Allowance for Loan and Lease Losses and Credit Quality Information | 9 Months Ended |
Sep. 30, 2013 |
Allowance for Loan and Lease Losses and Credit Quality Information | ' |
Allowance for Loan and Lease Losses and Credit Quality Information | ' |
(5) Allowance for Loan and Lease Losses and Credit Quality Information |
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The following tables provide the allowance for loan and lease losses. TCF’s key credit quality indicator is the receivable’s payment performance status, defined as accruing or non-accruing. |
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(In thousands) | | Consumer | | Commercial | | Leasing and | | Inventory | | Auto | | Other | | Total | |
Real Estate | Equipment | Finance | Finance |
| Finance | | |
At or For the Three Months Ended September 30, 2013: | | | | | | | | | | | | | | | |
Balance, at beginning of quarter | | $ | 181,052 | | $ | 50,072 | | $ | 17,975 | | $ | 8,197 | | $ | 7,509 | | $ | 794 | | $ | 265,599 | |
Charge-offs | | (20,452 | ) | (7,286 | ) | (1,733 | ) | (216 | ) | (1,281 | ) | (2,550 | ) | (33,518 | ) |
Recoveries | | 2,208 | | 773 | | 1,075 | | 130 | | 159 | | 1,557 | | 5,902 | |
Net charge-offs | | (18,244 | ) | (6,513 | ) | (658 | ) | (86 | ) | (1,122 | ) | (993 | ) | (27,616 | ) |
Provision for credit losses | | 15,377 | | 3,505 | | 899 | | 390 | | 3,430 | | 1,001 | | 24,602 | |
Other | | (215 | ) | (426 | ) | - | | 46 | | (705 | ) | - | | (1,300 | ) |
Balance, at end of quarter | | $ | 177,970 | | $ | 46,638 | | $ | 18,216 | | $ | 8,547 | | $ | 9,112 | | $ | 802 | | $ | 261,285 | |
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At or For the Three Months Ended September 30, 2012: | | | | | | | | | | | | | | | |
Balance, at beginning of quarter | | $ | 188,087 | | $ | 50,699 | | $ | 25,450 | | $ | 7,072 | | $ | 1,951 | | $ | 902 | | $ | 274,161 | |
Charge-offs | | (76,131 | ) | (20,813 | ) | (8,368 | ) | (602 | ) | (280 | ) | (2,520 | ) | (108,714 | ) |
Recoveries | | 1,460 | | 266 | | 847 | | 158 | | - | | 1,529 | | 4,260 | |
Net charge-offs | | (74,671 | ) | (20,547 | ) | (7,521 | ) | (444 | ) | (280 | ) | (991 | ) | (104,454 | ) |
Provision for credit losses | | 66,231 | | 23,604 | | 3,402 | | 313 | | 1,887 | | 838 | | 96,275 | |
Other | | (705 | ) | - | | - | | 62 | | (499 | ) | 1 | | (1,141 | ) |
Balance, at end of quarter | | $ | 178,942 | | $ | 53,756 | | $ | 21,331 | | $ | 7,003 | | $ | 3,059 | | $ | 750 | | $ | 264,841 | |
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(In thousands) | | Consumer | | Commercial | | Leasing and | | Inventory | | Auto | | Other | | Total | |
Real Estate | Equipment | Finance | Finance |
| Finance | | |
At or For the Nine Months Ended September 30, 2013: | | | | | | | | | | | | | | | |
Balance, at beginning of period | | $ | 182,013 | | $ | 51,575 | | $ | 21,037 | | $ | 7,569 | | $ | 4,136 | | $ | 798 | | $ | 267,128 | |
Charge-offs | | (79,160 | ) | (18,896 | ) | (5,021 | ) | (745 | ) | (3,154 | ) | (6,846 | ) | (113,822 | ) |
Recoveries | | 6,743 | | 2,085 | | 2,909 | | 318 | | 431 | | 5,022 | | 17,508 | |
Net charge-offs | | (72,417 | ) | (16,811 | ) | (2,112 | ) | (427 | ) | (2,723 | ) | (1,824 | ) | (96,314 | ) |
Provision for credit losses | | 71,729 | | 12,299 | | (709 | ) | 1,480 | | 8,949 | | 1,828 | | 95,576 | |
Other | | (3,355 | ) | (425 | ) | - | | (75 | ) | (1,250 | ) | - | | (5,105 | ) |
Balance, at end of period | | $ | 177,970 | | $ | 46,638 | | $ | 18,216 | | $ | 8,547 | | $ | 9,112 | | $ | 802 | | $ | 261,285 | |
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At or For the Nine Months Ended September 30, 2012: | | | | | | | | | | | | | | | |
Balance, at beginning of period | | $ | 183,435 | | $ | 46,954 | | $ | 21,173 | | $ | 2,996 | | $ | - | | $ | 1,114 | | $ | 255,672 | |
Charge-offs | | (149,273 | ) | (31,156 | ) | (12,811 | ) | (1,555 | ) | (364 | ) | (8,064 | ) | (203,223 | ) |
Recoveries | | 4,057 | | 630 | | 3,966 | | 243 | | 1 | | 6,079 | | 14,976 | |
Net charge-offs | | (145,216 | ) | (30,526 | ) | (8,845 | ) | (1,312 | ) | (363 | ) | (1,985 | ) | (188,247 | ) |
Provision for credit losses | | 141,428 | | 37,328 | | 9,003 | | 5,281 | | 4,262 | | 1,621 | | 198,923 | |
