HUNTINGTON BANCSHARES INC /MD/ (Form: 8-K/A, Received: 07/29/2021 16:35:57)

HUNTINGTON BANCSHARES INCORPORATED

Date: July 29, 2021

/s/ Jana J. Litsey

Jana J. Litsey

General Counsel

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 2)

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 8, 2021

LOGO

Huntington Bancshares Incorporated

(Exact name of registrant as specified in its charter)

Maryland

1-34073

31-0724920

(State or other jurisdiction of

incorporation or organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

Registrant’s address: 41 South High Street, Columbus, Ohio 43287

Registrant’s telephone number, including area code: (614) 480-2265

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of class	Trading Symbol(s)	Name of exchange on which registered
Depositary Shares (each representing a 1/40th interest in a share of 5.875% Series C Non-Cumulative, perpetual preferred stock)	HBANN	NASDAQ
Depositary Shares (each representing a 1/40th interest in a share of 4.500% Series H Non-Cumulative, perpetual preferred stock)	HBANP	NASDAQ
Depositary Shares (each representing a 1/1000th interest in a share of 5.70% Series I Non-Cumulative, perpetual preferred stock)	HBANM	NASDAQ
Common Stock—Par Value $0.01 per Share	HBAN	NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§24012b-2).

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. ☐

Explanatory Note

On June 9, 2021, Huntington Bancshares Incorporated (“Huntington”) filed a Current Report on Form 8-K (the “Initial Filing”), which was subsequently amended by a Current Report on Form 8-K/A filed on July 6, 2021 (together with the Initial Filing, the “Filing”), to report that Huntington had completed its acquisition of TCF Financial Corporation (“TCF”) pursuant to the Agreement and Plan of Merger, dated as of December 13, 2020 (the “Merger Agreement”), by and between Huntington and TCF. Pursuant to the Merger Agreement, effective June 9, 2021, TCF merged with and into Huntington (the “Merger”), with Huntington continuing as the surviving corporation in the Merger. This Current Report on Form 8-K/A amends the Filing to include the financial statements of TCF and the pro forma financial information required by Item 9.01 of Form 8-K.

The pro forma financial information included in this Current Report on Form 8-K/A has been presented for informational purposes only, as required by Form 8-K. It does not purport to represent the actual results of operations that Huntington and TCF would have achieved had the companies been combined during the periods presented in the pro forma financial information and is not intended to project the future results of operations that the combined company may achieve after completion of the Merger. Except as described above, all other information in the Filing remains unchanged.

Item 9.01

Financial Statements and Exhibits

(a)	Financial Statements of Business Acquired.

The audited consolidated financial statements of TCF as of December 31, 2020 and 2019, and for each of the fiscal years ended December 31, 2020, 2019 and 2018 are filed as Exhibit 99.1 hereto and incorporated herein by reference.

The unaudited interim financial statements of TCF as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 are filed as Exhibit 99.2 hereto and incorporated herein by reference.

(b)	Pro Forma Financial Information.

The unaudited pro forma condensed combined balance sheet of Huntington as of March 31, 2021, giving effect to the Merger as if it had occurred on March 31, 2021, and the unaudited pro forma condensed combined statements of income of Huntington for the three months ended March 31, 2021 and for the fiscal year ended December 31, 2020, in each case giving effect to the Merger as if it had occurred on January 1, 2020, are filed as Exhibit 99.3 hereto and incorporated herein by reference.

(d)

Exhibits.


Exhibit No.		Description

23.1		Consent of KPMG LLP, independent registered public accounting firm (with respect to TCF Financial Corporation).

99.1		Audited consolidated financial statements of TCF Financial Corporation as of December 31, 2020 and 2019, and for each of the fiscal years ended December 31, 2020, 2019 and 2018 (incorporated by reference to Exhibit 99.1 to Huntington Bancshares Incorporated’s Current Report on Form 8-K filed on April 30, 2021).

99.2		Unaudited interim financial statements of TCF Financial Corporation as of March 31, 2021 and for the three months ended March 31, 2021 and 2020.

99.3		Unaudited pro forma condensed combined balance sheet of Huntington Bancshares Incorporated as of March 31, 2021 and unaudited pro forma condensed combined statements of income of Huntington Bancshares Incorporated for the three months ended March 31, 2021 and for the fiscal year ended December 31, 2020.

104		Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Signature(s)

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 hereunto duly authorized.

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the registration statements on Form S-3 (No. 333-232886), Form S-4 (No. 333-252517) and Form S-8 (Nos. 33-10546, 33-41774, 33-44208, 333-136692, 333-140897, 333-144403, 333-153573, 333-158335, 333-161779, 333-161780, 333-168824, 333-173831, 333-183325, 333-187725, 333-192600, 333-202349, 333-206720, 333-209962, 333-224665, 333-224666 and 333-255677) of Huntington Bancshares Incorporated of our reports dated February 26, 2021, with respect to the consolidated financial statements and the effectiveness of internal control over financial reporting, of TCF Financial Corporation, which reports appear in the Form 8-K of Huntington Bancshares Incorporated dated April 30, 2021 which is incorporated by reference in Amendment No. 2 on Form 8-K/A dated July 29, 2021.

/s/ KPMG LLP

Detroit, Michigan

July 29, 2021

Exhibit 99.2

Item 1. Financial Statements.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Condition (Unaudited)


(Dollars in thousands, except per share data)	At March 31, 2021			At December 31, 2020
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	585,663		$	531,918
Interest-bearing deposits with other banks		463,641			728,677

Total cash and cash equivalents		1,049,304			1,260,595
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost		358,414			320,436
Investment securities:
Available-for-sale, at fair value (amortized cost of $8,396,973 and $8,041,173)		8,403,788			8,284,723
Held-to-maturity, at amortized cost (fair value of $212,411 and $193,554)		209,778			184,359

Total investment securities		8,613,566			8,469,082
Loans and leases held-for-sale (includes $107,417 and $221,784 at fair value)		107,649			222,028
Loans and leases		36,221,019			34,466,408
Allowance for loan and lease losses		(504,645	)		(525,868	)

Loans and leases, net		35,716,374			33,940,540
Premises and equipment, net		455,032			470,131
Goodwill		1,379,890			1,313,046
Other intangible assets, net		149,438			146,377
Loan servicing rights		44,151			38,303
Other assets		1,585,733			1,621,949

Total assets	$	49,459,551		$	47,802,487

LIABILITIES AND EQUITY
Liabilities
Deposits:
Noninterest-bearing	$	12,394,753		$	11,036,086
Interest-bearing		27,392,061			27,820,233

Total deposits		39,786,814			38,856,319
Short-term borrowings		1,426,083			617,363
Long-term borrowings		1,518,816			1,374,732
Other liabilities		1,136,067			1,264,776

Total liabilities		43,867,780			42,113,190

Equity
Preferred stock, no 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 - 152,696,133 shares at March 31, 2021 and 152,565,504 shares at December 31, 2020		152,696			152,566
Additional paid-in capital		3,466,655			3,457,802
Retained earnings		1,802,340			1,735,201
Accumulated other comprehensive income		2,654			182,673
Other		(29,813	)		(26,731	)

Total TCF Financial Corporation shareholders’ equity		5,563,834			5,670,813
Non-controlling interest		27,937			18,484

Total equity		5,591,771			5,689,297

Total liabilities and equity	$	49,459,551		$	47,802,487

See accompanying notes to consolidated financial statements.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)


	Three Months Ended March 31,
(In thousands, except per share data)	2021		2020
Interest income
Interest and fees on loans and leases	$	360,584	$	443,096
Interest on investment securities:
Taxable		38,716		40,920
Tax-exempt		3,700		4,349
Interest on loans held-for-sale		975		1,561
Interest on other earning assets		1,657		5,466

Total interest income		405,632		495,392

Interest expense
Interest on deposits		13,786		67,419
Interest on borrowings		10,019		26,492

Total interest expense		23,805		93,911

Net interest income		381,827		401,481
Provision for credit losses		20,556		96,943

Net interest income after provision for credit losses		361,271		304,538

Noninterest income
Leasing revenue		36,453		33,565
Fees and service charges on deposit accounts		25,895		34,597
Card and ATM revenue		24,661		21,685
Mortgage banking income		20,986		5,665
Wealth management revenue		6,944		6,151
Net gains on sales of loans and leases		6,058		7,573
Net gains on investment securities		8		—
Other		11,055		27,727

Total noninterest income		132,060		136,963

Noninterest expense
Compensation and employee benefits		173,602		171,528
Occupancy and equipment		52,166		57,288
Lease financing equipment depreciation		20,426		18,450
Net foreclosed real estate and repossessed assets		1,029		1,859
Merger-related expenses		16,216		36,728
Other		85,243		88,746

Total noninterest expense		348,682		374,599

Income before income tax expense		144,649		66,902
Income tax expense		19,540		13,086

Income after income tax expense		125,109		53,816
Income attributable to non-controlling interest		1,773		1,917

Net income attributable to TCF Financial Corporation		123,336		51,899
Preferred stock dividends		2,493		2,493

Net income available to common shareholders	$	120,843	$	49,406

Earnings per common share
Basic	$	0.79	$	0.33
Diluted		0.79		0.32
Weighted-average common shares outstanding
Basic		152,159,117		151,902,357
Diluted		152,540,687		152,114,017

See accompanying notes to consolidated financial statements.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended March 31,
(In thousands)	2021			2020
Net income attributable to TCF Financial Corporation	$	123,336		$	51,899
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips		(180,612	)		115,847
Net unrealized gains (losses) on net investment hedges		(1,559	)		10,481
Foreign currency translation adjustment		2,170			(14,426	)
Recognized postretirement prior service cost		(18	)		(9	)

Total other comprehensive income (loss), net of tax		(180,019	)		111,893

Comprehensive (loss) income	$	(56,683	)	$	163,792

See accompanying notes to consolidated financial statements.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Equity (Unaudited)

At or For the Three Months Ended March 31, 2021 and 2020


	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		Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Other			Total			Non- controlling Interest		Total Equity
Balance, December 31, 2020		7,000		152,565,504	$	169,302	$	152,566	$	3,457,802	$	1,735,201		$	182,673		$	(26,731	)	$	5,670,813		$	18,484	$	5,689,297
Net income		—		—		—		—		—		123,336			—			—			123,336			1,773		125,109
Other comprehensive income (loss), net of tax		—		—		—		—		—		—			(180,019	)		—			(180,019	)		—		(180,019	)
Net investment by (distribution to) non-controlling interest		—		—		—		—		—		—			—			—			—			7,680		7,680
Dividends on 5.70% Series C Preferred Stock		—		—		—		—		—		(2,493	)		—			—			(2,493	)		—		(2,493	)
Dividends on common stock of $0.35 per common share		—		—		—		—		—		(53,704	)		—			—			(53,704	)		—		(53,704	)
Stock compensation plans, net of tax		—		130,629		—		130		5,771		—			—			—			5,901			—		5,901
Change in shares held in trust for deferred compensation plans, at cost		—		—		—		—		3,082		—			—			(3,082	)		—			—		—

Balance, March 31, 2021		7,000		152,696,133	$	169,302	$	152,696	$	3,466,655	$	1,802,340		$	2,654		$	(29,813	)	$	5,563,834		$	27,937	$	5,591,771

See accompanying notes to consolidated financial statements.


