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Press Release

TCF Reports Quarterly Net Income of $52.3 Million, or 29 Cents Per Share

Company Release - 7/23/2015 8:00 AM ET

SECOND QUARTER HIGHLIGHTS

  • Revenue of $319.5 million, up 3.0 percent from the second quarter of 2014
  • Loan and lease originations of $3.9 billion, up 14.5 percent from the second quarter of 2014
  • Average deposits of $15.9 billion, up 7.3 percent from the second quarter of 2014
  • Non-accrual loans and leases of $205.7 million, down 21.0 percent from the second quarter of 2014
  • Earnings per share of 29 cents, flat to the second quarter of 2014, up 38.1 percent from the first quarter of 2015

WAYZATA, Minn.--(BUSINESS WIRE)-- TCF Financial Corporation (NYSE:TCB):

                                                 
Summary of Financial Results                                         Table 1
                Percent Change            
(Dollars in thousands, except per-share data) 2Q 1Q 2Q 2Q15 vs     2Q15 vs YTD YTD Percent
2015     2015     2014     1Q15     2Q14     2015     2014     Change
Net income attributable to TCF $ 52,255 $ 39,801 $ 53,125 31.3 % (1.6 )% $ 92,056 $ 97,882 (6.0 )%
Net interest income 206,029 203,420 206,101 1.3 409,449 407,375 0.5
Diluted earnings per common share 0.29 0.21 0.29 38.1 0.50 0.54 (7.4 )
 

Financial Ratios(1)

Pre-tax pre-provision return on average assets(2)

1.94 % 1.58 % 2.05 % 1.76 % 1.96 %
Return on average assets 1.10 0.85 1.17 0.98 1.09
Return on average common equity 9.93 7.47 10.99 8.71 10.18

Return on average tangible common equity(3)

11.34 8.58 12.72 9.98 11.82
Net interest margin 4.44 4.50 4.65 4.47 4.66

Net charge-offs as a percentage of average loans and leases

0.41 0.28 0.45 0.34 0.44
 
(1) Annualized.
(2) Pre-tax pre-provision profit is calculated as total revenues less non-interest expense.
(3) See "Reconciliation of GAAP to Non-GAAP Financial Measures" table.
 

TCF Financial Corporation ("TCF" or the "Company") (NYSE: TCB) today reported net income of $52.3 million for the second quarter of 2015, compared with net income of $53.1 million for the second quarter of 2014, and net income of $39.8 million for the first quarter of 2015. Diluted earnings per common share was 29 cents for the second quarter of 2015, compared with 29 cents for the second quarter of 2014, and 21 cents for the first quarter of 2015.

TCF reported net income of $92.1 million for the first six months of 2015, compared with net income of $97.9 million for the same period in 2014. Diluted earnings per common share was 50 cents for the first six months of 2015, compared with 54 cents for the same period in 2014.

Chairman's Statement

"TCF's second quarter was highlighted by increased fee revenue, reduced expenses and continued strong loan and lease originations,” said William A. Cooper, chairman and chief executive officer. "Banking fees experienced a seasonal rebound while our second auto loan securitization helped gains on sales of loans return to a more normalized level. Expenses declined from the prior quarter as we focus on improving operating leverage moving forward.

"Meanwhile, our continued strong originations, along with loan sale and securitization capabilities, are driving growth and diversification of both the balance sheet and revenue base. With credit issues largely behind us, an asset sensitive balance sheet and opportunities on the horizon, there is much to look forward to at TCF."

                               
Revenue
                                                 
Total Revenue                                         Table 2
Percent Change
(Dollars in thousands) 2Q 1Q 2Q 2Q15 vs 2Q15 vs YTD YTD Percent
2015     2015     2014     1Q15     2Q14     2015     2014     Change
Net interest income $ 206,029       $ 203,420       $ 206,101   1.3 % % $ 409,449       $ 407,375   0.5 %
Fees and other revenue:
Fees and service charges 36,295 33,972 38,035 6.8 (4.6 ) 70,267 74,654 (5.9 )
Card revenue 13,902 12,901 13,249 7.8 4.9 26,803 25,499 5.1
ATM revenue   5,540         5,122         5,794   8.2 (4.4 )   10,662         11,113   (4.1 )
Total banking fees 55,737 51,995 57,078 7.2 (2.3 ) 107,732 111,266 (3.2 )
Gains on sales of auto loans, net 10,756 6,265 7,270 71.7 48.0 17,021 15,740 8.1

