 | 0.55 | 13,449 | 0.53 | |||||||||
Total commercial loan and lease portfolio | 78,431 | 0.35 | 77,429 | 0.66 | |||||||||
Consumer loan portfolio: | |||||||||||||
Residential mortgage | 19,816 | 0.33 | 21,436 | 0.92 | |||||||||
Consumer installment | 1,859 | 0.12 | 35,151 | 1.75 | |||||||||
Home equity | 21,112 | 0.58 | 23,430 | 0.76 | |||||||||
Total consumer loan portfolio | 42,787 | 0.38 | 80,017 | 1.08 | |||||||||
Total allowance for loan and lease losses | 121,218 | 0.36 | 157,446 | 0.83 | |||||||||
Credit discount on acquired loans | 177,402 | ||||||||||||
Total allowance and discount on acquired loans | 298,620 | 0.89 | |||||||||||
Other credit loss reserves: | |||||||||||||
Reserves for unfunded commitments | 3,461 | N.A. | 1,429 | N.A. | |||||||||
Total credit loss reserves | $ | 302,081 | 0.90 | % | $ | 158,875 | 0.83 | % |
(In thousands) | |||
Three months or less | $ | 1,683,346 | |
Over three through six months | 1,574,030 | ||
Over six through 12 months | 1,445,375 | ||
Over 12 months | 392,054 | ||
Total | $ | 5,094,805 |
At or For the Three Months Ended September 30, | At or For the Nine Months Ended September 30, | ||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
FHLB advances | |||||||||||||||
Maximum outstanding at any month-end | $ | 2,440,000 | $ | — | $ | 2,440,000 | $ | — | |||||||
Balance outstanding at end of period | 2,335,960 | — | 2,335,960 | — | |||||||||||
Weighted average interest rate at end of period | 1.63 | % | — | % | 1.63 | % | — | % | |||||||
Average balance outstanding | $ | 1,698,763 | $ | — | $ | 773,576 | $ | — | |||||||
Weighted average interest rate | 1.62 | % | — | % | 2.07 | % | — | % | |||||||
Federal funds purchased | |||||||||||||||
Maximum outstanding at any month-end | $ | — | $ | — | $ | — | $ | — | |||||||
Balance outstanding at end of period | — | — | — | — | |||||||||||
Weighted average interest rate at end of period | — | % | — | % | — | % | — | % | |||||||
Average balance outstanding | $ | 283 | $ | 283 | $ | 209 | $ | 209 | |||||||
Weighted average interest rate | 2.37 | % | 2.19 | % | 2.53 | % | 1.90 | % | |||||||
Collateralized Deposits | |||||||||||||||
Maximum outstanding at any month-end | $ | 271,249 | $ | — | $ | 271,249 | $ | — | |||||||
Balance outstanding at end of period | 271,340 | — | 271,340 | — | |||||||||||
Weighted average interest rate at end of period | 1.00 | % | — | % | 1.00 | % | — | % | |||||||
Average balance outstanding | $ | 184,290 | $ | 1,669 | $ | 63,771 | $ | 2,077 | |||||||
Weighted average interest rate | 1.01 | % | 2.24 | % | 0.55 | % | 2.07 | % | |||||||
Line-of-credit: TCF Commercial Finance Canada, Inc. | |||||||||||||||
Maximum outstanding at any month-end | $ | 1,516 | $ | 2,324 | $ | 10,455 | $ | 8,565 | |||||||
Balance outstanding at end of period | — | 2,324 | — | — | |||||||||||
Weighted average interest rate at end of period | — | % | 2.75 | % | — | % | — | % | |||||||
Average balance outstanding | $ | 892 | $ | 1,405 | $ | 1,194 | $ | 1,187 | |||||||
Weighted average interest rate | 2.94 | % | 2.74 | % | 2.99 | % | 2.59 | % |
(In thousands) | September 30, 2019 | December 31, 2018 | |||||
FHLB advances | $ | 322,674 | $ | 1,100,000 | |||
Subordinated debt | 430,178 | 253,391 | |||||
Discounted lease rentals | 104,571 | 92,976 | |||||
Capital lease obligation | 3,059 | 3,105 | |||||
Total long-term borrowings | $ | 860,482 | $ | 1,449,472 |
Payments Due by Period | |||||||||||||||||||
(In thousands) | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||
Contractual Obligations: | |||||||||||||||||||
Certificates of deposit | $ | 8,385,972 | $ | 4,813,249 | $ | 3,404,739 | $ | 137,962 | $ | 30,022 | |||||||||
Long-term borrowings | 860,482 | 11,138 | 179,782 | 132,681 | 536,881 | ||||||||||||||
Lease obligations | 399,825 | 9,517 | 59,709 | 53,990 | 276,609 | ||||||||||||||
Other contractual obligations (1) | 129,916 | 12,256 | 115,786 | 1,026 | 848 | ||||||||||||||
Marketing related contracts | 246,100 | 46,793 | 79,497 | 63,450 | 56,360 | ||||||||||||||
Construction contracts and land purchase commitments for future branch sites | 13,313 | 13,313 | — | — | — | ||||||||||||||
Liabilities related to acquisition and portfolio purchase (2) | 8,288 | — | 4,089 | 1,024 | 3,175 | ||||||||||||||
Total | $ | 10,043,896 | $ | 4,906,266 | $ | 3,843,602 | $ | 390,133 | $ | 903,895 |
(1) | Includes commitments to fund qualified low income housing and other tax investment projects, private equity capital investments and other similar types of investments. |
(2) | Relates to TCF's acquisition of EFLC and a leasing and equipment finance loan and lease portfolio purchase in 2017. |
Amount of Commitment - Expiration by Period | |||||||||||||||||||
(In thousands) | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||
Commitments: | |||||||||||||||||||
Commitments to extend credit: | |||||||||||||||||||
Consumer | $ | 2,266,913 | $ | 116,212 | $ | 133,673 | $ | 181,397 | $ | 1,835,631 | |||||||||
Commercial | 5,269,843 | 2,616,356 | 1,442,146 | 894,466 | 316,875 | ||||||||||||||
Total commitments to extend credit | 7,536,756 | 2,732,568 | 1,575,819 | 1,075,863 | 2,152,506 | ||||||||||||||
Standby letters of credit and guarantees on industrial revenue bonds | 125,438 | 70,662 | 26,574 | 19,356 | 8,846 | ||||||||||||||
Total | $ | 7,662,194 | $ | 2,803,230 | $ | 1,602,393 | $ | 1,095,219 | $ | 2,161,352 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(Dollars in thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income available to common shareholders | $ | 19,654 | $ | 83,702 | $ | 175,588 | $ | 206,131 | ||||||||
Less: Earnings allocated to participating securities | — | 13 | 19 | 30 | ||||||||||||
Earnings allocated to common shareholders | (a) | 19,654 | 83,689 | 175,569 | 206,101 | |||||||||||
Plus: Merger-related expenses | 111,259 | — | 124,943 | — | ||||||||||||
Non-core items: | ||||||||||||||||
Plus: Loss on transfer of legacy TCF auto finance portfolio to held-for-sale(1) | 19,264 | — | 19,264 | — | ||||||||||||
Plus: Termination of interest rate swaps(2) | 17,302 | — | 17,302 | — | ||||||||||||
Less: Gain on sale of certain investment securities(3) | (5,869 | ) | — | (5,869 | ) | — | ||||||||||
Plus: Write-down of company-owned vacant land parcels(4) | 5,890 | — | 5,890 | — | ||||||||||||
Plus: Loan servicing rights impairment(2) | 4,520 | — | 4,520 | — | ||||||||||||
Plus: CFPB/OCC settlement adjustment(4) | — | — | — | 32,000 | ||||||||||||
Total non-core items | 41,107 | — | 41,107 | 32,000 | ||||||||||||
Less: Related income tax expense, net of benefits(5) | 46,213 | — | 49,481 | 6,491 | ||||||||||||
Total adjustments, net of tax | 106,153 | — | 116,569 | 25,509 | ||||||||||||
Adjusted earnings allocated to common stock | (b) | $ | 125,807 | $ | 83,689 | $ | 292,138 | $ | 231,610 | |||||||
Weighted-average common shares outstanding used in diluted earnings per common share calculation(6) | (c) | 128,754,588 | 83,808,063 | 98,055,279 | 84,791,124 | |||||||||||
Diluted earnings per common share | (a) / (c) | $ | 0.15 | $ | 1.00 | $ | 1.79 | $ | 2.43 | |||||||
Adjusted diluted earnings per common share | (b) / (c) | 0.98 | 1.00 | 2.98 | 2.73 | |||||||||||
Net income attributable to TCF | $ | 22,148 | $ | 86,196 | $ | 183,069 | $ | 218,706 | ||||||||
Total adjustments, net of tax | 106,153 | — | 116,569 | 25,509 | ||||||||||||
Adjusted net income attributable to TCF | $ | 128,301 | $ | 86,196 | $ | 299,638 | $ | 244,215 |
(1) | Included within Net (losses) gains on sales of loans and leases |
(2) | Included within Other noninterest income. |
(3) | Included within Net gains (losses) on investment securities. |
(4) | Included within Other noninterest expense. |
(5) | Included within Income tax (benefit) expense. |
(6) | Assumes conversion of common shares, as applicable. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net Interest Income | $ | 371,793 | $ | 253,502 | $ | 880,279 | $ | 755,342 | |||||||
Purchase accounting accretion and amortization | 28,411 | — | 28,411 | — | |||||||||||
Net interest income, excluding purchase accounting accretion and amortization | $ | 343,382 | $ | 253,502 | $ | 851,868 | $ | 755,342 | |||||||
Net interest margin (FTE) | 4.14 | % | 4.73 | % | 4.36 | % | 4.70 | % | |||||||
Purchase accounting accretion and amortization | 0.31 | — | 0.14 | — | |||||||||||
Net interest margin, excluding purchase accounting accretion and amortization (FTE) | 3.83 | % | 4.73 | % | 4.22 | % | 4.70 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Adjusted net income after tax expense: | ||||||||||||||||
Income after tax expense | (a) | $ | 24,978 | $ | 88,839 | $ | 192,470 | $ | 227,472 | |||||||
Plus: Merger-related expenses | 111,259 | — | 124,943 | — | ||||||||||||
Plus: Non-core items | 41,107 | — | 41,107 | 32,000 | ||||||||||||
Less: Related income tax expense, net of tax benefits | 46,213 | — | 49,481 | 25,509 | ||||||||||||
Adjusted net income after tax expense for ROAA calculation | (b) | $ | 131,131 | $ | 88,839 | $ | 309,039 | $ | 233,963 | |||||||
Net income available to common shareholders | (c) | $ | 19,654 | $ | 83,702 | $ | 175,588 | $ | 206,131 | |||||||
Plus: Other intangibles amortization | 4,544 | 911 | 6,154 | 2,572 | ||||||||||||
Less: Related income tax expense | 1,085 | 220 | 1,470 | 620 | ||||||||||||
Net income available to common shareholders used in ROATCE calculation | (d) | $ | 23,113 | $ | 84,393 | $ | 180,272 | $ | 208,083 | |||||||
Adjusted net income available to common shareholders: | ||||||||||||||||
Net income available to common shareholders | $ | 19,654 | $ | 83,702 | $ | 175,588 | $ | 206,131 | ||||||||
Plus: Non-core items | 41,107 | — | 41,107 | 32,000 | ||||||||||||
Plus: Merger-related expenses | 111,259 | — | 124,943 | — | ||||||||||||
Less: Related income tax expense, net of tax benefits | 46,213 | — | 49,481 | 25,509 | ||||||||||||
Net income available to common shareholders used in adjusted ROACE calculation | (e) | 125,807 | 83,702 | 292,157 | 212,622 | |||||||||||
Plus: Other intangibles amortization | 4,544 | 911 | 6,154 | 2,572 | ||||||||||||
Less: Related income tax expense | 1,085 | 220 | 1,470 | 620 | ||||||||||||
Net income available to common shareholders used in adjusted ROATCE calculation | (f) | $ | 129,266 | $ | 84,393 | $ | 296,841 | $ | 214,574 | |||||||
Average balances: | ||||||||||||||||
Average assets | (g) | $ | 39,094,366 | $ | 22,904,404 | $ | 29,283,275 | $ | 23,031,108 | |||||||
Total average equity | $ | 4,683,129 | $ | 2,511,983 | $ | 3,316,504 | $ | 2,534,758 | ||||||||
Less: Non-controlling interest in subsidiaries | 25,516 | 23,548 | 26,558 | 25,133 | ||||||||||||
Total TCF Financial Corporation shareholders' equity | 4,657,613 | 2,488,435 | 3,289,946 | 2,509,625 | ||||||||||||
Less: Preferred stock | 169,302 | 169,302 | 169,302 | 169,302 | ||||||||||||
