Allowance for Loan and Lease Losses and Credit Quality

12 Months Ended

Dec. 31, 2019

Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]

Allowance for Loan and Lease Losses and Credit Quality

Allowance for Loan and Lease Losses and Credit Quality

The rollforwards of the allowance for loan and lease losses were as follows:

	At or For the Year Ended December 31, 2019
(In thousands)	Consumer Loan Portfolio			Commercial Loan and Lease Portfolio			Total Loans and Leases
Balance, beginning of period	$	80,017		$	77,429		$	157,446
Charge-offs	(50,480		)	(47,455		)	(97,935		)
Recoveries	23,653			6,731			30,384
Net (charge-offs) recoveries	(26,827		)	(40,724		)	(67,551		)
Provision for credit losses	17,492			47,790			65,282
Other(1)	(42,110		)	(15		)	(42,125		)
Balance, end of period	$	28,572		$	84,480		$	113,052
	At or For the Year Ended December 31, 2018
(In thousands)	Consumer Loan Portfolio			Commercial Loan and Lease Portfolio			Total Loans and Leases
Balance, beginning of period	$	98,085		$	72,956		$	171,041
Charge-offs	(64,520		)	(20,208		)	(84,728		)
Recoveries	26,487			3,216			29,703
Net (charge-offs) recoveries	(38,033		)	(16,992		)	(55,025		)
Provision for credit losses	24,851			21,917			46,768
Other(1)	(4,886		)	(452		)	(5,338		)
Balance, end of period	$	80,017		$	77,429		$	157,446
	At or For the Year Ended December 31, 2017
(In thousands)	Consumer Loan Portfolio			Commercial Loan and Lease Portfolio			Total Loans and Leases
Balance, beginning of period	$	92,292		$	67,977		$	160,269
Charge-offs	(59,831		)	(19,261		)	(79,092		)
Recoveries	30,916			3,736			34,652
Net (charge-offs) recoveries	(28,915		)	(15,525		)	(44,440		)
Provision for credit losses	47,911			20,532			68,443
Other(1)	(13,203		)	(28		)	(13,231		)
Balance, end of period	$	98,085		$	72,956		$	171,041

(1) Primarily includes the transfer of the allowance for loan and lease losses to loans and leases held-for-sale.

The allowance for loan and lease losses and loans and leases outstanding by type of allowance methodology were as follows:

	At December 31, 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	$	26,430	$	75,756	$	102,186
Individually evaluated for impairment	1,468		5,769		7,237
Loans acquired with deteriorated credit quality	674		2,955		3,629
Total	$	28,572	$	84,480	$	113,052
Loans and leases outstanding:
Collectively evaluated for impairment	$	11,087,534	$	22,986,607	$	34,074,141
Individually evaluated for impairment	60,694		115,843		176,537
Loans acquired with deteriorated credit quality	72,895		173,891		246,786
Total	$	11,221,123	$	23,276,341	$	34,497,464

	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	$	57,113	$	68,140	$	125,253
Individually evaluated for impairment	22,904		9,289		32,193
Total	$	80,017	$	77,429	$	157,446
Loans and leases outstanding:
Collectively evaluated for impairment	$	7,285,753	$	11,587,372	$	18,873,125
Individually evaluated for impairment	128,159		67,919		196,078
Loans acquired with deteriorated credit quality	—		3,817		3,817
Total	$	7,413,912	$	11,659,108	$	19,073,020

Accruing and Nonaccrual Loans and Leases  The Corporation's key credit quality indicator is the receivable's payment performance status, defined as accruing or nonaccruing. Nonaccrual loans and leases are those which management believes have a higher risk of loss. Delinquent balances are determined based on the contractual terms of the loan or lease. Loans and leases that are over 60 days delinquent have a higher potential to become nonaccrual and generally are a leading indicator for future charge-off trends. The Corporation's accruing and nonaccrual loans and leases were as follows:

