CORRECTING and REPLACING TCF Reports Third Quarter 2020 Results

In the “Balance Sheet” section, sixth paragraph, the record date for the common stock and 5.70% Series C Non-Cumulative Perpetual Preferred Stock dividends should be November 13, 2020 (instead of November 16, 2020).

The updated release reads:

TCF REPORTS THIRD QUARTER 2020 RESULTS

TCF also announces quarterly cash dividends on common and preferred stock

TCF Financial Corporation (NASDAQ: TCF):

Third Quarter 2020 Highlights

• Quarterly net income of $55.7 million, or $0.35 per diluted share, up 134.5% from the second quarter of 2020
• Adjusted diluted earnings per common share of $0.63(1), up 16.7% from the second quarter of 2020. Adjusted diluted earnings per common share excludes $43.0 million, or $0.28 per share, after-tax impact of merger-related expenses and notable items
• Successful on-time completion of merger-of-equals integration activities
• Loan and lease balances on deferral status down to $403.6 million as of September 30, 2020 ($289.5 million of commercial balances and $114.1 million of consumer balances)
• Loan and lease balances declined 3.4% from June 30, 2020, primarily due to declines in the commercial and industrial and consumer portfolios
• Net charge-offs of $24.6 million, or 0.28% of average loans and leases (annualized)
• Provision for credit losses of $69.7 million, down 11.5% from the second quarter of 2020
• Allowance for credit losses, which includes the reserve for unfunded lending commitments, of 1.60% of total loans and leases, up from 1.42% at June 30, 2020
• Efficiency ratio of 75.29%, improved 297 basis points from the second quarter of 2020. Adjusted efficiency ratio of 61.17%(1), up 137 basis points from the second quarter of 2020
• Common equity Tier 1 capital ratio of 11.45%, compared to 11.06% at June 30, 2020
• Declared quarterly cash dividends on common stock of $0.35 per share payable on December 1, 2020

Merger-related Expenses and Notable items in the Third Quarter of 2020 and Second Quarter of 2020(

• Pre-tax merger-related expenses of $54.0 million, $42.8 million net of tax, or $0.28 per diluted common share for the third quarter of 2020, compared to pre-tax merger-related expenses of $81.6 million, $64.6 million net of tax, or $0.42 per diluted common share for the second quarter of 2020
• Pre-tax expenses, of $154 thousand, $122 thousand net of tax, or $0.00 per diluted common share related to notable items for the third quarter of 2020, compared to pre-tax income, net expenses of $4.4 million, $3.5 million net of tax, or $0.02 per diluted common share related to notable items for the second quarter of 2020, see summary of notable items adjustments below

Note: For the third quarter 2019, TCF’s reported financial results reflect Legacy TCF financial results for the period before August 1, 2019 and the post-merger combined TCF financial results on and after August 1, 2019. The number of shares issued and outstanding, earnings per share, additional paid-in-capital, dividends paid and all references to share quantities of TCF have been retrospectively restated to reflect the equivalent number of shares issued in the Merger as the Merger was treated as a reverse merger.

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

TCF Financial Corporation ("TCF" or the "Corporation") (NASDAQ: TCF) today reported net income of $55.7 million, or diluted earnings per common share of $0.35, for the third quarter of 2020, compared with $23.8 million, or diluted earnings per common share of $0.14, for the second quarter of 2020. Adjusted net income was $98.7 million, or $0.63 per diluted common share for the third quarter of 2020, compared with $84.9 million, or $0.54 per diluted common share, for the second quarter of 2020 (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables).

“The highlight of the third quarter was the successful completion of integration activities related to our merger of equals, with our business now aligned under a single brand and going to market as One TCF across the broader footprint,” said Craig R. Dahl, president and chief executive officer. “We were able to complete these efforts on time, despite the challenges related to COVID-19 and our work-from-home approach. This success was driven by the hard work and dedication of our team members across the bank who continued to focus on serving our customers. As a result, we remain on track to achieve our expense target for the fourth quarter. Now fully integrated, we can bring the full breadth and depth of our services - and our team members’ expertise - to enhance our ability to support our customers and communities.

