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TCF Reports First Quarter 2021 Results

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TCF Financial Corporation (NASDAQ: TCF) reported a strong first quarter of 2021, achieving a net income of $123.3 million ($0.79 per diluted share), marking a 35.0% increase from Q4 2020. Adjusted diluted earnings rose by 12.0% to $0.84 per share. The corporation experienced a 5.1% growth in loan and lease balances, totaling $36.2 billion. Deposits also increased by $930 million (2.4%). Credit quality remained stable, with a provision for credit losses of $20.6 million, up 73.9% from the previous quarter. The upcoming merger with Huntington Bancshares received shareholder approval.

Positive
  • Net income of $123.3 million, up 35.0% from Q4 2020.
  • Adjusted diluted earnings per share increased by 12.0% to $0.84.
  • Loan and lease balances grew by $1.8 billion (5.1%) from Q4 2020.
  • Deposit balances rose by $930 million (2.4%) from Q4 2020.
  • Efficiency ratio improved by 668 basis points to 67.85%.
Negative
  • Provision for credit losses increased by 73.9% to $20.6 million.
  • Net charge-offs rose to $43.3 million, a net charge-off rate of 0.49%.

TCF Financial Corporation (NASDAQ: TCF):

First Quarter 2021 Highlights

  • Quarterly net income of $123.3 million, or $0.79 per diluted share, up 35.0% from the fourth quarter of 2020
  • Adjusted diluted earnings per common share of $0.84(1), up 12.0% from the fourth quarter of 2020. Adjusted diluted earnings per common share excludes $6.7 million, or $0.04 per share, after-tax impact of merger-related expenses and notable items
  • Loan and lease balances grew $1.8 billion, or 5.1%, from December 31, 2020. Loan and lease balances, excluding PPP loans(1), grew $1.4 billion, or 4.4%, from December 31, 2020
  • Deposit balances grew $930 million, or 2.4%, from December 31, 2020
  • Provision for credit losses of $20.6 million, up 73.9% from the fourth quarter of 2020, primarily reflects loan and lease growth
  • Allowance for credit losses, which includes the reserve for unfunded lending commitments, of 1.45% of total loans and leases, compared to 1.59% at December 31, 2020
  • Nonaccrual loans and leases of $677.9 million, relatively stable compared to December 31, 2020
  • Net charge-offs of $43.3 million, or 0.49% of average loans and leases (annualized)
  • Efficiency ratio of 67.85%, improved 668 basis points from the fourth quarter of 2020. Adjusted efficiency ratio of 62.69%(1), improved 211 basis points from the fourth quarter of 2020
  • Common equity Tier 1 capital ratio of 11.06%, compared to 11.45% at December 31, 2020
  • On January 29, 2021, TCF acquired BB&T Commercial Equipment Capital, Corp. ("CEC"), which included a portfolio of $1.0 billion of equipment finance loans and leases
  • On March 25, 2021, TCF shareholders approved the announced merger with Huntington Bancshares Incorporated ("Huntington"), which is expected to close in the second quarter of 2021, subject to regulatory approval

Merger-related Expenses and Notable items in the First Quarter of 2021 and Fourth Quarter of 2020(1)

  • Pre-tax merger-related expenses of $16.2 million, $12.7 million net of tax, or $0.08 per diluted common share for the first quarter of 2021, compared to pre-tax merger-related expenses of $31.5 million, $24.4 million net of tax, or $0.17 per diluted common share for the fourth quarter of 2020
  • Pre-tax benefit of $7.6 million, $6.0 million net of tax, related to notable items for the first quarter of 2021, compared to pre-tax expenses of $357 thousand, $276 thousand net of tax, related to notable items for the fourth quarter of 2020, see summary of notable items adjustments below
(1)

Denotes a non-GAAP financial measure. See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables and the following table detailing merger-related expenses and notable items.

Summary of Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

At or For the Quarter Ended

 

Change From

 

Mar. 31,

 

Dec. 31,

 

Sep. 30,

 

Jun. 30,

 

Mar. 31,

 

Dec. 31,

 

Mar. 31,

(Dollars in thousands, except per share data)

2021

 

2020

 

2020

 

2020

 

2020

 

2020

 

2020

Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to TCF

$

123,336

 

 

$

91,358

 

 

$

55,738

 

 

$

23,764

 

 

$

51,899

 

 

35.0

 

%

 

137.6

 

%

Net interest income

 

381,827

 

 

 

381,394

 

 

 

377,167

 

 

 

378,359

 

 

 

401,481

 

 

0.1

 

 

 

(4.9)

 

 

Basic earnings per common share

$

0.79

 

 

$

0.58

 

 

$

0.35

 

 

$

0.14

 

 

$

0.33

 

 

36.2

 

 

 

139.4

 

 

Diluted earnings per common share

 

0.79

 

 

 

0.58

 

 

 

0.35

 

 

 

0.14

 

 

 

0.32

 

 

36.2

 

 

 

146.9

 

 

Return on average assets ("ROAA")(1)

 

1.03

%

 

 

0.78

%

 

 

0.46

%

 

 

0.21

%

 

 

0.46

%

 

25

 

bps

 

57

 

bps

ROACE(1)

 

8.78

 

 

 

6.44

 

 

 

3.87

 

 

 

1.56

 

 

 

3.64

 

 

234

 

 

 

514

 

 

