false--12-31Q3202000000196120.025P24MP12Mus-gaap:AccountingStandardsUpdate201613Member42.040.350.940.351.05112200000002200000001529655711523797220.050900000017300000007340000000000912020004601720000.0570.0570.0570.0570.010.01200000020000007000700078071614539080873376 0000019612 us-gaap:FairValueInputsLevel1Member us-gaap:~~EstimateOfFairValueFairValueDisclosureMember us-gaap:~~FairValueMeasurementsRecurringMember ~~tcf:FHLBAndFRBStocksMember 2019-09-30~~2019-12-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, ~~2019~~2020

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 000-08185

TCF Financial Corporation

(Exact name of registrant as specified in its charter)



Michigan	38-2022454
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

333 W. Fort Street, Suite 1800

Detroit, Michigan 48226

(Address and Zip Code of principal executive offices)

(800) 867-9757

(Registrant's telephone number, including area code)

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



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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

As of ~~November 8, 2019,~~October 30, 2020, there were ~~153,406,792~~152,487,285 shares outstanding of the registrant's common stock, par value $1 per share, its only outstanding class of common stock.

Table of Contents

TABLE OF CONTENTS



Description	Page

Part I - Financial Information

Item 1. Financial Statements.

Consolidated Statements of Financial Condition at September 30, ~~2019~~2020 and December 31, ~~2018~~2019 (Unaudited)	1

Consolidated Statements of Income for the Three Months and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019 (Unaudited)	2

Consolidated Statements of Comprehensive Income for the Three Months and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019 (Unaudited)	3

Consolidated Statements of Equity for the Three Months and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019 (Unaudited)	4

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019 (Unaudited)	6

Notes to Consolidated Financial Statements (Unaudited)	7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.	6055

Item 3. Quantitative and Qualitative Disclosures About Market Risk.	9399

Item 4. Controls and Procedures.	94100

Part II - Other Information

Item 1. Legal Proceedings.	95102

Item 1A. Risk Factors.	95102

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	96103

Item 3. Defaults Upon Senior Securities.	96103

Item 4. Mine Safety Disclosures.	96103

Item 5. Other Information.	97103

Item 6. Index to Exhibits.	98104

Signatures	99105

Table of Contents

Part I - Financial Information

Item 1. Financial Statements.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Condition (Unaudited)


(Dollars in thousands, except per share data)	At September 30, 2019			At December 31, 2018			At September 30, 2020			At December 31, 2019

ASSETS
Cash and cash equivalents:
Cash and due from banks	$	586,060		$	279,267		$	538,481		$	491,787
Interest-bearing deposits with other banks	736,954			307,790			1,232,773			736,584
Total cash and cash equivalents	1,323,014			587,057			1,771,254			1,228,371
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost	290,238			91,654			300,444			442,440
Investment securities:
Available-for-sale, at fair value	5,579,835			2,470,065
Held-to-maturity, at amortized cost (fair value of $149,928 and $149,267)	144,000			148,852
Available-for-sale, at fair value (amortized cost of $7,187,692 and $6,639,277)							7,446,163			6,720,001
Held-to-maturity, at amortized cost (fair value of $180,364 and $144,844)							170,309			139,445
Total investment securities	5,723,835			2,618,917			7,616,472			6,859,446
Loans and leases held-for-sale (includes $114,831 and $18,070 at fair value)	1,436,069			90,664
Loans and leases held-for-sale (includes $460,172 and $91,202 at fair value)							460,427			199,786
Loans and leases	33,510,752			19,073,020			34,343,691			34,497,464
Allowance for loan and lease losses	(121,218		)	(157,446		)	(515,229		)	(113,052		)
Loans and leases, net	33,389,534			18,915,574			33,828,462			34,384,412
Premises and equipment, net	554,194			427,534			469,699			533,138
Goodwill	1,265,111			154,757			1,313,046			1,299,878
Other intangible assets, net	215,910			20,496			151,875			168,368
Loan servicing rights	55,301			23			38,253			56,313
Other assets	1,439,305			792,936			1,615,857			1,479,401
Total assets	$	45,692,511		$	23,699,612		$	47,565,789		$	46,651,553
LIABILITIES AND EQUITY
Liabilities
Deposits:
Noninterest-bearing	$	7,979,900		$	3,936,155		$	10,691,041		$	7,970,590
Interest-bearing	27,306,174			14,967,531			28,481,056			26,497,873
Total deposits	35,286,074			18,903,686			39,172,097			34,468,463
Short-term borrowings	2,607,300			—			655,461			2,669,145
Long-term borrowings	860,482			1,449,472			871,845			2,354,448
Other liabilities	1,245,238			790,194			1,207,966			1,432,256
Total liabilities	39,999,094			21,143,352			41,907,369			40,924,312
Equity
Preferred stock, $0.01 par value
Authorized - 2,000,000 shares at September 30, 2019 and 30,000,000 shares at December 31, 2018
Issued and outstanding - 7,000 shares at both September 30, 2019 and December 31, 2018	169,302			169,302
Common stock, $1.00 par value at both September 30, 2019 and December 31, 2018
Authorized - 220,000,000 shares at September 30, 2019 and 142,268,000 shares at December 31, 2018
Issued and outstanding - 153,571,381 shares at September 30, 2019 and 88,198,460 shares at December 31, 2018	153,571			88,198
Preferred stock, $0.01 par value, 2,000,000 shares authorized; 7,000 shares issued							169,302			169,302
Common stock, $1.00 par value, 220,000,000 shares authorized
Issued - 152,379,722 shares at September 30, 2020 and 152,965,571 shares at December 31, 2019							152,380			152,966
Additional paid-in capital	3,478,159			798,627			3,450,669			3,462,080
Retained earnings	1,840,214			1,766,994			1,700,044			1,896,427
Accumulated other comprehensive income (loss)	56,228			(33,138		)
Treasury stock at cost and other (4,909,069 Treasury shares at December 31, 2018)	(27,370		)	(252,182		)
Accumulated other comprehensive income							191,771			54,277
Other							(27,122		)	(28,037		)
Total TCF Financial Corporation shareholders' equity	5,670,104			2,537,801			5,637,044			5,707,015
Non-controlling interest	23,313			18,459			21,376			20,226
Total equity	5,693,417			2,556,260			5,658,420			5,727,241
Total liabilities and equity	$	45,692,511		$	23,699,612		$	47,565,789		$	46,651,553

See accompanying notes to consolidated financial statements.

Table of Contents

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except per share data)	2019			2018		2019			2018		2020			2019			2020		2019
Interest income
Interest and fees on loans and leases	$	417,370		$	269,167	$	983,890		$	806,935	$	373,112		$	417,370		$	1,209,034	$	983,890
Interest on investment securities:
Taxable	31,038			11,498		69,745			27,491		35,648			31,038			109,073		69,745
Tax-exempt	3,385			4,328		7,277			12,991		3,892			3,385			12,396		7,277
Interest on loans held-for-sale	1,408			3,625		2,832			5,281		3,829			1,408			8,712		2,832
Interest on other earning assets	6,607			3,089		13,739			8,722		3,967			6,607			14,995		13,739
Total interest income	459,808			291,707		1,077,483			861,420		420,448			459,808			1,354,210		1,077,483
Interest expense
Interest on deposits	70,900			27,479		149,154			74,228		31,852			70,900			146,056		149,154
Interest on borrowings	17,115			10,726		48,050			31,850		11,429			17,115			51,147		48,050
Total interest expense	88,015			38,205		197,204			106,078		43,281			88,015			197,203		197,204
Net interest income	371,793			253,502		880,279			755,342		377,167			371,793			1,157,007		880,279
Provision for credit losses	27,188			2,270		50,879			27,874		69,664			27,188			245,333		50,879
Net interest income after provision for credit losses	344,605			251,232		829,400			727,468		307,503			344,605			911,674		829,400
Noninterest income
Leasing revenue											31,905			39,590			102,642		117,032
Fees and service charges on deposit accounts	34,384			29,175		88,504			83,703		25,470			34,384			82,899		88,504
Leasing revenue	39,590			41,944		117,032			121,001
Net gains (losses) on sales of loans and leases											23,490			(5,984		)	73,114		13,374
Card and ATM revenue											23,383			23,315			65,704		62,470
Wealth management revenue	4,241			—		4,241			—		6,506			4,241			18,863		4,241
Card and ATM revenue	23,315			20,074		62,470			58,313
Net (losses) gains on sales of loans and leases	(5,984		)	8,502		13,374			24,900
Servicing fee revenue	5,121			6,032		14,754			21,811		321			5,121			10,154		14,754
Net gains (losses) on investment securities	5,900			94		7,417			181
Net gains on investment securities											2,324			5,900			2,332		7,417
Other	(12,309		)	6,243		(312		)	20,620		5,411			(12,309		)	33,119		(312		)
Total noninterest income	94,258			112,064		307,480			330,529		118,810			94,258			388,827		307,480
Noninterest expense
Compensation and employee benefits	155,745			124,996		395,953			372,174		168,323			155,745			511,650		395,953
Occupancy and equipment	49,229			42,337		132,789			123,562		48,233			49,229			159,628		132,789
Lease financing equipment depreciation	19,408			19,525		57,797			54,744		17,932			19,408			54,594		57,797
Net foreclosed real estate and repossessed assets	2,203			3,880		9,281			12,654		1,518			2,203			4,375		9,281
Merger-related expenses	111,259			—		124,943			—		54,011			111,259			172,358		124,943
Other	87,776			55,685		194,781			201,308		83,423			87,776			245,675		194,781
Total noninterest expense	425,620			246,423		915,544			764,442		373,440			425,620			1,148,280		915,544
Income before income tax expense	13,243			116,873		221,336			293,555
Income before income tax (benefit) expense											52,873			13,243			152,221		221,336
Income tax (benefit) expense	(11,735		)	28,034		28,866			66,083		(4,429		)	(11,735		)	14,870		28,866
Income after income tax (benefit) expense	24,978			88,839		192,470			227,472		57,302			24,978			137,351		192,470
Income attributable to non-controlling interest	2,830			2,643		9,401			8,766		1,564			2,830			5,950		9,401
Net income attributable to TCF Financial Corporation	22,148			86,196		183,069			218,706		55,738			22,148			131,401		183,069
Preferred stock dividends	2,494			2,494		7,481			9,094		2,494			2,494			7,481		7,481
Impact of preferred stock redemption	—			—		—			3,481
Net income available to common shareholders	$	19,654		$	83,702	$	175,588		$	206,131	$	53,244		$	19,654		$	123,920	$	175,588
Earnings per common share
Basic	$	0.15		$	1.00	$	1.79		$	2.44	$	0.35		$	0.15		$	0.82	$	1.79
Diluted	0.15			1.00		1.79			2.43		0.35			0.15			0.82		1.79
Weighted-average common shares outstanding
Basic	128,575,171			83,762,625		97,876,262			84,522,519		151,768,337			128,575,171			151,761,299		97,876,262
Diluted	128,754,588			83,808,063		98,055,279			84,791,124		151,821,592			128,754,588			151,826,928		98,055,279