Other | | (705 | ) | - | | - | | 38 | | (840 | ) | - | | (1,507 | ) |
Balance, at end of period | | $ | 178,942 | | $ | 53,756 | | $ | 21,331 | | $ | 7,003 | | $ | 3,059 | | $ | 750 | | $ | 264,841 | |
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The following tables provide other information regarding the allowance for loan and lease losses and balances by type of allowance methodology. |
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| | At September 30, 2013 | |
(In thousands) | | Consumer | | Commercial | | Leasing and | | Inventory | | Auto | | Other | | Total | |
Real Estate | Equipment | Finance | Finance |
| Finance | | |
Allowance for loan and lease losses: | | | | | | | | | | | | | | | |
Collectively evaluated for impairment | | $ | 59,740 | | $ | 33,737 | | $ | 16,234 | | $ | 8,262 | | $ | 9,080 | | $ | 802 | | $ | 127,855 | |
Individually evaluated for impairment | | 118,230 | | 12,901 | | 1,982 | | 285 | | 32 | | - | | 133,430 | |
Total | | $ | 177,970 | | $ | 46,638 | | $ | 18,216 | | $ | 8,547 | | $ | 9,112 | | $ | 802 | | $ | 261,285 | |
Loans and leases outstanding: | | | | | | | | | | | | | | | |
Collectively evaluated for impairment | | $ | 5,746,031 | | $ | 2,931,496 | | $ | 3,272,688 | | $ | 1,710,801 | | $ | 1,068,257 | | $ | 26,798 | | $ | 14,756,071 | |
Individually evaluated for impairment | | 669,601 | | 205,592 | | 12,689 | | 5,741 | | 301 | | 29 | | 893,953 | |
Loans acquired with deteriorated credit quality | | - | | - | | 1,129 | | - | | 495 | | - | | 1,624 | |
Total | | $ | 6,415,632 | | $ | 3,137,088 | | $ | 3,286,506 | | $ | 1,716,542 | | $ | 1,069,053 | | $ | 26,827 | | $ | 15,651,648 | |
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| | At December 31, 2012 | |
(In thousands) | | Consumer | | Commercial | | Leasing and | | Inventory | | Auto | | Other | | Total | |
Real Estate | Equipment | Finance | Finance |
| Finance | | |
Allowance for loan and lease losses: | | | | | | | | | | | | | | | |
Collectively evaluated for impairment | | $ | 181,139 | | $ | 37,210 | | $ | 20,337 | | $ | 7,339 | | $ | 4,136 | | $ | 798 | | $ | 250,959 | |
Individually evaluated for impairment | | 874 | | 14,365 | | 700 | | 230 | | - | | - | | 16,169 | |
Total | | $ | 182,013 | | $ | 51,575 | | $ | 21,037 | | $ | 7,569 | | $ | 4,136 | | $ | 798 | | $ | 267,128 | |
Loans and leases outstanding: | | | | | | | | | | | | | | | |
Collectively evaluated for impairment | | $ | 6,669,424 | | $ | 3,133,011 | | $ | 3,187,393 | | $ | 1,565,727 | | $ | 551,456 | | $ | 27,924 | | $ | 15,134,935 | |
Individually evaluated for impairment | | 5,077 | | 272,224 | | 7,754 | | 1,487 | | 101 | | - | | 286,643 | |
Loans acquired with deteriorated credit quality | | - | | - | | 2,870 | | - | | 1,276 | | - | | 4,146 | |
Total | | $ | 6,674,501 | | $ | 3,405,235 | | $ | 3,198,017 | | $ | 1,567,214 | | $ | 552,833 | | $ | 27,924 | | $ | 15,425,724 | |
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Accruing and Non-accrual Loans and Leases The following tables set forth information regarding TCF’s accruing and non-accrual loans and leases. Non-accrual loans and leases are those which management believes have a higher risk of loss than accruing loans and leases. Delinquent balances are determined based on the contractual terms of the loan or lease. TCF’s key credit quality indicator is the receivable’s payment performance status as accruing or non-accruing. TCF modified its consumer real estate portfolio non-accrual policy in the third quarter of 2013. See Note 1 of Notes to the Consolidated Financial Statements, Basis of Presentation, for additional information. |
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| | At September 30, 2013 | | | | |
(In thousands) | | Current-59 Days | | 60-89 Days | | 90 Days or More | | Total | | Non-Accrual | | Total | | | | |
Delinquent and | Delinquent | Delinquent and | Accruing | | | |
Accruing | and Accruing | Accruing | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | |
First mortgage lien | $ | | 3,668,292 | | $ | 22,111 | | $ | 1,465 | | $ | 3,691,868 | | $ | 170,306 | | $ | 3,862,174 | | | | |
Junior lien | | 2,513,904 | | 3,822 | | - | | 2,517,726 | | 35,732 | | 2,553,458 | | | | |
Total consumer real estate | | 6,182,196 | | 25,933 | | 1,465 | | 6,209,594 | | 206,038 | | 6,415,632 | | | | |