ROATCE (non-GAAP)(1)(2)

 

12.51

 

 

 

9.18

 

 

 

5.71

 

 

 

2.57

 

 

 

5.42

 

 

333

 

 

 

709

 

 

Net interest margin

 

3.45

 

 

 

3.53

 

 

 

3.31

 

 

 

3.33

 

 

 

3.73

 

 

(8)

 

 

 

(28)

 

 

Net interest margin (FTE)(1)(2)

 

3.47

 

 

 

3.55

 

 

 

3.34

 

 

 

3.35

 

 

 

3.76

 

 

(8)

 

 

 

(29)

 

 

Net charge-offs as a percentage of average loans and leases(1)

 

0.49

 

 

 

0.14

 

 

 

0.28

 

 

 

0.04

 

 

 

0.06

 

 

35

 

 

 

43

 

 

Nonperforming assets as a percentage of total loans and leases and other real estate owned

 

1.96

 

 

 

2.06

 

 

 

1.20

 

 

 

0.94

 

 

 

0.80

 

 

(10)

 

 

 

116

 

 

Efficiency ratio

 

67.85

 

 

 

74.53

 

 

 

75.29

 

 

 

78.26

 

 

 

69.57

 

 

(668)

 

 

 

(172)

 

 

Adjusted Financial Results (non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income attributable to TCF(1)(2)

$

130,074

 

 

$

116,054

 

 

$

98,696

 

 

$

84,862

 

 

$

89,855

 

 

12.1

 

%

 

44.8

 

%

Adjusted diluted earnings per common

share(2)

$

0.84

 

 

$

0.75

 

 

$

0.63

 

 

$

0.54

 

 

$

0.57

 

 

12.0

 

 

 

47.4

 

 

Adjusted ROAA(1)(2)

 

1.08

%

 

 

0.99

%

 

 

0.81

%

 

 

0.70

%

 

 

0.78

%

 

9

 

bps

 

30

 

bps

Adjusted ROACE(1)(2)

 

9.27

 

 

 

8.23

 

 

 

6.99

 

 

 

6.03

 

 

 

6.43

 

 

104

 

 

 

284

 

 

Adjusted ROATCE(1)(2)

 

13.18

 

 

 

11.62

 

 

 

9.96

 

 

 

8.70

 

 

 

9.24

 

 

156

 

 

 

394

 

 

Adjusted efficiency ratio(2)

 

62.69

 

 

 

64.80

 

 

 

61.17

 

 

 

59.80

 

 

 

58.24

 

 

(211)

 

 

 

445

 

 

(1)

Annualized.

(2)

Denotes a non-GAAP financial measure. See "Reconciliation of GAAP to Non-GAAP Financial Measures" tables.

The following table includes merger-related expenses and notable items used to arrive at adjusted net income in the Adjusted Financial Results (non-GAAP) (see "Reconciliation of Non-GAAP Financial Measures" tables).

 

For the Quarter Ended March 31, 2021

 

For the Quarter Ended December 31, 2020

(Dollars in thousands, except per share data)

Pre-tax
income (loss)

 

After-tax
benefit (loss)(1)

 

Per Share

 

Pre-tax
income (loss)

 

After-tax
benefit (loss)(1)

 

Per Share

Merger-related expenses

$

(16,216

)

 

$

(12,736

)

 

$

(0.08

)

 

$

(31,530

)

 

 

(24,420

)

 

$

(0.17

)

Notable items:

 

 

 

 

 

 

 

 

 

 

 

Loan servicing rights recovery (impairment)(2)

 

7,637

 

 

 

5,998

 

 

 

0.04

 

 

 

(357

)

 

 

(276

)

 

 

 

Total notable items

 

7,637

 

 

 

5,998

 

 

 

0.04

 

 

 

(357

)

 

 

(276

)

 

 

 

Total merger-related and notable items

$

(8,579

)

 

$

(6,738

)

 

$

(0.04

)

 

$

(31,887

)

 

$

(24,696

)

 

$

(0.17

)

(1)

Net of tax benefit at our normal tax rate and other tax benefits.

(2)

Included within other mortgage banking income.

TCF Financial Corporation ("TCF" or the "Corporation") (NASDAQ: TCF) today reported net income of $123.3 million, or diluted earnings per common share of $0.79, for the first quarter of 2021, compared with $91.4 million, or diluted earnings per common share of $0.58, for the fourth quarter of 2020. Adjusted net income was $130.1 million, or $0.84 per diluted common share for the first quarter of 2021, compared with $116.1 million, or $0.75 per diluted common share, for the fourth quarter of 2020 (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

“Our first quarter performance was highlighted by strong balance sheet growth as our teams remained focused on taking care of our customers, while we also continued preparing for the closing of our merger with Huntington,” said David T. Provost, chief executive officer. “We were pleased by the overwhelming shareholder approval of the pending merger with Huntington. With the transaction on track to close later in the second quarter of 2021, we look forward to delivering enhanced shareholder value through our greater Midwest market share, increased scale, broader product set, and enhanced technology capabilities and investments.”

“We continued to execute on our business strategy during the quarter as we generated strong loan and lease growth driven by our commercial portfolios,” said Thomas C. Shafer, vice chairman and chief executive officer of TCF National Bank. “This growth included the acquisition of an equipment finance company in January, further bolstering our team of talented and experienced professionals, which we believe will continue to provide incremental growth opportunities going forward. In addition, we saw strong deposit growth driven by noninterest-bearing deposit inflows during the quarter, which helped to further reduce our overall cost of deposits. As we continue to operate our business and serve our customers today, we will be well positioned to transition our business into Huntington when the merger closes.”