Average total common shareholders' equity used in ROACE calculation | (h) | $ | 4,488,311 | $ | 2,319,133 | $ | 3,120,644 | $ | 2,340,323 | |||||||
Less: Average goodwill, net | 890,155 | 154,757 | 402,583 | 154,757 | ||||||||||||
Less: Average other intangibles, net | 142,925 | 21,772 | 61,208 | 22,549 | ||||||||||||
Average tangible common shareholders' equity used in ROATCE calculation | (i) | $ | 3,455,231 | $ | 2,142,604 | $ | 2,656,853 | $ | 2,163,017 | |||||||
ROAA(1) | (a) / (g) | 0.26 | % | 1.55 | % | 0.88 | % | 1.32 | % | |||||||
Adjusted ROAA(1) | (b) / (g) | 1.34 | 1.55 | 1.41 | 1.46 | |||||||||||
ROACE(1) | (c) / (h) | 1.75 | 14.44 | 7.50 | 11.80 | |||||||||||
Adjusted ROACE(1) | (e) / (h) | 11.21 | 14.44 | 12.48 | 13.26 | |||||||||||
ROATCE(1) | (d) / (i) | 2.68 | 15.76 | 9.05 | 12.89 | |||||||||||
Adjusted ROATCE(1) | (f) / (i) | 14.96 | 15.76 | 14.90 | 14.47 |
(1) | Annualized. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Noninterest expense | (a) | $ | 425,620 | $ | 246,423 | $ | 915,544 | $ | 764,442 | |||||||
Less: Merger-related expenses | 111,259 | — | 124,943 | — | ||||||||||||
Less: CFPB/OCC settlement adjustment | — | — | — | 32,000 | ||||||||||||
Less: Write-down of company-owned vacant land parcels | 5,890 | — | 5,890 | — | ||||||||||||
Adjusted noninterest expense | $ | 308,471 | $ | 246,423 | $ | 784,711 | $ | 732,442 | ||||||||
Less: Lease financing equipment depreciation | 19,408 | 19,525 | 57,797 | 54,744 | ||||||||||||
Less: Other intangibles amortization | 4,544 | 911 | 6,154 | 2,572 | ||||||||||||
Adjusted noninterest expense, efficiency ratio | (b) | $ | 284,519 | $ | 225,987 | $ | 720,760 | $ | 675,126 | |||||||
Net interest income | $ | 371,793 | $ | 253,502 | $ | 880,279 | $ | 755,342 | ||||||||
Noninterest income | 94,258 | 112,064 | 307,480 | 330,529 | ||||||||||||
Total revenue | (c) | $ | 466,051 | $ | 365,566 | $ | 1,187,759 | $ | 1,085,871 | |||||||
Noninterest income | $ | 94,258 | $ | 112,064 | $ | 307,480 | $ | 330,529 | ||||||||
Plus: Loss on transfer of legacy TCF auto loans to held-for-sale | 19,264 | — | 19,264 | — | ||||||||||||
Plus: Termination of interest rate swaps | 17,302 | — | 17,302 | — | ||||||||||||
Less: Gain on sales of certain investment securities | (5,869 | ) | — | (5,869 | ) | — | ||||||||||
Plus: Loan servicing rights impairment | 4,520 | — | 4,520 | — | ||||||||||||
Adjusted noninterest income | 129,475 | 112,064 | 342,697 | 330,529 | ||||||||||||
Net interest income | 371,793 | 253,502 | 880,279 | 755,342 | ||||||||||||
Plus: Net interest income FTE adjustment | 2,488 | 2,112 | 5,547 | 6,269 | ||||||||||||
Adjusted net interest income | 374,281 | 255,614 | 885,826 | 761,611 | ||||||||||||
Less: Lease financing equipment depreciation | 19,408 | 19,525 | 57,797 | 54,744 | ||||||||||||
Adjusted total revenue, efficiency ratio | (d) | $ | 484,348 | $ | 348,153 | $ | 1,170,726 | $ | 1,037,396 | |||||||
Efficiency ratio | (a) / (c) | 91.32 | % | 67.41 | % | 77.08 | % | 70.40 | % | |||||||
Adjusted efficiency ratio | (b) / (d) | 58.74 | 64.91 | 61.57 | 65.08 |
(Dollars in thousands, except per share data) | At September 30, 2019 | At December 31, 2018 | ||||||
Total equity | $ | 5,693,417 | $ | 2,556,260 | ||||
Less: Non-controlling interest in subsidiaries | 23,313 | 18,459 | ||||||
Total TCF Financial Corporation shareholders' equity | 5,670,104 | 2,537,801 | ||||||
Less: Preferred share | 169,302 | 169,302 | ||||||
Total common shareholders' equity | (a) | 5,500,802 | 2,368,499 | |||||
Less: Goodwill | 1,265,111 | 154,757 | ||||||
Less: Other intangibles, net | 215,910 | 20,496 | ||||||
Tangible common shareholders' equity | (b) | $ | 4,019,781 | $ | 2,193,246 | |||
Total assets | (c) | $ | 45,692,511 | $ | 23,699,612 | |||
Less: Goodwill | 1,265,111 | 154,757 | ||||||
Less: Other intangibles, net | 215,910 | 20,496 | ||||||
Tangible assets | (d) | $ | 44,211,490 | $ | 23,524,359 | |||
Common stock shares outstanding | (e) | 153,571,381 | 88,198,460 | |||||
Common equity to assets | (a) / (c) | 12.04 | % | 9.99 | % | |||
Tangible common equity to tangible assets | (b) / (d) | 9.09 | 9.32 | |||||
Book value per common share | (a) / (e) | $ | 35.82 | $ | 26.85 | |||
Tangible book value per common share | (b) / (e) | 26.18 | 24.87 |
Impact on Net Interest Income | |||||
(Dollars in millions) | September 30, 2019 | ||||
Immediate change in interest rates: | |||||
+200 basis points | $ | 59,400 | 3.9 | % | |
+100 basis points | 35,500 | 2.3 | |||
-100 basis points | (74,700 | ) | (4.9 | ) |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan | ||||||
July 1 to July 31, 2019 | |||||||||
Share repurchase program(1) | 780,716 | $ | 41.39 | 780,716 | |||||
Employee transactions(2) | 2,153 | 41.33 | N.A. | ||||||
August 1 to August 31, 2019 | |||||||||
Employee transactions(2) | 6,899 | 38.14 | N.A. | ||||||
September 1 to September 30, 2019 | |||||||||
Employee transactions(2) | 2,777 | 37.44 | N.A. | ||||||
Total | |||||||||
Share repurchase program(1) | 780,716 | $ | 41.39 | 780,716 | |||||
Employee transactions(2) | 11,829 | 38.55 | N.A. |
(1) | On July 25, 2018, the Legacy TCF Board of Directors approved a $150.0 million increase to Legacy TCF's common stock repurchase program, with repurchases to be based on market conditions, the trading price of TCF shares and other factors. This repurchase authorization was terminated in connection with the completion of the Merger effective August 1, 2019. The total number of shares purchased and the average price paid have been retrospectively adjusted to reflect the equivalent number of shares issued in the Merger. |
(2) | Represents restricted stock withheld pursuant to the terms of awards granted under either the Legacy TCF Financial Incentive Stock Program or the Legacy TCF Omnibus Incentive Plan to offset tax withholding obligations that occur upon vesting and release of restricted stock. Both plans provide that the value of shares withheld shall be the average of the high and low prices of common stock of Legacy TCF on the date the relevant transaction occurs. With respect to employee transactions from July 1 to July 31, 2019, the total number of shares purchased and the average price paid have been retrospectively adjusted to reflect the equivalent number of shares issued in the Merger. |
• | The cash payment called for in the event of a termination by the Corporation without Cause, or by Mr. Dahl with Good Reason was changed from 2.5 times the sum of (i) his Annual Base Salary and (ii) his annual bonus (which was set as to equal 100% of his salary) to 2.5 times the sum of (i) Mr. Dahl’s Annual Base Salary and (ii) the average of Mr. Dahl’s annual bonus for the three most recently completed fiscal years; |
• | in the event of a termination by the Corporation without Cause, by Mr. Dahl for Good Reason, or upon death, disability or retirement on one year's notice, all of Mr. Dahl’s outstanding equity awards will vest; and |
• | The definition of Change in Control was changed by increasing the percentage of securities of the Corporation that any person would have to become the beneficial owner of in order to qualify as a Change in Control from 30% to 40% and the definition was expanded to include an “Active Change in Control Proposal Period” as defined in the Employment Agreement; |
Exhibit Number | Description | |
2(a) | ||
3(a) | ||
3(b) | ||
3(c) | ||
4(a) | ||
10(a)#* | ||
10(b)* | ||
10(c)* | ||
10(d)* | ||
31.1# | ||
31.2# | ||
32.1# | ||
32.2# | ||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH# | XBRL Taxonomy Extension Schema Document | |
101.CAL# | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF# | XBRL Taxonomy Extension Definitions Linkbase Document | |
101.LAB# | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE# | XBRL Taxonomy Extension Presentation Linkbase Document |
TCF FINANCIAL CORPORATION | ||
/s/ Craig R. Dahl | ||
Craig R. Dahl, | ||
Chief Executive Officer and President | ||
(Principal Executive Officer) | ||
/s/ Dennis L. Klaeser | ||
Dennis L. Klaeser, | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) | ||
/s/ Kathleen S. Wendt | ||
Kathleen S. Wendt, | ||
Executive Vice President and Chief Accounting Officer | ||
(Principal Accounting Officer) |
TCF FINANCIAL CORPORATION | |
/s/ Joseph Green By: Joseph Green Its: Authorized Signatory |
EXECUTIVE | |
/s/ Craig R. Dahl Craig R. Dahl |
1. | I have reviewed this Quarterly Report on Form 10-Q of TCF Financial Corporation for the quarter ended September 30, 2019; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Craig R. Dahl | ||
Craig R. Dahl | ||
Chief Executive Officer and President | ||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of TCF Financial Corporation for the quarter ended September 30, 2019; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Dennis L. Klaeser | ||
Dennis L. Klaeser | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) |
1. | This statement is provided pursuant to 18 U.S.C. § 1350 in connection with the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 (the “Periodic Report”); |
2. | The Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
3. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods indicated therein. |
/s/ Craig R. Dahl | ||
Craig R. Dahl | ||
Chief Executive Officer and President | ||
(Principal Executive Officer) |
* | A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to TCF Financial Corporation and will be retained by TCF Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request. |
1. | This statement is provided pursuant to 18 U.S.C. § 1350 in connection with the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 (the “Periodic Report”); |
2. | The Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
3. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods indicated therein. |
/s/ Dennis L. Klaeser | ||
Dennis L. Klaeser | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) |
* | A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to TCF Financial Corporation and will be retained by TCF Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request. |
Deposits |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Banking and Thrift [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | Deposits Deposits were as follows:
Excluded from total deposits are account overdrafts which have been classified as loans. At September 30, 2019 and December 31, 2018, overdrafts totaled $18.4 million and $9.6 million, respectively. Scheduled maturities for certificates of deposits, including Certificate of Deposit Account Registry Service ("CDARS") deposits, IRA deposits and other brokered funds at September 30, 2019 were as follows:
The aggregate amount of certificates of deposit with balances equal to or greater than the Federal Deposit Insurance Corporation ("FDIC") insurance limit of $250,000 was $3.0 billion at September 30, 2019 and $782.4 million at December 31, 2018.