	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			Preferred Stock		Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)		Other			Total			Non- controlling Interest		Total Equity
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		—		—			—		—			—			51,899			—		—			51,899			1,917		53,816
Other comprehensive income (loss), net of tax		—		—			—		—			—			—			111,893		—			111,893			—		111,893
Net investment by (distribution to) non-controlling interest		—		—			—		—			—			—			—		—			—			7,932		7,932
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		—		—			—		—			—			(2,493	)		—		—			(2,493	)		—		(2,493	)
Dividends on common stock of $0.35 per common share		—		—			—		—			—			(53,578	)		—		—			(53,578	)		—		(53,578	)
Stock compensation plans, net of tax		—		93,789			—		93			3,276			—			—		—			3,369			—		3,369
Change in shares held in trust for deferred compensation plans, at cost		—		—			—		—			103			—			—		(103	)		—			—		—

Balance, March 31, 2020		7,000		152,185,984		$	169,302	$	152,186		$	3,433,234		$	1,732,932		$	166,170	$	(28,140	)	$	5,625,684		$	30,149	$	5,655,833

(1)	See “Note 2. Summary of Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2020 for further information.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)


	Quarter Ended March 31,
(In thousands)	2021			2020
Cash flows from operating activities
Income after income tax expense	$	125,109		$	53,816
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses		20,556			96,943
Share-based compensation expense		7,277			5,647
Depreciation and amortization		106,381			99,541
Provision (benefit) for deferred income taxes		46,452			(3,016	)
Net gains on sales of assets		(24,365	)		(28,573	)
Proceeds from sales of loans and leases held-for-sale		525,556			268,133
Originations of loans and leases held-for-sale, net of repayments		(399,628	)		(362,680	)
Loan servicing rights (recovery) impairment		(7,637	)		8,236
Net change in other assets		(138,828	)		(218,094	)
Net change in other liabilities		(143,062	)		(405,718	)
Other, net		(1,073	)		(14,106	)

Net cash provided by (used in) operating activities		116,738			(499,871	)

Cash flows from investing activities
Proceeds from maturities of and principal collected on investment securities available-for-sale		704,304			311,531
Purchases of investment securities available-for-sale		(858,934	)		(412,011	)
Proceeds from maturities of and principal collected on investment securities held-to-maturity		9,865			4,152
Purchases of investment securities held-to-maturity		(20,051	)		—
Redemption of Federal Home Loan Bank stock		136,002			144,000
Purchases of Federal Home Loan Bank stock		(174,000	)		(186,000	)
Proceeds from sales of loans and leases		67,791			287,050
Loan and lease originations and purchases, net of principal collected		(961,317	)		(1,717,733	)
Proceeds from sales of other assets		28,114			16,494
Purchases of premises and equipment and lease equipment		(25,304	)		(23,846	)
Net cash paid in business combination		(1,069,830	)		—
Other, net		(1,732	)		15,177

Net cash used in investing activities		(2,165,092	)		(1,561,186	)

Cash flows from financing activities
Net change in deposits		930,495			1,143,905
Net change in short-term borrowings		808,720			813,425
Proceeds from long-term borrowings		2,857,651			4,150,000
Payments on long-term borrowings		(2,710,221	)		(3,912,310	)
Repurchases of common stock		—			(33,098	)
Dividends paid on preferred stock		(2,493	)		(2,493	)
Dividends paid on common stock		(53,704	)		(53,578	)
Exercise of stock options		(327	)		63
Payments related to tax-withholding upon conversion of share-based awards		(738	)		(2,289	)
Net investment by (distribution to) non-controlling interest		7,680			7,932

Net cash provided by financing activities		1,837,063			2,111,557

Net change in cash and due from banks		(211,291	)		50,500
Cash and cash equivalents at beginning of period		1,260,595			1,228,371

Cash and cash equivalents at end of period	$	1,049,304		$	1,278,871

Supplemental disclosures of cash flow information
Cash paid for:
Interest on deposits and borrowings	$	34,454		$	76,688
Income taxes, net		4,971			1,838
Noncash activities:
Transfer of loans and leases to other assets		8,143			15,983
Transfer of loans and leases from held-for-investment to held for sale, net		48,210			251,855

See accompanying notes to consolidated financial statements.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Basis of Presentation

TCF Financial Corporation, a Michigan 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 National Bank (“TCF Bank”), TCF’s wholly owned bank subsidiary, a national banking association, has its main office in Sioux Falls, South Dakota. References herein to “TCF Financial” refer to TCF Financial Corporation on an unconsolidated basis.

TCF Bank operates banking centers primarily located in Michigan, Illinois and Minnesota with additional locations in Colorado, Ohio, Wisconsin and South Dakota (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, 2020.

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.

Note 2. Business Combinations

Proposed Merger with Huntington Bancshares Incorporated

On December 13, 2020, TCF and Huntington Bancshares Incorporated (“Huntington”) jointly announced the signing of a definitive merger agreement (the “TCF/Huntington Merger Agreement”). Under the terms of the agreement, the combined company will have dual headquarters for banking operations in Detroit, Michigan and Columbus, Ohio. Huntington is headquartered in Columbus, Ohio with reported assets of $125.8 billion as of March 31, 2021. Under the terms of the TCF/Huntington Merger Agreement, TCF shareholders will receive 3.0028 shares of Huntington common stock for each share of TCF common stock. Holders of TCF common stock will receive cash in lieu of fractional shares. Each outstanding share of 5.70% Series C Non-Cumulative Perpetual Preferred Stock of TCF will be converted into the right to receive one share of a newly created series of preferred stock of Huntington and Huntington will assume the obligations of TCF under the applicable deposit agreement related to the depositary shares. On March 25, 2021, shareholders of both TCF and Huntington have approved the merger. Subject to receipt of regulatory approvals and satisfaction of other customary closing conditions, the transaction is anticipated to close in the second quarter of 2021.

Note 3. Summary of Significant Accounting Policies

Accounting policies in effect at December 31, 2020, as previously disclosed in “Note 2. Summary of Significant Accounting Policies” in the Corporation’s Annual Report on Form 10-K at and for the year ended December 31, 2020, remain significantly unchanged and have been followed similarly as in previous periods.

Recently Adopted Accounting Pronouncements

Effective January 1, 2021, the Corporation adopted Accounting Standards Update (“ASU”) No. 2020-10, Codification Improvements, which is intended to clarify or correct the unintended application of the Codification of accounting guidance for a wide variety of topics. The adoption of this guidance did not have a material impact on the consolidated financial statements.

Effective January 1, 2021, the Corporation adopted ASU No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs, which clarifies the intent of certain updates that were included in ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The adoption of this guidance did not have a material impact on the consolidated financial statements.

Effective January 1, 2021, the Corporation adopted 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 guidance did not have a material impact on the consolidated financial statements.

Effective January 1, 2021, the Corporation adopted 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 guidance did not have a material impact on the consolidated financial statements.

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. 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. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, which clarifies that the scope of Topic 848 includes derivative instruments that do not reference a rate that is expected to be discontinued but that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. 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.

Note 4. Cash 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 $1.0 billion and $1.3 billion at March 31, 2021 and December 31, 2020, respectively.

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 $95.5 million and $95.1 million at March 31, 2021 and December 31, 2020, respectively.

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 March 31, 2021		At December 31, 2020
FHLB stock, at cost	$	234,455	$	196,457
FRB stock, at cost		123,959		123,979

Total investments	$	358,414	$	320,436

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 March 31, 2021 and December 31, 2020.

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 March 31, 2021
Debt securities:
Obligations of states and political subdivisions	$	824,061	$	30,772	$	8,041	$	846,792
Government and government-sponsored enterprises		186,541		506		649		186,398
Mortgage-backed securities:
Residential agency		6,545,644		93,014		123,937		6,514,721
Residential non-agency		119,284		1,882		3		121,163
Commercial agency		681,641		23,146		10,557		694,230
Commercial non-agency		39,348		671		—		40,019

Total mortgage-backed debt securities		7,385,917		118,713		134,497		7,370,133
Corporate debt and trust preferred securities		454		11		—		465

Total investment securities available-for-sale	$	8,396,973	$	150,002	$	143,187	$	8,403,788

At December 31, 2020
Debt securities:
Obligations of states and political subdivisions	$	827,191	$	44,077	$	1,087	$	870,181
Government and government-sponsored enterprises		196,560		153		813		195,900
Mortgage-backed securities:
Residential agency		6,151,511		157,955		1,388		6,308,078
Residential non-agency		156,865		2,819		2		159,682
Commercial agency		669,235		39,715		999		707,951
Commercial non-agency		39,358		3,072		—		42,430

Total mortgage-backed debt securities		7,016,969		203,561		2,389		7,218,141
Corporate debt and trust preferred securities		453		48		—		501

Total investment securities available-for-sale	$	8,041,173	$	247,839	$	4,289	$	8,284,723


	Investment Securities Held-to-Maturity
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At March 31, 2021
Residential agency mortgage-backed securities	$	206,151	$	6,615	$	3,982	$	208,784
Corporate debt and trust preferred securities		3,627		—		—		3,627

Total investment securities held-to-maturity ⁽¹⁾	$	209,778	$	6,615	$	3,982	$	212,411

At December 31, 2020
Residential agency mortgage-backed securities	$	180,946	$	9,267	$	72	$	190,141
Corporate debt and trust preferred securities		3,413		—		—		3,413

Total investment securities held-to-maturity ⁽¹⁾	$	184,359	$	9,267	$	72	$	193,554

(1)	At both March 31, 2021 and December 31, 2020 there was no ACL for investment securities held-to-maturity.

Accrued interest receivable for investment securities was $23.1 million and $20.6 million at March 31, 2021 and December 31, 2020, 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 March 31, 2021
	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	$	130,928	$	8,041	$	—	$	—	$	130,928	$	8,041
Government and government sponsored enterprises		93,950		649		—		—		93,950		649
Mortgage-backed securities:
Residential agency		3,848,667		123,937		—		—		3,848,667		123,937
Residential non-agency		3,001		3		—		—		3,001		3
Commercial agency		175,579		10,557		—		—		175,579		10,557
Commercial non-agency		—		—		—		—		—		—

Total mortgage-backed debt securities		4,027,247		134,497		—		—		4,027,247		134,497

Total investment securities available-for-sale	$	4,252,125	$	143,187	$	—	$	—	$	4,252,125	$	143,187

Investment securities held-to-maturity
Residential agency mortgage-backed securities		108,682		3,982		—		—		108,682		3,982

Total investment securities held-to-maturity	$	108,682	$	3,982	$	—	$	—	$	108,682	$	3,982


	At December 31, 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	$	78,241	$	1,087	$	—	$	—	$	78,241	$	1,087
Government and government sponsored enterprises		139,940		813		—		—		139,940		813
Mortgage-backed securities:
Residential agency		426,171		1,388		—		—		426,171		1,388
Residential non-agency		1,529		2		—		—		1,529		2
Commercial agency		96,667		999		—		—		96,667		999
Commercial non-agency		—		—		—		—		—		—

Total mortgage-backed debt securities		524,367		2,389		—		—		524,367		2,389

Total investment securities available-for-sale	$	742,548	$	4,289	$	—	$	—	$	742,548	$	4,289

At March 31, 2021 there was no ACL for investment securities available-for-sale. At March 31, 2021 there were 582 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 available-for-sale 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 March 31,
(In thousands)	2021		2020
Gross realized gains	$	—	$	—
Gross realized losses		—		—
Recoveries on previously impaired investment securities held-to-maturity		8		—

Net gains on investment securities	$	8	$	—

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 March 31, 2021				At December 31, 2020
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Investment Securities Available-for-Sale
Due in one year or less	$	45,902	$	46,020	$	45,912	$	46,163
Due in 1-5 years		160,915		163,885		163,346		168,125
Due in 5-10 years		770,039		788,800		681,135		720,239
Due after 10 years		7,420,117		7,405,083		7,150,780		7,350,196

Total investment securities available-for-sale	$	8,396,973	$	8,403,788	$	8,041,173	$	8,284,723

Investment Securities Held-to-Maturity
Due in one year or less	$	400	$	400	$	400	$	400
Due in 1-5 years		2,150		2,150		2,150		2,150
Due in 5-10 years		43		48		46		51
Due after 10 years		207,185		209,813		181,763		190,953

Total investment securities held-to-maturity	$	209,778	$	212,411	$	184,359	$	193,554

At March 31, 2021 and December 31, 2020, investment securities with a carrying value of $581.0 million and $1.0 billion, respectively, were pledged as collateral to secure certain deposits and borrowings.

Note 7. Loans and Leases

Loans and leases were as follows:


(In thousands)	At March 31, 2021		At December 31, 2020
Commercial loan and lease portfolio:
Commercial and industrial⁽¹⁾	$	12,856,701	$	11,422,383
Commercial real estate		9,881,341		9,702,587
Lease financing		2,956,626		2,817,231

Total commercial loan and lease portfolio		25,694,668		23,942,201

Consumer loan portfolio:
Residential mortgage		6,510,981		6,182,045
Home equity		2,864,142		3,108,736
Consumer installment		1,151,228		1,233,426

Total consumer loan portfolio		10,526,351		10,524,207

Total loans and leases⁽²⁾	$	36,221,019	$	34,466,408

(1)	Includes $1.9 billion and $1.6 billion of PPP loans at March 31, 2021 and December 31, 2020, respectively.

(2)

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 $(85.4) million and $(118.6) million at March 31, 2021 and December 31, 2020, respectively.

Accrued interest receivable for loans and leases was $94.2 million and $93.6 million at March 31, 2021 and December 31, 2020, 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. On January 29, 2021, TCF acquired BB&T Commercial Equipment Capital, Corp. (“CEC”) through a business combination, which included a portfolio of $1.0 billion of commercial loans and leases. During the three months ended March 31, 2021, the Corporation acquired total loans and leases with a fair value of $1.8 billion, which primarily included the CEC commercial loans and leases and jumbo residential mortgage loans.