See accompanying notes to consolidated financial statements.

Table of Contents

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2019			2018			2019			2018			2020			2019			2020			2019
Net income attributable to TCF Financial Corporation	$	22,148		$	86,196		$	183,069		$	218,706		$	55,738		$	22,148		$	131,401		$	183,069
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on available for sale investment securities and interest-only strips	19,230			(13,434		)	87,223			(46,059		)
Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips													(7,694		)	19,230			138,550			87,223
Net unrealized gains (losses) on net investment hedges	1,641			(1,904		)	(2,846		)	3,479			(2,655		)	1,641			3,269			(2,846		)
Foreign currency translation adjustment	(1,968		)	2,899			5,014			(4,136		)	3,721			(1,968		)	(4,298		)	5,014
Recognized postretirement prior service cost	(9		)	(9		)	(25		)	(26		)	(9		)	(9		)	(27		)	(25		)
Total other comprehensive income (loss), net of tax	18,894			(12,448		)	89,366			(46,742		)	(6,637		)	18,894			137,494			89,366
Comprehensive income	$	41,042		$	73,748		$	272,435		$	171,964		$	49,101		$	41,042		$	268,895		$	272,435

See accompanying notes to consolidated financial statements.

Table of Contents

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Equity (Unaudited)

At or For the Three Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

TCF Financial Corporation
Number of
Shares Issued Preferred
Stock Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Treasury
Stock
and Other Total Non-
controlling
Interest Total
Equity
(Dollars in thousands) Preferred Common
Balance, June 30, 2019 7,000
87,943,860
$ 169,302
$ 87,944
$ 781,788
$ 1,874,308
$ 37,334
$ (265,017 ) $ 2,685,659
$ 24,858
$ 2,710,517
Net income —
—
—
—
—
22,148
—
—
22,148
2,830
24,978
Other comprehensive income (loss), net of tax —
—
—
—
—
—
18,894
—
18,894
—
18,894
Reverse merger with Chemical Financial Corporation —
65,539,678
—
65,540
2,687,153
—
—
265,863
3,018,556
—
3,018,556
Net investment by (distribution to) non-controlling interest —
—
—
—
—
—
—
—
—
(4,375 ) (4,375 )
Repurchases of 780,716 shares of common stock —
—
—
—
—
—
—
(32,310 ) (32,310 ) —
(32,310 )
Dividends on 5.70% Series C Preferred Stock —
—
—
—
—
(2,494 ) —
—
(2,494 ) —
(2,494 )
Dividends on common stock of $0.35 per common share —
—
—
—
—
(53,748 ) —
—
(53,748 ) —
(53,748 )
Stock compensation plans, net of tax —
87,843
—
87
13,070
—
—
242
13,399
—
13,399
Change in shares held in trust for deferred compensation plans, at cost —
—
—
—
(3,852 ) —
—
3,852
—
—
—
Balance, September 30, 2019 7,000
153,571,381
$ 169,302
$ 153,571
$ 3,478,159
$ 1,840,214
$ 56,228
$ (27,370 ) $ 5,670,104
$ 23,313
$ 5,693,417


Balance, June 30, 2018	7,000	88,166,532		$	169,302	$	88,167		$	790,933		$	1,649,449		$	(52,811	)	$	(164,107	)	$	2,480,933		$	23,646		$	2,504,579
																														TCF Financial Corporation
																														Number of Shares Issued		Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Other			Total			Non- controlling Interest			Total Equity
(Dollars in thousands)																														Preferred	Common
Balance, June 30, 2020																														7,000	152,233,106	$	169,302	$	152,233	$	3,441,925	$	1,700,480		$	198,408		$	(27,093	)	$	5,635,255		$	23,300		$	5,658,555
Net income	—	—		—		—			—			86,196			—			—			86,196			2,643			88,839			—	—	—		—		—		55,738			—			—			55,738			1,564			57,302
Other comprehensive income (loss), net of tax	—	—		—		—			—			—			(12,448		)	—			(12,448		)	—			(12,448		)	—	—	—		—		—		0			(6,637		)	—			(6,637		)	0			(6,637		)
Net investment by (distribution to) non-controlling interest	—	—		—		—			—			—			—			—			—			(5,135		)	(5,135		)	—	—	—		—		—		—			—			—			—			(3,488		)	(3,488		)
Repurchases of 477,804 shares of common stock	—	—		—		—			—			—			—			(24,026		)	(24,026		)	—			(24,026		)
Dividends on 5.70% Series C Preferred Stock	—	—		—		—			—			(2,494		)	—			—			(2,494		)	—			(2,494		)	—	—	—		—		—		(2,494		)	—			—			(2,494		)	—			(2,494		)
Dividends on common stock of $0.295 per common share	—	—		—		—			—			(24,741		)	—			—			(24,741		)	—			(24,741		)
Common stock warrants exercised	—	40,304		—		40			(40		)	—			—			—			—			—			—
Dividends on common stock of $0.35 per common share																														—	—	—		—		—		(53,680		)	—			—			(53,680		)	—			(53,680		)
Stock compensation plans, net of tax	—	(5,791	)	—		(6		)	3,444			—			—			—			3,438			—			3,438			—	146,616	—		147		8,715		—			—			0			8,862			—			8,862
Change in shares held in trust for deferred compensation plans, at cost	—	—		—		—			1,519			—			—			(1,519		)	—			—			—			—	—	—		—		29		—			—			(29		)	—			—			—
Balance, September 30, 2018	7,000	88,201,045		$	169,302	$	88,201		$	795,856		$	1,708,410		$	(65,259	)	$	(189,652	)	$	2,506,858		$	21,154		$	2,528,012
Balance, September 30, 2020																														7,000	152,379,722	$	169,302	$	152,380	$	3,450,669	$	1,700,044		$	191,771		$	(27,122	)	$	5,637,044		$	21,376		$	5,658,420



Balance, June 30, 2019	7,000	87,943,860	$	169,302	$	87,944	$	781,788		$	1,874,308		$	37,334	$	(265,017	)	$	2,685,659		$	24,858		$	2,710,517
Net income	—	—	—		—		—			22,148			—		—			22,148			2,830			24,978
Other comprehensive income (loss), net of tax	—	—	—		—		—			—			18,894		—			18,894			—			18,894
Reverse merger with Chemical Financial Corporation	—	65,539,678	—		65,540		2,687,153			—			—		265,863			3,018,556			—			3,018,556
Net investment by (distribution to) non-controlling interest	—	—	—		—		—			—			—		—			—			(4,375		)	(4,375		)
Repurchases of 780,716 shares of common stock	—	—	—		—		—			—			—		(32,310		)	(32,310		)	—			(32,310		)
Dividends on 5.70% Series C Preferred Stock	—	—	—		—		—			(2,494		)	—		—			(2,494		)	—			(2,494		)
Dividends on common stock of $0.35 per common share	—	—	—		—		—			(53,748		)	—		—			(53,748		)	—			(53,748		)
Stock compensation plans, net of tax	—	87,843	—		87		13,070			—			—		242			13,399			—			13,399
Change in shares held in trust for deferred compensation plans, at cost	—	—	—		—		(3,852		)	—			—		3,852			—			—			—
Balance, September 30, 2019	7,000	153,571,381	$	169,302	$	153,571	$	3,478,159		$	1,840,214		$	56,228	$	(27,370	)	$	5,670,104		$	23,313		$	5,693,417

See accompanying notes to consolidated financial statements.

