false--12-31Q3202000000196120.025P24MP12Mus-gaap:AccountingStandardsUpdate201613Member42.040.350.940.351.05112200000002200000001529655711523797220.050900000017300000007340000000000912020004601720000.0570.0570.0570.0570.010.01200000020000007000700078071614539080873376 0000019612 2020-01-01 2020-09-30 0000019612 2020-10-30 0000019612 us-gaap:CommonStockMember 2020-01-01 2020-09-30 0000019612 us-gaap:SeriesCPreferredStockMember 2020-01-01 2020-09-30 0000019612 2020-09-30 0000019612 2019-12-31 0000019612 2019-01-01 2019-09-30 0000019612 2020-07-01 2020-09-30 0000019612 us-gaap:FinancialServiceOtherMember 2020-07-01 2020-09-30 0000019612 2019-07-01 2019-09-30 0000019612 us-gaap:FiduciaryAndTrustMember 2019-07-01 2019-09-30 0000019612 tcf:LeasingRevenueMember 2020-01-01 2020-09-30 0000019612 us-gaap:FiduciaryAndTrustMember 2019-01-01 2019-09-30 0000019612 tcf:LeasingRevenueMember 2020-07-01 2020-09-30 0000019612 us-gaap:CreditAndDebitCardMember 2020-07-01 2020-09-30 0000019612 us-gaap:FinancialServiceOtherMember 2019-07-01 2019-09-30 0000019612 us-gaap:DepositAccountMember 2019-01-01 2019-09-30 0000019612 tcf:LeasingRevenueMember 2019-01-01 2019-09-30 0000019612 us-gaap:CreditAndDebitCardMember 2020-01-01 2020-09-30 0000019612 tcf:LeasingRevenueMember 2019-07-01 2019-09-30 0000019612 us-gaap:CreditAndDebitCardMember 2019-01-01 2019-09-30 0000019612 us-gaap:DepositAccountMember 2020-01-01 2020-09-30 0000019612 us-gaap:DepositAccountMember 2019-07-01 2019-09-30 0000019612 us-gaap:FinancialServiceOtherMember 2020-01-01 2020-09-30 0000019612 us-gaap:FiduciaryAndTrustMember 2020-07-01 2020-09-30 0000019612 us-gaap:FinancialServiceOtherMember 2019-01-01 2019-09-30 0000019612 us-gaap:CreditAndDebitCardMember 2019-07-01 2019-09-30 0000019612 us-gaap:DepositAccountMember 2020-07-01 2020-09-30 0000019612 us-gaap:FiduciaryAndTrustMember 2020-01-01 2020-09-30 0000019612 us-gaap:NoncontrollingInterestMember 2019-12-31 0000019612 us-gaap:RetainedEarningsMember 2020-01-01 2020-09-30 0000019612 us-gaap:NoncontrollingInterestMember 2018-12-31 0000019612 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000019612 us-gaap:ParentMember 2020-01-01 2020-09-30 0000019612 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-09-30 0000019612 us-gaap:ParentMember 2019-01-01 2019-09-30 0000019612 us-gaap:SeriesCPreferredStockMember us-gaap:ParentMember 2020-01-01 2020-09-30 0000019612 us-gaap:PreferredStockMember 2020-09-30 0000019612 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0000019612 us-gaap:CommonStockMember 2018-12-31 0000019612 us-gaap:CommonStockMember 2020-09-30 0000019612 us-gaap:ParentMember 2019-09-30 0000019612 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-09-30 0000019612 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember us-gaap:NoncontrollingInterestMember 2019-12-31 0000019612 us-gaap:RetainedEarningsMember 2020-09-30 0000019612 us-gaap:SeriesCPreferredStockMember us-gaap:ParentMember 2019-01-01 2019-09-30 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember us-gaap:CommonStockMember 2019-12-31 0000019612 us-gaap:CommonStockMember 2019-09-30 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember us-gaap:NoncontrollingInterestMember 2019-12-31 0000019612 us-gaap:CommonStockMember 2019-12-31 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember us-gaap:PreferredStockMember 2019-12-31 0000019612 us-gaap:NoncontrollingInterestMember 2020-09-30 0000019612 us-gaap:RetainedEarningsMember 2019-01-01 2019-09-30 0000019612 tcf:TreasuryStockandOtherMember 2019-01-01 2019-09-30 0000019612 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-09-30 0000019612 us-gaap:NoncontrollingInterestMember 2020-01-01 2020-09-30 0000019612 us-gaap:CommonStockMember 2019-01-01 2019-09-30 0000019612 us-gaap:RetainedEarningsMember 2019-12-31 0000019612 us-gaap:PreferredStockMember 2019-09-30 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2019-12-31 0000019612 us-gaap:PreferredStockMember 2019-12-31 0000019612 2019-09-30 0000019612 us-gaap:RetainedEarningsMember 2018-12-31 0000019612 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0000019612 tcf:TreasuryStockandOtherMember 2019-12-31 0000019612 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000019612 tcf:TreasuryStockandOtherMember 2020-01-01 2020-09-30 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember us-gaap:ParentMember 2019-12-31 0000019612 2018-12-31 0000019612 us-gaap:NoncontrollingInterestMember 2019-09-30 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember tcf:TreasuryStockandOtherMember 2019-12-31 0000019612 us-gaap:PreferredStockMember 2018-12-31 0000019612 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000019612 us-gaap:CommonStockMember 2020-01-01 2020-09-30 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2019-12-31 0000019612 us-gaap:ParentMember 2018-12-31 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0000019612 tcf:TreasuryStockandOtherMember 2019-09-30 0000019612 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-09-30 0000019612 us-gaap:SeriesCPreferredStockMember 2019-01-01 2019-09-30 0000019612 us-gaap:ParentMember 2020-09-30 0000019612 us-gaap:ParentMember 2019-12-31 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember us-gaap:RetainedEarningsMember 2019-12-31 0000019612 tcf:TreasuryStockandOtherMember 2018-12-31 0000019612 us-gaap:RetainedEarningsMember 2019-09-30 0000019612 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-09-30 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember us-gaap:RetainedEarningsMember 2019-12-31 0000019612 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0000019612 tcf:TreasuryStockandOtherMember 2020-09-30 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember us-gaap:ParentMember 2019-12-31 0000019612 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0000019612 us-gaap:CommonStockMember 2019-06-30 0000019612 us-gaap:NoncontrollingInterestMember 2019-06-30 0000019612 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0000019612 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0000019612 tcf:TreasuryStockandOtherMember 2019-07-01 2019-09-30 0000019612 us-gaap:ParentMember 2019-07-01 2019-09-30 0000019612 2019-06-30 0000019612 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0000019612 us-gaap:PreferredStockMember 2019-06-30 0000019612 us-gaap:RetainedEarningsMember 2019-06-30 0000019612 us-gaap:SeriesCPreferredStockMember us-gaap:ParentMember 2019-07-01 2019-09-30 0000019612 us-gaap:SeriesCPreferredStockMember 2019-07-01 2019-09-30 0000019612 us-gaap:NoncontrollingInterestMember 2019-07-01 2019-09-30 0000019612 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000019612 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0000019612 us-gaap:ParentMember 2019-06-30 0000019612 tcf:TreasuryStockandOtherMember 2019-06-30 0000019612 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000019612 us-gaap:SeriesCPreferredStockMember us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0000019612 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0000019612 2020-06-30 0000019612 us-gaap:PreferredStockMember 2020-06-30 0000019612 tcf:TreasuryStockandOtherMember 2020-06-30 0000019612 us-gaap:NoncontrollingInterestMember 2020-06-30 0000019612 us-gaap:NoncontrollingInterestMember 2020-07-01 2020-09-30 0000019612 us-gaap:ParentMember 2020-07-01 2020-09-30 0000019612 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0000019612 us-gaap:CommonStockMember 2020-06-30 0000019612 us-gaap:SeriesCPreferredStockMember 2020-07-01 2020-09-30 0000019612 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0000019612 us-gaap:SeriesCPreferredStockMember us-gaap:ParentMember 2020-07-01 2020-09-30 0000019612 us-gaap:RetainedEarningsMember 2020-06-30 0000019612 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0000019612 tcf:TreasuryStockandOtherMember 2020-07-01 2020-09-30 0000019612 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0000019612 us-gaap:ParentMember 2020-06-30 0000019612 us-gaap:SeriesCPreferredStockMember us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0000019612 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0000019612 2019-08-01 0000019612 2019-08-01 2019-08-01 0000019612 tcf:LegacyTCFMember tcf:ChemicalShareholdersMember 2019-08-01 0000019612 tcf:LegacyTCFMember 2019-08-01 2019-08-01 0000019612 tcf:LegacyTCFMember tcf:LegacyTCFShareholdersMember 2019-08-01 0000019612 tcf:LegacyTCFMember tcf:LegacyTCFShareholdersMember 2019-08-01 2019-08-01 0000019612 tcf:LegacyTCFMember 2019-08-01 0000019612 tcf:LegacyTCFMember tcf:ChemicalShareholdersMember 2019-08-01 2019-08-01 0000019612 us-gaap:CoreDepositsMember 2020-01-01 2020-09-30 0000019612 tcf:CommercialBankingMember 2019-08-01 0000019612 us-gaap:CustomerRelationshipsMember 2019-08-01 0000019612 tcf:LegacyTCFMember us-gaap:SeriesCPreferredStockMember 2019-08-01 0000019612 tcf:ChemicalFinancialCorporationMember 2019-08-01 0000019612 us-gaap:CommonStockMember 2019-08-01 2019-08-01 0000019612 tcf:ConsumerBankingMember 2019-08-01 0000019612 tcf:ChemicalFinancialCorporationMember us-gaap:PreferredStockMember 2019-08-01 0000019612 tcf:TCFFinancialCorporationMember 2019-08-01 0000019612 tcf:LegacyTCFMember us-gaap:SeriesCPreferredStockMember 2019-08-01 2019-08-01 0000019612 us-gaap:CoreDepositsMember 2019-08-01 0000019612 tcf:ChemicalFinancialCorporationMember us-gaap:PreferredStockMember 2019-08-01 2019-08-01 0000019612 tcf:ChemicalFinancialCorporationMember tcf:DepositarySharesMember 2019-08-01 0000019612 srt:ProFormaMember 2019-01-01 2019-12-31 0000019612 us-gaap:CustomerRelationshipsMember 2020-01-01 2020-09-30 0000019612 tcf:ChemicalFinancialCorporationMember tcf:LegacyTCFShareholdersMember 2019-08-01 0000019612 tcf:ChemicalFinancialCorporationMember 2019-08-01 2019-08-01 0000019612 tcf:ChemicalFinancialCorporationMember tcf:ChemicalShareholdersMember 2019-08-01 0000019612 tcf:ChemicalFinancialCorporationMember tcf:ChemicalShareholdersMember 2019-08-01 2019-08-01 0000019612 tcf:ChemicalFinancialCorporationMember tcf:LegacyTCFShareholdersMember 2019-08-01 2019-08-01 0000019612 tcf:ChemicalFinancialCorporationStockOptionHoldersMember 2019-08-01 2019-08-01 0000019612 tcf:LegacyTCFShareholdersMember 2019-07-31 0000019612 tcf:LegacyTCFShareholdersMember 2019-07-31 2019-07-31 0000019612 tcf:ChemicalFinancialCorporationMember 2019-08-01 2019-08-01 0000019612 tcf:ChemicalFinancialCorporationMember us-gaap:CommonStockMember 2019-08-01 0000019612 2020-01-01 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2020-01-01 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember us-gaap:UnfundedLoanCommitmentMember 2020-01-01 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2020-01-01 2020-01-01 0000019612 srt:ParentCompanyMember 2020-01-01 0000019612 2019-01-01 2019-12-31 0000019612 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2020-09-30 0000019612 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2019-12-31 0000019612 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-12-31 0000019612 tcf:AgencyCollateralizedMortgageObligationsMember 2020-09-30 0000019612 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2020-09-30 0000019612 us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-12-31 0000019612 tcf:CorporateDebtAndTrustPreferredSecuritiesMember 2019-12-31 0000019612 tcf:CorporateDebtAndTrustPreferredSecuritiesMember 2020-09-30 0000019612 us-gaap:MortgageBackedSecuritiesMember 2020-09-30 0000019612 tcf:AgencyCollateralizedMortgageObligationsMember 2019-12-31 0000019612 tcf:NonAgencyCollateralizedMortgageObligationsMember 2020-09-30 0000019612 tcf:NonAgencyCollateralizedMortgageObligationsMember 2019-12-31 0000019612 us-gaap:MortgageBackedSecuritiesIssuedByPrivateEnterprisesMember 2020-09-30 0000019612 us-gaap:MortgageBackedSecuritiesMember 2019-12-31 0000019612 us-gaap:MortgageBackedSecuritiesIssuedByPrivateEnterprisesMember 2019-12-31 0000019612 us-gaap:USStatesAndPoliticalSubdivisionsMember 2020-09-30 0000019612 us-gaap:CollateralPledgedMember us-gaap:MortgageBackedSecuritiesMember 2019-12-31 0000019612 us-gaap:CollateralPledgedMember us-gaap:MortgageBackedSecuritiesMember 2020-09-30 0000019612 us-gaap:MortgagesMember 2020-03-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember 2020-09-30 0000019612 us-gaap:PerformingFinancingReceivableMember 2020-09-30 0000019612 us-gaap:NonperformingFinancingReceivableMember us-gaap:ConsumerPortfolioSegmentMember 2020-09-30 0000019612 us-gaap:PerformingFinancingReceivableMember us-gaap:ConsumerPortfolioSegmentMember 2020-09-30 0000019612 us-gaap:NonperformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:NonperformingFinancingReceivableMember 2020-09-30 0000019612 us-gaap:PerformingFinancingReceivableMember us-gaap:ConsumerPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:PerformingFinancingReceivableMember 2019-12-31 0000019612 us-gaap:NonperformingFinancingReceivableMember 2019-12-31 0000019612 us-gaap:PerformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:NonperformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2020-09-30 0000019612 us-gaap:PerformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2020-09-30 0000019612 us-gaap:NonperformingFinancingReceivableMember us-gaap:ConsumerPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2020-07-01 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2020-01-01 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2019-07-01 2019-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-07-01 2019-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2020-07-01 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-01-01 2019-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2019-01-01 2019-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2020-01-01 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2020-07-01 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2019-07-01 2019-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2019-07-01 2019-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2019-01-01 2019-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2020-01-01 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember 2019-07-01 2019-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember 2020-01-01 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember 2020-07-01 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2019-01-01 2019-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2020-01-01 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember 2019-01-01 2019-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2020-07-01 2020-09-30 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2020-09-30 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember 2020-09-30 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2020-09-30 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember 2020-09-30 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember 2020-09-30 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2020-09-30 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember us-gaap:SubstandardMember 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:PassMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember us-gaap:PassMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember us-gaap:SpecialMentionMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember us-gaap:SubstandardMember 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember us-gaap:SubstandardMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember us-gaap:PassMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember us-gaap:SpecialMentionMember 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember us-gaap:PassMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember us-gaap:PassMember 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember us-gaap:SpecialMentionMember 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember us-gaap:PassMember 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:SubstandardMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember us-gaap:SubstandardMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember us-gaap:SubstandardMember 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:PassMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember us-gaap:PassMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember us-gaap:PassMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:SubstandardMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:SubstandardMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember us-gaap:SpecialMentionMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember us-gaap:SubstandardMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember us-gaap:PassMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember us-gaap:SpecialMentionMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember us-gaap:PassMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:SpecialMentionMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:SubstandardMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:PassMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember us-gaap:SubstandardMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember us-gaap:SubstandardMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:SpecialMentionMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember us-gaap:SpecialMentionMember 2019-12-31 0000019612 us-gaap:PassMember 2019-12-31 0000019612 us-gaap:SubstandardMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember us-gaap:SubstandardMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:PassMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember us-gaap:SpecialMentionMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember us-gaap:SubstandardMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember us-gaap:PassMember 2019-12-31 0000019612 us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:SpecialMentionMember 2019-12-31 0000019612 us-gaap:SpecialMentionMember 2019-12-31 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember 2019-07-01 2019-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember 2020-06-30 0000019612 us-gaap:CommercialPortfolioSegmentMember 2020-01-01 2020-09-30 0000019612 tcf:PCDLoansMember 2019-01-01 2019-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember 2020-07-01 2020-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember 2019-06-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:PCDLoansMember 2019-01-01 2019-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember 2019-01-01 2019-09-30 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember us-gaap:ConsumerPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember 2019-06-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember 2018-12-31 0000019612 tcf:PCDLoansMember 2019-07-01 2019-09-30 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember us-gaap:ConsumerPortfolioSegmentMember 2019-12-31 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember us-gaap:CommercialPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:PCDLoansMember 2019-07-01 2019-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember 2020-06-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:PCDLoansMember 2019-01-01 2019-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember 2019-09-30 0000019612 us-gaap:ConsumerPortfolioSegmentMember tcf:PCDLoansMember 2019-07-01 2019-09-30 0000019612 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember us-gaap:CommercialPortfolioSegmentMember 2019-12-31 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2020-07-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2019-01-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2020-07-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2019-01-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember 2019-07-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2020-01-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2020-01-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2020-07-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2019-01-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2020-01-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2019-01-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-01-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember 2020-01-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember 2020-01-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember 2019-07-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2020-07-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember 2019-01-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember 2020-07-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-07-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember 2020-07-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember 2019-01-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2020-01-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2019-07-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2019-07-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2019-07-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2020-01-01 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2019-07-01 2019-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2020-07-01 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2019-07-01 2019-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2020-01-01 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2020-07-01 2020-09-30 0000019612 us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2019-01-01 2019-09-30 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2019-12-31 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:CommercialPortfolioSegmentMember 2020-09-30 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2020-09-30 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2019-12-31 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:CommercialPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember 2019-12-31 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:ConsumerPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2019-12-31 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2019-12-31 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2020-09-30 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2020-09-30 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2020-09-30 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2020-09-30 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-12-31 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember 2020-09-30 0000019612 us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMember 2019-12-31 0000019612 us-gaap:FinancialAssetOriginatedMember us-gaap:ConsumerPortfolioSegmentMember 2020-09-30 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-12-31 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember 2019-12-31 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember 2019-12-31 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:FinancingLeaseMember 2019-12-31 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2019-12-31 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2019-12-31 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember tcf:ConsumerInstallmentLoansMember 2019-12-31 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember 2019-12-31 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-12-31 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2019-12-31 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember 2019-12-31 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember 2019-12-31 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialMortgageMember 2019-12-31 0000019612 tcf:ImpairedLoansWithValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember 2019-12-31 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember tcf:CommercialRealEstateLoansMember 2019-12-31 0000019612 tcf:ImpairedLoansWithNoValuationAllowanceMember us-gaap:CommercialPortfolioSegmentMember us-gaap:CommercialLoanMember 2019-12-31 0000019612 us-gaap:CommercialPortfolioSegmentMember us-gaap:EquipmentLeasedToOtherPartyMember 2020-09-30 0000019612 us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMember us-gaap:CommercialPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMember us-gaap:ConsumerPortfolioSegmentMember 2019-12-31 0000019612 tcf:WholesaleBankingMember 2019-12-31 0000019612 tcf:WholesaleBankingMember 2020-09-30 0000019612 tcf:ConsumerBankingMember 2019-12-31 0000019612 tcf:ConsumerBankingMember 2020-09-30 0000019612 tcf:FederalHistoricProjectsAndOhioHistoricalPreservationProjectsMember 2019-12-31 0000019612 tcf:OhioHistoricPreservationProjectsMember 2020-07-01 2020-09-30 0000019612 tcf:QualifiedAffordableHousingProjectsMember 2019-01-01 2019-09-30 0000019612 tcf:OhioHistoricPreservationProjectsMember 2020-01-01 2020-09-30 0000019612 tcf:QualifiedAffordableHousingProjectsMember 2020-09-30 0000019612 tcf:QualifiedAffordableHousingProjectsMember 2019-12-31 0000019612 tcf:FederalHistoricProjectsMember 2020-01-01 2020-09-30 0000019612 tcf:QualifiedAffordableHousingProjectsMember 2020-07-01 2020-09-30 0000019612 tcf:QualifiedAffordableHousingProjectsMember 2020-01-01 2020-09-30 0000019612 tcf:FederalHistoricProjectsMember 2020-07-01 2020-09-30 0000019612 tcf:QualifiedAffordableHousingProjectsMember 2019-07-01 2019-09-30 0000019612 tcf:FederalHistoricProjectsAndOhioHistoricalPreservationProjectsMember 2020-09-30 0000019612 us-gaap:RevolvingCreditFacilityMember tcf:AmendedTCFFinancialCorporationLineofCreditMember 2020-06-29 2020-06-29 0000019612 2020-05-06 0000019612 us-gaap:FederalReserveBankAdvancesMember 2020-09-30 0000019612 us-gaap:RevolvingCreditFacilityMember tcf:AmendedTCFFinancialCorporationLineofCreditMember 2020-06-29 0000019612 us-gaap:FederalHomeLoanBankAdvancesMember 2020-09-30 0000019612 tcf:TCFFinancialCorporationLineofCreditMember us-gaap:LineOfCreditMember 2020-09-30 0000019612 tcf:TCFFinancialCorporationLineofCreditMember us-gaap:LineOfCreditMember 2019-12-31 0000019612 us-gaap:FederalHomeLoanBankAdvancesMember 2019-12-31 0000019612 tcf:CollateralizedDepositsMember 2020-09-30 0000019612 tcf:CollateralizedDepositsMember 2019-12-31 0000019612 tcf:FinanceLeaseObligationDue2038Member 2019-12-31 0000019612 tcf:FinanceLeaseObligationDue2038Member 2020-09-30 0000019612 tcf:FHLBAdvancesDue20202025Member 2019-12-31 0000019612 tcf:FHLBAdvancesDue20202025Member 2020-09-30 0000019612 us-gaap:LondonInterbankOfferedRateLIBORMember 2020-05-06 2020-05-06 0000019612 tcf:GainLossonSaleofDebtSecuritiesMember 2020-01-01 2020-09-30 0000019612 tcf:OtherNoninterestExpenseMember 2019-01-01 2019-09-30 0000019612 tcf:GainLossonSaleofDebtSecuritiesMember 2019-01-01 2019-09-30 0000019612 us-gaap:InterestIncomeMember 2020-07-01 2020-09-30 0000019612 tcf:OtherNoninterestExpenseMember 2020-01-01 2020-09-30 0000019612 tcf:GainLossonSaleofDebtSecuritiesMember 2020-07-01 2020-09-30 0000019612 us-gaap:InterestIncomeMember 2020-01-01 2020-09-30 0000019612 us-gaap:InterestIncomeMember 2019-01-01 2019-09-30 0000019612 tcf:OtherNoninterestExpenseMember 2019-07-01 2019-09-30 0000019612 tcf:OtherNoninterestExpenseMember 2020-07-01 2020-09-30 0000019612 tcf:GainLossonSaleofDebtSecuritiesMember 2019-07-01 2019-09-30 0000019612 us-gaap:InterestIncomeMember 2019-07-01 2019-09-30 0000019612 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-09-30 0000019612 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2020-01-01 2020-09-30 0000019612 tcf:AccumulatedNetGainLossFromDesignatedOrQualifyingNetInvestmentHedgesDomain 2019-12-31 0000019612 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-01-01 2019-09-30 0000019612 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-06-30 0000019612 tcf:AccumulatedNetGainLossFromDesignatedOrQualifyingNetInvestmentHedgesDomain 2019-09-30 0000019612 us-gaap:AccumulatedTranslationAdjustmentMember 2020-07-01 2020-09-30 0000019612 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-09-30 0000019612 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2019-01-01 2019-09-30 0000019612 tcf:AccumulatedNetGainLossFromDesignatedOrQualifyingNetInvestmentHedgesDomain 2020-09-30 0000019612 tcf:AccumulatedNetGainLossFromDesignatedOrQualifyingNetInvestmentHedgesDomain 2020-01-01 2020-09-30 0000019612 tcf:AccumulatedNetGainLossFromDesignatedOrQualifyingNetInvestmentHedgesDomain 2019-01-01 2019-09-30 0000019612 us-gaap:AccumulatedTranslationAdjustmentMember 2020-09-30 0000019612 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2019-09-30 0000019612 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-07-01 2019-09-30 0000019612 us-gaap:AccumulatedTranslationAdjustmentMember 2020-01-01 2020-09-30 0000019612 us-gaap:AccumulatedTranslationAdjustmentMember 2019-09-30 0000019612 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2020-07-01 2020-09-30 0000019612 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2020-06-30 0000019612 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2019-07-01 2019-09-30 0000019612 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-07-01 2020-09-30 0000019612 tcf:AccumulatedNetGainLossFromDesignatedOrQualifyingNetInvestmentHedgesDomain 2019-06-30 0000019612 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2018-12-31 0000019612 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-01-01 2020-09-30 0000019612 us-gaap:AccumulatedTranslationAdjustmentMember 2020-06-30 0000019612 tcf:AccumulatedNetGainLossFromDesignatedOrQualifyingNetInvestmentHedgesDomain 2019-07-01 2019-09-30 0000019612 tcf:AccumulatedNetGainLossFromDesignatedOrQualifyingNetInvestmentHedgesDomain 2020-07-01 2020-09-30 0000019612 us-gaap:AccumulatedTranslationAdjustmentMember 2019-07-01 2019-09-30 0000019612 us-gaap:AccumulatedTranslationAdjustmentMember 2019-12-31 0000019612 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2019-06-30 0000019612 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-09-30 0000019612 tcf:AccumulatedNetGainLossFromDesignatedOrQualifyingNetInvestmentHedgesDomain 2018-12-31 0000019612 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-12-31 0000019612 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2019-12-31 0000019612 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-06-30 0000019612 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0000019612 tcf:AccumulatedNetGainLossFromDesignatedOrQualifyingNetInvestmentHedgesDomain 2020-06-30 0000019612 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2020-09-30 0000019612 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-12-31 0000019612 us-gaap:AccumulatedTranslationAdjustmentMember 2019-06-30 0000019612 srt:ParentCompanyMember 2020-09-30 0000019612 srt:SubsidiariesMember 2020-09-30 0000019612 srt:SubsidiariesMember 2019-12-31 0000019612 srt:ParentCompanyMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:OtherContractMember us-gaap:NondesignatedMember 2019-12-31 0000019612 tcf:PowerEquityCDsMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:InterestRateLockCommitmentsMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember us-gaap:OtherContractMember us-gaap:NondesignatedMember 2019-12-31 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:PriceRiskDerivativeMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember tcf:ForwardLoanSalesCommitmentsMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember us-gaap:PriceRiskDerivativeMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember tcf:PowerEquityCDsMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember tcf:ForwardLoanSalesCommitmentsMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:InterestRateContractMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000019612 us-gaap:OtherContractMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember us-gaap:InterestRateLockCommitmentsMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember tcf:PowerEquityCDsMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:InterestRateContractMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:OtherAssetsMember us-gaap:InterestRateContractMember us-gaap:NondesignatedMember 2019-12-31 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000019612 tcf:ForwardLoanSalesCommitmentsMember 2019-12-31 0000019612 us-gaap:InterestRateContractMember 2019-12-31 0000019612 us-gaap:InterestRateLockCommitmentsMember 2019-12-31 0000019612 tcf:PowerEquityCDsMember 2019-12-31 0000019612 us-gaap:PriceRiskDerivativeMember 2019-12-31 0000019612 us-gaap:ForeignExchangeForwardMember 2019-12-31 0000019612 us-gaap:OtherContractMember 2019-12-31 0000019612 us-gaap:InterestRateLockCommitmentsMember 2020-09-30 0000019612 us-gaap:ForeignExchangeForwardMember 2020-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember 2020-09-30 0000019612 us-gaap:PriceRiskDerivativeMember 2020-09-30 0000019612 us-gaap:InterestRateContractMember 2020-09-30 0000019612 tcf:PowerEquityCDsMember 2020-09-30 0000019612 us-gaap:OtherContractMember 2020-09-30 0000019612 us-gaap:InterestRateSwapMember us-gaap:NondesignatedMember 2019-09-30 0000019612 us-gaap:InterestRateSwapMember us-gaap:NondesignatedMember 2019-07-01 2019-09-30 0000019612 us-gaap:DesignatedAsHedgingInstrumentMember tcf:InterestExpenseBorrowingsMember 2020-07-01 2020-09-30 0000019612 us-gaap:DesignatedAsHedgingInstrumentMember tcf:InterestExpenseBorrowingsMember 2020-01-01 2020-09-30 0000019612 us-gaap:DesignatedAsHedgingInstrumentMember tcf:InterestExpenseBorrowingsMember 2019-07-01 2019-09-30 0000019612 us-gaap:DesignatedAsHedgingInstrumentMember tcf:InterestExpenseBorrowingsMember 2019-01-01 2019-09-30 0000019612 us-gaap:NondesignatedMember 2019-07-01 2019-09-30 0000019612 us-gaap:OtherContractMember us-gaap:NondesignatedMember tcf:OtherNoninterestIncomeMember 2020-01-01 2020-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:NondesignatedMember tcf:NetGainOnSaleOfLoansAndOtherMortgageBankingRevenueMember 2019-07-01 2019-09-30 0000019612 us-gaap:OtherContractMember us-gaap:NondesignatedMember tcf:OtherNoninterestIncomeMember 2020-07-01 2020-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember tcf:OtherNoninterestExpenseMember 2019-07-01 2019-09-30 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:NondesignatedMember tcf:OtherNoninterestExpenseMember 2020-01-01 2020-09-30 0000019612 us-gaap:OtherContractMember us-gaap:NondesignatedMember tcf:OtherNoninterestIncomeMember 2019-01-01 2019-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:NondesignatedMember tcf:NetGainOnSaleOfLoansAndOtherMortgageBankingRevenueMember 2019-01-01 2019-09-30 0000019612 us-gaap:OtherContractMember us-gaap:NondesignatedMember tcf:OtherNoninterestIncomeMember 2019-07-01 2019-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember tcf:OtherNoninterestExpenseMember 2019-01-01 2019-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:NondesignatedMember tcf:NetGainOnSaleOfLoansAndOtherMortgageBankingRevenueMember 2019-01-01 2019-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember tcf:OtherNoninterestExpenseMember 2020-01-01 2020-09-30 0000019612 us-gaap:InterestRateContractMember us-gaap:NondesignatedMember tcf:OtherNoninterestIncomeMember 2020-07-01 2020-09-30 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:NondesignatedMember tcf:OtherNoninterestExpenseMember 2019-07-01 2019-09-30 0000019612 us-gaap:InterestRateContractMember us-gaap:NondesignatedMember tcf:OtherNoninterestIncomeMember 2020-01-01 2020-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:NondesignatedMember tcf:NetGainOnSaleOfLoansAndOtherMortgageBankingRevenueMember 2020-07-01 2020-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:NondesignatedMember tcf:NetGainOnSaleOfLoansAndOtherMortgageBankingRevenueMember 2020-07-01 2020-09-30 0000019612 us-gaap:InterestRateContractMember us-gaap:NondesignatedMember tcf:OtherNoninterestIncomeMember 2019-07-01 2019-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:NondesignatedMember tcf:NetGainOnSaleOfLoansAndOtherMortgageBankingRevenueMember 2020-01-01 2020-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:NondesignatedMember tcf:NetGainOnSaleOfLoansAndOtherMortgageBankingRevenueMember 2019-07-01 2019-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember tcf:OtherNoninterestExpenseMember 2020-07-01 2020-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:NondesignatedMember tcf:NetGainOnSaleOfLoansAndOtherMortgageBankingRevenueMember 2020-01-01 2020-09-30 0000019612 us-gaap:NondesignatedMember 2020-01-01 2020-09-30 0000019612 us-gaap:NondesignatedMember 2020-07-01 2020-09-30 0000019612 us-gaap:NondesignatedMember 2019-01-01 2019-09-30 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:NondesignatedMember tcf:OtherNoninterestExpenseMember 2020-07-01 2020-09-30 0000019612 us-gaap:InterestRateContractMember us-gaap:NondesignatedMember tcf:OtherNoninterestIncomeMember 2019-01-01 2019-09-30 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:NondesignatedMember tcf:OtherNoninterestExpenseMember 2019-01-01 2019-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember 2020-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember tcf:ForwardLoanSalesCommitmentsMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:OtherContractMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:InterestRateContractMember us-gaap:NondesignatedMember 2020-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:DesignatedAsHedgingInstrumentMember 2020-09-30 0000019612 us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember tcf:PowerEquityCDsMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember tcf:PowerEquityCDsMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:InterestRateContractMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:PriceRiskDerivativeMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:InterestRateLockCommitmentsMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember us-gaap:InterestRateLockCommitmentsMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-09-30 0000019612 us-gaap:OtherContractMember us-gaap:NondesignatedMember 2020-09-30 0000019612 tcf:PowerEquityCDsMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember us-gaap:OtherContractMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:InterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember us-gaap:PriceRiskDerivativeMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember us-gaap:InterestRateContractMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:OtherAssetsMember tcf:ForwardLoanSalesCommitmentsMember us-gaap:NondesignatedMember 2020-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:NetInvestmentHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-01-01 2020-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:NetInvestmentHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:NetInvestmentHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-07-01 2019-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:NetInvestmentHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-07-01 2020-09-30 0000019612 us-gaap:InterestRateSwapMember us-gaap:NondesignatedMember 2019-01-01 2019-09-30 0000019612 tcf:LoansHeldForSaleMember 2019-12-31 0000019612 tcf:LoansHeldForSaleMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:HeldtomaturitySecuritiesMember 2019-12-31 0000019612 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember tcf:FHLBAndFRBStocksMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember tcf:FHLBAndFRBStocksMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:HeldtomaturitySecuritiesMember 2019-12-31 0000019612 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:HeldtomaturitySecuritiesMember 2019-12-31 0000019612 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:HeldtomaturitySecuritiesMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:HeldtomaturitySecuritiesMember 2019-12-31 0000019612 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember tcf:FHLBAndFRBStocksMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember tcf:FHLBAndFRBStocksMember 2019-12-31 0000019612 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember tcf:FHLBAndFRBStocksMember 2019-12-31 0000019612 us-gaap:InterestRateLockCommitmentsMember 2019-01-01 2019-09-30 0000019612 us-gaap:OtherContractMember 2019-09-30 0000019612 us-gaap:AvailableforsaleSecuritiesMember 2020-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember 2019-01-01 2019-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember 2019-07-01 2019-09-30 0000019612 us-gaap:AvailableforsaleSecuritiesMember 2019-01-01 2019-09-30 0000019612 us-gaap:OtherContractMember 2019-07-01 2019-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember 2020-07-01 2020-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember 2019-07-01 2019-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember 2020-07-01 2020-09-30 0000019612 tcf:LoansHeldForSaleMember 2020-07-01 2020-09-30 0000019612 us-gaap:OtherContractMember 2019-01-01 2019-09-30 0000019612 tcf:LoansHeldForSaleMember 2019-07-01 2019-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember 2019-09-30 0000019612 tcf:LoansHeldForSaleMember 2019-01-01 2019-09-30 0000019612 us-gaap:AvailableforsaleSecuritiesMember 2019-12-31 0000019612 us-gaap:InterestRateLockCommitmentsMember 2020-01-01 2020-09-30 0000019612 us-gaap:AvailableforsaleSecuritiesMember 2019-07-01 2019-09-30 0000019612 tcf:LoansHeldForSaleMember 2020-01-01 2020-09-30 0000019612 us-gaap:InterestOnlyStripMember 2020-07-01 2020-09-30 0000019612 us-gaap:AvailableforsaleSecuritiesMember 2020-07-01 2020-09-30 0000019612 us-gaap:InterestOnlyStripMember 2019-07-01 2019-09-30 0000019612 us-gaap:AvailableforsaleSecuritiesMember 2020-01-01 2020-09-30 0000019612 us-gaap:InterestOnlyStripMember 2019-01-01 2019-09-30 0000019612 us-gaap:InterestOnlyStripMember 2020-01-01 2020-09-30 0000019612 us-gaap:InterestOnlyStripMember 2019-09-30 0000019612 us-gaap:InterestOnlyStripMember 2019-06-30 0000019612 tcf:LoansHeldForSaleMember 2020-09-30 0000019612 us-gaap:OtherContractMember 2020-07-01 2020-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember 2020-01-01 2020-09-30 0000019612 tcf:LoansHeldForSaleMember 2018-12-31 0000019612 us-gaap:InterestOnlyStripMember 2019-12-31 0000019612 tcf:ForwardLoanSalesCommitmentsMember 2019-09-30 0000019612 tcf:LoansHeldForSaleMember 2019-09-30 0000019612 tcf:LoansHeldForSaleMember 2020-06-30 0000019612 us-gaap:AvailableforsaleSecuritiesMember 2019-06-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember 2019-06-30 0000019612 us-gaap:InterestRateLockCommitmentsMember 2019-06-30 0000019612 tcf:LoansHeldForSaleMember 2019-12-31 0000019612 us-gaap:OtherContractMember 2020-01-01 2020-09-30 0000019612 us-gaap:InterestOnlyStripMember 2018-12-31 0000019612 us-gaap:AvailableforsaleSecuritiesMember 2019-09-30 0000019612 us-gaap:OtherContractMember 2018-12-31 0000019612 us-gaap:OtherContractMember 2020-06-30 0000019612 us-gaap:AvailableforsaleSecuritiesMember 2018-12-31 0000019612 us-gaap:InterestOnlyStripMember 2020-09-30 0000019612 us-gaap:OtherContractMember 2019-06-30 0000019612 tcf:LoansHeldForSaleMember 2019-06-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember 2020-06-30 0000019612 us-gaap:InterestRateLockCommitmentsMember 2020-06-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember 2018-12-31 0000019612 us-gaap:AvailableforsaleSecuritiesMember 2020-06-30 0000019612 us-gaap:InterestRateLockCommitmentsMember 2018-12-31 0000019612 us-gaap:InterestOnlyStripMember 2020-06-30 0000019612 tcf:PowerEquityCDsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 tcf:PowerEquityCDsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:SwapMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:InterestRateContractMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 tcf:PowerEquityCDsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:SwapMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:SwapMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:SwapMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 tcf:PowerEquityCDsMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember tcf:FHLBAndFRBStocksMember 2020-09-30 0000019612 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:HeldtomaturitySecuritiesMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:HeldtomaturitySecuritiesMember 2020-09-30 0000019612 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember tcf:FHLBAndFRBStocksMember 2020-09-30 0000019612 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:HeldtomaturitySecuritiesMember 2020-09-30 0000019612 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000019612 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember tcf:FHLBAndFRBStocksMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember tcf:FHLBAndFRBStocksMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:HeldtomaturitySecuritiesMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:HeldtomaturitySecuritiesMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember tcf:FHLBAndFRBStocksMember 2020-09-30 0000019612 us-gaap:SwapMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:SwapMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:InterestRateContractMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 tcf:PowerEquityCDsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 tcf:PowerEquityCDsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:SwapMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 tcf:PowerEquityCDsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 tcf:ForwardLoanSalesCommitmentsMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:PriceRiskDerivativeMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 tcf:PowerEquityCDsMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:InterestRateLockCommitmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:SwapMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000019612 srt:MinimumMember us-gaap:MeasurementInputDiscountRateMember 2020-09-30 0000019612 tcf:LoansHeldForSaleMember tcf:GainonsaleofloansnetMember 2019-07-01 2019-09-30 0000019612 tcf:LoansHeldForSaleMember tcf:GainonsaleofloansnetMember 2019-01-01 2019-09-30 0000019612 us-gaap:MeasurementInputPrepaymentRateMember 2020-09-30 0000019612 us-gaap:FairValueMeasurementsNonrecurringMember 2020-09-30 0000019612 srt:MaximumMember us-gaap:MeasurementInputDiscountRateMember 2020-09-30 0000019612 tcf:LoansHeldForSaleMember tcf:GainonsaleofloansnetMember 2020-01-01 2020-09-30 0000019612 tcf:LoansHeldForSaleMember tcf:GainonsaleofloansnetMember 2020-07-01 2020-09-30 0000019612 us-gaap:MeasurementInputDiscountRateMember 2020-09-30 0000019612 srt:MaximumMember us-gaap:MeasurementInputPrepaymentRateMember 2020-09-30 0000019612 srt:MinimumMember us-gaap:MeasurementInputPrepaymentRateMember 2020-09-30 0000019612 us-gaap:FairValueMeasurementsNonrecurringMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2020-09-30 0000019612 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-12-31 0000019612 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2020-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:ConsumerBankingMember 2019-01-01 2019-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:CommercialBankingMember 2019-01-01 2019-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:CommercialBankingMember 2019-01-01 2019-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:ConsumerBankingMember 2019-01-01 2019-09-30 0000019612 tcf:CommercialBankingMember 2019-01-01 2019-09-30 0000019612 us-gaap:DepositAccountMember tcf:CommercialBankingMember 2019-01-01 2019-09-30 0000019612 tcf:ConsumerBankingMember 2019-01-01 2019-09-30 0000019612 us-gaap:DepositAccountMember tcf:EnterpriseServicesMember 2019-01-01 2019-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:ConsumerBankingMember 2019-01-01 2019-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:CommercialBankingMember 2019-01-01 2019-09-30 0000019612 us-gaap:DepositAccountMember tcf:ConsumerBankingMember 2019-01-01 2019-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:EnterpriseServicesMember 2019-01-01 2019-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:EnterpriseServicesMember 2019-01-01 2019-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:EnterpriseServicesMember 2019-01-01 2019-09-30 0000019612 tcf:EnterpriseServicesMember 2019-01-01 2019-09-30 0000019612 us-gaap:ProductAndServiceOtherMember 2019-01-01 2019-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:CommercialBankingMember 2019-07-01 2019-09-30 0000019612 tcf:ConsumerBankingMember 2019-07-01 2019-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:EnterpriseServicesMember 2019-07-01 2019-09-30 0000019612 us-gaap:DepositAccountMember tcf:ConsumerBankingMember 2019-07-01 2019-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:EnterpriseServicesMember 2019-07-01 2019-09-30 0000019612 us-gaap:DepositAccountMember tcf:CommercialBankingMember 2019-07-01 2019-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:CommercialBankingMember 2019-07-01 2019-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:ConsumerBankingMember 2019-07-01 2019-09-30 0000019612 us-gaap:ProductAndServiceOtherMember 2019-07-01 2019-09-30 0000019612 us-gaap:DepositAccountMember tcf:EnterpriseServicesMember 2019-07-01 2019-09-30 0000019612 tcf:EnterpriseServicesMember 2019-07-01 2019-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:CommercialBankingMember 2019-07-01 2019-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:ConsumerBankingMember 2019-07-01 2019-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:ConsumerBankingMember 2019-07-01 2019-09-30 0000019612 tcf:CommercialBankingMember 2019-07-01 2019-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:EnterpriseServicesMember 2019-07-01 2019-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:ConsumerBankingMember 2020-07-01 2020-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:EnterpriseServicesMember 2020-07-01 2020-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:CommercialBankingMember 2020-07-01 2020-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:EnterpriseServicesMember 2020-07-01 2020-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:CommercialBankingMember 2020-07-01 2020-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:EnterpriseServicesMember 2020-07-01 2020-09-30 0000019612 us-gaap:DepositAccountMember tcf:CommercialBankingMember 2020-07-01 2020-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:ConsumerBankingMember 2020-07-01 2020-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:CommercialBankingMember 2020-07-01 2020-09-30 0000019612 tcf:CommercialBankingMember 2020-07-01 2020-09-30 0000019612 us-gaap:ProductAndServiceOtherMember 2020-07-01 2020-09-30 0000019612 us-gaap:DepositAccountMember tcf:ConsumerBankingMember 2020-07-01 2020-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:ConsumerBankingMember 2020-07-01 2020-09-30 0000019612 us-gaap:DepositAccountMember tcf:EnterpriseServicesMember 2020-07-01 2020-09-30 0000019612 tcf:EnterpriseServicesMember 2020-07-01 2020-09-30 0000019612 tcf:ConsumerBankingMember 2020-07-01 2020-09-30 0000019612 us-gaap:DepositAccountMember tcf:CommercialBankingMember 2020-01-01 2020-09-30 0000019612 tcf:ConsumerBankingMember 2020-01-01 2020-09-30 0000019612 us-gaap:ProductAndServiceOtherMember 2020-01-01 2020-09-30 0000019612 us-gaap:DepositAccountMember tcf:ConsumerBankingMember 2020-01-01 2020-09-30 0000019612 us-gaap:DepositAccountMember tcf:EnterpriseServicesMember 2020-01-01 2020-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:ConsumerBankingMember 2020-01-01 2020-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:ConsumerBankingMember 2020-01-01 2020-09-30 0000019612 tcf:EnterpriseServicesMember 2020-01-01 2020-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:ConsumerBankingMember 2020-01-01 2020-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:EnterpriseServicesMember 2020-01-01 2020-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:CommercialBankingMember 2020-01-01 2020-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:CommercialBankingMember 2020-01-01 2020-09-30 0000019612 tcf:CommercialBankingMember 2020-01-01 2020-09-30 0000019612 us-gaap:FiduciaryAndTrustMember tcf:EnterpriseServicesMember 2020-01-01 2020-09-30 0000019612 us-gaap:CreditAndDebitCardMember tcf:EnterpriseServicesMember 2020-01-01 2020-09-30 0000019612 us-gaap:ProductAndServiceOtherMember tcf:CommercialBankingMember 2020-01-01 2020-09-30 0000019612 tcf:EmployeesMember us-gaap:RestrictedStockMember 2019-07-01 2019-09-30 0000019612 tcf:EmployeesMember us-gaap:RestrictedStockMember 2020-01-01 2020-09-30 0000019612 srt:DirectorMember us-gaap:RestrictedStockMember 2020-01-01 2020-09-30 0000019612 us-gaap:RestrictedStockMember 2020-01-01 2020-09-30 0000019612 tcf:EmployeesMember us-gaap:RestrictedStockMember 2020-07-01 2020-09-30 0000019612 srt:DirectorMember us-gaap:RestrictedStockMember 2019-07-01 2019-09-30 0000019612 us-gaap:RestrictedStockMember 2019-01-01 2019-09-30 0000019612 us-gaap:RestrictedStockMember 2019-07-01 2019-09-30 0000019612 srt:DirectorMember us-gaap:RestrictedStockMember 2020-07-01 2020-09-30 0000019612 us-gaap:RestrictedStockMember 2020-07-01 2020-09-30 0000019612 srt:DirectorMember us-gaap:RestrictedStockMember 2019-01-01 2019-09-30 0000019612 tcf:EmployeesMember us-gaap:RestrictedStockMember 2019-01-01 2019-09-30 0000019612 tcf:SharebasedCompensationArrangementNonvestedOptionsMember 2019-12-31 0000019612 tcf:SharebasedCompensationArrangementOptionsOutstandingMember 2020-01-01 2020-09-30 0000019612 tcf:SharebasedCompensationArrangementOptionsOutstandingMember 2019-12-31 0000019612 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-09-30 0000019612 tcf:SharebasedCompensationArrangementOptionsOutstandingMember 2020-09-30 0000019612 tcf:SharebasedCompensationArrangementNonvestedOptionsMember 2020-01-01 2020-09-30 0000019612 tcf:SharebasedCompensationArrangementNonvestedOptionsMember 2020-09-30 0000019612 us-gaap:RestrictedStockUnitsRSUMember 2020-09-30 0000019612 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-09-30 0000019612 us-gaap:RestrictedStockUnitsRSUMember 2019-12-31 0000019612 us-gaap:RestrictedStockMember 2020-09-30 0000019612 us-gaap:RestrictedStockMember 2019-12-31 0000019612 srt:MaximumMember tcf:PerformanceBasedRestrictedStockUnitsMember 2020-01-01 2020-09-30 0000019612 srt:MinimumMember tcf:PerformanceBasedRestrictedStockUnitsMember 2020-01-01 2020-09-30 0000019612 tcf:OmnibusIncentivePlanMember 2020-09-30 0000019612 tcf:PerformanceBasedRestrictedStockUnitsMember 2020-01-01 2020-09-30 0000019612 tcf:PerformanceBasedRestrictedStockUnitsMember 2020-09-30 0000019612 tcf:StockIncentivePlan2019Member 2020-09-30 0000019612 tcf:PerformanceBasedRestrictedStockAwardsMember 2020-09-30 0000019612 us-gaap:PensionPlansDefinedBenefitMember 2020-07-01 2020-09-30 0000019612 us-gaap:PensionPlansDefinedBenefitMember 2020-01-01 2020-09-30 0000019612 us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-09-30 0000019612 us-gaap:PensionPlansDefinedBenefitMember 2019-07-01 2019-09-30 0000019612 tcf:TheTCF401KPlanMember 2020-01-01 2020-09-30 0000019612 tcf:TheTCF401KPlanMember 2020-07-01 2020-09-30 0000019612 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-07-01 2019-09-30 0000019612 tcf:A401KPlanAfterJanuary12016Member 2020-01-01 2020-09-30 0000019612 srt:MaximumMember tcf:A401KPlanAfterJanuary12016Member 2020-01-01 2020-09-30 0000019612 tcf:ChemicalFinancialCorporationMember 2020-07-01 2020-09-30 0000019612 us-gaap:PensionPlansDefinedBenefitMember 2020-09-30 0000019612 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2020-01-01 2020-09-30 0000019612 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2020-07-01 2020-09-30 0000019612 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-01-01 2019-09-30 0000019612 tcf:ChemicalFinancialCorporationMember 2019-07-01 2019-09-30 0000019612 tcf:ChemicalFinancialCorporationMember 2020-01-01 2020-09-30 0000019612 us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-12-31 0000019612 tcf:ChemicalFinancialCorporationMember 2019-01-01 2019-12-31 0000019612 tcf:NonParticipatingRestrictedStockMember 2019-01-01 2019-09-30 0000019612 tcf:NonParticipatingRestrictedStockMember 2020-01-01 2020-09-30 0000019612 tcf:NonParticipatingRestrictedStockMember 2020-07-01 2020-09-30 0000019612 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-09-30 0000019612 us-gaap:EmployeeStockOptionMember 2020-07-01 2020-09-30 0000019612 tcf:NonParticipatingRestrictedStockMember 2019-07-01 2019-09-30 0000019612 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-09-30 0000019612 us-gaap:EmployeeStockOptionMember 2019-07-01 2019-09-30 0000019612 tcf:EnterpriseServicesMember 2020-09-30 0000019612 tcf:CommercialBankingMember 2020-09-30 0000019612 tcf:CommercialBankingMember 2019-09-30 0000019612 tcf:EnterpriseServicesMember 2019-09-30 0000019612 tcf:ConsumerBankingMember 2019-09-30 0000019612 tcf:RepresentationsAndWarrantiesMember 2019-12-31 0000019612 tcf:SmallBusinessAdministrationGuaranteedLoansMember us-gaap:PerformanceGuaranteeMember 2020-09-30 0000019612 tcf:SmallBusinessAdministrationGuaranteedLoansMember us-gaap:PerformanceGuaranteeMember 2019-12-31 0000019612 tcf:CertainLoansMember us-gaap:PerformanceGuaranteeMember 2019-12-31 0000019612 tcf:RepresentationsAndWarrantiesMember 2020-09-30 0000019612 tcf:CertainLoansMember us-gaap:PerformanceGuaranteeMember 2020-09-30 0000019612 us-gaap:CommitmentsToExtendCreditMember 2019-12-31 0000019612 us-gaap:CommitmentsToExtendCreditMember us-gaap:CommercialPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:StandbyLettersOfCreditMember 2020-09-30 0000019612 us-gaap:CommitmentsToExtendCreditMember 2020-09-30 0000019612 us-gaap:CommitmentsToExtendCreditMember us-gaap:CommercialPortfolioSegmentMember 2020-09-30 0000019612 us-gaap:CommitmentsToExtendCreditMember us-gaap:ConsumerPortfolioSegmentMember 2020-09-30 0000019612 us-gaap:CommitmentsToExtendCreditMember us-gaap:ConsumerPortfolioSegmentMember 2019-12-31 0000019612 us-gaap:StandbyLettersOfCreditMember 2019-12-31 iso4217:USD xbrli:shares iso4217:USD xbrli:pure xbrli:shares tcf:investment
Table of Contents