Net Interest Income and Net Interest Margin

Net interest income was $381.8 million for the first quarter of 2021, an increase of $0.4 million, or 0.1%, from the fourth quarter of 2020. Purchase accounting accretion and amortization related to the TCF/Chemical merger included in net interest income was $15.0 million for the first quarter of 2021, compared to $23.0 million for the fourth quarter of 2020. At March 31, 2021, the remaining fair value discount from purchase accounting on acquired loans totaled $91.1 million. Additionally, net interest income recorded for the first quarter of 2021 included $17.8 million of interest and fee income from PPP less funding costs, compared to $19.1 million for the fourth quarter of 2020. Adjusted net interest income (FTE), excluding purchase accounting accretion and amortization and the impact from PPP loans, a non-GAAP financial measure, was $351.8 million for the first quarter of 2021, compared to $342.5 million for the fourth quarter of 2020.

Net interest margin was 3.45% for the first quarter of 2021, compared to 3.53% in the fourth quarter of 2020, while net interest margin on a fully tax-equivalent basis (FTE), a non-GAAP financial measure, was 3.47%, down 8 basis points from the fourth quarter of 2020. Adjusted net interest margin (FTE), a non-GAAP financial measure, was 3.30% for the first quarter of 2021, consistent with the fourth quarter of 2020. Adjusted net interest margin (FTE) excluded a 14 basis point impact related to purchase accounting accretion and amortization related to the TCF/Chemical merger and a three basis point impact related to PPP loans. See the "Reconciliation of GAAP to Non-GAAP Financial Measures" tables for reconciliations of our noted non-GAAP measures. The decrease in net interest margin from the fourth quarter of 2020 was primarily driven by lower purchase accounting accretion and new loan and lease originations at lower yields than loan and lease runoff, partially offset by lower cost of funds. Deposit costs continued to reprice lower as they declined from 0.22% in the fourth quarter of 2020 to 0.14% in the first quarter of 2021.

Noninterest Income

Noninterest income was $132.1 million for the first quarter of 2021, an increase of $4.8 million, or 3.8%, from the fourth quarter of 2020. Noninterest income for the first quarter of 2021 included a notable item of a $7.6 million loan servicing rights recovery of impairment, included in mortgage banking income. Noninterest income for the fourth quarter of 2020 included a notable item of a $357 thousand loan servicing rights impairment, included in mortgage banking income. Adjusted noninterest income, a non-GAAP financial measure that excludes the identified notable items, for the first quarter of 2021 was $124.4 million, compared to $127.6 million in the fourth quarter of 2020. Noninterest income in the first quarter of 2021, compared to the fourth quarter of 2020, also included an increase of $5.7 million in net gains on sales of loans and leases, a decrease of $3.9 million in fees and service charges on deposit accounts and a decrease of $3.6 million in leasing revenue. Net gains on sales of loans and leases for the first quarter of 2021 included the sale of $17.8 million of consumer nonaccrual loans. The first quarter of 2021 also included a $1.9 million favorable interest rate swap mark-to-market adjustment resulting from changes in the interest rate environment, included in other noninterest income, compared to a favorable interest rate swap mark-to-market adjustment of $2.4 million in the fourth quarter of 2020. See the "Reconciliation of GAAP to Non-GAAP Financial Measures" tables for reconciliations of our noted non-GAAP measures.

Noninterest Expense

Noninterest expense was $348.7 million for the first quarter of 2021, a decrease of $30.4 million, or 8.0%, from the fourth quarter of 2020. The first quarter of 2021 included $16.2 million of merger-related expenses and $543 thousand of historic tax credit amortization recorded in other noninterest expense. The decrease in the first quarter of 2021 primarily reflected decreases of $17.5 million in compensation and benefits expense and $15.3 million in merger-related expenses, partially offset by increases of $2.1 million in occupancy and equipment expense and $1.8 million in lease financing equipment depreciation. The decrease in compensation and benefits expense was primarily due to executive severance expense recognized in the fourth quarter of 2020 and a decrease in commissions and incentives expense, partially offset by an increase in payroll taxes due to the beginning of a new tax year.

Income Tax Expense

Income tax expense for the first quarter of 2021 was $19.5 million, an effective tax rate of 13.5%, compared to income tax expense of $25.0 million, an effective tax rate of 21.3%, for the fourth quarter of 2020. Income tax expense for the first quarter of 2021 included an additional $11.0 million benefit attributable to tax net operating loss carryback benefits associated with the CARES Act. Excluding the benefit provided by the CARES Act, our effective income tax rate was 21.1% for the first quarter of 2021.

Credit Quality

Provision for credit losses Provision for credit losses was $20.6 million for the first quarter of 2021, an increase of $8.7 million, from the fourth quarter of 2020. The provision for credit losses in the first quarter of 2021 primarily reflects loan and lease growth and the impact of higher net charge-offs. First quarter 2021 net charge-offs were $43.3 million, compared to $11.6 million in the fourth quarter of 2020.