Commercial: | | | | | | | | | | | | | | | | |
Commercial real estate | | 2,723,869 | | 6,383 | | 1 | | 2,730,253 | | 57,136 | | 2,787,389 | | | | |
Commercial business | | 343,745 | | 817 | | - | | 344,562 | | 5,137 | | 349,699 | | | | |
Total commercial | | 3,067,614 | | 7,200 | | 1 | | 3,074,815 | | 62,273 | | 3,137,088 | | | | |
Leasing and equipment finance | | 3,261,534 | | 2,598 | | 198 | | 3,264,330 | | 11,820 | | 3,276,150 | | | | |
Inventory finance | | 1,714,669 | | 71 | | - | | 1,714,740 | | 1,802 | | 1,716,542 | | | | |
Auto finance | | 1,066,917 | | 928 | | 501 | | 1,068,346 | | 212 | | 1,068,558 | | | | |
Other | | 26,099 | | - | | - | | 26,099 | | 728 | | 26,827 | | | | |
Subtotal | | 15,319,029 | | 36,730 | | 2,165 | | 15,357,924 | | 282,873 | | 15,640,797 | | | | |
Portfolios acquired with deteriorated credit quality | | 10,774 | | 34 | | 43 | | 10,851 | | - | | 10,851 | | | | |
Total | $ | | 15,329,803 | | $ | 36,764 | | $ | 2,208 | | $ | 15,368,775 | | $ | 282,873 | | $ | 15,651,648 | | | | |
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| | At December 31, 2012 | | | | |
(In thousands) | | Current-59 Days | | 60-89 Days | | 90 Days or More | | Total | | Non-Accrual | | Total | | | | |
Delinquent and | Delinquent | Delinquent and | Accruing | | | |
Accruing | and Accruing | Accruing | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | |
First mortgage lien | $ | | 3,963,873 | | $ | 28,132 | | $ | 47,888 | | $ | 4,039,893 | | $ | 199,631 | | $ | 4,239,524 | | | | |
Junior lien | | 2,386,567 | | 6,170 | | 6,971 | | 2,399,708 | | 35,269 | | 2,434,977 | | | | |
Total consumer real estate | | 6,350,440 | | 34,302 | | 54,859 | | 6,439,601 | | 234,900 | | 6,674,501 | | | | |
Commercial: | | | | | | | | | | | | | | | | |
Commercial real estate | | 2,960,383 | | 604 | | 1,655 | | 2,962,642 | | 118,300 | | 3,080,942 | | | | |
Commercial business | | 314,476 | | 17 | | 354 | | 314,847 | | 9,446 | | 324,293 | | | | |
Total commercial | | 3,274,859 | | 621 | | 2,009 | | 3,277,489 | | 127,746 | | 3,405,235 | | | | |
Leasing and equipment finance | | 3,155,744 | | 2,726 | | 534 | | 3,159,004 | | 13,652 | | 3,172,656 | | | | |
Inventory finance | | 1,565,608 | | 109 | | 10 | | 1,565,727 | | 1,487 | | 1,567,214 | | | | |
Auto finance | | 550,923 | | 228 | | 304 | | 551,455 | | 101 | | 551,556 | | | | |
Other | | 26,322 | | 20 | | 11 | | 26,353 | | 1,571 | | 27,924 | | | | |
Subtotal | | 14,923,896 | | 38,006 | | 57,727 | | 15,019,629 | | 379,457 | | 15,399,086 | | | | |
Portfolios acquired with deteriorated credit quality | | 26,348 | | 221 | | 69 | | 26,638 | | - | | 26,638 | | | | |
Total | $ | | 14,950,244 | | $ | 38,227 | | $ | 57,796 | | $ | 15,046,267 | | $ | 379,457 | | $ | 15,425,724 | | | | |
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The following table provides interest income recognized on loans and leases in non-accrual status and contractual interest that would have been recorded had the loans and leases performed in accordance with their original contractual terms. |
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| | Three Months Ended | | Nine Months Ended | | | | | | | | | |
| | September 30, | | September 30, | | | | | | | | | |
(In thousands) | | 2013 | | 2012 | | 2013 | | 2012 | | | | | | | | | |
Contractual interest due on non-accrual loans and leases | | $ | 8,856 | | $ | 12,790 | | $ | 27,131 | | $ | 30,424 | | | | | | | | | | |
Interest income recognized on loans and leases in non-accrual status | | 2,346 | | 4,156 | | 10,140 | | 7,644 | | | | | | | | | | |
Foregone interest income | | $ | 6,510 | | $ | 8,634 | | $ | 16,991 | | $ | 22,780 | | | | | | | | | | |
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The following table provides information regarding consumer real estate loans to customers currently involved in Chapter 7 and Chapter 13 bankruptcy proceedings which have not yet been discharged or completed by the courts. |
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(In thousands) | | At September 30, | | At December 31, | | | | | | | | | | | | | | | | |
2013 | 2012 | | | | | | | | | | | | | | | |
Consumer real estate loans to customers in bankruptcy: | | | | | | | | | | | | | | | | | | | | |