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Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments Derivatives Designated as Hedging Instruments TCF entered into an interest rate contract (interest rate swap agreement) in February 2015 related to its contemporaneously issued subordinated debt, which settles through a central clearing house. The swap was designated as a fair value hedge and effectively converts the fixed interest rate to a floating rate based on the three-month LIBOR plus a fixed number of basis points on the $150.0 million notional amount through February 27, 2025, the maturity date of the subordinated debt. The interest rate swap substantially offsets the change in fair value of the hedged underlying subordinated debt that is attributable to the changes in market risk. The gains and losses related to changes in the fair value of the interest rate swap, as well as the offsetting changes in fair value of the hedged debt, are recorded in interest expense. Forward foreign exchange contracts, which generally settle within 34 days, are used to manage the foreign exchange risk associated with TCF's net investment in TCF Commercial Finance Canada, Inc., a wholly-owned indirect Canadian subsidiary of TCF Bank. These forward foreign exchange contracts have been designated as net investment hedges. Changes in net investment hedges recorded within other comprehensive income (loss) are subsequently reclassified to noninterest expense during the period in which the foreign investment is substantially liquidated or when other elements of the currency translation adjustment are reclassified to income. Derivatives Not Designated as Hedges TCF executes interest rate contracts with commercial banking customers to facilitate their respective risk management strategies. Those interest rate contracts are simultaneously hedged with offsetting interest rate contracts that TCF executes with a third party and generally settles through a central clearing house, minimizing TCF's net risk exposure. As the interest rate contracts do not meet hedge accounting requirements, changes in the fair value of both the customer contracts and the offsetting contracts are recorded in other noninterest income. These contracts have original fixed maturity dates ranging from 27 days to 16 years. TCF executes its forward foreign exchange contracts in the over-the-counter market with large financial institutions pursuant to International Swaps and Derivatives Association, Inc. agreements. These agreements include credit risk-related features that enhance the creditworthiness of these instruments, as compared with other obligations of the respective counterparty with whom TCF has transacted, by requiring that additional collateral be posted under certain circumstances. The amount of collateral required depends on the contract and is determined daily based on market and currency exchange rate conditions. Changes in the fair value of these forward foreign exchange contracts are recorded in other noninterest expense. TCF enters into interest rate lock commitments in conjunction with the sale of certain consumer real estate loans. These interest rate lock commitments are agreements to extend credit under certain specified terms and conditions at fixed rates with original lock expirations generally within three months. They are not designated as hedges and accordingly, changes in the valuation of these commitments are recorded in net (losses) gains on sales of loans and leases. Residential mortgage loan commitments, forward loan sales commitments, are generally entered into at the time interest rate locks are accepted to protect the value of the mortgage loans from increases in market interest rates during the period held and are generally settled with the investor in the secondary market within 90 days after entering into the forward commitment. Certain forward loan commitments are accounted for as derivatives and recorded at fair value, with changes in fair value recorded through earnings. In the normal course of business, TCF may decide to settle a forward contract rather than fulfill the contract. Cash received or paid in this settlement manner is recorded in net (losses) gains on sales of loans and leases in the Consolidated Statements of Income and is considered a cost of executing a forward contract. Power Equity CDs are time deposits that provide the purchaser a guaranteed return of principal at maturity plus a potential equity return (a written option), while TCF receives a known stream of funds based on the equity return (a purchased option). The written and purchased options are mirror derivative instruments which are carried at fair value. Power Equity CDs include written and purchased option derivatives consisting of instruments to facilitate an equity-linked time deposit product. TCF's swap agreement is related to the sale of TCF's Visa Class B stock. The fair value of the swap agreement is based on TCF's estimated exposure related to the Visa covered litigation through a probability analysis of the funding and estimated settlement amounts. Changes, if any, in the valuation of this swap agreement, which has no determinable maturity date, are recorded in other noninterest expense. Derivative instruments, recognized at fair value within other assets or other liabilities were as follows:
Derivative instruments may be subject to master netting arrangements and collateral arrangements and qualify for offset in the Consolidated Statements of Financial Condition. A master netting arrangement with a counterparty creates a right of offset for amounts due to and from that same counterparty that is enforceable in the event of a default or bankruptcy. Derivative instruments subject to master netting arrangements and collateral arrangements are recognized on a net basis in the Consolidated Statements of Financial Condition. The gross amounts recognized, gross amounts offset and net amount presented of derivative instruments were as follows:
Derivatives Designated as Hedging Instruments Interest rate contract The carrying amount of the hedged subordinated debt, including the cumulative basis adjustment related to the application of fair value hedge accounting, is recorded in long-term borrowings on the Consolidated Statements of Financial Condition and was as follows:
The following table summarizes the effect of fair value hedge accounting on the Consolidated Statements of Income for the three and nine months ended September 30, 2019 and 2018.
Forward foreign exchange contracts The effect of net investment hedges on accumulated other comprehensive income was as follows:
Derivatives Not Designated as Hedging Instruments Certain other interest rate contracts, forward foreign exchange contracts, interest rate lock commitments, Power Equity CDs and other contracts have not been designated as hedging instruments. The effect of these derivatives on the Consolidated Statements of Income was as follows:
At September 30, 2019 and December 31, 2018, credit risk-related contingent features existed on forward foreign exchange contracts with a notional value of $30.2 million and $25.7 million, respectively. In the event TCF is rated less than BB- by Standard and Poor's, the contracts could be terminated or TCF may be required to provide approximately $0.6 million and $0.5 million in additional collateral at September 30, 2019 and December 31, 2018, respectively. There were no forward foreign exchange contracts containing credit risk-related features in a liability position at both September 30, 2019 and December 31, 2018. At September 30, 2019, TCF had posted $58.1 million and $0.1 million of cash collateral related to its interest rate contracts and forward foreign exchange contracts, respectively, and received $1.9 million of cash collateral related to its forward foreign exchange contracts.
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Fair Values Measurements - Fair Value Option (Details) - Loans Held for Sale - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Option, Quantitative Disclosures | ||
Fair value carrying amount | $ 114,831 | $ 18,070 |
Aggregate unpaid principal amount | 111,540 | 17,517 |
Fair value carrying amount less aggregate unpaid principal | $ 3,291 | $ 553 |
Other Intangible Assets - Future Amortization Expense (Details) $ in Thousands |
Sep. 30, 2019
USD ($)
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Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2019 | $ 9,509 |
2020 | 27,393 |
2021 | 24,892 |
2022 | 22,531 |
2023 | $ 20,762 |
Cash and Cash Equivalents - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Cash and Cash Equivalents [Abstract] | ||
Reserve in cash on hand or at the Federal Reserve as required by Federal Reserve regulations | $ 149.6 | $ 106.2 |
Total restricted cash balance | $ 72.7 | $ 38.3 |
Allowance for Loan and Lease Losses and Credit Quality - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
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Jun. 30, 2019 |
Jun. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Aug. 01, 2019 |
Dec. 31, 2018 |
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Receivables [Abstract] | ||||||
Commitments to lend additional funds | $ 500 | $ 600 | ||||
Other real estate owned and repossessed and returned assets, write down | $ 2,300 | $ 700 | 5,500 | $ 2,700 | ||
Business Acquisition [Line Items] | ||||||
Other real estate owned | 27,638 | 17,403 | ||||
Repossessed and returned assets | $ 14,598 | $ 14,574 | ||||
Chemical Financial Corporation | ||||||
Business Acquisition [Line Items] | ||||||
Other real estate owned | $ 14,600 | |||||
Repossessed and returned assets | $ 300 |
Merger - Summary of Acquired Loans (Details) $ in Thousands |
Aug. 01, 2019
USD ($)
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PCI loans: | |
Contractually required payments receivable | $ 458,374 |
Nonaccretable difference | (105,031) |
Expected cash flows | 353,343 |
Accretable yield | 39,733 |
Fair value of PCI loans | 313,610 |
Purchased nonimpaired: | |
Unpaid principal balance | 15,636,020 |
Fair value discount | (223,417) |
Fair value at acquisition | 15,412,603 |
Total fair value at acquisition | $ 15,726,213 |
Premises and Equipment, Net - Summary of Premises and Equipment, Net (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | $ 1,013,236 | $ 873,040 |
Less: Accumulated depreciation and amortization | (459,042) | (445,506) |
Premises and equipment, net | 554,194 | 427,534 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 156,380 | 144,754 |
Office buildings | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 345,663 | 268,495 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 57,274 | 51,868 |
Furniture, equipment and computer software | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 450,739 | 404,743 |
Premises and equipment leased under capital leases | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 3,180 | $ 3,180 |
Premises and equipment, net | $ 285,400 |
Loan Servicing Rights - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
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Transfers and Servicing [Abstract] | ||
Total loan servicing, late fee and other ancillary fee income | $ 2.8 | $ 2.8 |
Operating Lease Right-of-Use Assets and Liabilities - Components of Lease Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
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Leases [Abstract] | ||
Lease expense | $ 10,367 | $ 28,488 |
Short-term and variable lease cost | 241 | 332 |
Sublease income | (447) | (1,189) |
Total lease cost for operating leases | $ 10,161 | $ 27,631 |
Borrowings (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Short-term Borrowings | Short-term borrowings (borrowings with an original maturity of less than one year) were as follows:
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Schedule of Long-term Borrowings | Long-term borrowings were as follows:
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Schedule of Maturities of Long-term Borrowings | The contractual maturities of long-term borrowings at September 30, 2019 were as follows:
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Other Intangible Assets (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Intangible Assets | The following table sets forth the carrying amount and accumulated amortization of intangible assets that are amortizable and arose from business combinations or other acquisitions.
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated amortization expense for the remainder of 2019 through 2023 is as follows:
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Deposits - Maturities of Certificates of Deposits (Details) $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Banking and Thrift [Abstract] | |
Remainder of 2019 | $ 4,813,249 |
2020 | 3,138,314 |
2021 | 266,425 |
2022 | 97,139 |
2023 | 40,823 |
Thereafter | $ 30,022 |
Allowance for Loan and Lease Losses and Credit Quality - Allowance for Loan and Lease Losses and Balances Outstanding by Allowance Methodology (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|---|---|
Allowance for loan and lease losses | ||||||
Collectively evaluated for impairment | $ 96,243 | $ 125,253 | ||||
Individually evaluated for impairment | 24,975 | 32,193 | ||||
Total | 121,218 | $ 146,503 | 157,446 | $ 160,621 | $ 165,619 | $ 171,041 |
Loans and leases outstanding | ||||||
Collectively evaluated for impairment | 32,972,580 | 18,873,126 | ||||
Individually evaluated for impairment | 244,459 | 196,078 | ||||
PCI loans | 293,713 | 3,816 | ||||
Total | 33,510,752 | 19,073,020 | ||||
Consumer | ||||||
Allowance for loan and lease losses | ||||||
Collectively evaluated for impairment | 26,024 | 57,113 | ||||
Individually evaluated for impairment | 16,763 | 22,904 | ||||
Total | 42,787 | 70,711 | 80,017 | 85,864 | 91,241 | 98,085 |
Loans and leases outstanding | ||||||
Collectively evaluated for impairment | 11,016,429 | 7,285,753 | ||||
Individually evaluated for impairment | 132,900 | 128,159 | ||||
PCI loans | 79,737 | 0 | ||||
Total | 11,229,066 | 7,413,912 | ||||
Commercial | ||||||
Allowance for loan and lease losses | ||||||
Collectively evaluated for impairment | 70,219 | 68,140 | ||||
Individually evaluated for impairment | 8,212 | 9,289 | ||||
Total | 78,431 | $ 75,792 | 77,429 | $ 74,757 | $ 74,378 | $ 72,956 |
Loans and leases outstanding | ||||||
Collectively evaluated for impairment | 21,956,151 | 11,587,373 | ||||
Individually evaluated for impairment | 111,559 | 67,919 | ||||
PCI loans | 213,976 | 3,816 | ||||
Total | $ 22,281,686 | $ 11,659,108 |
Loans and Leases - Undiscounted Future Minimum Lease Payments (Details) $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Receivables [Abstract] | |
Remainder of 2019 | $ 20,087 |
2020 | 71,120 |
2021 | 48,885 |
2022 | 25,915 |
2023 | 9,777 |
Thereafter | 4,717 |
Total undiscounted future minimum lease payments | $ 180,501 |
Loans and Leases - Components of Lease Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
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Receivables [Abstract] | ||
Interest income on net investment in direct financing and sales-type leases | $ 32,832 | $ 98,116 |
Lease income from operating lease payments | 25,444 | 76,140 |
Profit (loss) recorded on commencement date on sales-type leases | 7,983 | 22,289 |
Gains (losses) on sales of leased equipment | 6,163 | 18,603 |
Leasing revenue | 39,590 | 117,032 |
Total lease income | $ 72,422 | $ 215,148 |
Other Noninterest Expense - Summary of Other Noninterest Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Other Income and Expenses [Abstract] | ||||
Outside processing | $ 12,084 | $ 5,052 | $ 23,475 | $ 15,936 |
Loan and lease expense | 9,323 | 3,313 | 15,986 | 10,430 |
Professional fees | 7,113 | 5,949 | 18,026 | 16,035 |
Advertising and marketing | 7,101 | 7,674 | 19,229 | 22,075 |
FDIC insurance | 6,298 | 4,376 | 11,708 | 12,165 |
Card processing and issuance costs | 5,746 | 4,090 | 14,437 | 12,759 |
Consumer Financial Protection Bureau and OCC settlement charge | 0 | 0 | 0 | 32,000 |
Other | 40,111 | 25,231 | 91,920 | 79,908 |
Total other noninterest expense | $ 87,776 | $ 55,685 | $ 194,781 | $ 201,308 |
Revenue from Contracts with Customers (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segregation of Noninterest Income | The following tables present total noninterest income segregated between contracts with customers within the scope of ASC 606 and those within the scope of other GAAP topics.