 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended
September 30, 2020
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 Commission File No. 000-08185
 
TCF Financial Corporation
(Exact name of registrant as specified in its charter)
Michigan
38-2022454
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
333 W. Fort Street, Suite 1800
Detroit, Michigan 48226
(Address and Zip Code of principal executive offices)
(800) 867-9757
(Registrant's telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock (par value $1 per share)
TCF
The NASDAQ Stock Market
Depositary shares, each representing a 1/1000th interest in a share of the 5.70% Series C Non-Cumulative Perpetual Preferred Stock
TCFCP
The NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes                                                    No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes                                                    No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
Accelerated filer
 
Non-accelerated filer
Smaller reporting company
 
 
 
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes                                                  No

As of October 30, 2020, there were 152,487,285 shares outstanding of the registrant's common stock, par value $1 per share, its only outstanding class of common stock.


Table of Contents



TABLE OF CONTENTS
 
Description
Page
 
 
Part I - Financial Information
 
 
 
 
 
 
1
 
 
2
 
 
3
 
 
4
 
 
6
 
 
7
 
 
55
 
 
99
 
 
100
 
 
Part II - Other Information
 
 
 
102
 
 
102
 
 
103
 
 
103
 
 
103
 
 
103
 
 
104
 
 
105




Table of Contents



Part I - Financial Information                                                

Item 1. Financial Statements.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands, except per share data)
At September 30, 2020
 
At December 31, 2019
ASSETS
 
 
 
Cash and cash equivalents:
 
 
 
Cash and due from banks
$
538,481

 
$
491,787

Interest-bearing deposits with other banks
1,232,773

 
736,584

Total cash and cash equivalents
1,771,254

 
1,228,371

Federal Home Loan Bank and Federal Reserve Bank stocks, at cost
300,444

 
442,440

Investment securities:
 
 
 
Available-for-sale, at fair value (amortized cost of $7,187,692 and $6,639,277)
7,446,163

 
6,720,001

Held-to-maturity, at amortized cost (fair value of $180,364 and $144,844)
170,309

 
139,445

Total investment securities
7,616,472

 
6,859,446

Loans and leases held-for-sale (includes $460,172 and $91,202 at fair value)
460,427

 
199,786

Loans and leases
34,343,691

 
34,497,464

Allowance for loan and lease losses
(515,229
)
 
(113,052
)
Loans and leases, net
33,828,462

 
34,384,412

Premises and equipment, net
469,699

 
533,138

Goodwill
1,313,046

 
1,299,878

Other intangible assets, net
151,875

 
168,368

Loan servicing rights
38,253

 
56,313

Other assets
1,615,857

 
1,479,401

Total assets
$
47,565,789

 
$
46,651,553

LIABILITIES AND EQUITY
 
 
 
Liabilities
 
 
 
Deposits:
 
 
 
Noninterest-bearing
$
10,691,041

 
$
7,970,590

Interest-bearing
28,481,056

 
26,497,873

Total deposits
39,172,097

 
34,468,463

Short-term borrowings
655,461

 
2,669,145

Long-term borrowings
871,845

 
2,354,448

Other liabilities
1,207,966

 
1,432,256

Total liabilities
41,907,369

 
40,924,312

Equity
 
 
 
Preferred stock, $0.01 par value, 2,000,000 shares authorized; 7,000 shares issued
169,302

 
169,302

Common stock, $1.00 par value, 220,000,000 shares authorized
 
 
 
Issued - 152,379,722 shares at September 30, 2020 and 152,965,571 shares at December 31, 2019
152,380

 
152,966

Additional paid-in capital
3,450,669

 
3,462,080

Retained earnings
1,700,044

 
1,896,427

Accumulated other comprehensive income
191,771

 
54,277

Other
(27,122
)
 
(28,037
)
Total TCF Financial Corporation shareholders' equity
5,637,044

 
5,707,015

Non-controlling interest
21,376

 
20,226

Total equity
5,658,420

 
5,727,241

Total liabilities and equity
$
47,565,789

 
$
46,651,553

 
See accompanying notes to consolidated financial statements.



1




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands, except per share data)
2020
 
2019
 
2020
 
2019
Interest income
 
 
 
 
 
 
 
Interest and fees on loans and leases
$
373,112

 
$
417,370

 
$
1,209,034

 
$
983,890

Interest on investment securities:
 
 
 
 
 
 
 
Taxable
35,648

 
31,038

 
109,073

 
69,745

Tax-exempt
3,892

 
3,385

 
12,396

 
7,277

Interest on loans held-for-sale
3,829

 
1,408

 
8,712

 
2,832

Interest on other earning assets
3,967

 
6,607

 
14,995

 
13,739

Total interest income
420,448

 
459,808

 
1,354,210

 
1,077,483

Interest expense
 
 
 
 
 
 
 
Interest on deposits
31,852

 
70,900

 
146,056

 
149,154

Interest on borrowings
11,429

 
17,115

 
51,147

 
48,050

Total interest expense
43,281

 
88,015

 
197,203

 
197,204

Net interest income
377,167

 
371,793

 
1,157,007

 
880,279

Provision for credit losses
69,664

 
27,188

 
245,333

 
50,879

Net interest income after provision for credit losses
307,503

 
344,605

 
911,674

 
829,400

Noninterest income
 
 
 
 
 
 
 
Leasing revenue
31,905

 
39,590

 
102,642

 
117,032

Fees and service charges on deposit accounts
25,470

 
34,384

 
82,899

 
88,504

Net gains (losses) on sales of loans and leases
23,490

 
(5,984
)
 
73,114

 
13,374

Card and ATM revenue
23,383

 
23,315

 
65,704

 
62,470

Wealth management revenue
6,506

 
4,241

 
18,863

 
4,241

Servicing fee revenue
321

 
5,121

 
10,154

 
14,754

Net gains on investment securities
2,324

 
5,900

 
2,332

 
7,417

Other
5,411

 
(12,309
)
 
33,119

 
(312
)
Total noninterest income
118,810

 
94,258

 
388,827

 
307,480

Noninterest expense
 
 
 
 
 
 
 
Compensation and employee benefits
168,323

 
155,745

 
511,650

 
395,953

Occupancy and equipment
48,233

 
49,229

 
159,628

 
132,789

Lease financing equipment depreciation
17,932

 
19,408

 
54,594

 
57,797

Net foreclosed real estate and repossessed assets
1,518

 
2,203

 
4,375

 
9,281

Merger-related expenses
54,011

 
111,259

 
172,358

 
124,943

Other
83,423

 
87,776

 
245,675

 
194,781

Total noninterest expense
373,440

 
425,620

 
1,148,280

 
915,544

Income before income tax (benefit) expense
52,873

 
13,243

 
152,221

 
221,336

Income tax (benefit) expense
(4,429
)
 
(11,735
)
 
14,870

 
28,866

Income after income tax (benefit) expense
57,302

 
24,978

 
137,351

 
192,470

Income attributable to non-controlling interest
1,564

 
2,830

 
5,950

 
9,401

Net income attributable to TCF Financial Corporation
55,738

 
22,148

 
131,401

 
183,069

Preferred stock dividends
2,494

 
2,494

 
7,481

 
7,481

Net income available to common shareholders
$
53,244

 
$
19,654

 
$
123,920

 
$
175,588

Earnings per common share
 
 
 
 
 
 
 
Basic
$
0.35

 
$
0.15

 
$
0.82

 
$
1.79

Diluted
0.35

 
0.15

 
0.82

 
1.79

Weighted-average common shares outstanding
 
 
 
 
 
 
 
Basic
151,768,337

 
128,575,171

 
151,761,299

 
97,876,262

Diluted
151,821,592

 
128,754,588

 
151,826,928

 
98,055,279

 
See accompanying notes to consolidated financial statements.


2




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Net income attributable to TCF Financial Corporation
$
55,738

 
$
22,148

 
$
131,401

 
$
183,069

Other comprehensive income (loss), net of tax:
 

 
 

 
 

 
 

Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips
(7,694
)
 
19,230

 
138,550

 
87,223

Net unrealized gains (losses) on net investment hedges
(2,655
)
 
1,641

 
3,269

 
(2,846
)
Foreign currency translation adjustment
3,721

 
(1,968
)
 
(4,298
)
 
5,014

Recognized postretirement prior service cost
(9
)
 
(9
)
 
(27
)
 
(25
)
Total other comprehensive income (loss), net of tax
(6,637
)
 
18,894

 
137,494

 
89,366

Comprehensive income
$
49,101

 
$
41,042

 
$
268,895

 
$
272,435

 See accompanying notes to consolidated financial statements.


3




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Equity (Unaudited)
At or For the Three Months Ended September 30, 2020 and 2019
 
TCF Financial Corporation
 
 
 
Number of
Shares Issued
Preferred
Stock
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Other
Total
Non-
controlling
Interest
Total
Equity
(Dollars in thousands)
Preferred
Common
Balance, June 30, 2020
7,000

152,233,106

$
169,302

$
152,233

$
3,441,925

$
1,700,480

$
198,408

$
(27,093
)
$
5,635,255

$
23,300

$
5,658,555

Net income





55,738



55,738

1,564

57,302

Other comprehensive income (loss), net of tax






(6,637
)

(6,637
)

(6,637
)
Net investment by (distribution to) non-controlling interest









(3,488
)
(3,488
)
Dividends on 5.70% Series C Preferred Stock





(2,494
)


(2,494
)

(2,494
)
Dividends on common stock of $0.35 per common share





(53,680
)


(53,680
)

(53,680
)
Stock compensation plans, net of tax

146,616


147

8,715




8,862


8,862

Change in shares held in trust for deferred compensation plans, at cost




29



(29
)



Balance, September 30, 2020
7,000

152,379,722

$
169,302

$
152,380

$
3,450,669

$
1,700,044

$
191,771

$
(27,122
)
$
5,637,044

$
21,376

$
5,658,420

Balance, June 30, 2019
7,000

87,943,860

$
169,302

$
87,944

$
781,788

$
1,874,308

$
37,334

$
(265,017
)
$
2,685,659

$
24,858

$
2,710,517

Net income





22,148



22,148

2,830

24,978

Other comprehensive income (loss), net of tax






18,894


18,894


18,894

Reverse merger with Chemical Financial Corporation

65,539,678


65,540

2,687,153



265,863

3,018,556


3,018,556

Net investment by (distribution to) non-controlling interest









(4,375
)
(4,375
)
Repurchases of 780,716 shares of common stock







(32,310
)
(32,310
)

(32,310
)
Dividends on 5.70% Series C Preferred Stock





(2,494
)


(2,494
)

(2,494
)
Dividends on common stock of $0.35 per common share





(53,748
)


(53,748
)

(53,748
)
Stock compensation plans, net of tax

87,843


87

13,070



242

13,399


13,399

Change in shares held in trust for deferred compensation plans, at cost




(3,852
)


3,852




Balance, September 30, 2019
7,000

153,571,381

$
169,302

$
153,571

$
3,478,159

$
1,840,214

$
56,228

$
(27,370
)
$
5,670,104

$
23,313

$
5,693,417

See accompanying notes to consolidated financial statements.



4




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Equity (Unaudited)
At or For the Nine Months Ended September 30, 2020 and 2019
 
TCF Financial Corporation
 
 
 
Number of
Shares Issued
Preferred
Stock
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Other
Total
Non-
controlling
Interest
Total
Equity
(Dollars in thousands)
Preferred
Common
Balance, December 31, 2019
7,000

152,965,571

$
169,302

$
152,966

$
3,462,080

$
1,896,427

$
54,277

$
(28,037
)
$
5,707,015

$
20,226

$
5,727,241

Cumulative effect adjustment related to adoption of Accounting Standards Update 2016-13(1)





(159,323
)


(159,323
)
74

(159,249
)
Balance, January 1, 2020
7,000

152,965,571

169,302

152,966

3,462,080

1,737,104

54,277

(28,037
)
5,547,692

20,300

5,567,992

Net income





131,401



131,401

5,950

137,351

Other comprehensive income (loss), net of tax






137,494


137,494


137,494

Net investment by (distribution to) non-controlling interest









(4,874
)
(4,874
)
Repurchases of 873,376 shares of common stock

(873,376
)

(873
)
(32,225
)



(33,098
)

(33,098
)
Dividends on 5.70% Series C Preferred Stock





(7,481
)


(7,481
)

(7,481
)
Dividends on common stock of $1.05 per common share





(160,980
)


(160,980
)

(160,980
)
Stock compensation plans, net of tax

287,527


287

21,729




22,016


22,016

Change in shares held in trust for deferred compensation plans, at cost




(915
)


915




Balance, September 30, 2020
7,000

152,379,722

$
169,302

$
152,380

$
3,450,669

$
1,700,044

$
191,771

$
(27,122
)
$
5,637,044

$
21,376

$
5,658,420

 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2018
7,000

88,198,460

$
169,302

$
88,198

$
798,627

$
1,766,994

$
(33,138
)
$
(252,182
)
$
2,537,801

$
18,459

$
2,556,260

Net income





183,069



183,069

9,401

192,470

Other comprehensive income (loss), net of tax






89,366


89,366


89,366

Reverse merger with Chemical Financial Corporation

65,539,678


65,540

2,687,153



265,863

3,018,556


3,018,556

Net investment by (distribution to) non-controlling interest









(4,547
)
(4,547
)
Repurchases of 1,453,908 shares of common stock







(58,805
)
(58,805
)

(58,805
)
Dividends on 5.70% Series C Preferred Stock





(7,481
)


(7,481
)

(7,481
)
Dividends on common stock of $0.94 per common share





(102,368
)


(102,368
)

(102,368
)
Stock compensation plans, net of tax

(166,757
)

(167
)
(5,626
)


15,759

9,966


9,966

Change in shares held in trust for deferred compensation plans, at cost




(1,995
)


1,995




Balance, September 30, 2019
7,000

153,571,381

$
169,302

$
153,571

$
3,478,159

$
1,840,214

$
56,228

$
(27,370
)
$
5,670,104

$
23,313

$
5,693,417

(1) See "Note 3. Summary of Significant Accounting Policies" for further information



5




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
Cash flows from operating activities
 
 
 
Income after income tax (benefit) expense
$
137,351

 
$
192,470

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 

 
 

Provision for credit losses
245,333

 
50,879

Share-based compensation expense
26,447

 
17,762

Depreciation and amortization
320,950

 
207,954

Provision (benefit) for deferred income taxes
(132,148
)
 
(27,732
)
Net gains on sales of assets
(97,068
)
 
(46,966
)
Proceeds from sales of loans and leases held-for-sale
1,271,793

 
512,051

Originations of loans and leases held-for-sale, net of repayments
(1,540,397
)
 
(548,371
)
Impairment of loan servicing rights
17,248

 
4,520

Net change in other assets
(422,496
)
 
(188,081
)
Net change in other liabilities
(165,881
)
 
16,229

Other, net
(42,154
)
 
(34,793
)
Net cash provided by (used in) operating activities
(381,022
)
 
155,922

Cash flows from investing activities
 

 
 

Proceeds from sales of investment securities available-for-sale
50,797

 
1,993,274

Proceeds from maturities of and principal collected on investment securities available-for-sale
1,646,241

 
398,989

Purchases of investment securities available-for-sale
(2,074,989
)
 
(1,424,344
)
Proceeds from maturities of and principal collected on investment securities held-to-maturity
22,643

 
11,945

Purchases of investment securities held-to-maturity
(27,428
)
 
(4,029
)
Redemption of Federal Home Loan Bank stock
344,014

 
162,011

Purchases of Federal Home Loan Bank stock
(202,000
)
 
(142,000
)
Proceeds from sales of loans and leases
530,734

 
566,880

Loan and lease originations and purchases, net of principal collected
(433,410
)
 
(674,459
)
Proceeds from sales of other assets
60,018

 
82,970

Purchases of premises and equipment and lease equipment
(75,885
)
 
(108,404
)
Net cash acquired (paid) in business combination

 
975,014

Other, net
23,456

 
(6,743
)
Net cash provided by (used in) investing activities
(135,809
)
 
1,831,104

Cash flows from financing activities
 

 
 

Net change in deposits
4,773,178

 
(15,296
)
Net change in short-term borrowings
(2,013,623
)
 
(17,292
)
Proceeds from long-term borrowings
4,956,373

 
2,799,986

Payments on long-term borrowings
(6,445,567
)
 
(3,838,454
)
Payments on liabilities related to acquisition and portfolio purchase

 
(1,000
)
Repurchases of common stock
(33,098
)
 
(58,804
)
Dividends paid on preferred stock
(7,481
)
 
(7,481
)
Dividends paid on common stock
(160,980
)
 
(102,368
)
Exercise of stock options
(110
)
 

Payments related to tax-withholding upon conversion of share-based awards
(4,104
)
 
(5,813
)
Net investment by (distribution to) non-controlling interest
(4,874
)
 
(4,547
)
Net cash provided by (used in) financing activities
1,059,714

 
(1,251,069
)
Net change in cash and due from banks
542,883

 
735,957

Cash and cash equivalents at beginning of period
1,228,371

 
587,057

Cash and cash equivalents at end of period
$
1,771,254

 
$
1,323,014

Supplemental disclosures of cash flow information
 

 
 

Cash paid (received) for:
 

 
 

Interest on deposits and borrowings
$
195,619

 
$
192,793

Income taxes, net
130,144

 
10,367

Noncash activities:


 


Transfer of loans and leases to other assets
38,938

 
73,314

Transfer of loans and leases from held-for-investment to held for sale, net
426,063

 
1,837,445

See accompanying notes to consolidated financial statements.


6




TCF FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)

Note 1. Basis of Presentation
 
On August 1, 2019 (the "Merger Date"), TCF Financial Corporation, a Delaware corporation ("Legacy TCF"), merged with and into Chemical Financial Corporation, a Michigan corporation ("Chemical"), with Chemical continuing as the surviving entity (the "Merger"). Immediately following the Merger, Chemical’s wholly owned bank subsidiary, Chemical Bank, a Michigan state-chartered bank, merged with and into Legacy TCF’s wholly owned bank subsidiary, TCF National Bank, a national banking association, with TCF National Bank surviving the merger (“TCF Bank”). Upon completion of the Merger, Chemical was renamed TCF Financial Corporation. TCF Financial Corporation (together with its direct and indirect subsidiaries, "we," "us," "our," "TCF" or the "Corporation"), is a financial holding company, headquartered in Detroit, Michigan. TCF Bank has its main office in Sioux Falls, South Dakota. References herein to "TCF Financial" or the "Holding Company" refer to TCF Financial Corporation on an unconsolidated basis.

The Merger was accounted for as a reverse merger using the acquisition method of accounting, therefore, Legacy TCF was deemed the accounting acquirer for financial reporting purposes, even though Chemical was the legal acquirer. Accordingly, Legacy TCF's historical financial statements are the historical financial statements of the combined company for all periods before the Merger Date. TCF's results of operations include the results of operations of Chemical on and after August 1, 2019. Results for periods before August 1, 2019 reflect only those of Legacy TCF and do not include the results of operations of Chemical. The number of shares issued and outstanding, earnings per share, additional paid-in-capital, dividends paid and all references to share quantities of TCF have been retrospectively adjusted to reflect the equivalent number of shares issued to holders of Legacy TCF common stock in the Merger. See "Note 2. Merger" for further information. In addition, the assets and liabilities of Chemical as of the Merger Date have been recorded at their estimated fair value and added to those of Legacy TCF.

TCF Bank operates banking centers primarily located in Michigan, Illinois and Minnesota with additional locations in Colorado, Ohio, South Dakota and Wisconsin (TCF's "primary banking markets"). Through its direct subsidiaries, TCF Bank provides a full range of consumer-facing and commercial services, including consumer and commercial banking, trust and wealth management, and specialty leasing and lending products and services to consumers, small businesses and commercial customers.

The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission ("SEC"). Accordingly, the consolidated financial statements do not include all of the information and notes necessary for complete financial statements in conformity with GAAP. In the opinion of management, the accompanying unaudited consolidated financial statements contain all the significant adjustments, consisting of normal recurring items, considered necessary for fair presentation. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. The information in this Quarterly Report on Form 10-Q is written with the presumption that the users of the interim financial statements have read or have access to the Corporation's most recent Annual Report on Form 10-K, which contains the latest audited financial statements and notes thereto, together with Management's Discussion and Analysis of Financial Condition and Results of Operations at and for the year ended December 31, 2019.
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. These estimates are based on information available to management at the time the estimates are made. Actual results could differ from those estimates. Certain reclassifications have been made to prior period financial statements to conform to the current period presentation.



7


Note 2. Merger

As described in Note 1. Basis of Presentation, on August 1, 2019, the Corporation completed the 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, therefore, Legacy TCF was deemed the acquirer for financial reporting purposes even though Chemical was the legal acquirer. As a result, the historical financial statements of Legacy TCF became the historical financial statements of the combined company. In addition, the assets acquired, including the intangible assets identified, and assumed 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.
(Dollars in thousands)
 TCF Financial Ownership and Market Value Table
 
 Number of Chemical Outstanding Shares
 
 Percentage Ownership
 
 Market Value at $42.04 Chemical Share Price
Legacy TCF shareholders
81,920,494

 
53.38
%
 
$
3,443,938

Chemical shareholders
71,558,755

 
46.62

 
3,008,330

 Total
153,479,249

 
100.00
%
 
$
6,452,268





8




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):
 
 
 Hypothetical Legacy TCF Ownership
 
 
 Number of Legacy TCF Outstanding Shares
 
 Percentage Ownership
Legacy TCF shareholders
 
161,229,078

 
53.38
%
Chemical shareholders
 
140,835,967

 
46.62

 Total
 
302,065,045

 
100.00
%


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.
(Dollars in thousands, except per share data)
 
 
Number of hypothetical Legacy TCF shares issued to Chemical shareholders
140,835,967

Legacy TCF market price per share as of July 31, 2019
$
21.38

Purchase price determination of hypothetical Legacy TCF shares issued to Chemical shareholders
$
3,011,073

Value of Chemical stock options hypothetically converted to options to acquire shares of Legacy TCF common stock
7,335

Cash in lieu of fractional shares
148

Purchase price consideration
$
3,018,556





9




The following table provides the purchase price allocation as of the Merger Date and the assets acquired and liabilities assumed at their estimated fair value as of the Merger Date as recorded by the Corporation. The Corporation 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 the Corporation believes that the information available at the Merger Date provided a reasonable basis for estimating fair value, following the Merger, the Corporation obtained additional information and evidence and then finalized all valuations and recorded final adjustments during the first quarter of 2020. These adjustments included: (i) changes in the estimated fair value of loans and leases acquired, (ii) 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 (iii) changes in goodwill as a result of the net effect of any adjustments.
(In thousands)
 
Purchase price consideration:
 
Stock
$
3,018,556

Fair value of assets acquired(1)
 
Cash and cash equivalents
975,014

Federal Home Loan Bank and Federal Reserve Bank stocks
218,582

Investment securities
3,774,738

Loans held-for-sale
44,532

Loans and leases
15,713,399

Premises and equipment
140,219

Loan servicing rights
59,567

Other intangible assets
159,532

Net deferred tax asset(2)
65,685

Other assets
552,432

Total assets acquired
21,703,700

Fair value of liabilities assumed(1)
 
Deposits
16,418,215

Short-term borrowings
2,629,426

Long-term borrowings
442,323

Other liabilities
353,469

Total liabilities assumed
19,843,433

Fair value of net identifiable assets
1,860,267

Goodwill resulting from Merger(1)
$
1,158,289

(1)
All amounts were previously reported in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2019, with the exception of the following adjustments to fair value based on additional information obtained in the first quarter of 2020: (i) loans and leases ($17.2 million decrease), (ii) net deferred tax asset ($4.0 million increase), and (iii) goodwill resulting from Merger ($13.2 million increase).
(2)
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.

The final loan valuation adjustments also impacted interest income in the first quarter of 2020. Additional accretion of $2.4 million would have been recorded as interest income in the year ended December 31, 2019, had the final loan valuation been recorded at the Merger Date.

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. The acquired loans and leases were segregated into two classifications at acquisition, purchased credit impaired (“PCI”) loans accounted for under the provisions of legacy GAAP Accounting Standards Codification ("ASC") Topic 310-30, and purchased nonimpaired loans and leases, also referred to as purchased loans and leases. 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 as the nonaccretable difference.


10




Information regarding acquired loans and leases included in net loans and leases acquired at the Merger Date was as follows:
(In thousands)
 
PCI loans:
 
Contractually required payments receivable
$
413,176

Nonaccretable difference
(63,014
)
Expected cash flows
350,162

Accretable yield
38,479

Fair value of PCI loans
$
311,683

 
 
Purchased nonimpaired loans and leases:
 
Unpaid principal balance
$
15,636,020

Fair value discount
(234,304
)
Fair value at acquisition
15,401,716

    Total fair value at acquisition
$
15,713,399



Other intangible assets consisted of core deposits and customer relationship intangibles with estimated fair values at the Merger Date of $138.2 million and $21.3 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 11 years.

As a result of the Merger, the Corporation recorded $1.2 billion of goodwill. Of the $1.2 billion, $528.0 million was attributable to Consumer Banking and $630.3 million was attributable to Commercial Banking. 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, 2019 with pro forma adjustments. The pro forma adjustments give effect to any change in interest income due to the accretion of the discount (amortization of premium) associated with the fair value adjustments to acquired loans and leases, 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, amortization of the customer relationship intangibles, and amortization of the core deposit intangibles that would have resulted had the deposits been acquired as of January 1, 2019. Merger-related expenses incurred by TCF prior to completion of the Merger 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 2019. 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, 2020 and 2019.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands, except per share data)
2020
 
2019
 
2020
 
2019
Net interest income and other noninterest income
$
495,977

 
$
536,165

 
$
1,545,834

 
$
1,654,571

Net income
55,738

 
125,560

 
131,401

 
435,003

Net income available to common shareholders
53,244

 
123,066

 
123,920

 
427,522

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.35

 
$
0.81

 
$
0.82

 
$
2.79

Diluted
0.35

 
0.81

 
0.82

 
2.77





11




Note 3. Summary of Significant Accounting Policies

Accounting policies in effect at December 31, 2019, as previously disclosed in "Note 3. Summary of Significant Accounting Policies" in the Corporation’s Annual Report on Form 10-K at and for the year ended December 31, 2019, remain significantly unchanged and have been followed similarly as in previous periods except for the allowance for credit losses accounting policy, the loans and leases acquired in a business combination accounting policy, the investments securities held-to-maturity accounting policy, and the investment securities available-for-sale accounting policy, resulting from the adoption of Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and related ASUs, as described below.

Allowance for Credit Losses The Corporation's reserve methodology used to determine the appropriate level of the allowance for credit losses ("ACL") is a critical accounting estimate. The ACL is maintained at a level believed to be appropriate to provide for the current credit losses expected to be incurred in the loan and lease portfolios over the remaining expected life of each financial asset at the balance sheet date, including known or anticipated problem loans and leases, as well as for loans and leases which are not currently known to require specific allowances. The Corporation individually evaluates loans and leases that do not share similar risk characteristics with other financial assets for impairment, generally this means troubled debt restructuring ("TDR") loans, previously removed TDR loans and any other loans and leases that no longer exhibit similar risk characteristics of one of the pools of financial assets used for collective evaluation. All other loans and leases are evaluated collectively for impairment. The ACL includes the allowance for loan and lease losses ("ALLL") and a reserve for unfunded lending commitments ("RULC"). The ALLL and RULC are valuation accounts presented separately on the Consolidated Statements of Financial Condition. The ALLL is deducted from or added to loans' amortized cost basis to present the net amount expected to be collected. The RULC for letters of credit, financial guarantees and binding unfunded loan commitments is recorded in other liabilities.

Individually evaluated loans and leases are a key component of the ALLL. Individually evaluated consumer loans are generally measured at the present value of the expected future cash flows discounted at the loan's initial effective interest rate, unless the loans are collateral dependent, in which case loan impairment is based on the fair value of the collateral less estimated selling costs. Individually evaluated commercial loans and leases are generally measured at the present value of the expected future cash flows discounted at the initial effective interest rate of the loan or lease, unless the loan or lease is collateral dependent, in which case impairment is based on the fair value of collateral less estimated selling costs; however, if payment or satisfaction of the loan or lease is dependent on the operation, rather than the sale of the collateral, the impairment does not include estimated selling costs.

The impairment for all other consumer and commercial loans and leases is evaluated collectively by various characteristics. The collective evaluation of expected losses in these portfolios is based on their probability of default multiplied by historical loss rates, as well as adjustments for forward-looking information, including industry and macroeconomic forecasts. Management's current methodology includes a twenty-four month reasonable and supportable forecast period with a twelve month straight line reversion to historical loss rates. Factors utilized in the determination of the amount of the allowance include historical loss experience, current economic forecasts and measurement date credit risk characteristics such as product type, lien position, delinquency, collateral value, credit bureau scores and financial statement ratios. The various quantitative and qualitative factors used in the methodologies are reviewed quarterly.

Loans and leases are charged off to the extent they are deemed to be uncollectible. Net charge-offs are included in historical data utilized for calculating the ACL. Loans that are not collateral dependent are charged off when deemed uncollectible based on specific facts and circumstances. Residential mortgage and home equity loans are charged off to the estimated fair value of the underlying collateral, less estimated selling costs, no later than 150 days past due. Additional review of the fair value, less estimated costs to sell, compared with the recorded value occurs upon foreclosure and additional charge-offs are recorded if necessary. Consumer installment loans will generally be charged off in full no later than 120 days past due, unless repossession is reasonably assured and in process, in which case the loan would be charged off to the fair value of the collateral, less estimated selling costs. Consumer loans in bankruptcy status may be charged down to the fair value of the collateral, less estimated selling costs, when the loan is 60 days past due, or within 60 days after receipt of bankruptcy notification, whichever is shorter. Deposit account overdrafts are reported in other loans. Net losses on uncollectible overdrafts are reported as net charge-offs in the ALLL within 60 days from the date of overdraft. Commercial loans and leases that are considered collateral dependent are charged off to the estimated fair value, less estimated selling costs when it becomes probable, based on current information and events, that all principal and interest amounts will not be collectible in accordance with their contractual terms.



12




The RULC leverages the same loss estimate methodology utilized to measure the ALLL. The Corporation estimates expected credit losses over the period in which it is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation. The RULC estimate considers both the likelihood that funding will occur and expected credit losses on funded balances at the time of default.

The amount of the ACL significantly depends on management's estimates of key factors and assumptions affecting valuation, appraisals of collateral, evaluations of performance and status, the amounts and timing of future cash flows expected to be received, forecasts of future economic conditions and reversion periods. Such estimates, appraisals, evaluations, cash flows and forecasts may be subject to frequent adjustments due to changing economic prospects of borrowers, lessees, properties or economic conditions. These estimates are reviewed quarterly and adjustments, if necessary, are recorded in the provision for credit losses in the periods in which they become known.

Accrued interest receivable is included in other assets on the Consolidated Statements of Financial Condition, and an ACL is not recorded for these balances. Generally, when a loan or lease is placed on nonaccrual status, typically when the collection of interest or principal is 90 days or more past due, uncollected interest accrued in prior years is charged off against the ACL and interest accrued in the current year is reversed against interest income.

Management maintains a framework of controls over the estimation process for the ACL, including review of collective reserve methodologies for compliance with GAAP. Management has a quarterly process to review the appropriateness of historical observation periods and loss assumptions, risk ratings assigned to commercial loans and leases, and discount rate assumptions used to estimate the fair value of consumer real estate. Management reviews its qualitative framework and the effect on the collective reserve compared with relevant credit risk factors and consistency with credit trends. Management also maintains controls over the information systems, models and spreadsheets used in the quantitative components of the reserve estimate. This includes the quality and accuracy of historical data used to derive loss rates, the probability of default, loss given default, the inputs to industry and macroeconomic forecasts and the reversion periods utilized. The results of this process are summarized and presented to management quarterly for their approval of the recorded allowance.

See "Note 8Allowance for Credit Losses and Credit Quality" for further information.

Loans and Leases Acquired in a Business Combination The Corporation records 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. An ALLL is also recorded following the Corporation’s ACL accounting policy. Purchased and acquired loans and leases are evaluated at the acquisition date and classified as either (i) loans and leases purchased without evidence of deteriorated credit quality since origination, or (ii) loans and leases purchased that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, referred to as purchased financial assets with credit deterioration ("PCD") assets. In determining whether an acquired asset should be classified as PCD, the Corporation must make numerous assumptions, interpretations and judgments using internal and third-party credit quality information to determine whether or not the asset has experienced more-than-insignificant credit deterioration since origination. 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 ALLL estimated for PCD loans and leases as of the acquisition date is recorded as a gross-up of the loan or lease balance and the ALLL. Any remaining discount or premium after the gross-up is then recognized as an adjustment to yield over the remaining life of each PCD loan or lease. After the acquisition date, the accounting for acquired loans and leases, including PCD and non-PCD loans and leases, follows the same accounting guidance as loans and leases originated by the Corporation.

See "Note 8. Allowance for Credit Losses and Credit Quality" for further information.



13




Investment Securities Held-to-Maturity

Investment securities held-to-maturity are carried at cost and adjusted for amortization of premiums or accretion of discounts using a level yield method; however, transfers of investment securities available-for-sale to investment securities held-to-maturity are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of each transfer is retained in accumulated other comprehensive income (loss) and in the carrying value of the held-to-maturity investment security. Such amounts are then amortized over the remaining life of the transferred investment security as an adjustment of the yield on those securities. The Corporation evaluates investment securities held-to-maturity for credit losses on a quarterly basis, and records any such losses as a component of provision for credit losses in the Consolidated Statements of Income and a corresponding ACL. At September 30, 2020 there was no ACL recorded. See "Note 6. Investment Securities" for further information on investment securities held-to-maturity.

Investment Securities Available-for-Sale

Investment securities available-for-sale are carried at fair value with the unrealized gains or losses net of related deferred income taxes reported within accumulated other comprehensive income (loss). The cost of investment securities sold is determined on a specific identification basis and gains or losses on sales of investment securities available-for-sale are recognized on trade dates. Discounts and premiums on investment securities available-for-sale are amortized using a level yield method over the expected life of the security, or to the earliest call date for premiums on investment securities with call features. The Corporation evaluates investment securities available-for-sale for credit losses on a quarterly basis, and records any such losses as a component of provision for credit losses in the Consolidated Statements of Income and a corresponding ACL. At September 30, 2020 there was no ACL recorded. See "Note 6. Investment Securities" for further information on investment securities available-for-sale.

Recently Adopted Accounting Pronouncements

Effective January 1, 2020, the Corporation adopted ASU No. 2020-03, Codification Improvements to Financial Instruments, which is comprised of amendments intended to clarify or improve the accounting guidance for various financial instruments, including fair value measurement and disclosure, disclosures for depository and lending institutions, and the interaction between Topic 326 - Financial Instruments - Credit losses and other Topics. Each of the clarifying amendments are either not relevant to the Corporation's consolidated financial statements or further confirmed the Corporation's existing interpretation of the accounting guidance. As such, the adoption of this guidance did not have a material impact on the consolidated financial statements.

Effective January 1, 2020, the Corporation adopted ASU No. 2019-08, Compensation-Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements-Share-Based Consideration Payable to a Customer, which requires entities to measure and classify share-based payment awards granted to a customer by applying the guidance in Topic 718. The adoption of this guidance did not have a material impact on the consolidated financial statements.

Effective January 1, 2020, the Corporation adopted 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 guidance did not have a material impact on the consolidated financial statements.

Effective January 1, 2020, the Corporation adopted ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. In addition to providing variable interest entities ("VIE") guidance to private companies, 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 guidance did not have a material impact on the consolidated financial statements.

Effective January 1, 2020, the Corporation adopted 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. While the adoption of this guidance required adjustments to our fair value disclosures, it did not have a material impact on the consolidated financial statements.



14




Effective January 1, 2020, the Corporation adopted 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. Under the new guidance, the Corporation will compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for any amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance largely remains unchanged. The adoption of this guidance did not have a material impact on the consolidated financial statements.

Effective January 1, 2020, the Corporation adopted 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 exposures), 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 adjustments for current conditions and reasonable and supportable forecasts of future economic conditions. Effective January 1, 2020, the Corporation also adopted the following ASUs, which further amend the original CECL guidance in Topic 326: (i) 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; (ii) 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; (iii) ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, which provides an option to irrevocably elect to apply the fair value option in Subtopic 825-10 to certain instruments within the scope of Subtopic 326-20 upon adoption of Topic 326; (iv) ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies that expected recoveries of amounts previously written off or expected to be written off should be included in the estimate of allowance for credit losses for purchased financial assets with credit deterioration, provides certain transition relief for TDR accounting when the discounted cash flow method is used to estimate credit losses, allows entities to elect to disclose separately the total amount of accrued interest included in the amortized cost basis as a single balance to meet certain disclosure requirements, and clarifies that an entity should assess whether it reasonably expects the borrower will be able to continually replenish collateral securing financial assets when electing a practical expedient to measure the estimate of expected credit losses by comparing the amortized cost basis of the financial asset and the fair value of collateral securing the financial asset as of the reporting date. These ASUs were adopted on a modified retrospective basis.