Table of Contents

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Equity (Unaudited)

At or For the Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019


	TCF Financial Corporation																															TCF Financial Corporation
	Number of Shares Issued				Preferred Stock			Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock and Other			Total			Non- controlling Interest			Total Equity			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	Common
Balance, December 31, 2019																																7,000	152,965,571		$	169,302	$	152,966		$	3,462,080		$	1,896,427		$	54,277		$	(28,037	)	$	5,707,015		$	20,226		$	5,727,241
Cumulative effect adjustment related to adoption of Accounting Standards Update 2016-13⁽¹⁾																																—	—		—		—			—			(159,323		)	—			—			(159,323		)	74			(159,249		)
Balance, January 1, 2020																																7,000	152,965,571		169,302		152,966			3,462,080			1,737,104			54,277			(28,037		)	5,547,692			20,300			5,567,992
Net income																																—	—		—		—			—			131,401			—			—			131,401			5,950			137,351
Other comprehensive income (loss), net of tax																																—	—		—		—			—			—			137,494			—			137,494			—			137,494
Net investment by (distribution to) non-controlling interest																																—	—		—		—			—			—			—			—			—			(4,874		)	(4,874		)
Repurchases of 873,376 shares of common stock																																—	(873,376	)	—		(873		)	(32,225		)	—			—			—			(33,098		)	—			(33,098		)
Dividends on 5.70% Series C Preferred Stock																																—	—		—		—			—			(7,481		)	—			—			(7,481		)	—			(7,481		)
Dividends on common stock of $1.05 per common share																																—	—		—		—			—			(160,980		)	—			—			(160,980		)	—			(160,980		)
Stock compensation plans, net of tax																																—	287,527		—		287			21,729			—			—			—			22,016			—			22,016
Change in shares held in trust for deferred compensation plans, at cost																																—	—		—		—			(915		)	—			—			915			—			—			—
Balance, September 30, 2020																																7,000	152,379,722		$	169,302	$	152,380		$	3,450,669		$	1,700,044		$	191,771		$	(27,122	)	$	5,637,044		$	21,376		$	5,658,420

Balance, December 31, 2018	7,000		88,198,460		$	169,302		$	88,198		$	798,627		$	1,766,994		$	(33,138	)	$	(252,182	)	$	2,537,801		$	18,459		$	2,556,260		7,000	88,198,460		$	169,302	$	88,198		$	798,627		$	1,766,994		$	(33,138	)	$	(252,182	)	$	2,537,801		$	18,459		$	2,556,260
Net income	—		—		—			—			—			183,069			—			—			183,069			9,401			192,470			—	—		—		—			—			183,069			—			—			183,069			9,401			192,470
Other comprehensive income (loss), net of tax	—		—		—			—			—			—			89,366			—			89,366			—			89,366			—	—		—		—			—			—			89,366			—			89,366			—			89,366
Reverse merger with Chemical Financial Corporation	—		65,539,678		—			65,540			2,687,153			—			—			265,863			3,018,556			—			3,018,556			—	65,539,678		—		65,540			2,687,153			—			—			265,863			3,018,556			—			3,018,556
Net investment by (distribution to) non-controlling interest	—		—		—			—			—			—			—			—			—			(4,547		)	(4,547		)	—	—		—		—			—			—			—			—			—			(4,547		)	(4,547		)
Repurchases of 1,453,908 shares of common stock	—		—		—			—			—			—			—			(58,805		)	(58,805		)	—			(58,805		)	—	—		—		—			—			—			—			(58,805		)	(58,805		)	—			(58,805		)
Dividends on 5.70% Series C Preferred Stock	—		—		—			—			—			(7,481		)	—			—			(7,481		)	—			(7,481		)	—	—		—		—			—			(7,481		)	—			—			(7,481		)	—			(7,481		)
Dividends on common stock of $0.94 per common share	—		—		—			—			—			(102,368		)	—			—			(102,368		)	—			(102,368		)	—	—		—		—			—			(102,368		)	—			—			(102,368		)	—			(102,368		)
Stock compensation plans, net of tax	—		(166,757	)	—			(167		)	(5,626		)	—			—			15,759			9,966			—			9,966			—	(166,757	)	—		(167		)	(5,626		)	—			—			15,759			9,966			—			9,966
Change in shares held in trust for deferred compensation plans, at cost	—		—		—			—			(1,995		)	—			—			1,995			—			—			—			—	—		—		—			(1,995		)	—			—			1,995			—			—			—
Balance, September 30, 2019	7,000		153,571,381		$	169,302		$	153,571		$	3,478,159		$	1,840,214		$	56,228		$	(27,370	)	$	5,670,104		$	23,313		$	5,693,417		7,000	153,571,381		$	169,302	$	153,571		$	3,478,159		$	1,840,214		$	56,228		$	(27,370	)	$	5,670,104		$	23,313		$	5,693,417

Balance, December 31, 2017	4,007,000		87,473,708		$	265,821		$	87,474		$	791,465		$	1,577,311		$	(18,517	)	$	(40,797	)	$	2,662,757		$	17,827		$	2,680,584
Change in accounting principle	—		—		—			—			—			(116		)	—			—			(116		)	—			(116		)
Balance, January 1, 2018	4,007,000		87,473,708		265,821			87,474			791,465			1,577,195			(18,517		)	(40,797		)	2,662,641			17,827			2,680,468
Net income	—		—		—			—			—			218,706			—			—			218,706			8,766			227,472
Other comprehensive income (loss), net of tax	—		—		—			—			—			—			(46,742		)	—			(46,742		)	—			(46,742		)
Net investment by (distribution to) non-controlling interest	—		—		—			—			—			—			—			—			—			(5,439		)	(5,439		)
Redemption of Series B Preferred Stock	(4,000,000	)	—		(96,519		)	—			—			(3,481		)	—			—			(100,000		)	—			(100,000		)
Repurchases of 3,195,126 shares of common stock	—		—		—			—			—			—			—			(149,912		)	(149,912		)	—			(149,912		)
Dividends on 6.45% Series B Preferred Stock	—		—		—			—			—			—			—			—			—			—			—
Dividends on 5.70% Series C Preferred Stock	—		—		—			—			—			(9,094		)	—			—			(9,094		)	—			(9,094		)
Dividends on common stock of $0.885 per common share	—		—		—			—			—			(74,916		)	—			—			(74,916		)	—			(74,916		)
Common stock warrants exercised	—		533,548		—			534			(534		)	—			—			—			—			—			—
Common shares purchased by TCF employee benefit plans	—		17,594		—			17			698			—			—			—			715			—			715
Stock compensation plans, net of tax	—		176,195		—			176			5,284			—			—			—			5,460			—			5,460
Change in shares held in trust for deferred compensation plans, at cost	—		—		—			—			(1,057		)	—			—			1,057			—			—			—
Balance, September 30, 2018	7,000		88,201,045		$	169,302		$	88,201		$	795,856		$	1,708,410		$	(65,259	)	$	(189,652	)	$	2,506,858		$	21,154		$	2,528,012

(1) See ~~accompanying notes to consolidated financial statements.~~"Note 3. Summary of Significant Accounting Policies" for further information