Net charge-off rate The annualized net charge-offs as a percentage of average loans and leases were 0.49% for the first quarter of 2021, compared to 0.24% for the average of the trailing four quarters. The increase in the first quarter of 2021 was primarily due to charge-offs taken on nonaccrual loans and leases within the commercial and industrial portfolio, as well as the commercial real estate portfolio primarily in the hotel sector.

Allowance for Credit Losses The ACL includes both the allowance for loan and lease losses, which is presented separately on the Consolidated Statements of Financial Condition, and the reserve for unfunded lending commitments, which is included in other liabilities on the Consolidated Statements of Financial Condition. The ACL was $526.6 million, or 1.45% of total loans and leases, at March 31, 2021, compared to $549.2 million, or 1.59%, at December 31, 2020. The ACL as a percentage of total loans and leases, excluding PPP loans, a non-GAAP financial measure, was 1.53% at March 31, 2021, compared to 1.67% at December 31, 2020 (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables). The PPP loans are individually guaranteed by the Small Business Administration and therefore the accounting under CECL does not require reserves to be recorded on such loans. The decrease in the ACL as a percentage of total loans and leases from December 31, 2020 was primarily due to continued improvement in both current and forecasted macro-economic conditions and benefit from nonaccrual loan sale recoveries.

Nonaccrual loans and leases Nonaccrual loans and leases were $677.9 million at March 31, 2021 and represented 1.87% of total loans and leases, compared to $677.3 million, or 1.97% of total loans and leases, at December 31, 2020.

Nonaccrual loans and leases in the hotel sector were $110.6 million, an increase of $32.0 million from December 31, 2020, while nonaccrual loans in the motor coach sector were $100.2 million, a decrease of $3.9 million from December 31, 2020, and nonaccrual loans and leases in the shuttle bus sector were $37.0 million, an increase of $569 thousand from December 31, 2020. Due to the prolonged recovery of revenues for borrowers in these sectors given the dependency on travel and related activity levels, we have taken a proactive approach by working with borrowers to extend deferrals continuing into 2021 where necessary, many of which have been moved to nonaccrual status.

Loan and Lease Deferrals Loans and leases on deferral status were $231.0 million at March 31, 2021, a decrease of $98.9 million, or 30.0%, from December 31, 2020. Loans and leases on deferral status included $148.8 million of balances that are included in nonaccrual balances at March 31, 2021, the majority of which have been on deferral for over 180 days.

Balance Sheet

Loans and leases

 

 

 

 

March 31,

 

December 31,

 

Change

(Dollars in thousands)

2021

 

2020

 

$

 

%

Total loans and leases

$

36,221,019

 

$

34,466,408

 

$

1,754,611

5.1

%

PPP loans

 

1,865,319

 

 

1,553,908

 

$

311,411

20.0

 

Adjusted total loans and leases, excluding PPP(1)

$

34,355,700

 

$

32,912,500

 

$

1,443,200

4.4

%

(1)

Denotes a non-GAAP financial measure.

Loans and leases were $36.2 billion at March 31, 2021, an increase of $1.8 billion, or 5.1%, compared to $34.5 billion at December 31, 2020. At March 31, 2021 we had $1.9 billion of PPP loans outstanding, compared to $1.6 billion at December 31, 2020, all included in our commercial and industrial loan portfolio. Loans and leases excluding PPP loans, a non-GAAP financial measure, increased $1.4 billion, or 4.4%, from December 31, 2020, primarily due to the CEC portfolio purchase and additional increases in the commercial loan and lease portfolio and residential mortgage loans.

Investment securities The investment securities portfolio was $8.6 billion at March 31, 2021, an increase of $144.5 million, or 1.7%, compared to $8.5 billion at December 31, 2020.

Deposits Deposits were $39.8 billion at March 31, 2021, an increase of $930.5 million, or 2.4%, compared to $38.9 billion at December 31, 2020. Increases in noninterest-bearing deposits of $1.4 billion, savings account balances of $478.5 million and checking deposit account balances of $3.3 million, were partially offset by decreases in certificates of deposits of $859.2 million and money market accounts of $50.8 million as of March 31, 2021 compared to December 31, 2020. On a year-over-year basis, noninterest-bearing deposits increased $4.2 billion, or 50.5%.

Capital The common equity Tier 1 capital ratio was 11.06% at March 31, 2021, compared to 11.45% at December 31, 2020. Our capital ratios reflect our election of the five-year CECL transition for regulatory capital purposes.

TCF's board of directors declared a quarterly cash dividend of $0.35625 per depositary share payable on June 1, 2021 to shareholders of record of the depositary shares, representing a 1/1,000th interest in a share of the 5.70% Series C Non-Cumulative Perpetual Preferred Stock, at the close of business on May 14, 2021.

TCF's board of directors has not declared a regular quarterly cash dividend on TCF's common shares given the expected closing date of the merger with Huntington in the second quarter of 2021. If necessary to give effect to the intent of the Agreement and Plan of Merger to provide that TCF shareholders will receive either a common dividend from TCF or a common dividend from Huntington, but not both for the quarter, TCF's board of directors will revisit the dividend topic.