15




CECL represents a significant change in GAAP and has resulted in a significant change to industry practice, which the Corporation expects will continue to evolve over time. Our adoption resulted in an ALLL as of January 1, 2020 that is larger than the ALLL that would have been recorded under the legacy guidance on the same date by $206.0 million in total for all portfolios. Approximately 20% of the increase relates to originated loans and leases, with the largest impact on the consumer segment given the longer duration of the portfolios. A significant portion of the increase is a result of new requirements to record ALLL related to acquired loans and leases, regardless of any credit mark previously recorded with respect to them. Approximately 80% of the increase relates to acquired loans and leases, which were recorded at estimated fair value at their respective acquisition date, the majority of which relate to loans and leases acquired in the Merger. Under legacy GAAP, credit marks were included in the determination of the fair value adjustments reflected as a discount to the carrying value of the loans, and an ALLL was not recorded on acquired loans and leases until evidence of credit deterioration existed post acquisition. However, upon adoption of CECL an ALLL is recorded for all acquired loans and leases based on the lifetime loss concept. Further, for acquired loans and leases that do not meet the definition of PCD, the credit and interest marks which existed from acquisition accounting as of December 31, 2019 will continue to accrete over the life of loan. For acquired loans that met the definition of PCI under legacy GAAP and converted to PCD at CECL adoption, the ALLL recorded is recognized through a gross-up that increases the amortized cost basis of loans with a corresponding ALLL, and therefore results in little to no impact to the cumulative effect adjustment to retained earnings. Prior to the adoption of CECL, PCI loans were not classified as nonaccrual loans because they were recorded at their net realizable value based on the principal and interest expected to be collected on the loans. At January 1, 2020, $73.4 million of loans previously classified as PCI were reclassified to nonaccrual loans as a result of the adoption of CECL. The adoption of CECL also resulted in an increase in the liability for unfunded lending commitments of $14.7 million. For other assets within the scope of the standard such as available-for-sale investment securities, held-to-maturity investment securities, and trade and other receivables, the impact from the standard was inconsequential. The cumulative tax effected adjustment to record ALLL and to increase the unfunded lending commitment liability resulted in a reduction to retained earnings of $159.3 million. Post-adoption, as loans and leases are added to the portfolio, the Corporation expects higher levels of ACL determined by CECL assumptions, resulting in accelerated recognition of provision for credit losses, as compared to historical results. In response to the COVID-19 pandemic, the regulatory agencies published a final rule that provides the option to delay the cumulative effect of the day 1 impact of CECL adoption on regulatory capital, along with 25% of the change in the adjusted allowance for credit losses (as computed for regulatory capital purposes which excludes PCD loans), for 2 years, followed by a three-year phase-in period. Management elected the 5-year transition period consistent with the final rule issued by the regulatory agencies. Additional and modified disclosure requirements under CECL are included in "Note 6. Investment Securities" and "Note 8. Allowance for Credit Losses and Credit Quality."

CARES Act and Interagency Regulatory Guidance Regarding Troubled Debt Restructurings

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law. Section 4013 of the CARES Act provides banks the option to temporarily suspend certain TDR accounting guidance for loans modified due to the effects of COVID-19. Additionally, on April 7, 2020, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency (collectively the "agencies") issued a statement, "Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working With Customers Affected by the Coronavirus (Revised)" ("Interagency Statement on Loan Modifications") to encourage banks to work prudently with borrowers and to describe the agencies' interpretation of how accounting guidance for troubled debt restructuring applies to certain COVID-19-related modifications.

The CARES Act includes a provision permitting the Corporation to opt out of applying TDR accounting guidance for certain loan modifications. Loan modifications made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the President of the United States declares a termination of the COVID-19 national emergency are eligible for this relief if the related loans were not more than 30 days past due as of December 31, 2019 and meet the other requirements. The Corporation will first assess if a loan modification meets the qualifications. If the loan modification does not meet the qualification under the CARES Act, the Corporation will then assess applicability of the Interagency Statement on Loan Modifications offering practical expedients for short term modifications. Under both guidance principals, subsequent modifications must be re-evaluated for the appropriate accounting treatment. The Corporation will apply its existing accounting policies for those loans that either do not qualify for the relief under either the CARES Act or the Interagency Statement on Loan Modifications, or for which the Corporation has decided not to apply the relief.



16




The Corporation has granted short-term (up to 180 days) deferral of payment for certain borrowers. In these cases, the Corporation recognizes interest income as earned. The deferred interest will be repaid by the borrower in a future period, and will be evaluated by the Corporation for collectability. Certain borrowers that need additional relief beyond the initial 180 day deferral continue to be evaluated under the CARES Act, if applicable, but will generally be placed on nonaccrual with any remaining accrued interest balance reversed against interest income.

Recently Issued but Not Yet Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which reduces the complexity of accounting for certain financial instruments with characteristics of both debt and equity. The adoption of this ASU will be required beginning with the Corporation's Quarterly Report on Form 10-Q for the quarter ending March 31, 2022. Early adoption is allowed, but no earlier than the quarter ending March 31, 2021. Management is currently evaluating the impact of this guidance on the consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides a number of optional expedients to general accounting guidance intended to ease the burden of the accounting impacts of reference rate reform related to contract modifications and hedge accounting elections. Adoption of the expedients is allowed after March 12, 2020 and no later than December 31, 2022. Management is currently evaluating the impact of this guidance on the consolidated financial statements.

In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force), which clarifies the interactions between Topic 321, Topic 323 and Topic 815, including accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. The adoption of this ASU will be required beginning with the Corporation's Quarterly Report on Form 10-Q for the quarter ending March 31, 2021. Early adoption is allowed. Management is currently evaluating the impact of this guidance on the consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify the accounting for income taxes by removing certain exceptions to the general rules found in Topic 740 - Income Taxes. The adoption of this ASU will be required beginning with the Corporation's Quarterly Report on Form 10-Q for the quarter ending March 31, 2021. Early adoption is allowed. Management is currently evaluating the impact of this guidance on the consolidated financial statements.

Note 4Cash and Cash Equivalents
 
Cash and cash equivalents include cash and due from banks and interest-bearing deposits in other banks. Total cash and cash equivalents were $1.8 billion and $1.2 billion at September 30, 2020 and December 31, 2019, respectively.

As of March 26, 2020, TCF Bank was no longer required by Federal Reserve regulations to maintain reserves in cash on hand or at the Federal Reserve Bank.

The Corporation maintains cash balances that are restricted as to their use in accordance with certain obligations. Cash payments received on loans serviced for third parties are generally held in separate accounts until remitted. The Corporation may also retain cash balances for collateral on certain borrowings and derivatives. The Corporation maintained restricted cash totaling $103.9 million and $68.6 million at September 30, 2020 and December 31, 2019, respectively.



17




Note 5. Federal Home Loan Bank and Federal Reserve Bank Stocks

Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stocks were as follows:
(In thousands)
At September 30, 2020
 
At December 31, 2019
FHLB stock, at cost
$
176,459

 
$
318,473

FRB stock, at cost
123,985

 
123,967

Total investments
$
300,444

 
$
442,440



The investments in FHLB stock are required investments related to the Corporation's membership and borrowings in the FHLB of Des Moines, and additional commitments from the FHLB of Indianapolis and Cincinnati. The Corporation's investments in the FHLB of Des Moines, Indianapolis and Cincinnati could be adversely impacted by the financial operations of the Federal Home Loan Banks and actions of their regulator, the Federal Housing Finance Agency. The amount of FRB stock that TCF Bank is required to hold is based on TCF Bank's capital structure. The Corporation periodically evaluates investments for impairment. There was no impairment of these investments at September 30, 2020 and December 31, 2019.

Note 6.  Investment Securities
 
The amortized cost and fair value of investment securities were as follows:
 
Investment Securities Available-for-sale, At Fair Value
(In thousands)
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
At September 30, 2020
 
 
 
 
 
 
 
Debt securities:
 

 
 

 
 

 
 

Obligations of states and political subdivisions
$
836,691

 
$
41,081

 
$
1,008

 
$
876,764

Government and government-sponsored enterprises
205,213

 
372

 
500

 
205,085

Mortgage-backed securities:
 

 
 

 
 

 
 

Residential agency
5,229,551

 
171,039

 
580

 
5,400,010

Residential non-agency
205,029

 
4,571

 
3

 
209,597

Commercial agency
671,387

 
40,373

 
180

 
711,580

Commercial non-agency
39,368

 
3,295

 

 
42,663

Total mortgage-backed debt securities
6,145,335

 
219,278

 
763

 
6,363,850

Corporate debt and trust preferred securities
453

 
11

 

 
464

Total investment securities available-for-sale
$
7,187,692

 
$
260,742

 
$
2,271

 
$
7,446,163

At December 31, 2019
 
 
 
 
 
 
 
Debt securities:
 

 
 

 
 

 
 

Obligations of states and political subdivisions
$
852,096

 
$
12,446

 
$
687

 
$
863,855

Government and government-sponsored enterprises
235,045

 
18

 
678

 
234,385

Mortgage-backed securities:
 

 
 

 
 

 
 

Residential agency
4,492,427

 
68,797

 
6,103

 
4,555,121

Residential non-agency
374,046

 
1,166

 
616

 
374,596

Commercial agency
645,814

 
8,639

 
2,049

 
652,404

Commercial non-agency
39,398

 
17

 
205

 
39,210

Total mortgage-backed debt securities
5,551,685

 
78,619

 
8,973

 
5,621,331

Corporate debt and trust preferred securities
451

 

 
21

 
430

Total investment securities available-for-sale
$
6,639,277

 
$
91,083

 
$
10,359

 
$
6,720,001




18




 
Investment Securities Held-to-Maturity
(In thousands)
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
At September 30, 2020
 
 
 
 
 
 
 
Residential agency mortgage-backed securities
$
166,594

 
$
10,262

 
$
207

 
$
176,649

Corporate debt and trust preferred securities
3,715

 

 

 
3,715

Total investment securities held-to-maturity (1)
$
170,309

 
$
10,262

 
$
207

 
$
180,364

At December 31, 2019
 
 
 
 
 
 
 
Residential agency mortgage-backed securities
$
135,769

 
$
5,576

 
$
177

 
$
141,168

Corporate debt and trust preferred securities
3,676

 

 

 
3,676

Total investment securities held-to-maturity
$
139,445

 
$
5,576

 
$
177

 
$
144,844

(1)
The adoption of CECL was inconsequential to held-to-maturity investment securities. At September 30, 2020 there was no ACL for investment securities held-to-maturity.

Accrued interest receivable for investment securities was $23.1 million and $21.6 million at September 30, 2020 and December 31, 2019, respectively, and is included in other assets on the Consolidated Statements of Financial Condition.

Gross unrealized losses and fair value of available-for-sale 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, 2020
 
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:
 

 
 

 
 

 
 

 
 

 
 

Obligations of states and political subdivisions
$
47,548

 
$
1,008

 
$

 
$

 
$
47,548

 
$
1,008

Government and government sponsored enterprises
100,992

 
500

 

 

 
100,992

 
500

Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Residential agency
177,611

 
580

 

 

 
177,611

 
580

Residential non-agency
3,691

 
3

 

 

 
3,691

 
3

Commercial agency
58,349

 
180

 

 

 
58,349

 
180

Commercial non-agency

 

 

 

 

 

Total mortgage-backed debt securities
239,651

 
763

 

 

 
239,651

 
763

Total investment securities available-for-sale
$
388,191

 
$
2,271

 
$

 
$

 
$
388,191

 
$
2,271

Investment securities held-to-maturity
 

 
 

 
 

 
 

 
 

 
 

Residential agency mortgage-backed securities
51,766

 
207

 

 

 
51,766

 
207

Total investment securities held-to-maturity
$
51,766

 
$
207

 
$

 
$

 
$
51,766

 
$
207



19




 
At December 31, 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:
 

 
 

 
 

 
 

 
 

 
 

Obligations of states and political subdivisions
$
60,639

 
$
687

 
$

 
$

 
$
60,639

 
$
687

Government and government sponsored enterprises
226,177

 
678

 

 

 
226,177

 
678

Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 Residential agency
667,511

 
3,586

 
200,534

 
2,517

 
868,045

 
6,103

Residential non-agency
140,403

 
616

 

 

 
140,403

 
616

Commercial agency
176,880

 
2,049

 

 

 
176,880

 
2,049

Commercial non-agency
25,560

 
205

 

 

 
25,560

 
205

Total mortgage-backed debt securities
1,010,354

 
6,456

 
200,534

 
2,517

 
1,210,888

 
8,973

Corporate debt and trust preferred securities
430

 
21

 

 

 
430

 
21

Total investment securities available-for-sale
$
1,297,600

 
$
7,842

 
$
200,534

 
$
2,517

 
$
1,498,134

 
$
10,359



The adoption of CECL was inconsequential to available-for-sale investment securities. At September 30, 2020 there was no ACL for investment securities available-for-sale. At September 30, 2020 there were 144 available-for-sale investment securities in an unrealized loss position. Management assessed each investment security with unrealized losses for credit impairment. Substantially all unrealized losses on investment securities were due to credit spreads and interest rates rather than credit impairment. As part of that assessment management evaluated and concluded that it is more-likely-than-not that the Corporation will not be required and does not intend to sell any of the investment securities prior to recovery of the amortized cost.

The gross gains and losses on sales of investment securities were as follows: 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Gross realized gains
$
2,309

 
$
7,717

 
$
2,309

 
$
10,872

Gross realized losses

 
1,849

 

 
3,491

Recoveries on previously impaired investment securities held-to-maturity
15

 
32

 
23

 
36

Net gains on investment securities
$
2,324

 
$
5,900

 
$
2,332

 
$
7,417




20





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.
 
At September 30, 2020
 
At December 31, 2019
(In thousands)
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
Investment Securities Available-for-Sale
 

 
 

 
 

 
 

Due in one year or less
$
45,229

 
$
45,518

 
$
66,124

 
$
66,112

Due in 1-5 years
171,134

 
176,145

 
191,364

 
192,065

Due in 5-10 years
664,743

 
703,227

 
547,813

 
555,523

Due after 10 years
6,306,586

 
6,521,273

 
5,833,976

 
5,906,301

Total investment securities available-for-sale
$
7,187,692

 
$
7,446,163

 
$
6,639,277

 
$
6,720,001

Investment Securities Held-to-Maturity
 

 
 

 
 

 
 

Due in one year or less
$
400

 
$
400

 
$

 
$

Due in 1-5 years
$
3,150

 
$
3,150

 
$
3,550

 
$
3,550

Due in 5-10 years
49

 
55

 
58

 
64

Due after 10 years
166,710

 
176,759

 
135,837

 
141,230

Total investment securities held-to-maturity
$
170,309

 
$
180,364

 
$
139,445

 
$
144,844



At September 30, 2020 and December 31, 2019, investment securities with a carrying value of $1.2 billion and $627.0 million, respectively, were pledged as collateral to secure certain deposits and borrowings.

Note 7Loans and Leases

Loans and leases were as follows:
(In thousands)
At September 30, 2020
 
At December 31, 2019
Commercial loan and lease portfolio:
 

 
 

Commercial and industrial
$
11,557,237

 
$
11,439,602

Commercial real estate
9,627,330

 
9,136,870

Lease financing
2,724,686

 
2,699,869

Total commercial loan and lease portfolio
23,909,253

 
23,276,341

Consumer loan portfolio:
 
 
 
Residential mortgage
5,790,251

 
6,179,805

Home equity
3,302,983

 
3,498,907

Consumer installment
1,341,204

 
1,542,411

Total consumer loan portfolio
10,434,438

 
11,221,123

Total loans and leases(1)
$
34,343,691

 
$
34,497,464

(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 these loan and lease adjustments was $(174.2) million and $(201.5) million at September 30, 2020 and December 31, 2019, respectively.

Accrued interest receivable for loans and leases was $91.6 million and $106.5 million at September 30, 2020 and December 31, 2019, respectively, and is included in other assets on the Consolidated Statements of Financial Condition.

Acquired Loans and Leases The Corporation acquires loans and leases through business combinations and purchases of loan and lease portfolios. These loans and leases are recorded at fair value at acquisition and the fair value discount or premium is recognized as an adjustment to yield over the remaining life of each loan or lease. The Corporation purchased jumbo residential mortgage loans at their fair value of $423.0 million during the three months ended March 31, 2020, none of which qualified as PCD loans.

See "Note 3. Summary of Significant Accounting Policies" for further acquired loans and leases policy information.



21




Lease Income The components of total lease income were as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Interest income - loans and leases:
 
 
 
 
 
 
 
Interest income on net investment in direct financing and sales-type leases
$
32,696

 
$
32,833

 
$
100,655

 
$
98,116

Leasing revenue (noninterest income):
 
 
 
 
 
 
 
Lease income from operating lease payments
23,542

 
25,492

 
71,243

 
76,388

Profit recorded on commencement date on sales-type leases
4,503

 
7,983

 
13,690

 
22,289

Gains on sales of leased equipment
3,860

 
6,115

 
17,709

 
18,355

Leasing revenue
31,905

 
39,590

 
102,642

 
117,032

Total lease income
$
64,601

 
$
72,423

 
$
203,297

 
$
215,148



Loan and Lease Sales The following table summarizes the net gains on sales of loans and leases. The Corporation retains servicing on a majority of loans sold. See "Note 10. Loan Servicing Rights" for further information.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Sale proceeds, net
$
667,807

 
$
472,800

 
$
1,802,193

 
$
1,066,576

Recorded investment in loans and leases sold, including accrued interest
635,149

 
458,697

 
1,727,687

 
1,033,961

Other
(9,168
)
 
(20,087
)
 
(1,392
)
 
(19,241
)
Net gains on sales of loans and leases
$
23,490

 
$
(5,984
)
 
$
73,114

 
$
13,374



The interest-only strips on the balance sheet related to loan sales were as follows:
(In thousands)
At September 30, 2020
 
At December 31, 2019
Interest-only strips
$
9,555

 
$
12,813



The Corporation recorded no impairment charges during the three months ended September 30, 2020 and $224 thousand of impairment charges on interest-only strips for the nine months ended September 30, 2020, and $22 thousand and $43 thousand of impairment charges for the three and nine months ended September 30, 2019, respectively.

The Corporation's agreements to sell consumer loans typically contain certain representations, warranties and covenants regarding the loans sold or securitized. These representations, warranties and covenants generally relate to, among other things, the ownership of the loan, the validity, priority and perfection of the lien securing the loan, accuracy of information supplied to the buyer or investor, the loan's compliance with the criteria set forth in the agreement, the manner in which the loans will be serviced, payment delinquency and compliance with applicable laws and regulations. These agreements generally require the repurchase of loans or indemnification of the purchaser in the event these representations are breached, warranties or covenants and such breaches are not cured. In addition, some agreements contain a requirement to repurchase loans as a result of early payoffs by the borrower, early payment default of the borrower or the failure to obtain valid title. Losses related to repurchases pursuant to such representations, warranties and covenants were immaterial for the three and nine months ended September 30, 2020 and 2019.

Note 8Allowance for Credit Losses and Credit Quality
 
Effective January 1, 2020, the Corporation adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and related ASUs on a modified retrospective basis. Financial information at June 30, 2020 reflects this adoption, and historical financial information disclosed is in accordance with ASC Topic 310.


22





Allowance for Credit Losses The rollforwards of the allowance for credit losses were as follows:
(In thousands)
Consumer Loan Portfolio
 
Commercial Loan and Lease Portfolio
 
Total Allowance for Loan and Lease Losses
 
Reserve for Unfunded Lending Commitments(1)
 
Total Allowance for Credit Losses
At or For the Three Months Ended September 30, 2020
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
157,685

 
$
303,429

 
$
461,114

 
$
42,788

 
$
503,902

Charge-offs
(5,768
)
 
(26,467
)
 
(32,235
)
 

 
(32,235
)
Recoveries
3,698

 
3,961

 
7,659

 

 
7,659

Net (charge-offs) recoveries
(2,070
)
 
(22,506
)
 
(24,576
)
 

 
(24,576
)
Provision for credit losses(2)
(20,835
)
 
99,158

 
78,323

 
(8,659
)
 
69,664

Other
357

 
11

 
368

 

 
368

Balance, end of period
$
135,137

 
$
380,092


$
515,229

 
$
34,129

 
$
549,358

At or For the Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
70,711

 
$
75,792

 
$
146,503

 
$
1,936

 
$
148,439

Charge-offs
(14,098
)
 
(21,449
)
 
(35,547
)
 

 
(35,547
)
Recoveries
5,330

 
1,639

 
6,969

 

 
6,969

Net (charge-offs) recoveries
(8,768
)
 
(19,810
)
 
(28,578
)
 

 
(28,578
)
Provision for credit losses(2)
4,693

 
22,495

 
27,188

 
(342
)
 
26,846

Other(3)
(23,849
)
 
(46
)
 
(23,895
)
 

 
(23,895
)
Addition due to merger

 

 

 
1,867

 
1,867

Balance, end of period
$
42,787

 
$
78,431

 
$
121,218

 
$
3,461

 
$
124,679

At or For the Nine Months Ended September 30, 2020
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
28,572

 
$
84,480

 
$
113,052

 
$
3,528

 
$
116,580

Impact of CECL adoption
107,337

 
98,655

 
205,992

 
14,707

 
220,699

Adjusted balance, beginning of period
135,909

 
183,135

 
319,044

 
18,235

 
337,279

Charge-offs
(16,613
)
 
(40,309
)
 
(56,922
)
 

 
(56,922
)
Recoveries
12,035

 
11,439

 
23,474

 

 
23,474

Net (charge-offs) recoveries
(4,578
)
 
(28,870
)
 
(33,448
)
 

 
(33,448
)
Provision for credit losses(2)
3,449

 
225,990

 
229,439

 
15,894

 
245,333

Other
357

 
(163
)
 
194

 

 
194

Balance, end of period
$
135,137

 
$
380,092

 
$
515,229

 
$
34,129

 
$
549,358

At or For the Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
 


Balance, beginning of period
$
80,017

 
$
77,429

 
$
157,446

 
$
1,428

 
$
158,874

Charge-offs
(43,922
)
 
(37,122
)
 
(81,044
)
 

 
(81,044
)
Recoveries
15,840

 
3,890

 
19,730

 

 
19,730

Net (charge-offs) recoveries
(28,082
)
 
(33,232
)
 
(61,314
)
 

 
(61,314
)
Provision for credit losses(2)
16,644

 
34,235

 
50,879

 
166

 
51,045

Other(3)
(25,792
)
 
(1
)
 
(25,793
)
 

 
(25,793
)
Addition due to merger

 

 

 
1,867

 
1,867

Balance, end of period
$
42,787

 
$
78,431

 
$
121,218

 
$
3,461

 
$
124,679

(1)
RULC is recognized within other liabilities.
(2)
As a result of the adoption of CECL, effective January 1, 2020, the provision for credit losses includes the provision for unfunded lending commitments that was previously included within other noninterest expense.
(3)
Primarily includes the transfer of the allowance for credit losses to loans and leases held-for-sale.



23




The following tables provide additional disclosures previously required by ASC Topic 310 related to the Corporation's December 31, 2019 balances.

The allowance for loan and lease losses and loans and leases outstanding by type of allowance methodology was 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



Information on impaired loans and leases at December 31, 2019 was as follows:
 
At December 31, 2019
(In thousands)
Unpaid Contractual Balance
 
Loan and Lease 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

Commercial real estate
4,225

 
3,962

 
333

Lease financing
10,956

 
10,956

 
2,592

Total commercial loan and lease portfolio
35,250

 
35,008

 
5,769

Consumer loan portfolio:
 

 
 

 
 

Residential mortgage
24,297

 
22,250

 
1,030

Home equity
9,418

 
8,791

 
438

Total consumer loan portfolio
33,715

 
31,041

 
1,468

Total impaired loans and leases with an allowance recorded
68,965

 
66,049

 
7,237

Impaired loans and leases without an allowance recorded:
 

 
 

 
 

Commercial loan and lease portfolio:
 
 
 
 
 
Commercial and industrial
55,889

 
39,098

 

Commercial real estate
69,143

 
41,737

 

Total commercial loan and lease portfolio
125,032

 
80,835

 

Consumer loan portfolio:
 

 
 

 
 

Residential mortgage
31,142

 
22,594

 

Home equity
24,709

 
6,179

 

Consumer installment
2,095

 
880

 

Total consumer loan portfolio
57,946

 
29,653

 

Total impaired loans and leases without an allowance recorded
182,978

 
110,488

 

Total impaired loans and leases
$
251,943

 
$
176,537

 
$
7,237





24




Accruing and Nonaccrual Loans and Leases The Corporation's key credit quality indicator is the receivable's payment performance status, defined as accruing or not accruing. 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 90 days delinquent are a leading indicator for future charge-off trends and are generally placed on nonaccrual status. In addition, loans and leases that have requested payment deferral under the CARES Act of greater than 180 days are generally placed on nonaccrual status. The Corporation's accruing and nonaccrual loans and leases were as follows:
(In thousands)
Current
 
30-89 Days Delinquent and Accruing
 
90 Days or More Delinquent and Accruing
 
Total
 Accruing
 
Nonaccrual(1)
 
Total
At September 30, 2020
 
 
 
 
 
 
 
 
 
 
 
Commercial loan and lease portfolio:
 

 
 

 
 

 
 
 
 

 
 
Commercial and industrial
$
11,357,324

 
$
56,320

 
$
3,101

 
$
11,416,745

 
$
140,492

 
$
11,557,237

Commercial real estate
9,492,853

 
63,981

 
244

 
9,557,078

 
70,252

 
9,627,330

Lease financing
2,648,447

 
30,652

 
3,564

 
2,682,663

 
42,023

 
2,724,686

Total commercial loan and lease portfolio
23,498,624

 
150,953

 
6,909

 
23,656,486

 
252,767

 
23,909,253

Consumer loan portfolio:
 

 
 

 
 

 
 

 
 

 
 

Residential mortgage
5,700,715

 
22,954

 
1,347

 
5,725,016

 
65,235

 
5,790,251

Home equity
3,160,742

 
90,057

 

 
3,250,799

 
52,184

 
3,302,983

Consumer installment
1,329,989

 
4,680

 

 
1,334,669

 
6,535

 
1,341,204

Total consumer loan portfolio
10,191,446

 
117,691

 
1,347

 
10,310,484

 
123,954

 
10,434,438

Total
$
33,690,070

 
$
268,644

 
$
8,256

 
$
33,966,970

 
$
376,721

 
$
34,343,691

At December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
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

Home equity
3,434,771

 
22,568

 

 
3,457,339

 
35,863

 
3,493,202

Consumer installment
1,536,714

 
4,292

 
108

 
1,541,114

 
714

 
1,541,828

Total consumer loan portfolio
11,028,302

 
44,105

 
667

 
11,073,074

 
75,154

 
11,148,228

Purchased credit impaired 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)
Prior to the adoption of CECL as of January 1, 2020, purchased credit impaired loans were not classified as nonaccrual loans because they were recorded at their net realizable value based on the principal and interest expected to be collected on the loans. At January 1, 2020, $73.4 million of previous purchased credit impaired loans were reclassified to nonaccrual loans as a result of the adoption of CECL.



25




Loans and leases that are 90 days or more delinquent and accruing by year of origination were as follows:
 
 
 
Amortized Cost Basis
(In thousands)
Term Loans and Leases by Origination Year
 
Revolving Loans and Leases
 
Revolving Loans and Leases Converted to Term Loans and Leases
 
 
At September 30, 2020
2020
 
2019
 
2018
 
2017
 
2016
 
2015 and Prior
 
 
 
Total
Commercial loan and lease portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
142

 
$
86

 
$

 
$
4

 
$

 
$
2,468

 
$
401

 
$

 
$
3,101

Commercial real estate

 

 

 

 

 
244

 

 

 
244

Lease financing
139

 
906

 
697

 
1,308

 
482

 
32

 

 

 
3,564

Total commercial loan and lease portfolio
281

 
992

 
697

 
1,312

 
482

 
2,744

 
401

 

 
6,909

Consumer loan portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
85

 
134

 

 

 

 
1,128

 

 

 
1,347

Total consumer loan portfolio
85

 
134

 

 

 

 
1,128

 

 

 
1,347

Total 90 days or more delinquent and accruing
$
366

 
$
1,126

 
$
697

 
$
1,312

 
$
482

 
$
3,872

 
$
401

 
$

 
$
8,256


Nonaccrual loans and leases by year of origination were as follows:
 
 
 
Amortized Cost Basis
(In thousands)
Term Loans and Leases by Origination Year
 
Revolving Loans and Leases
 
Revolving Loans and Leases Converted to Term Loans and Leases
 
 
At September 30, 2020
2020
 
2019
 
2018
 
2017
 
2016
 
2015 and Prior
 
 
 
Total
Commercial loan and lease portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
3,739

 
$
38,211

 
$
34,112

 
$
17,978

 
$
12,395

 
$
16,424

 
$
17,629

 
$
4

 
$
140,492

Commercial real estate

 
1,079

 
11,937

 
11,618

 
8,810

 
36,808

 

 

 
70,252

Lease financing
1,810

 
9,695

 
12,289

 
7,204

 
4,532

 
4,863

 
100

 
1,530

 
42,023

Total commercial loan and lease portfolio
5,549

 
48,985

 
58,338

 
36,800

 
25,737

 
58,095

 
17,729

 
1,534

 
252,767

Consumer loan portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
476

 
2,895

 
2,902

 
2,112

 
2,392

 
54,458

 

 

 
65,235

Home equity
675

 
1,604

 
458

 
341

 
211

 
4,502

 
43,360

 
1,033

 
52,184

Consumer installment
42

 
163

 
656

 
285

 
248

 
4,973

 
168

 

 
6,535

Total consumer loan portfolio
1,193

 
4,662

 
4,016

 
2,738

 
2,851

 
63,933

 
43,528

 
1,033

 
123,954

Total nonaccrual loans and leases
$
6,742

 
$
53,647

 
$
62,354

 
$
39,538

 
$
28,588

 
$
122,028

 
$
61,257

 
$
2,567

 
$
376,721





26




The average balance of nonaccrual loans and leases and interest income recognized on nonaccrual loans and leases were as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2020
 
2019
 
2020
 
2019
(In thousands)
Average Loan and Lease Balance(1)
 
Interest Income Recognized(1)
 
Average Loan and Lease Balance
 
Interest Income Recognized
 
Average Loan and Lease Balance(1)
 
Interest Income Recognized(1)
 
Average Loan and Lease Balance
 
Interest Income Recognized
Commercial loan and lease portfolio:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial and industrial
$
119,338

 
$
2,544

 
$
36,761

 
$
40

 
$
97,153

 
$
6,212

 
$
40,550

 
$
162

Commercial real estate
63,885

 
2,452

 
13,531

 
35

 
49,993

 
5,982

 
15,518

 
97

Lease financing
30,390

 
31

 
12,195

 
55

 
26,489

 
102

 
9,748

 
116

Total commercial loan and lease portfolio
213,613

 
5,027

 
62,487

 
130

 
173,635

 
12,296

 
65,816

 
375

Consumer loan portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
66,498

 
769

 
41,788

 
68

 
51,906

 
2,133

 
40,963

 
205

Home equity
49,872

 
3,000

 
35,991

 
79

 
44,023

 
3,283

 
32,476

 
174

Consumer installment
4,102

 
143

 
4,634

 

 
3,625

 
209

 
4,608

 

Total consumer loan portfolio
120,472

 
3,912

 
82,413

 
147

 
99,554

 
5,625

 
78,047

 
379

Total nonaccrual loans and leases
$
334,085

 
$
8,939

 
$
144,900

 
$
277

 
$
273,189

 
$
17,921

 
$
143,863

 
$
754


(1)
At January 1, 2020, $73.4 million of previously purchased credit impaired loans were reclassified to nonaccrual loans as a result of the adoption of CECL. Beginning January 1, 2020, interest income, including the related purchase accounting accretion and amortization is included related to these loans.

In addition to the receivable's payment performance status, credit quality is also analyzed using credit risk classifications, 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 credit risk classifications also measure the quality of the borrower's management and the repayment support offered by any guarantors. Loan and lease credit risk 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.


27




The amortized cost basis of loans and leases by credit risk classifications and year of origination was as follows:
 
Amortized Cost Basis
(In thousands)
Term Loans and Leases by Origination Year
 
Revolving Loans and Leases(1)
 
Revolving Loans and Leases Converted to Term Loans and Leases(2)
 
 
At September 30, 2020
2020
 
2019
 
2018
 
2017
 
2016
 
2015 and Prior
 
 
 
Total
Commercial loan and lease portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Pass
$
3,046,289

 
$
2,070,267

 
$
1,165,510

 
$
650,511

 
$
412,527

 
$
354,391

 
$
3,173,255

 
$
45,162

 
$
10,917,912

Special mention
9,996

 
55,414

 
34,345

 
44,613

 
14,564

 
13,127

 
142,520

 

 
314,579

Substandard
7,238

 
51,459

 
88,920

 
36,442

 
19,116

 
23,474

 
97,984

 
113

 
324,746

Total commercial and industrial
3,063,523

 
2,177,140

 
1,288,775

 
731,566

 
446,207

 
390,992

 
3,413,759

 
45,275

 
11,557,237

Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pass
930,314

 
2,152,099

 
1,932,737

 
1,371,335

 
784,174

 
1,672,418

 

 

 
8,843,077

Special mention
289

 
100,532

 
55,678

 
168,496

 
62,608

 
102,896

 

 

 
490,499

Substandard
1,056

 
5,129

 
34,754

 
119,637

 
43,004

 
90,174

 

 

 
293,754

Total commercial real estate
931,659

 
2,257,760

 
2,023,169

 
1,659,468

 
889,786

 
1,865,488

 

 

 
9,627,330

Lease financing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Pass
718,133

 
797,020

 
449,720

 
270,567

 
143,098

 
47,280

 
31,963

 
172,653

 
2,630,434

Special mention
2,703

 
11,432

 
4,687

 
5,731

 
2,469

 
1,658

 
3,837

 
5,299

 
37,816

Substandard
5,428

 
11,672

 
15,082

 
9,305

 
5,501

 
5,926

 
418

 
3,104

 
56,436

Total lease financing
726,264

 
820,124

 
469,489

 
285,603

 
151,068

 
54,864

 
36,218

 
181,056

 
2,724,686

Total commercial
4,721,446

 
5,255,024

 
3,781,433

 
2,676,637

 
1,487,061

 
2,311,344

 
3,449,977

 
226,331

 
23,909,253

Consumer loan portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Pass
1,024,652

 
1,243,341

 
743,949

 
507,124

 
497,004

 
1,702,326

 

 

 
5,718,396

Special mention

 

 

 

 
161

 
214

 

 

 
375

Substandard
677

 
3,076

 
3,387

 
2,488

 
3,173

 
58,679

 

 

 
71,480

Total residential mortgage
1,025,329

 
1,246,417

 
747,336

 
509,612

 
500,338

 
1,761,219

 

 

 
5,790,251

Home equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Pass
24,496

 
56,729

 
54,356

 
44,760

 
32,586

 
146,650

 
2,871,820

 
8,501

 
3,239,898

Substandard
698

 
1,753

 
580

 
483

 
569

 
7,181

 
50,379

 
1,442

 
63,085

Total home equity
25,194

 
58,482

 
54,936

 
45,243

 
33,155

 
153,831

 
2,922,199

 
9,943

 
3,302,983

Consumer installment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Pass
198,591

 
407,891

 
211,270

 
209,484

 
141,032

 
139,869

 
26,018

 
70

 
1,334,225

Substandard
397

 
1,262

 
1,382

 
1,062

 
547

 
1,860

 
469

 

 
6,979

Total consumer installment
198,988

 
409,153

 
212,652

 
210,546

 
141,579

 
141,729

 
26,487

 
70

 
1,341,204

Total consumer
1,249,511

 
1,714,052

 
1,014,924

 
765,401

 
675,072

 
2,056,779

 
2,948,686

 
10,013

 
10,434,438

Total loans and leases
$
5,970,957

 
$
6,969,076

 
$
4,796,357

 
$
3,442,038

 
$
2,162,133

 
$
4,368,123

 
$
6,398,663

 
$
236,344

 
$
34,343,691

(1)
This balance includes $36.2 million of leased equipment that has been provided to lessees under certain master lease agreements. Under these agreements, the total amount of equipment included in each lease is provided over time, and additional amounts are required to be provided to the respective lessees in future accounting periods.
(2)
This balance includes $226.3 million of leased equipment that has been provided to lessees under certain master lease agreements. Under these agreements, the total amount of equipment included in each lease was provided over time, and all equipment required by the lease has been provided to the respective lessees in current or previous accounting periods.



28




The recorded investment of loans and leases by credit risk categories as of December 31, 2019 was as follows:
(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

Home equity
3,457,292

 
456

 
41,159

 
3,498,907

Consumer installment
1,541,524

 

 
887

 
1,542,411

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



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 would generally be classified as a TDR. However, Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications provide banks the option to temporarily suspend the application of TDR accounting guidance for loans modified due to the effects of COVID-19 when certain conditions are met. See "Note 3. Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements for information regarding recent updated guidance on TDR accounting provided by the CARES Act and Interagency guidance. 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.

The following table presents the recorded investment of loan modifications first classified as TDRs during the periods presented:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2020
 
2019
 
2020
 
2019
(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
$
5,378

 
$
5,344

 
$

 
$

 
$
10,742

 
$
10,709

 
$

 
$

Commercial real estate
29,735

 
29,735

 

 

 
32,267

 
32,177

 
31,518

 
31,518

Total commercial loan and lease portfolio
35,113

 
35,079

 

 

 
43,009

 
42,886

 
31,518

 
31,518

Consumer loan portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
4,994

 
4,994

 
1,724

 
1,723

 
10,423

 
10,423

 
4,023

 
4,016

Consumer installment
88

 
88

 

 

 
481

 
391

 

 

Home equity
2,796

 
2,796

 
1,115

 
1,115

 
4,553

 
4,494

 
3,589

 
3,577

Total consumer loan portfolio
7,878

 
7,878

 
2,839

 
2,838

 
15,457

 
15,308

 
7,612

 
7,593

Total
$
42,991

 
$
42,957

 
$
2,839

 
$
2,838

 
$
58,466

 
$
58,194

 
$
39,130

 
$
39,111


The following table presents TDR loans:
 
At September 30, 2020
 
At December 31, 2019
(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
$
36,947

 
$
13,250

 
$
50,197

 
$
12,986

 
$
5,356

 
$
18,342

Consumer loan portfolio
17,956

 
21,526

 
39,482

 
12,403

 
14,875

 
27,278

Total
$
54,903

 
$
34,776

 
$
89,679

 
$
25,389

 
$
20,231

 
$
45,620



29





Commitments to lend additional funds to borrowers whose terms have been modified in TDRs were $1.3 million and $638 thousand at September 30, 2020 and December 31, 2019, respectively.

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.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Defaulted TDR loan balances modified during the applicable period
 
 
 
 
 
 
 
Commercial loan and lease portfolio:
 
 
 
 
 
 
 
Commercial and industrial
$
60

 
$

 
$
283

 
$
297

Consumer loan portfolio:
 

 
 

 
 

 
 

Residential mortgage
265

 
212

 
1,404

 
964

Home equity
170

 
82

 
426

 
328

Consumer installment
35

 
452

 
50

 
1,555

Total consumer loan portfolio
470

 
746

 
1,880

 
2,847

Defaulted TDR loan balances
$
530

 
$
746

 
$
2,163

 
$
3,144



Other Real Estate Owned and Repossessed and Returned Assets Other real estate owned and repossessed and returned assets were as follows:
(In thousands)
At September 30, 2020
 
At December 31, 2019
Other real estate owned
$
35,554

 
$
34,256

Repossessed and returned assets
11,104

 
8,045

Consumer loans in process of foreclosure
14,555

 
17,758


Other real estate owned and repossessed and returned assets were written down $1.1 million and $2.3 million, and $2.3 million and $5.5 million during the three and nine months ended September 30, 2020 and September 30, 2019, respectively, and were included in other assets on the Consolidated Statements of Financial Condition.

Note 9. Goodwill

Goodwill was as follows:
(In thousands)
At September 30, 2020
 
At December 31, 2019
Goodwill related to consumer banking segment
$
771,555

 
$
764,389

Goodwill related to commercial banking segment
541,491

 
535,489

Goodwill, net
$
1,313,046

 
$
1,299,878


 
The Corporation recorded goodwill in the amount of $1.2 billion related to the merger with Legacy TCF completed on August 1, 2019. Goodwill was allocated to the appropriate reporting unit based on the relative fair value of assets acquired and deposits held by the reporting unit. This methodology allocates goodwill in proportion to the assets held by each reporting unit as well as incorporating the value of the funding source provided by the in place deposits. The reporting units aggregate between the Consumer Banking and Commercial Banking segments. See "Note 2. Merger" for further information. There was no impairment of goodwill for the three and nine months ended September 30, 2020 and 2019.



30




Note 10. Loan Servicing Rights

Information regarding LSRs was as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Balance, beginning of period
$
38,816

 
$
18

 
$
56,313

 
$
23

Acquired in the Merger

 
59,567

 

 
59,567

New servicing assets created
5,280

 
1,906

 
11,238

 
1,906

Impairment (charge) recovery
(154
)
 
(4,520
)
 
(17,248
)
 
(4,520
)
Amortization
(5,689
)
 
(1,670
)
 
(12,050
)
 
(1,675
)
Balance, end of period
$
38,253

 
$
55,301

 
$
38,253

 
$
55,301

Valuation allowance, end of period
$
(21,131
)
 
$
(4,520
)
 
$
(21,131
)
 
$
(4,520
)
Loans serviced for others that have servicing rights capitalized, end of period
$
6,179,464

 
$
6,647,153

 
$
6,179,464

 
$
6,647,153



Total loan servicing, late fee and other ancillary fee income, included in servicing fee income, related to loans serviced for others that have servicing rights capitalized was $4.1 million and $12.4 million for the three and nine months ended September 30, 2020, respectively, and $2.8 million for both the three and nine months ended September 30, 2019.

Note 11. Investments in Qualified Affordable Housing Projects and Federal Historic Projects

The Corporation invests in qualified affordable housing projects and federal historic projects for the purposes of community reinvestment and to obtain tax credits. Return on the Corporation's investment in these projects comes in the form of pass-through tax credits and tax losses. The carrying value of the investments is included in other assets. The Corporation primarily utilizes the proportional amortization method to account for investments in qualified affordable housing projects and the equity method to account for investments in other tax credit projects.

Under the proportional amortization method, the Corporation amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits. The Corporation recognized amortization expense of investments in qualified affordable housing projects of $5.2 million and $15.6 million for the three and nine months ended September 30, 2020, respectively, and $3.6 million and $8.5 million for the three and nine months ended September 30, 2019, respectively. Amortization expense was more than offset by tax credits and other benefits of $6.5 million and $19.4 million for the three and nine months ended September 30, 2020, respectively, and $4.5 million and $10.5 million for the three and nine months ended September 30, 2019, respectively. The Corporation's remaining investment in qualified affordable housing projects totaled $219.9 million and $195.8 million at September 30, 2020 and December 31, 2019, respectively.

Under the equity method, the Corporation's share of the earnings or losses is included in other noninterest expense. The Corporation's remaining investment in the federal historic projects and Ohio historic preservation tax credits totaled $52.4 million and $43.6 million at September 30, 2020 and December 31, 2019, respectively. During the three months ended September 30, 2020, $0.5 million of income tax benefit was recognized due to the federal historic tax credits, which was partially offset by amortization expense, inclusive of impairment, of $0.4 million. During the nine months ended September 30, 2020, $1.1 million of income tax benefit was recognized due to the federal historic tax credits, which was partially offset by amortization expense, inclusive of impairment, of $0.8 million. During the three months ended September 30, 2020, the amount of state tax credits recognized, inclusive of impairment, was $0.4 million. During the nine months ended September 30, 2020, the amount of state tax credits recognized, inclusive of impairment, was $0.9 million.

The Corporation's unfunded equity contributions relating to investments in qualified affordable housing projects and federal historic projects are included in other liabilities. The Corporation's remaining unfunded equity contributions totaled $134.2 million and $131.3 million at September 30, 2020 and December 31, 2019, respectively.

Management analyzes these investments for potential impairment when events or changes in circumstances indicate that it is more-likely-than-not that the carrying amount of the investment will not be realized. An impairment loss is measured as the amount by which the carrying amount of an investment exceeds its fair value.



31




Investments in qualified affordable housing projects and federal historic projects are considered VIEs because TCF, as a limited partner, lacks the power to direct the activities that most significantly impact the entities' economic performance. TCF has concluded it is not the primary beneficiary and therefore, they are not consolidated. The maximum exposure to loss on the VIE investments is limited to the carrying amount of the investments and the potential recapture of any recognized tax credits. TCF believes the likelihood of the tax credits being recaptured is remote, as a loss would only take place if the managing entity failed to meet certain government compliance requirements. Further, certain of TCF's investments in affordable housing limited liability entities include guaranteed minimum returns which are backed by an investment grade credit-rated company, which reduces the risk of loss.

Note 12. Borrowings

TCF Bank is a member of the FHLB, which provides short- and long-term funding collateralized by mortgage related assets to its members.

Collateralized Deposits include TCF Bank's Repurchase Investment Sweep Agreement product collateralized by mortgage-backed securities, and funds deposited by customers that are collateralized by investment securities owned by TCF Bank, as these deposits are not covered by FDIC insurance.

Short-term borrowings (borrowings with an original maturity of less than one year) were as follows:
 
At September 30, 2020
 
At December 31, 2019
(Dollars in thousands)
Amount
 
Weighted-average Rate
 
Amount
 
Weighted-average Rate
FHLB advances
$
400,000

 
0.37
%
 
$
2,450,000

 
1.85
%
Collateralized Deposits
253,959

 
0.14

 
219,145

 
0.64

Line-of-Credit - TCF Commercial Finance Canada, Inc.
1,502

 
1.50

 

 

 Total short-term borrowings
$
655,461

 
0.28

 
$
2,669,145

 
1.75



On June 29, 2020, TCF Financial voluntarily prepaid the outstanding $80.0 million on its $150.0 million unsecured 364-day revolving credit facility with an unaffiliated bank and subsequently closed the credit facility.