Table of Contents

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2019			2018			2020			2019
Cash flows from operating activities
Net income	$	192,470		$	227,472
Income after income tax (benefit) expense							$	137,351		$	192,470
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses	50,879			27,874			245,333			50,879
Share-based compensation expense	17,762			14,040			26,447			17,762
Depreciation and amortization	207,954			153,018			320,950			207,954
Provision (benefit) for deferred income taxes	(27,732		)	33,409			(132,148		)	(27,732		)
Net gains on sales of assets	(46,966		)	(28,977		)	(97,068		)	(46,966		)
Proceeds from sales of loans and leases held-for-sale	512,051			264,970			1,271,793			512,051
Originations of loans and leases held-for-sale, net of repayments	(548,371		)	(271,793		)	(1,540,397		)	(548,371		)
Impairment of loan servicing rights	4,520			—			17,248			4,520
Net change in other assets	(188,081		)	21,984			(422,496		)	(188,081		)
Net change in other liabilities	16,229			(1,849		)	(165,881		)	16,229
Other, net	(34,793		)	(29,668		)	(42,154		)	(34,793		)
Net cash provided by (used in) operating activities	155,922			410,480			(381,022		)	155,922
Cash flows from investing activities
Proceeds from sales of investment securities available-for-sale	1,993,274			—			50,797			1,993,274
Proceeds from maturities of and principal collected on investment securities available-for-sale	398,989			120,183			1,646,241			398,989
Purchases of investment securities available-for-sale	(1,424,344		)	(919,645		)	(2,074,989		)	(1,424,344		)
Proceeds from maturities of and principal collected on investment securities held-to-maturity	11,945			11,259			22,643			11,945
Purchases of investment securities held-to-maturity	(4,029		)	(2,187		)	(27,428		)	(4,029		)
Redemption of Federal Home Loan Bank stock	162,011			201,001			344,014			162,011
Purchases of Federal Home Loan Bank stock	(142,000		)	(199,000		)	(202,000		)	(142,000		)
Proceeds from sales of loans and leases	566,880			675,164			530,734			566,880
Loan and lease originations and purchases, net of principal collected	(674,459		)	735,840			(433,410		)	(674,459		)
Proceeds from sales of other assets	82,970			58,879			60,018			82,970
Purchases of premises and equipment and lease equipment	(108,404		)	(903,394		)	(75,885		)	(108,404		)
Net cash acquired (paid) in business combination	975,014			—			0			975,014
Other, net	(6,743		)	15,151			23,456			(6,743		)
Net cash provided by (used in) investing activities	1,831,104			(206,749		)	(135,809		)	1,831,104
Cash flows from financing activities
Net change in deposits	(15,296		)	163,442			4,773,178			(15,296		)
Net change in short-term borrowings	(17,292		)	2,451			(2,013,623		)	(17,292		)
Proceeds from long-term borrowings	2,799,986			7,043,458			4,956,373			2,799,986
Payments on long-term borrowings	(3,838,454		)	(7,118,690		)	(6,445,567		)	(3,838,454		)
Payments on liabilities related to acquisition and portfolio purchase	(1,000		)	—			0			(1,000		)
Redemption of Series B preferred stock	—			(100,000		)
Repurchases of common stock	(58,804		)	(149,912		)	(33,098		)	(58,804		)
Common shares sold to TCF employee benefit plans	—			715
Dividends paid on preferred stock	(7,481		)	(9,094		)	(7,481		)	(7,481		)
Dividends paid on common stock	(102,368		)	(74,916		)	(160,980		)	(102,368		)
Exercise of stock options	—			(997		)	(110		)	0
Payments related to tax-withholding upon conversion of share-based awards	(5,813		)	(6,563		)	(4,104		)	(5,813		)
Net investment by (distribution to) non-controlling interest	(4,547		)	(5,439		)	(4,874		)	(4,547		)
Net cash provided by (used in) financing activities	(1,251,069		)	(255,545		)	1,059,714			(1,251,069		)
Net change in cash and due from banks	735,957			(51,814		)	542,883			735,957
Cash and cash equivalents at beginning of period	587,057			621,782			1,228,371			587,057
Cash and cash equivalents at end of period	$	1,323,014		$	569,968		$	1,771,254		$	1,323,014
Supplemental disclosures of cash flow information
Cash paid (received) for:
Interest on deposits and borrowings	$	192,793		$	99,336		$	195,619		$	192,793
Income taxes, net	10,367			(21,035		)	130,144			10,367
Noncash activities:
Transfer of loans and leases to other assets	73,314			77,704			38,938			73,314
Transfer of loans and leases from held for investment to held for sale, net	1,837,445			644,488
Transfer of loans and leases from held-for-investment to held for sale, net							426,063			1,837,445

See accompanying notes to consolidated financial statements.

Table of Contents

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Basis of Presentation

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

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

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

The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission ("SEC"). Accordingly, the consolidated financial statements do not include all of the information and notes necessary for complete financial statements in conformity with GAAP. In the opinion of management, the accompanying unaudited consolidated financial statements contain all the significant adjustments, consisting of normal recurring items, considered necessary for fair presentation. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. ~~These interim unaudited financial statements should be read~~The information in ~~connection with the Legacy TCF audited Consolidated Financial Statements and notes thereto, at and for the year ended December 31, 2018, which were filed as Exhibit 99.1 to TCF's Current~~this Quarterly Report on Form ~~8-K filed~~10-Q is written with the ~~SEC~~presumption that the users of the interim financial statements have read or have access to the Corporation's most recent Annual Report on ~~August 1, 2019,~~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 ~~included in the Annual Report on Form 10-K of Legacy TCF~~at and for the year ended December 31, ~~2018.~~2019.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. These estimates are based on information available to management at the time the estimates are made. Actual results could differ from those estimates. Certain reclassifications have been made to prior period financial statements to conform to the current period presentation.

In connection with the Merger, effective August 1, 2019, TCF renamed its Wholesale Banking segment to Commercial Banking to align with the way TCF is now managed. In addition, activity that was related to small business banking and private banking were moved from the Wholesale Banking (now named Commercial Banking) segment to the Consumer Banking segment. The revised presentation of previously reported segment data has been applied retroactively for all periods presented in these financial statements. See Note 25. Reportable Segments for further information.

Table of Contents

Note 2. Merger

As described in Note 1. Basis of Presentation, on August 1, 2019, wethe Corporation completed ~~our~~the Merger with Legacy TCF.

The Merger was an all-stock transaction. Pursuant to the merger agreement, on the Merger Date, each holder of Legacy TCF common stock received 0.5081 shares (the "Exchange Ratio") of TCF's common stock for each share of Legacy TCF common stock held. Each outstanding share of common stock of Chemical remained outstanding and was unaffected by the Merger other than by the change of the Corporation’s name from Chemical Financial Corporation to TCF Financial Corporation. As of the effective time of the Merger on August 1, 2019, TCF Financial had approximately 153.5 million shares of common stock outstanding. On the Merger Date, the shares of Legacy TCF common stock, which previously traded under the ticker symbol "TCF" on the New York Stock Exchange (the "NYSE") ceased trading on, and were delisted from, the NYSE. Following the Merger, TCF Financial common stock continues to trade on the Nasdaq Stock Market (“NASDAQ”), but its ticker symbol changed from "CHFC" to "TCF" effective August 1, 2019.

Pursuant to the merger agreement, each outstanding share of Legacy TCF 5.70% Series C Non-Cumulative Perpetual Preferred Stock, with a liquidation preference of $25,000 per share (the "Legacy TCF Preferred Stock") was converted into the right to receive 1 share of newly created 5.70% Series C Non-Cumulative Perpetual Preferred Stock of TCF, with a liquidation preference of $25,000 per share (the "New TCF Preferred Stock"), and each depository share representing 1/1000^th of a share of Legacy TCF Preferred Stock was converted into one depositary share representing 1/1000th of a share of New TCF Preferred Stock. Immediately following the effective time of the Merger, as of August 1, 2019, TCF Financial had 7,000 shares of New TCF Preferred Stock outstanding and 7.0 million related depositary shares outstanding.

The Merger constituted a business combination and was accounted for as a reverse merger using the acquisition method of ~~accounting. As a result,~~accounting, therefore, Legacy TCF was deemed the ~~accounting~~ acquirer ~~and~~for financial reporting purposes even though Chemical was the legal ~~acquirer and the accounting acquiree. Therefore,~~acquirer. As a result, the historical financial statements of Legacy TCF became the historical financial statements of the combined company. In addition, the assets acquired, including the intangible assets identified, and assumed liabilities of Chemical as of the Merger Date, have been recorded at their estimated fair value and added to those of Legacy TCF. In many cases, the determination of fair value required management to make estimates about discount rates, expected future cash flows, market conditions and other future events that are highly subjective in nature and subject to change.

As the legal acquirer, Chemical (now TCF Financial Corporation) issued approximately 81.9 million shares of TCF Financial common stock in connection with the Merger, which represented approximately 53% of the voting interests in TCF Financial upon completion of the Merger. Guidance in Accounting Standards Codification ("ASC") 805-40-30-2 explains that the purchase price in a reverse acquisition is determined based on “the number of equity interests the legal acquiree would have had to issue to give the owners of the legal acquirer the same percentage equity interest in the combined entity that results from the reverse acquisition.” The first step in calculating the purchase price in the Merger is to determine the ownership of the combined company following the Merger. The table below summarizes the ownership of the combined company ~~(TCF Financial)~~("TCF Financial") following the Merger, as well as the market capitalization of the combined company using shares of Chemical and Legacy TCF common stock outstanding at July 31, 2019 and Chemical’s closing price on July 31, 2019.