0-59 days delinquent and accruing | | $ | 69,484 | | $ | 69,170 | | | | | | | | | | | | | | | | |
60+ days delinquent and accruing | | 695 | | 644 | | | | | | | | | | | | | | | | |
Non-accrual | | 11,315 | | 18,982 | | | | | | | | | | | | | | | | |
Total consumer real estate loans to customers in bankruptcy | | $ | 81,494 | | $ | 88,796 | | | | | | | | | | | | | | | | |
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Loan Modifications for Borrowers with Financial Difficulties Included within loans and leases in the previous tables are certain loans that have been modified in order to maximize collection of loan balances. If, for economic or legal reasons related to the customer’s financial difficulties, TCF grants a concession, the modified loan is classified as a troubled debt restructuring (“TDR”). |
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The following tables provide a summary of accruing and non-accrual TDR loans by portfolio. |
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| | At September 30, 2013 | | | | | | | | | | | | |
(In thousands) | | Accruing TDR | | Non-Accrual | | Total TDR | | | | | | | | | | | | |
Loans | TDR Loans | Loans | | | | | | | | | | | | |
Consumer real estate | | $ | 514,234 | | $ | 129,715 | | $ | 643,949 | | | | | | | | | | | | | |
Commercial | | 126,776 | | 47,646 | | 174,422 | | | | | | | | | | | | | |
Leasing and equipment finance | | 778 | | 2,578 | | 3,356 | | | | | | | | | | | | | |
Inventory finance | | 3,939 | | - | | 3,939 | | | | | | | | | | | | | |
Auto finance | | 89 | | 212 | | 301 | | | | | | | | | | | | | |
Other | | 27 | | 2 | | 29 | | | | | | | | | | | | | |
Total | | $ | 645,843 | | $ | 180,153 | | $ | 825,996 | | | | | | | | | | | | | |
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| | At December 31, 2012 | | | | | | | | | | | | |
(In thousands) | | Accruing TDR | | Non-Accrual | | Total TDR | | | | | | | | | | | | |
Loans | TDR Loans | Loans | | | | | | | | | | | | |
Consumer real estate | | $ | 478,262 | | $ | 173,587 | | $ | 651,849 | | | | | | | | | | | | | |
Commercial | | 144,508 | | 92,311 | | 236,819 | | | | | | | | | | | | | |
Leasing and equipment finance | | 1,050 | | 2,794 | | 3,844 | | | | | | | | | | | | | |
Auto finance | | - | | 101 | | 101 | | | | | | | | | | | | | |
Other | | 38 | | - | | 38 | | | | | | | | | | | | | |
Total | | $ | 623,858 | | $ | 268,793 | | $ | 892,651 | | | | | | | | | | | | | |
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The amount of additional funds committed to consumer real estate and commercial borrowers in TDR status was $3.5 million and $8.6 million at September 30, 2013 and December 31, 2012, respectively. At September 30, 2013 and December 31, 2012, no additional funds were committed to leasing and equipment finance, inventory finance or auto finance borrowers in TDR status. |
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When a loan is modified as a TDR, principal balances are generally not forgiven. Loan modifications are not reported as TDR loans in calendar years after modification if the loans were modified at an interest rate equal to the yields of new loan originations with comparable risk and the loans are performing based on the terms of the restructuring agreements. All loans classified as TDR loans are considered to be impaired. During the nine months ended September 30, 2013, $17.1 million of commercial loans were removed from TDR status as they were restructured at market terms and are performing. |
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The financial effects of TDR loans are presented in the following tables and represent the difference between interest income recognized on accruing TDR loans and the contractual interest that would have been recorded under the original contractual terms. |
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| | Three Months Ended September 30, | | | |
| | 2013 | | 2012 | | | |
(In thousands) | | Original | | Interest Income | | Foregone | | Original | | Interest Income | | Foregone | | | |
Contractual Interest | Recognized on | Interest | Contractual Interest | Recognized on | Interest | | | |
Due on Accruing | Accruing TDR | Income | Due on Accruing | Accruing TDR | Income | | | |