Long-term borrowings were as follows:
(In thousands)
At September 30, 2020
 
At December 31, 2019
FHLB advances
$
210,372

 
$
1,822,058

Subordinated debt obligations
586,729

 
428,470

Discounted lease rentals
71,738

 
100,882

Finance lease obligation
3,006

 
3,038

Total long-term borrowings
$
871,845

 
$
2,354,448



On May 6, 2020, TCF Bank issued $150.0 million of fixed-to-floating rate subordinated notes (the “2030 Notes”) at par. The fixed-to-floating rate subordinated notes, due May 6, 2030, bear an initial fixed interest rate of 5.50% per annum, payable semi-annually in arrears on May 6 and November 6, commencing on November 6, 2020. The 2030 Notes are redeemable at TCF Bank's option beginning on May 6, 2025. Commencing May 6, 2025, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR rate plus 509 basis points, payable quarterly in arrears on February 6, May 6, August 6 and November 6. TCF Bank incurred issuance costs of $1.6 million that are amortized as interest expense over the full term of the 2030 Notes using the effective interest method.

At September 30, 2020, TCF Bank had pledged $14.0 billion of loans secured by consumer and commercial real estate to provide borrowing capacity from the FHLB.

At September 30, 2020, TCF Bank had pledged $2.5 billion of loans secured by assets to provide borrowing capacity from the Federal Reserve Bank discount window. No borrowings were sourced from this facility at September 30, 2020.



32




The contractual maturities of long-term borrowings at September 30, 2020 were as follows:
(In thousands)
 
Remainder of 2020
$
501

2021
10,955

2022
135,533

2023
24,055

2024
8,806

Thereafter
691,995

Total long-term borrowings
$
871,845



Note 13Accumulated Other Comprehensive Income (Loss)
 
The components of other comprehensive income (loss), reclassifications from accumulated other comprehensive income (loss) to various financial statement line items and the related tax effects were as follows:
 
Three Months Ended September 30,
 
2020
 
2019
(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
$
(8,489
)
 
$
1,992

 
$
(6,497
)
 
$
24,236

 
$
(5,606
)
 
$
18,630

Reclassification of net (gains) losses from accumulated other comprehensive income (loss) to:
 
 
 
 
 
 
 
 
 
 
 
Total interest income
777

 
(183
)
 
594

 
844

 
(205
)
 
639

Net gains (losses) on investment securities
(2,309
)
 
542

 
(1,767
)
 

 

 

Other noninterest expense
(32
)
 
8

 
(24
)
 
(53
)
 
14

 
(39
)
Amounts reclassified from accumulated other comprehensive income (loss)
(1,564
)
 
367

 
(1,197
)
 
791

 
(191
)
 
600

Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips
(10,053
)
 
2,359

 
(7,694
)
 
25,027

 
(5,797
)
 
19,230

Recognized postretirement prior service cost:
 

 
 

 
 

 
 

 
 

 
 

Reclassification of amortization of prior service cost to other noninterest expense
(12
)
 
3

 
(9
)
 
(12
)
 
3

 
(9
)
Foreign currency translation adjustment(1)
3,721

 

 
3,721

 
(1,968
)
 

 
(1,968
)
Net unrealized gains (losses) on net investment hedges
(3,469
)
 
814

 
$
(2,655
)
 
2,170

 
(529
)
 
1,641

Total other comprehensive income (loss)
$
(9,813
)
 
$
3,176

 
$
(6,637
)
 
$
25,217

 
$
(6,323
)
 
$
18,894

 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30,
 
2020
 
2019
(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
$
180,391

 
$
(42,562
)
 
$
137,829

 
$
114,263

 
$
(27,519
)
 
$
86,744

Reclassification of net (gains) losses from accumulated other comprehensive income (loss) to:
 
 
 
 
 
 
 
 
 
 
 
Total interest income
3,156

 
(741
)
 
2,415

 
2,495

 
(607
)
 
1,888

Net gains (losses) on investment securities
(2,309
)
 
542

 
(1,767
)
 
(1,513
)
 
368

 
(1,145
)
Other noninterest expense
95

 
(22
)
 
73

 
(350
)
 
86

 
(264
)
Amounts reclassified from accumulated other comprehensive income (loss)
942

 
(221
)
 
721

 
632

 
(153
)
 
479

Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips
181,333

 
(42,783
)
 
138,550

 
114,895

 
(27,672
)
 
87,223

Recognized postretirement prior service cost:
 

 
 

 
 

 
 

 
 

 
 

Reclassification of amortization of prior service cost to other noninterest expense
(35
)
 
8

 
(27
)
 
(35
)
 
10

 
(25
)
Foreign currency translation adjustment(1)
(4,298
)
 

 
(4,298
)
 
5,014

 

 
5,014

Net unrealized gains (losses) on net investment hedges
4,272

 
(1,003
)
 
3,269

 
(3,761
)
 
915

 
(2,846
)
Total other comprehensive income (loss)
$
181,272

 
$
(43,778
)
 
$
137,494

 
$
116,113

 
$
(26,747
)
 
$
89,366

(1)
Foreign investments are deemed to be permanent in nature and, therefore, TCF does not provide for taxes on foreign currency translation adjustments.



33




The components of accumulated other comprehensive income (loss) were as follows:
(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, 2020
 

 
 

 
 

 
 

 
 

Balance, beginning of period
$
202,342

 
$
15,724

 
$
(19,716
)
 
$
58

 
$
198,408

Other comprehensive income (loss)
(6,497
)
 
(2,655
)
 
3,721

 

 
(5,431
)
Amounts reclassified from accumulated other comprehensive income (loss)
(1,197
)
 

 

 
(9
)
 
(1,206
)
Net other comprehensive income (loss)
(7,694
)
 
(2,655
)
 
3,721

 
(9
)
 
(6,637
)
Balance, end of period
$
194,648

 
$
13,069

 
$
(15,995
)
 
$
49

 
$
191,771

At or For the Three Months Ended September 30, 2019
 

 
 

 
 

 
 

 
 

Balance, beginning of period
$
39,971

 
$
10,499

 
$
(13,229
)
 
$
93

 
$
37,334

Other comprehensive income (loss)
18,630

 
1,641

 
(1,968
)
 

 
18,303

Amounts reclassified from accumulated other comprehensive income (loss)
600

 

 

 
(9
)
 
591

Net other comprehensive income (loss)
19,230

 
1,641

 
(1,968
)
 
(9
)
 
18,894

Balance, end of period
$
59,201

 
$
12,140

 
$
(15,197
)
 
$
84

 
$
56,228

At or For the Nine Months Ended September 30, 2020
 

 
 

 
 

 
 

 
 

Balance, beginning of period
$
56,098

 
$
9,800

 
$
(11,697
)
 
$
76

 
$
54,277

Other comprehensive income (loss)
137,829

 
3,269

 
(4,298
)
 

 
136,800

Amounts reclassified from accumulated other comprehensive income (loss)
721

 

 

 
(27
)
 
694

Net other comprehensive income (loss)
138,550

 
3,269

 
(4,298
)
 
(27
)
 
137,494

Balance, end of period
$
194,648

 
$
13,069

 
$
(15,995
)
 
$
49

 
$
191,771

At or For the Nine Months Ended September 30, 2019
 

 
 

 
 

 
 

 
 

Balance, beginning of period
$
(28,022
)
 
$
14,986

 
$
(20,211
)
 
$
109

 
$
(33,138
)
Other comprehensive income (loss)
86,744

 
(2,846
)
 
5,014

 

 
88,912

Amounts reclassified from accumulated other comprehensive income (loss)
479

 

 

 
(25
)
 
454

Net other comprehensive income (loss)
87,223

 
(2,846
)
 
5,014

 
(25
)
 
89,366

Balance, end of period
$
59,201

 
$
12,140

 
$
(15,197
)
 
$
84

 
$
56,228



Note 14Regulatory Capital Requirements

TCF and TCF Bank are subject to minimum capital requirements administered by the federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory, and possible additional discretionary, actions by the federal banking regulators that could have a material adverse effect on TCF. In general, TCF Bank may not declare or pay a dividend to TCF Financial in excess of 100% of its net retained earnings for the current year combined with its net retained earnings for the preceding two calendar years, which was $73.6 million at September 30, 2020, without prior approval of the Office of the Comptroller of the Currency ("OCC"). The OCC also has the authority to prohibit the payment of dividends by a national bank when it determines such payments would constitute an unsafe and unsound banking practice. TCF Bank's ability to make capital distributions in the future may require regulatory approval and may be restricted by its federal banking regulators. TCF Bank's ability to make any such distributions will also depend on its earnings and ability to meet minimum regulatory capital requirements in effect during future periods. In the future, these capital adequacy standards may be higher than existing minimum regulatory capital requirements.

The Basel III capital standards allowed institutions not subject to the advanced approaches requirements to opt out of including components of accumulated other comprehensive income (loss) in common equity Tier 1 capital. TCF and TCF Bank made the one-time permanent election to not include accumulated other comprehensive income (loss) in regulatory capital.


34





Effective January 1, 2020, the Corporation adopted CECL. In response to the COVID-19 pandemic, the regulatory agencies published a final rule that provides the option to delay the cumulative effect of the day 1 impact of CECL adoption on regulatory capital, along with 25% of the change in the adjusted allowance for credit losses (as computed for regulatory capital purposes which excludes PCD loans), for two years, followed by a three-year phase-in period. Management elected the 5-year transition period consistent with the final rule issued by the regulatory agencies.

Regulatory capital information for TCF and TCF Bank was as follows:
 
TCF
 
TCF Bank
 
At September 30,
 
At December 31,
 
At September 30,
 
At December 31,
Well-capitalized Standard
 
Minimum Capital Requirement(1)
(Dollars in thousands)
2020
 
2019
 
2020
 
2019
 
Regulatory Capital:
 
 
 
 
 
 
 
 
 
 
Common equity Tier 1 capital
$
4,053,931

 
$
4,050,826

 
$
4,029,278

 
$
4,039,191

 
 
 
Tier 1 capital
4,244,609

 
4,236,648

 
4,050,654

 
4,059,417

 
 
 
Total capital
4,972,715

 
4,681,630

 
4,769,055

 
4,524,051

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulatory Capital Ratios:
 
 
 
 
 
 
 
 
 
 
Common equity Tier 1 capital ratio
11.45
%
 
10.99
%
 
11.39
%
 
10.97
%
6.50
%
 
7.00
%
Tier 1 risk-based capital ratio
11.98

 
11.49

 
11.45

 
11.03

8.00

 
8.50

Total risk-based capital ratio
14.04

 
12.70

 
13.48

 
12.29

10.00

 
10.50

Tier 1 leverage ratio
8.83

 
9.49

 
8.43

 
9.10

5.00

 
4.00

(1)
Excludes capital conservation buffer of 2.5% at both September 30, 2020 and December 31, 2019.

Note 15Derivative Instruments

Derivative instruments, recognized at fair value within other assets or other liabilities on the Consolidated Statements of Financial Condition, were as follows:
 
At September 30, 2020
 
 
 
Fair Value
(In thousands)
Notional Amount(1)
 
Derivative Assets
 
Derivative Liabilities
Derivatives designated as hedging instruments
 
 
 
 
 
Interest rate contract
$
150,000

 
$

 
$
84

Forward foreign exchange contracts
196,852

 
2,237

 
85

Total derivatives designated as hedging instruments


 
$
2,237

 
$
169

Derivatives not designated as hedging instruments
 
 
 
 
 
Interest rate contracts
$
5,773,205

 
$
279,710

 
$
14,001

Risk participation agreements
445,120

 
163

 
171

Forward foreign exchange contracts
95,052

 
537

 
125

Interest rate lock commitments
579,456

 
18,596

 
4

Forward loan sales commitments
805,887

 
117

 
786

Power Equity CDs
21,958

 
442

 
443

Swap agreement
12,652

 

 
141

Total derivatives not designated as hedging instruments


 
$
299,565

 
$
15,671

Total derivatives before netting


 
301,802

 
15,840

Netting(2)
 
 
(2,861
)
 
498

Total derivatives, net
 
 
$
298,941

 
$
16,338

(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.



35




 
At December 31, 2019
 
 
 
Fair Value
(In thousands)
Notional Amount(1)
 
Derivative Assets
 
Derivative Liabilities
Derivatives designated as hedging instruments
 
 
 
 
 
Interest rate contract
$
150,000

 
$

 
$
168

Forward foreign exchange contracts
177,593

 

 
3,251

Total derivatives designated as hedging instruments


 
$

 
$
3,419

Derivatives not designated as hedging instruments
 
 
 
 
 
Interest rate contracts
$
5,095,969

 
$
102,893

 
$
5,872

Risk participation agreements
316,353

 
202

 
354

Forward foreign exchange contracts
262,656

 

 
3,268

Interest rate lock commitments
158,111

 
2,772

 
20

Forward loan sales commitments
174,013

 
41

 
289

Power Equity CD
29,009

 
734

 
734

Swap agreement
12,652

 

 
356

Total derivatives not designated as hedging instruments


 
$
106,642

 
$
10,893

Total derivatives before netting


 
$
106,642

 
$
14,312

Netting(2)
 
 
(540
)
 
(5,109
)
Total derivatives, net
 
 
$
106,102

 
$
9,203

(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.

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:
 
At September 30, 2020
(In thousands)
Gross Amounts Recognized
 
Gross Amounts
 Offset(1)
 
Net Amount Presented
Derivative assets
 
 
 
 
 
Interest rate contracts
$
279,710

 
$

 
$
279,710

Risk participation agreements
163

 

 
163

Forward foreign exchange contracts
2,774

 
(2,740
)
 
34

Interest rate lock commitments
18,596

 
(4
)
 
18,592

Forward loan sales commitments
117

 
(117
)
 

Power Equity CDs
442

 

 
442

Total derivative assets
$
301,802

 
$
(2,861
)
 
$
298,941

Derivative liabilities
 
 
 
 
 
Interest rate contracts
$
14,085

 
$

 
$
14,085

Risk participation agreements
171

 

 
171

Forward foreign exchange contracts
210

 
760

 
970

Interest rate lock commitments
4

 
(4
)
 

Forward loan sales commitments
786

 
(117
)
 
669

Power Equity CDs
443

 

 
443

Swap agreement
141

 
(141
)
 

Total derivative liabilities
$
15,840

 
$
498

 
$
16,338

(1)
Includes the amounts with counterparties subject to enforceable master netting arrangements that have been offset in the Consolidated Statements of Financial Condition.



36




 
At December 31, 2019
(In thousands)
Gross Amounts Recognized
 
Gross Amounts
Offset(1)
 
Net Amount Presented
Derivative assets
 
 
 
 
 
Interest rate contracts
$
102,893

 
$
(492
)
 
$
102,401

Risk participation agreements
202

 

 
202

Forward foreign exchange contracts

 

 

Interest rate lock commitments
2,772

 
(7
)
 
2,765

Forward loan sales commitments
41

 
(41
)
 

Power Equity CDs
734

 

 
734

Total derivative assets
$
106,642

 
$
(540
)
 
$
106,102

Derivative liabilities
 
 
 
 
 
Interest rate contracts
$
6,040

 
$
(491
)
 
$
5,549

Risk participation agreements
354

 

 
354

Forward foreign exchange contracts
6,519

 
(4,214
)
 
2,305

Interest rate lock commitments
20

 
(7
)
 
13

Forward loan sales commitments
289

 
(41
)
 
248

Power Equity CD
734

 

 
734

Swap agreement
356

 
(356
)
 

Total derivative liabilities
$
14,312

 
$
(5,109
)
 
$
9,203


(1)
Includes the amounts with counterparties subject to enforceable master netting arrangements that have been offset in the Consolidated Statements of Financial Condition.

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:
 
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, 2020
 
At December 31, 2019
 
At September 30, 2020
 
At December 31, 2019
Subordinated bank note - 2025
$
160,694

 
$
151,454

 
$
11,840

 
$
2,773



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, 2020 and 2019.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Statement of income line where the gain (loss) on the fair value hedge was recorded:
 
 
 
 
 
 
 
Interest expense on borrowings
$
11,429

 
$
17,115

 
$
51,147

 
$
48,050

Gain (loss) on interest rate contract (fair value hedge)
 
 
 
 
 
 
 
Hedged item
680

 
(2,100
)
 
(9,068
)
 
(8,847
)
Derivative designated as a hedging instrument
(731
)
 
2,195

 
9,134

 
8,938

Gain (loss) on interest rate contract recognized in interest expense on borrowings
$
(51
)
 
$
95

 
$
66

 
$
91





37




Forward foreign exchange contracts: The effect of net investment hedges on accumulated other comprehensive income was as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Forward foreign exchange contracts
$
(3,469
)
 
$
2,170

 
$
4,272

 
$
(3,761
)


Derivatives Not Designated as Hedging Instruments Certain other interest rate contracts, forward foreign exchange contracts, interest rate lock commitments and other contracts have not been designated as hedging instruments. The effect of these derivatives on the Consolidated Statements of Income was as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
Location of Gain (Loss)
2020
 
2019
 
2020
 
2019
Interest rate contracts(1)
Other noninterest income
$
(2,314
)
 
$
(20,085
)
 
$
3,459

 
$
(21,345
)
Risk participation agreements
Other noninterest expense
(310
)
 
321

 
(523
)
 
38

Forward foreign exchange contracts
Other noninterest expense
(1,606
)
 
3,307

 
9,615

 
(5,302
)
Interest rate lock commitments
Net gains on sales of loans and leases
68

 
337

 
15,840

 
1,117

Forward loan sales commitments
Net gains on sales of loans and leases
3,881

 
(11
)
 
(421
)
 
(11
)
Swap agreement
Other noninterest income

 
4

 
(1
)
 
4

Net gain (loss) recognized
 
$
(281
)
 
$
(16,127
)
 
$
27,969

 
$
(25,499
)

(1)
Included in both the three and nine months ended September 30, 2019 is a loss of $17.3 million related to the termination of $1.1 billion of interest rate swaps.

At September 30, 2020 and December 31, 2019, credit risk-related contingent features existed on forward foreign exchange contracts with a notional value of $26.3 million and $23.1 million, respectively. In the event the Corporation is rated less than BB- by Standard and Poor's, the contracts could be terminated or the Corporation may be required to provide approximately $526 thousand and $462 thousand in additional collateral at September 30, 2020 and December 31, 2019, respectively. There were no forward foreign exchange contracts containing credit risk-related features in a liability position at both September 30, 2020 and December 31, 2019.

At September 30, 2020, the Corporation had posted $67.9 million and $0.8 million of cash collateral related to its interest rate contracts and forward foreign exchange contracts, respectively, and received $3.5 million of cash collateral related to its forward foreign exchange contracts.

Note 16Fair Value Measurements

The Corporation uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Fair values are based on the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investment securities available-for-sale, certain loans held for sale, interest-only strips, derivative instruments, forward loan sales commitments and assets and liabilities held in trust for deferred compensation plans are recorded at fair value on a recurring basis. From time to time the Corporation may be required to record at fair value other assets on a non-recurring basis, such as certain investment securities held-to-maturity, loans and leases, goodwill, loan servicing rights, other intangible assets, other real estate owned, repossessed and returned assets or securitization receivables. These non-recurring fair value adjustments typically involve application of lower of cost or fair value accounting or write-downs of individual assets.
 


38




The Corporation groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the degree and reliability of estimates and assumptions used to determine fair value. The levels are as follows:

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 model-based techniques that use at least one significant unobservable input. Such unobservable inputs reflect estimates of assumptions that market participants would use in pricing the asset or liability.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Investment Securities Available-for-Sale: The fair value of investment securities available-for-sale, categorized primarily as Level 2, is recorded using prices obtained from independent asset pricing services that are based on observable transactions, but not quoted markets. Management reviews the prices obtained from independent asset pricing services for unusual fluctuations and comparisons to current market trading activity.

Loans Held-for-Sale: The Corporation has elected the fair value option for residential mortgage loans held-for-sale. Accordingly, the fair values of residential mortgage loans held-for-sale are based on valuation models that use the market price for similar loans sold in the secondary market. As these prices are derived from market observable inputs, they are categorized as Level 2.

Interest-only Strips: The fair value of interest-only strips, categorized as Level 3, represents the present value of future cash flows expected to be received by the Corporation on certain assets. The Corporation uses available market data, along with its own empirical data and discounted cash flow models, to arrive at the fair value of its interest-only strips. The present value of the estimated expected future cash flows to be received is determined by using discount, loss and prepayment rates that the Corporation believes are commensurate with the risks associated with the cash flows and what a market participant would use. These assumptions are inherently subject to volatility and uncertainty and, as a result, the fair value of the interest-only strips may fluctuate significantly from period to period. Unobservable inputs used to value the interest-only strips include a discount rate of 14% (weighted average) and prepayment rates of 4% (weighted average).

Derivative Instruments:

Interest Rate Contracts: The Corporation executes interest rate contracts as described in "Note 15. Derivative Instruments." The fair value of these interest rate contracts, categorized as Level 2, is determined using a cash flow model which may consider the forward curve, the discount curve, option volatilities and credit valuation adjustments related to counterparty and/or borrower non-performance risk.

Risk Participation Agreements: The fair value of risk participation agreements, categorized as Level 2, is determined using a cash flow model which may consider the forward curve, the discount curve, option volatilities and credit valuation adjustments related to counterparty and/or borrower nonperformance risk.

Forward Foreign Exchange Contracts: The Corporation's forward foreign exchange contracts are recorded at fair value using a cash flow model that includes key inputs such as foreign exchange rates and an assessment of the risk of counterparty non-performance. The risk of counterparty non-performance is based on external assessments of credit risk. The fair value of these contracts, categorized as Level 2, is based on observable transactions, but not quoted markets.

Interest Rate Lock Commitments: The Corporation's interest rate lock commitments are derivative instruments that are recorded at fair value based on valuation models that use the market price for similar loans sold in the secondary market. The interest rate lock commitments are adjusted for expectations of exercise and funding. As the prices are derived from market observable inputs, the Corporation categorized these instruments as Level 2.



39




Power Equity CDs: Power Equity CDs are categorized as Level 2, and determined using quoted prices of underlying stocks, along with other terms and features of the derivative instruments.

Swap Agreement: The Corporation's swap agreement, categorized as Level 3, is related to the sale of Legacy TCF's Visa Class B stock. The fair value of the swap agreement is based on the Corporation's estimated exposure related to the Visa covered litigation through a probability analysis of the funding and estimated settlement amounts.

Forward Loan Sales Commitments: The Corporation enters into forward loan sales commitments to sell certain mortgage loans which are recorded at fair value based on valuation models. The Corporation’s expectation of the amount of its interest rate lock commitments that will ultimately close is a factor in determining the position. The valuation models utilize the fair value of related mortgage loans determined using observable market data and therefore the commitments are categorized as Level 2.

Assets and Liabilities Held in Trust for Deferred Compensation Plans: Assets held in trust for deferred compensation plans include investments in publicly traded securities, excluding TCF Financial common stock reported in other equity, and U.S. Treasury notes. The fair value of these assets, categorized as Level 1, is based on prices obtained from independent asset pricing services based on active markets. The fair value of the liabilities equals the fair value of the assets.

The balances of assets and liabilities measured at fair value on a recurring basis were as follows:
 
September 30, 2020
(In thousands)
Level 1
Level 2
Level 3
Total
Assets
 
 
 
 
Investment securities available-for-sale
$

$
7,445,696

$
467

$
7,446,163

Loans held-for-sale

460,172


460,172

Interest-only strips


9,555

9,555

Derivative assets:(1)
 
 
 
 
Interest rate contracts

279,710


279,710

Risk participation agreements

163


163

Forward foreign exchange contracts

2,774


2,774

Interest rate lock commitments

18,596


18,596

   Forward loan sales commitments

117


117

Power Equity CDs

442


442

Total derivative assets

301,802


301,802

Assets held in trust for deferred compensation plans
46,210



46,210

Total assets at fair value
$
46,210

$
8,207,670

$
10,022

$
8,263,902

Liabilities
 
 
 
 
Derivative liabilities:(1)
 
 
 
 
Interest rate contracts
$

$
14,085

$

$
14,085

Risk participation agreements

171


171

Forward foreign exchange contracts

210


210

Interest rate lock commitments

4


4

   Forward loan sales commitments

786


786

Power Equity CDs

443


443

Swap agreement


141

141

Total derivative liabilities

15,699

141

15,840

Liabilities held in trust for deferred compensation plans
46,210



46,210

Total liabilities at fair value
$
46,210

$
15,699

$
141

$
62,050

(1)
As permitted under GAAP, the Corporation 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.




40




 
December 31, 2019
(In thousands)
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
Investment securities available-for-sale
$

 
$
6,719,568

 
$
433

 
$
6,720,001

Loans held-for-sale

 
91,202

 

 
91,202

Interest-only strips

 

 
12,813

 
12,813

Derivative assets:(1)
 
 
 
 
 
 
 
Interest rate contracts

 
102,893

 

 
102,893

Risk participation agreements

 
202

 

 
202

Interest rate lock commitments

 
2,772

 

 
2,772

Forward loan sales commitments

 
41

 

 
41

Power Equity CDs

 
734

 

 
734

Total derivative assets

 
106,642

 

 
106,642

Forward loan sales commitments, non-derivative

 
46

 

 
46

Assets held in trust for deferred compensation plans
43,743

 

 

 
43,743

Total assets at fair value
$
43,743

 
$
6,917,458

 
$
13,246

 
$
6,974,447

Liabilities
 
 
 
 
 
 
 
Derivative liabilities:(1)
 
 
 
 
 
 
 
Interest rate contracts
$

 
$
6,040

 
$

 
$
6,040

Risk participation agreements

 
354

 

 
354

Forward foreign exchange contracts

 
6,519

 

 
6,519

Interest rate lock commitments

 
20

 

 
20

Forward loan sales commitments

 
289

 

 
289

Power Equity CDs

 
734

 

 
734

Swap agreement

 

 
356

 
356

Total derivative liabilities

 
13,956

 
356

 
14,312

Liabilities held in trust for deferred compensation plans
43,743

 

 

 
43,743

Total liabilities at fair value
$
43,743

 
$
13,956

 
$
356

 
$
58,055

(1)
As permitted under GAAP, the Corporation 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.

Management assesses the appropriate classification of financial assets and liabilities within the fair value hierarchy by monitoring the level of available observable market information. Changes in markets or economic conditions, as well as changes to the valuation models, may require the transfer of financial instruments from one fair value level to another. Such transfers, if any, are recorded at the fair values as of the beginning of the quarter in which the transfers occurred.



41




The changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:
(In thousands)
Investment securities available-for-sale
 
Loans
held-for-sale
 
Interest-only strips
 
Interest rate lock commitments
 
Swap agreement
 
Forward loan sales commitments
At or For the Three Months Ended September 30, 2020
 
 
 
 
 
 
 
 
 
 
 
Asset (liability) balance, beginning of period
$
441

 
$

 
$
11,811

 
$

 
$
(213
)
 
$

Total net gains (losses) included in:
 
 
 
 
 
 
 
 
 
 
 
Net income
1

 

 
277

 

 

 

Other comprehensive income (loss)
25

 

 
(1,211
)
 

 

 

Principal paydowns / settlements

 

 
(1,322
)
 

 
72

 

Asset (liability) balance, end of period
$
467

 
$

 
$
9,555

 
$

 
$
(141
)
 
$

Unrealized gains (losses) included in other comprehensive income for assets held at the end of the period
$
25

 
$

 
$
(1,211
)
 
$

 
$

 
$

At or For the Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Asset (liability) balance, beginning of period
$
3

 
$
29,211

 
$
15,236

 
$
1,402

 
$
(435
)
 
$
(145
)
Transfers out of Level 3(1)

 
(29,211
)
 

 
(1,402
)
 

 
145

Total net gains (losses) included in:
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 
610

 

 

 

Other comprehensive income (loss)
(25
)
 

 
(65
)
 

 

 

Acquired
450

 

 

 

 

 

Originations

 

 
628

 

 

 

Principal paydowns / settlements

 

 
(2,332
)
 

 
79

 

Asset (liability) balance, end of period
$
428

 
$

 
$
14,077

 
$

 
$
(356
)
 
$

Unrealized gains (losses) included in other comprehensive income for assets held at the end of the period
$
(25
)
 
$

 
$
(65
)
 
$

 
$

 
$

At or For the Nine Months Ended September 30, 2020
 
 
 
 
 
 
 
 
 
 
 
Asset (liability) balance, beginning of period
$
433

 
$

 
$
12,813

 
$

 
$
(356
)
 
$

Total net gains (losses) included in:
 
 
 
 
 
 
 
 
 
 
 
Net income
3

 

 
763

 

 
(1
)
 

Other comprehensive income (loss)
31

 

 
430

 

 

 

Principal paydowns / settlements

 

 
(4,451
)
 

 
216

 

Asset (liability) balance, end of period
$
467

 
$

 
$
9,555

 
$

 
$
(141
)
 
$

Unrealized gains (losses) included in other comprehensive income for assets held at the end of the period
$
31

 
$

 
$
430

 
$

 
$

 
$

At or For the Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Asset (liability) balance, beginning of period
$
4

 
$
18,070

 
$
16,835

 
$
624

 
$
(583
)
 
$
(26
)
Total net gains (losses) included in:
 
 
 
 
 
 
 
 
 
 
 
Net income

 
534

 
1,975

 
778

 

 
(119
)
Other comprehensive income (loss)
(25
)
 

 
246

 

 

 

Acquired
450

 
 
 
 
 
 
 
 
 
 
Sales

 
(164,693
)
 

 

 

 

Originations

 
175,304

 
2,180

 

 

 

Principal paydowns / settlements
(1
)
 
(4
)
 
(7,159
)
 

 
227

 

Transfers out of Level 3(1)

 
(29,211
)
 

 
(1,402
)
 

 
145

Asset (liability) balance, end of period
$
428

 
$

 
$
14,077

 
$

 
$
(356
)
 
$

Unrealized gains (losses) included in other comprehensive income for assets held at the end of the period
$
(25
)
 
$

 
$
246

 
$

 
$

 
$

(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.



42




Assets and Liabilities Recorded at Fair Value on a Non-recurring Basis

The following is a discussion of the valuation methodologies used to record assets and liabilities at fair value on a non-recurring basis.

Loans and Leases: Loans and leases for which repayment is expected to be provided solely by the value of the underlying collateral, categorized as Level 3 and recorded at fair value on a non-recurring basis, are valued based on the fair value of that collateral less estimated selling costs. The fair value of the collateral is determined based on internal estimates and/or assessments provided by third-party appraisers and the valuation relies on discount rates ranging from 10% to 15%.

Loan servicing rights: The fair value of loan servicing rights, categorized as Level 3, is based on a third party valuation model utilizing a discounted cash flow analysis using interest rates and prepayment speed assumptions currently quoted for comparable instruments and a discount rate determined by management. The valuation relies on discount rates ranging from 10% to 15% and prepayment speeds ranging from 9% to 25%. Loan servicing rights are recorded at the lower of cost or fair value.

Other Real Estate Owned: The fair value of other real estate owned, categorized as Level 3, is based on independent appraisals, real estate brokers' price opinions or automated valuation methods, less estimated selling costs. Certain properties require assumptions that are not observable in an active market in the determination of fair value and include a discount rate of 10%. Assets acquired through foreclosure are initially recorded at the lower of the loan or lease carrying amount or fair value less estimated selling costs at the time of transfer to other real estate owned.

Repossessed and Returned Assets: The fair value of repossessed and returned assets, categorized as Level 2 or Level 3 depending on the underlying asset type, are based on available pricing guides, auction results or price opinions, less estimated selling costs. Assets acquired through repossession or returned to TCF are initially recorded at the lower of the loan or lease carrying amount or fair value less estimated selling costs at the time of transfer to repossessed and returned assets.

The balances of assets measured at fair value on a non-recurring basis were as follows. There were no liabilities measured at fair value on a non-recurring basis at September 30, 2020 and December 31, 2019.
(In thousands)
Level 1
 
Level 2
 
Level 3
 
Total
At September 30, 2020
 
 
 
 
 
 
 
Loans and leases
$

 
$

 
$
261,885

 
$
261,885

Loan servicing rights

 

 
38,253

 
38,253

Other real estate owned

 

 
15,730

 
15,730

Repossessed and returned assets

 
10,077

 

 
10,077

Total non-recurring fair value measurements
$

 
$
10,077

 
$
315,868

 
$
325,945

At December 31, 2019
 
 
 
 
 
 
 
Loans and leases
$

 
$

 
$
141,199

 
$
141,199

Loan servicing rights

 

 
56,298

 
56,298

Other real estate owned

 

 
17,577

 
17,577

Repossessed and returned assets

 
6,968

 

 
6,968

Total non-recurring fair value measurements
$

 
$
6,968

 
$
215,074

 
$
222,042



Fair Value Option

The Corporation has elected the fair value option for residential mortgage loans held-for-sale. This election facilitates the offsetting of changes in fair value of the loans held-for-sale and the derivative financial instruments used to economically hedge them. The difference between the aggregate fair value and aggregate unpaid principal balance of these loans held-for-sale was as follows:
(In thousands)
September 30, 2020
 
December 31, 2019
Fair value carrying amount
$
460,172

 
$
91,202

Aggregate unpaid principal amount
436,216

 
88,192

Fair value carrying amount less aggregate unpaid principal
$
23,956

 
$
3,010




43





Differences between the fair value carrying amount and the aggregate unpaid principal balance include changes in fair value recorded at and subsequent to funding and gains and losses on the related loan commitment prior to funding. No loans recorded under the fair value option were delinquent or on nonaccrual status at September 30, 2020 and December 31, 2019. The net gain from initial measurement of the loans held-for-sale, any subsequent changes in fair value while the loans are outstanding and any actual adjustment to the gains realized upon sales of the loans totaled $31.4 million and $79.0 million for the three and nine months ended September 30, 2020 and $12.4 million and $18.3 million for the same periods in 2019, and are included in net gains on sales of loans and leases. These amounts exclude the impacts from the interest rate lock commitments and forward loan sales commitments which are also included in net gains on sales of loans and leases.

Disclosures about Fair Value of Financial Instruments

Management discloses the estimated fair value of financial instruments, including assets and liabilities on and off the Consolidated Statements of Financial Condition, for which it is practicable to estimate fair value. These fair value estimates were made at September 30, 2020 and December 31, 2019 based on relevant market information and information about the financial instruments. Fair value estimates are intended to represent the price at which an asset could be sold or a liability could be settled. However, given there is no active market or observable market transactions for many of TCF's financial instruments, the estimates of fair value are subjective in nature, involve uncertainties and include matters of significant judgment. Changes in assumptions could significantly affect the estimated values.

The carrying amounts and estimated fair values of the financial instruments, excluding short-term financial assets and liabilities as their carrying amounts approximate fair value and financial instruments recorded at fair value on a recurring basis, are included below. This information represents only a portion of the Consolidated Statements of Financial Condition not recorded in their entirety on a recurring basis and not the estimated value of the Corporation as a whole. Non-financial instruments such as the intangible value of the Corporation's banking centers and core deposits, leasing operations, goodwill, premises and equipment and the future revenues from the Corporation's customers are not reflected in this disclosure. Therefore, this information is of limited use in assessing the value of the Corporation.
 
At September 30, 2020
 
Carrying
 
Estimated Fair Value
(In thousands)
Amount
 
Level 1
 
Level 2
 
Level 3
 
Total
Financial instrument assets
 

 
 

 
 

 
 

 
 

FHLB and FRB stocks
$
300,444

 
$

 
$
300,444

 
$

 
$
300,444

Investment securities held-to-maturity
170,309

 

 
176,649

 
3,715

 
180,364

Loans and leases held-for-sale
255

 

 

 
262

 
262

Net loans(1)
31,140,162

 

 

 
31,323,032

 
31,323,032

Securitization receivable(2)

 

 

 
19,802

 
19,802

Deferred fees on commitments to extend credit(2)
21,222

 

 
21,222

 

 
21,222

Total financial instrument assets
$
31,632,392

 
$

 
$
498,315

 
$
31,346,811

 
$
31,845,126

Financial instrument liabilities
 

 
 

 
 

 
 

 
 
Certificates of deposits
$
6,334,760

 
$

 
$
6,355,057

 
$

 
$
6,355,057

Long-term borrowings
871,845

 

 
901,221

 

 
901,221

Total financial instrument liabilities
$
7,206,605

 
$

 
$
7,256,278

 
$

 
$
7,256,278

(1)
Expected credit losses are included in the carrying amount and estimated fair value.
(2)
Carrying amounts are included in other assets.
(3)
Carrying amounts are included in other liabilities.



44




 
At December 31, 2019
 
Carrying
 
Estimated Fair Value
(In thousands)
  Amount
 
Level 1
 
Level 2
 
Level 3
 
Total
Financial instrument assets
 

 
 

 
 

 
 

 
 

FHLB and FRB stocks
$
442,440

 
$

 
$
442,440

 
$

 
$
442,440

Investment securities held-to-maturity
139,445

 

 
141,168

 
3,676

 
144,844

Loans held-for-sale
108,584

 

 
110,252

 
2,273

 
112,525

Net loans(1)
31,699,285

 

 

 
31,804,513

 
31,804,513

Securitization receivable(2)
19,689

 

 

 
19,466

 
19,466

Deferred fees on commitments to extend credit(2)
19,300

 

 
19,300

 

 
19,300

Total financial instrument assets
$
32,428,743

 
$

 
$
713,160

 
$
31,829,928

 
$
32,543,088

Financial instrument liabilities
 

 
 
 
 

 
 

 
 

Certificates of deposits
$
7,455,556

 
$

 
$
7,460,577

 
$

 
$
7,460,577

Long-term borrowings
2,354,448

 

 
2,368,469

 

 
2,368,469

Deferred fees on standby letters of credit(3)
56

 

 
56

 

 
56

Total financial instrument liabilities
$
9,810,060

 
$

 
$
9,829,102

 
$

 
$
9,829,102


(1)
Expected credit losses are included in the carrying amount and estimated fair value.
(2)
Carrying amounts are included in other assets.
(3)
Carrying amounts are included in other liabilities.

Note 17. Revenue from Contracts with Customers

The Corporation earns a variety of revenue, including interest and fees, from customers, as well as revenues from noncustomers. The majority of the sources of revenue are included in interest income and noninterest income and are outside of the scope of ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"). Other sources of revenue fall within the scope of ASC 606 and are mostly included in noninterest income.

The Corporation recognizes revenue when the performance obligations related to the transfer of goods or services under the terms of a contract are satisfied. Some obligations are satisfied at a point in time, while others are satisfied over a period of time. Revenue is recognized as the amount of consideration expected to be received in exchange for transferring goods or services to a customer and is segregated based on the nature of product and services offered as part of contractual arrangements. Revenue streams within the scope of ASC 606 are discussed below.

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. The Corporation'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. The Corporation 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 the Corporation 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 transaction-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 (e.g., 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.



45




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.
 
Three Months Ended September 30, 2020
 
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
$
23,010

 
$
2,425

 
$

 
$
35

 
$
25,470

Wealth management revenue
1,334

 

 

 
5,172

 
6,506

Card and ATM revenue
21,635

 
64

 

 
1,684

 
23,383

Other noninterest income
1,461

 
1,413

 
199

 
60,378

 
63,451

Total
$
47,440

 
$
3,902

 
$
199

 
$
67,269

 
$
118,810

 
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
$
32,552

 
$
2,046

 
$

 
$
(214
)
 
$
34,384

Wealth management revenue
1,047

 

 

 
3,194

 
4,241

Card and ATM revenue
21,479

 
2

 

 
1,834

 
23,315

Other noninterest income
(455
)
 
1,592

 
163

 
31,018

 
32,318

Total
$
54,623

 
$
3,640

 
$
163

 
$
35,832

 
$
94,258

 
Nine Months Ended September 30, 2020
 
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
$
75,130

 
$
7,459

 
$

 
$
310

 
$
82,899

Wealth management revenue
3,846

 

 

 
15,017

 
18,863

Card and ATM revenue
59,041

 
66

 

 
6,597

 
65,704

Other noninterest income
1,293

 
4,466

 
767

 
214,835

 
221,361

Total
$
139,310

 
$
11,991

 
$
767

 
$
236,759

 
$
388,827

 
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
$
84,453

 
$
4,243

 
$

 
$
(192
)
 
$
88,504

Wealth management revenue
1,047

 

 

 
3,194

 
4,241

Card and ATM revenue
60,584

 
3

 

 
1,883

 
62,470

Other noninterest income
395

 
6,908

 
245

 
144,717

 
152,265

Total
$
146,479

 
$
11,154

 
$
245

 
$
149,602

 
$
307,480



Contract Balances A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity's obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The noninterest income streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is most often received immediately or shortly after the Corporation satisfies its performance obligation and revenue is recognized. The Corporation does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances.



46




Note 18Share-based Compensation

The Corporation maintains share-based compensation plans under which it periodically grants share-based awards for a fixed number of shares to directors and certain officers of the Corporation.

Before the Merger, Chemical and Legacy TCF granted share-based awards under their respective share-based compensation plans, including the Chemical Stock Incentive Plan of 2019 (the "Stock Incentive Plan of 2019") and the TCF Financial 2015 Omnibus Incentive Plan (the "Legacy TCF Omnibus Incentive Plan"). At September 30, 2020, there were 1,440,141 shares reserved for issuance under the Legacy TCF Omnibus Incentive Plan and there were 1,147,952 shares reserved for issuance under the Stock Incentive Plan of 2019.

The fair value of share-based awards is recognized as compensation expense over the requisite service or performance period. Compensation expense for share-based awards, including the merger-related share-based compensation expense was $11.9 million and $33.6 million for the three and nine months ended September 30, 2020, respectively, and $9.8 million and $13.6 million for the same period in 2019, respectively. The excess tax realized from share-based compensation transactions during the three and nine months ended September 30, 2020 was an expense of $897 thousand and $2.0 million, respectively, and a benefit of $743 thousand and $2.0 million for the same period in 2019, respectively.

Restricted Stock Units

The Corporation can grant performance-based restricted stock units ("PRSUs") and time-based restricted stock units ("TRSUs") (collectively referred to as "RSUs") under the Stock Incentive Plan of 2019 and the Legacy TCF Omnibus Incentive Plan; provided, that, RSUs granted under the Legacy TCF Omnibus Incentive Plan may only be granted to new employees hired after the merger or employees who previously were employees of Legacy TCF. At September 30, 2020, there were 407,323 PRSUs outstanding dependent on achieving certain performance target levels and the grantee completing the requisite service period. The TRSUs vest upon satisfaction of a service condition. Upon achievement of the satisfaction of a service condition and/or performance target level, as applicable, the TRSUs are converted into shares of TCF Financial's common stock on a one-to-one basis and the PRSUs are converted into shares of TCF Financial's common stock in accordance with the achievement of the performance target (ranging from 0% to 150% of the granted PRSUs). Compensation expense related to RSUs is recognized over the expected requisite performance or service period, as applicable.
 
A summary of the activity for RSUs at and for the nine months ended September 30, 2020 is presented below:
 
Number of Units
 
Weighted-average Grant Date Fair Value Per Unit
Outstanding at December 31, 2019
1,511,820

 
$
44.49

Granted
1,465,165

 
24.59

Forfeited/canceled
(45,388
)
 
28.93

Vested
(601,651
)
 
43.99

Outstanding at September 30, 2020
2,329,946

 
$
32.41



Unrecognized compensation expense related to RSUs totaled $52.1 million at September 30, 2020 and is expected to be recognized over the remaining weighted-average period of 2.7 years.

Restricted Stock Awards

The Corporation's restricted stock award transactions were as follows:
 
Number of Awards
 
Weighted-Average Grant Date Fair Value Per Award
Outstanding at December 31, 2019
888,305

 
$
40.67

Granted
54,040

 
25.91

Forfeited/canceled
(7,959
)
 
39.91

Vested
(379,485
)
 
41.11

Outstanding at September 30, 2020
554,901

 
$
38.63





47




At September 30, 2020, there were no shares of performance-based restricted stock awards outstanding. Unrecognized stock compensation expense for restricted stock awards was $11.5 million at September 30, 2020 with a weighted-average remaining amortization period of 1.9 years.

The following table provides information regarding total expense for restricted stock awards:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Restricted stock expense related to employees(1)
$
7,600

 
$
4,779

 
$
17,995

 
$
9,455

Restricted stock expense related to directors(2)
352

 
391

 
566

 
709

Total restricted stock expense
$
7,952

 
$
5,170

 
$
18,561

 
$
10,164

(1) 
Included in "Compensation and employee benefits" in the Consolidated Statements of Income.
(2) 
Included in "Other noninterest expense" in the Consolidated Statements of Income.

Stock Options

A summary of activity for the Corporation's stock options at and for the nine months ended September 30, 2020 is presented below:
 
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, 2019
120,809

 
$
39.63

 
495,165

 
$
29.48

Exercised

 

 
(82,276
)
 
22.03

Forfeited/canceled
(3,659
)
 
38.18

 

 

Expired

 

 
(74,626
)
 
38.89

Vested
(57,262
)
 
38.38

 
57,262

 
38.38

Outstanding at September 30, 2020
59,888

 
$
40.92

 
395,525

 
$
30.55

Exercisable/vested at September 30, 2020
 
 
 
 
395,525

 
$
30.55



The weighted-average remaining contractual term was 4.1 years for all outstanding stock options and 3.9 years for exercisable stock options at September 30, 2020.