Lease Income The components of total lease income were as follows:


	Three Months Ended March 31,
(In thousands)	2021		2020
Interest and fees on loans and leases (Interest income):
Interest income on net investment in direct financing and sales-type leases	$	34,189	$	34,156
Leasing revenue (Noninterest income):
Lease income from operating lease payments		25,550		23,902
Profit recorded on commencement date on sales-type leases		6,541		3,580
Gains on sales of leased equipment		4,362		6,083

Leasing revenue		36,453		33,565

Total lease income	$	70,642	$	67,721

Loan and Lease Sales The following table summarizes the net gains on sales of loans and leases related to all loan and lease sales. The Corporation retains servicing on a majority of loans sold. See “Note 10. Loan Servicing Rights” for further information.


	Three Months Ended March 31,
(In thousands)	2021			2020
Sale proceeds, net	$	593,347		$	555,182
Recorded investment in loans and leases sold, including accrued interest		563,489			537,180
Other		(8,135	)		2,588

Net gains on sales of loans and leases related to all loan and lease sales⁽¹⁾	$	21,723		$	20,590

(1)

Three months ended March 31, 2021 amount included within net gain on sales of loans and leases ($6.1 million) and mortgage banking income ($15.7 million). Three months ended March 31, 2020 amounts included within net gain on sales of loans and leases ($7.6 million) and mortgage banking income ($13.0 million).

The interest-only strips on the balance sheet related to loan sales were as follows:


(In thousands)	At March 31, 2021		At December 31, 2020
Interest-only strips	$	6,737	$	7,823

The Corporation recorded $262 thousand of impairment charges related to interest-only strips during the three months ended March 31, 2021 and $224 thousand of impairment charges for the three months ended March 31, 2020.

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 months ended March 31, 2021 and 2020.

Note 8. Allowance 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.

Allowance for Credit Losses The rollforwards of the allowance for credit losses (“ACL”) 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
Three months ended March 31, 2021
Balance, beginning of period	$	136,894		$	388,974		$	525,868		$	23,313		$	549,181
Charge-offs		(8,340	)		(47,278	)		(55,618	)		—			(55,618	)
Recoveries		7,879			4,477			12,356			—			12,356

Net (charge-offs) recoveries		(461	)		(42,801	)		(43,262	)		—			(43,262	)

Provision for credit losses		9,276			12,684			21,960			(1,404	)		20,556
Other⁽²⁾		(2,230	)		2,309			79			—			79

Balance, end of period	$	143,479		$	361,166		$	504,645		$	21,909		$	526,554

Three months ended March 31, 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		(5,848	)		(8,881	)		(14,729	)		—			(14,729	)
Recoveries		4,708			4,544			9,252			—			9,252

Net (charge-offs) recoveries		(1,140	)		(4,337	)		(5,477	)		—			(5,477	)

Provision for credit losses		40,288			52,702			92,990			3,953			96,943
Other⁽²⁾		—			(174	)		(174	)		—			(174	)

Balance, end of period	$	175,057		$	231,326		$	406,383		$	22,188		$	428,571

(1)	Reserve for unfunded lending commitments (“RULC”) is recognized within other liabilities.

(2)	Primarily includes the allowance for purchased financial assets with credit deterioration (“PCD”) and the transfer of the allowance to loans and leases held-for-sale.

Management considers our ACL of $526.6 million, or 1.45% 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 March 31, 2021, including loans and leases which are not currently known to require specific allowances. The ACL was $549.2 million, or 1.59% of total loans and leases, at December 31, 2020. The decrease in the ACL as a percentage of total loans and leases from December 31, 2020 was primarily due to continued improvement in both current and forecasted macro-economic conditions and benefit from nonaccrual loan sale recoveries. The provision for credit losses related to loans and leases for the three months ended March 31, 2021 was primarily due to loan and lease growth, which included the purchase of commercial loans and leases as a part of the CEC business combination. PPP loans totaling $1.9 billion at March 31, 2021, are individually guaranteed by the Small Business Administration and therefore the accounting under CECL does not require reserves to be recorded on such loans.

PCD Loan Activity

For PCD loans and leases, the initial estimate of expected credit losses is recognized in the allowance for loan and lease losses (“ALLL”) on the date of acquisition using the same methodology as other loans and leases held-for-investment. The following table provides a summary of loans and leases purchased as part of the CEC business combination with credit deterioration at acquisition:


(In thousands)
Three months ended March 31, 2021
Par value	$	70,263
ALLL at acquisition		(2,383	)
Non-credit premium (discount)		(1,020	)

Purchase price	$	66,860

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 Coronavirus Aid, Relief and Economic Security (“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		Total
At March 31, 2021
Commercial loan and lease portfolio:
Commercial and industrial	$	12,588,529	$	25,413	$	2,772	$	12,616,714	$	239,987	$	12,856,701
Commercial real estate		9,662,431		30,490		—		9,692,921		188,420		9,881,341
Lease financing		2,824,770		33,164		4,734		2,862,668		93,958		2,956,626

Total commercial loan and lease portfolio		25,075,730		89,067		7,506		25,172,303		522,365		25,694,668
Consumer loan portfolio:
Residential mortgage		6,421,403		11,171		1,874		6,434,448		76,533		6,510,981
Home equity		2,781,347		9,798		56		2,791,201		72,941		2,864,142
Consumer installment		1,142,579		2,587		—		1,145,166		6,062		1,151,228

Total consumer loan portfolio		10,345,329		23,556		1,930		10,370,815		155,536		10,526,351

Total	$	35,421,059	$	112,623	$	9,436	$	35,543,118	$	677,901	$	36,221,019

At December 31, 2020
Commercial loan and lease portfolio:
Commercial and industrial	$	11,119,453	$	42,033	$	1,458	$	11,162,944	$	259,439	$	11,422,383
Commercial real estate		9,453,743		94,383		22		9,548,148		154,439		9,702,587
Lease financing		2,695,356		27,118		3,935		2,726,409		90,822		2,817,231

Total commercial loan and lease portfolio		23,268,552		163,534		5,415		23,437,501		504,700		23,942,201

Consumer loan portfolio:
Residential mortgage		6,065,379		17,048		1,965		6,084,392		97,653		6,182,045
Home equity		3,008,450		30,840		63		3,039,353		69,383		3,108,736
Consumer installment		1,224,059		3,801		—		1,227,860		5,566		1,233,426

Total consumer loan portfolio		10,297,888		51,689		2,028		10,351,605		172,602		10,524,207

Total	$	33,566,440	$	215,223	$	7,443	$	33,789,106	$	677,302	$	34,466,408

Further details of the Corporation’s nonaccrual loans and leases were as follows:


	At March 31, 2021				At December 31, 2020
(In thousands)	Total nonaccrual		Nonaccrual with no ACL		Total nonaccrual		Nonaccrual with no ACL
Commercial loan and lease portfolio:
Commercial and industrial	$	239,987	$	45,371	$	259,439	$	55,773
Commercial real estate		188,420		150,882		154,439		79,203
Lease financing		93,958		—		90,822		—

Total commercial loan and lease portfolio		522,365		196,253		504,700		134,976
Consumer loan portfolio:
Residential mortgage		76,533		—		97,653		49
Home equity		72,941		358		69,383		23
Consumer installment		6,062		3,505		5,566		3,531

Total consumer loan portfolio		155,536		3,863		172,602		3,603

Total	$	677,901	$	200,116	$	677,302	$	138,579

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 March 31, 2021	2021		2020		2019		2018		2017		2016 and Prior		Revolving Loans and Leases				Total
Commercial loan and lease portfolio:
Commercial and industrial	$	—	$	420	$	163	$	—	$	4	$	262	$	1,923	$	—	$	2,772
Commercial real estate		—		—		—		—		—		—		—		—		—
Lease financing		—		1,693		1,085		1,022		674		260		—		—		4,734

Total commercial loan and lease portfolio		—		2,113		1,248		1,022		678		522		1,923		—		7,506

Consumer loan portfolio:
Residential mortgage		—		85		312		—		202		1,275		—		—		1,874
Home equity		—		—		—		—		56		—		—		—		56
Consumer installment		—		—		—		—		—		—		—		—		—

Total consumer loan portfolio		—		85		312		—		258		1,275		—		—		1,930

Total 90 days or more delinquent and accruing	$	—	$	2,198	$	1,560	$	1,022	$	936	$	1,797	$	1,923	$	—	$	9,436


			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 December 31, 2020	2020		2019		2018		2017		2016		2015 and Prior		Revolving Loans and Leases				Total
Commercial loan and lease portfolio:
Commercial and industrial	$	874	$	50	$	94	$	13	$	—	$	52	$	375	$	—	$	1,458
Commercial real estate		—		—		—		—		—		22		—		—		22
Lease financing		1,286		975		680		463		392		139		—		—		3,935

Total commercial loan and lease portfolio		2,160		1,025		774		476		392		213		375		—		5,415

Consumer loan portfolio:
Residential mortgage		85		134		—		—		—		1,746		—		—		1,965
Home equity		—		—		—		—		—		27		36		—		63
Consumer installment		—		—		—		—		—		—		—		—		—

Total consumer loan portfolio		85		134		—		—		—		1,773		36		—		2,028

Total 90 days or more delinquent and accruing	$	2,245	$	1,159	$	774	$	476	$	392	$	1,986	$	411	$	—	$	7,443

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 March 31, 2021	2021		2020		2019		2018		2017		2016 and Prior		Revolving Loans and Leases				Total
Commercial loan and lease portfolio:
Commercial and industrial	$	121	$	27,464	$	58,160	$	51,542	$	25,885	$	39,613	$	37,191	$	11	$	239,987
Commercial real estate		—		4,309		25,233		13,738		57,547		87,593		—		—		188,420
Lease financing		—		3,606		29,189		26,513		16,047		16,758		—		1,845		93,958

Total commercial loan and lease portfolio		121		35,379		112,582		91,793		99,479		143,964		37,191		1,856		522,365

Consumer loan portfolio:
Residential mortgage		—		3,253		7,744		11,920		2,996		50,620		—		—		76,533
Home equity		22		847		934		445		432		5,594		63,920		747		72,941
Consumer installment		—		87		238		340		514		4,690		193		—		6,062

Total consumer loan portfolio		22		4,187		8,916		12,705		3,942		60,904		64,113		747		155,536

Total nonaccrual loans and leases	$	143	$	39,566	$	121,498	$	104,498	$	103,421	$	204,868	$	101,304	$	2,603	$	677,901


			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 December 31, 2020	2020		2019		2018		2017		2016		2015 and Prior		Revolving Loans and Leases				Total
Commercial loan and lease portfolio:
Commercial and industrial	$	26,109	$	61,595	$	60,686	$	29,360	$	17,669	$	23,644	$	40,364	$	12	$	259,439
Commercial real estate		5,194		4,835		14,452		53,934		21,667		54,357		—		—		154,439
Lease financing		3,190		27,412		26,348		15,184		8,601		8,145		—		1,942		90,822

Total commercial loan and lease portfolio		34,493		93,842		101,486		98,478		47,937		86,146		40,364		1,954		504,700

Consumer loan portfolio:
Residential mortgage		2,631		9,177		16,391		4,172		2,812		62,470		—		—		97,653
Home equity		889		1,449		530		379		223		5,149		59,826		938		69,383
Consumer installment		33		267		181		281		575		4,060		169		—		5,566

Total consumer loan portfolio		3,553		10,893		17,102		4,832		3,610		71,679		59,995		938		172,602

Total nonaccrual loans and leases	$	38,046	$	104,735	$	118,588	$	103,310	$	51,547	$	157,825	$	100,359	$	2,892	$	677,302

The average balance of nonaccrual loans and leases and interest income recognized on nonaccrual loans and leases were as follows:


	Three Months Ended March 31,
	2021				2020
(In thousands)	Average Loan and Lease Balance		Interest Income Recognized		Average Loan and Lease Balance		Interest Income Recognized
Commercial loan and lease portfolio:
Commercial and industrial	$	249,713	$	2,116	$	68,985	$	1,709
Commercial real estate		171,429		3,040		38,383		1,784
Lease financing		92,390		19		12,063		51

Total commercial loan and lease portfolio		513,532		5,175		119,431		3,544

Consumer loan portfolio:
Residential mortgage		87,093		1,304		50,278		638
Home equity		71,162		1,387		39,505		156
Consumer installment		5,814		66		852		25

Total consumer loan portfolio		164,069		2,757		90,635		819

Total nonaccrual loans and leases	$	677,601	$	7,932	$	210,066	$	4,363

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 group 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.