TDR Loans | Loans | | TDR Loans | Loans | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | |
First mortgage lien | $ | | 8,389 | | $ | 3,802 | | $ | 4,587 | | $ | 7,545 | | $ | 4,178 | | $ | 3,367 | | | | |
Junior lien | | 906 | | 592 | | 314 | | 637 | | 421 | | 216 | | | | |
Total consumer real estate | | 9,295 | | 4,394 | | 4,901 | | 8,182 | | 4,599 | | 3,583 | | | | |
Commercial: | | | | | | | | | | | | | | | | |
Commercial real estate | | 1,610 | | 1,440 | | 170 | | 1,377 | | 1,373 | | 4 | | | | |
Commercial business | | 77 | | 58 | | 19 | | 82 | | 73 | | 9 | | | | |
Total commercial | | 1,687 | | 1,498 | | 189 | | 1,459 | | 1,446 | | 13 | | | | |
Leasing and equipment finance | | 13 | | 16 | | (3 | ) | 13 | | 16 | | (3 | ) | | | |
Inventory finance | | 8 | | 8 | | - | | - | | - | | - | | | | |
Auto finance | | 2 | | 1 | | 1 | | - | | - | | - | | | | |
Other | | - | | 1 | | (1 | ) | - | | - | | - | | | | |
Total | $ | | 11,005 | | $ | 5,918 | | $ | 5,087 | | $ | 9,654 | | $ | 6,061 | | $ | 3,593 | | | | |
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| | Nine Months Ended September 30, | | | | |
| | 2013 | | 2012 | | | | |
(In thousands) | | Original | | Interest Income | | Foregone | | Original | | Interest Income | | Foregone | | | | |
Contractual Interest | Recognized on | Interest | Contractual Interest | Recognized on | Interest | | | |
Due on Accruing | Accruing TDR | Income | Due on Accruing | Accruing TDR | Income | | | |
TDR Loans | Loans | | TDR Loans | Loans | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | |
First mortgage lien | $ | | 24,372 | | $ | 11,268 | | $ | 13,104 | | $ | 21,835 | | $ | 11,713 | | $ | 10,122 | | | | |
Junior lien | | 2,573 | | 1,696 | | 877 | | 1,784 | | 1,131 | | 653 | | | | |
Total consumer real estate | | 26,945 | | 12,964 | | 13,981 | | 23,619 | | 12,844 | | 10,775 | | | | |
Commercial: | | | | | | | | | | | | | | | | |
Commercial real estate | | 4,955 | | 4,575 | | 380 | | 3,993 | | 4,018 | | (25 | ) | | | |
Commercial business | | 328 | | 243 | | 85 | | 297 | | 279 | | 18 | | | | |
Total commercial | | 5,283 | | 4,818 | | 465 | | 4,290 | | 4,297 | | (7 | ) | | | |
Leasing and equipment finance | | 47 | | 51 | | (4 | ) | 42 | | 48 | | (6 | ) | | | |
Inventory finance | | 8 | | 8 | | - | | - | | - | | - | | | | |
Auto finance | | 3 | | 1 | | 2 | | - | | - | | - | | | | |
Other | | 3 | | 3 | | - | | - | | - | | - | | | | |
Total | $ | | 32,289 | | $ | 17,845 | | $ | 14,444 | | $ | 27,951 | | $ | 17,189 | | $ | 10,762 | | | | |
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The table below summarizes TDR loans that defaulted during the three and nine months ended September 30, 2013 and 2012, which were modified within one year of the beginning of the respective reporting period. TCF considers a loan to have defaulted when it becomes 90 or more days delinquent under the modified terms, has been transferred to non-accrual status subsequent to the modification or has been transferred to other real estate owned. |
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| | Three Months Ended September 30, | | Nine Months Ended September 30, | | |
| | 2013 | | 2012 | | 2013 | | 2012 | | |
(Dollars in thousands) | | Number | | Loan | | Number | | Loan | | Number | | Loan | | Number | | Loan | | |
of Loans | Balance (1) | of Loans | Balance (1) | of Loans | Balance (1) | of Loans | Balance (1) | |
Consumer real estate: | | | | | | | | | | | | | | | | | | |
First mortgage lien | | 53 | | $ | 6,571 | | 109 | | $ | 18,784 | | 105 | | $ | 15,048 | | 173 | | $ | 32,157 | | |
Junior lien | | 59 | | 1,938 | | 51 | | 2,889 | | 85 | | 3,243 | | 57 | | 3,213 | | |
Total consumer real estate | | 112 | | 8,509 | | 160 | | 21,673 | | 190 | | 18,291 | | 230 | | 35,370 | | |
Commercial real estate | | 3 | | 3,340 | | 5 | | 9,416 | | 6 | | 5,296 | | 18 | | 38,325 | | |
Auto finance | | 1 | | 14 | | - | | - | | 2 | | 18 | | - | | - | | |
Total defaulted modified loans | | 116 | | $ | 11,863 | | 165 | | $ | 31,089 | | 198 | | $ | 23,605 | | 248 | | $ | 73,695 | | |
Total loans modified in the applicable period | | 1,226 | | $ | 248,547 | | 1,795 | | $ | 428,757 | | 1,765 | | $ | 363,923 | | 2,121 | | $ | 523,546 | | |