Gains on sales of consumer real estate loans, net

11,954 8,763 8,151 36.4 46.7 20,717 19,857 4.3
Servicing fee income   7,216         7,342         4,892   (1.7 ) 47.5   14,558         9,199   58.3
Subtotal 29,926 22,370 20,313 33.8 47.3 52,296 44,796 16.7
Leasing and equipment finance 26,385 22,224 23,069 18.7 14.4 48,609 45,049 7.9
Other   1,460         4,127         2,789   (64.6 ) (47.7 )   5,587         5,171   8.0
Total fees and other revenue 113,508 100,716 103,249 12.7 9.9 214,224 206,282 3.9
Gains (losses) on securities, net   (59 )       (78 )       767   24.4 N.M.   (137 )       1,141   N.M.
Total non-interest income   113,449         100,638         104,016   12.7 9.1   214,087         207,423   3.2
Total revenue $ 319,478       $ 304,058       $ 310,117   5.1 3.0 $ 623,536       $ 614,798   1.4
 
Net interest margin(1) 4.44 % 4.50 % 4.65 % 4.47 % 4.66 %
Total non-interest income as a percentage of total revenue 35.5 33.1 33.5 34.3 33.7
 
N.M. Not Meaningful.
(1) Annualized.
 

Net Interest Income

  • Net interest income for the second quarter of 2015 remained consistent compared with the second quarter of 2014 and increased $2.6 million, or 1.3 percent, compared with the first quarter of 2015. The increase from the first quarter of 2015 was primarily due to higher average loan and lease balances in the auto finance and inventory finance portfolios, partially offset by lower first mortgage consumer real estate loan balances due to run-off.
  • Net interest margin in the second quarter of 2015 was 4.44 percent, compared with 4.65 percent in the second quarter of 2014 and 4.50 percent in the first quarter of 2015. The decreases from both periods were primarily due to margin compression resulting from the competitive low interest rate environment. The decrease from the second quarter of 2014 was further driven by a higher total deposit rate.

Non-interest Income

  • Fees and service charges in the second quarter of 2015 were $36.3 million, down $1.7 million, or 4.6 percent, from the second quarter of 2014 and up $2.3 million, or 6.8 percent, from the first quarter of 2015. The decrease from the second quarter of 2014 was primarily due to consumer behavior changes, as well as higher average checking account balances per customer. The increase from the first quarter of 2015 was primarily due to seasonality resulting in an increase in transaction activity and lower average checking account balances per customer.
  • TCF sold $436.4 million, $220.2 million and $203.5 million of auto loans during the second quarters of 2015 and 2014, and the first quarter of 2015, respectively, resulting in net gains in each respective period. The auto loans sold for the second quarter of 2015 related to the execution of the Company's second auto loan securitization.
  • TCF sold $364.9 million, $224.2 million and $264.3 million of consumer real estate loans during the second quarters of 2015 and 2014, and the first quarter of 2015, respectively, resulting in net gains in each respective period. The majority of the consumer real estate loans sold are junior lien loans. Included in consumer real estate loans sold was $74.5 million and $61.8 million of first mortgage loans related to the correspondent lending program for the second quarter of 2015 and the first quarter of 2015, respectively, resulting in net gains in each respective period.
  • Servicing fee income was $7.2 million on $3.7 billion of average loans and leases serviced for others during the second quarter of 2015 compared with $4.9 million on $2.5 billion for the second quarter of 2014 and $7.3 million on $3.5 billion for the first quarter of 2015. The increase from the second quarter of 2014 was primarily due to the cumulative effect of an increase in the portfolio of auto and consumer real estate loans sold with servicing retained by TCF.
 
Loans and Leases
                                                 
Period-End and Average Loans and Leases               Table 3
                Percent Change            
(Dollars in thousands) 2Q 1Q 2Q 2Q15 vs   2Q15 vs YTD YTD Percent
2015     2015     2014     1Q15     2Q14     2015     2014     Change
Period-End:
Consumer real estate:
First mortgage lien $ 2,865,911 $ 3,011,166 $ 3,542,324 (4.8 )% (19.1 )%
Junior lien   2,678,118       2,597,895       2,480,763 3.1 8.0
Total consumer real estate 5,544,029 5,609,061 6,023,087 (1.2 ) (8.0 )
Commercial 3,112,344 3,205,599 3,093,161 (2.9 ) 0.6
Leasing and equipment finance