“Financial results for the third quarter included a stable net interest margin, significant declines in loan deferrals, and continued strong capital ratios and liquidity. While loan demand remained at relatively low levels due to economic uncertainty, we have begun to see trends gradually improve over the past couple of months as commercial loan pipelines have been building, including in CRE and certain C&I sectors such as manufacturing. In addition, we are continuing to monitor credit quality trends as we further isolate the portions of certain portfolios that are more heavily impacted by COVID.

“As we look ahead, we expect to benefit from the outcomes of our merger-of-equals, including our expanded product set that is allowing us to better meet the needs of our commercial and consumer customers. This has also resulted in various merger-related revenue synergy initiatives that are still in front of us and provide opportunities to drive incremental organic growth.”

Net Interest Income and Net Interest Margin

Net interest income was $377.2 million for the third quarter of 2020, a decrease of $1.2 million, or 0.3%, from the second quarter of 2020. Purchase accounting accretion and amortization included in net interest income was $17.7 million for the third quarter of 2020, compared to $18.2 million for the second quarter of 2020. Additionally, third quarter of 2020 net interest income recorded included $14.7 million of interest and fee income from PPP less funding costs, compared to $9.6 million for the second quarter of 2020. Adjusted net interest income, excluding purchase accounting accretion and amortization and the impact from PPP loans, a non-GAAP financial measure, was $344.7 million for the third quarter of 2020, compared to $350.6 million for the second quarter of 2020. Net interest margin was 3.31% for the third quarter of 2020, compared to 3.33% in the second quarter of 2020, while net interest margin on a fully tax-equivalent basis (FTE), a non-GAAP financial measure, was 3.34%, down one basis point from the second quarter of 2020. The decrease in net interest margin from the second quarter of 2020 was driven by higher average cash balances and lower yields on loans, leases and securities, partially offset by lower cost of funds. Adjusted net interest margin FTE, excluding purchase accounting accretion and amortization and the impact of PPP loans, a non-GAAP financial measure, was 3.19% for the third quarter of 2020, down one basis point from the second quarter of 2020. See the "Reconciliation of GAAP to Non-GAAP Financial Measures" tables for reconciliations of our noted non-GAAP measures.

Noninterest Income

Noninterest income was $118.8 million for the third quarter of 2020, a decrease of $14.2 million, or 10.7%, from the second quarter of 2020. Noninterest income for the third quarter of 2020 included a notable item of an $154 thousand loan servicing rights impairment, included in other noninterest income. Noninterest income for the second quarter of 2020 included notable items of a $14.7 million gain on the sale of our Arizona branches and an $8.9 million loan servicing rights impairment, both included in other noninterest income. Adjusted noninterest income, a non-GAAP financial measure, for the third quarter of 2020 was $119.0 million, compared to $127.2 million in the second quarter of 2020. The third quarter of 2020 noninterest income, compared to the second quarter of 2020, also included decreases of $5.5 million in net gains on sales of loans and leases, $5.3 million in leasing revenue due to a decrease in sales-type lease revenue through our equipment financing activity, and $2.7 million in servicing fee revenue due to accelerated loan servicing rights amortization related to faster prepayment speeds, partially offset by increases of $2.7 million in card and ATM revenue, $2.6 million in fees and service charges on deposit accounts, and $2.3 million in net gains on investment securities. The third quarter of 2020 also included a $2.6 million unfavorable interest rate swap mark-to-market adjustment resulting from changes in the interest rate environment, included in other noninterest income, compared to an unfavorable interest rate swap mark-to-market adjustment of $428 thousand in the second quarter of 2020.