Defaulted modified loans as a percent of total | | 9.5 | % | 4.8 | % | 9.2 | % | 7.3 | % | 11.2 | % | 6.5 | % | 11.7 | % | 14.1 | % | |
loans modified in the applicable period | |
(1) The loan balances presented are not materially different than the pre-modification loan balances as TCF’s loan modifications generally do not forgive principal amounts. |
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Consumer real estate TDR loans are evaluated separately in TCF’s allowance methodology. Impairment is generally based upon the present value of the expected future cash flows or the fair value of the collateral less selling expenses for collateral dependent loans. The allowance on accruing consumer real estate TDR loans was $104.2 million, or 20.3% of the outstanding balance, at September 30, 2013, and $82.3 million, or 17.2% of the outstanding balance, at December 31, 2012. For consumer real estate TDR loans, TCF utilized average remaining re-default rates ranging from 11% to 25% in 2013, compared with 10% to 25% in 2012, depending on modification type, in determining impairment, which is consistent with actual experience. Generally consumer real estate loans remain on accruing status upon modification if they are less than 90 days past due and payment in full under the modified loan terms is expected. In addition, consumer real estate junior lien loans are placed on non-accrual status and charged off to the estimated fair value when the junior lien loan is 30 days or more past due and when TCF has evidence that the related third-party first mortgage lien is 90 days or more past due or foreclosure action has been initiated. Loans are placed on non-accrual status and reported as non-accrual until there is sustained repayment performance for six consecutive payments, except for loans discharged in Chapter 7 bankruptcy that are not reaffirmed, which remain on non-accrual status for the remainder of the term of the loan. All eligible loans are re-aged to current delinquency status upon modification. |
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Commercial TDR loans are individually evaluated for impairment based upon the present value of the expected future cash flows or the fair value of the collateral less selling expenses for collateral-dependent loans. The allowance on accruing commercial TDR loans was $3 million, or 2.4% of the outstanding balance, at September 30, 2013, and $1.5 million, or 1% of the outstanding balance, at December 31, 2012. |
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Impaired Loans TCF considers impaired loans to include non-accrual commercial loans, non-accrual equipment finance loans and non-accrual inventory finance loans, as well as all TDR loans. Non-accrual impaired loans, including non-accrual TDR loans, are included in non-accrual loans and leases within the previous tables. Non-accrual commercial loans are charged off to the estimated fair value of underlying collateral, less estimated selling costs. Accruing TDR loans have been disclosed by delinquency status within the previous tables of accruing and non-accrual loans and leases. In the following tables, the loan balance of impaired loans represents the amount recorded within loans and leases on the Consolidated Statements of Financial Condition, whereas the unpaid contractual balance represents the balances legally owed by the borrowers. |
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The following tables summarize impaired loans. |
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| | At September 30, 2013 | | | | | | | | | | | | |
(In thousands) | | Unpaid | | Loan | | Related | | | | | | | | | | | | |
Contractual | Balance | Allowance | | | | | | | | | | | | |
Balance | | Recorded | | | | | | | | | | | | |
Impaired loans with an allowance recorded: | | | | | | | | | | | | | | | | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | | | | |
First mortgage lien | $ | | 558,082 | | $ | 526,243 | | $ | 104,839 | | | | | | | | | | | | | |
Junior lien | | 85,675 | | 72,477 | | 12,513 | | | | | | | | | | | | | |
Total consumer real estate | | 643,757 | | 598,720 | | 117,352 | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | 118,598 | | 102,033 | | 12,021 | | | | | | | | | | | | | |