Note 19Retirement Plans
 
The Corporation's retirement plans include qualified defined benefit pension plans, nonqualified postretirement benefit plans, 401(k) savings plans and nonqualified supplemental retirement plans. These plans are discussed in further detail in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2019.

Qualified Defined Benefit Pension Plans

The TCF Cash Balance Pension Plan (the "Legacy TCF Pension Plan") and the Chemical Financial Corporation Employees' Pension Plan ("Chemical Pension Plan") are both defined as qualified benefit pension plans (collectively, the "Pension Plans"), which previously provided for postretirement pension benefits for plan eligible employees.

The Board of Directors of Legacy TCF approved the termination of the Legacy TCF Pension Plan effective November 1, 2019. The Corporation believes all participants will have their benefits paid in full. During the three months ended September 30, 2020, distributions were made to all participants electing a lump sum payment. Due to the TCF Pension Plan’s funding level, assets were liquidated and additional funding was made for the annuity purchase in October 2020. The weighted-average interest crediting rate was 2.05% as of September 30, 2020. TCF does not consolidate the assets and liabilities associated with the Legacy TCF Pension Plan.



48




The termination of the Chemical Pension Plan was effective August 31, 2019. The discount rate was adjusted to 3.48% based on the remeasurement of the Chemical Pension Plan required due to the Merger and the termination. At the time of the Merger, as a result of the termination, the Corporation recognized a prepaid asset representing the funded status of the Chemical Pension Plan, net of estimated settlement costs, and the balance previously recorded in accumulated other comprehensive income was eliminated. The purchase accounting adjustment, as a result of the Merger, was reported in goodwill. The Chemical Pension Plan was fully funded as of September 30, 2020. During the three months ended September 30, 2020, distributions were made to all participants electing a lump-sum payment. Following that distribution, existing plan assets will be liquidated over the next several months and an annuity purchase transaction was completed in October 2020.

Nonqualified Postretirement Benefit Plans

The Legacy TCF Postretirement Plan provides health care benefits to eligible retired employees who retired prior to December 31, 2009. The provisions for active and retired employees then eligible for these benefits were not changed. The Postretirement Plan is not funded.

The Chemical Postretirement Benefit Plan provides medical and dental benefits, during retirement, to a limited number of active and retired employees. The benefits can be amended, modified or terminated by the Corporation at any time.

401(k) Savings Plans

The TCF 401K Plan (the "TCF 401K"), a qualified postretirement benefit and employee stock ownership plan provides, and until December 31, 2019 the Chemical Financial Corporation 401K Savings Plan (the "Chemical 401K"), a qualified postretirement benefit plan provided the option to invest in TCF common stock. Effective December 31, 2019, the Chemical 401K merged with and into the TCF 401K. All participant balances remaining in the Chemical 401K were transferred into the TCF 401K on December 31, 2019.

Nonqualified Supplemental Retirement Plans

The TCF 401K Supplemental Plan (the "Legacy TCF SERP") and the TCF Financial Corporation Deferred Compensation Plan (the "TCF Deferred Compensation Plan") are both defined as nonqualified supplemental retirement plans. The Legacy TCF SERP's assets, which include investments in TCF common stock, are held in trust and included in equity in the other line item.

Net Periodic Benefit

The net periodic benefit plan (income) cost included in other noninterest expense for defined benefit pension plans and postretirement benefit plans were as follows:
 
Defined Benefit Pension Plans
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Interest cost
$
946

 
$
1,046

 
$
2,839

 
$
1,574

Return on plan assets
(864
)
 
(949
)
 
(2,594
)
 
(1,223
)
Net periodic benefit plan (income) cost
$
82

 
$
97

 
$
245

 
$
351

 
Postretirement Benefit Plans
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Interest cost
$
36

 
$
41

 
$
107

 
$
101

Service cost

 

 
1

 

Amortization of prior service cost
(12
)
 
(11
)
 
(35
)
 
(35
)
Net periodic benefit plan (income) cost
$
24

 
$
30

 
$
73

 
$
66





49




TCF made no cash contributions to the defined benefit pension plans during the three and nine months ended September 30, 2020 and 2019. Due to the funding level upon final termination, assets were liquidated and additional funding was made for the annuity purchase in October 2020. TCF contributed $0.1 million and $0.2 million to the Legacy TCF Postretirement Plan during the three and nine months ended September 30, 2020, respectively, compared to $0.1 million and $0.3 million during the three and nine months ended September 30, 2019, respectively. TCF made no contributions to the Chemical Postretirement Benefit Plan during both the three and nine months ended September 30, 2020 and 2019.

As of December 31, 2019, the TCF 401K allows participants to make contributions of up to 50% of their covered compensation on a tax-deferred and/or after-tax basis, subject to the annual covered compensation limitation imposed by the Internal Revenue Service ("IRS"). TCF matches the contributions of all participants at a rate of $1 per dollar for employees to a maximum company contribution of 5% of the employee's covered compensation per pay period subject to the annual covered compensation limitation imposed by the IRS. Employee contributions and matching contributions vest immediately. The Corporation match under the TCF 401K was $5.0 million and $16.8 million for the three and nine months ended September 30, 2020, respectively. The Corporation match under both the Legacy TCF 401k and the Chemical 401k was $4.3 million and $11.4 million for the three and nine months ended September 30, 2019, respectively. Dividends on TCF's common shares held in the TCF 401K are reinvested in such fund or, at the election of the participant, may be paid in cash to the participant.

Effective January 1, 2020, the TCF Deferred Compensation Plan (previously the Chemical Deferred Compensation Plan), a nonqualified supplemental retirement plan, was amended to allow certain employees to contribute up to 60% of their salary and up to 85% of bonus compensation. The amounts deferred under this plan are invested in a selection of participant designated mutual funds.

Note 20Earnings Per Common Share

The computations of basic and diluted earnings per common share were as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(Dollars in thousands, except per share data)
2020
 
2019
 
2020
 
2019
Basic earnings per common share
 

 
 

 
 

 
 

Net income attributable to TCF Financial Corporation
$
55,738

 
$
22,148

 
$
131,401

 
$
183,069

Preferred stock dividends
2,494

 
2,494

 
7,481

 
7,481

Net income available to common shareholders
53,244

 
19,654

 
123,920

 
175,588

Less: Earnings allocated to participating securities

 

 

 
19

Earnings allocated to common stock
$
53,244

 
$
19,654

 
$
123,920

 
$
175,569

Weighted-average common shares outstanding used in basic earnings per common share calculation
151,768,337

 
128,575,171

 
151,761,299

 
97,876,262

Basic earnings per common share
$
0.35

 
$
0.15

 
$
0.82

 
$
1.79

Diluted earnings per common share
 

 
 

 
 

 
 

Earnings allocated to common stock
$
53,244

 
$
19,654

 
$
123,920

 
$
175,569

Weighted-average common shares outstanding used in basic earnings per common share calculation
151,768,337

 
128,575,171

 
151,761,299

 
97,876,262

Net dilutive effect of:
 

 
 

 
 

 
 

Non-participating restricted stock
26,163

 
73,698

 
12,383

 
139,795

Stock options
27,092

 
105,719

 
53,246

 
39,222

Weighted-average common shares outstanding used in diluted earnings per common share calculation
151,821,592

 
128,754,588

 
151,826,928

 
98,055,279

Diluted earnings per common share
$
0.35

 
$
0.15

 
$
0.82

 
$
1.79

Anti-dilutive shares outstanding not included in the computation of diluted earnings per common share
 
 
 
 
 
 
 
Non-participating restricted stock
2,303,249

 
1,271,045

 
2,531,355

 
1,271,045

Stock options
323,386

 
97,980

 
228,106

 
97,980





50




Note 21. Other Noninterest Income and Expense

Other noninterest income and expense was as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
2020
 
2019
 
2020
 
2019
Other Noninterest Income
 
 
 
 
 
 
 
Gain on branch sales(1)
$

 
$

 
$
14,717

 
$

Termination of interest rate swaps

 
(17,302
)
 

 
(17,302
)
Loan servicing rights impairment
(154
)
 
(4,520
)
 
(17,248
)
 
(4,520
)
Other
5,565

 
9,513

 
35,650

 
21,510

Total other noninterest income
$
5,411


$
(12,309
)

$
33,119


$
(312
)
 
 
 
 
 
 
 
 
Other Noninterest Expense
 
 
 
 
 
 
 
Outside processing
$
15,697

 
$
12,084

 
$
42,414

 
$
23,475

Loan and lease expense
7,849

 
6,750

 
23,988

 
13,413

Professional fees
6,552

 
7,406

 
18,749

 
18,319

Advertising and marketing
8,251

 
7,101

 
21,091

 
19,229

FDIC insurance
5,138

 
6,298

 
18,439

 
11,708

Card processing and issuance costs
6,064

 
5,746

 
20,585

 
14,437

Other
33,872

 
42,391

 
100,409

 
94,200

Total other noninterest expense
$
83,423

 
$
87,776

 
$
245,675

 
$
194,781


(1) Represents the completion of the sale of seven banking centers in conjunction with deposits associated with those banking centers.

Note 22. Reportable Segments
 
The Corporation's reportable segments are Consumer Banking, Commercial Banking and Enterprise Services. Consumer Banking is comprised of all of the Corporation'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 the Corporation'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, the Corporation renamed its Wholesale Banking segment to Commercial Banking to align with the way it 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.

The Corporation 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. The Corporation generally accounts for inter-segment sales and transfers at cost.



51




Certain information for each of the Corporation's reportable segments, including reconciliations of the consolidated totals, was as follows:
(In thousands)
Consumer Banking
 
Commercial Banking
 
Enterprise Services
 
Consolidated
At or For the Three Months Ended September 30, 2020
 
 
 
 
 
 
 
Net interest income
$
216,851

 
$
167,160


$
(6,844
)
 
$
377,167

Provision (benefit) for credit losses
(27,217
)
 
96,881

 

 
69,664

Net interest income after provision for credit losses
244,068

 
70,279

 
(6,844
)
 
307,503

Noninterest income
78,587

 
35,105

 
5,118

 
118,810

Noninterest expense
204,239

 
105,646

 
63,555

 
373,440

Income (loss) before income tax expense (benefit)
118,416

 
(262
)
 
(65,281
)
 
52,873

Income tax expense (benefit)
19,744

 
(8,613
)
 
(15,560
)
 
(4,429
)
Income (loss) after income tax expense (benefit)
98,672

 
8,351

 
(49,721
)
 
57,302

Income attributable to non-controlling interest

 
1,564

 

 
1,564

Preferred stock dividends

 

 
2,494

 
2,494

Net income (loss) available to common shareholders
98,672

 
6,787

 
(52,215
)
 
53,244

Total assets
$
13,935,521

 
$
23,466,019

 
$
10,164,249

 
$
47,565,789

Revenues from external customers
 

 
 

 
 

 
 
Interest income
$
139,827

 
$
237,060

 
$
43,561

 
$
420,448

Noninterest income
78,587

 
35,105

 
5,118

 
118,810

Total
$
218,414

 
$
272,165

 
$
48,679

 
$
539,258

At or For the Three Months Ended September 30, 2019
 
 
 
 
 
 
 
Net interest income
$
191,940

 
$
157,437

 
$
22,416

 
$
371,793

Provision for credit losses
4,489

 
22,699

 

 
27,188

Net interest income after provision for credit losses
187,451

 
134,738

 
22,416

 
344,605

Noninterest income
57,102

 
47,929

 
(10,773
)
 
94,258

Noninterest expense
210,728

 
102,841

 
112,051

 
425,620

Income (loss) before income tax expense (benefit)
33,825

 
79,826

 
(100,408
)
 
13,243

Income tax expense (benefit)
6,817

 
8,172

 
(26,724
)
 
(11,735
)
Income (loss) after income tax expense (benefit)
27,008

 
71,654

 
(73,684
)
 
24,978

Income attributable to non-controlling interest

 
2,830

 

 
2,830

Preferred stock dividends

 

 
2,494

 
2,494

Net income available to common shareholders
27,008

 
68,824

 
(76,178
)
 
19,654

Total assets
$
13,701,633

 
$
19,045,367

 
$
12,945,511

 
$
45,692,511

Revenues from external customers
 

 
 

 
 

 
 
Interest income
$
153,843

 
$
265,678

 
$
40,287

 
$
459,808

Noninterest income
57,102

 
47,929

 
(10,773
)
 
94,258

Total
$
210,945

 
$
313,607

 
$
29,514

 
$
554,066





52




(In thousands)
Consumer Banking
 
Commercial Banking
 
Enterprise Services
 
Consolidated
At or For the Nine Months Ended September 30, 2020
 
 
 
 
 
 
 
Net interest income
$
616,968

 
$
522,619

 
$
17,420

 
$
1,157,007

Provision for credit losses
6,228

 
239,105

 

 
245,333

Net interest income after provision for credit losses
610,740

 
283,514

 
17,420

 
911,674

Noninterest income
245,277

 
134,709

 
8,841

 
388,827

Noninterest expense
640,417

 
325,425

 
182,438

 
1,148,280

Income (loss) before income tax expense (benefit)
215,600

 
92,798

 
(156,177
)
 
152,221

Income tax expense (benefit)
37,478

 
11,133

 
(33,741
)
 
14,870

Income (loss) after income tax expense (benefit)
178,122

 
81,665

 
(122,436
)
 
137,351

Income attributable to non-controlling interest

 
5,950

 

 
5,950

Preferred stock dividends

 

 
7,481

 
7,481

Net income (loss) available to common shareholders
178,122

 
75,715

 
(129,917
)
 
123,920

Total assets
$
13,935,521

 
$
23,466,019

 
$
10,164,249

 
$
47,565,789

Revenues from external customers
 
 
 
 
 
 
 
Interest income
$
430,162

 
$
788,745

 
$
135,303

 
$
1,354,210

Noninterest income
245,277

 
134,709

 
8,841

 
388,827

Total
$
675,439

 
$
923,454

 
$
144,144

 
$
1,743,037

At or For the Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
Net interest income
$
470,738

 
$
350,848

 
$
58,693

 
$
880,279

Provision for credit losses
16,406

 
34,473

 

 
50,879

Net interest income after provision for credit losses
454,332

 
316,375

 
58,693

 
829,400

Noninterest income
183,767

 
132,883

 
(9,170
)
 
307,480

Noninterest expense
520,007

 
267,147

 
128,390

 
915,544

Income (loss) before income tax expense (benefit)
118,092

 
182,111

 
(78,867
)
 
221,336

Income tax expense (benefit)
26,529

 
30,271

 
(27,934
)
 
28,866

Income (loss) after income tax expense (benefit)
91,563

 
151,840

 
(50,933
)
 
192,470

Income attributable to non-controlling interest

 
9,401

 

 
9,401

Preferred stock dividends

 

 
7,481

 
7,481

Net income available to common shareholders
91,563

 
142,439

 
(58,414
)
 
175,588

Total assets
$
13,701,633

 
$
19,045,367

 
$
12,945,511

 
$
45,692,511

Revenues from external customers
 
 
 
 
 
 
 
Interest income
$
370,016

 
$
619,419

 
$
88,048

 
$
1,077,483

Noninterest income
183,767

 
132,883

 
(9,170
)
 
307,480

Total
$
553,783

 
$
752,302

 
$
78,878

 
$
1,384,963



Note 23. Commitments, Contingent Liabilities and Guarantees

Financial Instruments with Off-Balance Sheet Risk In the normal course of business, the Corporation enters into financial instruments with off-balance sheet risk, primarily to meet the financing needs of its customers. These financial instruments, which are issued or held for purposes other than trading, involve elements of credit and interest-rate risk in excess of the amounts recognized in the Consolidated Statements of Financial Condition.

The Corporation's exposure to credit loss, in the event of non-performance by the counterparty to the financial instrument is represented by the contractual amount of the commitments. The Corporation uses the same credit policies in making these commitments as it does for making direct loans. The Corporation evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained is based on a credit evaluation of the customer.

Financial instruments with off-balance sheet risk were as follows:
(In thousands)
At September 30, 2020
 
At December 31, 2019
Commitments to extend credit:
 
 
 
Commercial
$
4,522,128

 
$
5,743,072

Consumer
2,171,676

 
2,305,096

Total commitments to extend credit
6,693,804

 
8,048,168

Standby letters of credit and guarantees on industrial revenue bonds
116,792

 
129,192

Total
$
6,810,596

 
$
8,177,360




53





Commitments to Extend Credit: Commitments to extend credit are agreements to lend provided there is no violation of any condition in the contract. These commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a certain amount of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Collateral to secure any funding of these commitments predominantly consists of residential and commercial real estate mortgages.

Standby Letters of Credit and Guarantees on Industrial Revenue Bonds: Standby letters of credit and guarantees on industrial revenue bonds are conditional commitments issued by the Corporation guaranteeing the performance of a customer to a third party. These conditional commitments expire in various years through 2039. The majority of these standby letters of credit are collateralized. Collateral held consists primarily of commercial real estate mortgages. Since the conditions under which the Corporation is required to fund these commitments may not materialize, the cash requirements are expected to be less than the total outstanding commitments.

Contingencies and Guarantees The Corporation has originated and sold certain loans, and additionally acquired the potential liability for loans originated and sold by merged or acquired entities, for which the buyer has limited recourse to the Corporation in the event the loans do not perform as specified in the agreements. These loans had an outstanding balance of $6.6 million and $6.2 million at September 30, 2020 and December 31, 2019, respectively. The maximum potential amount of undiscounted future payments that the Corporation could be required to make in the event of nonperformance by the borrower totaled $6.6 million and $6.0 million at September 30, 2020 and December 31, 2019, respectively. In the event of nonperformance, the Corporation has rights to the underlying collateral securing the loans. At December 31, 2019 the Corporation had recorded a liability of $0.1 million, in connection with the recourse agreements, in other liabilities. There was no recorded liability at September 30, 2020.

In addition, the Corporation acquired, through the Merger, certain Small Business Administration ("SBA") guaranteed loans in which the guaranteed portion had been sold to a third party investor. In the event these loans default and the SBA guaranty is no longer intact (i.e. an issue is found to have occurred during the origination or the liquidation of the loans) the Corporation would be liable to make the loan whole to the third party investor. The maximum potential amount of undiscounted future payments that the Corporation could be required to make in the event of default by the borrower was $13.9 million and $16.7 million at September 30, 2020 and December 31, 2019, respectively. In the event of default, the Corporation has rights to the underlying collateral securing the loans. At September 30, 2020 and December 31, 2019, the Corporation had recorded a liability of $0.8 million and $0.9 million, respectively, in other liabilities.

Representations, Warranties and Contractual Liabilities In connection with the Corporation's residential mortgage loan sales, and the historical sales of merged or acquired entities, the Corporation makes certain representations and warranties that the loans meet certain criteria, such as collateral type, underwriting standards and the manner in which the loans will be serviced. The Corporation may be required to repurchase individual loans and/or indemnify the purchaser against losses if the loan fails to meet established criteria. In addition, some agreements contain a requirement to repurchase loans as a result of early payoffs by the borrower, early payment default of the borrower or the failure to obtain valid title. At September 30, 2020 and December 31, 2019 the liability recorded in connection with these representations and warranties was $3.8 million and $5.7 million, respectively, included in other liabilities.

Litigation Contingencies From time to time, we are a party to legal proceedings arising out of our lending, leasing and deposit operations, including foreclosure proceedings and other collection actions as part of our lending and leasing collections activities. We may also be subject to regulatory examinations and enforcement actions brought by federal regulators, including the SEC, the Federal Reserve, the OCC and the CFPB which may impose sanctions on us for failures related to regulatory compliance. From time to time borrowers and other customers, and employees and former employees have also brought actions against us, in some cases claiming substantial damages. We, like other financial services companies are subject to the risk of class action litigation. Litigation is often unpredictable and the actual results of litigation cannot be determined and therefore the ultimate resolution of a matter and the possible range of loss associated with certain potential outcomes cannot be established. Based on our current understanding of our pending legal proceedings, management does not believe that judgments or settlements arising from pending or threatened legal matters, individually or in the aggregate, would have a material adverse effect on our consolidated financial position, operating results or cash flows.




54





Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-looking Information

Any statements contained in this Quarterly Report on Form 10-Q regarding the outlook for the Corporation's businesses and their respective markets, such as 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.
These statements include, among others, statements related to: our strategic plan to develop customer relationships that will drive core deposit growth and stability, management's belief that our commercial and commercial real estate loan portfolios are generally well-secured, the impact of projected changes in net interest income assuming changes to short-term market interest rates, statements regarding our risk exposure, statements related to integration following our Merger, including statements related to the anticipated effects on results of operations and financial condition from expected developments. All statements referencing future time periods are forward-looking.
Management's determination of the allowance for credit losses and related provision; the carrying value of goodwill and loan servicing rights; the fair value of investment securities (including whether there is any credit impairment); and management's assumptions concerning postretirement benefit plans involve judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated. All of the information concerning interest rate sensitivity is forward-looking. The future effect of changes in the financial and credit markets and the national and regional economies on the banking industry, generally, and on us, specifically, are also inherently uncertain.
These forward-looking statements are subject to certain risks, uncertainties and assumptions ("risk factors") that could cause actual results to differ materially from those expressed or implied in such statements, and no assurance can be given that the results in any forward-looking statement will be achieved. 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, except as required by law. These factors include the factors discussed in Item 1A. in our Annual Report on Form 10-K for the year ended December 31, 2019 under the heading "Risk Factors" or otherwise disclosed in documents filed or furnished by us with or to the SEC after the filing of the Annual Reporting on Form 10-K, the factors discussed below and any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statements. Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive: macroeconomic and other challenges and uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, financial markets and consumer and corporate customers and clients, including economic activity, employment levels and market liquidity, as well as the various actions taken in response to the challenges and uncertainties by governments, central banks and others, including TCF; a failure to manage credit risk; cyber-security breaches involving us or third parties, hacking, denial of service, loss or theft of information, or other cyber-attacks that disrupt TCF's business operations or damage its reputation; adverse developments affecting TCF's banking centers, including supermarket banking centers; inability to successfully execute on TCF's growth strategy through acquisitions or expanding existing business relationships; adverse effects related to competition from traditional competitors, non-bank providers of financial services and new technologies; technological difficulties, including those related to system upgrades or the failure to keep pace with technological changes in response to customer demands; risks related to developing new products, markets or lines of business; risks related to TCF's loan origination and sales activity; lack of access to liquidity or ability to raise capital that isn’t dilutive; adverse changes in monetary, fiscal or tax policies; litigation or government enforcement actions; heightened consumer protection, supervisory or regulatory practices or requirements; deficiencies in TCF's compliance programs or risk mitigation frameworks; dependence on accurate and complete information from customers and counterparties; the failure to attract and retain key employees; ineffective


55




internal controls; soundness of other financial institutions and other counterparty risk, including the risk of default, operational disruptions, or diminished availability of counterparties who satisfy our credit quality requirements; inability to grow deposits, increase earnings and revenue, manage operating expenses, or pay and receive dividends; interruptions, systems failures information technology and telecommunications systems failures of third-party services; deficiencies in TCF's quantitative models; the effect of any negative publicity or reputational damage; changes in accounting standards or interpretations of existing standards; adverse federal, state or foreign tax assessments; and the effects of man-made and natural disasters, any of which may negatively affect our operations and/or our customers.
This Quarterly Report on Form 10-Q also contains forward-looking statements regarding our outlook or expectations with respect to post-merger integration. Examples of forward-looking statements include, but are not limited to, statements regarding outlook and expectations with respect to the strategic and financial benefits of the Merger, including the expected impact on TCF's future financial performance (including operating and return metrics operational aspects of post-Merger integration). 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.
Overview

TCF Financial Corporation, formerly known as Chemical Financial Corporation, ("TCF") is a financial holding company, incorporated in Michigan in 1973 and headquartered in Detroit, Michigan.

Through our wholly-owned bank subsidiary, TCF National Bank, a national banking association ("TCF Bank") with its main office in Sioux Falls, South Dakota, we provide a full range of consumer-facing and commercial services, including consumer and commercial banking, trust and wealth management, and specialty leasing and lending products and services to consumers, small businesses and commercial customers. As of September 30, 2020, TCF had approximately 475 banking centers primarily located in Michigan, Illinois and Minnesota with additional locations in Colorado, Ohio, South Dakota and Wisconsin (our "primary banking markets"). We also conduct business across all 50 states and Canada through our specialty lending and leasing businesses.

References herein to "TCF Financial" or the "Holding Company" refer to TCF Financial Corporation on an unconsolidated basis. TCF Financial Corporation (together with its direct and indirect subsidiaries, are referred to as "we," "us," "our," "TCF" or the "Corporation".

Supporting Team Members, Customers and Communities through the COVID-19 Pandemic and Civil Unrest

To support our team members we have:
Implemented health and safety policies, protocols and guidelines while ensuring adequate PPE and cleaning supplies are available at all locations in response to the COVID-19 pandemic;
developed a thoughtful return to work approach where team members are returning in phases based on safety guidelines and local restrictions while evaluating lessons learned and opportunities for a more flexible workspace strategy in the future; and
established various internal initiatives to increase awareness of diversity and inclusion issues including launching the Executive Diversity and Inclusion Council, providing executive office hours for team members to have candid discussions with leaders regarding diversity issues, and required unconscious bias training for all team members.

To support our customers we have:
Assisted customers in response to the COVID-19 pandemic via loan and lease deferrals, evaluated under the CARES Act, with $403.6 million on deferral status as of September 30, 2020 ($289.5 million of commercial balance and $114.1 million of consumer balance); and
assisted business and commercial customers via $1.9 billion of total loans funded through the Paycheck Protection Program ("PPP"), of which $1.8 billion of PPP loan balance was outstanding at September 30, 2020.


56





To support our communities we have:
Established a $1 billion loan commitment for minority communities and minority- and women-owned small businesses over 5 years;
expanded closing costs assistance program through the Heart and Home Lending Program providing up to $10 million of grants to help cover closing costs for qualified low-to-moderate income home buyers over 5 years;
partnered with Wayne County, Michigan to provide fast relief through low-interest loans to help small businesses in the Detroit area;
provided $700 thousand in donations to organizations that offered programs and resources to underserved communities impacted by COVID-19; and
committed $250 thousand for relief efforts supporting Great Lakes Bay Region community organizations and a $10 million Hardship Lending Program to support residents and business impacted by dam failures and historic flooding in the Midland, Michigan area.

The COVID-19 pandemic has resulted in historic job losses and decreases in economic activity. While the duration and full extent of job losses and magnitude of economic dislocation are not yet known, it is clear that they have impacted, and may impact in the future, the ability of individuals and small businesses to make payments, the value of underlying collateral and the ability of guarantors to make payments in the case of default, which may decrease consumer demand for our products and services and reduce our ability to access capital. As a result of the decrease in economic activity and restrictions on indoor activity, we have faced and may continue to face a decrease in demand for certain products, reduced access to our banking centers by our customers, and disruptions in the operations of our vendors. The pandemic could also result in the recognition of additional credit losses in our loan and lease portfolios and increase our allowance for credit losses as both businesses and consumers are negatively impacted by the economic downturn. In addition, reduced origination volumes and credit losses triggered by COVID-19 may impact significant estimates included within our fair valuation analyses. The extent of such impact will depend on the outcome of certain developments, including but not limited to, the duration and spread of the outbreak as well as its continuing impact on our customers, vendors, employees and the financial markets all of which are uncertain. See Part II, Item 1A, "Risk Factors - Risks related to the impact of COVID-19" for further discussion.

Merger of Equals

On August 1, 2019 (the "Merger Date"), TCF Financial Corporation, a Delaware corporation ("Legacy TCF"), merged with and into Chemical Financial Corporation, a Michigan corporation ("Chemical"), with Chemical surviving the merger (the "Merger") and being renamed TCF Financial Corporation. Immediately following the Merger, Chemical’s wholly owned bank subsidiary, Chemical Bank, a Michigan state-chartered bank, merged with and into TCF Bank, with TCF Bank surviving the Merger. Upon completion of the Merger, Chemical was renamed TCF Financial Corporation.

The Merger was accounted for as a reverse merger using the acquisition method of accounting, therefore, Legacy TCF was deemed the acquirer for financial reporting purposes, even though Chemical was the legal acquirer. Accordingly, Legacy TCF's historical financial statements are the historical financial statements of the combined company for all periods before the Merger Date. Our results of operations for the periods before August 1, 2019 reflect financial data of Legacy TCF, while periods after the Merger reflect financial data for the combined company. Accordingly, comparisons of our results for the third quarter of 2020 to the third quarter of 2019 and the nine months ended September 30, 2020 to the nine months ended September 30, 2019 may not be meaningful. The number of shares issued and outstanding, earnings per share, additional paid-in-capital and all references to share quantities of TCF have been retrospectively adjusted to reflect the equivalent number of shares issued in the Merger. See "Note 2. Merger" of the Notes to Consolidated Financial Statements for further information.


57





Business Overview

Net interest income, the difference between interest income earned on loans and leases, investments securities and other earning assets (interest income) and interest paid on deposits and borrowings (interest expense), represented 76.0% of our total revenue for the three months ended September 30, 2020, compared to 74.0% and 79.8% of our total revenue for the three months ended June 30, 2020 and September 30, 2019, respectively. Net interest income represented 74.8% of our total revenue for the nine months ended September 30, 2020, compared to 74.1% of our total revenue for the nine months ended September 30, 2019. Net interest income can change significantly from period to period based on interest rates, customer prepayment patterns and the volume and mix of interest-earning assets, noninterest-bearing deposits and interest-bearing liabilities. We manage the risk of changes in interest rates on our net interest income through TCF's Asset & Liability Committee ("ALCO") and through related interest rate risk monitoring and management policies. See "Part I, Item 3. Quantitative and Qualitative Disclosures about Market Risk" for further discussion.

Noninterest income is a significant source of our revenue and an important component of our results of operations. The significant components of noninterest income are leasing revenue, fees and service charges on deposit accounts, net gains on sales of loans and leases, card and ATM revenue, wealth management revenue and servicing fee revenue. Leasing revenue generates noninterest income primarily from operating and sales-type leases. Primary drivers of fees and service charges include the number of customers we attract, the customers' level of engagement and the frequency with which the customer uses our solutions. Providing a wide range of consumer banking services is an integral component of our business philosophy. We sell loans, primarily secured by consumer real estate, which results in gains on sales, as well as servicing fee income. Primary drivers of gains on sales include our ability to originate loans, identify loan buyers and execute loan sales.

The following portions of this Management's Discussion and Analysis of Financial Condition and Results of Operations ("Management's Discussion and Analysis") focus in more detail on the results of operations for the three and nine months ended September 30, 2020, the three months ended June 30, 2020, and the three and nine months ended September 30, 2019 and on information about our financial condition, loan and lease portfolio, liquidity, funding resources, capital and other matters. This discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes appearing in this report and the Consolidated Financial Statements and related notes and disclosures in our 2019 Annual Report on Form 10-K.

Critical Accounting Estimates

Our Consolidated Financial Statements are prepared in accordance with United States generally accepted accounting principles ("GAAP"), Securities and Exchange Commission ("SEC") rules and interpretive releases and general practices within our industry. Application of these principles requires management to make estimates, assumptions and complex judgments that affect the amounts reported in our Consolidated Financial Statements and accompanying notes. These estimates, assumptions and judgments are based on historical experience and various assumptions that we believe to be reasonable as of the date of the financial statements; accordingly, as this information changes, our Consolidated Financial Statements could reflect different estimates, assumptions and judgments. Actual results could differ significantly from those estimates.

Certain accounting measurements inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. We use third-party sources to assist us with developing certain estimates, assumptions and judgments regarding certain amounts reported in our Consolidated Financial Statements and accompanying notes. When using third-party sources, management remains responsible for complying with GAAP. To meet management's responsibilities, we have processes in place to develop an understanding of the third-party methodologies used and to design and implement internal controls.

We have identified the determination of the allowance for credit losses (loans and leases), accounting for business combinations (including fair value of purchased loans and leases and core deposit intangibles), and the evaluation of goodwill impairment to be the accounting areas that require the most subjective or complex judgments and, as such, could be most subject to revision as new or additional information becomes available or circumstances change, including overall changes in the economic climate and/or market interest rates. Therefore, we consider them to be critical accounting estimates and discuss them directly with the Audit Committee of our Board of Directors.



58




Our significant accounting estimate related to accounting for business combinations is more fully described in the Critical Accounting Estimates section of this Management's Discussion and Analysis of Financial Condition within our audited Consolidated Financial Statements and notes thereto and additionally described in our Annual Report on Form 10-K for the year ended December 31, 2019. As a result of our adoption of CECL as of January 1, 2020, we have made updates to our allowance for credit losses accounting measurements as detailed below. We have also provided updates regarding the evaluation of goodwill impairment below.

Updates to Critical Accounting Estimates

Allowance for Credit Losses

The allowance for credit losses ("ACL") represents management's estimate of current credit losses expected to be incurred in the loan and lease portfolios over the remaining expected life of each financial asset at the balance sheet date, including known or anticipated problem loans and leases, as well as for loans and leases which are not currently known to require specific allowances. The ACL includes the allowance for loan and lease losses ("ALLL") and a reserve for unfunded lending commitments ("RULC"). Determining the amount of the ACL is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amounts and timing of expected future cash flows, adjustments for forward-looking information, estimates of losses based on measurement date credit risk characteristics and consideration of other qualitative factors, all of which may be susceptible to significant change.

Events that are not within our control, such as changes in economic conditions, could change subsequent to the end of the period covered by this Quarterly Report on Form 10-Q, and could cause the ACL to be overstated or understated. The amount of ACL is affected by net charge-offs, which decrease the ACL, and the provision for credit losses charged to earnings, which increases or decreases the ACL.

The amount of the ACL significantly depends on management's estimates of key factors and assumptions affecting valuation, appraisals of collateral, evaluations of performance and status, the amounts and timing of future cash flows expected to be received, forecasts of future economic conditions and reversion periods. Such estimates, appraisals, evaluations, cash flows and forecasts may be subject to frequent adjustments due to changing economic prospects of borrowers, lessees, properties or economic conditions. These estimates are reviewed quarterly and adjustments, if necessary, are recorded in the provision for credit losses in the periods in which they become known.

See "Note 3. Summary of Significant Accounting Policies" and "Note 8. Allowance for Credit Losses and Credit Quality" of the Consolidated Financial Statements for additional disclosure regarding our ACL.

Goodwill

Goodwill represents the excess of the purchase price of our business acquisition and other purchases of banking centers and other businesses over the fair value of the net assets acquired. Goodwill is not amortized, but rather is tested by management annually in the fourth quarter for impairment, or more frequently if triggering events occur and indicate potential impairment, in accordance with ASC Topic 350-20, Goodwill (ASC 350-20). ASC 350-20 allows an entity to assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. ASC 350-20 also allows an entity to bypass the qualitative assessment approach and determine if goodwill is impaired utilizing a quantitative assessment approach.

Given the economic deterioration due to the COVID-19 pandemic, during each quarter of 2020, we evaluated whether it was more-likely-than-not that the fair value of any reporting unit was less than its carrying amount. We assessed economic conditions, including projections of the duration of current conditions and timing of a potential recovery; industry and market considerations; government intervention and regulatory updates; the impact of recent events to financial performance and cost factors of the reporting units including Merger synergies; the market price of our common stock and other relevant events. At the conclusion of each assessment, we determined that it was not more-likely-than-not that the fair value of each reporting unit was less than its carrying amount. If economic conditions deteriorate, or the pandemic’s effects prolong or worsen, it may be more-likely-than-not that the fair value of one or more of TCF's reporting units falls below its respective carrying amount and would need to be evaluated for impairment.




59




Selected Financial Data

The following table provides our selected financial information for the periods and at the dates indicated. This information should be read together with our Consolidated Financial Statements and the related notes thereto, which are included elsewhere in this report. Our financial results were significantly impacted by the Merger, and periods before August 1, 2019 reflect financial data of Legacy TCF, while periods after the Merger reflect financial data for the combined company. Earnings per share and share quantities of TCF have been retrospectively adjusted to reflect the equivalent number of shares issued in the Merger. As noted in the following table, we have included certain non-GAAP financial measures, which should be read in conjunction with the section entitled "Non-GAAP Financial Measures" and the accompanying table entitled "Reconciliation of Non-GAAP Operating Results," for an explanation of the use of non-GAAP financial measures in this Quarterly Report on Form 10-Q and a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measure. Historical data is not necessarily indicative of TCF's future results of operations or financial condition.
 
 
For the Three Months Ended
 
For the Nine Months Ended
(Dollars in thousands, except per share data)
 
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
September 30, 2020
 
September 30, 2019
Consolidated Income:
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
420,448

 
$
438,370

 
$
459,808

 
$
1,354,210

 
$
1,077,483

Interest expense
 
43,281

 
60,011

 
88,015

 
197,203

 
197,204

Net interest income
 
377,167

 
378,359

 
371,793

 
1,157,007

 
880,279

Noninterest income
 
118,810

 
133,054

 
94,258

 
388,827

 
307,480

Total revenue
 
495,977

 
511,413

 
466,051

 
1,545,834

 
1,187,759

Provision for credit losses
 
69,664

 
78,726

 
27,188

 
245,333

 
50,879

Noninterest expense
 
373,440

 
400,241

 
425,620

 
1,148,280

 
915,544

Income before income tax expense
 
52,873

 
32,446

 
13,243

 
152,221

 
221,336

Income tax (benefit) expense
 
(4,429
)
 
6,213

 
(11,735
)
 
14,870

 
28,866

Income attributable to non-controlling interest
 
1,564

 
2,469

 
2,830

 
5,950

 
9,401

Net income attributable to TCF
 
55,738

 
23,764

 
22,148

 
131,401

 
183,069

Preferred stock dividends
 
2,494

 
2,494

 
2,494

 
7,481

 
7,481

Net income available to common shareholders
 
$
53,244

 
$
21,270

 
$
19,654

 
$
123,920

 
$
175,588

Earnings per common share:
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.35

 
$
0.14

 
$
0.15

 
$
0.82

 
$
1.79

Diluted
 
0.35

 
0.14

 
0.15

 
0.82

 
1.79

Financial Ratios:
 
 
 
 
 
 
 
 
 
 
Return on average assets ("ROAA")(1)
 
0.46
%
 
0.21
%
 
0.26
%
 
0.38
%
 
0.88
%
Return on average common equity ("ROACE")(1)
 
3.87

 
1.56

 
1.75

 
3.02

 
7.50

Return on average tangible common equity ("ROATCE")(1)(2)
 
5.71

 
2.57

 
2.68

 
4.57

 
9.05

Net interest margin
 
3.31

 
3.33

 
4.12

 
3.45

 
4.35

Net interest margin (FTE)(1)(3)(4)
 
3.34

 
3.35

 
4.14

 
3.48

 
4.36

Dividend payout ratio
 
100.00

 
250.00

 
233.33

 
128.05

 
52.54

Efficiency ratio
 
75.29

 
78.26

 
91.32

 
74.28

 
77.08

Credit Quality Ratios:
 
 
 
 
 
 
 
 
 
 
Net charge-offs as a percentage of average loans and leases(1)
 
0.28

 
0.04

 
0.39

 
0.13

 
0.36

Adjusted Financial Results (non-GAAP):
 
 
 
 
 
 
 
 
 
 
Adjusted net income attributable to TCF(2)
 
$
98,696

 
$
84,862

 
$
128,301

 
$
273,413

 
$
299,638

Adjusted diluted earnings per common share(2)
 
$
0.63

 
$
0.54

 
$
0.98

 
$
1.75

 
$
2.98

Adjusted ROAA(1)(2)
 
0.81
%
 
0.70
%
 
1.34
%
 
0.76
%
 
1.41
%
Adjusted ROACE(1)(2)
 
6.99

 
6.03

 
11.21

 
6.48

 
12.48

Adjusted ROATCE(1)(2)
 
9.96

 
8.70

 
14.96

 
9.31

 
14.90

Adjusted efficiency ratio (non-GAAP)(2)
 
61.17

 
59.80

 
58.74

 
59.69

 
61.57

(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.


60




(Dollars in thousands)
 
At September 30, 2020
 
At December 31, 2019
Consolidated Financial Condition:
 
 
 
 
Loans and leases
 
$
34,343,691

 
$
34,497,464

Total assets
 
47,565,789

 
46,651,553

Deposits
 
39,172,097

 
34,468,463

Borrowings
 
1,527,306

 
5,023,593

Total equity
 
5,658,420

 
5,727,241

Financial Ratios:
 
 
 
 
Common equity to assets
 
11.50
%
 
11.87
%
Tangible common equity as a percent of tangible assets (non-GAAP)(1)
 
8.68

 
9.01

Total risk-based capital ratio
 
14.04

 
12.70

Book value per common share
 
$
35.88

 
$
36.20

Tangible book value per common share (non-GAAP)(1)
 
26.27

 
26.60

Credit Quality Ratios:
 
 
 
 
Nonaccrual loans and leases as a percentage of total loans and leases(2)
 
1.10
%
 
0.49
%
Nonperforming assets as a percentage of total loans and leases and other real estate owned(2)
 
1.20

 
0.59

Allowance for loan and lease losses as a percentage of total nonaccrual loans and leases(2)
 
136.77

 
66.64

Allowance for credit losses as a percentage of total nonaccrual loans and leases(2)
 
145.83

 
68.71

Allowance for loan and lease losses as a percentage of total loans and leases
 
1.50

 
0.33

Allowance for credit losses as a percentage of total loans and leases
 
1.60

 
0.34

(1)
See section entitled "Non-GAAP Financial Measures" for further information.
(2)
Prior to the adoption of CECL as of January 1, 2020, purchased credit impaired loans were not classified as nonaccrual loans because they were recorded at their net realizable value based on the principal and interest expected to be collected on the loans. At January 1, 2020, $73.4 million of previous purchased credit impaired loans were classified as nonaccrual loans.

Results of Operations

Performance Summary We reported net income of $55.7 million for the three months ended September 30, 2020, compared to $23.8 million for the three months ended June 30, 2020, and $22.1 million for the three months ended September 30, 2019. Merger-related expenses included in net income totaled $54.0 million for the three months ended September 30, 2020, $81.6 million for the three months ended June 30, 2020 and $111.3 million for the three months ended September 30, 2019. Notable items, on a pre-tax basis, for the three months ended September 30, 2020, included $0.2 million of loan servicing rights impairment. Notable items, on a pre-tax basis, for the three months ended June 30, 2020, included $14.2 million of gains on sales of branches, net of expense related to branch exit costs, $8.9 million of loan servicing rights impairment and $0.9 million of expenses related to the sale of the Legacy TCF auto finance portfolio. Notable items, for the three months ended September 30, 2019, included a $19.3 million net loss on transfer of Legacy TCF auto finance portfolio to held-for-sale, a $17.3 million loss on termination of interest rate swaps, $5.9 million of expense associated with the write-down of company-owned vacant land parcels due to an intent to sell, and $4.5 million of loan servicing rights impairment, partially offset by $5.9 million of gain on sales of certain investment securities. Adjusted net income, a non-GAAP financial measure that excludes merger-related expenses and the identified notable items, net of tax, was $98.7 million for the three months ended September 30, 2020, compared to $84.9 million for the three months ended June 30, 2020 and $128.3 million for the three months ended September 30, 2019. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.



61




We reported net income of $131.4 million for the nine months ended September 30, 2020, compared to $183.1 million for the nine months ended September 30, 2019. Merger-related expenses included in net income totaled $172.4 million for the nine months ended September 30, 2020, compared to $124.9 million for the nine months ended September 30, 2019. Notable items, on a pre-tax basis, for the nine months ended September 30, 2020, included $17.2 million of loan servicing rights impairment, $14.2 million of gains on sales of branches, net of expense related to branch exit costs and $4.0 million of expense related to the sale of the Legacy TCF auto finance portfolio. Notable items, on a pre-tax basis, for the nine months ended September 30, 2019, included a $19.3 million net loss on transfer of Legacy TCF auto finance portfolio to held-for-sale, a $17.3 million loss on termination of interest rate swaps, $5.9 million of expense associated with the write-down of company-owned vacant land parcels due to an intent to sell, and $4.5 million of loan servicing rights impairment, partially offset by $5.9 million of gain on sales of certain investment securities. Adjusted net income, a non-GAAP financial measure that excludes merger-related expenses and the identified notable items, net of tax, was $273.4 million for the nine months ended September 30, 2020, compared to $299.6 million for the nine months ended September 30, 2019. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

We reported diluted earnings per common share of $0.35 for the three months ended September 30, 2020, compared to $0.14 for the three months ended June 30, 2020, and $0.15 for the three months ended September 30, 2019. For the nine months ended September 30, 2020, we reported diluted earnings per common share of $0.82, compared to $1.79 for the nine months ended September 30, 2019. Adjusted diluted earnings per common share, a non-GAAP financial measure that excludes merger-related expenses and notable items was $0.63 for the three months ended September 30, 2020, compared to $0.54 for the three months ended June 30, 2020 and $0.98 for the three months ended September 30, 2019. Adjusted diluted earnings per common share for the nine months ended September 30, 2020 was $1.75, compared to $2.98 for the nine months ended September 30, 2019. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

The following table provides our financial ratios and the adjusted ratios (non-GAAP), which exclude merger-related expenses and notable items.
Summary of Financial Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
Change From
 
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
September 30, 2020
 
September 30, 2019
 
Three Months Ended
Nine Months Ended
 
 
 
 
 
 
March 31, 2020
September 30, 2019
September 30, 2019
Return on average assets ("ROAA")(1)
0.46
%
 
0.21
%
 
0.26
%
 
0.38
%
 
0.88
%
 
25

bps
20

bps
(50
)
bps
ROACE(1)
3.87

 
1.56

 
1.75

 
3.02

 
7.50

 
231

 
212

 
(448
)
 
ROATCE(1)(2)
5.71

 
2.57

 
2.68

 
4.57

 
9.05

 
314

 
303

 
(448
)
 
Efficiency ratio
75.29

 
78.26

 
91.32

 
74.28

 
77.08

 
(297
)
 
(1,603
)
 
(280
)
 
Adjusted Financial Results (non-GAAP)
 
 
 
 
 
 
 
 
 
 
 
 

 

 
Adjusted ROAA(1)(2)
0.81
%
 
0.70
%
 
1.34
%
 
0.76
%
 
1.41
%
 
11

bps
(53
)
bps
(65
)
bps
Adjusted ROACE(1)(2)
6.99

 
6.03

 
11.21

 
6.48

 
12.48

 
96

 
(422
)
 
(600
)
 
Adjusted ROATCE(1)(2)
9.96

 
8.70

 
14.96

 
9.31

 
14.90

 
126

 
(500
)
 
(559
)

Adjusted efficiency ratio(2)
61.17

 
59.80

 
58.74

 
59.69

 
61.57

 
137

 
243

 
(188
)
 
(1)
Annualized.
(2)
See section entitled "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.