Noninterest Expense

Noninterest expense was $373.4 million for the third quarter of 2020, a decrease of $26.8 million, or 6.7%, from the second quarter of 2020. The decrease in the third quarter of 2020 reflected decreases in merger-related expenses, occupancy and equipment expense and compensation and benefits expense, partially offset by an increase in other noninterest expense. The third quarter of 2020 included $54.0 million of merger-related expenses, compared to $81.6 million for the second quarter of 2020. Noninterest expense for the second quarter of 2020 also included $0.9 million of expense related to the sale of the Legacy TCF auto finance portfolio ($0.8 million in other noninterest expense and $0.1 million in compensation and employee benefits) and $0.6 million of expense related to branch exit costs, included in other noninterest expense considered notable items. Excluding merger-related expenses and notable items, adjusted noninterest expense, a non-GAAP financial measure, was $319.4 million for the third quarter of 2020, compared to $317.2 million for the second quarter of 2020 (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables). The third quarter of 2020 also included $1.8 million of federal historic tax credit amortization, included in other noninterest expense, compared to $0.2 million in the second quarter of 2020.

Income Tax Expense

Income tax benefit for the third quarter of 2020 was $4.4 million, compared to income tax expense of $6.2 million, an effective tax rate of 19.1% for the second quarter of 2020. Income tax for the third quarter of 2020 included a benefit of $16.0 million attributable to tax net operating loss carryback benefits associated with the CARES Act. Excluding the benefit provided by the CARES Act, our effective tax rate for the third quarter of 2020 was 21.9%.

Credit Quality

Provision for credit losses Provision for credit losses was $69.7 million for the third quarter of 2020, a decrease of $9.1 million, from the second quarter of 2020. The provision for credit losses in the third quarter of 2020 reflects a build to the allowance for credit losses primarily due to commercial portfolio credit risk management activities, driven by Capital Solutions loans and leases, as well as the impact of net charge offs. Third quarter 2020 net charge offs were $24.6 million compared to $3.4 million in the second quarter of 2020.

Net charge-off rate The annualized net charge-offs as a percentage of average loans and leases were 0.28% for the third quarter of 2020, up 24 basis points from the second quarter of 2020. The increase from the second quarter of 2020 was due to an increase in net charge-offs in the commercial and industrial portfolio, primarily driven by two loans totaling $16.1 million of charge-offs. Subsequent to September 30, 2020, we received a $9.1 million full repayment related to one of these loans which was fully charged off at quarter-end.

Allowance for Credit Losses Allowance for credit losses ("ACL") includes both the allowance for loan and lease losses, which is presented separately on the Consolidated Statements of Financial Condition, and the reserve for unfunded lending commitments, which is included in other liabilities on the Consolidated Statements of Financial Condition. The ACL was $549.4 million, or 1.60% of total loans and leases, at September 30, 2020, up from $503.9 million, or 1.42%, at June 30, 2020. The ACL as a percentage of total loans and leases, excluding PPP loans, a non-GAAP financial measure, was 1.69% at September 30, 2020, an increase from 1.49% at June 30, 2020 (see "Reconciliation of GAAP to Non-GAAP Financial Measures" tables). The PPP loans are individually guaranteed by the Small Business Administration and therefore the accounting under CECL does not require reserves to be recorded on such loans. The increase in the ACL and the ACL as a percentage of total loans and leases from June 30, 2020 was primarily due to commercial portfolio credit risk management activities, driven by Capital Solutions loans and leases, partially offset by a decrease in reserve for unfunded lending commitments.

Nonaccrual loans and leases Nonaccrual loans and leases were $376.7 million at September 30, 2020 and represented 1.10% of total loans and leases, compared to $291.5 million, or 0.82% of total loans and leases, at June 30, 2020. The $85.3 million increase in nonaccrual loans and leases from June 30, 2020 was impacted by $46.6 million of motor coach and shuttle bus balances, within our commercial and industrial portfolio, that moved to nonaccrual.