Commercial business | | 10,680 | | 5,157 | | 880 | | | | | | | | | | | | | |
Total commercial | | 129,278 | | 107,190 | | 12,901 | | | | | | | | | | | | | |
Leasing and equipment finance | | 5,432 | | 5,432 | | 733 | | | | | | | | | | | | | |
Inventory finance | | 5,741 | | 5,741 | | 285 | | | | | | | | | | | | | |
Auto finance | | 123 | | 111 | | 32 | | | | | | | | | | | | | |
Other | | 32 | | 29 | | - | | | | | | | | | | | | | |
Total impaired loans with an allowance recorded | | 784,363 | | 717,223 | | 131,303 | | | | | | | | | | | | | |
Impaired loans without an allowance recorded: | | | | | | | | | | | | | | | | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | | | | |
First mortgage lien | | 56,422 | | 41,529 | | - | | | | | | | | | | | | | |
Junior lien | | 25,335 | | 3,700 | | - | | | | | | | | | | | | | |
Total consumer real estate | | 81,757 | | 45,229 | | - | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | 96,099 | | 74,824 | | - | | | | | | | | | | | | | |
Commercial business | | 7,032 | | 7,035 | | - | | | | | | | | | | | | | |
Total commercial | | 103,131 | | 81,859 | | - | | | | | | | | | | | | | |
Auto finance | | 371 | | 190 | | - | | | | | | | | | | | | | |
Total impaired loans without an allowance recorded | | 185,259 | | 127,278 | | - | | | | | | | | | | | | | |
Total impaired loans | $ | | 969,622 | | $ | 844,501 | | $ | 131,303 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | At December 31, 2012 | | | | | | | | | | | | |
(In thousands) | | Unpaid | | Loan | | Related | | | | | | | | | | | | |
Contractual | Balance | Allowance | | | | | | | | | | | | |
Balance | | Recorded | | | | | | | | | | | | |
Impaired loans with an allowance recorded: | | | | | | | | | | | | | | | | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | | | | |
First mortgage lien | $ | | 448,887 | | $ | 441,336 | | $ | 76,425 | | | | | | | | | | | | | |
Junior lien | | 44,218 | | 42,836 | | 9,120 | | | | | | | | | | | | | |
Total consumer real estate | | 493,105 | | 484,172 | | 85,545 | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | 144,847 | | 126,570 | | 12,963 | | | | | | | | | | | | | |
Commercial business | | 20,742 | | 15,741 | | 1,408 | | | | | | | | | | | | | |
Total commercial | | 165,589 | | 142,311 | | 14,371 | | | | | | | | | | | | | |
Leasing and equipment finance | | 7,668 | | 7,668 | | 838 | | | | | | | | | | | | | |
Inventory finance | | 1,487 | | 1,487 | | 230 | | | | | | | | | | | | | |
Other | | 38 | | 38 | | - | | | | | | | | | | | | | |
Total impaired loans with an allowance recorded | | 667,887 | | 635,676 | | 100,984 | | | | | | | | | | | | | |
Impaired loans without an allowance recorded: | | | | | | | | | | | | | | | | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | | | | |
First mortgage lien | | 184,790 | | 141,511 | | - | | | | | | | | | | | | | |
Junior lien | | 59,451 | | 26,166 | | - | | | | | | | | | | | | | |
Total consumer real estate | | 244,241 | | 167,677 | | - | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | 142,214 | | 124,008 | | - | | | | | | | | | | | | | |
Commercial business | | 6,920 | | 5,935 | | - | | | | | | | | | | | | | |
Total commercial | | 149,134 | | 129,943 | | - | | | | | | | | | | | | | |
Auto finance | | 187 | | 101 | | - | | | | | | | | | | | | | |
Total impaired loans without an allowance recorded | | 393,562 | | 297,721 | | - | | | | | | | | | | | | | |
Total impaired loans | $ | | 1,061,449 | | $ | 933,397 | | $ | 100,984 | | | | | | | | | | | | | |
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The average loan balance of impaired loans and interest income recognized on impaired loans during the three and nine months ended September 30, 2013 and 2012 are included within the table below. |
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| | Three Months Ended | | | | | | | | | |
| | September 30, 2013 | | September 30, 2012 | | | | | | | | | |
(In thousands) | | Average Loan | | Interest Income | | Average Loan | | Interest Income | | | | | | | | | |
Balance | Recognized | Balance | Recognized | | | | | | | | | |
Impaired loans with an allowance recorded: | | | | | | | | | | | | | | | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | | | |
First mortgage lien | | $ | 499,760 | | $ | 4,716 | | $ | 424,378 | | $ | 3,895 | | | | | | | | | | |
Junior lien | | 65,003 | | 1,001 | | 37,083 | | 358 | | | | | | | | | | |
Total consumer real estate | | 564,763 | | 5,717 | | 461,461 | | 4,253 | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | |
Commercial real estate | | 108,682 | | 905 | | 187,667 | | 1,122 | | | | | | | | | | |
Commercial business | | 6,640 | | 5 | | 10,844 | | 49 | | | | | | | | | | |
Total commercial | | 115,322 | | 910 | | 198,511 | | 1,171 | | | | | | | | | | |
Leasing and equipment finance | | 5,797 | | 3 | | 8,897 | | 9 | | | | | | | | | | |
Inventory finance | | 3,837 | | 52 | | 1,510 | | 48 | | | | | | | | | | |
Auto finance | | 89 | | 1 | | 20 | | - | | | | | | | | | | |
Other | | 31 | | 1 | | 11 | | - | | | | | | | | | | |
Total impaired loans with an allowance recorded | | 689,839 | | 6,684 | | 670,410 | | 5,481 | | | | | | | | | | |
Impaired loans without an allowance recorded: | | | | | | | | | | | | | | | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | | | |
First mortgage lien | | 67,369 | | 386 | | 96,519 | | 2,013 | | | | | | | | | | |
Junior lien | | 10,519 | | 319 | | 14,789 | | 830 | | | | | | | | | | |
Total consumer real estate | | 77,888 | | 705 | | 111,308 | | 2,843 | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | |
Commercial real estate | | 86,614 | | 586 | | 64,129 | | 251 | | | | | | | | | | |
Commercial business | | 8,104 | | 53 | | 8,792 | | 40 | | | | | | | | | | |
Total commercial | | 94,718 | | 639 | | 72,921 | | 291 | | | | | | | | | | |
Auto finance | | 154 | | - | | - | | - | | | | | | | | | | |
Total impaired loans without an allowance recorded | | 172,760 | | 1,344 | | 184,229 | | 3,134 | | | | | | | | | | |
Total impaired loans | | $ | 862,599 | | $ | 8,028 | | $ | 854,639 | | $ | 8,615 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | Nine Months Ended | | | | | | | | | |
| | September 30, 2013 | | September 30, 2012 | | | | | | | | | |
(In thousands) | | Average Loan | | Interest Income | | Average Loan | | Interest Income | | | | | | | | | |
Balance | Recognized | Balance | Recognized | | | | | | | | | |
Impaired loans with an allowance recorded: | | | | | | | | | | | | | | | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | | | |
First mortgage lien | | $ | 483,789 | | $ | 12,152 | | $ | 410,610 | | $ | 10,996 | | | | | | | | | | |
Junior lien | | 57,657 | | 2,315 | | 35,491 | | 1,039 | | | | | | | | | | |
Total consumer real estate | | 541,446 | | 14,467 | | 446,101 | | 12,035 | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | |
Commercial real estate | | 114,301 | | 2,452 | | 170,256 | | 3,768 | | | | | | | | | | |
Commercial business | | 10,449 | | 69 | | 14,603 | | 255 | | | | | | | | | | |
Total commercial | | 124,750 | | 2,521 | | 184,859 | | 4,023 | | | | | | | | | | |
Leasing and equipment finance | | 6,550 | | 45 | | 9,522 | | 19 | | | | | | | | | | |
Inventory finance | | 3,614 | | 113 | | 972 | | 81 | | | | | | | | | | |
Auto finance | | 56 | | 1 | | 20 | | - | | | | | | | | | | |
Other | | 34 | | 4 | | 6 | | - | | | | | | | | | | |
Total impaired loans with an allowance recorded | | 676,450 | | 17,151 | | 641,480 | | 16,158 | | | | | | | | | | |
Impaired loans without an allowance recorded: | | | | | | | | | | | | | | | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | | | |
First mortgage lien | | 91,520 | | 1,758 | | 92,706 | | 2,724 | | | | | | | | | | |
Junior lien | | 14,933 | | 1,356 | | 13,835 | | 916 | | | | | | | | | | |
Total consumer real estate | | 106,453 | | 3,114 | | 106,541 | | 3,640 | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | |
Commercial real estate | | 99,417 | | 2,385 | | 64,129 | | 251 | | | | | | | | | | |
Commercial business | | 6,485 | | 174 | | 8,792 | | 40 | | | | | | | | | | |
Total commercial | | 105,902 | | 2,559 | | 72,921 | | 291 | | | | | | | | | | |
Auto finance | | 145 | | - | | - | | - | | | | | | | | | | |
Total impaired loans without an allowance recorded | | 212,500 | | 5,673 | | 179,462 | | 3,931 | | | | | | | | | | |
Total impaired loans | | $ | 888,950 | | $ | 22,824 | | $ | 820,942 | | $ | 20,089 | | | | | | | | | | |
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