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Other Noninterest Expense (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Non-interest Expense | Other noninterest expense was as follows:
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Borrowings - Short-term Borrowings Narrative (Details) - Revolving Line-of-Credit - USD ($) |
9 Months Ended | |
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Sep. 30, 2019 |
Aug. 05, 2019 |
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Short-term Debt [Line Items] | ||
Maximum borrowing capacity | $ 50,000,000.0 | |
Eurocurrency Rate | ||
Short-term Debt [Line Items] | ||
Basis spread on variable rate | 1.50% |
Merger (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The table below summarizes the ownership of the combined company (TCF Financial) following the Merger, as well as the market capitalization of the combined company using shares of Chemical and Legacy TCF common stock outstanding at July 31, 2019 and Chemical’s closing price on July 31, 2019.
Next, the hypothetical number of shares Legacy TCF would have to issue to give Chemical owners the same percentage ownership in the combined company is calculated in the table below (based on shares of Legacy TCF common stock outstanding at July 31, 2019):
Finally, the purchase price is calculated based on the number of hypothetical shares of Legacy TCF common stock issued to Chemical shareholders multiplied by the share price as demonstrated in the table below (amounts in thousands except per share data).
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | While we believe that the information available on the Merger Date provided a reasonable basis for estimating fair value, we expect that we may obtain additional information and evidence during the measurement period that would result in changes to the estimated fair value amounts. The measurement period ends on the earlier of one year after the Merger Date or the date we are able to determine that we have obtained all necessary information about the facts and circumstances that existed as of Merger Date. Subsequent adjustments to fair value, if necessary, will be reflected in our future filings. These adjustments include: (i) changes in the estimated fair value of loans acquired, (ii) changes in the estimated fair value of intangible assets acquired, (iii) changes in deferred tax assets related to fair value estimates and changes in the expected realization of items considered to be net operating loss carryforwards and (iv) changes in goodwill as a result of the net effect of any adjustments.
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Summary of PCI Loans | Information regarding acquired loans included in net loans and leases acquired at the Merger Date was as follows:
The carrying value and changes in accretable yield of all PCI loans were as follows:
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Schedule of Cash Flow, Supplemental Disclosures | Supplemental disclosures of cash flow information related to investing and financing activities regarding the Merger are as follows for the nine months ended September 30, 2019:
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Business Acquisition, Pro Forma Information | The following pro forma financial information presents the consolidated results of operations of Legacy TCF and Chemical as if the Merger had occurred as of January 1, 2018 with pro forma adjustments. The pro forma adjustments give effect to any change in interest income due to the accretion of the discount (premium) associated with the fair value adjustments to acquired loans, any change in interest expense due to estimated premium amortization/discount accretion associated with the fair value adjustments to acquired time deposits and borrowings and other debt and the amortization of the core deposit intangible that would have resulted had the deposits been acquired as of January 1, 2018. Merger-related expenses incurred by TCF during the three and nine months ended September 30, 2019 are not reflected in the pro forma amounts. The pro forma information does not necessarily reflect the results of operations that would have occurred had Legacy TCF merged with Chemical at the beginning of 2018. Anticipated cost savings that have not yet been realized are also not reflected in the pro forma amounts for the three and nine months ended September 30, 2019 and 2018.
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Reportable Segments |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments | Reportable Segments TCF's reportable segments are Consumer Banking, Commercial Banking and Enterprise Services. Consumer Banking is comprised of all of TCF's consumer-facing businesses and includes retail banking, consumer lending, wealth management and small business banking. Commercial Banking, previously named Wholesale Banking, is comprised of commercial and industrial and commercial real estate banking and lease financing. Enterprise Services is comprised of (i) corporate treasury, which includes TCF's investment and borrowing portfolios and management of capital, debt and market risks, (ii) corporate functions, such as information technology, risk and credit management, bank operations, finance, investor relations, corporate development, internal audit, legal and human capital management that provide services to the operating segments, (iii) the Holding Company and (iv) eliminations. In connection with the Merger, effective August 1, 2019, TCF renamed its Wholesale Banking segment to Commercial Banking to align with the way TCF is now managed. In addition, activity that was related to small business banking and private banking were moved from the Wholesale Banking (now named Commercial Banking) segment to the Consumer Banking segment. The revised presentation of previously reported segment data has been applied retroactively to all periods presented in these financial statements. TCF evaluates performance and allocates resources based on each reportable segment's net income or loss. The reportable segments follow GAAP as described in Note 1. Basis of Presentation, except for the accounting for intercompany interest income and interest expense, which are eliminated in consolidation and presenting net interest income on a fully tax-equivalent basis. TCF generally accounts for inter-segment sales and transfers at cost. Certain information for each of TCF's reportable segments, including reconciliations of TCF's consolidated totals, was as follows:
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Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Intangible Assets | Other Intangible Assets The following table sets forth the carrying amount and accumulated amortization of intangible assets that are amortizable and arose from business combinations or other acquisitions.
Amortization expense recognized on intangible assets was $4.5 million and $6.2 million for the three and nine months ended September 30, 2019, respectively, and $0.9 million and $2.6 million for the same periods in 2018. Estimated amortization expense for the remainder of 2019 through 2023 is as follows:
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Merger |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Merger | Merger As described in Note 1. Basis of Presentation, on August 1, 2019, we completed our Merger with Legacy TCF. The Merger was an all-stock transaction. Pursuant to the merger agreement, on the Merger Date, each holder of Legacy TCF common stock received 0.5081 shares (the "Exchange Ratio") of TCF's common stock for each share of Legacy TCF common stock held. Each outstanding share of common stock of Chemical remained outstanding and was unaffected by the Merger other than by the change of the Corporation’s name from Chemical Financial Corporation to TCF Financial Corporation. As of the effective time of the Merger on August 1, 2019, TCF Financial had approximately 153.5 million shares of common stock outstanding. On the Merger Date, the shares of Legacy TCF common stock, which previously traded under the ticker symbol "TCF" on the New York Stock Exchange (the "NYSE") ceased trading on, and were delisted from, the NYSE. Following the Merger, TCF Financial common stock continues to trade on the Nasdaq Stock Market (“NASDAQ”), but its ticker symbol changed from "CHFC" to "TCF" effective August 1, 2019. Pursuant to the merger agreement, each outstanding share of Legacy TCF 5.70% Series C Non-Cumulative Perpetual Preferred Stock, with a liquidation preference of $25,000 per share (the "Legacy TCF Preferred Stock") was converted into the right to receive one share of newly created 5.70% Series C Non-Cumulative Perpetual Preferred Stock of TCF, with a liquidation preference of $25,000 per share (the "New TCF Preferred Stock"), and each depository share representing 1/1000th of a share of Legacy TCF Preferred Stock was converted into one depositary share representing 1/1000th of a share of New TCF Preferred Stock. Immediately following the effective time of the Merger, as of August 1, 2019, TCF Financial had 7,000 shares of New TCF Preferred Stock outstanding and 7.0 million related depositary shares outstanding. The Merger constituted a business combination and was accounted for as a reverse merger using the acquisition method of accounting. As a result, Legacy TCF was the accounting acquirer, and Chemical was the legal acquirer and the accounting acquiree. Therefore, the historical financial statements of Legacy TCF became the historical financial statements of the combined company. In addition, the assets, including the intangible assets identified, and liabilities of Chemical as of the Merger Date, have been recorded at their estimated fair value and added to those of Legacy TCF. In many cases, the determination of fair value required management to make estimates about discount rates, expected future cash flows, market conditions and other future events that are highly subjective in nature and subject to change. As the legal acquirer, Chemical (now TCF Financial Corporation) issued approximately 81.9 million shares of TCF Financial common stock in connection with the Merger, which represented approximately 53% of the voting interests in TCF Financial upon completion of the Merger. Guidance in Accounting Standards Codification ("ASC") 805-40-30-2 explains that the purchase price in a reverse acquisition is determined based on “the number of equity interests the legal acquiree would have had to issue to give the owners of the legal acquirer the same percentage equity interest in the combined entity that results from the reverse acquisition.” The first step in calculating the purchase price in the Merger is to determine the ownership of the combined company following the Merger. The table below summarizes the ownership of the combined company (TCF Financial) following the Merger, as well as the market capitalization of the combined company using shares of Chemical and Legacy TCF common stock outstanding at July 31, 2019 and Chemical’s closing price on July 31, 2019.
Next, the hypothetical number of shares Legacy TCF would have to issue to give Chemical owners the same percentage ownership in the combined company is calculated in the table below (based on shares of Legacy TCF common stock outstanding at July 31, 2019):
Finally, the purchase price is calculated based on the number of hypothetical shares of Legacy TCF common stock issued to Chemical shareholders multiplied by the share price as demonstrated in the table below (amounts in thousands except per share data).
The following table provides the purchase price allocation as of the Merger Date and the Chemical assets acquired and liabilities assumed at their estimated fair value as of the Merger Date as recorded by TCF. We recorded the estimate of fair value based on initial valuations available at the Merger Date and these estimates are considered preliminary and subject to adjustment for up to one year after the Merger Date. While we believe that the information available on the Merger Date provided a reasonable basis for estimating fair value, we expect that we may obtain additional information and evidence during the measurement period that would result in changes to the estimated fair value amounts. The measurement period ends on the earlier of one year after the Merger Date or the date we are able to determine that we have obtained all necessary information about the facts and circumstances that existed as of Merger Date. Subsequent adjustments to fair value, if necessary, will be reflected in our future filings. These adjustments include: (i) changes in the estimated fair value of loans acquired, (ii) changes in the estimated fair value of intangible assets acquired, (iii) changes in deferred tax assets related to fair value estimates and changes in the expected realization of items considered to be net operating loss carryforwards and (iv) changes in goodwill as a result of the net effect of any adjustments.