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 March 31, 2021	2021		2020		2019		2018		2017		2016 and Prior		Revolving Loans and Leases⁽¹⁾				Total
Commercial loan and lease portfolio:
Commercial and industrial
Pass	$	1,289,456	$	3,069,589	$	1,924,724	$	1,033,717	$	527,205	$	618,661	$	3,541,892	$	51,531	$	12,056,775
Special mention		6,898		16,592		87,857		75,921		42,692		10,888		147,237		754		388,839
Substandard		2,501		36,312		98,860		61,460		33,431		76,814		101,429		280		411,087

Total commercial and industrial		1,298,855		3,122,493		2,111,441		1,171,098		603,328		706,363		3,790,558		52,565		12,856,701
Commercial real estate
Pass		304,562		1,373,808		2,274,851		1,767,581		1,169,172		2,021,114		—		—		8,911,088
Special mention		81		17,878		88,125		83,486		214,000		175,698		—		—		579,268
Substandard		1,739		60,777		43,251		86,540		82,812		115,866		—		—		390,985

Total commercial real estate		306,382		1,452,463		2,406,227		1,937,607		1,465,984		2,312,678		—		—		9,881,341
Lease financing
Pass		247,246		970,143		686,909		389,597		205,845		115,862		32,369		148,755		2,796,726
Special mention		848		14,307		8,802		5,459		4,670		2,461		—		4,586		41,133
Substandard		1,023		10,122		35,382		30,848		18,302		18,751		—		4,339		118,767

Total lease financing		249,117		994,572		731,093		425,904		228,817		137,074		32,369		157,680		2,956,626

Total commercial		1,854,354		5,569,528		5,248,761		3,534,609		2,298,129		3,156,115		3,822,927		210,245		25,694,668
Consumer loan portfolio:
Residential mortgage
Pass		710,828		2,207,173		860,827		510,015		361,669		1,780,396		—		—		6,430,908
Substandard		—		3,338		8,056		11,920		3,198		53,561		—		—		80,073

Total residential mortgage		710,828		2,210,511		868,883		521,935		364,867		1,833,957		—		—		6,510,981
Home equity
Pass		1,362		20,638		44,156		42,176		34,373		135,924		2,503,856		7,331		2,789,816
Substandard		22		847		934		445		488		6,923		63,920		747		74,326

Total home equity		1,384		21,485		45,090		42,621		34,861		142,847		2,567,776		8,078		2,864,142

Consumer installment
Pass		65,000		183,103		335,641		171,972		155,700		212,480		20,871		62		1,144,829
Substandard		—		134		403		340		514		4,815		193		—		6,399

Total consumer installment		65,000		183,237		336,044		172,312		156,214		217,295		21,064		62		1,151,228

Total consumer		777,212		2,415,233		1,250,017		736,868		555,942		2,194,099		2,588,840		8,140		10,526,351

Total loans and leases	$	2,631,566	$	7,984,761	$	6,498,778	$	4,271,477	$	2,854,071	$	5,350,214	$	6,411,767	$	218,385	$	36,221,019

(1)

This balance includes $32.4 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 $210.2 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 was provided over time, and all equipment required by the lease has been provided to the respective lessees in current or previous accounting periods.


	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⁾
December 31, 2020	2020		2019		2018		2017		2016		2015 and Prior		Revolving Loans and Leases⁽¹⁾				Total
Commercial loan and lease portfolio:
Commercial and industrial
Pass	$	3,282,275	$	1,877,468	$	994,081	$	547,940	$	357,567	$	316,557	$	3,286,687	$	48,079	$	10,710,654
Special mention		13,377		66,485		46,174		34,959		4,661		6,733		94,338		858		267,585
Substandard		28,908		69,510		94,227		48,246		52,944		29,295		120,738		276		444,144

Total commercial and industrial		3,324,560		2,013,463		1,134,482		631,145		415,172		352,585		3,501,763		49,213		11,422,383
Commercial real estate
Pass		1,361,117		2,193,489		1,877,374		1,211,426		683,612		1,480,027		—		—		8,807,045
Special mention		17,745		78,236		53,087		197,935		79,540		104,473		—		—		531,016
Substandard		6,995		53,079		31,930		124,728		57,221		90,573		—		—		364,526

Total commercial real estate		1,385,857		2,324,804		1,962,391		1,534,089		820,373		1,675,073		—		—		9,702,587
Lease financing
Pass		1,013,374		715,327		393,644		226,818		109,992		30,620		23,806		167,726		2,681,307
Special mention		4,050		9,871		3,897		4,870		1,484		1,001		—		8,911		34,084
Substandard		6,440		29,040		27,579		16,150		9,360		8,635		7		4,629		101,840

Total lease financing		1,023,864		754,238		425,120		247,838		120,836		40,256		23,813		181,266		2,817,231

Total commercial		5,734,281		5,092,505		3,521,993		2,413,072		1,356,381		2,067,914		3,525,576		230,479		23,942,201
Consumer loan portfolio:
Residential mortgage
Pass		2,011,791		1,047,735		604,127		435,617		439,816		1,539,779		—		—		6,078,865
Special mention		—		—		—		—		—		112		—		—		112
Substandard		3,292		9,311		17,268		4,601		3,814		64,782		—		—		103,068

Total residential mortgage		2,015,083		1,057,046		621,395		440,218		443,630		1,604,673		—		—		6,182,045
Home equity
Pass		23,066		51,448		48,092		39,834		29,071		126,147		2,703,354		7,753		3,028,765
Special mention		—		—		—		—		—		—		—		—		—
Substandard		940		1,469		579		515		424		8,354		66,590		1,100		79,971

Total home equity		24,006		52,917		48,671		40,349		29,495		134,501		2,769,944		8,853		3,108,736

Consumer installment
Pass		206,994		371,924		192,067		185,051		119,663		127,252		24,043		67		1,227,061
Special mention		—		—		—		—		—		—		—		—		—
Substandard		247		1,179		680		887		909		2,086		377		—		6,365

Total consumer installment		207,241		373,103		192,747		185,938		120,572		129,338		24,420		67		1,233,426

Total consumer		2,246,330		1,483,066		862,813		666,505		593,697		1,868,512		2,794,364		8,920		10,524,207

Total loans and leases	$	7,980,611	$	6,575,571	$	4,384,806	$	3,079,577	$	1,950,078	$	3,936,426	$	6,319,940	$	239,399	$	34,466,408

(1)

This balance includes $23.8 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 $230.5 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.

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. 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 March 31,
	2021				2020
(In thousands)	Pre-modification Investment		Post-modification Investment		Pre-modification Investment		Post-modification Investment
Commercial loan and lease portfolio:
Commercial and industrial	$	2,491	$	2,491	$	5,751	$	5,751
Commercial real estate		1,700		1,700		106		106

Total commercial loan and lease portfolio		4,191		4,191		5,857		5,857

Consumer loan portfolio:
Residential mortgage		1,126		1,126		3,222		3,157
Home equity		334		334		997		996
Consumer installment		44		44		376		353

Total consumer loan portfolio		1,504		1,504		4,595		4,506

Total	$	5,695	$	5,695	$	10,452	$	10,363

The following table presents TDR loans:


	At March 31, 2021						At December 31, 2020
(In thousands)	Accruing TDR Loans		Nonaccrual TDR Loans		Total TDR Loans		Accruing TDR Loans		Nonaccrual TDR Loans		Total TDR Loans
Commercial loan and lease portfolio	$	12,121	$	21,554	$	33,675	$	35,697	$	23,575	$	59,272
Consumer loan portfolio		17,154		19,700		36,854		16,658		22,804		39,462

Total	$	29,275	$	41,254	$	70,529	$	52,355	$	46,379	$	98,734

Commitments to lend additional funds to borrowers whose terms have been modified in TDRs were $1.3 million and $2.6 million at March 31, 2021 and December 31, 2020, 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 do not share similar risk characteristics with other loans and follow the Corporation’s loan reserve policies for individually evaluated loans.

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 March 31,
(In thousands)	2021		2020
Defaulted TDR loan balances modified during the applicable period
Commercial loan and lease portfolio:
Commercial and industrial	$	1,515	$	—
Commercial real estate		1,228		—

Total commercial loan and lease portfolio		2,743		—

Consumer loan portfolio:
Residential mortgage		197		630
Home equity		198		59
Consumer installment		34		—

Total consumer loan portfolio		429		689

Defaulted TDR loan balances	$	3,172	$	689

Other Real Estate Owned and Repossessed and Returned Assets Other real estate owned and repossessed and returned assets were as follows:


(In thousands)	At March 31, 2021		At December 31, 2020
Other real estate owned	$	32,115	$	33,192
Repossessed and returned assets		8,501		8,932
Consumer loans in process of foreclosure		24,173		14,790

Other real estate owned and repossessed and returned assets were written down $816 thousand and $842 thousand and during the three months ended March 31, 2021 and March 31, 2020, respectively. Other real estate owned and repossessed and returned assets are included in other assets on the Consolidated Statements of Financial Condition.

Note 9. Goodwill

Goodwill was as follows:


(In thousands)	At March 31, 2021		At December 31, 2020
Goodwill related to consumer banking segment	$	771,555	$	771,555
Goodwill related to commercial banking segment		608,335		541,491

Goodwill, net	$	1,379,890	$	1,313,046

During the three months ended March 31, 2021, the Corporation recorded additional goodwill in the amount of $66.8 million related to the CEC business combination. There was no impairment of goodwill for the three months ended March 31, 2021 and 2020.

Note 10. Loan Servicing Rights

Information regarding LSRs was as follows:


	Three Months Ended March 31,
(In thousands)	2021			2020
Balance, beginning of period	$	38,303		$	56,313
New servicing assets created		4,531			2,451
Impairment (charge) recovery		7,637			(8,236	)
Amortization		(6,320	)		(3,245	)

Balance, end of period	$	44,151		$	47,283

Valuation allowance, end of period	$	(13,850	)	$	(12,118	)

Loans serviced for others that have servicing rights capitalized, end of period	$	6,068,120		$	6,444,101

Total loan servicing, late fee and other ancillary fee income, included in mortgage banking income, related to loans serviced for others that have servicing rights capitalized was $4.0 million for the three months ended March 31, 2021 and $4.2 million for the three months ended March 31, 2020.

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

The Corporation invests in qualified affordable housing projects and 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 $5.9 million and $5.3 million for the three months ended March 31, 2021 and 2020, respectively. Amortization expense was more than offset by tax credits and other tax benefits of $7.9 million and $6.6 million for the three months ended March 31, 2021 and 2020, respectively. The Corporation’s remaining investment in qualified affordable housing projects totaled $222.1 million and $214.3 million at March 31, 2021 and December 31, 2020, 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 historic projects and Ohio historic preservation tax credits totaled $50.2 million and $48.6 million at March 31, 2021 and December 31, 2020, respectively. During the three months ended March 31, 2021, $0.6 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 $0.5 million. During the three months ended March 31, 2020, $0.3 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 $0.2 million. During the three months ended March 31, 2020, state tax credits, inclusive of impairment, totaled $0.4 million.

The Corporation’s unfunded equity contributions relating to investments in qualified affordable housing projects and historic projects are included in other liabilities. The Corporation’s remaining unfunded equity contributions totaled $109.4 million and $107.4 million at March 31, 2021 and December 31, 2020, 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.

Investments in qualified affordable housing projects and 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 March 31, 2021					At December 31, 2020
(Dollars in thousands)	Amount		Weighted-average Rate			Amount		Weighted-average Rate
FHLB advances	$	1,200,000		0.29	%	$	400,000		0.33	%
Collateralized Deposits		223,695		0.07			217,363		0.11
Line-of-Credit - TCF Commercial Finance Canada, Inc.		2,388		2.45			—		—

Total short-term borrowings	$	1,426,083		0.26	%	$	617,363		0.25	%

Long-term borrowings were as follows:


(In thousands)	At March 31, 2021		At December 31, 2020
FHLB advances	$	859,335	$	709,848
Subordinated debt obligations		583,312		586,145
Discounted lease rentals		73,222		75,770
Finance lease obligation		2,947		2,969

Total long-term borrowings	$	1,518,816	$	1,374,732

At March 31, 2021, TCF Bank had pledged $13.0 billion of loans secured by consumer and commercial real estate to provide borrowing capacity from the FHLB.

At March 31, 2021, TCF Bank had pledged $3.4 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 March 31, 2021.