TCF Financial Corporation (NASDAQ: TCF) is a Detroit, Michigan-based financial holding company with $49 billion in total assets at March 31, 2021 and a top 10 deposit market share in the Midwest. TCF’s primary banking subsidiary, TCF National Bank, is a premier Midwest bank offering consumer and commercial banking, trust and wealth management, and specialty leasing and lending products and services to consumers, small businesses and commercial clients. TCF has approximately 475 banking centers primarily located in Michigan, Illinois and Minnesota with additional locations in Colorado, Ohio, South Dakota and Wisconsin. TCF also conducts business across all 50 states and Canada through its specialty lending and leasing businesses. To learn more about TCF, visit ir.tcfbank.com.

Cautionary Statements for Purposes of the Safe Harbor Provisions of the Securities Litigation Reform Act

Any statements contained in this earnings release regarding the outlook for the Corporation's businesses and their respective markets, such as statements regarding projections of future performance, targets, guidance, statements of the Corporation's plans and objectives, forecasts of market trends and other matters are forward-looking statements based on the Corporation's assumptions and beliefs. Such statements may be identified by such words or phrases as "will likely result," "are expected to," "will continue," "outlook," "will benefit," "is anticipated," "estimate," "project," "management believes" or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such statements and no assurance can be given that the results in any forward-looking statement will be achieved. For these statements, TCF claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any forward-looking statement speaks only as of the date on which it is made and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.

This release also contains forward-looking statements regarding TCF's outlook or expectations with respect to the planned merger with Huntington. Examples of forward-looking statements include, but are not limited to, statements regarding the outlook and expectations of TCF and Huntington with respect to the planned merger, the strategic benefits and financial benefits of the merger, including the expected impact of the merger on the combined corporation's future financial performance (including anticipated accretion to earnings per share, the tangible book value earn-back period and other operating and return metrics), and the timing of the closing of the merger. Such risks, uncertainties and assumptions, include, among others:

  • the failure to obtain necessary regulatory approvals when expected or at all (and the risk that such approvals may result in the imposition of conditions that could adversely affect TCF or Huntington or the expected benefits of the merger);
  • the failure of either TCF or Huntington to satisfy any of the other closing conditions to the merger on a timely basis or at all;
  • the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement;
  • the possibility that the anticipated benefits of the merger, including anticipated cost savings and strategic gains, are not realized when expected or at all, including as a result of the impact of, or problems arising from, economic weakness, competitive factors in the areas where TCF and Huntington do business, or as a result of other unexpected factors or events;
  • the impact of purchase accounting with respect to the merger, or any change in the assumptions used regarding the assets purchased and liabilities assumed to determine their fair value;
  • diversion of management's attention from ongoing business operations and opportunities;
  • potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the merger;
  • the ability of either TCF or Huntington to repurchase their stock and the prices at which such repurchases may be made;
  • the outcome of any legal proceedings that may be instituted against TCF or Huntington;
  • the integration of the businesses and operations of TCF and Huntington, which may take longer than anticipated or be more costly than anticipated or have unanticipated adverse results relating to our businesses;
  • business disruptions following the merger; and
  • other factors that may affect future results of TCF and Huntington including changes in asset quality and credit risk; the inability to grow revenue and earnings; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.

Additional factors that could cause results to differ materially from those described above can be found in the risk factors described in Part I, Item 1A of TCF’s Annual Report on Form 10-K under the heading "Risk Factors" and Huntington’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2020 or otherwise disclosed in documents filed or furnished by us with or to the SEC after the filing of the Annual Report on Form 10-K. TCF disclaims any obligation to update or revise any forward-looking statements contained in this communication, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law. Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive.

Use of Non-GAAP Financial Measures

Management uses the adjusted net income, adjusted diluted earnings per common share, adjusted ROAA, adjusted ROACE, ROATCE, adjusted ROATCE, adjusted efficiency ratio, adjusted net interest income, net interest margin (FTE), adjusted net interest margin (FTE), adjusted noninterest income, adjusted noninterest expense, tangible book value per common share, tangible common equity to tangible assets and the allowance for credit losses as percentage of total loans and leases, excluding PPP loans, internally to measure performance and believes that these financial measures not recognized under generally accepted accounting principles in the United States ("GAAP") (i.e. non-GAAP) provide meaningful information to investors that will permit them to assess the Corporation's capital and ability to withstand unexpected market or economic conditions and to assess the performance of the Corporation in relation to other banking institutions on the same basis as that applied by management, analysts and banking regulators. TCF adjusts certain results to exclude merger-related expenses and notable items, including the related tax impact, in addition to presenting net interest income and net interest margin (FTE) excluding purchase accounting accretion and amortization and the impact of PPP loans. Management believes these measures are useful to investors in understanding TCF's business and operating results.

These non-GAAP financial measures are not defined by GAAP and other entities may calculate them differently than TCF does. Non-GAAP financial measures have inherent limitations and are not required to be uniformly applied. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a corporation, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes selected items does not represent the amount that effectively accrues directly to shareholders. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measure may be found in the reconciliation tables included in this press release.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Condition (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Change From

(Dollars in thousands)

Mar. 31,

 

Dec. 31,

 

Sep. 30,

 

Jun. 30,

 

Mar. 31,

 

Dec. 31, 2020

 

Mar. 31, 2020

2021

 

2020

 

2020

 

2020

 

2020

 

$

 

%

 

$

 

%

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

585,663

 

 

$

531,918

 

 

$

538,481

 

 

$

535,507

 

 

$

713,413

 

 

$

53,745

 

 

10.1

%

 

$

(127,750

)

 

(17.9

)%

Interest-bearing deposits with other banks

 