As described in more detail in Note 3. Summary of Significant Accounting Policies below, all Chemical loans and leases were recorded at their estimated fair value as of the Merger Date with no carryover of the related allowance for loans and lease losses. These loans were segregated into two classifications at acquisition, purchased credit impaired (“PCI”) loans accounted for under the provisions of Accounting Standards Codification ("ASC") Topic 310-30, and purchased nonimpaired loans, also referred to as purchased loans. The excess of cash flows expected to be collected over the estimated fair value of PCI loans is referred to as the accretable yield and is accreted into interest income over the estimated remaining life of the loan using the effective yield method. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayment and estimates of future credit losses expected to be incurred, is referred to the nonaccretable difference. Information regarding acquired loans included in net loans and leases acquired at the Merger Date was as follows:
Supplemental disclosures of cash flow information related to investing and financing activities regarding the Merger are as follows for the nine months ended September 30, 2019:
Other intangible assets consisted of core deposits and customer relationship intangibles with estimated fair values at the Merger Date of $177.8 million and $23.8 million, respectively. Core deposit intangibles are being amortized over a weighted-average life of ten years on an accelerated basis. Customer relationship intangibles are being amortized over a weighted-average life of 15.6 years based on expected economic benefits of the underlying intangible assets. The weighted-average life of amortizable intangibles acquired in the Merger was eleven years. As a result of the Merger, we recorded $1.1 billion of goodwill. Due to the timing of the Merger, we are in the process of completing our analysis of the allocation of goodwill across business segments, and, therefore, goodwill is presented as part of Enterprise Services at September 30, 2019. The goodwill recorded is not deductible for income tax purposes. Pro Forma Combined Results of Operations The following pro forma financial information presents the consolidated results of operations of Legacy TCF and Chemical as if the Merger had occurred as of January 1, 2018 with pro forma adjustments. The pro forma adjustments give effect to any change in interest income due to the accretion of the discount (premium) associated with the fair value adjustments to acquired loans, any change in interest expense due to estimated premium amortization/discount accretion associated with the fair value adjustments to acquired time deposits and borrowings and other debt and the amortization of the core deposit intangible that would have resulted had the deposits been acquired as of January 1, 2018. Merger-related expenses incurred by TCF during the three and nine months ended September 30, 2019 are not reflected in the pro forma amounts. The pro forma information does not necessarily reflect the results of operations that would have occurred had Legacy TCF merged with Chemical at the beginning of 2018. Anticipated cost savings that have not yet been realized are also not reflected in the pro forma amounts for the three and nine months ended September 30, 2019 and 2018.
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Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Investment Securities The amortized cost and fair value of investment securities were as follows:
Gross unrealized losses and fair value of investment securities aggregated by investment category and the length of time the securities were in a continuous loss position were as follows:
At September 30, 2019 there were 1,056 investment securities in an unrealized loss position. We have assessed each investment security with unrealized losses for credit impairment. As part of that assessment we evaluated and concluded that it is more likely than not that we will not be required and do not intend to sell any of the investment securities prior to recovery of the amortized cost. Unrealized losses on investment securities were primarily due to changes in interest rates. The gross gains and losses on sales of investment securities were as follows:
The amortized cost and fair value of investment securities by final contractual maturity were as follows. Securities with multiple maturity dates are classified in the period of final maturity. The final contractual maturities do not consider possible prepayments and therefore expected maturities may differ because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Loans and Leases - Narrative (Details) - USD ($) $ in Thousands |
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
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Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Residual value of leased assets | $ 263,300 | $ 263,300 | |||
Depreciation and amortization | 207,954 | $ 153,018 | |||
Premises and equipment, net | 554,194 | 554,194 | $ 427,534 | ||
Impairment charges on interest-only strips | 22 | $ 45 | 43 | $ 700 | |
Premises and equipment leased under capital leases | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Depreciation and amortization | 19,400 | 57,800 | |||
Premises and equipment, net | $ 285,400 | $ 285,400 |
Retirement Plans - Net Periodic Benefit Plan (Income) Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Defined Benefit Pension Plans | ||||
Net periodic benefit plan (income) cost included in non-interest expense | ||||
Interest cost | $ 1,046 | $ 246 | $ 1,574 | $ 738 |
Service cost | 0 | 0 | 0 | 0 |
Contractual termination cost | 0 | 0 | 0 | 0 |
Return on plan assets | (949) | (133) | (1,223) | (397) |
Amortization of prior service credit | 0 | 0 | 0 | 0 |
Amortization of unrecognized net loss | 0 | 0 | 0 | 0 |
Recognized actuarial (gain) loss | 0 | 0 | ||
Net periodic benefit plan (income) cost | 97 | 113 | 351 | 341 |
Postretirement Benefit Plans | ||||
Net periodic benefit plan (income) cost included in non-interest expense | ||||
Interest cost | 41 | 28 | 101 | 83 |
Service cost | 0 | 0 | 0 | 0 |
Amortization of prior service credit | (11) | (12) | (35) | (35) |
Amortization of unrecognized net loss | 0 | 0 | 0 | 0 |
Recognized actuarial (gain) loss | 0 | 0 | 0 | 0 |
Net periodic benefit plan (income) cost | $ 30 | $ 16 | $ 66 | $ 48 |
Allowance for Loan and Lease Losses and Credit Quality - Rollfowards of the Allowance for Loan and Lease Losses (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Allowance for loan and lease losses | ||||
Balance, beginning of period | $ 146,503 | $ 165,619 | $ 157,446 | $ 171,041 |
Charge-offs | (35,547) | (19,448) | (81,044) | (57,501) |
Recoveries | 6,969 | 12,658 | 19,730 | 23,790 |
Net (charge-offs) recoveries | (28,578) | (6,790) | (61,314) | (33,711) |
Provision for credit losses | 27,188 | 2,270 | 50,879 | 27,874 |
Other | (23,895) | (478) | (25,793) | (4,583) |
Balance, end of period | 121,218 | 160,621 | 121,218 | 160,621 |
Consumer | ||||
Allowance for loan and lease losses | ||||
Balance, beginning of period | 70,711 | 91,241 | 80,017 | 98,085 |
Charge-offs | (14,098) | (15,942) | (43,922) | (48,120) |
Recoveries | 5,330 | 11,711 | 15,840 | 21,299 |
Net (charge-offs) recoveries | (8,768) | (4,231) | (28,082) | (26,821) |
Provision for credit losses | 4,693 | (847) | 16,644 | 18,872 |
Other | (23,849) | (299) | (25,792) | (4,272) |
Balance, end of period | 42,787 | 85,864 | 42,787 | 85,864 |
Commercial | ||||
Allowance for loan and lease losses | ||||
Balance, beginning of period | 75,792 | 74,378 | 77,429 | 72,956 |
Charge-offs | (21,449) | (3,506) | (37,122) | (9,381) |
Recoveries | 1,639 | 947 | 3,890 | 2,491 |
Net (charge-offs) recoveries | (19,810) | (2,559) | (33,232) | (6,890) |
Provision for credit losses | 22,495 | 3,117 | 34,235 | 9,002 |
Other | (46) | (179) | (1) | (311) |
Balance, end of period | $ 78,431 | $ 74,757 | $ 78,431 | $ 74,757 |
Investment Securities - Amortized Cost and Fair Value of Debt Securities Available for Sale and Debt Securities Held to Maturity (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Amortized cost | ||
Due in one year or less | $ 60,739 | $ 0 |
Due in 1-5 years | 199,777 | 24,464 |
Due in 5-10 years | 483,336 | 509,832 |
Due after 10 years | 4,750,770 | 1,962,708 |
Amortized Cost | 5,494,622 | 2,497,004 |
Fair value | ||
Due in one year or less | 60,652 | 0 |
Due in 1-5 years | 199,399 | 24,375 |
Due in 5-10 years | 492,755 | 503,768 |
Due after 10 years | 4,827,029 | 1,941,922 |
Total investment securities available-for-sale | 5,579,835 | 2,470,065 |
Amortized cost | ||
Due in 1-5 years | 3,150 | 2,400 |
Due in 5-10 years | 460 | 430 |
Due after 10 years | 140,390 | 146,022 |
Amortized Cost | 144,000 | 148,852 |
Fair value | ||
Due in 1-5 years | 3,150 | 2,400 |
Due in 5-10 years | 467 | 432 |
Due after 10 years | 146,311 | 146,435 |
Fair Value | $ 149,928 | $ 149,267 |
Loans and Leases - Undiscounted Future Minimum Lease Payments Receivable (Details) $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Receivables [Abstract] | |
Remainder of 2019 | $ 51,851 |
2020 | 333,516 |
2021 | 459,359 |
2022 | 554,951 |
2023 | 563,752 |
Thereafter | 612,063 |
Equipment under leases not yet commenced | 47,948 |
Total undiscounted future minimum lease payments receivable for direct financing and sales-type leases | 2,623,440 |
Third-party residual value guarantees | 58,657 |
Total carrying amount of direct financing and sales-type leases | $ 2,682,097 |
Borrowings - Contractual Maturities of Long-term Debt (Details) $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Remainder of 2019 | $ 11,138 |
2020 | 150,274 |
2021 | 29,508 |
2022 | 126,721 |
2023 | 5,960 |
Thereafter | 536,881 |
Long-term Debt | $ 860,482 |
Borrowings - Schedule of Short-term Borrowings (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Short-term Debt [Line Items] | ||
Amount | $ 2,607,300 | $ 0 |
Weighted-average Rate | 1.56% | 0.00% |
FHLB advances | ||
Short-term Debt [Line Items] | ||
Amount | $ 2,335,960 | $ 0 |
Weighted-average Rate | 1.63% | 0.00% |
Collateralized Deposits | ||
Short-term Debt [Line Items] | ||
Amount | $ 271,340 | $ 0 |
Weighted-average Rate | 1.00% | 0.00% |
Regulatory Capital Requirements - Narrative (Details) $ in Millions |
9 Months Ended |
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Sep. 30, 2019
USD ($)
| |
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |
Percentage of net retained profits for the current year combined with retained net profits for the preceding two calendar years that can be declared as dividend | 100.00% |
TCF Bank | |
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |
Net profits for the current year combined with retained net profits for preceding two calendar years | $ 296.6 |
Stock Based Compensation (Tables) |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Award Transactions | A summary of the activity for RSUs at and for the nine months ended September 30, 2019 is presented below:
(1) In connection with the Merger, certain Legacy TCF PRSUs were converted at their maximum payout into 55,022 TRSUs. TCF's restricted stock award transactions were as follows:
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Stock Option Activity | A summary of activity for TCF's stock options at and for the nine months ended September 30, 2019 is presented below:
(1) Options acquired in the Merger expire ten years from the date of grant and vest ratably over a five-year period.