	At December 31, 2019
(In thousands)	Current		30-89 Days  Delinquent  and Accruing		90 Days or More Delinquent  and Accruing		Total  Accruing		Nonaccrual		Total
Commercial loan and lease portfolio:
Commercial and industrial	$	11,283,832	$	29,780	$	331	$	11,313,943	$	53,812	$	11,367,755
Commercial real estate	8,993,360		10,291		1,440		9,005,091		29,735		9,034,826
Lease financing	2,662,354		24,657		1,901		2,688,912		10,957		2,699,869
Total commercial loan and lease portfolio	22,939,546		64,728		3,672		23,007,946		94,504		23,102,450
Consumer loan portfolio:
Residential mortgage	6,056,817		17,245		559		6,074,621		38,577		6,113,198
Consumer installment	1,536,714		4,292		108		1,541,114		714		1,541,828
Home equity	3,434,771		22,568		—		3,457,339		35,863		3,493,202
Total consumer loan portfolio	11,028,302		44,105		667		11,073,074		75,154		11,148,228
PCI loans(1)	217,206		3,843		25,737		246,786		$	—	246,786
Total	$	34,185,054	$	112,676	$	30,076	$	34,327,806	$	169,658	$	34,497,464

(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.

	At December 31, 2018
(In thousands)	Current		30-89 Days  Delinquent  and Accruing		90 Days or More Delinquent  and Accruing		Total  Accruing		Nonaccrual		Total
Commercial loan and lease portfolio:
Commercial and industrial	$	6,253,949	$	13,653	$	760	$	6,268,362	$	26,061	$	6,294,423
Commercial real estate	2,826,187		—		—		2,826,187		4,518		2,830,705
Lease financing	2,498,811		21,477		1,882		2,522,170		7,993		2,530,163
Total commercial loan and lease portfolio	11,578,947		35,130		2,642		11,616,719		38,572		11,655,291
Consumer loan portfolio:
Residential mortgage	2,291,435		10,014		1,275		2,302,724		33,111		2,335,835
Consumer installment	1,951,302		40,340		3,349		1,994,991		8,581		2,003,572
Home equity	3,042,968		5,883		—		3,048,851		25,654		3,074,505
Total consumer loan portfolio	7,285,705		56,237		4,624		7,346,566		67,346		7,413,912
PCI loans(1)	3,639		—		178		3,817		$	—	3,817
Total	$	18,868,291	$	91,367	$	7,444	$	18,967,102	$	105,918	$	19,073,020

(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 addition to the receivables payment performance status, credit quality is also analyzed using risk categories, which vary based on the size and type of credit risk exposure and additionally measure liquidity, debt capacity, coverage and payment behavior as shown in the borrower's financial statements. The risk categories also measure the quality of the borrower's management and the repayment support offered by any guarantors. Loan and lease credit classifications are derived from standard regulatory rating definitions, which include: pass, special mention, substandard, doubtful and loss. Substandard and doubtful loans and leases have well-defined weaknesses, but may never result in a loss.

The following schedule presents the recorded investment of loans and leases by credit risk categories.

(In thousands)	Pass		Special Mention		Substandard		Total
At December 31, 2019
Commercial loan and lease portfolio:
Commercial and industrial	$	10,930,939	$	315,097	$	193,566	$	11,439,602
Commercial real estate	8,891,361		170,114		75,395		9,136,870
Lease financing	2,646,874		28,091		24,904		2,699,869
Total commercial loan and lease portfolio	22,469,174		513,302		293,865		23,276,341
Consumer loan portfolio:
Residential mortgage	6,135,096		565		44,144		6,179,805
Consumer installment	1,541,524		—		887		1,542,411
Home equity	3,457,292		456		41,159		3,498,907
Total consumer loan portfolio	11,133,912		1,021		86,190		11,221,123
Total loans and leases	$	33,603,086	$	514,323	$	380,055	$	34,497,464
At December 31, 2018
Commercial loan and lease portfolio:
Commercial and industrial	$	6,033,321	$	158,296	$	106,623	$	6,298,240
Commercial real estate	2,792,103		12,864		25,738		2,830,705
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

Troubled Debt Restructurings In certain circumstances, the Corporation may consider modifying the terms of a loan for economic or legal reasons related to the customer's financial difficulties. If the Corporation grants a concession, the modified loan is classified as a troubled debt restructuring ("TDR"). TDRs typically involve a deferral of the principal balance of the loan, a reduction of the stated interest rate of the loan or, in certain limited circumstances, a reduction of the principal balance of the loan or the loan's accrued interest. All loans classified as TDR loans are considered to be impaired.