(In thousands)	TCF Financial Ownership and Market Value Table
(Dollars in thousands)						TCF Financial Ownership and Market Value Table
	Number of Chemical Outstanding Shares	Percentage Ownership		Market Value at $42.04 Chemical Share Price		Number of Chemical Outstanding Shares	Percentage Ownership		Market Value at $42.04 Chemical Share Price
Legacy TCF shareholders						81,920,494	53.38	%	$	3,443,938
Chemical shareholders	71,559	46.62	%	$	3,008,330	71,558,755	46.62		3,008,330
Legacy TCF shareholders	81,920	53.38		3,443,938
Total	153,479	100		$	6,452,268	153,479,249	100.00	%	$	6,452,268

Table of Contents

Next, the hypothetical number of shares Legacy TCF would have to issue to give Chemical owners the same percentage ownership in the combined company is calculated in the table below (based on shares of Legacy TCF common stock outstanding at July 31, 2019):


(In thousands)	Hypothetical Legacy TCF Ownership
	Number of Legacy TCF Outstanding Shares	Percentage Ownership		Hypothetical Legacy TCF Ownership
				Number of Legacy TCF Outstanding Shares	Percentage Ownership
Legacy TCF shareholders				161,229,078	53.38	%
Chemical shareholders	140,836	46.62	%	140,835,967	46.62
Legacy TCF shareholders	161,229	53.38
Total	302,065	100	%	302,065,045	100.00	%

Finally, the purchase price is calculated based on the number of hypothetical shares of Legacy TCF common stock issued to Chemical shareholders multiplied by the share price as demonstrated in the table ~~below (amounts in thousands except per share data).~~below.


(In thousands, except per share data)
(Dollars in thousands, except per share data)
Number of hypothetical Legacy TCF shares issued to Chemical shareholders	Number of hypothetical Legacy TCF shares issued to Chemical shareholders	140,835,967		Number of hypothetical Legacy TCF shares issued to Chemical shareholders	140,835,967
Legacy TCF market price per share as of July 31, 2019	Legacy TCF market price per share as of July 31, 2019	$	21.38	Legacy TCF market price per share as of July 31, 2019	$	21.38
Purchase price determination of hypothetical Legacy TCF shares issued to Chemical shareholders	Purchase price determination of hypothetical Legacy TCF shares issued to Chemical shareholders	3,011,073		Purchase price determination of hypothetical Legacy TCF shares issued to Chemical shareholders	$	3,011,073
Value of Chemical stock options hypothetically converted to options to acquire shares of Legacy TCF common stock	Value of Chemical stock options hypothetically converted to options to acquire shares of Legacy TCF common stock	7,335		Value of Chemical stock options hypothetically converted to options to acquire shares of Legacy TCF common stock	7,335
Cash in lieu of fractional shares	Cash in lieu of fractional shares	148		Cash in lieu of fractional shares	148
Purchase price consideration	Purchase price consideration	$	3,018,556	Purchase price consideration	$	3,018,556

Table of Contents

The following table provides the purchase price allocation as of the Merger Date and the ~~Chemical~~ assets acquired and liabilities assumed at their estimated fair value as of the Merger Date as recorded by ~~TCF. We~~the Corporation. The Corporation recorded the estimate of fair value based on initial valuations available at the Merger Date and these estimates are considered preliminary and subject to adjustment for up to one year after the Merger Date. While ~~we believe~~the Corporation believes that the information available onat the Merger Date provided a reasonable basis for estimating fair value, ~~we expect that we may obtain~~following the Merger, the Corporation obtained additional information and evidence and then finalized all valuations and recorded final adjustments during the ~~measurement period that would result in changes to the estimated fair value amounts. The measurement period ends on the earlier~~first quarter of one year after the Merger Date or the date we are able to determine that we have obtained all necessary information about the facts and circumstances that existed as of Merger Date. Subsequent adjustments to fair value, if necessary, will be reflected in our future filings.2020. These adjustments ~~include:~~included: (i) changes in the estimated fair value of loans and leases acquired, (ii) ~~changes in the estimated fair value of intangible assets acquired, (iii)~~ changes in deferred tax assets related to fair value estimates and changes in the expected realization of items considered to be net operating loss carryforwards, and ~~(iv)~~(iii) changes in goodwill as a result of the net effect of any adjustments.


(In thousands)
Purchase price consideration:
Stock	$	3,018,556	$	3,018,556
Fair value of assets acquired:
Fair value of assets acquired⁽¹⁾
Cash and cash equivalents	975,014		975,014
Federal Home Loan Bank and Federal Reserve Bank stocks	218,582		218,582
Investment securities	3,774,738		3,774,738
Loans held-for-sale	44,532		44,532
Loans and leases	15,726,213		15,713,399
Premises and equipment	140,219		140,219
Loan servicing rights	59,567		59,567
Other intangible assets	201,568		159,532
Net deferred tax asset⁽¹⁾⁽²⁾	49,345		65,685
Other assets	553,796		552,432
Total assets acquired	21,743,574		21,703,700
Fair value of liabilities assumed:
Fair value of liabilities assumed⁽¹⁾
Deposits	16,418,019		16,418,215
Short-term borrowings	2,629,426		2,629,426
Long-term borrowings	442,323		442,323
Other liabilities	345,604		353,469
Total liabilities assumed	19,835,372		19,843,433
Fair value of net identifiable assets	1,908,202		1,860,267
Goodwill resulting from Merger⁽²⁾⁽¹⁾	$	1,110,354	$	1,158,289

(1)

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


(2)	Net deferred tax asset includes acquisition-related fair value adjustments, loss and tax credit carry forwards, mortgage servicing rights and core deposit and customer intangibles.


~~(2)~~	~~The goodwill recorded was primarily attributable to the synergies and economies of scale expected from combining the operations of Legacy TCF and Chemical.~~

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

As described in more detail in Note 3. Summary of Significant Accounting Policies below, all Chemical loans and leases were recorded at their estimated fair value as of the Merger Date with no0 carryover of the related allowance for loans and lease losses. ~~These~~The acquired loans and leases were segregated into two classifications at acquisition, purchased credit impaired (“PCI”) loans accounted for under the provisions of legacy GAAP Accounting Standards Codification ("ASC") Topic 310-30, and purchased nonimpaired loans and leases, also referred to as purchased ~~loans.~~loans and leases. The excess of cash flows expected to be collected over the estimated fair value of PCI loans is referred to as the accretable yield and is accreted into interest income over the estimated remaining life of the loan using the effective yield method. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayment and estimates of future credit losses expected to be incurred, is referred to as the nonaccretable difference.

Table of Contents

Information regarding acquired loans and leases included in net loans and leases acquired at the Merger Date was as follows:

(In thousands)
PCI loans:
Contractually required payments receivable $ 458,374
Nonaccretable difference (105,031 )
Expected cash flows 353,343
Accretable yield 39,733
Fair value of PCI loans $ 313,610

Purchased nonimpaired loans and leases:
Unpaid principal balance $ 15,636,020
Fair value discount (223,417 )
Fair value at acquisition 15,412,603
Total fair value at acquisition $ 15,726,213

~~Supplemental disclosures of cash flow information related to investing and financing activities regarding the Merger are as follows for the nine months ended September 30, 2019:~~

(In thousands)
Business combination
Fair value of tangible assets acquired $ 21,482,439
Goodwill, loan servicing rights and other identifiable intangible assets acquired 1,371,489
Liabilities assumed 19,835,372
Common stock and stock options converted 3,018,556



(In thousands)
PCI loans:
Contractually required payments receivable	$	413,176
Nonaccretable difference	(63,014		)
Expected cash flows	350,162
Accretable yield	38,479
Fair value of PCI loans	$	311,683

Purchased nonimpaired loans and leases:
Unpaid principal balance	$	15,636,020
Fair value discount	(234,304		)
Fair value at acquisition	15,401,716
Total fair value at acquisition	$	15,713,399

Other intangible assets consisted of core deposits and customer relationship intangibles with estimated fair values at the Merger Date of ~~$177.8~~$138.2 million and ~~$23.8~~$21.3 million, respectively. Core deposit intangibles are being amortized over a weighted-average life of ten years on an accelerated basis. Customer relationship intangibles are being amortized over a weighted-average life of 15.6 years based on expected economic benefits of the underlying intangible assets. The weighted-average life of amortizable intangibles acquired in the Merger was ~~eleven~~11 years.

As a result of the Merger, wethe Corporation recorded ~~$1.1~~$1.2 billion of goodwill. ~~Due~~Of the $1.2 billion, $528.0 million was attributable to ~~the timing of the Merger, we are in the process of completing our analysis of the allocation of goodwill across business segments,~~Consumer Banking and ~~therefore, goodwill is presented as part of Enterprise Services at September 30, 2019.~~$630.3 million was attributable to Commercial Banking. The goodwill recorded is not deductible for income tax purposes.