Balance Sheet

Loans and leases Loans and leases were $34.3 billion at September 30, 2020, a decrease of $1.2 billion, or 3.4%, compared to $35.5 billion at June 30, 2020. The decrease was primarily due to a decline in inventory finance loans in the commercial and industrial portfolio related to continued strong dealer activity and the lack of backfill from manufacturers as a result of the previous economic shutdown and slow reopening, in addition to a decline in the consumer loan portfolio. At both September 30, 2020 and June 30, 2020, we had $1.8 billion of PPP loans outstanding, all included in our commercial and industrial loan portfolio.

Investment securities The investment securities portfolio was $7.6 billion at September 30, 2020, an increase of $267.0 million, or 3.6%, compared to $7.3 billion at June 30, 2020. The increase from June 30, 2020 was primarily due to purchases of residential and commercial mortgage-backed securities and municipal securities.

Deposits Deposits were $39.2 billion at both September 30, 2020 and June 30, 2020, despite the continued run-off of higher cost certificates of deposit. Increases in checking deposit account balances of $760.4 million and noninterest bearing deposits of $210.8 million were offset by decreases in certificates of deposits of $808.2 million, money market accounts of $186.9 million and savings account balances of $14.9 million as of September 30, 2020 compared to June 30, 2020.

Capital The common equity Tier 1 capital ratio was 11.45% at September 30, 2020, compared to 11.06% at June 30, 2020. Our capital ratios reflect our election of the five-year CECL transition for regulatory capital purposes.

In response to the COVID-19 pandemic, TCF temporarily suspended buybacks under its share repurchase program, but retains the ability to resume as circumstances warrant. TCF is well positioned with strong capital and liquidity and is committed to supporting our customers, team members and communities.

TCF's board of directors also declared a regular quarterly cash dividend of $0.35 per common share payable on December 1, 2020 to shareholders of record at the close of business on November 13, 2020. In addition, the board of directors declared a quarterly cash dividend of $0.35625 per depositary share payable on December 1, 2020 to shareholders of record of the depositary shares, representing a 1/1,000th interest in a share of the 5.70% Series C Non-Cumulative Perpetual Preferred Stock, at the close of business on November 13, 2020.

Conference Call Details TCF will host a conference call to discuss third quarter 2020 results on Tuesday, October 27, 2020 at 10:00 a.m. Eastern Time. The conference call will be available via a live webcast on the Investor Relations section of TCF's website, ir.tcfbank.com, and archived for replay. The conference call can also be accessed by dialing (844) 512-2926 and entering access code 8567352. To listen to the replay via phone, please dial (877) 344-7529 and enter access code 10148473. The replay begins approximately one hour after the call is completed on Tuesday, October 27, 2020 and will be available through Tuesday, November 3, 2020.

TCF Financial Corporation (NASDAQ: TCF) is a Detroit, Michigan-based financial holding company with $48 billion in total assets at September 30, 2020 and a top 10 deposit market share in the Midwest. TCF’s primary banking subsidiary, TCF National Bank, is a premier Midwest bank offering consumer and commercial banking, trust and wealth management, and specialty leasing and lending products and services to consumers, small businesses and commercial clients. TCF has approximately 475 banking centers primarily located in Michigan, Illinois and Minnesota with additional locations in Colorado, Ohio, South Dakota and Wisconsin. TCF also conducts business across all 50 states and Canada through its specialty lending and leasing businesses. To learn more about TCF, visit ir.tcfbank.com.

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

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

Certain factors could cause the Corporation's future results to differ materially from those expressed or implied in any forward-looking statements contained herein. These factors include the factors discussed in Part I, Item 1A of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2019 under the heading "Risk Factors" or otherwise disclosed in documents filed or furnished by the Corporation with or to the SEC after the filing of such Annual Report on Form 10-K, and any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statements. Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive.

This release also contains forward-looking statements regarding TCF’s outlook or expectations with respect to post-merger integration. Examples of forward-looking statements include, but are not limited to, statements regarding outlook and expectations with respect to the strategic and financial benefits of the merger, including the expected impact on TCF’s future financial performance (including operating and return metrics and operational aspects of post-merger integration).

Use of Non-GAAP Financial Measures

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

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

N.M. Not Meaningful