The following table presents the recorded investment of loan modifications first classified as TDRs during the periods presented:

	Year Ended December 31,
	2019				2018				2017
(In thousands)	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	$	5,347	$	5,347	$	7,253	$	7,253	$	10,266	$	10,241
Commercial real estate	35,997		35,997		5,228		5,228		3,077		3,077
Total commercial loan and lease portfolio	41,344		41,344		12,481		12,481		13,343		13,318
Consumer loan portfolio:
Residential mortgage	6,053		5,912		5,333		5,259		7,666		7,480
Consumer installment	217		183		1,052		1,052		892		892
Home equity	4,144		4,089		2,182		2,181		2,169		2,157
Total consumer loan portfolio	10,414		10,184		8,567		8,492		10,727		10,529
Total	$	51,758	$	51,528	$	21,048	$	20,973	$	24,070	$	23,847

The following table presents TDR loans:

	At December 31, 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	$	12,986	$	5,356	$	18,342	$	12,665	$	6,153	$	18,818
Consumer loan portfolio	12,403		14,875		27,278		85,794		22,554		108,348
Total	$	25,389	$	20,231	$	45,620	$	98,459	$	28,707	$	127,166

Commitments to lend additional funds to borrowers whose terms have been modified in TDRs were $638 thousand at both December 31, 2019 and December 31, 2018.

Loan modifications to troubled borrowers are no longer disclosed as TDR loans in the calendar years after modification if the loans were modified to an interest rate equal to or greater than the yields of new loan originations with comparable risk at the time of restructuring and if the loan is performing based on the restructured terms; however, these loans are still considered impaired and follow the Corporation's impaired loan reserve policies.

The following table summarizes the TDR loans that defaulted during the periods presented that were modified during the respective reporting period or within one year of the beginning of the respective reporting period. The Corporation considers a loan to have defaulted when under the modified terms it becomes 90 or more days delinquent, has been transferred to nonaccrual status, has been charged down or has been transferred to other real estate owned or repossessed and returned assets.

	Year Ended December 31,
(In thousands)	2019		2018		2017
Defaulted TDR loan balances modified during the applicable period
Commercial loan and lease portfolio:
Commercial and industrial	$	956	$	4,697	$	555
Total commercial loan and lease portfolio	956		4,697		555
Consumer loan portfolio:
Residential mortgage	1,325		3,258		2,819
Consumer installment	1,555		1,436		1,169
Home equity	401		558		841
Total consumer loan portfolio	3,281		5,252		4,829
Defaulted TDR loan balances	$	4,237	$	9,949	$	5,384

Impaired Loans and Leases  Effective January 1, 2019, in conjunction with the adoption of ASU No. 2016-02, Leases (Topic 842) and related ASUs, the Corporation considers impaired loans and leases to include nonaccrual commercial loans and leases, as well as all commercial and consumer TDR loans. Previously, the Corporation did not include impaired leases within the following tables. For purposes of this disclosure, PCI loans have been excluded. In the following table, the balance of impaired loans and leases represents the amount recorded within loans and leases on the Consolidated Statements of Financial Condition, whereas the unpaid contractual balance represents the balances legally owed by the borrowers.