~~Table of Contents~~

Pro Forma Combined Results of Operations The following pro forma financial information presents the consolidated results of operations of Legacy TCF and Chemical as if the Merger had occurred as of January 1, ~~2018~~2019 with pro forma adjustments. The pro forma adjustments give effect to any change in interest income due to the accretion of the discount ~~(premium)~~(amortization of premium) associated with the fair value adjustments to acquired loans and leases, any change in interest expense due to estimated premium amortization/discount accretion associated with the fair value adjustments to acquired time deposits and borrowings and other debt, amortization of the customer relationship intangibles, and ~~the~~ amortization of the core deposit ~~intangible~~intangibles that would have resulted had the deposits been acquired as of January 1, ~~2018.~~2019. Merger-related expenses incurred by TCF ~~during~~prior to completion of the ~~three and nine months ended September 30, 2019~~Merger are not reflected in the pro forma amounts. The pro forma information does not necessarily reflect the results of operations that would have occurred had Legacy TCF merged with Chemical at the beginning of ~~2018.~~2019. Anticipated cost savings that have not yet been realized are also not reflected in the pro forma amounts for the three and nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2019		2018		2019		2018		2020		2019		2020		2019
Net interest income and other noninterest income	$	536,165	$	570,396	$	1,654,571	$	1,693,537	$	495,977	$	536,165	$	1,545,834	$	1,654,571
Net income	125,560		156,977		435,003		434,686		55,738		125,560		131,401		435,003
Net income available to common shareholders	123,066		154,483		427,522		422,111		53,244		123,066		123,920		427,522
Earnings per share:
Basic	$	0.81	$	1.00	$	2.79	$	2.71	$	0.35	$	0.81	$	0.82	$	2.79
Diluted	0.81		0.99		2.77		2.69		0.35		0.81		0.82		2.77

Table of Contents

Note 3. Summary of Significant Accounting Policies

Accounting policies in effect at December 31, ~~2018,~~2019, as previously disclosed in ~~Note 2.~~"Note 3. Summary of Significant Accounting ~~Policies~~Policies" in ~~Legacy TCF’s audited Consolidated Financial Statements~~the Corporation’s Annual Report on Form 10-K at and for the year ended December 31, ~~2018, which were filed as Exhibit 99.1 to TCF’s Current Report on Form 8-K filed with the SEC on August 1,~~ 2019, remain significantly unchanged and have been followed similarly as in previous periods except for the ~~lease financing~~allowance for credit losses accounting policy, the loans and leases acquired in a business combination accounting policy, the investments securities held-to-maturity accounting policy, and the investment securities available-for-sale accounting policy, resulting from the adoption of Accounting Standards Update ("ASU") No. ~~2016-02,~~2016-13, ~~Leases~~Financial Instruments - Credit Losses (Topic ~~842)~~326): Measurement of Credit Losses on Financial Instruments and related ASUs, ~~and certain policies added as a result of the Merger,~~ as described below.

~~Business Combinations~~Allowance for Credit Losses ~~Pursuant~~The Corporation's reserve methodology used to determine the ~~guidance of ASC Topic 805 ("ASC 805"), TCF recognized assets acquired, including identified intangible assets, and the liabilities assumed in mergers and acquisitions at their fair values as~~appropriate level of the ~~acquisition date, with~~allowance for credit losses ("ACL") is a critical accounting estimate. The ACL is maintained at a level believed to be appropriate to provide for the ~~acquisition and merger-related transaction and restructuring costs expensed~~current credit losses expected to be incurred in the ~~period incurred.~~loan and lease portfolios over the remaining expected life of each financial asset at the balance sheet date, including known or anticipated problem loans and leases, as well as for loans and leases which are not currently known to require specific allowances. The Corporation individually evaluates loans and leases that do not share similar risk characteristics with other financial assets for impairment, generally this means troubled debt restructuring ("TDR") loans, previously removed TDR loans and any other loans and leases that no longer exhibit similar risk characteristics of one of the pools of financial assets used for collective evaluation. All other loans and leases are evaluated collectively for impairment. The ACL includes the allowance for loan and lease losses ("ALLL") and a reserve for unfunded lending commitments ("RULC"). The ALLL and RULC are valuation accounts presented separately on the Consolidated Statements of Financial Condition. The ALLL is deducted from or added to loans' amortized cost basis to present the net amount expected to be collected. The RULC for letters of credit, financial guarantees and binding unfunded loan commitments is recorded in other liabilities.

~~ASC 805 affords~~Individually evaluated loans and leases are a ~~measurement~~key component of the ALLL. Individually evaluated consumer loans are generally measured at the present value of the expected future cash flows discounted at the loan's initial effective interest rate, unless the loans are collateral dependent, in which case loan impairment is based on the fair value of the collateral less estimated selling costs. Individually evaluated commercial loans and leases are generally measured at the present value of the expected future cash flows discounted at the initial effective interest rate of the loan or lease, unless the loan or lease is collateral dependent, in which case impairment is based on the fair value of collateral less estimated selling costs; however, if payment or satisfaction of the loan or lease is dependent on the operation, rather than the sale of the collateral, the impairment does not include estimated selling costs.

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

Loans and leases are charged off to the extent they are deemed to be uncollectible. Net charge-offs are included in historical data utilized for calculating the ACL. Loans that are not ~~known or available at that time. This measurement period ends~~collateral dependent are charged off when deemed uncollectible based on ~~the earlier of one year after the acquisition or the date information about the~~specific facts and ~~circumstances that existed at~~circumstances. Residential mortgage and home equity loans are charged off to the ~~acquisition~~estimated fair value of the underlying collateral, less estimated selling costs, no later than 150 days past due. Additional review of the fair value, less estimated costs to sell, compared with the recorded value occurs upon foreclosure and additional charge-offs are ~~available. TCF anticipates that measurement period adjustments may arise from adjustments~~recorded if necessary. Consumer installment loans will generally be charged off in full no later than 120 days past due, unless repossession is reasonably assured and in process, in which case the loan would be charged off to the fair ~~values~~value of ~~Chemical's assets~~the collateral, less estimated selling costs. Consumer loans in bankruptcy status may be charged down to the fair value of the collateral, less estimated selling costs, when the loan is 60 days past due, or within 60 days after receipt of bankruptcy notification, whichever is shorter. Deposit account overdrafts are reported in other loans. Net losses on uncollectible overdrafts are reported as net charge-offs in the ALLL within 60 days from the date of overdraft. Commercial loans and ~~liabilities recorded at~~leases that are considered collateral dependent are charged off to the ~~Merger Date, as additional~~estimated fair value, less estimated selling costs when it becomes probable, based on current information and ~~evidence is obtained. In the event~~events, that ~~a measurement period adjustment is identified, TCF~~all principal and interest amounts will ~~recognize the adjustment as part of its acquisition accounting, which may result~~not be collectible in ~~an adjustment to goodwill in the period the adjustment was identified.~~

~~See Note 2. Merger for further information.~~accordance with their contractual terms.

Table of Contents

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

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

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

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

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

Loans and Leases Acquired in a Business Combination ~~We record~~The Corporation records loans and leases acquired in a business combination at fair value at the acquisition date and the fair value discount or premium is recognized as an adjustment to yield over the remaining life of each loan or lease. ~~Credit discounts are included in~~An ALLL is also recorded following the ~~determination of fair value; therefore, an allowance for loan~~Corporation’s ACL accounting policy. Purchased and ~~lease losses is not recorded at the acquisition date. Purchased~~acquired loans and leases are evaluated at the acquisition date and classified as either (i) loans and leases purchased without evidence of deteriorated credit quality since origination, or (ii) loans and leases purchased that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, referred to as purchased ~~loans, or (ii) loans purchased~~financial assets with ~~evidence of deteriorated~~ credit quality since origination for which it is probable that all contractually required payments will not be collected, referred to as PCI loans. PCI loans are considered to be impaired and are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Qualitydeterioration ("~~ASC 310-30"~~PCD"). assets. In determining whether ~~a purchased loan~~an acquired asset should be classified as ~~a PCI loan, we~~PCD, the Corporation must make numerous assumptions, interpretations and judgments using internal and third-party credit quality information to determine whether or not ~~it is probable that we will be able to collect all contractually required payments.~~the asset has experienced more-than-insignificant credit deterioration since origination. This is a point in time assessment and is inherently subjective due to the nature of the available information and judgment involved. Evidence of credit quality deterioration as of the acquisition date may include statistics such as past due and nonaccrual status, recent borrower credit scores and loan-to-value percentages. The ~~excess~~ALLL estimated for PCD loans and leases as of ~~cash flows expected~~the acquisition date is recorded as a gross-up of the loan or lease balance and the ALLL. Any remaining discount or premium after the gross-up is then recognized as an adjustment to ~~be collected~~yield over the ~~estimated fair value of PCI loans is referred to as the accretable yield and is accreted into interest income over the estimated~~ remaining life of each PCD loan or lease. After the ~~loan using~~acquisition date, the ~~effective yield method. We estimate~~accounting for acquired loans and leases, including PCD and non-PCD loans and leases, follows the ~~expected cash flows based on~~same accounting guidance as loans and leases originated by the expected remaining life of the loans, which includes the effects of estimated prepayments and estimates of future credit losses. Cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, is referred to as the nonaccretable difference.Corporation.

~~We do not classify PCI loans as nonaccrual loans subsequent to acquisition because the loans are recorded at net realizable value based on the principal~~See "Note 8. Allowance for Credit Losses and interest expected to be collected on the loan. Judgment is required to estimate the timing and amount of cash flows expected to be collected when the loans are not performing in accordance with the original contractual terms.