463,641

 

 

 

728,677

 

 

 

1,232,773

 

 

 

2,545,170

 

 

 

565,458

 

 

 

(265,036

)

 

(36.4

)

 

 

(101,817

)

 

(18.0

)

Total cash and cash equivalents

 

1,049,304

 

 

 

1,260,595

 

 

 

1,771,254

 

 

 

3,080,677

 

 

 

1,278,871

 

 

 

(211,291

)

 

(16.8

)

 

 

(229,567

)

 

(18.0

)

Federal Home Loan Bank and Federal Reserve Bank stocks, at cost

 

358,414

 

 

 

320,436

 

 

 

300,444

 

 

 

386,483

 

 

 

484,461

 

 

 

37,978

 

 

11.9

 

 

 

(126,047

)

 

(26.0

)

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale, at fair value

 

8,403,788

 

 

 

8,284,723

 

 

 

7,446,163

 

 

 

7,219,373

 

 

 

7,025,224

 

 

 

119,065

 

 

1.4

 

 

 

1,378,564

 

 

19.6

 

Held-to-maturity, at amortized cost

 

209,778

 

 

 

184,359

 

 

 

170,309

 

 

 

130,101

 

 

 

135,619

 

 

 

25,419

 

 

13.8

 

 

 

74,159

 

 

54.7

 

Total investment securities

 

8,613,566

 

 

 

8,469,082

 

 

 

7,616,472

 

 

 

7,349,474

 

 

 

7,160,843

 

 

 

144,484

 

 

1.7

 

 

 

1,452,723

 

 

20.3

 

Loans and leases held-for-sale

 

107,649

 

 

 

222,028

 

 

 

460,427

 

 

 

532,799

 

 

 

287,177

 

 

 

(114,379

)

 

(51.5

)

 

 

(179,528

)

 

(62.5

)

Loans and leases

 

36,221,019

 

 

 

34,466,408

 

 

 

34,343,691

 

 

 

35,535,824

 

 

 

35,921,614

 

 

 

1,754,611

 

 

5.1

 

 

 

299,405

 

 

0.8

 

Allowance for loan and lease losses

 

(504,645

)

 

 

(525,868

)

 

 

(515,229

)

 

 

(461,114

)

 

 

(406,383

)

 

 

21,223

 

 

4.0

 

 

 

(98,262

)

 

(24.2

)

Loans and leases, net

 

35,716,374

 

 

 

33,940,540

 

 

 

33,828,462

 

 

 

35,074,710

 

 

 

35,515,231

 

 

 

1,775,834

 

 

5.2

 

 

 

201,143

 

 

0.6

 

Premises and equipment, net

 

455,032

 

 

 

470,131

 

 

 

469,699

 

 

 

472,240

 

 

 

516,454

 

 

 

(15,099

)

 

(3.2

)

 

 

(61,422

)

 

(11.9

)

Goodwill

 

1,379,890

 

 

 

1,313,046

 

 

 

1,313,046

 

 

 

1,313,046

 

 

 

1,313,046

 

 

 

66,844

 

 

5.1

 

 

 

66,844

 

 

5.1

 

Other intangible assets, net

 

149,438

 

 

 

146,377

 

 

 

151,875

 

 

 

157,373

 

 

 

162,887

 

 

 

3,061

 

 

2.1

 

 

 

(13,449

)

 

(8.3

)

Loan servicing rights

 

44,151

 

 

 

38,303

 

 

 

38,253

 

 

 

38,816

 

 

 

47,283

 

 

 

5,848

 

 

15.3

 

 

 

(3,132

)

 

(6.6

)

Other assets

 

1,585,733

 

 

 

1,621,949

 

 

 

1,615,857

 

 

 

1,656,842

 

 

 

1,828,130

 

 

 

(36,216

)

 

(2.2

)

 

 

(242,397

)

 

(13.3

)

Total assets

$

49,459,551

 

 

$

47,802,487

 

 

$

47,565,789

 

 

$

50,062,460

 

 

$

48,594,383

 

 

$

1,657,064

 

 

3.5

%

 

$

865,168

 

 

1.8

%

LIABILITIES AND EQUITY:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

$

12,394,753

 

 

$

11,036,086

 

 

$

10,691,041

 

 

$

10,480,245

 

 

$

8,237,916

 

 

$

1,358,667

 

 

12.3

%

 

$

4,156,837

 

 

50.5

%

Interest-bearing

 

27,392,061

 

 

 

27,820,233

 

 

 

28,481,056

 

 

 

28,730,627

 

 

 

27,561,387

 

 

 

(428,172

)

 

(1.5

)

 

 

(169,326

)

 

(0.6

)

Total deposits

 

39,786,814

 

 

 

38,856,319

 

 

 

39,172,097

 

 

 

39,210,872

 

 

 

35,799,303

 

 

 

930,495

 

 

2.4

 

 

 

3,987,511

 

 

11.1

 

Short-term borrowings

 

1,426,083

 

 

 

617,363

 

 

 

655,461

 

 

 

2,772,998

 

 

 

3,482,535

 

 

 

808,720

 

 

131.0

 

 

 

(2,056,452

)

 

(59.1

)

Long-term borrowings

 

1,518,816

 

 

 

1,374,732

 

 

 

871,845

 

 

 

936,908

 

 

 

2,600,594

 