Information on impaired loans and leases at December 31, 2019 and information on impaired loans at December 31, 2018 was as follows:

	At December 31, 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	$	20,069	$	20,090	$	2,844	$	35,444	$	32,326	$	6,354
Commercial real estate	4,225		3,962		333		4,905		4,474		1,108
Lease financing	10,956		10,956		2,592		—		—		—
Total commercial loan and lease portfolio	35,250		35,008		5,769		40,349		36,800		7,462
Consumer loan portfolio:
Residential mortgage	24,297		22,250		1,030		63,004		60,172		17,216
Consumer installment	—		—		—		919		647		81
Home equity	9,418		8,791		438		27,386		25,836		5,288
Total consumer loan portfolio	33,715		31,041		1,468		91,309		86,655		22,585
Total impaired loans and leases with an allowance recorded	68,965		66,049		7,237		131,658		123,455		30,047
Impaired loans and leases without an allowance recorded:
Commercial loan and lease portfolio:
Commercial and industrial	55,889		39,098		—		2,239		2,237		—
Commercial real estate	69,143		41,737		—		4,275		4,208		—
Total commercial loan and lease portfolio	125,032		80,835		—		6,514		6,445		—
Consumer loan portfolio:
Residential mortgage	31,142		22,594		—		11,636		9,494		—
Consumer installment	2,095		880		—		15,400		10,770		—
Home equity	24,709		6,179		—		10,620		1,429		—
Total consumer loan portfolio	57,946		29,653		—		37,656		21,693		—
Total impaired loans and leases without an allowance recorded	182,978		110,488		—		44,170		28,138		—
Total impaired loans and leases	$	251,943	$	176,537	$	7,237	$	175,828	$	151,593	$	30,047

The average balances of impaired loans and leases and interest income recognized on impaired loans and leases for the year ended December 31, 2019 and the average loan balance of impaired loans and interest income recognized on impaired loans for the years ended December 31, 2018 and December 31, 2017 were as follows:

	Year Ended December 31,
	2019				2018				2017
(In thousands)	Average Loan and Lease Balance		Interest Income Recognized		Average Loan 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	$	26,208	$	54	$	29,285	$	282	$	20,260	$	347
Commercial real estate	4,218		172		5,588		—		8,388		16
Lease financing	5,478		153		—		—		—		—
Total commercial loan and lease portfolio	35,904		379		34,873		282		28,648		363
Consumer loan portfolio:
Residential mortgage	41,211		1,942		68,850		1,653		89,247		2,125
Consumer installment	324		1		834		—		3,223		—
Home equity	17,313		849		29,327		1,609		43,932		2,111
Total consumer loan portfolio	58,848		2,792		99,011		3,262		136,402		4,236
Total impaired loans and leases with an allowance recorded	94,752		3,171		133,884		3,544		165,050		4,599
Impaired loans and leases without an allowance recorded
Commercial loan and lease portfolio:
Commercial and industrial	20,667		205		2,527		173		1,971		200
Commercial real estate	22,972		1,209		4,350		231		10,136		709
Total commercial loan and lease portfolio	43,639		1,414		6,877		404		12,107		909
Consumer loan portfolio:
Residential mortgage	16,044		983		9,923		655		11,428		896
Consumer installment	5,825		256		9,284		302		5,103		209
Home equity	3,804		174		1,553		216		1,864		463
Total consumer loan portfolio	25,673		1,413		20,760		1,173		18,395		1,568
Total impaired loans and leases without an allowance recorded	69,312		2,827		27,637		1,577		30,502		2,477
Total impaired loans and leases	$	164,064	$	5,998	$	161,521	$	5,121	$	195,552	$	7,076

Other Real Estate Owned and Repossessed and Returned Assets Other real estate owned, repossessed and returned assets and consumer real estate loans in process of foreclosure were as follows:

	At December 31,
(In thousands)	2019		2018
Other real estate owned	$	34,256	$	17,403
Repossessed and returned assets	8,045		14,574
Consumer real estate loans in process of foreclosure	17,758		15,540

On August 1, 2019, the Corporation acquired $14.6 million of other real estate owned and $338 thousand of repossessed and returned assets in connection with the Merger. Other real estate owned and repossessed and returned assets were written down $7.7 million, $3.4 million and $6.2 million in 2019, 2018 and 2017, respectively.