The contractual maturities of long-term borrowings at March 31, 2021 were as follows:


(In thousands)
Remainder of 2021	$	4,339
2022		779,845
2023		25,099
2024		15,996
2025		373,772
Thereafter		319,765

Total long-term borrowings	$	1,518,816

Note 13. Accumulated 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 March 31,
	2021									2020
(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	$	(237,054	)	$	56,371		$	(180,683	)	$	150,744		$	(35,607	)	$	115,137
Reclassification of net (gains) losses from accumulated other comprehensive income (loss) to:
Total interest income		(44	)		10			(34	)		754			(177	)		577
Net gains (losses) on investment securities		—			—			—			—			—			—
Other noninterest expense		137			(32	)		105			173			(40	)		133

Amounts reclassified from accumulated other comprehensive income (loss)		93			(22	)		71			927			(217	)		710

Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips		(236,961	)		56,349			(180,612	)		151,671			(35,824	)		115,847

Recognized postretirement prior service cost:
Reclassification of amortization of prior service cost to other noninterest expense		(23	)		5			(18	)		(12	)		3			(9	)

Foreign currency translation adjustment⁽¹⁾		2,170			—			2,170			(14,426	)		—			(14,426	)

Net unrealized gains (losses) on net investment hedges		(2,046	)		487		$	(1,559	)		13,695			(3,214	)		10,481

Total other comprehensive income (loss)	$	(236,860	)	$	56,841		$	(180,019	)	$	150,928		$	(39,035	)	$	111,893

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

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 March 31, 2021
Balance, beginning of period	$	182,488		$	5,605		$	(5,803	)	$	383		$	182,673
Other comprehensive income (loss)		(180,683	)		(1,559	)		2,170			—			(180,072	)
Amounts reclassified from accumulated other comprehensive income (loss)		71			—			—			(18	)		53

Net other comprehensive income (loss)		(180,612	)		(1,559	)		2,170			(18	)		(180,019	)

Balance, end of period	$	1,876		$	4,046		$	(3,633	)	$	365		$	2,654

At or For the Three Months Ended March 31, 2020
Balance, beginning of period	$	56,098		$	9,800		$	(11,697	)	$	76		$	54,277
Other comprehensive income (loss)		115,137			10,481			(14,426	)		—			111,192
Amounts reclassified from accumulated other comprehensive income (loss)		710			—			—			(9	)		701

Net other comprehensive income (loss)		115,847			10,481			(14,426	)		(9	)		111,893

Balance, end of period	$	171,945		$	20,281		$	(26,123	)	$	67		$	166,170

Note 14. Regulatory 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 $207.8 million at March 31, 2021, 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.

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									Minimum
	At March 31,			At December 31,			At March 31,			At December 31,			Well-capitalized			Capital
(Dollars in thousands)	2021			2020			2021			2020			Standard			Requirement⁽¹⁾
Regulatory Capital:
Common equity Tier 1 capital	$	4,101,896		$	4,103,007		$	4,095,564		$	4,093,974
Tier 1 capital		4,299,135			4,290,793			4,123,501			4,112,458
Total capital		4,994,676			5,026,611			4,799,935			4,831,026
Regulatory Capital Ratios:
Common equity Tier 1 capital ratio		11.06	%		11.45	%		11.06	%		11.45	%		6.50	%		4.50	%
Tier 1 risk-based capital ratio		11.59			11.98			11.14			11.50			8.00			6.00
Total risk-based capital ratio		13.47			14.03			12.96			13.51			10.00			8.00
Tier 1 leverage ratio		9.09			9.34			8.73			8.97			5.00			4.00

(1)	Excludes capital conservation buffer of 2.5% at both March 31, 2021 and December 31, 2020.

Note 15. Derivative Instruments

Derivative instruments, recognized at fair value within other assets or other liabilities on the Consolidated Statements of Financial Condition, were as follows:


	At March 31, 2021
			Fair Value
(In thousands)	Notional Amount⁽¹⁾		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments
Interest rate contract	$	150,000	$	—		$	118
Forward foreign exchange contracts		210,856		373			1,400

Total derivatives designated as hedging instruments				373			1,518

Derivatives not designated as hedging instruments
Interest rate contracts	$	6,297,778	$	164,438		$	21,827
Risk participation agreements		549,262		27			63
Forward foreign exchange contracts		75,267		820			105
Interest rate lock commitments		465,180		7,073			166
Forward loan sales commitments		460,280		5,560			45
Power Equity CDs		10,450		300			300
Swap agreement		12,652		—			286

Total derivatives not designated as hedging instruments				178,218			22,792

Total derivatives before netting				178,591			24,310
Netting⁽²⁾				(781	)		(627	)
Total derivatives, net			$	177,810		$	23,683

(1)

Notional or contract amounts, which represent the extent of involvement in the derivatives market, are used to determine the contractual cash flows required in accordance with the terms of the agreement. These amounts are typically not exchanged, significantly exceed amounts subject to credit or market risk and are not reflected in the Consolidated Statements of Financial Condition.

(2)	Includes netting of derivative asset and liability balances and related cash collateral, where counterparty netting agreements are in place.


	At December 31, 2020
			Fair Value
(In thousands)	Notional Amount⁽¹⁾		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments
Interest rate contract	$	150,000	$	59		$	—
Forward foreign exchange contracts		207,515		—			1,521

Total derivatives designated as hedging instruments				59			1,521

Derivatives not designated as hedging instruments
Interest rate contracts		6,140,464		248,208			14,681
Risk participation agreements		470,670		62			125
Forward foreign exchange contracts		90,647		11			865
Interest rate lock commitments		447,278		14,565			4
Forward loan sales commitments		535,244		37			3,411
Power Equity CD		16,752		459			459
Swap agreement		12,652		—			66

Total derivatives not designated as hedging instruments				263,342			19,611

Total derivatives before netting				263,401			21,132
Netting⁽²⁾				(52	)		(1,876	)

Total derivatives, net			$	263,349		$	19,256

(1)

(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 March 31, 2021
(In thousands)	Gross Amounts Recognized		Gross Amounts Offset⁽¹⁾			Net Amount Presented
Derivative assets
Interest rate contracts	$	164,438	$	—		$	164,438
Risk participation agreements		27		—			27
Forward foreign exchange contracts		1,193		(570	)		623
Interest rate lock commitments		7,073		(166	)		6,907
Forward loan sales commitments		5,560		(45	)		5,515
Power Equity CDs		300					300

Total derivative assets	$	178,591	$	(781	)	$	177,810

Derivative liabilities
Interest rate contracts	$	21,945	$	—		$	21,945
Risk participation agreements		63		—			63
Forward foreign exchange contracts		1,505		(130	)		1,375
Interest rate lock commitments		166		(166	)		—
Forward loan sales commitments		45		(45	)		—
Power Equity CDs		300					300
Swap agreement		286		(286	)		—

Total derivative liabilities	$	24,310	$	(627	)	$	23,683

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


	At December 31, 2020
(In thousands)	Gross Amounts Recognized		Gross Amounts Offset⁽¹⁾			Net Amount Presented
Derivative assets
Interest rate contracts	$	248,267	$	—		$	248,267
Risk participation agreements		62		—			62
Forward foreign exchange contracts		11		(11	)		—
Interest rate lock commitments		14,565		(4	)		14,561
Forward loan sales commitments		37		(37	)		—
Power Equity CDs		459		—			459

Total derivative assets	$	263,401	$	(52	)	$	263,349

Derivative liabilities
Interest rate contracts	$	14,681	$	—		$	14,681
Risk participation agreements		125		—			125
Forward foreign exchange contracts		2,386		(1,769	)		617
Interest rate lock commitments		4		(4	)		—
Forward loan sales commitments		3,411		(37	)		3,374
Power Equity CD		459		—			459
Swap agreement		66		(66	)		—

Total derivative liabilities	$	21,132	$	(1,876	)	$	19,256

(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 March 31, 2021		At December 31, 2020		At March 31, 2021		At December 31, 2020
Subordinated bank note - 2025	$	156,829	$	159,888	$	7,857	$	10,975

The following table summarizes the effect of fair value hedge accounting on the Consolidated Statements of Income for the three months ended March 31, 2021 and 2020.


	Three Months Ended March 31,
(In thousands)	2021			2020
Statement of income line where the gain (loss) on the fair value hedge was recorded:
Interest expense on borrowings	$	10,019		$	26,492
Gain (loss) on interest rate contract (fair value hedge)
Hedged item		3,118			(8,830	)
Derivative designated as a hedging instrument		(3,176	)		8,936

Gain (loss) on interest rate contract recognized in interest expense on borrowings	$	(58	)	$	106

Forward foreign exchange contracts: The effect of net investment hedges on accumulated other comprehensive income was as follows:


	Three Months Ended March 31,
(In thousands)	2021			2020
Forward foreign exchange contracts	$	(2,046	)	$	13,695

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 March 31,
(In thousands)	Location of Gain (Loss)	2021			2020
Interest rate contracts	Other noninterest income	$	255		$	1,662
Risk participation agreements	Other noninterest expense		1,607			4,326
Forward foreign exchange contracts	Other noninterest expense		10			18,713
Interest rate lock commitments	Mortgage banking income		(7,189	)		10,378
Forward loan sales commitments	Mortgage banking income		8,889			(8,545	)
Swap agreement	Other noninterest income		(288	)		(1	)

Net gain (loss) recognized		$	3,284		$	26,533

At March 31, 2021 and December 31, 2020, credit risk-related contingent features existed on forward foreign exchange contracts with a notional value of $26.8 million and $35.0 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 $535 thousand and $699 thousand in additional collateral at March 31, 2021 and December 31, 2020, respectively. There were no forward foreign exchange contracts containing credit risk-related features in a liability position at both March 31, 2021 and December 31, 2020.

At March 31, 2021, the Corporation had posted $65.9 million and $340 thousand of cash collateral related to its interest rate contracts and forward foreign exchange contracts, respectively, and received $440 thousand of cash collateral related to its forward foreign exchange contracts.

Note 16. Fair 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.

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.

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 related to the sale of Legacy TCF’s Visa Class B stock is categorized as Level 3. 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:


	March 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Investment securities available-for-sale	$	—	$	8,403,321	$	467	$	8,403,788
Loans held-for-sale		—		107,417		—		107,417
Interest-only strips		—		—		6,737		6,737
Derivative assets:⁽¹⁾
Interest rate contracts		—		164,438		—		164,438
Risk participation agreements		—		27		—		27
Forward foreign exchange contracts		—		1,193		—		1,193
Interest rate lock commitments		—		7,073		—		7,073
Forward loan sales commitments		—		5,560		—		5,560
Power Equity CDs		—		300		—		300

Total derivative assets		—		178,591		—		178,591
Assets held in trust for deferred compensation plans		49,669		—		—		49,669

Total assets at fair value	$	49,669	$	8,689,329	$	7,204	$	8,746,202

Liabilities
Derivative liabilities:⁽¹⁾
Interest rate contracts	$	—	$	21,945	$	—	$	21,945
Risk participation agreements		—		63		—		63
Forward foreign exchange contracts		—		1,505		—		1,505
Interest rate lock commitments		—		166		—		166
Forward loan sales commitments		—		45		—		45
Power Equity CDs		—		300		—		300
Swap agreement		—		—		286		286

Total derivative liabilities		—		24,024		286		24,310
Liabilities held in trust for deferred compensation plans		49,669		—		—		49,669

Total liabilities at fair value	$	49,669	$	24,024	$	286	$	73,979

(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.


	December 31, 2020
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Investment securities available-for-sale	$	—	$	8,284,219	$	504	$	8,284,723
Loans held-for-sale		—		221,784		—		221,784
Interest-only strips		—		—		7,823		7,823
Derivative assets:⁽¹⁾
Interest rate contracts		—		248,267		—		248,267
Risk participation agreements		—		62		—		62
Forward foreign exchange contracts		—		11		—		11
Interest rate lock commitments		—		14,565		—		14,565
Forward loan sales commitments		—		37		—		37
Power Equity CDs		—		459		—		459

Total derivative assets		—		263,401		—		263,401
Assets held in trust for deferred compensation plans		48,659		—		—		48,659

Total assets at fair value	$	48,659	$	8,769,404	$	8,327	$	8,826,390

Liabilities
Derivative liabilities:⁽¹⁾
Interest rate contracts	$	—	$	14,681	$	—	$	14,681
Risk participation agreements		—		125		—		125
Forward foreign exchange contracts		—		2,386		—		2,386
Interest rate lock commitments		—		4		—		4
Forward loan sales commitments		—		3,411		—		3,411
Power Equity CDs		—		459		—		459
Swap agreement		—		—		66		66

Total derivative liabilities		—		21,066		66		21,132
Liabilities held in trust for deferred compensation plans		48,659		—		—		48,659

Total liabilities at fair value	$	48,659	$	21,066	$	66	$	69,791

(1)

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.