 

 

144,084

 

 

10.5

 

 

 

(1,081,778

)

 

(41.6

)

Other liabilities

 

1,136,067

 

 

 

1,264,776

 

 

 

1,207,966

 

 

 

1,483,127

 

 

 

1,056,118

 

 

 

(128,709

)

 

(10.2

)

 

 

79,949

 

 

7.6

 

Total liabilities

 

43,867,780

 

 

 

42,113,190

 

 

 

41,907,369

 

 

 

44,403,905

 

 

 

42,938,550

 

 

 

1,754,590

 

 

4.2

 

 

 

929,230

 

 

2.2

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

169,302

 

 

 

169,302

 

 

 

169,302

 

 

 

169,302

 

 

 

169,302

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

152,696

 

 

 

152,566

 

 

 

152,380

 

 

 

152,233

 

 

 

152,186

 

 

 

130

 

 

0.1

 

 

 

510

 

 

0.3

 

Additional paid-in capital

 

3,466,655

 

 

 

3,457,802

 

 

 

3,450,669

 

 

 

3,441,925

 

 

 

3,433,234

 

 

 

8,853

 

 

0.3

 

 

 

33,421

 

 

1.0

 

Retained earnings

 

1,802,340

 

 

 

1,735,201

 

 

 

1,700,044

 

 

 

1,700,480

 

 

 

1,732,932

 

 

 

67,139

 

 

3.9

 

 

 

69,408

 

 

4.0

 

Accumulated other comprehensive income

 

2,654

 

 

 

182,673

 

 

 

191,771

 

 

 

198,408

 

 

 

166,170

 

 

 

(180,019

)

 

(98.5

)

 

 

(163,516

)

 

(98.4

)

Other

 

(29,813

)

 

 

(26,731

)

 

 

(27,122

)

 

 

(27,093

)

 

 

(28,140

)

 

 

(3,082

)

 

(11.5

)

 

 

(1,673

)

 

(5.9

)

Total TCF Financial Corporation shareholders' equity

 

5,563,834

 

 

 

5,670,813

 

 

 

5,637,044

 

 

 

5,635,255

 

 

 

5,625,684

 

 

 

(106,979

)

 

(1.9

)

 

 

(61,850

)

 

(1.1

)

Non-controlling interest

 

27,937

 

 

 

18,484

 

 

 

21,376

 

 

 

23,300

 

 

 

30,149

 

 

 

9,453

 

 

51.1

 

 

 

(2,212

)

 

(7.3

)

Total equity

 

5,591,771

 

 

 

5,689,297

 

 

 

5,658,420

 

 

 

5,658,555

 

 

 

5,655,833

 

 

 

(97,526

)

 

(1.7

)

 

 

(64,062

)

 

(1.1

)

Total liabilities and equity

$

49,459,551

 

 

$

47,802,487

 

 

$

47,565,789

 

 

$

50,062,460

 

 

$

48,594,383

 

 

$

1,657,064

 

 

3.5

%

 

$

865,168

 

 

1.8

%

N.M. Not Meaningful

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Change From

(Dollars in thousands)

Mar. 31,

 

Dec. 31,

 

Sep. 30,

 

Jun. 30,

 

Mar. 31,

 

Dec. 31, 2020

 

Mar. 31, 2020

2021

 

2020

 

2020

 

2020

 

2020

 

$

 

%

 

$

 

%

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans and leases

$

360,584

 

$

366,152

 

$

373,112

 

 

$

392,826

 

$

443,096

 

$

(5,568

)

 

(1.5

)%

 

$

(82,512

)

 

(18.6

)%

Interest on investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

38,716

 

 

35,389

 

 

35,648

 

 

 

32,505

 

 

40,920

 

 

3,327

 

 

9.4

 

 

 

(2,204

)

 

(5.4

)

Tax-exempt

 

3,700

 

 

3,772

 

 

3,892

 

 

 

4,155

 

 

4,349

 

 

(72

)

 

(1.9

)

 

 

(649

)

 

(14.9

)

Interest on loans held-for-sale

 

975

 

 

2,682

 

 

3,829

 

 

 

3,322

 

 

1,561

 

 

(1,707

)

 

(63.6

)

 

 

(586

)

 

(37.5

)

Interest on other earning assets

 

1,657

 

 

3,457

 

 

3,967

 

 

 

5,562

 

 

5,466

 

 

(1,800

)

 

(52.1

)

 

 

(3,809

)

 

(69.7

)

Total interest income

 

405,632

 

 

411,452

 

 

420,448

 

 

 

438,370

 

 

495,392

 

 

(5,820

)

 

(1.4

)

 

 

(89,760

)

 

(18.1

)

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

13,786

 

 

20,930

 

 

31,852

 

 

 

46,785

 

 

67,419

 

 

(7,144

)

 

(34.1

)

 

 

(53,633

)

 

(79.6

)

Interest on borrowings

 

10,019

 

 

9,128

 

 

11,429

 

 

 

13,226

 

 

26,492

 

 

891

 

 

9.8

 

 

 

(16,473

)

 

(62.2

)

Total interest expense

 

23,805

 

 

30,058

 

 

43,281

 

 

 

60,011

 

 

93,911

 

 

(6,253

)

 

(20.8

)

 

 

(70,106

)

 

(74.7

)

Net interest income

 

381,827

 

 

381,394

 