62




Consolidated Income Statement Analysis

Net Interest Income Net interest income was $377.2 million for the three months ended September 30, 2020, compared to $378.4 million for the three months ended June 30, 2020 and $371.8 million for the three months ended September 30, 2019. Net interest income was $1.2 billion for the nine months ended September 30, 2020, compared to $880.3 million for the nine months ended September 30, 2019. Net interest income, our largest source of net revenue (net interest income plus noninterest income), represented 76.0% of our total revenue for the three months ended September 30, 2020, 74.0% for the three months ended June 30, 2020 and 79.8% for the three months ended September 30, 2019. Net interest income represented 74.8% of our total revenue for the nine months ended September 30, 2020, compared to 74.1% for the nine months ended September 30, 2019. The decrease in net interest income for the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to a decrease in average loan and lease balances, partially offset by lower cost of funds. The increase in net interest income for the three and nine months ended September 30, 2020, compared to the three and nine months ended September 30, 2019, was primarily due to the increase in interest-earning assets acquired in the Merger, partially offset by the increase in interest-bearing liabilities acquired in the Merger.

Purchase accounting accretion and amortization included in net interest income was $17.7 million for the three months ended September 30, 2020, compared to $18.2 million for the three months ended June 30, 2020 and $28.4 million for the three months ended September 30, 2019. Purchase accounting accretion and amortization included in net interest income was $61.2 million for the nine months ended September 30, 2020, compared to $28.4 million for the nine months ended September 30, 2019. Additionally, three months ended September 30, 2020 net interest income recorded included $14.7 million of interest and fee income from PPP less funding costs, compared to $9.6 million for the three months ended June 30, 2020. Net interest income recorded included $24.3 million of interest and fee income from PPP less funding costs for the nine months ended September 30, 2020. Adjusted net interest income, excluding purchase accounting accretion and amortization and the impact from PPP loans, a non-GAAP financial measure, was $344.7 million for the three months ended September 30, 2020, compared to $350.6 million for the three months ended June 30, 2020 and $343.4 million for the three months ended September 30, 2019. Adjusted net interest income, excluding purchase accounting accretion and amortization and the impact from PPP loans, a non-GAAP financial measure, was $1.1 billion for the nine months ended September 30, 2020, compared to $851.9 million for the nine months ended September 30, 2019. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

Net interest income, on a fully tax-equivalent ("FTE") basis, a non-GAAP financial measure, was $380.0 million and $1.2 billion for the three and nine months ended September 30, 2020, respectively, compared to $381.4 million for the three months ended June 30, 2020 and $374.3 million and $885.8 million for the three and nine months ended September 30, 2019, respectively. Net interest income (FTE), a non-GAAP financial measure, is the difference between interest income and interest expense adjusted for the tax benefit received on tax-exempt loans, leases and investment securities. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.



63




Net interest margin was 3.31% for the three months ended September 30, 2020, compared to 3.33% for the three months ended June 30, 2020 and 4.12% for the three months ended September 30, 2019. Net interest margin was 3.45% for the nine months ended September 30, 2020, compared to 4.35% for the nine months ended September 30, 2019. Net interest margin (FTE), a non-GAAP financial measure, is calculated by dividing net interest income (FTE) by average interest-earning assets, expressed as a percentage, annualized as applicable. Net interest income and net interest margin are affected by (i) changes in prevailing short- and long-term interest rates, (ii) loan, lease and deposit pricing strategies and competitive conditions, (iii) the volume and mix of interest-earning assets, noninterest-bearing deposits and interest-bearing liabilities, (iv) the level of nonaccrual loans and leases and other real estate owned, (v) the impact of modified loans and leases, and (vi) changes in customer demand for products due to economic events. Net interest margin (FTE) was 3.34% for the three months ended September 30, 2020, compared to 3.35% for the three months ended June 30, 2020 and 4.14% for the three months ended September 30, 2019. Net interest margin (FTE) was 3.48% for the nine months ended September 30, 2020, compared to 4.36% for the nine months ended September 30, 2019. The decrease in both net interest margin and net interest margin (FTE) for the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to higher average cash balances and lower yields on loans, leases and securities, partially offset by lower cost of funds. The decreases in both net interest margin and net interest margin (FTE) for the three and nine months ended September 30, 2020, compared to the three and nine months ended September 30, 2019, was primarily due to a decrease in the yield earned on loans and leases added as a result of the lower average yields added to the portfolio through the Merger in addition to the impact of the Federal Reserve's rate cuts, partially offset by lower cost of funds. Adjusted net interest margin (FTE), excluding purchase accounting accretion and amortization and the impact of PPP loans, a non-GAAP financial measure, was 3.19% for the three months ended September 30, 2020, compared to 3.20% for the three months ended June 30, 2020 and 3.83% for the three months ended September 30, 2019. Adjusted net interest margin (FTE), excluding purchase accounting accretion and amortization and the impact of PPP loans, a non-GAAP financial measure, was 3.28% for the nine months ended September 30, 2020, compared to 4.22% for the nine months ended September 30, 2019. See the tables following for a reconciliation of net interest margin (FTE) and adjusted net interest margin (FTE) and "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

The following tables present the average balances of our major categories of assets and liabilities, interest income and expense on a FTE basis, average interest rates earned and paid on the assets and liabilities, net interest income (FTE), net interest spread and net interest margin for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, and for the nine months ended September 30, 2020 and September 30, 2019. The presentation of net interest income on a FTE basis is not in accordance with GAAP but is customary in the banking industry. This non-GAAP measure ensures comparability of net interest income arising from both taxable and tax-exempt loans and investment securities.


64




 
Three Months Ended
 
September 30, 2020
 
June 30, 2020
 
September 30, 2019
(Dollars in thousands)
Average
Balance
 
Interest(1)
 
Yields &
Rates
(1)(2)
 
Average
Balance
 
Interest(1)
 
Yields &
Rates
(1)(2)
 
Average
Balance
 
Interest(1)
 
Yields &
Rates
(1)(2)
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Home Loan Bank and Federal Reserve Bank stocks
$
361,320

 
$
2,973

 
3.27
%
 
$
401,532

 
$
4,376

 
4.38
%
 
$
230,767

 
$
806

 
1.39
%
Investment securities held-to-maturity
135,332

 
573

 
1.69

 
132,054

 
71

 
0.21

 
143,078

 
602

 
1.68

Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
6,021,643

 
35,076

 
2.33

 
5,730,762

 
32,434

 
2.26

 
4,232,878

 
30,436

 
2.88

Tax-exempt(3)
685,652

 
4,971

 
2.90

 
743,744

 
5,221

 
2.81

 
643,576

 
4,283

 
2.66

Loans and leases held-for-sale
490,886

 
3,829

 
3.13

 
356,671

 
3,322

 
3.73

 
118,482

 
1,408

 
4.74

Loans and leases(3)(4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
11,740,727

 
127,751

 
4.30

 
12,713,714

 
140,576

 
4.41

 
9,290,978

 
146,865

 
6.25

Commercial real estate
9,616,301

 
95,779

 
3.90

 
9,658,124

 
95,373

 
3.91

 
6,964,643

 
97,042

 
5.45

Lease financing
2,679,142

 
32,696

 
4.88

 
2,712,291

 
33,803

 
4.99

 
2,570,567

 
32,833

 
5.11

Residential mortgage
5,987,754

 
57,609

 
3.86

 
6,326,227

 
62,023

 
3.93

 
4,853,627

 
51,511

 
4.23

Home equity
3,399,468

 
43,489

 
5.09

 
3,509,107

 
45,314

 
5.19

 
3,433,830

 
56,166

 
6.49

Consumer installment
1,386,448

 
17,551

 
5.04

 
1,459,446

 
17,703

 
4.88

 
2,389,830

 
34,543

 
5.73

Total loans and leases(3)(4)
34,809,840

 
374,875

 
4.26

 
36,378,909

 
394,792

 
4.33

 
29,503,475

 
418,960

 
5.62

Interest-bearing deposits with banks and other
2,572,254

 
994

 
0.16

 
1,587,665

 
1,186

 
0.30

 
933,014

 
5,800

 
2.44

Total interest-earning assets
45,076,927

 
423,291

 
3.72

 
45,331,337

 
441,402

 
3.88

 
35,805,270

 
462,295

 
5.11

Other assets
4,462,673

 
 
 
 
 
4,384,779

 
 
 
 
 
3,289,096

 
 
 
 
Total assets
$
49,539,600

 
 
 
 
 
$
49,716,116

 
 
 
 
 
$
39,094,366

 
 
 
 
Liabilities and Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
10,654,288

 
 
 
 
 
$
9,830,687

 
 
 
 
 
$
6,564,195

 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Savings
9,301,198

 
4,050

 
0.17

 
9,082,184

 
8,930

 
0.40

 
7,676,165

 
14,110

 
0.73

Certificates of deposit
6,657,697

 
18,446

 
1.10

 
7,491,502

 
26,744

 
1.44

 
7,320,720

 
38,233

 
2.07

Checking
7,029,914

 
2,025

 
0.11

 
6,649,288

 
2,329

 
0.14

 
4,805,843

 
5,520

 
0.46

Money market
5,501,747

 
7,331

 
0.53

 
5,380,547

 
8,782

 
0.66

 
3,490,922

 
13,037

 
1.48

Total interest-bearing deposits
28,490,556

 
31,852

 
0.44

 
28,603,521

 
46,785

 
0.66

 
23,293,650

 
70,900

 
1.21

Total deposits
39,144,844

 
31,852

 
0.32

 
38,434,208

 
46,785

 
0.49

 
29,857,845

 
70,900

 
0.94

Borrowings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
2,153,030

 
2,511

 
0.46

 
3,016,490

 
4,085

 
0.54

 
1,884,228

 
5,345

 
1.11

Long-term borrowings
910,149

 
8,917

 
3.91

 
1,072,394

 
9,141

 
3.40

 
1,472,150

 
11,769

 
3.17

Total borrowings
3,063,179

 
11,428

 
1.48

 
4,088,884

 
13,226

 
1.29

 
3,356,378

 
17,114

 
2.01

Total interest-bearing liabilities
31,553,735

 
43,280

 
0.55

 
32,692,405

 
60,011

 
0.74

 
26,650,028

 
88,014

 
1.31

Total deposits and borrowings
42,208,023

 
43,280

 
0.41

 
42,523,092

 
60,011

 
0.57

 
33,214,223

 
88,014

 
1.05

Other liabilities
1,633,850

 
 
 
 
 
1,534,769

 
 
 
 
 
1,197,014

 
 
 
 
Total liabilities
43,841,873

 
 
 
 
 
44,057,861

 
 
 
 
 
34,411,237

 
 
 
 
Total TCF Financial Corporation shareholders' equity
5,675,089

 
 
 
 
 
5,630,133

 
 
 
 
 
4,657,613

 
 
 
 
Non-controlling interest in subsidiaries
22,638

 
 
 
 
 
28,122

 
 
 
 
 
25,516

 
 
 
 
Total equity
5,697,727

 
 
 
 
 
5,658,255

 
 
 
 
 
4,683,129

 
 
 
 
Total liabilities and equity
$
49,539,600

 
 
 
 
 
$
49,716,116

 
 
 
 
 
$
39,094,366

 
 
 
 
Net interest spread (FTE)
 
 
 
 
3.31

 
 
 
 
 
3.31

 
 
 
 
 
4.06

Net interest income (FTE) and net interest margin (FTE)
 
 
$380,011
 
3.34
%
 
 
 
$381,391
 
3.35
%
 
 
 
$374,281
 
4.14
%
Reconciliation of Net Interest Income (FTE) and Net Interest Margin (FTE)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income and net interest margin (GAAP)
 
 
$
377,167

 
3.31
%
 
 
 
$
378,359

 
3.33
%
 
 
 
$
371,793

 
4.12%
Adjustments for taxable equivalent interest(1)(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and leases
 
 
$
1,763

 
 
 
 
 
$
1,966

 
 
 
 
 
$
1,590

 
 
Tax-exempt investment securities
 
 
1,079

 
 
 
 
 
1,066

 
 
 
 
 
898

 
 
Total FTE adjustments
 
 
2,842

 
 
 
 
 
3,032

 
 
 
 
 
2,488

 
 
Net interest income (FTE) and net interest margin (FTE)
 
 
$
380,009

 
3.34
%
 
 
 
$
381,391

 
3.35
%
 
 
 
$
374,281

 
4.14%
(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.


65




 
Nine Months Ended
 
September 30, 2020
 
September 30, 2019
(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
$
405,680

 
$
10,501

 
3.46
%
 
$
149,801

 
$
2,860

 
2.55
%
Investment securities held-to-maturity
134,557

 
1,204

 
1.19

 
145,627

 
2,061

 
1.89

Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Taxable
5,881,983

 
107,870

 
2.45

 
3,029,754

 
67,684

 
2.98

Tax-exempt(3)
734,110

 
15,695

 
2.85

 
461,499

 
9,210

 
2.66

Loans and leases held-for-sale
329,131

 
8,712

 
3.53

 
71,739

 
2,832

 
5.27

Loans and leases(3)(4)
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
12,092,629

 
429,129

 
4.70

 
7,499,975

 
363,260

 
6.59

Commercial real estate
9,522,333

 
308,895

 
4.26

 
4,332,238

 
173,983

 
5.30

Lease financing
2,691,208

 
100,655

 
4.99

 
2,554,521

 
98,116

 
5.12

Residential mortgage
6,141,855

 
181,011

 
3.93

 
3,188,294

 
109,634

 
4.59

Home equity
3,474,012

 
139,906

 
5.38

 
3,161,083

 
160,206

 
6.78

Consumer installment
1,454,187

 
54,996

 
5.05

 
1,945,059

 
82,305

 
5.66

Total loans and leases(3)(4)
35,376,224

 
1,214,592

 
4.55

 
22,681,170

 
987,504

 
5.80

Interest-bearing deposits with banks and other
1,569,968

 
4,494

 
0.38

 
494,007

 
10,878

 
2.92

Total interest-earning assets
44,431,653

 
1,363,068

 
4.07

 
27,033,597

 
1,083,029

 
5.33

Other assets
4,318,287

 
 
 
 
 
2,249,678

 
 
 
 
Total assets
$
48,749,940

 
 
 
 
 
$
29,283,275

 
 
 
 
Liabilities and Equity:
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
9,475,952

 
 
 
 
 
$
4,831,271

 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Savings
8,992,197

 
26,649

 
0.40

 
6,799,432

 
37,094

 
0.73

Certificates of deposit
7,157,779

 
78,255

 
1.46

 
5,500,105

 
83,635

 
2.03

Checking
6,558,232

 
10,184

 
0.21

 
3,256,409

 
6,347

 
0.26

Money market
5,225,858

 
30,968

 
0.79

 
2,144,697

 
22,078

 
1.38

Total interest-bearing deposits
27,934,066

 
146,056

 
0.70

 
17,700,643

 
149,154

 
1.13

Total deposits
37,410,018

 
146,056

 
0.52

 
22,531,914

 
149,154

 
0.88

Borrowings:
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
2,617,891

 
17,178

 
0.86

 
838,750

 
9,433

 
1.48

Long-term borrowings
1,527,986

 
33,968

 
2.95

 
1,543,398

 
38,616

 
3.32

Total borrowings
4,145,877

 
51,146

 
1.63

 
2,382,148

 
48,049

 
2.67

Total interest-bearing liabilities
32,079,943

 
197,202

 
0.82

 
20,082,791

 
197,203

 
1.31

Total deposits and borrowings
41,555,895

 
197,202

 
0.63

 
24,914,062

 
197,203

 
1.06

Other liabilities
1,531,759

 
 
 
 
 
1,052,709

 
 
 
 
Total liabilities
43,087,654

 
 
 
 
 
25,966,771

 
 
 
 
Total TCF Financial Corp. shareholders' equity
5,636,933

 
 
 
 
 
3,289,946

 
 
 
 
Non-controlling interest in subsidiaries
25,353

 
 
 
 
 
26,558

 
 
 
 
Total equity
5,662,286

 
 
 
 
 
3,316,504

 
 
 
 
Total liabilities and equity
$
48,749,940

 
 
 
 
 
$
29,283,275

 
 
 
 
Net interest spread (FTE)
 
 
 
 
3.44

 
 
 
 
 
4.27

Net interest income (FTE) and net interest margin (FTE)
 
 
$
1,165,866

 
3.48
%
 
 
 
$
885,826

 
4.36
%
Reconciliation of Net Interest Income (FTE) and Net Interest Margin (FTE)
 
 
 
 
 
 
 
 
 
 
 
Net interest income and net interest margin (GAAP)
 
 
$
1,157,007

 
3.45
%
 
 
 
$
880,279

 
4.35%
Adjustments for taxable equivalent interest(1)(3)
 
 
 
 
 
 
 
 
 
 
 
Loans and leases
 
 
5,558

 
 
 
 
 
3,614

 
 
Tax-exempt investment securities
 
 
3,299

 
 
 
 
 
1,933

 
 
Total FTE adjustments
 
 
8,857

 
 
 
 
 
5,547

 
 
Net interest income (FTE) and net interest margin (FTE)
 
 
$
1,165,864

 
3.48
%
 
 
 
$
885,826

 
4.36%
(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.



66




Volume and Rate Variance Analysis
 
Three Months Ended September 30, 2020 vs. June 30, 2020
 
Three Months Ended September 30, 2020 vs. September 30, 2019
 
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
$
(407
)
 
$
(996
)
 
$
(1,403
)
 
$
636

 
$
1,531

 
$
2,167

Investment securities held-to-maturity
2

 
500

 
502

 
(33
)
 
4

 
(29
)
Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Taxable
1,677

 
965

 
2,642

 
11,177

 
(6,537
)
 
4,640

Tax-exempt
(417
)
 
167

 
(250
)
 
291

 
397

 
688

Loans and leases held-for-sale
1,116

 
(609
)
 
507

 
3,046

 
(625
)
 
2,421

Loans and leases
(15,237
)
 
(4,680
)
 
(19,917
)
 
67,481

 
(111,566
)
 
(44,085
)
Interest-bearing deposits with banks and other
532

 
(724
)
 
(192
)
 
3,916

 
(8,722
)
 
(4,806
)
Total interest-earning assets
$
(12,734
)
 
$
(5,377
)
 
$
(18,111
)
 
$
86,514

 
$
(125,518
)
 
$
(39,004
)
Changes in Interest Expense on Interest-Bearing Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Savings
$
215

 
$
(5,095
)
 
$
(4,880
)
 
$
2,477

 
$
(12,537
)
 
$
(10,060
)
Certificates of deposit
(2,755
)
 
(5,543
)
 
(8,298
)
 
(3,210
)
 
(16,577
)
 
(19,787
)
Checking
130

 
(434
)
 
(304
)
 
1,814

 
(5,309
)
 
(3,495
)
Money market
198

 
(1,649
)
 
(1,451
)
 
5,198

 
(10,904
)
 
(5,706
)
Interest-bearing deposits
(2,212
)
 
(12,721
)
 
(14,933
)
 
6,279

 
(45,327
)
 
(39,048
)
Short-term borrowings
(1,034
)
 
(540
)
 
(1,574
)
 
674

 
(3,508
)
 
(2,834
)
Long-term borrowings
(1,490
)
 
1,266

 
(224
)
 
(5,172
)
 
2,320

 
(2,852
)
Total interest-bearing liabilities
$
(4,736
)
 
$
(11,995
)
 
$
(16,731
)
 
$
1,781

 
$
(46,515
)
 
$
(44,734
)
Total change in net interest income (FTE)(2)
$
(7,998
)
 
$
6,618

 
$
(1,380
)
 
$
84,733

 
$
(79,003
)
 
$
5,730

(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%. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry.
 
Nine Months Ended September 30, 2020 vs. September 30, 2019
 
Increase (Decrease)
Due to Changes in
 
 
(Dollars in thousands)
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
$
6,296

 
$
1,345

 
$
7,641

Investment securities held-to-maturity
(147
)
 
(710
)
 
(857
)
Investment securities available-for-sale:
 
 
 
 
 
Taxable
54,131

 
(13,945
)
 
40,186

Tax-exempt
5,787

 
698

 
6,485

Loans and leases held-for-sale
7,101

 
(1,221
)
 
5,880

Loans and leases
471,187

 
(244,099
)
 
227,088

Interest-bearing deposits with banks and other
8,947

 
(15,331
)
 
(6,384
)
Total interest-earning assets
$
553,302

 
$
(273,263
)
 
$
280,039

Changes in Interest Expense on Interest-Bearing Liabilities:
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
Savings
$
9,683

 
$
(20,128
)
 
$
(10,445
)
Certificates of deposit
21,416

 
(26,796
)
 
(5,380
)
Checking
5,321

 
(1,484
)
 
3,837

Money market
21,266

 
(12,376
)
 
8,890

Interest-bearing deposits
57,686

 
(60,784
)
 
(3,098
)
Short-term borrowings
13,080

 
(5,335
)
 
7,745

Long-term borrowings
(384
)
 
(4,264
)
 
(4,648
)
Total interest-bearing liabilities
$
70,382

 
$
(70,383
)
 
$
(1
)
Total change in net interest income (FTE)(2)
$
482,920

 
$
(202,880
)
 
$
280,040

(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%. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry.


67





Provision for Credit Losses The provision for credit losses was $69.7 million for the three months ended September 30, 2020, compared to $78.7 million for the three months ended June 30, 2020 and $27.2 million for the three months ended September 30, 2019. The provision for credit losses was $245.3 million for the nine months ended September 30, 2020, compared to $50.9 million for the nine months ended September 30, 2019. The provision for credit losses is comprised of the provision for credit losses related to loans and leases and the provision (benefit) for credit losses related to unfunded lending commitments as follows:
 
Three Months Ended
 
Nine Months Ended
(In thousands)
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
September 30, 2020
 
September 30, 2019
Provision for credit losses
 
 
 
 
 
 
 
 
 
Provision for credit losses related to loans and leases
$
78,323

 
$
58,126

 
$
27,188

 
$
229,439

 
$
50,879

Provision (benefit) for credit losses related to unfunded lending commitments(1)
(8,659
)
 
20,600

 
(342
)
 
15,894

 
166

Total provision for credit losses(1)
$
69,664

 
$
78,726

 
$
26,846

 
$
245,333

 
$
51,045

(1)
Provision for credit losses related to loans and leases and the provision (benefit) for credit losses related to unfunded lending commitments are included within provision for credit losses in the Consolidated Statements of Income beginning January 1, 2020 as a result of the adoption of CECL.

The increase in provision for credit losses related to loans and leases of $20.2 million in the three months ended September 30, 2020 from the three months ended June 30, 2020 was primarily due to commercial portfolio credit risk management activities and associated risk rating downgrades, as evidenced by the increase in special mention and classified balances during the quarter. Downgrades were primarily in commercial sectors more heavily impacted by COVID-19, driven by motor coach, shuttle bus and hotel. The increases of $51.1 million and $178.6 million in the three and nine months ended September 30, 2020 from the three and nine months ended September 30, 2019, respectively, were primarily due to impacts from the adoption of CECL at January 1, 2020, high levels of change in both current and forecasted macroeconomic conditions, which are impacted by COVID-19 and commercial portfolio credit risk management activities. Prior to the adoption of CECL on January 1, 2020, the allowance for credit losses was calculated under an incurred loss model which delayed recognition of loss until it was probable the loss had been incurred. The accounting under CECL considers current credit losses expected to be incurred in the loan and lease portfolios over the remaining expected life of each financial asset and considers expected future changes in macroeconomic conditions. In addition, as a result of the adoption of CECL, the provision for credit losses now includes the provision (benefit) for unfunded lending commitments that was previously included within other noninterest expense. The decreases in provision (benefit) for credit losses related to unfunded lending commitments of $29.3 million and $8.3 million in the three months ended September 30, 2020 from the three months ended June 30, 2020, and the three months ended September 30, 2019, respectively, were primarily rate-driven and also impacted by declines in the total unfunded lending commitment balance. The increase in the provision for unfunded lending commitments in the nine months ended September 30, 2020, compared to the prior period, was primarily due to changes in macroeconomic conditions impacted by the COVID-19 pandemic, partially offset by a decline in the total unfunded commitment balance. The provision for credit losses is predominantly a function of our reserving methodology used to determine the appropriate level of the allowance for credit losses, which is a critical accounting estimate.

An analysis of the allowance for credit losses is presented under "Consolidated Financial Condition Analysis — Credit Quality" in this Management's Discussion and Analysis.



68




Noninterest Income The components of noninterest income were as follows:
 
Three Months Ended
 
Change from
 
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
June 30, 2020
 
September 30, 2019
(Dollars in thousands)
 
$
 
% / bps
 
$
 
% / bps
Leasing revenue
$
31,905

 
$
37,172

 
$
39,590

 
(5,267
)
 
(14.2
)
 
(7,685
)
 
(19.4
)
Fees and service charges on deposit accounts
25,470

 
22,832

 
34,384

 
2,638

 
11.6

 
(8,914
)
 
(25.9
)
Net gains (losses) on sales of loans and leases
23,490

 
29,034

 
(5,984
)
 
(5,544
)
 
(19.1
)
 
29,474

 
N.M.

Card and ATM revenue
23,383

 
20,636

 
23,315

 
2,747

 
13.3

 
68

 
0.3

Wealth management revenue
6,506

 
6,206

 
4,241

 
300

 
4.8

 
2,265

 
53.4

Servicing fee revenue
321

 
3,041

 
5,121

 
(2,720
)
 
(89.4
)
 
(4,800
)
 
(93.7
)
Net gains on investment securities
2,324

 
8

 
5,900

 
2,316

 
N.M.

 
(3,576
)
 
(60.6
)
Other
5,411

 
14,125

 
(12,309
)
 
(8,714
)
 
(61.7
)
 
17,720

 
N.M.

Total noninterest income
$
118,810

 
$
133,054

 
$
94,258

 
$
(14,244
)
 
(10.7
)
 
$
24,552

 
26.0

Total noninterest income as a percentage of total revenue
24.0
%

26.0
%
 
20.2
%
 


 
(200) bps

 
 
 
380 bps

N.M. Not Meaningful
 
Nine Months Ended
 
Change
(Dollars in thousands)
September 30, 2020
 
September 30, 2019
 
$
 
%
Leasing revenue
$
102,642

 
$
117,032

 
$
(14,390
)
 
(12.3
)%
Fees and service charges on deposit accounts
82,899

 
88,504

 
(5,605
)
 
(6.3
)
Net gains (losses) on sales of loans and leases
73,114

 
13,374

 
59,740

 
N.M.

Card and ATM revenue
65,704

 
62,470

 
3,234

 
5.2

Wealth management revenue
18,863

 
4,241

 
14,622

 
N.M.

Servicing fee revenue
10,154

 
14,754

 
(4,600
)
 
(31.2
)
Net gains on investment securities
2,332

 
7,417

 
(5,085
)
 
(68.6
)
Other
33,119

 
(312
)
 
33,431

 
N.M.

Total noninterest income
$
388,827

 
$
307,480

 
$
81,347

 
26.5

Total noninterest income as a percentage of total revenue
25.2
%
 
25.9
%
 

 
(70) bps

N.M. Not Meaningful

Noninterest income was $118.8 million for the three months ended September 30, 2020, compared to $133.1 million for the three months ended June 30, 2020 and $94.3 million for the three months ended September 30, 2019. Noninterest income included notable items of $154 thousand of loan servicing rights impairment for the three months ended September 30, 2020, compared to notable items of $14.7 million gain on the sale of our Arizona branches and $8.9 million of loan servicing rights impairment for the three months ended June 30, 2020. For the three months ended September 30, 2019 notable items included a $19.3 million net loss on transfer of Legacy TCF auto finance portfolio to held-for-sale, a $17.3 million loss on termination of interest rate swaps and $4.5 million of loan servicing rights impairment, partially offset by $5.9 million of gain on sales of certain investment securities. The gain on sales of branches, loan servicing rights impairment and the loss on termination of interest rate swaps are recorded within other noninterest income. The net loss on transfer of Legacy TCF auto finance portfolio to held-for-sale is recorded within net gains (losses) on sales of loans and leases. Adjusted noninterest income, a non-GAAP financial measure that excludes the identified notable items, was $119.0 million for the three months ended September 30, 2020, compared to $127.2 million for the three months ended June 30, 2020 and $129.5 million for the three months ended September 30, 2019. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.



69




Noninterest income was $388.8 million for the nine months ended September 30, 2020, compared to $307.5 million for the nine months ended September 30, 2019. Noninterest income nine months ended September 30, 2020 included notable items of $17.2 million of loan servicing rights impairment and a $14.7 million gain on the sale of our Arizona branches , and for the nine months ended September 30, 2019 notable items included a $19.3 million net loss on transfer of Legacy TCF auto finance portfolio to held-for-sale, a $17.3 million loss on termination of interest rate swaps and $4.5 million of loan servicing rights impairment, partially offset by $5.9 million of gain on sales of certain investment securities. Adjusted noninterest income, a non-GAAP financial measure that excludes the identified notable item, was $391.4 million for the nine months ended September 30, 2020, compared to $342.7 million for the nine months ended September 30, 2019. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

Leasing revenue Leasing revenue was $31.9 million for the three months ended September 30, 2020, compared to $37.2 million for the three months ended June 30, 2020 and $39.6 million for the three months ended September 30, 2019. Leasing revenue was $102.6 million in the nine months ended September 30, 2020, compared to $117.0 million for the nine months ended September 30, 2019. Leasing revenue is impacted by changes in our operating lease revenue and sales-type lease revenue through our equipment financing activity. The decreases in leasing revenue for the three and nine months ended September 30, 2020, compared to each prior period were primarily due to a decrease in sales-type lease revenue through our equipment financing activity.

Fees and service charges on deposit accounts Fees and service charges on deposit accounts were $25.5 million for the three months ended September 30, 2020, compared to $22.8 million for the three months ended June 30, 2020 and $34.4 million for the three months ended September 30, 2019. Fees and service charges on deposit accounts were $82.9 million in the nine months ended September 30, 2020, compared to $88.5 million for the nine months ended September 30, 2019. The increase for the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was customers increased account activity. The decreases for the three and nine months ended September 30, 2020, compared to the three and nine months ended September 30, 2019, was primarily attributable to customer account balances maintaining excess liquidity resulting in a decline in fees charged, partially offset by incremental fees resulting from the Merger.

Net gains (losses) on sales of loans and leases Net gains (losses) on sales of loans and leases were a gain of $23.5 million for the three months ended September 30, 2020, compared to gain of $29.0 million for the three months ended June 30, 2020 and a loss of $6.0 million for the three months ended September 30, 2019. The decrease for three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to the strong demand during the three months ended June 30, 2020. The increase for three months ended September 30, 2020, compared to the three months ended September 30, 2019, was primarily due to higher volume of consumer loans sold. The $59.7 million increase in net gains on sales of loans and leases in the nine months ended September 30, 2020, compared to $13.4 million for the nine months ended September 30, 2019, was primarily attributable to higher volume of consumer loans sold resulting from the Merger. We sold $634.1 million and $1.7 billion of loans and leases during the three and nine months ended September 30, 2020, respectively, compared to $554.2 million during the three months ended June 30, 2020 and $457.9 million and $1.0 billion during the three and nine months ended September 30, 2019, respectively.

Card and ATM revenue Card and ATM revenue was $23.4 million for the three months ended September 30, 2020, compared to $20.6 million for the three months ended June 30, 2020 and $23.3 million for the three months ended September 30, 2019. The increase for three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to an increase in debit card and ATM activity partly related to the easing of governmental imposed restrictions on activities as a result of the COVID-19 pandemic. The $3.2 million increase in card and ATM revenue in the nine months ended September 30, 2020, compared to $62.5 million for the nine months ended September 30, 2019, was primarily attributable to incremental revenue resulting from the Merger, partially offset by the decline in debit card and ATM activity partly related to the COVID-19 pandemic.



70




Wealth management Wealth management revenue is comprised of investment fees that are generally based on the market value of assets within a trust account, custodial fees and fees from the sale of investment products and is a revenue stream added as a result of the Merger. Revenues from wealth management were $6.5 million for the three months ended September 30, 2020, compared to $6.2 million for the three months ended June 30, 2020 and $4.2 million for the three months ended September 30, 2019. For the nine months ended September 30, 2020, revenues from wealth management were $18.9 million, compared to $4.2 million for the nine months ended September 30, 2019. The increase in wealth management revenue in the three and nine months ended September 30, 2020, compared to the three and nine months ended September 30, 2019, was primarily attributable to it being a new revenue stream as a result of the Merger.

Servicing fee revenue Servicing fee revenue was $321 thousand for the three months ended September 30, 2020, compared to $3.0 million for the three months ended June 30, 2020 and $5.1 million for the three months ended September 30, 2019. The decrease for the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to accelerated loan servicing rights amortization related to an increase in prepayment speeds. The decrease for the three months ended September 30, 2020, compared to the three months ended September 30, 2019 was primarily due to no further transitional servicing fee revenue being received on the Legacy TCF auto finance portfolio, partially offset by the incremental servicing fee revenue resulting from the Merger. The $4.6 million decrease in servicing fee revenue in the nine months ended September 30, 2020, compared to $14.8 million for the nine months ended September 30, 2019, was primarily attributable to no further transitional servicing fees received related to the Legacy TCF auto finance portfolio subsequent to the first quarter of 2020, partially offset by the incremental servicing fee revenue resulting from the Merger. Final transitional servicing fees were received in the first quarter of 2020 on the Legacy auto finance portfolio.

Net gains on investment securities There were $2.3 million of net gains on sales of investment securities for both the three and nine months ended September 30, 2020, compared to $8 thousand of net gains on sales of investment securities for the three months ended June 30, 2020, and $5.9 million and $7.4 million of net gains on sales of investment securities for the three and nine months ended September 30, 2019.

Other Other noninterest income was $5.4 million for the three months ended September 30, 2020, compared to $14.1 million for the three months ended June 30, 2020 and a loss of $12.3 million for the three months ended September 30, 2019. The decrease for the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to a $14.7 million gain on the sale of our Arizona branches in the three months ended June 30, 2020, partially offset by a decrease in loan servicing rights impairment. The increase for three months ended September 30, 2020, compared to the three months ended September 30, 2019, was primarily due to the $17.3 million loss on termination of interest rate swaps recognized in the three months ended September 30, 2019 and a decrease in loan servicing rights impairment. The $33.4 million increase in other noninterest income in the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, was primarily due to the $17.3 million loss on termination of interest rate swaps recognized in the nine months ended September 30, 2019, the $14.7 million gain on the sale of our Arizona branches recognized in the nine months ended September 30, 2020, partially offset by an increase in loan servicing rights impairment.



71




Noninterest Expense The components of noninterest expense were as follows:
 
Three Months Ended
 
Change from
 
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
June 30, 2020
 
September 30, 2019
(Dollars in thousands)
 
 
 
$
 
% / bps
 
$
 
% / bps
Compensation and employee benefits
$
168,323

 
$
171,799

 
$
155,745

 
$
(3,476
)
 
(2.0
)%
 
$
12,578

 
8.1
 %
Occupancy and equipment
48,233

 
54,107

 
49,229

 
(5,874
)
 
(10.9
)
 
(996
)
 
(2.0
)
Lease financing equipment depreciation
17,932

 
18,212

 
19,408

 
(280
)
 
(1.5
)
 
(1,476
)
 
(7.6
)
Net foreclosed real estate and repossessed assets
1,518

 
998

 
2,203

 
520

 
52.1

 
(685
)
 
(31.1
)
Merger-related expenses
54,011

 
81,619

 
111,259

 
(27,608
)
 
(33.8
)
 
(57,248
)
 
(51.5
)
Other
83,423

 
73,506

 
87,776

 
9,917

 
13.5

 
(4,353
)
 
(5.0
)
Total noninterest expense
$
373,440

 
$
400,241

 
$
425,620

 
$
(26,801
)
 
(6.7
)
 
$
(52,180
)
 
(12.3
)
Full-time equivalent staff (at period end)
7,140

 
7,183

 
7,374

 
(43
)
 
(0.6
)
 
(234
)
 
(3.2
)
Efficiency ratio
75.29
%
 
78.26
%
 
91.32
%
 


 
(297
) bps
 
 
 
(1,603
) bps
Adjusted efficiency ratio (non-GAAP)(1)
61.17

 
59.80

 
58.74

 


 
137

 
 
 
243

N.M. Not Meaningful
(1)
See "Consolidated Financial Condition Analysis - Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

 
Nine Months Ended
 
Change
(Dollars in thousands)
September 30, 2020
 
September 30, 2019
 
$
 
%
Compensation and employee benefits
$
511,650

 
$
395,953

 
$
115,697

 
29.2
 %
Occupancy and equipment
159,628

 
132,789

 
26,839

 
20.2

Lease financing equipment depreciation
54,594

 
57,797

 
(3,203
)
 
(5.5
)
Net foreclosed real estate and repossessed assets
4,375

 
9,281

 
(4,906
)
 
(52.9
)
Merger-related expenses
172,358

 
124,943

 
47,415

 
37.9

Other
245,675

 
194,781

 
50,894

 
26.1

Total noninterest expense
$
1,148,280

 
$
915,544

 
$
232,736

 
25.4

Efficiency ratio
74.28
%
 
77.08
%
 
 
 
(280
) bps
Adjusted efficiency ratio, Non-GAAP(1)
59.69

 
61.57

 
 
 
(188
)
N.M. Not Meaningful
(1)
See "Consolidated Financial Condition Analysis - Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

Noninterest expense was $373.4 million for the three months ended September 30, 2020, compared to $400.2 million for the three months ended June 30, 2020 and $425.6 million for the three months ended September 30, 2019. Noninterest expense included merger-related costs of $54.0 million for the three months ended September 30, 2020, $81.6 million for the three months ended June 30, 2020 and $111.3 million for the three months ended September 30, 2019. Noninterest expense for the three months ended June 30, 2020, included $0.9 million of expense related to the sale of the Legacy TCF auto finance portfolio ($0.8 million in other noninterest expense and $0.1 million in compensation and employee benefits) and $0.6 million of expense related to branch exit costs, included in other noninterest expense, considered notable items. Noninterest expense for the three months ended September 30, 2019 included $5.9 million of expense associated with the write-down of company-owned vacant land parcels due to an intent to sell, included in other noninterest expense, considered a notable item. Adjusted noninterest expense, a non-GAAP financial measure that excludes merger-related expenses and the identified notable items, was $319.4 million for the three months ended September 30, 2020, compared to $317.2 million for the three months ended June 30, 2020 and $308.5 million for the three months ended September 30, 2019. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.



72


Noninterest expense was $1.1 billion for the nine months ended September 30, 2020, compared to $915.5 million for the nine months ended September 30, 2019. Noninterest expense included merger-related costs of $172.4 million for the nine months ended September 30, 2020 and $124.9 million for the nine months ended September 30, 2019. Noninterest expense for the nine months ended September 30, 2020 included $4.0 million of expenses related to the sale of the Legacy TCF auto finance portfolio ($1.6 million included in occupancy and equipment, $1.4 million included in other noninterest expense and $1.0 million included in compensation and employee benefits) and $0.6 million of expense related to branch exit costs, included in other noninterest expense, considered notable items. Noninterest expense for the nine months ended September 30, 2019 included $5.9 million of expense associated with the write-down of company-owned vacant land parcels due to an intent to sell, included in other noninterest expense, considered a notable item. Adjusted noninterest expense, a non-GAAP financial measure that excludes merger-related expenses and the identified notable items, was $971.4 million for the nine months ended September 30, 2020, compared to $784.7 million for the nine months ended September 30, 2019. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

Compensation and employee benefits expense Compensation and employee benefits expense was $168.3 million for the three months ended September 30, 2020, compared to $171.8 million for the three months ended June 30, 2020 and $155.7 million for the three months ended September 30, 2019. Compensation and employee benefits expense was $511.7 million for the nine months ended September 30, 2020, compared to $396.0 million for the nine months ended September 30, 2019. The increases in both the three and nine months ended September 30, 2020, compared to the three and nine months ended September 30, 2019, were primarily due to the staff additions beginning August 1, 2019 resulting from the Merger.

Occupancy and equipment Occupancy and equipment expense was $48.2 million for the three months ended September 30, 2020, compared to $54.1 million for the three months ended June 30, 2020 and $49.2 million for the three months ended September 30, 2019. Occupancy expense for the nine months ended September 30, 2020 was $159.6 million, compared to $132.8 million for the nine months ended September 30, 2019. The decrease in the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to a reduction in our software related expense due to the completion of our system integration. The increase in the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, were primarily due to the incremental operating costs associated with the Merger.

Lease financing equipment depreciation Lease financing equipment depreciation was $17.9 million for the three months ended September 30, 2020, compared to $18.2 million for the three months ended June 30, 2020 and $19.4 million for the three months ended September 30, 2019. Lease financing equipment depreciation was $54.6 million for the nine months ended September 30, 2020, compared to $57.8 million for the nine months ended September 30, 2019. Shifts in lease financing equipment depreciation are the result of changes in balances of leased equipment.

Merger-related expenses Merger-related expenses were $54.0 million for the three months ended September 30, 2020, compared to $81.6 million for the three months ended June 30, 2020 and $111.3 million for the three months ended September 30, 2019. Merger-related expenses were $172.4 million for the nine months ended September 30, 2020, an increase of $47.4 million compared to $124.9 million for the nine months ended September 30, 2019. Merger-related expenses consist primarily of employment related expenses, professional fees and merger-related branch closing expenses. Through the remainder of 2020, we anticipate incurring less merger-related expenses as compared to the three months ended September 30, 2020.

Other noninterest expense Other noninterest expense was $83.4 million for the three months ended September 30, 2020, compared to $73.5 million for the three months ended June 30, 2020 and $87.8 million for the three months ended September 30, 2019. Other noninterest expense was $245.7 million for the nine months ended September 30, 2020, compared to $194.8 million for the nine months ended September 30, 2019. The increase in the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to increases in marketing and outside processing expense. The increase in the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, was primarily due to the incremental operating costs associated with the Merger.



73


Income Tax (Benefit) Expense Income tax benefit was $4.4 million for the three months ended September 30, 2020, compared to income tax expense of $6.2 million, or 19.1% of income before income tax expense for the three months ended June 30, 2020, and a benefit of $11.7 million for the three months ended September 30, 2019. Income tax expense was $14.9 million, or 9.8% of income before income tax expense for the nine months ended September 30, 2020, compared to $28.9 million, or 13.0% of income before income tax expense for the nine months ended September 30, 2019. Income tax for the three and nine months ended September 30, 2020 included a benefit of $16.0 million attributable to tax net operating loss ("NOL") carryback benefits associated with the CARES Act. The $16.0 million benefit included a $9.0 million benefit associated with pre-2020 depreciation method changes and a $7.0 million benefit related to estimated current year activity. The three and nine months ended September 30, 2019 included an $8.0 million tax basis adjustment benefit in addition to a $5.7 million benefit provided by the repricing of TCF's net deferred tax position in connection with the completion of the Merger. The remaining fluctuations in our effective income tax rate reflect changes each period in the proportion of tax-exempt interest income, nondeductible expenses and credits relative to income before income tax expense.

The CARES Act was enacted in March 2020 in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOLs from 2018, 2019 and 2020 to be carried back five years to generate refunds of previously paid income taxes. Additionally, it provides retroactive changes in depreciation rules for certain qualified improvement property. Guidance implementing the CARES Act’s provisions provided retroactive choices to opt into or out of the full expensing of equipment purchases in the year of acquisition. In the three months ended September 30, 2020, we implemented these and other options, which resulted in a forecasted full year 2020 tax NOL. Carrying back 2020 tax NOLs to pre-2018 years results in tax refunds and a permanent tax benefit associated with the difference between the 21% federal tax rate in 2020 and the 35% federal tax rate before 2018.

Reportable Segment Results Our reportable segments are Consumer Banking, Commercial Banking and Enterprise Services. See "Note 22. Reportable Segments" of the Notes to Consolidated Financial Statements for further information regarding net income (loss), revenues and assets for each of our reportable segments.