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			Interest-only strips			Swap agreement
At or For the Three Months Ended March 31, 2021
Asset (liability) balance, beginning of period	$	504		$	7,823		$	(66	)
Total net gains (losses) included in:
Net income		—			144			—
Other comprehensive income (loss)		(37	)		(181	)		—
Originations		—			—			(288	)
Principal paydowns / settlements		—			(1,049	)		68

Asset (liability) balance, end of period	$	467		$	6,737		$	(286	)

Unrealized gains (losses) included in other comprehensive income for assets held at the end of the period	$	(37	)	$	(181	)	$	—

At or For the Three Months Ended March 31, 2020
Asset (liability) balance, beginning of period	$	433		$	12,813		$	(356	)
Total net gains (losses) included in:
Net income		1			159			(1	)
Other comprehensive income (loss)		(31	)		(348	)		—
Principal paydowns / settlements		—			(1,673	)		71

Asset (liability) balance, end of period	$	403		$	10,951		$	(286	)

Unrealized gains (losses) included in other comprehensive income for assets held at the end of the period	$	(31	)	$	(348	)	$	—

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 of 10%.

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 8% to 43%. 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 March 31, 2021 and December 31, 2020.


(In thousands)	Level 1		Level 2		Level 3		Total
At March 31, 2021
Loans and leases	$	—	$	—	$	602,723	$	602,723
Loan servicing rights		—		—		44,151		44,151
Other real estate owned		—		—		14,072		14,072
Repossessed and returned assets		—		6,348		—		6,348

Total non-recurring fair value measurements	$	—	$	6,348	$	660,946	$	667,294

At December 31, 2020
Loans and leases	$	—	$	—	$	592,133	$	592,133
Loan servicing rights		—		—		38,303		38,303
Other real estate owned		—		—		14,575		14,575
Repossessed and returned assets		—		7,332		—		7,332

Total non-recurring fair value measurements	$	—	$	7,332	$	645,011	$	652,343

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)	March 31, 2021		December 31, 2020
Fair value carrying amount	$	107,417	$	221,784
Aggregate unpaid principal amount		105,019		210,311

Fair value carrying amount less aggregate unpaid principal	$	2,398	$	11,473

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 March 31, 2021 and December 31, 2020. 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 $9.5 million for the three months ended March 31, 2021 and $15.2 million for the same period in 2020, and are included in mortgage banking income. These amounts exclude the impacts from the interest rate lock commitments and forward loan sales commitments which are also included in mortgage banking income.

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 March 31, 2021 and December 31, 2020 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 March 31, 2021
	Carrying		Estimated Fair Value
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
Financial instrument assets
FHLB and FRB stocks	$	358,414	$	—	$	358,414	$	—	$	358,414
Investment securities held-to-maturity		209,778		—		208,784		3,627		212,411
Loans and leases held-for-sale		232		—		—		233		233
Net loans⁽¹⁾		32,806,406		—		—		32,983,379		32,983,379
Securitization receivable⁽²⁾		19,992		—		—		19,992		19,992
Deferred fees on commitments to extend credit⁽²⁾		18,477		—		18,477		—		18,477

Total financial instrument assets	$	33,413,299	$	—	$	585,675	$	33,007,231	$	33,592,906

Financial instrument liabilities
Certificates of deposits	$	4,665,211	$	—	$	4,670,257	$	—	$	4,670,257
Long-term borrowings		1,518,816		—		1,562,225		—		1,562,225

Total financial instrument liabilities	$	6,184,027	$	—	$	6,232,482	$	—	$	6,232,482

(1)	Expected credit losses are included in the carrying amount and estimated fair value.

(2)	Carrying amounts are included in other assets.


	At December 31, 2020
	Carrying		Estimated Fair Value
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
Financial instrument assets
FHLB and FRB stocks	$	320,436	$	—	$	320,436	$	—	$	320,436
Investment securities held-to-maturity		184,359		—		190,141		3,413		193,554
Loans held-for-sale		244		—		—		248		248
Net loans⁽¹⁾		31,164,287		—		—		31,434,749		31,434,749
Securitization receivable⁽²⁾		19,949		—		—		19,916		19,916
Deferred fees on commitments to extend credit⁽²⁾		20,002		—		20,002		—		20,002

Total financial instrument assets	$	31,709,277	$	—	$	530,579	$	31,458,326	$	31,988,905

Financial instrument liabilities
Certificates of deposits	$	5,524,381	$	—	$	5,534,751	$	—	$	5,534,751
Long-term borrowings		1,374,732		—		1,416,355		—		1,416,355

Total financial instrument liabilities	$	6,899,113	$	—	$	6,951,106	$	—	$	6,951,106

(1)	Expected credit losses are included in the carrying amount and estimated fair value.

(2)	Carrying amounts are included in other assets.

Note 17. Revenue from Contracts with Customers

The Corporation earns revenue from various sources, including interest and fees from customers and 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 and 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 the performance obligation is satisfied with related revenue 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.

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 March 31, 2021
	Within the scope of ASC 606						Out of scope of ASC 606		Total
(In thousands)	Consumer Banking		Commercial Banking		Enterprise Services		Out of scope of ASC 606		Total
Noninterest income
Fees and service charges on deposit accounts	$	22,560	$	3,007	$	—	$	328	$	25,895
Wealth management revenue		1,919		—		—		5,025		6,944
Card and ATM revenue		21,214		29		—		3,418		24,661
Other noninterest income		1,755		1,785		30		70,990		74,560

Total	$	47,448	$	4,821	$	30	$	79,761	$	132,060


	Three Months Ended March 31, 2020
	Within the scope of ASC 606						Out of scope of ASC 606		Total
(In thousands)	Consumer Banking		Commercial Banking		Enterprise Services		Out of scope of ASC 606		Total
Noninterest income
Fees and service charges on deposit accounts	$	31,828	$	2,555	$	—	$	214	$	34,597
Wealth management revenue		1,110		—		—		5,041		6,151
Card and ATM revenue		19,182		2		—		2,501		21,685
Other noninterest income		1,004		2,405		359		70,762		74,530

Total	$	53,124	$	4,962	$	359	$	78,518	$	136,963

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. Noninterest income is 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.

Note 18. Share-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 TCF/Chemical 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 March 31, 2021, there were 1,029,723 shares reserved for issuance under the Legacy TCF Omnibus Incentive Plan and there were 639,366 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 $6.2 million for the three months ended March 31, 2021 and $4.7 million for the same period in 2020. The excess tax realized from share-based compensation transactions during the three months ended March 31, 2021 was a benefit of $161 thousand and a benefit of $677 thousand for the same period in 2020.

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 March 31, 2021, there were 306,190 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 three months ended March 31, 2021 is presented below:


	Number of Units			Weighted-average Grant Date Fair Value Per Unit
Outstanding at December 31, 2020		2,015,514		$	31.25
Granted		686,885			47.41
Forfeited/canceled		(56,707	)		32.93
Vested		(121,476	)		45.07

Outstanding at March 31, 2021		2,524,216		$	34.94

Unrecognized compensation expense related to RSUs totaled $66.8 million at March 31, 2021 and is expected to be recognized over the remaining weighted-average period of 3.1 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, 2020		505,162		$	38.57
Granted		27,417			47.41
Forfeited/canceled		(3,983	)		40.48
Vested		(50,264	)		40.38

Outstanding at March 31, 2021		478,332		$	38.88

At March 31, 2021, there were no shares of performance-based restricted stock awards outstanding. Unrecognized stock compensation expense for restricted stock awards was $7.9 million at March 31, 2021 with a weighted-average remaining amortization period of 1.6 years.

The following table provides information regarding total expense for restricted stock awards:


	Three Months Ended March 31,
(In thousands)	2021		2020
Restricted stock expense related to employees⁽¹⁾	$	5,692	$	4,724
Restricted stock expense related to directors⁽²⁾		470		—

Total restricted stock expense	$	6,162	$	4,724

(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 three months ended March 31, 2021 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, 2020		55,722		$	41.23		401,636		$	31.69
Exercised		—			—		(156,347	)		27.74
Forfeited/canceled		(135	)		53.72		—			—
Vested		(43,272	)		38.00		43,272			38.00

Outstanding at March 31, 2021		12,315		$	52.46		288,561		$	35.05

Exercisable/vested at March 31, 2021							288,561		$	35.05

The weighted-average remaining contractual term was 4.3 years for all outstanding stock options and 4.2 years for exercisable stock options at March 31, 2021.

Note 19. Earnings Per Common Share

The computations of basic and diluted earnings per common share were as follows:


	Three Months Ended March 31,
(Dollars in thousands, except per share data)	2021		2020
Basic earnings per common share
Net income attributable to TCF Financial Corporation	$	123,336	$	51,899
Preferred stock dividends		2,493		2,493

Net income available to common shareholders		120,843		49,406
Less: Earnings allocated to participating securities		—		—

Earnings allocated to common stock	$	120,843	$	49,406

Weighted-average common shares outstanding used in basic earnings per common share calculation		152,159,117		151,902,357

Basic earnings per common share	$	0.79	$	0.33

Diluted earnings per common share
Earnings allocated to common stock	$	120,843	$	49,406

Weighted-average common shares outstanding used in basic earnings per common share calculation		152,159,117		151,902,357
Net dilutive effect of:
Non-participating restricted stock		279,308		83,580
Stock options		102,262		128,080

Weighted-average common shares outstanding used in diluted earnings per common share calculation		152,540,687		152,114,017

Diluted earnings per common share	$	0.79	$	0.32

Anti-dilutive shares outstanding not included in the computation of diluted earnings per common share
Non-participating restricted stock		324,514		1,173,331
Stock options		74,376		90,144

Note 20. Other Noninterest Income and Expense

Other noninterest income and expense was as follows:


	Three Months Ended March 31,
(In thousands)	2021		2020
Other Noninterest Income
Interest rate swap mark-to-market adjustment	$	1,863	$	5,988
Other		9,192		21,739

Total other noninterest income	$	11,055	$	27,727

Other Noninterest Expense
Outside processing	$	16,730	$	13,913
Loan and lease expense		7,185		7,783
Professional fees		9,073		6,569
Advertising and marketing		6,879		8,377
FDIC insurance		5,688		6,559
Card processing and issuance costs		4,274		8,690
Other		35,414		36,855

Total other noninterest expense	$	85,243	$	88,746

Note 21. 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 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.

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

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 March 31, 2021
Net interest income	$	199,374	$	174,018	$	8,435		$	381,827
Provision (benefit) for credit losses		4,101		16,455		—			20,556

Net interest income after provision for credit losses		195,273		157,563		8,435			361,271
Noninterest income		81,390		49,016		1,654			132,060
Noninterest expense		212,304		110,630		25,748			348,682

Income (loss) before income tax expense (benefit)		64,359		95,949		(15,659	)		144,649
Income tax expense (benefit)		13,401		19,568		(13,429	)		19,540

Income (loss) after income tax expense (benefit)		50,958		76,381		(2,230	)		125,109
Income attributable to non-controlling interest		—		1,773		—			1,773
Preferred stock dividends		—		—		2,493			2,493

Net income (loss) available to common shareholders		50,958		74,608		(4,723	)		120,843

Total assets	$	13,699,477	$	25,941,038	$	9,819,036		$	49,459,551

At or For the Three Months Ended March 31, 2020
Net interest income	$	193,832	$	185,986	$	21,663		$	401,481
Provision for credit losses		44,369		52,574		—			96,943

Net interest income after provision for credit losses		149,463		133,412		21,663			304,538
Noninterest income		81,414		55,773		(224	)		136,963
Noninterest expense		228,859		114,455		31,285			374,599

Income (loss) before income tax expense (benefit)		2,018		74,730		(9,846	)		66,902
Income tax expense (benefit)		1,982		16,306		(5,202	)		13,086

Income (loss) after income tax expense (benefit)		36		58,424		(4,644	)		53,816
Income attributable to non-controlling interest		—		1,917		—			1,917
Preferred stock dividends		—		—		2,493			2,493

Net income (loss) available to common shareholders		36		56,507		(7,137	)		49,406

Total assets	$	14,463,055	$	24,859,839	$	9,271,489		$	48,594,383

Note 22. 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 March 31, 2021		At December 31, 2020
Commitments to extend credit:
Commercial	$	4,441,962	$	4,396,191
Consumer		2,113,311		2,126,327

Total commitments to extend credit		6,555,273		6,522,518
Standby letters of credit and guarantees on industrial revenue bonds		120,779		114,636

Total	$	6,676,052	$	6,637,154

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 $6.8 million and $7.0 million at March 31, 2021 and December 31, 2020, 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 $6.8 million and $7.0 million at March 31, 2021 and December 31, 2020, respectively. In the event of nonperformance, the Corporation has rights to the underlying collateral securing the loans. At both March 31, 2021 and December 31, 2020 there was no recorded liability.

In addition, the Corporation acquired 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 $12.7 million and $13.2 million at March 31, 2021 and December 31, 2020, respectively. In the event of default, the Corporation has rights to the underlying collateral securing the loans. At both March 31, 2021 and December 31, 2020, the Corporation had recorded a liability of $829 thousand 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 March 31, 2021 and December 31, 2020 the liability recorded in connection with these representations and warranties was $3.0 million and $3.6 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 in the event of a regulatory violation. The COVID-19 pandemic has resulted in novel legal and regulatory risks, including risks in the area of workplace safety, risks related to emergency lending programs and the associated risk of fraud and regulatory activity. 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.