~~Purchased loans outside the scope of ASC 310-30 are accounted~~Credit Quality" for under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs. For purchased loans, credit discounts representing the principal losses expected over the life of the loan are a component of the initial fair value and the discount is accreted to interest income over the life of the loan. Subsequent to the purchase date, the method used to evaluate the sufficiency of the credit discount is similar to originated loans, and if necessary, additional reserves are recognized in the allowance for loan and lease losses.

~~Leases~~ TCF enters into lease contracts as both a lessor and a lessee. A contract, or part of a contract, is considered a lease if it conveys the right to obtain substantially all of the economic benefits from, and the right to direct and use, an identified asset for a period of time in exchange for consideration. The determination of lease classification requires various judgments and estimates by management which may include the fair value of the equipment at lease inception, useful life of the equipment under lease, estimate of the lease residual value and collectability of minimum lease payments. Management has policies and procedures in place for the determination of lease classification and review of the related judgments and estimates for all leases.

As a lessor, TCF provides various types of lease financing that are classified for accounting purposes as direct financing, sales-type or operating leases. Leases that transfer substantially all of the benefits and risks of ownership to the lessee are classified as direct financing or sales-type leases and are recorded in loans and leases. Direct financing and sales-type leases are carried at the combined present value of future minimum lease payments and lease residual values.

Interest income on net investment in direct financing and sales-type leases is recognized using methods that approximate a level yield over the fixed, non-cancelable term of the lease, including pro rata rent payments received for the interim period until the lease contract commences and the fixed, non-cancelable lease term begins. Sales-type leases generate selling profit (loss), which is recognized on the commencement date by recording lease revenue net of lease cost. Lease revenue consists of the present value of the future minimum lease payments and lease cost consists of the leased equipment's net book value, less the present value of its residual.further information.

Table of Contents

~~Some lease financing contracts include~~Investment Securities Held-to-Maturity

Investment securities held-to-maturity are carried at cost and adjusted for amortization of premiums or accretion of discounts using a ~~residual~~level yield method; however, transfers of investment securities available-for-sale to investment securities held-to-maturity are made at fair value ~~component, which represents~~at the ~~estimated fair~~date of transfer. The unrealized holding gain or loss at the date of each transfer is retained in accumulated other comprehensive income (loss) and in the carrying value of the ~~leased equipment at~~held-to-maturity investment security. Such amounts are then amortized over the ~~expiration~~remaining life of the ~~initial term~~transferred investment security as an adjustment of the ~~transaction.~~yield on those securities. The ~~estimation~~Corporation evaluates investment securities held-to-maturity for credit losses on a quarterly basis, and records any such losses as a component of residual values involves judgment regarding product and technology changes, customer behavior, shifts in supply and demand and other economic assumptions. TCF reviews residual assumptions when assessing potential impairment of the net investment in direct financing and sales-type leases each quarter. Decreases in the expected residual value are reflected through an increase in the provision for credit losses ~~which results~~ in ~~an increase to~~ the ~~allowance for loan and lease losses.~~

TCF may sell minimum lease payment receivables, primarily as a credit risk reduction tool, to third-party financial institutions at fixed rates, on a non-recourse basis, with its underlying equipment as collateral. For those transactions that qualify for sale accounting, the related lease cash flow stream and the non-recourse financing are derecognized. For those transactions that do not qualify for sale accounting, the underlying lease remains on TCF's Consolidated Statements of ~~Financial Condition~~Income and ~~non-recourse debt~~a corresponding ACL. At September 30, 2020 there was 0 ACL recorded. See "Note 6. Investment Securities" for further information on investment securities held-to-maturity.

Investment Securities Available-for-Sale

Investment securities available-for-sale are carried at fair value with the unrealized gains or losses net of related deferred income taxes reported within accumulated other comprehensive income (loss). The cost of investment securities sold is ~~recorded in~~determined on a specific identification basis and gains or losses on sales of investment securities available-for-sale are recognized on trade dates. Discounts and premiums on investment securities available-for-sale are amortized using a level yield method over the ~~amount~~expected life of the ~~proceeds received. TCF retains servicing of these leases and bills, collects and remits funds~~security, or to the ~~third-party financial institution. Upon default by the lessee, the third-party financial institutions may take control of the underlying collateral which TCF would otherwise retain as residual value.~~

Leases that do not transfer substantially all benefits and risks of ownership to the lessee are classified as operating leases. Such leased equipment and related initial direct costs are included in other assets and depreciated to their estimated salvage valueearliest call date for premiums on investment securities with call features. The Corporation evaluates investment securities available-for-sale for credit losses on a ~~straight-line~~quarterly basis, ~~over the term of the lease. Lease financing equipment depreciation is recorded in noninterest expense. Operating lease payments received are recognized as lease income when due~~ and ~~recorded~~records any such losses as a component of ~~leasing~~provision for credit losses in the Consolidated Statements of Income and ~~equipment finance noninterest income. An allowance~~a corresponding ACL. At September 30, 2020 there was 0 ACL recorded. See "Note 6. Investment Securities" for ~~lease losses is not provided~~further information on ~~operating leases.~~investment securities available-for-sale.

~~See Note 7. Loans and Leases for further information.~~

As a lessee, TCF enters into contracts to lease real estate, information technology equipment and various other types of equipment. Leases that transfer substantially all of the benefits and risks of ownership to TCF are classified as finance leases, while all others are classified as operating leases. At lease commencement, a lease liability and right-of-use asset are calculated and recognized for both types of leases. The lease liability is equal to the present value of future minimum lease payments. The right-of-use asset is equal to the lease liability, plus any initial direct costs and prepaid lease payments, less any lease incentives received. Operating lease right-of-use assets are recorded in other assets and finance lease right-of-use assets are recorded in premises and equipment, net. TCF uses the appropriate term Federal Home Loan Bank ("FHLB") rate to determine the discount rate for the present value calculation of future minimum payments when an implicit rate is not known for a given lease. The lease term used in the calculation includes any options to extend that TCF is reasonably certain to exercise.

Subsequent to lease commencement, lease liabilities recorded for finance leases are measured using the effective interest rate method and the related right-of-use assets are amortized on a straight-line basis over the lease term. Interest expense and amortization expense are recorded separately in the income statement in interest expense on borrowings and occupancy and equipment noninterest expense, respectively. For operating leases, total lease cost is comprised of lease expense, short-term lease cost, variable lease cost and sublease income. Lease expense includes future minimum lease payments, which are recognized on a straight-line basis over the lease term, as well as common area maintenance charges, real estate taxes, insurance and other expenses, where applicable, which are expensed as incurred. Total lease cost for operating leases is recorded in occupancy and equipment noninterest expense.

~~See Note 12. Operating Lease Right-of-Use Assets and Liabilities for further information.~~

~~Loan Servicing Rights~~ Loan servicing rights ("LSRs") are recognized as assets or liabilities as a result of selling residential mortgage and commercial real estate loans in the secondary market while retaining the right to service these loans and receive servicing income over the life of the loan, and from acquisitions of other banks that had LSRs. An LSR is recorded at estimated fair value when initially recognized. Fair value is determined by the present value of expected cash flows received in excess of a market servicing rate. If the amount earned to service assets is equal to the market rate, no value is recorded. Subsequently, LSRs are accounted for at the lower of amortized cost or fair value and amortized in proportion to and over the period of net servicing income. Unexpected prepayments of mortgage loans result in increased amortization of LSRs, as the remaining book value of the LSRs is expensed at the time of prepayment. LSRs are assessed quarterly for impairment. See Note 11. Loan Servicing Rights for further information.

~~Table of Contents~~

Recently Adopted Accounting Pronouncements

Effective January 1, ~~2019, TCF~~2020, the Corporation adopted ASU No. ~~2018-16,~~2020-03, ~~Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes~~Codification Improvements to Financial Instruments, which ~~permits~~is comprised of amendments intended to clarify or improve the ~~use~~accounting guidance for various financial instruments, including fair value measurement and disclosure, disclosures for depository and lending institutions, and the interaction between Topic 326 - Financial Instruments - Credit losses and other Topics. Each of the ~~OIS Rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition~~clarifying amendments are either not relevant to the ~~interest rates on direct Treasury obligations~~Corporation's consolidated financial statements or further confirmed the Corporation's existing interpretation of the ~~U.S. government,~~accounting guidance. As such, the ~~London Interbank Offered Rate ("LIBOR") swap rate, the OIS Rate based on the Fed Funds Effective Rate and the Securities Industry and Financial Markets Association Municipal Swap Rate. The~~ adoption of this ~~ASU was~~guidance did not have a material impact on ~~a prospective basis for qualifying new or redesignated hedging relationships entered into on or after~~the consolidated financial statements.

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

Effective January 1, ~~2019, TCF~~2020, the Corporation adopted ~~ASU No. 2018-15,~~ Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force), which requires the decision to capitalize or expense implementation costs incurred in a cloud computing arrangement (i.e. a hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40. TCF's policy had been to expense these costs as incurred. The adoption of this ASU was on a prospective basis. The adoption of this guidance did not have a material impact on our consolidated financial statements.