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Reportable Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments, Including a Reconciliation of Consolidated Totals | Certain information for each of TCF's reportable segments, including reconciliations of TCF's consolidated totals, was as follows:
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Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Business Combinations | Business Combinations Pursuant to the guidance of ASC Topic 805 ("ASC 805"), TCF recognized assets acquired, including identified intangible assets, and the liabilities assumed in mergers and acquisitions at their fair values as of the acquisition date, with the acquisition and merger-related transaction and restructuring costs expensed in the period incurred. ASC 805 affords a measurement period beyond the acquisition date that allows the opportunity to finalize the acquisition accounting in the event that new information is identified that existed as of the acquisition date but was not known or available at that time. This measurement period ends on the earlier of one year after the acquisition or the date information about the facts and circumstances that existed at the acquisition are available. TCF anticipates that measurement period adjustments may arise from adjustments to the fair values of Chemical's assets and liabilities recorded at the Merger Date, as additional information and evidence is obtained. In the event that a measurement period adjustment is identified, TCF will recognize the adjustment as part of its acquisition accounting, which may result in an adjustment to goodwill in the period the adjustment was identified. See Note 2. Merger for further information. Loans and Leases Acquired in a Business Combination We record loans and leases acquired in a business combination at fair value at the acquisition date and the fair value discount or premium is recognized as an adjustment to yield over the remaining life of each loan or lease. Credit discounts are included in the determination of fair value; therefore, an allowance for loan and lease losses is not recorded at the acquisition date. Purchased loans are evaluated at the acquisition date and classified as either (i) loans purchased without evidence of deteriorated credit quality since origination, referred to as purchased loans, or (ii) loans purchased with evidence of deteriorated credit quality since origination for which it is probable that all contractually required payments will not be collected, referred to as PCI loans. PCI loans are considered to be impaired and are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"). In determining whether a purchased loan should be classified as a PCI loan, we must make numerous assumptions, interpretations and judgments using internal and third-party credit quality information to determine whether or not it is probable that we will be able to collect all contractually required payments. This is a point in time assessment and is inherently subjective due to the nature of the available information and judgment involved. Evidence of credit quality deterioration as of the acquisition date may include statistics such as past due and nonaccrual status, recent borrower credit scores and loan-to-value percentages. The excess of cash flows expected to be collected over the estimated fair value of PCI loans is referred to as the accretable yield and is accreted into interest income over the estimated remaining life of the loan using the effective yield method. We estimate the expected cash flows based on the expected remaining life of the loans, which includes the effects of estimated prepayments and estimates of future credit losses. Cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, is referred to as the nonaccretable difference. We do not classify PCI loans as nonaccrual loans subsequent to acquisition because the loans are recorded at net realizable value based on the principal and interest expected to be collected on the loan. Judgment is required to estimate the timing and amount of cash flows expected to be collected when the loans are not performing in accordance with the original contractual terms. Purchased loans outside the scope of ASC 310-30 are accounted for under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs. For purchased loans, credit discounts representing the principal losses expected over the life of the loan are a component of the initial fair value and the discount is accreted to interest income over the life of the loan. Subsequent to the purchase date, the method used to evaluate the sufficiency of the credit discount is similar to originated loans, and if necessary, additional reserves are recognized in the allowance for loan and lease losses. |
Leases | Leases TCF enters into lease contracts as both a lessor and a lessee. A contract, or part of a contract, is considered a lease if it conveys the right to obtain substantially all of the economic benefits from, and the right to direct and use, an identified asset for a period of time in exchange for consideration. The determination of lease classification requires various judgments and estimates by management which may include the fair value of the equipment at lease inception, useful life of the equipment under lease, estimate of the lease residual value and collectability of minimum lease payments. Management has policies and procedures in place for the determination of lease classification and review of the related judgments and estimates for all leases. As a lessor, TCF provides various types of lease financing that are classified for accounting purposes as direct financing, sales-type or operating leases. Leases that transfer substantially all of the benefits and risks of ownership to the lessee are classified as direct financing or sales-type leases and are recorded in loans and leases. Direct financing and sales-type leases are carried at the combined present value of future minimum lease payments and lease residual values. Interest income on net investment in direct financing and sales-type leases is recognized using methods that approximate a level yield over the fixed, non-cancelable term of the lease, including pro rata rent payments received for the interim period until the lease contract commences and the fixed, non-cancelable lease term begins. Sales-type leases generate selling profit (loss), which is recognized on the commencement date by recording lease revenue net of lease cost. Lease revenue consists of the present value of the future minimum lease payments and lease cost consists of the leased equipment's net book value, less the present value of its residual. Some lease financing contracts include a residual value component, which represents the estimated fair value of the leased equipment at the expiration of the initial term of the transaction. The estimation of residual values involves judgment regarding product and technology changes, customer behavior, shifts in supply and demand and other economic assumptions. TCF reviews residual assumptions when assessing potential impairment of the net investment in direct financing and sales-type leases each quarter. Decreases in the expected residual value are reflected through an increase in the provision for credit losses, which results in an increase to the allowance for loan and lease losses. TCF may sell minimum lease payment receivables, primarily as a credit risk reduction tool, to third-party financial institutions at fixed rates, on a non-recourse basis, with its underlying equipment as collateral. For those transactions that qualify for sale accounting, the related lease cash flow stream and the non-recourse financing are derecognized. For those transactions that do not qualify for sale accounting, the underlying lease remains on TCF's Consolidated Statements of Financial Condition and non-recourse debt is recorded in the amount of the proceeds received. TCF retains servicing of these leases and bills, collects and remits funds to the third-party financial institution. Upon default by the lessee, the third-party financial institutions may take control of the underlying collateral which TCF would otherwise retain as residual value. Leases that do not transfer substantially all benefits and risks of ownership to the lessee are classified as operating leases. Such leased equipment and related initial direct costs are included in other assets and depreciated to their estimated salvage value on a straight-line basis over the term of the lease. Lease financing equipment depreciation is recorded in noninterest expense. Operating lease payments received are recognized as lease income when due and recorded as a component of leasing and equipment finance noninterest income. An allowance for lease losses is not provided on operating leases. See Note 7. Loans and Leases for further information. As a lessee, TCF enters into contracts to lease real estate, information technology equipment and various other types of equipment. Leases that transfer substantially all of the benefits and risks of ownership to TCF are classified as finance leases, while all others are classified as operating leases. At lease commencement, a lease liability and right-of-use asset are calculated and recognized for both types of leases. The lease liability is equal to the present value of future minimum lease payments. The right-of-use asset is equal to the lease liability, plus any initial direct costs and prepaid lease payments, less any lease incentives received. Operating lease right-of-use assets are recorded in other assets and finance lease right-of-use assets are recorded in premises and equipment, net. TCF uses the appropriate term Federal Home Loan Bank ("FHLB") rate to determine the discount rate for the present value calculation of future minimum payments when an implicit rate is not known for a given lease. The lease term used in the calculation includes any options to extend that TCF is reasonably certain to exercise. Subsequent to lease commencement, lease liabilities recorded for finance leases are measured using the effective interest rate method and the related right-of-use assets are amortized on a straight-line basis over the lease term. Interest expense and amortization expense are recorded separately in the income statement in interest expense on borrowings and occupancy and equipment noninterest expense, respectively. For operating leases, total lease cost is comprised of lease expense, short-term lease cost, variable lease cost and sublease income. Lease expense includes future minimum lease payments, which are recognized on a straight-line basis over the lease term, as well as common area maintenance charges, real estate taxes, insurance and other expenses, where applicable, which are expensed as incurred. Total lease cost for operating leases is recorded in occupancy and equipment noninterest expense. See Note 12. Operating Lease Right-of-Use Assets and Liabilities for further information.
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Leases | Leases TCF enters into lease contracts as both a lessor and a lessee. A contract, or part of a contract, is considered a lease if it conveys the right to obtain substantially all of the economic benefits from, and the right to direct and use, an identified asset for a period of time in exchange for consideration. The determination of lease classification requires various judgments and estimates by management which may include the fair value of the equipment at lease inception, useful life of the equipment under lease, estimate of the lease residual value and collectability of minimum lease payments. Management has policies and procedures in place for the determination of lease classification and review of the related judgments and estimates for all leases. As a lessor, TCF provides various types of lease financing that are classified for accounting purposes as direct financing, sales-type or operating leases. Leases that transfer substantially all of the benefits and risks of ownership to the lessee are classified as direct financing or sales-type leases and are recorded in loans and leases. Direct financing and sales-type leases are carried at the combined present value of future minimum lease payments and lease residual values. Interest income on net investment in direct financing and sales-type leases is recognized using methods that approximate a level yield over the fixed, non-cancelable term of the lease, including pro rata rent payments received for the interim period until the lease contract commences and the fixed, non-cancelable lease term begins. Sales-type leases generate selling profit (loss), which is recognized on the commencement date by recording lease revenue net of lease cost. Lease revenue consists of the present value of the future minimum lease payments and lease cost consists of the leased equipment's net book value, less the present value of its residual. Some lease financing contracts include a residual value component, which represents the estimated fair value of the leased equipment at the expiration of the initial term of the transaction. The estimation of residual values involves judgment regarding product and technology changes, customer behavior, shifts in supply and demand and other economic assumptions. TCF reviews residual assumptions when assessing potential impairment of the net investment in direct financing and sales-type leases each quarter. Decreases in the expected residual value are reflected through an increase in the provision for credit losses, which results in an increase to the allowance for loan and lease losses. TCF may sell minimum lease payment receivables, primarily as a credit risk reduction tool, to third-party financial institutions at fixed rates, on a non-recourse basis, with its underlying equipment as collateral. For those transactions that qualify for sale accounting, the related lease cash flow stream and the non-recourse financing are derecognized. For those transactions that do not qualify for sale accounting, the underlying lease remains on TCF's Consolidated Statements of Financial Condition and non-recourse debt is recorded in the amount of the proceeds received. TCF retains servicing of these leases and bills, collects and remits funds to the third-party financial institution. Upon default by the lessee, the third-party financial institutions may take control of the underlying collateral which TCF would otherwise retain as residual value. Leases that do not transfer substantially all benefits and risks of ownership to the lessee are classified as operating leases. Such leased equipment and related initial direct costs are included in other assets and depreciated to their estimated salvage value on a straight-line basis over the term of the lease. Lease financing equipment depreciation is recorded in noninterest expense. Operating lease payments received are recognized as lease income when due and recorded as a component of leasing and equipment finance noninterest income. An allowance for lease losses is not provided on operating leases. See Note 7. Loans and Leases for further information. As a lessee, TCF enters into contracts to lease real estate, information technology equipment and various other types of equipment. Leases that transfer substantially all of the benefits and risks of ownership to TCF are classified as finance leases, while all others are classified as operating leases. At lease commencement, a lease liability and right-of-use asset are calculated and recognized for both types of leases. The lease liability is equal to the present value of future minimum lease payments. The right-of-use asset is equal to the lease liability, plus any initial direct costs and prepaid lease payments, less any lease incentives received. Operating lease right-of-use assets are recorded in other assets and finance lease right-of-use assets are recorded in premises and equipment, net. TCF uses the appropriate term Federal Home Loan Bank ("FHLB") rate to determine the discount rate for the present value calculation of future minimum payments when an implicit rate is not known for a given lease. The lease term used in the calculation includes any options to extend that TCF is reasonably certain to exercise. Subsequent to lease commencement, lease liabilities recorded for finance leases are measured using the effective interest rate method and the related right-of-use assets are amortized on a straight-line basis over the lease term. Interest expense and amortization expense are recorded separately in the income statement in interest expense on borrowings and occupancy and equipment noninterest expense, respectively. For operating leases, total lease cost is comprised of lease expense, short-term lease cost, variable lease cost and sublease income. Lease expense includes future minimum lease payments, which are recognized on a straight-line basis over the lease term, as well as common area maintenance charges, real estate taxes, insurance and other expenses, where applicable, which are expensed as incurred. Total lease cost for operating leases is recorded in occupancy and equipment noninterest expense. See Note 12. Operating Lease Right-of-Use Assets and Liabilities for further information.
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Loan Servicing Rights | Loan Servicing Rights Loan servicing rights ("LSRs") are recognized as assets or liabilities as a result of selling residential mortgage and commercial real estate loans in the secondary market while retaining the right to service these loans and receive servicing income over the life of the loan, and from acquisitions of other banks that had LSRs. An LSR is recorded at estimated fair value when initially recognized. Fair value is determined by the present value of expected cash flows received in excess of a market servicing rate. If the amount earned to service assets is equal to the market rate, no value is recorded. Subsequently, LSRs are accounted for at the lower of amortized cost or fair value and amortized in proportion to and over the period of net servicing income. Unexpected prepayments of mortgage loans result in increased amortization of LSRs, as the remaining book value of the LSRs is expensed at the time of prepayment. LSRs are assessed quarterly for impairment. See Note 11. Loan Servicing Rights for further information.