 

377,167

 

 

 

378,359

 

 

401,481

 

 

433

 

 

0.1

 

 

 

(19,654

)

 

(4.9

)

Provision for credit losses

 

20,556

 

 

11,818

 

 

69,664

 

 

 

78,726

 

 

96,943

 

 

8,738

 

 

73.9

 

 

 

(76,387

)

 

(78.8

)

Net interest income after provision for credit losses

 

361,271

 

 

369,576

 

 

307,503

 

 

 

299,633

 

 

304,538

 

 

(8,305

)

 

(2.2

)

 

 

56,733

 

 

18.6

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing revenue

 

36,453

 

 

40,081

 

 

31,905

 

 

 

37,172

 

 

33,565

 

 

(3,628

)

 

(9.1

)

 

 

2,888

 

 

8.6

 

Fees and service charges on deposit accounts

 

25,895

 

 

29,782

 

 

25,470

 

 

 

22,832

 

 

34,597

 

 

(3,887

)

 

(13.1

)

 

 

(8,702

)

 

(25.2

)

Card and ATM revenue

 

24,661

 

 

22,995

 

 

23,383

 

 

 

20,636

 

 

21,685

 

 

1,666

 

 

7.2

 

 

 

2,976

 

 

13.7

 

Mortgage banking income(1)

 

20,986

 

 

11,647

 

 

19,880

 

 

 

16,300

 

 

5,665

 

 

9,339

 

 

80.2

 

 

 

15,321

 

 

N.M.

 

Wealth management revenue

 

6,944

 

 

6,838

 

 

6,506

 

 

 

6,206

 

 

6,151

 

 

106

 

 

1.6

 

 

 

793

 

 

12.9

 

Net gains on sales of loans and leases(2)

 

6,058

 

 

330

 

 

1,760

 

 

 

4,717

 

 

7,573

 

 

5,728

 

 

N.M.

 

 

 

(1,515

)

 

(20.0

)

Net gains on investment securities

 

8

 

 

6

 

 

2,324

 

 

 

8

 

 

 

 

2

 

 

33.3

 

 

 

8

 

 

N.M.

 

Other

 

11,055

 

 

15,557

 

 

7,582

 

 

 

25,183

 

 

27,727

 

 

(4,502

)

 

(28.9

)

 

 

(16,672

)

 

(60.1

)

Total noninterest income

 

132,060

 

 

127,236

 

 

118,810

 

 

 

133,054

 

 

136,963

 

 

4,824

 

 

3.8

 

 

 

(4,903

)

 

(3.6

)

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

173,602

 

 

191,052

 

 

168,323

 

 

 

171,799

 

 

171,528

 

 

(17,450

)

 

(9.1

)

 

 

2,074

 

 

1.2

 

Occupancy and equipment

 

52,166

 

 

50,062

 

 

48,233

 

 

 

54,107

 

 

57,288

 

 

2,104

 

 

4.2

 

 

 

(5,122

)

 

(8.9

)

Lease financing equipment depreciation

 

20,426

 

 

18,610

 

 

17,932

 

 

 

18,212

 

 

18,450

 

 

1,816

 

 

9.8

 

 

 

1,976

 

{ "@context": "https://schema.org", "@type": "FAQPage", "name": "TCF Reports First Quarter 2021 Results FAQs", "mainEntity": [ { "@type": "Question", "name": "What were TCF's financial results for Q1 2021?", "acceptedAnswer": { "@type": "Answer", "text": "In Q1 2021, TCF reported a net income of $123.3 million, or $0.79 per diluted share, showing a 35.0% increase from the previous quarter." } }, { "@type": "Question", "name": "How much did TCF's loan and lease balances grow in Q1 2021?", "acceptedAnswer": { "@type": "Answer", "text": "TCF's loan and lease balances increased by $1.8 billion, or 5.1%, from December 31, 2020." } }, { "@type": "Question", "name": "What is the expected timeline for TCF's merger with Huntington?", "acceptedAnswer": { "@type": "Answer", "text": "The merger with Huntington Bancshares is expected to close in the second quarter of 2021, pending regulatory approval." } }, { "@type": "Question", "name": "How did TCF's deposit balances change in Q1 2021?", "acceptedAnswer": { "@type": "Answer", "text": "Deposits increased by $930 million, or 2.4%, from December 31, 2020." } }, { "@type": "Question", "name": "What was the change in TCF's provision for credit losses in Q1 2021?", "acceptedAnswer": { "@type": "Answer", "text": "The provision for credit losses increased by 73.9% to $20.6 million from the previous quarter." } } ] }

FAQ

What were TCF's financial results for Q1 2021?

In Q1 2021, TCF reported a net income of $123.3 million, or $0.79 per diluted share, showing a 35.0% increase from the previous quarter.

How much did TCF's loan and lease balances grow in Q1 2021?

TCF's loan and lease balances increased by $1.8 billion, or 5.1%, from December 31, 2020.

What is the expected timeline for TCF's merger with Huntington?

The merger with Huntington Bancshares is expected to close in the second quarter of 2021, pending regulatory approval.

How did TCF's deposit balances change in Q1 2021?

Deposits increased by $930 million, or 2.4%, from December 31, 2020.

What was the change in TCF's provision for credit losses in Q1 2021?

The provision for credit losses increased by 73.9% to $20.6 million from the previous quarter.

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