Consumer Banking

Consumer Banking is comprised of all of our consumer and small business-facing businesses and includes Retail Banking, Wealth Management, Residential and Consumer Lending, and Business Banking. Our consumer banking strategy is primarily to generate deposits and originate high credit quality loans for investment and sale. Deposits are generated from consumers and small businesses to provide a source of low cost funds, with a focus on building and maintaining quality customer relationships.
 
Three Months Ended
 
Nine Months Ended
(In thousands)
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
September 30, 2020
 
September 30, 2019
Consumer Banking
 
 
 
 
 
 
 
 
 
Net interest income
$
216,851

 
$
206,285

 
$
191,940

 
$
616,968

 
$
470,738

Provision (benefit) for credit losses
(27,217
)
 
(10,924
)
 
4,489

 
6,228

 
16,406

Net interest income after provision (benefit) for credit losses
244,068

 
217,209

 
187,451

 
610,740

 
454,332

Noninterest income
78,587

 
85,276

 
57,102

 
245,277

 
183,767

Noninterest expense
204,239

 
207,319

 
210,728

 
640,417

 
520,007

Income before income tax expense
118,416

 
95,166

 
33,825

 
215,600

 
118,092

Income tax expense
19,744

 
15,752

 
6,817

 
37,478

 
26,529

Net income available to common shareholders
98,672

 
79,414

 
27,008

 
178,122

 
91,563

Total assets (at period end)
$
13,935,521

 
$
14,693,227

 
$
13,701,633

 
$
13,935,521

 
$
13,701,633




74


Consumer Banking generated net income available to common shareholders of $98.7 million for the three months ended September 30, 2020, compared to $79.4 million for the three months ended June 30, 2020 and $27.0 million for the three months ended September 30, 2019. Consumer Banking generated net income available to common shareholders of $178.1 million for the nine months ended September 30, 2020, compared to $91.6 million for the nine months ended September 30, 2019. The increase in the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to increases in the provision (benefit) for credit losses, largely due to lower loan originations, and net interest income. The increases in the three and nine months ended September 30, 2020, compared to the three and nine months ended September 30, 2019, were primarily due to the incremental income resulting from the Merger in addition to a decrease in provision for credit losses, partially offset by increases in incremental operating costs. The provision for credit losses is predominantly a function of our reserving methodology used to determine the appropriate level of the allowance for credit losses. For further information, see "Consolidated Income Statement Analysis — Provision for Credit Losses" and "Consolidated Financial Condition Analysis — Credit Quality" in this Management's Discussion and Analysis and "Note 8. Allowance for Credit Losses and Credit Quality" of the Notes to Consolidated Financial Statements.

Commercial Banking

Commercial Banking is comprised of commercial and industrial, commercial real estate banking and lease financing. Our commercial banking strategy focuses on building full commercial relationships including originating high credit quality loans and leases and providing deposit and treasury services.
 
Three Months Ended
 
Nine Months Ended
(In thousands)
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
September 30, 2020
 
September 30, 2019
Commercial Banking
 
 
 
 
 
 
 
 
 
Net interest income
$
167,160

 
$
169,473

 
$
157,437

 
$
522,619

 
$
350,848

Provision for credit losses
96,881

 
89,650

 
22,699

 
239,105

 
34,473

Net interest income after provision for credit losses
70,279

 
79,823

 
134,738

 
283,514

 
316,375

Noninterest income
35,105

 
43,831

 
47,929

 
134,709

 
132,883

Noninterest expense
105,646

 
105,324

 
102,841

 
325,425

 
267,147

Income (loss) before income tax expense
(262
)
 
18,330

 
79,826

 
92,798

 
182,111

Income tax (benefit) expense
(8,613
)
 
3,440

 
8,172

 
11,133

 
30,271

Income after income tax (benefit) expense
8,351

 
14,890

 
71,654

 
81,665

 
151,840

Income attributable to non-controlling interest
1,564

 
2,469

 
2,830

 
5,950

 
9,401

Net income available to common shareholders
6,787

 
12,421

 
68,824

 
75,715

 
142,439

Total assets (at period end)
$
23,466,019

 
$
22,219,240

 
$
19,045,367

 
$
23,466,019

 
$
19,045,367


Commercial Banking generated net income available to common shareholders of $6.8 million for the three months ended September 30, 2020, compared to $12.4 million for the three months ended June 30, 2020 and $68.8 million for the three months ended September 30, 2019. Commercial Banking generated net income available to common shareholders of $75.7 million for the nine months ended September 30, 2020, compared to $142.4 million for the nine months ended September 30, 2019. The decrease in the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to an increase in provision for credit losses and a decrease in leasing revenue, partially offset by the benefit attributable to tax net operating loss carryback benefits associated with the CARES Act. The decreases in the three and nine months ended September 30, 2020, compared to the three and nine months ended September 30, 2019, were primarily due to an increase in provision for credit losses, partially offset by the incremental income resulting from the Merger. The provision for credit losses is predominantly a function of our reserving methodology used to determine the appropriate level of the allowance for credit losses. For further information, see "Consolidated Income Statement Analysis — Provision for Credit Losses" and "Consolidated Financial Condition Analysis — Credit Quality" in this Management's Discussion and Analysis and "Note 8. Allowance for Credit Losses and Credit Quality" of the Notes to Consolidated Financial Statements.



75


Enterprise Services

Enterprise Services is comprised of (i) corporate treasury, which includes our 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) TCF Financial and (iv) eliminations. Our investment portfolio accounts for the earning assets within this segment. Borrowings may be used to offset reductions in deposits or to support lending activities. This segment also includes residual revenues and expenses representing the difference between actual amounts incurred by Enterprise Services and amounts allocated to the operating segments, including interest rate risk residuals such as funds transfer pricing mismatches.
 
Three Months Ended
 
Nine Months Ended
(In thousands)
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
September 30, 2020
 
September 30, 2019
Enterprise Services
 
 
 
 
 
 
 
 
 
Net interest income
$
(6,844
)
 
$
2,601

 
$
22,416

 
$
17,420

 
$
58,693

Noninterest income
5,118

 
3,947

 
(10,773
)
 
8,841

 
(9,170
)
Noninterest expense
63,555

 
87,598

 
112,051

 
182,438

 
128,390

Income (loss) before income tax (benefit) expense
(65,281
)
 
(81,050
)
 
(100,408
)
 
(156,177
)
 
(78,867
)
Income tax (benefit) expense
(15,560
)
 
(12,979
)
 
(26,724
)
 
(33,741
)
 
(27,934
)
Income (loss) after income tax (benefit) expense
(49,721
)
 
(68,071
)
 
(73,684
)
 
(122,436
)
 
(50,933
)
Preferred stock dividends
2,494

 
2,494

 
2,494

 
7,481

 
7,481

Net loss available to common shareholders
(52,215
)
 
(70,565
)
 
(76,178
)
 
(129,917
)
 
(58,414
)
Total assets (at period end)
$
10,164,249

 
$
13,149,993

 
$
12,945,511

 
$
10,164,249

 
$
12,945,511


Enterprise Services generated a net loss available to common shareholders of $52.2 million for the three months ended September 30, 2020, compared to a net loss of $70.6 million for the three months ended June 30, 2020 and a net loss of $76.2 million for the three months ended September 30, 2019. Enterprise Services generated a net loss available to common shareholders of $129.9 million for the nine months ended September 30, 2020, compared to a net loss of $58.4 million for the nine months ended September 30, 2019. The reduced net loss in the three months ended September 30, 2020, compared to the three months ended June 30, 2020 and September 30, 2019, was primarily due to a decrease in merger-related expenses, included in noninterest expense, and partially offset by a decrease in net interest income. The increase in net loss in the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, was primarily due to increases in merger-related expenses and compensation and employee benefits and a decrease in net interest income.

Consolidated Financial Condition Analysis

Investment Securities Total investment securities available-for-sale, at fair value, were $7.4 billion at September 30, 2020, compared to $6.7 billion at December 31, 2019. Our investment securities available-for-sale are debt securities consisting primarily of fixed-rate mortgage-backed securities issued by the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"), and obligations of states and political subdivisions. The increase in investment securities available-for-sale was primarily due to purchases of additional residential and commercial mortgage-backed securities.

Total investment securities held-to-maturity were $170.3 million at September 30, 2020, compared to $139.4 million at December 31, 2019. Our investment securities held-to-maturity portfolio consists primarily of fixed-rate mortgage-backed securities issued by the FNMA.



76


The amortized cost and fair value of investment securities available-for-sale and held-to-maturity were as follows:
 
At September 30, 2020
 
At December 31, 2019
(In thousands)
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
Investment securities available-for-sale, at fair value
 
 
 
 
 
 
 
Debt securities:
 
 
 
 
 
 
 
Residential mortgage-backed securities
$
5,434,580

 
$
5,609,607

 
$
4,866,473

 
$
4,929,717

Obligations of states and political subdivisions
836,691

 
876,764

 
852,096

 
863,855

Commercial mortgage-backed securities
710,755

 
754,243

 
685,212

 
691,614

Government and government-sponsored enterprises
205,213

 
205,085

 
235,045

 
234,385

Corporate debt and trust preferred securities
453

 
464

 
451

 
430

Total investment securities available-for-sale
7,187,692

 
7,446,163

 
6,639,277

 
6,720,001

Investment securities held-to-maturity
 
 
 
 
 
 
 
Residential mortgage-backed securities
166,594

 
176,649

 
135,769

 
141,168

Corporate debt and trust preferred securities
3,715

 
3,715

 
3,676

 
3,676

Total investment securities held-to-maturity
170,309

 
180,364

 
139,445

 
144,844

Total investment securities
$
7,358,001

 
$
7,626,527

 
$
6,778,722

 
$
6,864,845


The carrying value and FTE yield of investment securities available-for-sale and investment securities held-to-maturity by final contractual maturity were as follows. 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.
 
September 30, 2020
 
 
 
 
 
Residential Mortgage-backed securities
 
Obligations of States and Political Subdivisions
 
Commercial Mortgage-backed Securities
 
Government and Government-sponsored Enterprises
 
Corporate Debt And Trust Preferred Securities
 
Total
(Dollars in thousands)
Amount
 
Yield(1)
 
Amount
 
Yield(1)
 
Amount
 
Yield(1)
 
Amount
 
Yield(1)
 
Amount
 
Yield(1)
 
Amount
 
Yield(1)
Investment securities available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Due in one year or less
$

 
%
 
$
45,518

 
2.64
%
 
$

 
%
 
$

 
%
 
$

 
%
 
$
45,518

 
2.64
%
Due in 1-5 years
16,486

 
1.88

 
147,076

 
2.85

 
12,583

 
1.57

 

 

 

 

 
176,145

 
2.67

Due in 5-10 years
125,628

 
2.01

 
251,172

 
2.57

 
307,404

 
2.02

 
19,023

 
1.13

 

 

 
703,227

 
2.19

Due after 10 years
5,467,493

 
2.22

 
432,998

 
2.75

 
434,256

 
2.55

 
186,062

 
1.64

 
464

 
4.74

 
6,521,273

 
2.26

Total
$
5,609,607

 
2.21
%
 
$
876,764

 
2.71
%
 
$
754,243

 
2.32
%
 
$
205,085


1.59
%
 
$
464

 
4.74
%
 
$
7,446,163

 
2.26
%
Investment securities held-to-maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Due in one year or less
$

 
%
 
$

 
%
 
$

 
$

 
$

 
%
 
$
400

 
2.50
%
 
$
400

 
2.50
%
Due in 1-5 years

 

 

 

 

 

 

 

 
3,150

 
2.88

 
3,150

 
2.88

Due in 5-10 years
49

 
6.50

 

 

 

 

 

 

 

 

 
49

 
6.50

Due after 10 years
166,545

 
1.99

 

 

 

 

 

 

 
165

 
6.00

 
166,710

 
1.99

Total
$
166,594

 
1.99
%
 
$

 
%
 
$

 
%
 
$

 
%
 
$
3,715

 
2.98
%
 
$
170,309

 
2.01
%
(1)
Interest and yields are presented on a FTE basis.

See "Note 6. Investment Securities" of Notes to Consolidated Financial Statements for further information regarding our investment securities available-for-sale and investment securities held-to-maturity.

Loans and Leases Held-for-Sale

Our loans and leases held-for-sale were $460.4 million at September 30, 2020, an increase of $260.6 million, compared to $199.8 million at December 31, 2019. The increase was primarily due to an increase in timing to settle sale transactions.



77


Loans and Leases 

Our commercial loan and lease portfolio is comprised of commercial and industrial loans, commercial real estate loans, and lease financing. Our consumer loan portfolio is comprised of residential mortgages, home equity loans and lines of credit, and consumer installment loans. Our lending markets primarily consist of communities throughout our primary banking markets in addition to Florida, Texas, New York, California and Canada.

Total loans and leases were $34.3 billion at September 30, 2020, a decrease of $153.8 million, or 0.4%, compared to $34.5 billion at December 31, 2019. At September 30, 2020, commercial and industrial loans included $1.8 billion of PPP loans outstanding. Excluding the PPP loans, the decrease from December 31, 2019 was primarily due to a decrease in the commercial and industrial portfolio, primarily inventory finance related to seasonality, strong dealer activity and the lack of backfill from manufacturers as a result of the economic shutdown, in addition to a decrease in our consumer loan portfolio, partially offset by an increase in our commercial real estate portfolio.

Information about our loans and leases was as follows:
 
At September 30, 2020
 
At December 31, 2019
 
Change
(Dollars in thousands)
Amount
 
% of Total
 
Amount
 
% of Total
 
$
 
%
Commercial loan and lease portfolio:
 

 
 
 
 

 
 
 
 
 
 

Commercial and industrial
$
11,557,237

 
33.7
%
 
$
11,439,602

 
33.2
%
 
$
117,635

 
1.0
 %
Commercial real estate
9,627,330

 
28.0

 
9,136,870

 
26.5

 
490,460

 
5.4

Lease financing
2,724,686

 
7.9

 
2,699,869

 
7.8

 
24,817

 
0.9

Total commercial loan and lease portfolio
23,909,253

 
69.6

 
23,276,341

 
67.5

 
632,912

 
2.7

Consumer loan portfolio:
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
5,790,251

 
16.9

 
6,179,805

 
17.9

 
(389,554
)
 
(6.3
)
Home equity
3,302,983

 
9.6

 
3,498,907

 
10.1

 
(195,924
)
 
(5.6
)
Consumer installment
1,341,204

 
3.9

 
1,542,411

 
4.5

 
(201,207
)
 
(13.0
)
Total consumer loan portfolio
10,434,438

 
30.4

 
11,221,123

 
32.5

 
(786,685
)
 
(7.0
)
Total loans and leases
$
34,343,691

 
100.0
%
 
$
34,497,464

 
100.0
%
 
$
(153,773
)
 
(0.4
)%

Commercial Loan and Lease Portfolio

Our commercial loan and lease portfolio was $23.9 billion at September 30, 2020, an increase of $632.9 million, or 2.7%, compared to $23.3 billion at December 31, 2019. We believe that our commercial loan and lease portfolio is well diversified across business lines and has no material concentration in any one industry.

Commercial and industrial Commercial and industrial ("C&I") loans and lines of credit include loans to varying types of businesses, municipalities, school districts and nonprofit organizations, for the purpose of supporting working capital and operational needs and term financing of equipment. C&I loans are secured by various types of business assets including inventory, floorplan equipment, receivables, equipment or financial instruments. Origination levels related to equipment dealers are impacted by the velocity of fundings and repayments with dealers. C&I loans were $11.6 billion at September 30, 2020, an increase of $117.6 million, or 1.0%, compared to $11.4 billion at December 31, 2019. At September 30, 2020 C&I loans included $1.8 billion of PPP loans.



78


Our C&I portfolio by North American Industry Classification System ("NAICS") code was as follows:
 
At September 30, 2020
(In thousands)
Total
 
% of Total Loan and Lease Portfolio
Retail trade
$
2,091,972

 
6.1
%
Transportation and warehouse
1,387,743

 
4.0

Manufacturing
1,287,135

 
3.7

Real estate rental and leasing
947,770

 
2.8

Wholesale trade
853,542

 
2.5

Construction
686,970

 
2.0

Health care and social assistance
582,007

 
1.7

Finance and insurance
504,772

 
1.5

Administration and Support and Waste Management and Remediation
420,519

 
1.2

All other
2,794,807

 
8.2

Total
$
11,557,237

 
33.7
%

Commercial real estate Commercial real estate loans include loans that are secured by real estate occupied by the borrower for ongoing operations, non-owner occupied real estate leased to one or more tenants and construction and development loans primarily originated for construction of commercial properties. Construction and development loans often convert to a commercial real estate loan at the completion of the construction period. Commercial real estate loans were $9.6 billion at September 30, 2020, an increase of $490.5 million, or 5.4%, compared to $9.1 billion at December 31, 2019.

Our commercial real estate loan portfolio by property and loan type was as follows:
 
At September 30, 2020
 
At December 31, 2019
(In thousands)
Total
 
Percent of Total Loan and Lease Portfolio
 
Total
 
Percent of Total Loan and Lease Portfolio
Multifamily
$
2,022,758

 
5.9
%
 
$
1,799,949

 
5.2
%
Office
1,394,723

 
4.1

 
1,219,618

 
3.5

Retail
1,323,275

 
3.9

 
1,323,773

 
3.8

Warehouse
1,113,346

 
3.2

 
1,081,165

 
3.1

Hotel
786,656

 
2.3

 
759,773

 
2.2

Senior housing
780,338

 
2.3

 
729,169

 
2.1

Self‐storage
520,334

 
1.5

 
436,415

 
1.3

Mixed use
456,606

 
1.3

 
450,782

 
1.3

Other
1,229,294

 
3.5

 
1,336,226

 
3.9

Total
$
9,627,330

 
28.0
%
 
$
9,136,870

 
26.4
%



79


Lease financing We provide a broad range of comprehensive lease products addressing the diverse financing needs of small to large companies. Lease financings were $2.7 billion at both September 30, 2020 and December 31, 2019.

Our lease financing portfolio by equipment type was as follows:
 
At September 30, 2020
At December 31, 2019
(Dollars in thousands)
Balance
 
Percent of Total Loan and Lease Portfolio
 
Balance
 
Percent of Total Loan and Lease Portfolio
Specialty vehicles
$
596,434

 
1.7
%
 
$
585,829

 
1.7
%
Golf cart and turf equipment
515,016

 
1.5

 
473,476

 
1.4

Medical equipment
384,571

 
1.1

 
377,998

 
1.1

Technology and data processing equipment
225,316

 
0.7

 
248,187

 
0.7

Construction equipment
195,804

 
0.6

 
180,963

 
0.5

Material handling
185,340

 
0.5

 
138,182

 
0.4

Manufacturing equipment
176,524

 
0.5

 
226,833

 
0.7

Trucks and trailers
100,993

 
0.3

 
91,711

 
0.3

Agricultural equipment
96,987

 
0.3

 
92,392

 
0.3

Other
247,701

 
0.7

 
284,298

 
0.7

Total
$
2,724,686

 
7.9
%
 
$
2,699,869

 
7.8
%

Consumer Loan Portfolio

Our consumer loan portfolio was $10.4 billion at September 30, 2020, a decrease of $786.7 million, or 7.0%, compared to $11.2 billion at December 31, 2019.

Residential mortgage Residential mortgage loans consist primarily of one-to-four family residential loans with fixed and adjustable interest rates, with amortization periods generally from 15 to 30 years. The loan-to-value ratio at the time of origination is generally 90% or less. Loans with more than an 80% loan-to-value ratio generally require private mortgage insurance. Residential mortgage loans also include loans to consumers for the construction of single family residences that are secured by these properties. Residential mortgage loans were $5.8 billion at September 30, 2020, a decrease of $389.6 million, or 6.3%, compared to $6.2 billion at December 31, 2019, as payoffs outpaced new originations.

Home equity Home equity loans and lines of credit are comprised of loans to consumers who utilize equity in their personal residence, including junior lien mortgages, as collateral to secure the loan or line-of-credit. Our home equity portfolio totaled $3.3 billion at September 30, 2020 (consisting of $2.9 billion of home equity lines of credit and $372.9 million of amortizing home equity loans), compared to $3.5 billion at December 31, 2019 (consisting of $3.0 billion of home equity lines of credit and $474.7 million of amortizing home equity loans). At September 30, 2020, $2.4 billion of our home equity lines of credit were comprised of loans with a 10-year interest-only draw period and a 20-year amortization repayment period, of which all were within the 10-year interest-only draw period and will not convert to amortizing loans until 2021 or later. At September 30, 2020, $546.8 million of the home equity line of credits were interest-only revolving draw loans with no defined amortization period and original draw periods of five to 40 years. Home equity lines of credit mostly include junior lien mortgages where the first lien mortgage is held by a nonaffiliated financial institution.

Consumer installment Consumer installment loans consist of relatively small loan amounts to consumers to finance personal items (primarily automobiles, recreational vehicles and marine vehicles) and are comprised primarily of indirect loans purchased from dealerships. Consumer rates are both fixed and variable, with negotiated terms. Our consumer installment loans typically amortize over periods up to 60 months. Consumer loans not secured by real estate are generally considered to have greater risk than first or second mortgages on real estate because they may be unsecured, or, if they are secured, the value of the collateral may be difficult to assess and more likely to decrease in value, and the collateral is more difficult to control, than real estate. Consumer installment loans were $1.3 billion at September 30, 2020, a decrease of $201.2 million, or 13.0%, compared to $1.5 billion at December 31, 2019.



80


Credit Quality

Loans and Leases The following summarizes our loan and lease portfolio based on the credit quality factors that we believe are the most important and should be considered to understand the overall condition of the portfolio. The following items should be considered throughout this section:

Loans and leases that are over 90-days delinquent and accruing generally are a leading indicator for future charge-off trends.
Nonaccrual loans and leases have been charged down to the estimated fair value of the collateral less estimated selling costs, or reserved for expected loss upon workout.
Within the performing loans and leases, we classify customers within regulatory classification guidelines. Loans and leases that are "classified" are loans or leases that management has concerns regarding the ability of the borrowers to meet existing loan or lease terms and conditions, but may never become nonaccrual or result in a loss.

Past due loans and leases  Delinquent balances are determined based on the contractual terms of the loan or lease. See "Note 8. Allowance for Credit Losses and Credit Quality" of Notes to Consolidated Financial Statements for further information. Over 90-day delinquent loans and leases by type, excluding nonaccrual loans and leases, were as follows:
 
At September 30, 2020
 
At December 31, 2019
(Dollars in thousands)
90 Days or More Delinquent and Accruing
 
Percentage of Period-end Loans and Leases
 
90 Days or More Delinquent and Accruing
 
Percentage of Period-end Loans and Leases
Commercial loan and lease portfolio:
 

 
 

 
 

 
 

Commercial and industrial
$
3,101

 
0.03
%
 
$
331

 
%
Commercial real estate
244

 

 
1,440

 
0.02

Lease financing
3,564

 
0.13

 
1,901

 
0.07

Total commercial loan and lease portfolio
6,909

 
0.03

 
3,672

 
0.02

Consumer loan portfolio:
 
 
 
 
 
 
 
Residential mortgage
1,347

 
0.02

 
559

 
0.01

Consumer installment

 

 
108

 
0.01

Total consumer loan portfolio
1,347

 
0.01

 
667

 
0.01

Portfolios acquired with deteriorated credit quality(1)
N/A

 
N/A

 
25,737

 
10.43

Total
$
8,256

 
0.02
%
 
$
30,076

 
0.09
%
(1)
Prior to the adoption of CECL as of January 1, 2020, purchased credit impaired loans were not classified as nonaccrual loans because they were recorded at their net realizable value based on the principal and interest expected to be collected on the loans.



81


Nonperforming assets  Nonperforming assets, consisting of nonaccrual loans and leases and other real estate owned, were as follows:
(Dollars in thousands)
At September 30, 2020
 
At December 31, 2019
Commercial loan and lease portfolio:
 
 
 
Commercial and industrial
$
140,492

 
$
53,812

Commercial real estate
70,252

 
29,735

Lease financing
42,023

 
10,957

Total commercial loan and lease portfolio
252,767

 
94,504

Consumer loan portfolio:
 
 
 
Residential mortgage
65,235

 
38,577

Home equity
52,184

 
35,863

Consumer installment
6,535

 
714

Total consumer loan portfolio
123,954

 
75,154

Nonaccrual loans and leases
376,721

 
169,658

Other real estate owned
35,554

 
34,256

Total nonperforming assets
$
412,275

 
$
203,914

Nonaccrual loans and leases as a percentage of total loans and leases
1.10
%
 
0.49
%
Nonperforming assets as a percentage of total loans and leases and other real estate owned
1.20

 
0.59

Allowance for loan and lease losses as a percentage of nonaccrual loans and leases
136.77

 
66.64

Allowance for credit losses as a percentage of nonaccrual loans and leases
145.83

 
68.71


Nonperforming assets were $412.3 million at September 30, 2020, compared to $203.9 million at December 31, 2019. The $208.4 million increase in nonperforming assets from December 31, 2019 was substantially driven by an increase in nonaccrual balances in our commercial loan and lease portfolio, driven by the motor coach and shuttle bus sectors which were more heavily impacted by COVID-19 and also the adoption of CECL ($73.4 million of loans previously accounted for as purchased credit impaired were reclassified to nonaccrual loans as of January 1, 2020 due to the adoption of CECL).

Loans and leases are generally placed on nonaccrual status when the collection of interest or principal is 90 days or more past due unless, in the case of commercial loans, they are well secured and in process of collection. Delinquent consumer home equity loans with a junior lien are also placed on nonaccrual status when there is evidence that the related third-party first lien mortgage may be 90 days or more past due, or foreclosure, charge-off or collection action has been initiated. TDR loans are placed on nonaccrual status prior to the past due thresholds outlined above if repayment under the modified terms is not likely after performing a well-documented credit analysis. In addition, under the CARES Act, loans and leases that have been granted a deferral of greater than 180 days are generally placed on nonaccrual status. Loans on nonaccrual status are generally reported as nonaccrual loans until there is sustained repayment performance for six consecutive months, with the exception of loans not reaffirmed upon discharge in Chapter 7 bankruptcy, which remain on nonaccrual status until a well-documented credit analysis indicates full repayment of the remaining pre-discharged contractual principal and interest is likely.

Commercial real estate, residential mortgage and home equity nonaccrual loans are secured by real estate. Given the nature of these assets and the related mortgage foreclosure, property sale and, if applicable, mortgage insurance claims processes, it can take 18 months or longer for a loan to migrate from initial delinquency to final disposition. This resolution process generally takes much longer for loans secured by real estate than for unsecured loans or loans secured by other property primarily due to state real estate foreclosure laws.



82


Changes in the amount of nonaccrual loans and leases were as follows:
 
At or For the Three Months Ended September 30, 2020
(In thousands)
Consumer Loan Portfolio
 
Commercial Loan and Lease Portfolio
 
Total
Balance, beginning of period
$
116,990

 
$
174,461

 
$
291,451

Additions
27,188

 
160,802

 
187,990

Charge-offs
(2,353
)
 
(27,956
)
 
(30,309
)
Transfers to other assets
(2,341
)
 
(4,625
)
 
(6,966
)
Return to accrual status
(5,573
)
 
(14,993
)
 
(20,566
)
Payments received
(9,956
)
 
(35,972
)
 
(45,928
)
Other, net
(1
)
 
1,050

 
1,049

Balance, end of period
$
123,954

 
$
252,767

 
$
376,721

 
 
 
 
 
 
 
At or For the Nine Months Ended September 30, 2020
(In thousands)
Consumer Loan Portfolio
 
Commercial Loan and Lease Portfolio
 
Total
Balance, beginning of period
$
75,154

 
$
94,504

 
$
169,658

Transfer in of loans previously accounted for as purchased credit impaired(1)
20,560

 
52,825

 
73,385

Adjusted balance, beginning of period
95,714

 
147,329

 
243,043

Additions
73,736

 
303,259

 
376,995

Charge-offs
(8,229
)
 
(38,925
)
 
(47,154
)
Transfers to other assets
(5,784
)
 
(14,667
)
 
(20,451
)
Return to accrual status
(11,383
)
 
(59,971
)
 
(71,354
)
Payments received
(20,111
)
 
(83,305
)
 
(103,416
)
Other, net
11

 
(953
)
 
(942
)
Balance, end of period
$
123,954

 
$
252,767

 
$
376,721

(1)
Prior to the adoption of CECL as of January 1, 2020, purchased credit impaired loans were not classified as nonaccrual loans because they were recorded at their net realizable value based on the principal and interest expected to be collected on the loans.

Interest income recognized on loans and leases on nonaccrual status was $8.9 million and $17.9 million for the three and nine months ended September 30, 2020, respectively, compared to $4.6 million for the three months ended June 30, 2020, and $277 thousand and $754 thousand for the three and nine months ended September 30, 2019, respectively.

See "Note 8. Allowance for Credit Losses and Credit Quality" of Notes to Consolidated Financial Statements for further information.



83


Loan and lease credit risk classifications We assess the risk of our loan and lease portfolio utilizing numerous risk characteristics as outlined in the previous sections. Credit risk classifications are an additional characteristic monitored in the overall credit risk process. Loan and lease credit risk classifications are derived from standard regulatory rating definitions, which include: non-classified (pass and special mention) and classified (substandard). Classified loans and leases have well-defined weaknesses, but may never result in a loss.

Loans and leases by portfolio and credit risk classification were as follows:
 
At September 30, 2020
 
Non-classified
 
Classified
 
Total
(In thousands)
Pass
 
Special Mention
 
Substandard
 
Commercial loan and lease portfolio:
 
 
 
 
 
 
 
Commercial and industrial
$
10,917,912

 
$
314,579

 
$
324,746

 
$
11,557,237

Commercial real estate
8,843,077

 
490,499

 
293,754

 
9,627,330

Lease financing
2,630,434

 
37,816

 
56,436

 
2,724,686

Total commercial loan and lease portfolio
22,391,423

 
842,894

 
674,936

 
23,909,253

Consumer loan portfolio:
 
 
 
 
 
 
 
Residential mortgage
5,718,396

 
375

 
71,480

 
5,790,251

Home equity
3,239,898

 

 
63,085

 
3,302,983

Consumer installment
1,334,225

 

 
6,979

 
1,341,204

Total consumer loan portfolio
10,292,519

 
375

 
141,544

 
10,434,438

Total loans and leases
$
32,683,942

 
$
843,269

 
$
816,480

 
$
34,343,691

 
At December 31, 2019
 
Non-classified
 
Classified
 
Total
(In thousands)
Pass
 
Special Mention
 
Substandard
 
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

Home equity
3,457,292

 
456

 
41,159

 
3,498,907

Consumer installment
1,541,524

 

 
887

 
1,542,411

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


Total classified loans and leases in our loan and lease portfolio were $816.5 million at September 30, 2020, compared to $380.1 million at December 31, 2019. The increase was primarily due to downgrades in our commercial loan and lease portfolio, largely occurring due to economic impacts caused by COVID-19. We have identified certain sectors within our commercial loan and lease portfolio that have been more heavily impacted by COVID-19 including motor coach, shuttle bus, hotel, franchise, retail commercial real estate, retail trade and fitness, excluding any PPP loans within these sectors as they are guaranteed by the Small Business Administration. At September 30, 2020 loans and leases within these higher COVID-19 impacted sectors totaled $3.1 billion, or 9.1% of total loans and leases. At September 30, 2020, these higher COVID-19 impacted sectors represent $257.8 million of the total commercial loan and lease portfolio classified balance, of which $105.8 million are on nonaccrual status. Sectors identified as having a higher impact due to COVID-19 may change in future periods depending on how economic environment conditions develop over time.


84



Loan modifications  Troubled debt restructuring ("TDR") loans are loans to financially troubled borrowers that have been modified such that we have granted a concession in terms to improve the likelihood of collection of all principal and modified interest owed. TDR loans were as follows:
 
At September 30, 2020
 
At December 31, 2019
(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
$
36,947

 
$
13,250

 
$
50,197

 
$
12,986

 
$
5,356

 
$
18,342

Consumer loan portfolio
17,956

 
21,526

 
39,482

 
12,403

 
14,875

 
27,278

Total
$
54,903

 
$
34,776

 
$
89,679

 
$
25,389

 
$
20,231

 
$
45,620

Over 90-day delinquency as a percentage of total accruing TDR loans
0.91
%
 
N.A.

 
N.A.

 
0.52
%
 
N.A.

 
N.A.

N.A. Not Applicable

Total TDRs were $89.7 million at September 30, 2020, compared to $45.6 million at December 31, 2019.

Loan modifications to borrowers who have not been granted concessions are not considered TDR loans and therefore are not included in the table above. In addition, Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications provide banks the option to temporarily suspend certain TDR accounting guidance for loans modified due to the effects of COVID-19 when certain conditions are met. In March 2020, TCF began providing assistance to customers in response to the COVID-19 pandemic, predominantly in the form of payment deferrals. As of September 30, 2020, $403.6 million of loan and lease balance was on deferral status, compared to $1.8 billion as of June 30, 2020. TCF also granted certain other loan modifications which provide temporary customer assistance predominantly in the form of financial covenant concessions and modification of borrowing base. As of September 30, 2020, other loan modifications balance was $578.4 million. See "Note 3. Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements for information regarding recent updated guidance on TDR accounting provided by the CARES Act and Interagency Regulatory guidance. TDR loans with an interest rate consistent with market rates on loans with comparable risk at the time of restructuring and performing based on the restructured terms are no longer disclosed as TDR loans in the calendar years after modification; however, these loans are still considered impaired and follow our impaired loan reserve policies.
 
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.

Interest income recognized on TDR loans and contractual interest that would have been recorded had the TDR loans performed in accordance with their original contractual terms were as follows:
 
Three Months Ended
 
Nine Months Ended
(In thousands)
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
September 30, 2020
 
September 30, 2019
Contractual interest due on TDR loans
$
2,256

 
$
759

 
$
1,845

 
$
3,336

 
$
5,132

Interest income recognized on TDR loans
331

 
287

 
1,347

 
910

 
3,608

Unrecognized interest income
$
1,925

 
$
472

 
$
498

 
$
2,426

 
$
1,524


See "Note 8. Allowance for Credit Losses and Credit Quality" of Notes to Consolidated Financial Statements for further information.



85


Allowance for Credit Losses  The ACL includes the ALLL and the RULC. The ALLL is a valuation account presented separately on the Consolidated Statements of Financial Condition that is deducted from or added to loans' amortized cost basis to present the net amount expected to be collected. The RULC for letters of credit, financial guarantees and binding unfunded loan commitments is recorded in other liabilities on the Consolidated Statements of Financial Condition. The Corporation's reserve methodology used to determine the appropriate level of the ACL is a critical accounting estimate. The ACL is maintained at a level believed to be appropriate to provide for the current credit losses expected to be incurred in the loan and lease portfolios over the remaining expected life of each financial asset at the balance sheet date, including known or anticipated problem loans and leases, as well as for loans and leases which are not currently known to require specific allowances. The collective evaluation of expected losses in these portfolios is based on their probability of default multiplied by historical loss rates, as well as adjustments for forward-looking information, including industry and macroeconomic forecasts. Factors utilized in the determination of the amount of the allowance include historic loss experience, current economic forecasts and measurement date credit risk characteristics such as product type, lien position, delinquency, collateral value, credit bureau scores and financial statement ratios. The various quantitative and qualitative factors used in the methodologies are reviewed quarterly.

We consider our ACL of $549.4 million, or 1.60% of total loans and leases, appropriate to cover current credit losses expected to be incurred in the loan and lease portfolios over the remaining expected life of each financial asset at September 30, 2020, including loans and leases which are not currently known to require specific allowances. The increase in ACL and the ACL as a percentage of total loans and leases from December 31, 2019 was primarily due to impacts from the adoption of CECL at January 1, 2020, high levels of change in both current and forecasted macroeconomic conditions, which are impacted by COVID-19 and commercial portfolio credit risk management activities. The ACL as a percentage of total loans and leases, excluding PPP loans was 1.69%, a non-GAAP financial measure. 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. No assurance can be given that we will not, in any particular period, sustain loan and lease losses that are sizable in relation to the amount reserved or will not require significant changes in the balance of the ACL due to subsequent evaluations of the loan and lease portfolios, in light of factors then prevailing, including economic conditions, information obtained during our ongoing credit review process or regulatory requirements. Among other factors, economic slowdown, increasing levels of unemployment, declines in collateral values and/or rising interest rates may have an adverse impact on the current adequacy of our ACL by increasing credit risk and the risk of potential loss. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

The total ACL is expected to absorb losses from any segment of the portfolio. The allocation of our ACL disclosed in the following table is subject to change based on changes in the criteria used to evaluate the allowance.

Prior to the adoption of CECL on January 1, 2020, the ACL was calculated under an incurred loss model which delayed recognition of loss until it was probable the loss had been incurred, in contrast to the accounting under CECL which considers current credit losses expected to be incurred in the loan and lease portfolios over the remaining expected life of each financial asset.



86


Detailed information regarding our credit loss reserves was as follows:
 
At September 30, 2020
 
Adjusted for adoption of CECL(1)
 
At December 31, 2019
 
ACL(1)
 
% of Category to Total Loan and Lease Portfolio
 
ACL(1)
 
% of Category to Total Loan and Lease Portfolio
 
ACL(1)
 
% of Category to Total Loan and Lease Portfolio
(Dollars in thousands)
Amount
 
Reserve Rate
 
 
Amount
 
Reserve Rate

 
 
Amount
 
Reserve Rate

 
Commercial loan and lease portfolio:
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
145,814

 
1.26
%
 
33.7
%
 
$
93,884

 
0.82
%
 
29.4
%
 
$
42,430

 
0.38
%
 
33.2
%
Commercial real estate
197,892

 
2.06

 
28.0

 
67,620

 
0.74

 
21.2

 
27,308

 
0.29

 
26.5

Lease financing
36,386

 
1.34

 
7.9

 
21,631

 
0.80

 
6.8

 
14,742

 
0.55

 
7.8

Total commercial loan and lease portfolio
380,092

 
1.59

 
69.6

 
183,135

 
0.79

 
57.4

 
84,480

 
0.36

 
67.5

Consumer loan portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
62,006

 
1.07

 
16.9

 
72,939

 
1.18

 
22.9

 
8,099

 
0.13

 
17.9

Home equity
49,003

 
1.48

 
9.6

 
47,003

 
1.34

 
14.7

 
17,795

 
0.51

 
10.1

Consumer installment
24,128

 
1.80

 
3.9

 
15,967

 
1.04

 
5.0

 
2,678

 
0.17

 
4.5

Total consumer loan portfolio
135,137

 
1.30

 
30.4

 
135,909

 
1.21

 
42.6

 
28,572

 
0.25

 
32.5

Total allowance for loan and lease losses
515,229

 
1.50

 
100.0
%
 
319,044

 
0.92

 
100.0
%
 
113,052

 
0.33

 
100.0
%
Reserve for unfunded lending commitments
34,129

 
N.A.

 
 
 
18,235

 
N.A.

 
 
 
3,528

 
N.A.

 
 
Allowance for credit losses(1)
$
549,358

 
1.60
%
 
 
 
$
337,279

 
0.98
%
 
 
 
$
116,580

 
0.34
%
 
 
N.A. Not Applicable
(1)
Allowance for credit losses effective January 1, 2020 are calculated under the guidance of CECL. At December 31, 2019 allowance for credit losses were calculated under the guidance of ASC Topic 310 prior to adoption of CECL, See "Note 3. Summary of Significant Accounting Policies" and "Note 8. Allowance for Credit Losses and Credit Quality" of Notes to Consolidated Financial Statements for further information.



87


The rollforward of the allowance for credit losses were as follows:
 
Three Months Ended
 
Nine Months Ended
(Dollars in thousands)
Sep. 30, 2020
 
Jun. 30, 2020
 
Sep. 30, 2019
 
Sep. 30, 2020
 
Sep. 30, 2019
Allowance for loans and lease losses
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
461,114

 
$
406,383

 
$
146,503

 
$
113,052

 
$
157,446

Impact of CECL adoption

 

 

 
205,992

 

Adjusted balance, beginning of period
461,114

 
406,383

 
146,503

 
319,044

 
157,446

Charge-offs
 
 
 
 
 
 
 
 
 
Commercial loan and lease portfolio:
 
 
 
 
 
 
 
 
 
Commercial and industrial
(24,332
)
 
(2,562
)
 
(18,992
)
 
(34,478
)
 
(31,562
)
Commercial real estate
(804
)
 
(761
)
 
(1
)
 
(1,565
)
 
(1
)
Lease financing
(1,331
)
 
(1,638
)
 
(2,456
)
 
(4,266
)
 
(5,559
)
Total commercial loan and lease portfolio
(26,467
)
 
(4,961
)
 
(21,449
)
 
(40,309
)
 
(37,122
)
Consumer loan portfolio:
 
 
 
 
 
 
 
 
 
Residential mortgage
(3
)
 
(1,166
)
 
(518
)
 
(1,697
)
 
(1,851
)
Home equity
(1,052
)
 
(1,078
)
 
(346
)
 
(3,379
)
 
(2,212
)
Consumer installment
(4,713
)
 
(2,753
)
 
(13,234
)
 
(11,537
)
 
(39,859
)
Total consumer loan portfolio
(5,768
)
 
(4,997
)
 
(14,098
)
 
(16,613
)
 
(43,922
)
Total charge-offs
(32,235
)
 
(9,958
)
 
(35,547
)
 
(56,922
)
 
(81,044
)
Recoveries
 
 
 
 
 
 
 
 
 
Commercial loan and lease portfolio:
 
 
 
 
 
 
 
 
 
Commercial and industrial
2,131

 
2,571

 
1,361

 
8,264

 
2,852

Commercial real estate
660

 
117

 
14

 
1,340

 
28

Lease financing
1,170

 
246

 
264

 
1,835

 
1,010

Total commercial loan and lease portfolio
3,961

 
2,934

 
1,639

 
11,439

 
3,890

Consumer loan portfolio:
 
 
 
 
 
 
 
 
 
Residential mortgage
806

 
295

 
329

 
1,984

 
1,114

Home equity
815

 
743

 
751

 
2,561

 
2,402

Consumer installment
2,077

 
2,591

 
4,250

 
7,490

 
12,324

Total consumer loan portfolio
3,698

 
3,629

 
5,330

 
12,035

 
15,840

Total recoveries
7,659

 
6,563

 
6,969

 
23,474

 
19,730

Net charge-offs
(24,576
)
 
(3,395
)
 
(28,578
)
 
(33,448
)
 
(61,314
)
Provision for credit losses related to loans and leases(1)
78,323

 
58,126

 
27,188

 
229,439

 
50,879

Other
368

 

 
(23,895
)
 
194

 
(25,793
)
Balance, end of period
515,229

 
461,114

 
121,218

 
515,229

 
121,218

Reserve for unfunded lending commitments
 
 
 
 
 
 
 
 
 
Balance, beginning of period
42,788

 
22,188

 
1,936

 
3,528

 
1,428

Impact of CECL adoption

 

 

 
14,707

 

Adjusted balance, beginning of period
42,788

 
22,188

 
1,936

 
18,235

 
1,428

Provision (benefit) for credit losses related to unfunded lending commitments(1)
(8,659
)
 
20,600

 
(342
)
 
15,894

 
166

Addition due to merger

 

 
1,867

 

 
1,867

Balance, end of period
34,129

 
42,788

 
3,461

 
34,129

 
3,461

Total Allowance for Credit Losses
$
549,358

 
$
503,902

 
$
124,679

 
$
549,358

 
$
124,679

(1)
Provision for credit losses related to loans and leases and the provision for credit losses related to unfunded lending commitments are included within Provision for Credit Losses.



88


Net loan and lease charge-offs for the three months ended September 30, 2020 were $24.6 million, or 0.28% of average loans and leases (annualized), compared to $3.4 million, or 0.04% of average loans and leases (annualized) for the three months ended June 30, 2020, and $28.6 million, or 0.39% of average loans and leases (annualized) for the three months ended September 30, 2019. The increase in the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was due to an increase in net charge-offs in our commercial and industrial portfolio, primarily driven by two loans totaling $16.1 million of charge-offs. The decrease in the three months ended September 30, 2020, compared to the three months ended September 30, 2019, was primarily due to a decrease in net charge-offs in our consumer loan portfolio. Subsequent to September 30, 2020, we received a $9.1 million full repayment related to one loan which was fully charged off as of September 30, 2020.

Net loan and lease charge-offs for the nine months ended September 30, 2020 were $33.4 million, or 0.13% of average loans and leases (annualized), compared to $61.3 million, or 0.36% of average loans and leases (annualized) for the nine months ended September 30, 2019. The decrease in the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, was primarily due to a decrease in charge-offs in our consumer loan portfolio.

Investment Securities Held-to-Maturity The investment securities held-to-maturity portfolio consist primarily of fixed-rate mortgage-backed securities issued and guaranteed by FNMA, GNMA and FHLMC which significantly decreases credit risk. The most important credit quality factor we consider to understand the condition of the residential agency mortgage-backed securities is that all are AAA rated and guaranteed.