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Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements Effective January 1, 2019, TCF adopted ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes, which permits the use of the OIS Rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the interest rates on direct Treasury obligations of the U.S. government, the London Interbank Offered Rate ("LIBOR") swap rate, the OIS Rate based on the Fed Funds Effective Rate and the Securities Industry and Financial Markets Association Municipal Swap Rate. The adoption of this ASU was on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after January 1, 2019. The adoption of this guidance did not have a material impact on our consolidated financial statements. Effective January 1, 2019, TCF adopted ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force), which requires the decision to capitalize or expense implementation costs incurred in a cloud computing arrangement (i.e. a hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40. TCF's policy had been to expense these costs as incurred. The adoption of this ASU was on a prospective basis. The adoption of this guidance did not have a material impact on our consolidated financial statements. Effective January 1, 2019, TCF adopted ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments to nonemployees by aligning it more consistently with the accounting for share-based payments to employees. The new guidance in ASC 718 supersedes the guidance in ASC 505-50. The adoption of this ASU was on a modified retrospective basis with no cumulative effect adjustment recorded. The adoption of this guidance did not have a material impact on our consolidated financial statements. Effective January 1, 2019, TCF adopted ASU No. 2017-11, Earnings Per Share (Topic 260): Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, which simplifies the accounting for certain equity-linked financial instruments and embedded features with the down round features that reduce the exercise price when the pricing of a future round of financing is lower. The adoption of this ASU was on a modified retrospective basis. The adoption of this guidance did not have a material impact on our consolidated financial statements. Effective January 1, 2019, TCF adopted ASU No. 2016-02, Leases (Topic 842), which, along with other amendments, requires lessees to recognize most leases on their balance sheet. Lessor accounting is largely unchanged. The ASU requires both quantitative and qualitative disclosure regarding key information about leasing arrangements from both lessees and lessors. Effective January 1, 2019, TCF also adopted the following ASUs, which further amend the original lease guidance in Topic 842: (i) ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840) and Leases (Topic 842): Amendments to SEC Paragraphs, which rescinds certain SEC Observer comments and staff announcements from the lease guidance and incorporates SEC staff announcements on the effect of a change in tax law on leveraged leases from ASC 840 into ASC 842; (ii) ASU No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842, which amends the new lease guidance to add an optional transition practical expedient that permits an entity to continue applying its current accounting policy for land easements that existed or expired before January 1, 2019; (iii) ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which makes narrow scope improvements to the standard for specific issues; (iv) ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method allowing the standard to be applied at the adoption date and provides a practical expedient related to separating components of a contract for lessors; (v) ASU No. 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors, which allows lessors to elect to account for all sales taxes as lessee costs, instead of determining whether they are lessee or lessor costs in each individual jurisdiction. It requires lessor costs paid by lessees directly to third parties to be excluded from revenue, requires lessors to account for costs excluded from the consideration of a contract that are paid by the lessor as revenue and requires certain variable payments to be allocated (rather than recognized) to lease and nonlease components when changes occur in the facts and circumstances on which the variable payments are based; and (vi) ASU No. 2019-01, Leases (Topic 842): Codification Improvements, which allows lessors that are not manufacturers or dealers to calculate the fair value of an underlying asset as its cost less any volume or trade discount, requires lessors to classify principal payments received from direct financing and sales-type leases as investing activities in the statement of cash flows and clarifies that certain disclosure requirements that were explicitly excluded from annual reporting during the year of adoption are also excluded from interim reporting during the same year. These ASUs were adopted on a modified retrospective basis. Management elected the practical expedients and optional transition method, which allow for leases entered into prior to January 1, 2019 to be accounted for consistent with prior guidance. Management evaluated TCF's leasing contracts and activities, and developed methodologies and processes to estimate and account for the right-of-use assets and lease liabilities based on the present value of future lease payments. On January 1, 2019, TCF recorded right-of-use assets and lease liabilities totaling $91.9 million and $112.8 million, respectively. TCF also recorded additional right-of-use assets and lease liabilities totaling $39.8 million and $41.6 million on August 1, 2019 as a result of the Merger. The impact to capital ratios as a result of increased risk-weighted assets is immaterial. The adoption of this guidance did not result in a material change to lessee expense recognition. The changes to lessor accounting, as well as changes in customer behavior driven by the adoption of these ASUs, impacts the results of TCF's leasing and equipment financing businesses, including earlier recognition of expense due to a narrower definition of initial direct costs and the timing of revenue recognition for certain leases, resulting in more revenue being deferred over the lease term. Recently Issued but Not Yet Adopted Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which makes targeted improvements to the accounting for collaborative arrangements in response to questions raised as a result of the issuance of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The adoption of this ASU will be required beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020. Early adoption is allowed. The adoption of this guidance will not have a material impact on our consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, which provides an elective exemption to private companies from applying variable interest entities ("VIE") guidance to all entities under common control if certain criteria are met. In addition, this ASU contains an amendment applicable to all entities which amends how a decision maker or service provider determines whether its fee is a variable interest in a VIE when a related party under common control also has an interest in the VIE. The adoption of this ASU will be required beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020. Early adoption is allowed. The adoption of this guidance will not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The adoption of this ASU will be required beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020. Certain of the amendments require prospective application, while the remainder require retrospective application. Early adoption is allowed either for the entire standard or only the provisions that eliminate or modify the requirements. Management is currently evaluating which adoption method will be selected as well as the related potential impact of this guidance on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Subsequent to adoption, goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance largely remains unchanged. The adoption of this ASU will be required beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020 on a prospective basis. Early adoption is allowed. The adoption of this guidance will not have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets (including off-balance sheet exposure), including trade and other receivables, debt securities held to maturity, loans, net investments in leases and purchased financial assets with credit deterioration. The ASU requires the use of a current expected credit loss ("CECL") methodology to determine the allowance for credit losses for loans and debt securities held to maturity. CECL requires loss estimates for the remaining estimated life of the asset to be measured using historical loss data as well as reasonable and supportable forecasts based on current and forecasted economic conditions. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20 and should be accounted for in accordance with Topic 842. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which clarifies and corrects certain unintended applications of the guidance contained in each of the amended Topics. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, which provides an option to irrevocably elect the fair value option in Subtopic 825-10 to certain instruments within the scope of Subtopic 326-20 upon adoption of Topic 326. The adoption of these ASUs will be required on a modified retrospective basis with a cumulative effect adjustment required beginning January 1, 2020 with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020. CECL represents a significant change in GAAP and is expected to result in a material impact to our consolidated financial statements and capital ratios. The impact of these ASUs will depend on the composition of TCF's portfolios, the current economic conditions, and forecasted macroeconomic conditions at the date of adoption. Additionally, industry practice and interpretation of the ASUs continues to evolve which may impact management's implementation of the standard. TCF has established a governance structure to implement these ASUs and has developed a majority of the methodology and models to be used upon adoption. Based on parallel runs of the CECL process that TCF has performed alongside our current allowance for loan and lease losses process, we preliminarily estimated that the adoption of the standard will increase the allowance for loan and lease losses between 35% to 45% on Legacy TCF portfolios, when compared to current allowance for loan and lease loss levels. At September 30, 2019, Legacy TCF loan and lease portfolios totaled approximately $17.8 billion with a corresponding allowance for loans and lease losses of approximately $117.1 million. The largest impact is anticipated to be to our consumer segment given the longer duration of the portfolios. Management is in the process of finalizing model validations and approval of all key design decisions through its governance structure, which includes decisions about the methodology for estimating reserves for unfunded commitments and disclosures. The estimated impact of the standard depends on the composition of the portfolio, credit quality, economic conditions and forecasts at the time of adoption, as well as final decisions by management, all of which could result in a change to management’s estimate. With the close of the Merger on August 1, 2019, management is evaluating the impact of CECL on the acquired legacy Chemical portfolio which will then be included in the combined portfolio of TCF upon adoption. The loans and leases acquired in the Merger were recorded at estimated fair value on the Merger Date, which includes an estimate of credit losses. Under current GAAP, an allowance for loan and lease losses is not recorded on these loans and leases until there is evidence of credit deterioration post acquisition. However, upon adoption of CECL an allowance for loan and lease loss will need to be recorded for the acquired loans based on the lifetime loss concept within CECL. We are in the process of developing CECL assumptions on the acquired Chemical portfolios with those used by Legacy TCF. Since these assumptions could materially impact the estimate of the allowance for loan and lease losses under CECL, we are unable to estimate the impact on the Chemical portfolio at this time. |
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Other Noninterest Expense | Other Noninterest Expense Other noninterest expense was as follows:
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Summary of Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Accounting policies in effect at December 31, 2018, as previously disclosed in Note 2. Summary of Significant Accounting Policies in Legacy TCF’s audited Consolidated Financial Statements at and for the year ended December 31, 2018, which were filed as Exhibit 99.1 to TCF’s Current Report on Form 8-K filed with the SEC on August 1, 2019, remain significantly unchanged and have been followed similarly as in previous periods except for the lease financing accounting policy, resulting from the adoption of Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) and related ASUs, and certain policies added as a result of the Merger, as described below. Business Combinations Pursuant to the guidance of ASC Topic 805 ("ASC 805"), TCF recognized assets acquired, including identified intangible assets, and the liabilities assumed in mergers and acquisitions at their fair values as of the acquisition date, with the acquisition and merger-related transaction and restructuring costs expensed in the period incurred. ASC 805 affords a measurement period beyond the acquisition date that allows the opportunity to finalize the acquisition accounting in the event that new information is identified that existed as of the acquisition date but was not known or available at that time. This measurement period ends on the earlier of one year after the acquisition or the date information about the facts and circumstances that existed at the acquisition are available. TCF anticipates that measurement period adjustments may arise from adjustments to the fair values of Chemical's assets and liabilities recorded at the Merger Date, as additional information and evidence is obtained. In the event that a measurement period adjustment is identified, TCF will recognize the adjustment as part of its acquisition accounting, which may result in an adjustment to goodwill in the period the adjustment was identified. See Note 2. Merger for further information. Loans and Leases Acquired in a Business Combination We record loans and leases acquired in a business combination at fair value at the acquisition date and the fair value discount or premium is recognized as an adjustment to yield over the remaining life of each loan or lease. Credit discounts are included in the determination of fair value; therefore, an allowance for loan and lease losses is not recorded at the acquisition date. Purchased loans are evaluated at the acquisition date and classified as either (i) loans purchased without evidence of deteriorated credit quality since origination, referred to as purchased loans, or (ii) loans purchased with evidence of deteriorated credit quality since origination for which it is probable that all contractually required payments will not be collected, referred to as PCI loans. PCI loans are considered to be impaired and are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"). In determining whether a purchased loan should be classified as a PCI loan, we must make numerous assumptions, interpretations and judgments using internal and third-party credit quality information to determine whether or not it is probable that we will be able to collect all contractually required payments. This is a point in time assessment and is inherently subjective due to the nature of the available information and judgment involved. Evidence of credit quality deterioration as of the acquisition date may include statistics such as past due and nonaccrual status, recent borrower credit scores and loan-to-value percentages. The excess of cash flows expected to be collected over the estimated fair value of PCI loans is referred to as the accretable yield and is accreted into interest income over the estimated remaining life of the loan using the effective yield method. We estimate the expected cash flows based on the expected remaining life of the loans, which includes the effects of estimated prepayments and estimates of future credit losses. Cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, is referred to as the nonaccretable difference. We do not classify PCI loans as nonaccrual loans subsequent to acquisition because the loans are recorded at net realizable value based on the principal and interest expected to be collected on the loan. Judgment is required to estimate the timing and amount of cash flows expected to be collected when the loans are not performing in accordance with the original contractual terms. Purchased loans outside the scope of ASC 310-30 are accounted for under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs. For purchased loans, credit discounts representing the principal losses expected over the life of the loan are a component of the initial fair value and the discount is accreted to interest income over the life of the loan. Subsequent to the purchase date, the method used to evaluate the sufficiency of the credit discount is similar to originated loans, and if necessary, additional reserves are recognized in the allowance for loan and lease losses. Leases TCF enters into lease contracts as both a lessor and a lessee. A contract, or part of a contract, is considered a lease if it conveys the right to obtain substantially all of the economic benefits from, and the right to direct and use, an identified asset for a period of time in exchange for consideration. The determination of lease classification requires various judgments and estimates by management which may include the fair value of the equipment at lease inception, useful life of the equipment under lease, estimate of the lease residual value and collectability of minimum lease payments. Management has policies and procedures in place for the determination of lease classification and review of the related judgments and estimates for all leases. As a lessor, TCF provides various types of lease financing that are classified for accounting purposes as direct financing, sales-type or operating leases. Leases that transfer substantially all of the benefits