As previously disclosed, following the announcement of our proposed merger with Huntington, ten lawsuits challenging the merger were filed alleging, among other things, that the defendants, including TCF, caused a materially incomplete and misleading joint proxy statement/prospectus relating to the proposed merger to be filed with the SEC in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder and/or in breach of their fiduciary obligations under state law. We refer to the ten lawsuits collectively as the “Merger Litigation.”

TCF and Huntington believe that the claims asserted in the Merger Litigation, including those related to breaches of law or fiduciary duties to shareholders, are without merit and supplemental disclosures are not required or necessary under applicable laws. However, in order to avoid the risk that the Merger Litigation would delay or otherwise adversely affect the merger, and to minimize the costs, risks and uncertainties inherent in defending the lawsuits, and without admitting any liability or wrongdoing, TCF and Huntington agreed to supplement the joint proxy statement/prospectus as described in our Current Report on Form 8-K filed with the SEC on March 12, 2021, and plaintiffs in the Merger Litigation agreed to dismiss their complaints as moot. In the Garfield and Bushansky actions, which were filed as a putative class action, such dismissal was agreed to be with prejudice as to the named plaintiff only and without prejudice to all other members of the putative class. The Stein and Garfield cases were voluntarily dismissed on March 15, 2021, the Curtis case was voluntarily dismissed on March 12, 2021, and the Gallo case was voluntarily dismissed on March 16, 2021.

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information combines the historical consolidated financial position and results of operations of Huntington Bancshares Incorporated (“Huntington”) and TCF Financial Corporation (“TCF”) as an acquisition by Huntington of TCF. The merger of TCF with and into Huntington (the “merger”) was announced on December 13, 2020, and provides that each share of common stock, par value $1.00 per share, of TCF (“TCF common stock”) issued and outstanding immediately prior to the effective time of the merger (the “effective time”) (other than certain shares held by Huntington or TCF) will be automatically converted into the right to receive 3.0028 shares (the “exchange ratio” and such shares, the “merger consideration”) of common stock, par value $0.01 per share, of Huntington (“Huntington common stock”). In addition, at the effective time, each share of 5.70% Series C Non-Cumulative Perpetual Preferred Stock, no par value, of TCF (“TCF series C preferred stock”) issued and outstanding immediately prior to the effective time will be automatically converted into the right to receive one share of a newly created series of preferred stock of Huntington (the “new Huntington preferred stock”).

The unaudited pro forma condensed combined financial information have been prepared to give effect to the following:

•

The acquisition of TCF by Huntington under the provision of the Financial Accounting Standards Board (FASB) Accounting Standards Codification, ASC 805, “Business Combinations” where the assets and liabilities of TCF will be recorded by Huntington at their respective fair values as of the date the merger is completed;

•

The distribution of shares of Huntington common stock to TCF’s shareholders in exchange for shares of TCF common stock (based upon a 3.0028 exchange ratio);

•

The divestiture of certain TCF deposits and loans in satisfaction of commitments to the Antitrust Division of the Department of Justice (the “DOJ”) and the Federal Reserve Board;

•

Certain reclassifications to conform historical financial statement presentation of TCF to Huntington; and

•

Transaction costs in connection with the merger.

The following unaudited pro forma condensed combined financial information and related notes are based on and should be read in conjunction with (i) the historical audited consolidated financial statements of Huntington and the related notes included in Huntington’s Annual Report on Form 10-K for the year ended December 31, 2020, and the historical unaudited condensed consolidated financial statements of Huntington and the related notes included in Huntington’s Quarterly Report on Form 10-Q for the period ended March 31, 2021, and (ii) the historical audited consolidated financial statements of TCF and the related notes included in TCF’s Annual Report on Form 10-K for the year ended December 31, 2020, and the historical unaudited consolidated financial statements of TCF and the related notes included in TCF’s Quarterly Report on Form 10-Q for the period ended March 31, 2021.

The unaudited pro forma condensed combined income statements for the three-month period ended March 31, 2021 and for the year ended December 31, 2020 combine the historical consolidated income statements of Huntington and TCF, giving effect to the merger as if it had been completed on January 1, 2020. The accompanying unaudited pro forma condensed combined balance sheet as of March 31, 2021 combines the historical consolidated balance sheets of Huntington and TCF, giving effect to the merger as if it had been completed on March 31, 2021.

The unaudited pro forma condensed combined financial information is provided for illustrative information purposes only. The unaudited pro forma condensed combined financial information is not necessarily, and should not be assumed to be, an indication of the actual results that would have been achieved had the merger been completed as of the dates indicated or that may be achieved in the future. The pro forma financial information has been prepared by Huntington in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the SEC on May 21, 2020.

The unaudited pro forma condensed combined financial information also does not consider any potential effects of changes in market conditions on revenues, expense efficiencies, asset dispositions, and share repurchases, among other factors. In addition, as explained in more detail in the accompanying notes, the preliminary allocation of the pro forma purchase price reflected in the unaudited pro forma condensed combined financial information is subject to adjustment and may vary significantly from the final purchase price allocation.

As of the date of these pro formas, Huntington has not completed the valuation analysis and calculations in sufficient detail necessary to arrive at the required estimates of the fair market value of the TCF assets to be acquired or liabilities to be assumed, other than a preliminary estimate for intangible assets and certain financial assets and financial liabilities. Accordingly, apart from the aforementioned, certain TCF assets and liabilities are presented at their respective carrying amounts and should be treated as preliminary values. A final determination of the fair value of TCF’s assets and liabilities will be based on TCF’s actual assets and liabilities as of the closing date. Actual adjustments may differ from the amounts reflected in the unaudited pro forma condensed combined financial information, and the differences may be material.

Further, as of the date of these pro formas, a detailed review of TCF’s accounting policies is still ongoing. Differences could be identified between the accounting policies of the two companies that, when conformed, could have a material impact on the combined company’s financial information.

The pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma condensed combined financial information.

A final determination of the fair value of TCF’s assets and liabilities will be based on TCF’s actual assets and liabilities as of the closing date. Any changes in the fair values of the net assets or total purchase consideration as compared with the information shown in the unaudited pro forma condensed combined financial information may change the amount of the total purchase consideration allocated to goodwill and other assets and liabilities and may impact the combined company’s statement of income. The final purchase consideration allocation may be materially different than the preliminary purchase consideration allocation presented in the unaudited pro forma condensed combined financial information.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of March 31, 2021


							Transaction Accounting Adjustments											Pro forma Condensed Combined
(dollars in millions)	Historical Huntington			Historical TCF			Reclasses Note 2			Pro forma Adjustments			Note 4		Divestiture Note 6			Pro forma Condensed Combined
*Assets*
Cash and due from banks	$	1,096		$	586		$	—		$	—				$	—		$	1,682
Interest-bearing deposits in the Federal Reserve Bank		7,493			282											(700	)		7,075
Interest-bearing deposits in banks		52			182														234
Trading account securities		51			—														51
Available-for-sale securities		19,375			8,404			493											28,272
Held-to-maturity securities		7,815			210			(207	)		4			A					7,822
Other securities		411			358														769
Loans held for sale		1,537			108														1,645
Loans and leases		80,230			36,221			(286	)		(105	)		B		(275	)		115,785
Allowance for loan and lease losses		(1,703	)		(505	)					(168	)		C					(2,376	)

Net loans and leases		78,527			35,716			(286	)		(273	)				(275	)		113,409
Bank owned life insurance		2,581			—			179											2,760
Premises and equipment		747			455						(48	)		D					1,154
Goodwill		1,990			1,380						1,874			E					5,244
Servicing rights and other intangible assets		480			194						(33	)		F					641
Other assets		3,613			1,585			(179	)		(33	)		G					4,986

Total Assets	$	125,768		$	49,460		$	—		$	1,491				$	(975	)	$	175,744

*Liabilities and Shareholders’ Equity*
Deposits	$	102,184		$	39,787		$	—		$	6			H	$	(975	)	$	141,002
Short-term borrowings		219			1,426														1,645
Long-term debt		7,210			1,519						57			I					8,786
Other liabilities		2,555			1,136						118			J					3,809

Total Liabilities		112,168			43,868			—			181					(975	)		155,242

Shareholder’s Equity:
Preferred stock		2,676			169						16			K					2,861
Common stock		10			153						(148	)		L					15
Capital surplus		8,806			3,467						3,526			M					15,799
Less treasury shares, at cost, and other		(59	)		(30	)					30			N					(59	)
Accumulated other comprehensive gain (loss)		(56	)		3						(3	)		N					(56	)
Retained earnings		2,223			1,802						(2,111	)		O					1,914

Total Shareholders’ Equity		13,600			5,564			—			1,310					—			20,474
Non-controlling interests in consolidated subsidiaries		—			28						—								28

Total Equity Capital		13,600			5,592			—			1,310					—			20,502

Total Liabilities and Shareholders’ equity	$	125,768		$	49,460		$	—		$	1,491				$	(975	)	$	175,744

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information

UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT

For the Three Months Ended March 31, 2021


						Transaction Accounting Adjustments								Pro forma Condensed Combined
(dollars in millions)	Historical Huntington			Historical TCF		Reclassifications Note 2			Pro forma Adjustments			Note 5		Pro forma Condensed Combined
Interest and fee income:
Loans and leases	$	752		$	361	$	—		$	2			A	$	1,115
Investment securities		104			42		—			—			B		146
Other		13			3		—			—					16

Total interest income		869			406		—			2					1,277

Interest expense:															—
Deposits		11			14		—			—			C		25
Borrowings		(114	)		10		—			7			D		(97	)

Total interest expense		(103	)		24		—			7					(72	)

Net interest income		972			382		—			(5	)				1,349
Provision for credit losses		(60	)		21		—			—					(39	)

Net interest income after provision for credit losses		1,032			361		—			(5	)				1,388

Service charges on deposit accounts		69			26		—			—					95
Cards and payment processing income		65			25		—			—					90
Trust and investment management services		52			7		—			—					59
Mortgage banking income		100			21		—			—					121
Leasing income		—			36		—			—					36
Capital markets fees		29			—		5			—					34
Insurance income		27			—		—			—					27
Bank owned life insurance income		16			—		2			—					18
Gain on sale of loans and leases		3			6		—			—					9
Net (losses) gains on sales of securities		—			—		—			—					—
Other income		34			11		(7	)		8			F		46

Total noninterest income		395			132		—			8					535

Personnel costs		468			174		—			—					642
Outside data processing and other services		115			—		21			—					136
Equipment		46			52		(26	)		—					72
Net occupancy		42			—		26			(1	)		G		67
Lease financing equipment depreciation		—			20		—			—					20
Professional services		17			—		8			—					25
Amortization of intangibles		10			—		5			(1	)		H		14
Marketing		14			—		7			—					21
Deposit and other insurance expense		8			—		6			—					14
Merger-related expenses		—			16		—			—					16
Other expense		73			86		(47	)		—					112

Total noninterest expense		793			348		—			(2	)				1,139

Income before income taxes		634			145		—			5					784
Provision for income taxes		102			20		—			1			K		123

Income before minority interest		532			125		—			4					661
Income attributable to minority interest		—			2		—			—					2

Net income		532			123		—			4					659
Dividends on preferred shares		31			2		—			—					33

Net income applicable to common shares	$	501		$	121	$	—		$	4				$	626

Earnings per common share	$	0.49		$	0.79									$	0.42
Diluted earnings per common share		0.48			0.79									$	0.42
Weighted average common shares		1,017,512			152,159										1,474,415	L
Diluted average common shares		1,041,003			152,541										1,499,052	L

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information

UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT

For the Year Ended December 31, 2020


						Transaction Accounting Adjustments								Pro forma Condensed Combined
(dollars in millions)	Historical Huntington			Historical TCF		Reclassifications Note 2			Pro forma Adjustments			Note 5		Pro forma Condensed Combined
Interest and fee income:
Loans and leases	$	3,085		$	1,575	$	—			43			A	$	4,703
Investment securities		513			161		—			(2	)		B		672
Other		49			30		—			—					79

Total interest income		3,647			1,766		—			41					5,454

Interest expense:
Deposits		197			167		—			4			C		368
Borrowings		226			60		—			31			D		317

Total interest expense		423			227		—			35					685

Net interest income		3,224			1,539		—			6					4,769
Provision for credit losses		1,048			257		—			297			E		1,602

Net interest income after provision for credit losses		2,176			1,282		—			(291	)				3,167