Liquidity Management We manage our liquidity to ensure that our funding needs are met both promptly and in a cost-effective manner. Asset liquidity arises from liquid assets that can be sold or pledged as collateral, amortization, prepayment or maturity of assets and from our ability to sell loans. Liability liquidity results from our ability to maintain a diverse set of funding sources to promptly meet funding requirements.

TCF Bank had $939.7 million of net liquidity qualifying interest-bearing deposits at the Federal Reserve Bank at September 30, 2020, compared to $489.7 million at December 31, 2019. Certain investment securities held-to-maturity and investment securities carried at fair value provide the ability to liquidate or pledge unencumbered securities as needed. At September 30, 2020, $1.2 billion of our securities were pledged as collateral to secure certain deposits and borrowings.

TCF Financial had net liquidity qualifying cash of $198.2 million at September 30, 2020, compared to $156.0 million at December 31, 2019.

Deposits are the primary source of our funds for use in lending and for other general business purposes. In addition to deposits, we receive funds from loan and lease repayments, loan sales and borrowings. Borrowings may be used to compensate for reductions in normal sources of funds, such as deposit inflows at less than projected levels, net deposit outflows or to fund balance sheet growth. We primarily borrow from the Federal Home Loan Bank (the "FHLB") of Des Moines. We had $7.8 billion of additional borrowing capacity at the FHLB of Des Moines at September 30, 2020, as well as access to the Federal Reserve Discount Window. In addition, we maintain a diversified set of unsecured and uncommitted funding sources, including access to overnight federal funds purchased lines, brokered deposits and capital markets. Lending activities, such as loan originations, loan purchases and equipment purchases for lease financing are the primary uses of our funds.

On June 29, 2020, TCF Financial voluntarily prepaid the outstanding $80.0 million on its $150.0 million unsecured 364-day revolving credit facility with an unaffiliated bank and subsequently closed the credit facility.

Our wholly-owned subsidiary, TCF Commercial Finance Canada, Inc. ("TCFCFC"), maintains a $20.0 million Canadian dollar-denominated line of credit facility with an unaffiliated bank, which is guaranteed by TCF Bank. TCFCFC had $1.5 million (USD) outstanding under the line of credit with the counterparty at September 30, 2020 and no outstanding balance at December 31, 2019.



89


Deposits Deposits were $39.2 billion at September 30, 2020, an increase of $4.7 billion, compared to $34.5 billion at December 31, 2019. The increase in deposits was primarily due to increases in noninterest-bearing deposits of $2.7 billion, interest-bearing checking account balances of $1.5 billion, money market deposits of $827.2 million and savings account balances of $789.4 million, reflecting lower consumer spending impacted by the COVID-19 pandemic, partially offset by the continued run-off of certificates of deposit which declined $1.1 billion.

Noninterest-bearing checking accounts represented 27.2% of total deposits at September 30, 2020, compared to 23.1% of total deposits at December 31, 2019. Our weighted-average interest rate for deposits, including noninterest-bearing deposits, was 0.32% for the three months ended September 30, 2020, 0.49% for the three months ended June 30, 2020 and 0.94% for the three months ended September 30, 2019, and was 0.52% for the nine months ended September 30, 2020 and 0.88% for the nine months ended September 30, 2019.

Certificates of deposit including Certificate of Deposit Account Registry Service ("CDARS") deposits, IRA deposits and brokered deposits, were $6.3 billion at September 30, 2020, compared to $7.5 billion at December 31, 2019. The maturities of certificates of deposit with denominations equal to or greater than $100,000 at September 30, 2020 were as follows:
(In thousands)
 
Three months or less
$
1,334,859

Over three through six months
899,643

Over six through 12 months
843,283

Over 12 months
234,716

Total
$
3,312,501




90


Borrowings Borrowings were $1.5 billion at September 30, 2020, compared to $5.0 billion at December 31, 2019. The decrease in borrowings was primarily due to a decrease in long and short-term FHLB advances.

Information regarding short-term borrowings (borrowings with an original maturity of less than one year) was as follows:
 
At or For the Three Months Ended September 30,
 
At or For the Nine Months Ended September 30,
(Dollars in thousands)
2020
 
2019
 
2020
 
2019
FHLB advances
 
 
 
 
 
 
 
Maximum outstanding at any month-end
$
2,350,000

 
$
2,440,000

 
$
3,200,000

 
$
2,440,000

Balance outstanding at end of period
400,000

 
2,335,960

 
400,000

 
2,335,960

Weighted average interest rate at end of period
0.37
%
 
1.63
%
 
0.37
%
 
1.63
%
Average balance outstanding
$
1,921,739

 
$
1,698,763

 
$
2,370,073

 
$
773,576

Weighted average interest rate
0.48
%
 
1.62
%
 
0.88
%
 
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

 
$
77

 
$
209

Weighted average interest rate
%
 
2.37
%
 
1.78
%
 
2.53
%
Collateralized Deposits
 
 
 
 
 
 
 
Maximum outstanding at any month-end
$
253,960

 
$
271,340

 
$
253,960

 
$
271,340

Balance outstanding at end of period
253,960

 
271,340

 
253,960

 
271,340

Weighted average interest rate at end of period
0.14
%
 
1.00
%
 
0.14
%
 
1.00
%
Average balance outstanding
$
230,499

 
$
184,290

 
$
217,059

 
$
63,771

Weighted average interest rate
0.22
%
 
1.01
%
 
0.39
%
 
0.55
%
Line-of-credit: TCF Financial Corporation
 
 
 
 
 
 
 
Maximum outstanding at any month-end
$

 
$

 
$
80,000

 
$

Balance outstanding at end of period

 

 

 

Weighted average interest rate at end of period
%
 
%
 
%
 
%
Average balance outstanding
$

 
$

 
$
30,146

 
$

Weighted average interest rate
%
 
%
 
2.40
%
 
%
Line-of-credit: TCF Commercial Finance Canada, Inc.
 
 
 
 
 
 
 
Maximum outstanding at any month-end
$
3,066

 
$
1,516

 
$
3,066

 
$
10,455

Balance outstanding at end of period
1,501

 

 
1,501

 

Weighted average interest rate at end of period
1.50
%
 
%
 
1.50
%
 
%
Average balance outstanding
$
792

 
$
892

 
$
536

 
$
1,194

Weighted average interest rate
1.70
%
 
2.94
%
 
2.12
%
 
2.99
%

Long-term borrowings were as follows:
(In thousands)
September 30, 2020
 
December 31, 2019
FHLB advances
$
210,372

 
$
1,822,058

Subordinated debt obligations
586,729

 
428,470

Discounted lease rentals
71,738

 
100,882

Finance lease obligation
3,006

 
3,038

Total long-term borrowings
$
871,845

 
$
2,354,448


On May 6, 2020, TCF Bank issued $150.0 million of fixed-to-floating rate subordinated notes (the “2030 Notes”), at par. The 2030 Notes, due May 6, 2030, bear an initial fixed interest rate of 5.50% per annum until May 6, 2025, payable semi-annually in arrears on May 6 and November 6, commencing on November 6, 2020, resetting quarterly thereafter to the then-current three-month LIBOR rate plus 509 basis points.

See "Note 12. Borrowings" of Notes to Consolidated Financial Statements for further information regarding our long-term borrowings.



91


Commitments We have commitments that may impact our liquidity, including $6.7 billion of commitments to extend credit and $116.8 million of standby letters of credit as of September 30, 2020. Although many of these commitments historically have expired without being drawn upon, and therefore, the total amount of these commitments does not necessarily represent future liquidity requirements, changes in macroeconomic conditions and customer liquidity needs could result in greater utilization than we have experienced previously. See "Note 23. Commitments, Contingent Liabilities and Guarantees" of Notes to Consolidated Financial Statements for a further discussion of these obligations.

Capital Management We are committed to managing capital to maintain protection for shareholders, depositors and creditors. We employ a variety of capital management tools to achieve our capital goals, including, but not limited to, dividends, public offerings of debt and preferred and common stock, common stock repurchases, redemption of preferred stock and the issuance or redemption of subordinated debt and other capital instruments. We maintain a Capital Planning and Dividend Policy which applies to TCF Financial and incorporates TCF Bank's Capital Planning and Dividend Policy. These policies are intended to ensure that capital strategy actions, including the addition of new capital, if needed, common stock repurchases, redemption of preferred stock or the declaration of preferred stock, common stock and bank dividends are prudent, efficient and provide value to our shareholders, while ensuring that past and prospective earnings retention is consistent with our capital needs for growth, as well as asset quality and overall financial condition. TCF Financial and TCF Bank manage capital levels to exceed all regulatory capital requirements.

In 2019, our Board of Directors approved an authorization to repurchase up to $150 million of our common stock. The repurchase program has no expiration, and permits shares to be repurchased in compliance with Rule 10b-18 of the Exchange Act, through one or more broker-dealers as part of “block purchases” made by TCF, and/or through privately negotiated purchases, accelerated stock repurchase agreements, or Rule 10b5-1 plans at our discretion. In response to the COVID-19 pandemic, TCF temporarily suspended buybacks under its share repurchase program, but retains the ability to resume repurchases as circumstances warrant. We did not repurchase any shares of our common stock during the three months ended September 30, 2020, and we repurchased 873,376 shares of our common stock totaling $33.1 million during the nine months ended September 30, 2020.

Effective January 1, 2020, the Corporation adopted CECL. Consistent with the treatment of the ACL under the capital rule’s standardized approach, the ALLL (excluding PCD loans) and RULC are eligible for inclusion in TCF’s Tier 2 capital up to 1.25 percent of standardized total risk weighted assets. In response to the COVID-19 pandemic, the regulatory agencies published a final rule that provides the option to delay the cumulative effect of the day 1 impact of CECL adoption on regulatory capital, along with 25% of the change in the adjusted allowance for credit losses (as computed for regulatory capital purposes which excludes PCD loans), for two years, followed by a three-year phase-in period. Management elected the 5-year transition period consistent with the final rule issued by the regulatory agencies.

At September 30, 2020 and December 31, 2019, TCF Bank's capital ratios exceeded the quantitative capital ratios required for an institution to be considered "well-capitalized." Significant factors that may affect capital adequacy include, but are not limited to, economic uncertainty, deteriorating economic conditions, a disproportionate growth in assets versus capital and a change in mix or credit quality of assets. There are no conditions or events since September 30, 2020 that management believes have changed TCF Bank's status as well-capitalized.

Equity Total equity was $5.7 billion, or 11.9% of total assets, at September 30, 2020, compared to $5.7 billion, or 12.3% of total assets, at December 31, 2019.

Common Stock Dividends Dividends to common shareholders on a per share basis were $0.35 for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, and were $1.05 for the nine months ended September 30, 2020. Dividends to common shareholders on a per share basis, adjusted to reflect the Merger Exchange Ratio, were $0.94 for the nine months ended September 30, 2019. Our common stock dividend payout ratio was 100.00% and 128.05% for the three and nine months ended September 30, 2020, respectively, compared to 250.00% for the three months ended June 30, 2020, and 233.33% and 52.54% for the three and nine months ended September 30, 2019, respectively. TCF Financial's primary funding sources for dividends are dividends received from TCF Bank.



92


On October 26, 2020, our Board of Directors announced a regular quarterly cash dividend of $0.35 per common share payable on December 1, 2020 to shareholders of record at the close of business on November 13, 2020, and a quarterly cash dividend of $0.35625 per depositary share representing a 1/1,000th interest in a share of the 5.70% Series C Non-Cumulative Perpetual Preferred Stock, payable on December 1, 2020 to shareholders of record at the close of business on November 13, 2020.

Common Shareholders' Equity Total common shareholders' equity was $5.5 billion, or 11.50% of total assets, at September 30, 2020, compared to $5.5 billion, or 11.87%, at December 31, 2019. Tangible common equity was $4.0 billion, or 8.68% of total tangible assets, at September 30, 2020, compared with $4.1 billion, or 9.01% of total tangible assets, at December 31, 2019. Book value per common share was $35.88 at September 30, 2020, compared to $36.20 at December 31, 2019. Tangible book value per common share was $26.27 at September 30, 2020, compared to $26.60 at December 31, 2019. Tangible common equity and tangible book value are non-GAAP measures that exclude goodwill and other intangible assets See "Consolidated Financial Condition Analysis — Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

Non-GAAP Financial Measures

This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include our tangible book value per common share; tangible common shareholders' equity; presentation of net interest income and net interest margin on a fully tax-equivalent ("FTE") basis; our adjusted efficiency ratio (which excludes merger-related expenses, sale of the Legacy TCF auto finance portfolio and related expenses, gains on sales of branches, write-down of company-owned vacant land parcels and branch exit costs, termination of interest rate swaps, gain on sales of certain investment securities, loan servicing rights impairment, lease financing equipment depreciation, net interest income FTE adjustment, amortization of intangible assets, and federal historic tax credit amortization), composition of loans and allowance excluding PPP loans, the adjusted allowance for credit losses as a percentage of loans and leases, excluding PPP loans; adjusted net interest income and margin (which excludes purchase accounting accretion and amortization and the impact of PPP loans); and other adjusted information presented excluding merger-related expenses and notable items (defined as sale of the Legacy TCF auto finance portfolio and related expenses, gains on sales of branches, write-down of company-owned vacant land parcels and branch exit costs, termination of interest rate swaps, gain on sales of certain investment securities and loan servicing rights impairment) including net income, diluted earnings per share, return on average assets, return on average common shareholders' equity, return on average tangible common shareholders' equity tangible book value per common share and tangible common equity to tangible assets. Management believes that the presentation of these non-GAAP financial measures (i) provides important supplemental information that contributes to a proper understanding of our operating performance, (ii) enables a more complete understanding of factors and trends affecting our business and (iii) allows investors to evaluate our performance in a manner similar to management, the financial services industry, bank stock analysts, and bank regulators. Management uses non-GAAP financial measures internally in the preparation of our operating budgets, monthly financial performance reporting, and in our presentation to investors of our performance. Non-GAAP financial measures are not defined by GAAP and other entities may calculate them differently than we do. Non-GAAP financial measures have inherent limitations and are not required to be uniformly applied. Although non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, 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.

The following tables provide a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. A reconciliation of net interest income and net interest margin (FTE) to the most directly comparable GAAP financial measure can be found within the Net Interest Income subheading of this report.


93



The computation of the adjusted diluted earnings per common share and adjusted net income attributable to TCF was as follows:
 
 
Three Months Ended
 
Nine Months Ended
(Dollars in thousands, except per share data)
 
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
September 30, 2020
 
September 30, 2019
Net income available to common shareholders
 
$
53,244

 
$
21,270

 
$
19,654

 
$
123,920

 
$
175,588

Earnings allocated to participating securities
 

 

 

 

 
19

Earnings allocated to common shareholders
(a)
53,244

 
21,270

 
19,654

 
123,920

 
175,569

Merger-related expenses
 
54,011

 
81,619

 
111,259

 
172,358

 
124,943

Notable items:
 
 
 
 
 
 
 
 
 
 
Sale of legacy TCF auto finance portfolio and related expenses(1)
 

 
901

 
19,264

 
3,964

 
19,264

Termination of interest rate swaps(2)
 

 

 
17,302

 

 
17,302

Gain on sale of certain investment securities(3)
 

 
 
 
(5,869
)
 

 
(5,869
)
Gains on sales of branches, write-down of company-owned vacant land parcels and branch exit costs, net(4)
 

 
(14,166
)
 
5,890

 
(14,166
)
 
5,890

Loan servicing rights impairment(2)
 
154

 
8,858

 
4,520

 
17,248

 
4,520

Total notable items
 
154

 
(4,407
)
 
41,107

 
7,046

 
41,107

Total merger-related expenses and notable items
 
54,165

 
77,212

 
152,366

 
179,404

 
166,050

Related income tax expense, net of benefits(5)
 
(11,207
)
 
(16,114
)
 
(46,213
)
 
(37,392
)
 
(49,481
)
Total adjustments, net of tax
 
42,958

 
61,098

 
106,153

 
142,012

 
116,569

Adjusted earnings allocated to common stock
(b)
$
96,202

 
$
82,368

 
$
125,807

 
$
265,932

 
$
292,138

 
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding used in diluted earnings per common share calculation(6)
(c)
151,821,592

 
151,660,139

 
128,754,588

 
151,826,928

 
98,055,279

 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share
(a)/(c)
$
0.35

 
$
0.14

 
$
0.15

 
$
0.82

 
$
1.79

Adjusted diluted earnings per common share
(b)/(c)
0.63

 
0.54

 
0.98

 
1.75

 
2.98

 
 
 
 
 
 
 
 
 
 
 
Net income attributable to TCF
 
$
55,738

 
$
23,764

 
$
22,148

 
$
131,401

 
$
183,069

Total adjustments, net of tax
 
42,958

 
61,098

 
106,153

 
142,012

 
116,569

Adjusted net income attributable to TCF
 
$
98,696

 
$
84,862

 
$
128,301

 
$
273,413

 
$
299,638

(1)
Three months ended June 30, 2020 amount included within other noninterest expense ($0.8 million) and compensation and employee benefits ($0.1 million). Three months ended September 30, 2019 amount included within net gains (losses) on sales of loans and leases. Nine months ended September 30, 2020 amount included within occupancy and equipment ($1.6 million), other noninterest expense ($1.3 million) and compensation and employee benefits ($1.0 million). Nine months ended September 30, 2019 amount included within net gains (losses) on sales of loans and leases.
(2)
Included within other noninterest income.
(3)
Included within net gains on investment securities.
(4)
Three months ended June 30, 2020 amount included within other noninterest income ($14.7 million net gain) and other noninterest expense ($0.6 million). Three months ended September 30, 2020 amount included within other noninterest expense. Nine months ended September 30, 2020 amount included within other noninterest income ($14.7 million net gain) and other noninterest expense ($0.6 million). Nine months ended September 30, 2019 amount included within other noninterest expense.
(5)
Included within income tax (benefit) expense.
(6)
Assumes conversion of common shares, as applicable.



94


The computation of the adjusted net interest income and margin was as follows:
 
Three Months Ended
 
Nine Months Ended
(Dollars in thousands, except per share data)
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
September 30, 2020
 
September 30, 2019
Net Interest Income
$
377,167

 
$
378,359

 
$
371,793

 
$
1,157,007

 
$
880,279

Purchase accounting accretion and amortization
(17,710
)
 
(18,209
)
 
(28,411
)
 
(61,177
)
 
(28,411
)
Adjusted net interest income, excluding purchase accounting accretion and amortization
359,457

 
360,150

 
343,382

 
1,095,830

 
851,868

Net fees recognized on PPP loans
(11,886
)
 
(7,805
)
 

 
(19,691
)
 

Interest recognition on PPP loans(1)
(2,824
)
 
(1,759
)
 

 
(4,583
)
 

Total PPP loans impact
(14,710
)
 
(9,564
)
 

 
(24,274
)
 

Adjusted net interest income, excluding purchase accounting accretion and amortization and PPP impact
$
344,747

 
$
350,586

 
$
343,382

 
$
1,071,556

 
$
851,868

Net interest margin (FTE)
3.34
 %
 
3.35
 %
 
4.14
 %
 
3.48
 %
 
4.36
 %
Purchase accounting accretion and amortization
(0.16
)
 
(0.16
)
 
(0.31
)
 
(0.21
)
 
(0.14
)
Adjusted net interest margin, excluding purchase accounting accretion and amortization (FTE)
3.18

 
3.19

 
3.83

 
3.27

 
4.22

PPP loans impact(2)
0.01

 
0.01

 

 
0.01

 

Adjusted net interest margin, excluding purchase accounting accretion and amortization and PPP loans impact (FTE)
3.19
 %
 
3.20
 %
 
3.83
 %
 
3.28
 %
 
4.22
 %
(1)
Interest income on PPP loans less funding costs.
(2)
The exclusion of PPP loans additionally reduces average earning assets by $1.8 billion and $1.2 billion in the three months ended September 30, 2020 and June 30, 2020, respectively and $1.0 billion in the nine months ended September 30, 2020.



95


The computation of the adjusted return on average assets, common equity and average tangible common equity was as follows:
 
 
Three Months Ended
 
Nine Months Ended
(Dollars in thousands)
 
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
September 30, 2020
 
September 30, 2019
Adjusted net income after tax expense:
 
 
 
 
 
 
 
 
 
 
Income after tax expense
(a)
$
57,302

 
$
26,233

 
$
24,978

 
$
137,351

 
$
192,470

Merger-related expenses
 
54,011

 
81,619

 
111,259

 
172,358

 
124,943

Notable items
 
154

 
(4,407
)
 
41,107

 
7,046

 
41,107

Related income tax expense, net of tax benefits
 
(11,207
)
 
(16,114
)
 
(46,213
)
 
(37,392
)
 
(49,481
)
Adjusted net income after tax expense for ROAA calculation
(b)
100,260

 
87,331

 
131,131

 
279,363

 
309,039

Net income available to common shareholders
(c)
53,244

 
21,270

 
19,654

 
123,920

 
175,588

Other intangibles amortization
 
5,498

 
5,516

 
4,544

 
16,494

 
6,154

Related income tax expense
 
(1,137
)
 
(1,151
)
 
(1,085
)
 
(3,437
)
 
(1,470
)
Net income available to common shareholders used in ROATCE calculation
(d)
57,605

 
25,635

 
23,113

 
136,977

 
180,272

 
 
 
 
 
 
 
 
 
 
 
Adjusted net income available to common shareholders:
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
 
53,244

 
21,270

 
19,654

 
123,920

 
175,588

Notable items
 
154

 
(4,407
)
 
41,107

 
7,046

 
41,107

Merger-related expenses
 
54,011

 
81,619

 
111,259

 
172,358

 
124,943

Related income tax expense, net of tax benefits
 
(11,207
)
 
(16,114
)
 
(46,213
)
 
(37,392
)
 
(49,481
)
Net income available to common shareholders used in adjusted ROACE calculation
(e)
96,202

 
82,368

 
125,807

 
265,932

 
292,157

Other intangibles amortization
 
5,498

 
5,516

 
4,544

 
16,494

 
6,154

Related income tax expense
 
(1,137
)
 
(1,151
)
 
(1,085
)
 
(3,437
)
 
(1,470
)
Net income available to common shareholders used in adjusted ROATCE calculation
(f)
100,563

 
86,733

 
129,266

 
278,989

 
296,841

Average balances:
 
 
 
 
 
 
 
 
 
 
Average assets
(g)
49,539,600

 
49,716,116

 
39,094,366

 
48,749,940

 
29,283,275

Total average equity
 
5,697,727

 
5,658,255

 
4,683,129

 
5,662,286

 
3,316,504

Non-controlling interest in subsidiaries
 
(22,638
)
 
(28,122
)
 
(25,516
)
 
(25,353
)
 
(26,558
)
Total TCF Financial Corporation shareholders' equity
 
5,675,089

 
5,630,133

 
4,657,613

 
5,636,933

 
3,289,946

Preferred stock
 
(169,302
)
 
(169,302
)
 
(169,302
)
 
(169,302
)
 
(169,302
)
Average total common shareholders' equity used in ROACE calculation
(h)
5,505,787

 
5,460,831

 
4,488,311

 
5,467,631

 
3,120,644

Average goodwill, net
 
(1,313,046
)
 
(1,313,046
)
 
(890,155
)
 
(1,309,072
)
 
(402,583
)
Average other intangibles, net
 
(155,142
)
 
(160,841
)
 
(142,925
)
 
(160,740
)
 
(61,208
)
Average tangible common shareholders' equity used in ROATCE calculation
(i)
$
4,037,599

 
$
3,986,944

 
$
3,455,231

 
$
3,997,819

 
$
2,656,853

 
 
 
 
 
 
 
 
 
 
 
ROAA(1)
(a) / (g)
0.46
%
 
0.21
%
 
0.26
%
 
0.38
%
 
0.88
%
Adjusted ROAA(1)
(b) / (g)
0.81

 
0.70

 
1.34

 
0.76

 
1.41

ROACE(1)
(c) / (h)
3.87

 
1.56

 
1.75

 
3.02

 
7.50

Adjusted ROACE(1)
(e) / (h)
6.99

 
6.03

 
11.21

 
6.48

 
12.48

ROATCE(1)
(d) / (i)
5.71

 
2.57

 
2.68

 
4.57

 
9.05

Adjusted ROATCE(1)
(f) / (i)
9.96

 
8.70

 
14.96

 
9.31

 
14.90

(1)
Annualized.



96


The computation of the adjusted efficiency ratio, noninterest income and noninterest expense was as follows:
 
 
Three Months Ended
 
Nine Months Ended
(Dollars in thousands)
 
September 30, 2020
 
June 30, 2020
 
September 30, 2019
 
September 30, 2020
 
September 30, 2019
Noninterest expense
(a)
$
373,440

 
$
400,241

 
$
425,620

 
$
1,148,280

 
$
915,544

Merger-related expenses
 
(54,011
)
 
(81,619
)
 
(111,259
)
 
(172,358
)
 
(124,943
)
Write-down of company-owned vacant land parcels and branch exit costs
 

 
(551
)
 
(5,890
)
 
(551
)
 
(5,890
)
Expenses related to the sale of Legacy TCF auto finance portfolio
 

 
(901
)
 

 
(3,964
)
 

Adjusted noninterest expense
 
319,429

 
317,170

 
308,471

 
971,407

 
784,711

Lease financing equipment depreciation
 
(17,932
)
 
(18,212
)
 
(19,408
)
 
(54,594
)
 
(57,797
)
Amortization of intangibles
 
(5,498
)
 
(5,516
)
 
(4,544
)
 
(16,494
)
 
(6,154
)
Federal historic tax credit amortization
 
(1,758
)
 
(179
)
 

 
(3,459
)
 

Adjusted noninterest expense, efficiency ratio
(b)
$
294,241

 
$
293,263

 
$
284,519

 
$
896,860

 
$
720,760

 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
377,167

 
$
378,359

 
$
371,793

 
$
1,157,007

 
$
880,279

Noninterest income
 
118,810

 
133,054

 
94,258

 
388,827

 
307,480

Total revenue
(c)
495,977

 
511,413

 
466,051

 
1,545,834

 
1,187,759

 
 
 
 
 
 
 
 
 
 
 
Noninterest income
 
118,810

 
133,054

 
94,258

 
388,827

 
307,480

Loss on transfer of Legacy TCF auto loans to held-for-sale
 

 

 
19,264

 

 
19,264

Termination of interest rate swaps
 

 

 
17,302

 

 
17,302

Gain on sales of certain investment securities
 

 

 
(5,869
)
 

 
(5,869
)
Gain on sales of branches
 

 
(14,717
)
 

 
(14,717
)
 

Loan servicing rights impairment
 
154

 
8,858

 
4,520

 
17,248

 
4,520

Adjusted noninterest income
 
118,964

 
127,195

 
129,475

 
391,358

 
342,697

Net interest income
 
377,167

 
378,359

 
371,793

 
1,157,007

 
880,279

Net interest income FTE adjustment
 
2,844

 
3,032

 
2,488

 
8,859

 
5,547

Adjusted net interest income
 
380,011

 
381,391

 
374,281

 
1,165,866

 
885,826

Lease financing equipment depreciation
 
(17,932
)
 
(18,212
)
 
(19,408
)
 
(54,594
)
 
(57,797
)
Adjusted total revenue, efficiency ratio
(d)
$
481,043

 
$
490,374

 
$
484,348

 
$
1,502,630

 
$
1,170,726

 
 
 
 
 
 
 
 
 
 
 
Efficiency ratio
(a)/(c)
75.29
%
 
78.26
%
 
91.32
%
 
74.28
%
 
77.08
%
Adjusted efficiency ratio
(b)/(d)
61.17

 
59.80

 
58.74

 
59.69

 
61.57



97



The computations of tangible common equity to tangible assets and tangible book value per common share were as follows:
(Dollars in thousands, except per share data)
 
At September 30, 2020
 
At December 31, 2019
Total equity
 
$
5,658,420

 
$
5,727,241

Non-controlling interest in subsidiaries
 
(21,376
)
 
(20,226
)
Total TCF Financial Corporation shareholders' equity
 
5,637,044

 
5,707,015

Preferred stock
 
(169,302
)
 
(169,302
)
Total common shareholders' equity
(a)
5,467,742

 
5,537,713

Goodwill, net
 
(1,313,046
)
 
(1,299,878
)
Other intangibles, net
 
(151,875
)
 
(168,368
)
Tangible common shareholders' equity
(b)
$
4,002,821

 
$
4,069,467

 
 
 
 
 
Total assets
(c)
$
47,565,789

 
$
46,651,553

Goodwill, net
 
(1,313,046
)
 
(1,299,878
)
Other intangibles, net
 
(151,875
)
 
(168,368
)
Tangible assets
(d)
$
46,100,868

 
$
45,183,307

 
 
 
 
 
Common stock shares outstanding
(e)
152,379,722

 
152,965,571

 
 
 
 
 
Common equity to assets
(a)/(c)
11.50
%
 
11.87
%
Tangible common equity to tangible assets
(b)/(d)
8.68

 
9.01

 
 
 
 
 
Book value per common share
(a)/(e)
$
35.88

 
$
36.20

Tangible book value per common share
(b)/(e)
26.27

 
26.60


The computations of loans and leases and the related allowance for credit losses excluding PPP were as follows:
 
 
 
 
 
Change from
December 31, 2019
(Dollars in thousands)
At September 30, 2020
 
At December 31, 2019
 
$
%
Commercial and industrial
$
11,557,237

 
$
11,439,602

 
$
117,635

1.0%
Commercial real estate
9,627,330

 
9,136,870

 
490,460

5.4
Lease financing
2,724,686

 
2,699,869

 
24,817

0.9
Total commercial loan and lease portfolio
23,909,253

 
23,276,341

 
632,912

2.7
Residential mortgage
5,790,251

 
6,179,805

 
(389,554
)
(6.3)
Home equity
3,302,983

 
3,498,907

 
(3,498,907
)
(100.0)
Consumer installment
1,341,204

 
1,542,411

 
(201,207
)
(13.0)
Total consumer loan portfolio
10,434,438

 
11,221,123

 
(786,685
)
(7.0)
Total loans and leases
34,343,691

 
34,497,464

 
(153,773
)
(0.4)
PPP (Commercial and industrial)
1,836,850

 

 
1,836,850

N.M.
Loans and leases excluding PPP loans
 
 
 
 
 
 
Commercial and industrial
9,720,387

 
11,439,602

 
(1,719,215
)
(15.0)
Commercial real estate
9,627,330

 
9,136,870

 
490,460

5.4
Lease financing
2,724,686

 
2,699,869

 
24,817

0.9
Total commercial loan and lease portfolio
22,072,403

 
23,276,341

 
(1,203,938
)
(5.2)
Residential mortgage
5,790,251

 
6,179,805

 
(389,554
)
(6.3)
Home equity
3,302,983

 
3,498,907

 
(195,924
)
(5.6)
Consumer installment
1,341,204

 
1,542,411

 
(201,207
)
(13.0)
Total consumer loan portfolio
10,434,438

 
11,221,123

 
(786,685
)
(7.0)
Total loans and leases, excluding PPP loans
$
32,506,841

 
$
34,497,464

 
$
(1,990,623
)
(5.8)%
Allowance for credit losses
$
549,358

 
$
116,580

 
 
 
Allowance for credit losses as a % of total loans and leases
1.60
%
 
0.34
%
 
126

bps
Allowance for credit losses as a % of loans and leases, excluding PPP loans
1.69
%
 
0.34
%
 
135

 



98


Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our results of operations depend, to a large degree, on our net interest income and our ability to manage interest rate risk. Although we manage other risks in the normal course of business, such as credit risk, liquidity risk and foreign currency risk, we consider interest rate risk to be one of our more significant market risks.

Interest Rate Risk

Our ALCO and Finance Committee of our Board of Directors have established interest rate risk policy limits. Interest rate risk is defined as the exposure of net interest income and fair value of financial instruments (interest earning assets, deposits and borrowings) to movements in interest rates. The major sources of our interest rate risk are timing differences in the maturity and repricing characteristics of assets and liabilities, changes in the shape of the yield curve, changes in consumer behavior and changes in relationships between rate indices (basis risk). Management measures these risks and their impact in various ways, including through the use of simulation and valuation analyses. The interest rate scenarios may include gradual or rapid changes in interest rates, spread narrowing and widening, yield curve twists and changes in assumptions about consumer behavior in various interest rate scenarios. A mismatch between maturities, interest rate sensitivities and prepayment characteristics of assets and liabilities results in interest rate risk. We, like most financial institutions, have material interest rate risk exposure to changes in both short- and long-term interest rates, as well as variable interest rate indices (e.g., the prime rate or London Interbank Offered Rate).

Our ALCO is responsible for reviewing our interest rate sensitivity position and establishing policies to monitor and limit exposure to interest rate risk. ALCO manages our interest rate risk based on interest rate expectations and other factors. The principal objective in managing our assets and liabilities is to provide maximum levels of net interest income and facilitate our funding needs, while maintaining acceptable levels of interest rate risk and liquidity risk.
 
ALCO primarily uses two interest rate risk tools with policy limits to evaluate our interest rate risk: net interest income simulation and economic value of equity ("EVE") analysis.

Management utilizes net interest income simulation models to estimate the near-term effects of changing interest rates on our net interest income. Net interest income simulation involves forecasting net interest income under a variety of scenarios, including the level of interest rates, the shape of the yield curve and the spreads between market interest rates. Management exercises best judgment in making assumptions regarding events that management can influence, such as non-contractual deposit repricings and events outside management's control, including consumer behavior on loan and deposit activity and the effect that competition has on both loan and deposit pricing. These assumptions are subjective and, as a result, net interest income simulation results will differ from actual results due to the timing, magnitude and frequency of interest rate changes and changes in market conditions, consumer behavior and management strategies, among other factors. We perform various sensitivity analyses on new loan spreads, prepayment rates, basis risk and deposit assumptions.

The following table presents changes in our net interest income over a twelve month period if short- and long-term interest rates were to sustain an immediate change. These projections were based on our assets and liabilities remaining static over the next twelve months and factored into the simulation model.
 
Impact on Net Interest Income
(Dollars in thousands)
September 30, 2020
 
December 31, 2019
Immediate change in interest rates:
 
 
 
 
 
+200 basis points
$
81,800

5.6
 %
 
$
32,200

2.1
 %
+100 basis points
43,200

3.0

 
20,900

1.4

-100 basis points(1)
(34,600
)
(2.4
)
 
60,900

(4.0
)
(1) Sensitivity measure is calculated assuming market rates do not decline below 0%.

The increases in sensitivity at September 30, 2020, compared to December 31, 2019, was primarily driven by increased deposits, lower wholesale borrowings and overall lower rate environment.


99




Management also uses EVE to measure risk in the balance sheet that might not be taken into account in the net interest income simulation analysis. Net interest income simulation highlights exposure over a relatively short time period, while EVE analysis incorporates all cash flows over the estimated remaining life of all balance sheet positions. The valuation of the balance sheet, at a point in time, is defined as the discounted present value of asset cash flows minus the discounted present value of liability cash flows. EVE analysis addresses only the current balance sheet and does not incorporate the planned changes to assets or liabilities. As with the net interest income simulation model, EVE analysis is based on key assumptions about the timing and variability of balance sheet cash flows and does not take into account any potential responses by management to anticipated changes in interest rates.

LIBOR Transition

In 2017, the U.K. Financial Conduct Authority (the “FCA”) noted that market conditions raised serious questions about the future sustainability of LIBOR benchmarks. Many financial products, including mortgages and other consumer loans, commercial loans, corporate loans, various types of debt, derivatives and other securities, reference LIBOR to determine their applicable interest rate. As part of the expected upcoming cessation of publication of LIBOR rates after 2021, TCF created a company-wide LIBOR transition plan and has already taken several important steps to ensure TCF’s operational readiness for the transition, including completing an inventory of existing LIBOR-indexed products and developing LIBOR fallback language for inclusion in loans that contemplates the transition away from LIBOR.  As part of our plan, we have and will continue to engage with industry working groups and regulators in order to monitor and respond to risks associated with the discontinuation, unavailability, or non-representativeness of LIBOR, and will continue to actively engage with our clients to facilitate the transition to alternative reference rates.

Item 4. Controls and Procedures.
 
Disclosure Controls and Procedures TCF Financial carried out an evaluation, under the supervision and with the participation of TCF Financial's management, including its Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer) and Chief Accounting Officer (Principal Accounting Officer), of the effectiveness of the design and operation of TCF Financial's disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on that evaluation, TCF’s Principal Executive Officer and Principal Financial Officer concluded that TCF's disclosure controls and procedures were effective as of September 30, 2020.

Any system of disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of a control system inherently has limitations and the benefits of controls must be weighed against their costs. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. Therefore, no assessment of a cost-effective system of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, will be detected.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by TCF Financial in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to TCF Financial's management, including the Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer) and Chief Accounting Officer (Principal Accounting Officer), as appropriate, to allow for timely decisions regarding required disclosure. TCF Financial's disclosure controls also include internal controls that are designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use and that transactions are properly recorded and reported.

Changes in Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for TCF Financial. Internal control over financial reporting is a process designed 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.



100




Internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of TCF Financial; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of TCF Financial are only being made in accordance with authorizations of management and directors of TCF Financial; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of TCF Financial’s assets that could have a material effect on the financial statements.

While we describe certain control activity below, there was no change in internal control over financial reporting (as a defined rule in Rule 13a-15(f) of the Exchange Act) that occurred during the three months ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

The Corporation incorporated certain new controls related to the final adoption of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments into the existing internal control environment.

During the three months ended September 30, 2020, the Corporation completed Merger-related integration activities, including converting and consolidating legacy financial systems and certain legacy control processes into the previously existing internal control environment, which were undertaken to enhance our operating platform. The Corporation believes the necessary steps were taken to maintain appropriate internal controls over financial reporting during this integration period, and has continuously monitored the controls to provide reasonable assurance that controls were effective during and after each step of the integration process.




101




Part II - Other Information                                                

Item 1. Legal Proceedings.
 
From time to time, we are a party to legal proceedings arising out of our lending, leasing and deposit operations, including foreclosure proceedings and other collection actions as part of our lending and leasing collections activities. We may also be subject to regulatory examinations and enforcement actions brought by federal regulators, including the SEC, the Federal Reserve, the OCC and the CFPB which may impose sanctions on us for failures related to regulatory compliance. From time to time borrowers and other customers, and employees and former employees have also brought actions against us, in some cases claiming substantial damages. We, like other financial services companies are subject to the risk of class action litigation. Litigation is often unpredictable and the actual results of litigation cannot be determined, and therefore the ultimate resolution of a matter and the possible range of loss associated with certain potential outcomes cannot be established. Based on our current understanding of our pending legal proceedings, management does not believe that judgments or settlements arising from pending or threatened legal matters, individually or in the aggregate, would have a material adverse effect on our consolidated financial position, operating results or cash flows.

Item 1A. Risk Factors.
 
In addition to the risks detailed below, additional information concerning risk factors facing the Corporation is contained in this report under the heading "Forward-Looking Statements" and in Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2019. TCF's business, financial condition or results of operations could be materially adversely affected by any of these risks.

We face risks and uncertainties related to the outbreak of COVID-19

As previously disclosed in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, our operations and profitability are impacted by business and economic conditions generally, as well as those in the primary banking markets in which we operate. The COVID-19 pandemic first declared in March by the World Health Organization resulted in historic job losses and decreases in economic activity, neither of which have returned to pre-pandemic levels. Although we have taken steps such as offering loan deferrals to attempt to mitigate the adverse consequences to our businesses, these steps may not be sufficient, and the effects of the pandemic may impact the ability of individuals and small businesses to make payments, the value of underlying collateral, and the ability of guarantors to make payments in the case of default, reduce our ability to access capital, subject us to increased liability, and otherwise adversely impact the financial condition, results of operations, prospects of our businesses and our credit ratings. While the United States and various state and local governments have implemented various programs designed to aid individuals and businesses, the duration of such programs and the impact of, and extent to which these efforts will be successful, cannot be determined at this time.
Many of our customers and counterparties have been and may continue to be adversely impacted by the COVID-19 pandemic and resulting economic downturn. As a result, we have faced and may continue to face a decrease in demand for certain products, and disruptions in the operations of our branch network and our vendors. The pandemic could also result in the recognition of additional credit losses in our loan and lease portfolios and increase our allowance for credit losses as both businesses and consumers are negatively impacted by the economic downturn. Additionally, customers that are increasingly forced to work remotely and may not have appropriately secured remote networks may be more vulnerable to cyber-attacks or phishing schemes. Any of these occurrences could have a material adverse effect on our financial condition, results of operations and prospects. The extent to which the pandemic impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning its severity and the actions necessary to contain it or address its impact, among others. The duration of these impacts resulting from the COVID-19 is unknown, and the resulting customer behavioral changes are not fully known and may not be temporary.


102




In addition, the COVID-19 outbreak has caused, and will continue to cause, substantial disruption to our employees as a result of illness, increased family responsibilities, self-isolation, travel limitations, and otherwise. Most areas within the United States have imposed business and other restrictions, and it is currently unclear for how long such restrictions will last. These restrictions have affected many of our customers and businesses through which we sell our products and services, and the increased reliance on remote work may result in increased vulnerabilities through heavy dependence on remote networks.
Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently known, could materially impact our team members and decrease our ability to serve customers, increase our costs, negatively impact our sales and damage our results of operations and our liquidity position, possibly to a significant degree. The duration of any such impacts cannot be predicted.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Share repurchase activity for the three months ended September 30, 2020 was as follows:
Period
Total Number
of Shares
Purchased
 
Average
Price Paid
Per Share
 
Total Number of Shares
Purchased as Part of
Publicly Announced Plan
 
Approximate Dollar Value of
Shares that May Yet Be
Purchased Under the Plan
July 1 to July 31, 2020
 

 
 

 
 

 
 

Share repurchase program(1)

 
$

 

 
$
89,419,941

Employee transactions(2)
1,953

 
27.80

 
N.A.

 
N.A.

August 1 to August 31, 2020
 

 
 

 
 

 
 

Share repurchase program(1)

 
$

 

 
$
89,419,941

Employee transactions(2)
4,153

 
27.69

 
N.A.

 
N.A.

September 1 to September 30, 2020
 

 
 

 
 

 
 

Share repurchase program(1)

 
$

 

 
$
89,419,941

Employee transactions(2)
36

 
23.36

 
N.A.

 
N.A.

Total
 

 
 

 
 

 
 

Share repurchase program(1)

 
$

 

 
$
89,419,941

Employee transactions(2)
6,142

 
27.70

 
N.A.

 
N.A.

 N.A. Not Applicable
(1)
On October 24, 2019, the Board of Directors approved an authorization to repurchase up to $150.0 million of our common stock. Repurchases will be based on market conditions, the trading price of our shares and other factors. The ability to repurchase shares in the future may be adversely affected by new legislation or regulations or by changes in regulatory policies.
(2)
Represents restricted stock withheld pursuant to the terms of awards granted under the Legacy TCF Financial Omnibus Incentive Plan to offset tax withholding obligations that occur upon vesting and release of restricted stock. The plan provides that the value of shares withheld shall be the average of the high and low prices of common stock of TCF Financial Corporation on the date the relevant transaction occurs.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.
 
Not applicable.


Item 5. Other Information.

None.



103




Item 6. Exhibits.  
Exhibit
Number
 
Description
3(a)
 
3(b)
 
3(c)
 
4(a)
 
10(a)
 
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#
 
Inline XBRL Taxonomy Extension Schema Document
101.CAL#
 
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF#
 
Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB#
 
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE#
 
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
 
Cover Page Interactive Data File (formatted as Inline XBRL and embedded within Exhibit 101)
 

#  Filed herein



104




SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
TCF FINANCIAL CORPORATION
 
 
 
 
 
 
 
 
/s/ David T. Provost
 
 
David T. Provost,
 
 
Chief Executive Officer
 
 
(Principal Executive Officer)
 
 
 
 
 
/s/ Brian W. Maass
 
 
Brian W. Maass,
 
 
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)
 

Dated: November 6, 2020



105


Exhibit 31.1
CERTIFICATION
I, David T. Provost, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of TCF Financial Corporation for the quarter ended September 30, 2020;
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.
Date: November 6, 2020
 
/s/ David T. Provost
 
 
David T. Provost
 
 
Chief Executive Officer
 
 
(Principal Executive Officer)
 





Exhibit 31.2
CERTIFICATION
I, Brian W. Maass, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of TCF Financial Corporation for the quarter ended September 30, 2020;
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.
Date: November 6, 2020
 
/s/ Brian W. Maass
 
 
Brian W. Maass
 
 
Executive Vice President and Chief Financial Officer
 
 
(Principal Financial Officer)
 




Exhibit 32.1
TCF FINANCIAL CORPORATION
STATEMENT PURSUANT TO 18 U.S.C. §1350

I, David T. Provost, Chief Executive Officer of TCF Financial Corporation, a Michigan corporation (the “Company”), hereby certify as follows:
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, 2020 (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.
Date: November 6, 2020
 
/s/ David T. Provost
 
 
David T. Provost
 
 
Chief Executive Officer
 
 
(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.






Exhibit 32.2
TCF FINANCIAL CORPORATION
STATEMENT PURSUANT TO 18 U.S.C. §1350

I, Brian W. Maass, Executive Vice President and Chief Financial Officer of TCF Financial Corporation, a Michigan corporation (the “Company”), hereby certify as follows:
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, 2020 (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.
Date: November 6, 2020
 
/s/ Brian W. Maass
 
 
Brian W. Maass
 
 
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.