and risks of ownership to the lessee are classified as direct financing or sales-type leases and are recorded in loans and leases. Direct financing and sales-type leases are carried at the combined present value of future minimum lease payments and lease residual values. Interest income on net investment in direct financing and sales-type leases is recognized using methods that approximate a level yield over the fixed, non-cancelable term of the lease, including pro rata rent payments received for the interim period until the lease contract commences and the fixed, non-cancelable lease term begins. Sales-type leases generate selling profit (loss), which is recognized on the commencement date by recording lease revenue net of lease cost. Lease revenue consists of the present value of the future minimum lease payments and lease cost consists of the leased equipment's net book value, less the present value of its residual. Some lease financing contracts include a residual value component, which represents the estimated fair value of the leased equipment at the expiration of the initial term of the transaction. The estimation of residual values involves judgment regarding product and technology changes, customer behavior, shifts in supply and demand and other economic assumptions. TCF reviews residual assumptions when assessing potential impairment of the net investment in direct financing and sales-type leases each quarter. Decreases in the expected residual value are reflected through an increase in the provision for credit losses, which results in an increase to the allowance for loan and lease losses. TCF may sell minimum lease payment receivables, primarily as a credit risk reduction tool, to third-party financial institutions at fixed rates, on a non-recourse basis, with its underlying equipment as collateral. For those transactions that qualify for sale accounting, the related lease cash flow stream and the non-recourse financing are derecognized. For those transactions that do not qualify for sale accounting, the underlying lease remains on TCF's Consolidated Statements of Financial Condition and non-recourse debt is recorded in the amount of the proceeds received. TCF retains servicing of these leases and bills, collects and remits funds to the third-party financial institution. Upon default by the lessee, the third-party financial institutions may take control of the underlying collateral which TCF would otherwise retain as residual value. Leases that do not transfer substantially all benefits and risks of ownership to the lessee are classified as operating leases. Such leased equipment and related initial direct costs are included in other assets and depreciated to their estimated salvage value on a straight-line basis over the term of the lease. Lease financing equipment depreciation is recorded in noninterest expense. Operating lease payments received are recognized as lease income when due and recorded as a component of leasing and equipment finance noninterest income. An allowance for lease losses is not provided on operating leases. See Note 7. Loans and Leases for further information. As a lessee, TCF enters into contracts to lease real estate, information technology equipment and various other types of equipment. Leases that transfer substantially all of the benefits and risks of ownership to TCF are classified as finance leases, while all others are classified as operating leases. At lease commencement, a lease liability and right-of-use asset are calculated and recognized for both types of leases. The lease liability is equal to the present value of future minimum lease payments. The right-of-use asset is equal to the lease liability, plus any initial direct costs and prepaid lease payments, less any lease incentives received. Operating lease right-of-use assets are recorded in other assets and finance lease right-of-use assets are recorded in premises and equipment, net. TCF uses the appropriate term Federal Home Loan Bank ("FHLB") rate to determine the discount rate for the present value calculation of future minimum payments when an implicit rate is not known for a given lease. The lease term used in the calculation includes any options to extend that TCF is reasonably certain to exercise. Subsequent to lease commencement, lease liabilities recorded for finance leases are measured using the effective interest rate method and the related right-of-use assets are amortized on a straight-line basis over the lease term. Interest expense and amortization expense are recorded separately in the income statement in interest expense on borrowings and occupancy and equipment noninterest expense, respectively. For operating leases, total lease cost is comprised of lease expense, short-term lease cost, variable lease cost and sublease income. Lease expense includes future minimum lease payments, which are recognized on a straight-line basis over the lease term, as well as common area maintenance charges, real estate taxes, insurance and other expenses, where applicable, which are expensed as incurred. Total lease cost for operating leases is recorded in occupancy and equipment noninterest expense. See Note 12. Operating Lease Right-of-Use Assets and Liabilities for further information. Loan Servicing Rights Loan servicing rights ("LSRs") are recognized as assets or liabilities as a result of selling residential mortgage and commercial real estate loans in the secondary market while retaining the right to service these loans and receive servicing income over the life of the loan, and from acquisitions of other banks that had LSRs. An LSR is recorded at estimated fair value when initially recognized. Fair value is determined by the present value of expected cash flows received in excess of a market servicing rate. If the amount earned to service assets is equal to the market rate, no value is recorded. Subsequently, LSRs are accounted for at the lower of amortized cost or fair value and amortized in proportion to and over the period of net servicing income. Unexpected prepayments of mortgage loans result in increased amortization of LSRs, as the remaining book value of the LSRs is expensed at the time of prepayment. LSRs are assessed quarterly for impairment. See Note 11. Loan Servicing Rights for further information. Recently Adopted Accounting Pronouncements Effective January 1, 2019, TCF adopted ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes, which permits the use of the OIS Rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the interest rates on direct Treasury obligations of the U.S. government, the London Interbank Offered Rate ("LIBOR") swap rate, the OIS Rate based on the Fed Funds Effective Rate and the Securities Industry and Financial Markets Association Municipal Swap Rate. The adoption of this ASU was on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after January 1, 2019. The adoption of this guidance did not have a material impact on our consolidated financial statements. Effective January 1, 2019, TCF adopted ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force), which requires the decision to capitalize or expense implementation costs incurred in a cloud computing arrangement (i.e. a hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40. TCF's policy had been to expense these costs as incurred. The adoption of this ASU was on a prospective basis. The adoption of this guidance did not have a material impact on our consolidated financial statements. Effective January 1, 2019, TCF adopted ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments to nonemployees by aligning it more consistently with the accounting for share-based payments to employees. The new guidance in ASC 718 supersedes the guidance in ASC 505-50. The adoption of this ASU was on a modified retrospective basis with no cumulative effect adjustment recorded. The adoption of this guidance did not have a material impact on our consolidated financial statements. Effective January 1, 2019, TCF adopted ASU No. 2017-11, Earnings Per Share (Topic 260): Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, which simplifies the accounting for certain equity-linked financial instruments and embedded features with the down round features that reduce the exercise price when the pricing of a future round of financing is lower. The adoption of this ASU was on a modified retrospective basis. The adoption of this guidance did not have a material impact on our consolidated financial statements. Effective January 1, 2019, TCF adopted ASU No. 2016-02, Leases (Topic 842), which, along with other amendments, requires lessees to recognize most leases on their balance sheet. Lessor accounting is largely unchanged. The ASU requires both quantitative and qualitative disclosure regarding key information about leasing arrangements from both lessees and lessors. Effective January 1, 2019, TCF also adopted the following ASUs, which further amend the original lease guidance in Topic 842: (i) ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840) and Leases (Topic 842): Amendments to SEC Paragraphs, which rescinds certain SEC Observer comments and staff announcements from the lease guidance and incorporates SEC staff announcements on the effect of a change in tax law on leveraged leases from ASC 840 into ASC 842; (ii) ASU No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842, which amends the new lease guidance to add an optional transition practical expedient that permits an entity to continue applying its current accounting policy for land easements that existed or expired before January 1, 2019; (iii) ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which makes narrow scope improvements to the standard for specific issues; (iv) ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method allowing the standard to be applied at the adoption date and provides a practical expedient related to separating components of a contract for lessors; (v) ASU No. 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors, which allows lessors to elect to account for all sales taxes as lessee costs, instead of determining whether they are lessee or lessor costs in each individual jurisdiction. It requires lessor costs paid by lessees directly to third parties to be excluded from revenue, requires lessors to account for costs excluded from the consideration of a contract that are paid by the lessor as revenue and requires certain variable payments to be allocated (rather than recognized) to lease and nonlease components when changes occur in the facts and circumstances on which the variable payments are based; and (vi) ASU No. 2019-01, Leases (Topic 842): Codification Improvements, which allows lessors that are not manufacturers or dealers to calculate the fair value of an underlying asset as its cost less any volume or trade discount, requires lessors to classify principal payments received from direct financing and sales-type leases as investing activities in the statement of cash flows and clarifies that certain disclosure requirements that were explicitly excluded from annual reporting during the year of adoption are also excluded from interim reporting during the same year. These ASUs were adopted on a modified retrospective basis. Management elected the practical expedients and optional transition method, which allow for leases entered into prior to January 1, 2019 to be accounted for consistent with prior guidance. Management evaluated TCF's leasing contracts and activities, and developed methodologies and processes to estimate and account for the right-of-use assets and lease liabilities based on the present value of future lease payments. On January 1, 2019, TCF recorded right-of-use assets and lease liabilities totaling $91.9 million and $112.8 million, respectively. TCF also recorded additional right-of-use assets and lease liabilities totaling $39.8 million and $41.6 million on August 1, 2019 as a result of the Merger. The impact to capital ratios as a result of increased risk-weighted assets is immaterial. The adoption of this guidance did not result in a material change to lessee expense recognition. The changes to lessor accounting, as well as changes in customer behavior driven by the adoption of these ASUs, impacts the results of TCF's leasing and equipment financing businesses, including earlier recognition of expense due to a narrower definition of initial direct costs and the timing of revenue recognition for certain leases, resulting in more revenue being deferred over the lease term. Recently Issued but Not Yet Adopted Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which makes targeted improvements to the accounting for collaborative arrangements in response to questions raised as a result of the issuance of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The adoption of this ASU will be required beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020. Early adoption is allowed. The adoption of this guidance will not have a material impact on our consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, which provides an elective exemption to private companies from applying variable interest entities ("VIE") guidance to all entities under common control if certain criteria are met. In addition, this ASU contains an amendment applicable to all entities which amends how a decision maker or service provider determines whether its fee is a variable interest in a VIE when a related party under common control also has an interest in the VIE. The adoption of this ASU will be required beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020. Early adoption is allowed. The adoption of this guidance will not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The adoption of this ASU will be required beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020. Certain of the amendments require prospective application, while the remainder require retrospective application. Early adoption is allowed either for the entire standard or only the provisions that eliminate or modify the requirements. Management is currently evaluating which adoption method will be selected as well as the related potential impact of this guidance on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Subsequent to adoption, goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance largely remains unchanged. The adoption of this ASU will be required beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020 on a prospective basis. Early adoption is allowed. The adoption of this guidance will not have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets (including off-balance sheet exposure), including trade and other receivables, debt securities held to maturity, loans, net investments in leases and purchased financial assets with credit deterioration. The ASU requires the use of a current expected credit loss ("CECL") methodology to determine the allowance for credit losses for loans and debt securities held to maturity. CECL requires loss estimates for the remaining estimated life of the asset to be measured using historical loss data as well as reasonable and supportable forecasts based on current and forecasted economic conditions. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20 and should be accounted for in accordance with Topic 842. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which clarifies and corrects certain unintended applications of the guidance contained in each of the amended Topics. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, which provides an option to irrevocably elect the fair value option in Subtopic 825-10 to certain instruments within the scope of Subtopic 326-20 upon adoption of Topic 326. The adoption of these ASUs will be required on a modified retrospective basis with a cumulative effect adjustment required beginning January 1, 2020 with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020. CECL represents a significant change in GAAP and is expected to result in a material impact to our consolidated financial statements and capital ratios. The impact of these ASUs will depend on the composition of TCF's portfolios, the current economic conditions, and forecasted macroeconomic conditions at the date of adoption. Additionally, industry practice and interpretation of the ASUs continues to evolve which may impact management's implementation of the standard. TCF has established a governance structure to implement these ASUs and has developed a majority of the methodology and models to be used upon adoption. Based on parallel runs of the CECL process that TCF has performed alongside our current allowance for loan and lease losses process, we preliminarily estimated that the adoption of the standard will increase the allowance for loan and lease losses between 35% to 45% on Legacy TCF portfolios, when compared to current allowance for loan and lease loss levels. At September 30, 2019, Legacy TCF loan and lease portfolios totaled approximately $17.8 billion with a corresponding allowance for loans and lease losses of approximately $117.1 million. The largest impact is anticipated to be to our consumer segment given the longer duration of the portfolios. Management is in the process of finalizing model validations and approval of all key design decisions through its governance structure, which includes decisions about the methodology for estimating reserves for unfunded commitments and disclosures. The estimated impact of the standard depends on the composition of the portfolio, credit quality, economic conditions and forecasts at the time of adoption, as well as final decisions by management, all of which could result in a change to management’s estimate. With the close of the Merger on August 1, 2019, management is evaluating the impact of CECL on the acquired legacy Chemical portfolio which will then be included in the combined portfolio of TCF upon adoption. The loans and leases acquired in the Merger were recorded at estimated fair value on the Merger Date, which includes an estimate of credit losses. Under current GAAP, an allowance for loan and lease losses is not recorded on these loans and leases until there is evidence of credit deterioration post acquisition. However, upon adoption of CECL an allowance for loan and lease loss will need to be recorded for the acquired loans based on the lifetime loss concept within CECL. We are in the process of developing CECL assumptions on the acquired Chemical portfolios with those used by Legacy TCF. Since these assumptions could materially impact the estimate of the allowance for loan and lease losses under CECL, we are unable to estimate the impact on the Chemical portfolio at this time. |