Service charges on deposit accounts		301			113		—			—					414
Cards and payment processing income		248			89		—			—					337
Trust and investment management services		189			26		—			—					215
Mortgage banking income		366			11		42			—					419
Leasing income		—			143		—			—					143
Capital markets fees		125			—		21			—					146
Insurance income		97			—		—			—					97
Bank owned life insurance income		64			—		5			—					69
Gain on sale of loans and leases		42			87		(73	)		—					56
Net (losses) gains on sales of securities		(1	)		2		—			—					1
Other income		160			45		5			30			F		240

Total noninterest income		1,591			516		—			30					2,137

Personnel costs		1,692			703		—			—					2,395
Outside data processing and other services		384			—		85			—					469
Equipment		180			210		(93	)		—					297
Net occupancy		158			—		93			(3	)		G		248
Lease financing equipment depreciation		—			73		—			—					73
Professional services		55			—		25			—					80
Amortization of intangibles		41			—		22			(4	)		H		59
Marketing		38			—		26			—					64
Deposit and other insurance expense		32			—		24			—					56
Merger-related expenses		—			204		—			51			I		255
Other expense		215			337		(182	)		50			J		420

Total noninterest expense		2,795			1,527		—			94					4,416

Income before income taxes		972			271		—			(355	)				888
Provision for income taxes		155			40		—			(79	)		K		116

Income before minority interest		817			231		—			(276	)				772
Income attributable to minority interest		—			7		—			—					7

Net income		817			224		—			(276	)				765
Dividends on preferred shares		100			10		—			—					110

Net income applicable to common shares	$	717		$	214	$	—		$	(276	)			$	655

Earnings per common share	$	0.71		$	1.40									$	0.44
Diluted earnings per common share		0.69			1.40									$	0.44
Weighted average common shares		1,017,117			151,812										1,472,979	L
Diluted average common shares		1,032,683			151,888										1,488,771	L

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 1. Basis of Presentation

The accompanying unaudited pro forma condensed combined financial information and related notes were prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined income statement for the three months ended March 31, 2021 and for the year ended December 31, 2020 combine the historical consolidated income statement of Huntington and TCF, giving effect to the merger as if it had been completed on January 1, 2020. The accompanying unaudited pro forma condensed combined balance sheet as of March 31, 2021 combines the historical consolidated balance sheets of Huntington and TCF, giving effect to the merger as if it had been completed on March 31, 2021.

The unaudited pro forma condensed combined financial information and explanatory notes have been prepared to illustrate the effects of the merger involving Huntington and TCF under the acquisition method of accounting with Huntington treated as the acquirer. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not necessarily indicate the financial results of the combined company had the companies actually been combined at the beginning of each period presented, nor does it necessarily indicate the results of operations in future periods or the future financial position of the combined company. Under the acquisition method of accounting, the assets and liabilities of TCF, as of the effective time of the merger, will be recorded by Huntington at their respective fair values, and the excess of the merger consideration over the fair value of TCF’s net assets will be allocated to goodwill.

The merger provides for TCF common shareholders to receive 3.0028 shares of Huntington common stock for each share of TCF common stock they hold immediately prior to the merger. Based on the closing trading price of shares of Huntington common stock on the NASDAQ on June 8, 2021, the value of the merger consideration per share of TCF common stock was $45.67. In addition, each share of TCF’s series C preferred stock will be converted into the right to receive a share of new Huntington preferred stock.

The pro forma allocation of the purchase price reflected in the unaudited pro forma condensed combined financial information is subject to adjustment and may vary from the actual purchase price allocation that will be recorded after the merger is completed. Adjustments may include, but are not be limited to, changes in (i) TCF’s balance sheet through the effective time of the merger; (ii) the aggregate value of merger consideration paid if the number of shares of TCF common stock outstanding at the time of the merger varies from the number of shares outstanding as of March 31, 2021; (iii) total merger related expenses if consummation and/or implementation costs vary from currently estimated amounts; and (iv) the underlying values of assets and liabilities if market conditions differ from current assumptions.

The accounting policies of both Huntington and TCF are in the process of being reviewed in detail. Upon completion of such review, additional conforming adjustments or financial statement reclassification may be necessary.

Note 2. Reclassification Adjustments

During the preparation of the unaudited pro forma condensed combined financial information, management performed a preliminary analysis of TCF’s financial information to identify differences in accounting policies and differences in balance sheet and income statement presentation as compared to the presentation of Huntington. As of the date of these unaudited pro formas, a detailed review of TCF’s accounting policies is still ongoing. Differences could be identified between the accounting policies of the two companies that, when conformed, could have a material impact on the combined company’s financial information. The adjustments represent Huntington’s best estimates based upon the information currently available to Huntington and could be subject to change once more detailed information is available.

Note 3. Preliminary Purchase Price Allocation

The following table summarizes the determination of the purchase price consideration:


(dollars in millions, except per share data, shares in thousands)
Shares of TCF on June 8, 2021		152,581
Exchange ratio		3.0028

Huntington shares issued		458,170
Price per share of Huntington common stock on June 8, 2021	$	15.21

Fair value of common stock	$	6,969
Fair value of equity awards		29
Fair value of preferred stock exchange		185

Total purchase price consideration	$	7,183

Preliminary goodwill	$	3,254


TCF Net Assets at Fair Value	March 31, 2021
Assets
Cash and deposits	$	1,050
Investment and other securities		9,262
Loans held for sale		108
Loans and leases		35,394
Servicing rights and other intangible assets		161
Other assets		1,959

Total Assets		47,934
Liabilities and Equity
Deposits		39,793
Short-term borrowings		1,426
Long-term debt		1,576
Other liabilities		1,182

Total liabilities		43,977

Non-controlling interest		28

Total liabilities and equity		44,005

Net assets acquired		3,929

Preliminary goodwill	$	3,254

Note 4. Pro Forma Adjustments to the Unaudited Condensed Combined Balance Sheets

The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All taxable adjustments were calculated using a 22.4% tax rate, which represents the blended statutory rate, to arrive at deferred tax asset or liability adjustments. All adjustments are based on preliminary assumptions and valuations, which are subject to change.

A.	Adjustment to securities classified as held-to maturity to reflect the estimated fair value of the acquired investment securities.

B.	Adjustment to loans and leases reflect estimated fair value adjustments, which include lifetime credit loss expectations for loans and leases, current interest rates and liquidity. The adjustment includes the following:


	March 31, 2021
	(dollars in millions)
Reversal of historical TCF loan and lease fair value adjustments	$	81
Estimate of lifetime credit losses on acquired loans and leases		(673	)
Estimate of fair value related to current interest rates and liquidity		51

Net fair value pro forma adjustments		(541	)
Gross up of PCD loans and leases for credit mark - See C below for Allowance		436

Cumulative pro forma adjustments to loans and leases	$	(105	)

For purposes of pro forma presentation, the fair value adjustment is being recognized over a weighted average period of 2 years for commercial loans and leases and 5 years for consumer loans in Interest and fee income—Loans and leases.

C.	Adjustments to the allowance for loan and lease losses include the following:


	March 31, 2021
	(dollars in millions)
Reversal of historical TCF allowance for loan and lease losses	$	(505	)
Estimate of lifetime credit losses for PCD loans and leases		436
Estimate of lifetime credit losses for non-PCD loans and leases		237

Net change in allowance for loan and lease losses	$	168

D.	Adjustment to property and equipment to reflect the estimated fair value of acquired premises and equipment.

E.	Eliminate the historical TCF goodwill of $1.4 billion at the closing date and record estimated preliminary goodwill associated with the merger of $3.3 billion.

F.	Eliminate the historical TCF other intangibles of $149 million and record an estimated core deposit intangible of $94 million, trust relationship intangible of $6 million and a valuation adjustment to mortgage servicing rights of $16 million related to the merger.

G.	Adjustment to other assets to reflect the estimated fair value of software.

H.	Adjustment to deposits to reflect the estimated fair value of certificates of deposits.

I.	Adjustment to long-term debt to reflect the estimated fair value of TCF long-term debt.

Net adjustment to other liabilities of $118 million reflects estimated fair value adjustments for deferred taxes related to acquisition accounting adjustments, assumption of contractual obligations, merger-related transaction costs, estimate of the fair value of accrued expenses and other liabilities and the foundation contribution. The net adjustment also includes an estimated expected allowance for unfunded lending commitments.

K.	Adjustment to preferred shares to reflect the estimated fair value of the TCF series C preferred stock and its conversion to new Huntington preferred stock.

L.	Adjustments to common stock to eliminate TCF common stock of $153 million par value and record the issuance of Huntington common stock to TCF common shareholders of $5 million par value.

M.	Adjustments to capital surplus to eliminate TCF capital surplus of $3.5 billion and record the issuance of Huntington common stock in excess of par value to TCF common shareholders of $7.0 billion.

N.	Adjustment to eliminate TCF treasury shares, at cost, and other of $30 million and TCF accumulated other comprehensive gain of $3 million.

O.	Adjustment to eliminate TCF retained earnings of $1.8 billion offset by purchase accounting adjustments included herein.

Note 5. Pro Forma Adjustments to the Unaudited Condensed Combined Income Statements

Net adjustments to interest income of $2 million and $43 million for the three-month period ended March 31, 2021 and the year ended December 31, 2020, respectively, to eliminate TCF accretion of discounts on previously acquired loans and leases and record the estimated accretion of the net discount on acquired loans and leases.

B.	Net adjustments to interest income of $— million and $(2) million for the three-month period ended March 31, 2021 and the year ended December 31, 2020, respectively, to record the estimated amortization of the premium on acquired held-to-maturity securities.

Net adjustment to reflect interest expense on deposits of $— million and $4 million for the three-month period ended March 31, 2021 and the year ended December 31, 2020, respectively, to eliminate the TCF discount accretion on previously acquired deposits and to record the estimated amortization of the deposit premium on acquired interest-bearing deposits.

Net adjustment to reflect interest expense on borrowings of $7 million and $31 million for the three-month period ended March 31, 2021 and the year ended December 31, 2020, respectively, to eliminate the TCF discount accretion on previously acquired debt and to record the estimated amortization of premium on long-term debt.

E.	Adjustment to record provision expense of $297 million related to TCF’s non-PCD loans and leases and allowance for unfunded lending commitments.

F.	Adjustment to reflect the amortization of liability related to the assumption of contractual obligations over expected life of two years.

Adjustment to occupancy expense of $(1) million and $(3) million for the three-month period ended March 31, 2021 and the year ended December 31, 2020, respectively, to reflect reduction of depreciation expense as a result of estimated fair value on acquired property. Average life of the depreciable assets will be twelve years.

Net adjustments to intangible amortization of $(1) million and $(4) million for the three-month period ended March 31, 2021 and the year ended December 31, 2020, respectively, to eliminate TCF amortization on other intangible assets and record estimated amortization of acquired other intangible assets. Core deposit intangibles will be amortized on an accelerated basis over ten years. Trust relationship intangible assets will be amortized using the sum-of-the-year-digits over twelve years.


					Amortization Expense
(dollars in millions)	Estimated Fair Value		Useful Life (years)		Year ended December 31, 2020			Three-month period ended March 31, 2021
Core deposit intangible	$	94		10	$	17		$	4
Trust relationship intangible		6		12		1			—

	$	100				18			4
Historical amortization expense						(22	)		(5	)

Pro forma net adjustment to amortization					$	(4	)	$	(1	)

Amortization for next five years
Remainder of 2021	$	12
2022		14
2023		13
2024		11
2025		9

I.	Adjustment to reflect the merger-related transaction costs of $51 million.

J.	Adjustment to reflect Huntington’s committed contribution of $50 million to establish a new Huntington Donor Advised Fund at the Community Foundation for Southeast Michigan.

K.	Adjustment to income tax expense to record the income tax effects of pro forma adjustments at the estimated combined statutory federal and state rate at 22.4%.

L.	Adjustments to weighted-average shares of Huntington common stock outstanding to eliminate weighted-average shares of TCF common stock outstanding and record shares of Huntington common stock outstanding, calculated using an exchange ratio of 3.0028 per share for all shares.

Note 6. Divestitures in Connection with the Merger

In connection with the merger, TCF National Bank has entered into a definitive purchase and assumption agreement to sell 14 banking centers in Michigan to Horizon Bank, the wholly owned subsidiary of Michigan City, IN-based Horizon Bancorp, Inc. The branches, with approximately $975 million in total deposits and $275 million in total loans are being divested in satisfaction of commitments to the Antitrust Division of the DOJ and the Federal Reserve Board in connection with Huntington’s proposed acquisition of TCF. The divestiture is expected to close by the end of the third quarter in 2021, subject to regulatory approval and other customary closing conditions. As such, these divestitures are included in the unaudited pro forma condensed combined financial information.