~~Effective January 1, 2019, TCF adopted ASU No. 2018-07,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting~~, which simplifies the accounting for share-based payments to nonemployees by aligning it more consistently with the accounting for share-based payments to employees. The new guidance in ASC 718 supersedes the guidance in ASC 505-50. The adoption of this ASU was on a modified retrospective basis with no cumulative effect adjustment recorded. The adoption of this guidance did not have a material impact on our consolidated financial statements.

~~Effective January 1, 2019, TCF adopted ASU No. 2017-11,~~ ~~Earnings Per Share (Topic 260): Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features~~, which simplifies the accounting for certain equity-linked financial instruments and embedded features with the down round features that reduce the exercise price when the pricing of a future round of financing is lower. The adoption of this ASU was on a modified retrospective basis. The adoption of this guidance did not have a material impact on our consolidated financial statements.

~~Effective January 1, 2019, TCF adopted ASU No. 2016-02,~~ ~~Leases (Topic 842)~~, which, along with other amendments, requires lessees to recognize most leases on their balance sheet. Lessor accounting is largely unchanged. The ASU requires both quantitative and qualitative disclosure regarding key information about leasing arrangements from both lessees and lessors. Effective January 1, 2019, TCF also adopted the following ASUs, which further amend the original lease guidance in Topic 842: (i) ASU No. 2017-13, ~~Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840) and Leases (Topic 842): Amendments to SEC Paragraphs~~, which rescinds certain SEC Observer comments and staff announcements from the lease guidance and incorporates SEC staff announcements on the effect of a change in tax law on leveraged leases from ASC 840 into ASC 842; (ii) ASU No. 2018-01, ~~Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842~~, which amends the new lease guidance to add an optional transition practical expedient that permits an entity to continue applying its current accounting policy for land easements that existed or expired before January 1, 2019; (iii) ASU No. 2018-10, ~~Codification Improvements to Topic 842, Leases, which makes narrow scope improvements to the standard for specific issues; (iv) ASU No. 2018-11,~~ ~~Leases (Topic 842): Targeted Improvements~~, which provides an optional transition method allowing the standard to be applied at the adoption date and provides a practical expedient related to separating components of a contract for lessors; (v) ASU No. 2018-20, ~~Leases (Topic 842): Narrow-Scope Improvements for Lessors~~, which allows lessors to elect to account for all sales taxes as lessee costs, instead of determining whether they are lessee or lessor costs in each individual jurisdiction. It requires lessor costs paid by lessees directly to third parties to be excluded from revenue, requires lessors to account for costs excluded from the consideration of a contract that are paid by the lessor as revenue and requires certain variable payments to be allocated (rather than recognized) to lease and nonlease components when changes occur in the facts and circumstances on which the variable payments are based; and (vi) ASU No. 2019-01, ~~Leases (Topic 842): Codification Improvements~~, which allows lessors that are not manufacturers or dealers to calculate the fair value of an underlying asset as its cost less any volume or trade discount, requires lessors to classify principal payments received from direct financing and sales-type leases as investing activities in the statement of cash flows and clarifies that certain disclosure requirements that were explicitly excluded from annual reporting during the year of adoption are also excluded from interim reporting during the same year. These

~~Table of Contents~~

ASUs were adopted on a modified retrospective basis. Management elected the practical expedients and optional transition method, which allow for leases entered into prior to January 1, 2019 to be accounted for consistent with prior guidance. Management evaluated TCF's leasing contracts and activities, and developed methodologies and processes to estimate and account for the right-of-use assets and lease liabilities based on the present value of future lease payments. On January 1, 2019, TCF recorded right-of-use assets and lease liabilities totaling $91.9 million and $112.8 million, respectively. TCF also recorded additional right-of-use assets and lease liabilities totaling $39.8 million and $41.6 million on August 1, 2019 as a result of the Merger. The impact to capital ratios as a result of increased risk-weighted assets is immaterial. The adoption of this guidance did not result in a material change to lessee expense recognition. The changes to lessor accounting, as well as changes in customer behavior driven by the adoption of these ASUs, impacts the results of TCF's leasing and equipment financing businesses, including earlier recognition of expense due to a narrower definition of initial direct costs and the timing of revenue recognition for certain leases, resulting in more revenue being deferred over the lease term.

~~Recently Issued but Not Yet Adopted Accounting Pronouncements~~

~~In November 2018, the Financial Accounting Standards Board (the "FASB") issued~~ ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which makes targeted improvements to the accounting for collaborative arrangements in response to questions raised as a result of the issuance of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The adoption of this ~~ASU will be required beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020. Early adoption is allowed. The adoption of this~~ guidance ~~will~~did not have a material impact on ~~our~~the consolidated financial statements.

~~In October 2018,~~Effective January 1, 2020, the ~~FASB issued~~Corporation adopted ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities~~, which provides an elective exemption~~. In addition to ~~private companies from applying~~providing variable interest entities ("VIE") guidance to ~~all entities under common control if certain criteria are met. In addition,~~private companies, this ASU contains an amendment applicable to all entities which amends how a decision maker or service provider determines whether its fee is a variable interest in a VIE when a related party under common control also has an interest in the VIE. The adoption of this ~~ASU will be required beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020. Early adoption is allowed. The adoption of this~~ guidance ~~will~~did not have a material impact on ~~our~~the consolidated financial statements.

~~In August 2018,~~Effective January 1, 2020, the ~~FASB issued~~Corporation adopted ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. ~~The~~While the adoption of this ~~ASU will be~~guidance required ~~beginning with TCF's Quarterly Report~~adjustments to our fair value disclosures, it did not have a material impact on ~~Form 10-Q for~~ the quarter ending March 31, 2020. Certain of the amendments require prospective application, while the remainder require retrospective application. Early adoption is allowed either for the entire standard or only the provisions that eliminate or modify the requirements. Management is currently evaluating which adoption method will be selected as well as the related potential impact of this guidance on our consolidated financial statements.

Table of Contents

Effective January ~~2017,~~1, 2020, the ~~FASB issued~~Corporation adopted ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill ~~Impairment.~~Impairment. This ASU simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. ~~Subsequent to adoption, goodwill~~Under the new guidance, the Corporation will compare the fair value of a reporting unit with its carrying amount and recognize an impairment ~~will be the~~charge for any amount by which a reporting unit’s carrying ~~value~~amount exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance largely remains unchanged. The adoption of this ~~ASU will be required beginning with TCF's Quarterly Report on Form 10-Q for the quarter ending March 31, 2020 on a prospective basis. Early adoption is allowed. The adoption of this~~ guidance ~~will~~did not have a material impact on ~~our~~the consolidated financial statements.

~~In June 2016,~~Effective January 1, 2020, the ~~FASB issued~~Corporation adopted ASU No. 2016-13,Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets (including off-balance sheet ~~exposure)~~exposures), including trade and other receivables, debt securities ~~held to maturity,~~held-to-maturity, loans, net investments in leases and purchased financial assets with credit deterioration. The ASU requires the use of a current expected credit loss ("CECL") methodology to determine the allowance for credit losses for loans and debt securities ~~held to maturity.~~held-to-maturity. CECL requires loss estimates for the remaining estimated life of the asset to be measured using historical loss data as well as adjustments for current conditions and reasonable and supportable forecasts ~~based on current and forecasted~~of future economic conditions. ~~In November 2018,~~Effective January 1, 2020, the ~~FASB issued~~Corporation also adopted the following ASUs, which further amend the original CECL guidance in Topic 326: (i) ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20 and should be accounted for in accordance with Topic ~~842. In April 2019, the FASB issued~~842; (ii) ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging

~~Table of Contents~~

~~Hedging,~~, and Topic 825, Financial Instruments, which clarifies and corrects certain unintended applications of the guidance contained in each of the amended ~~Topics. In May 2019, the FASB issued~~Topics; (iii) ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, which provides an option to irrevocably elect to apply the fair value option in Subtopic 825-10 to certain instruments within the scope of Subtopic 326-20 upon adoption of Topic ~~326. The adoption~~326; (iv) ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies that expected recoveries of ~~these ASUs~~amounts previously written off or expected to be written off should be included in the estimate of allowance for credit losses for purchased financial assets with credit deterioration, provides certain transition relief for TDR accounting when the discounted cash flow method is used to estimate credit losses, allows entities to elect to disclose separately the total amount of accrued interest included in the amortized cost basis as a single balance to meet certain disclosure requirements, and clarifies that an entity should assess whether it reasonably expects the borrower will be ~~required~~able to continually replenish collateral securing financial assets when electing a practical expedient to measure the estimate of expected credit losses by comparing the amortized cost basis of the financial asset and the fair value of collateral securing the financial asset as of the reporting date. These ASUs were adopted on a modified retrospective basis.

Table of Contents

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

CARES Act and Interagency Regulatory Guidance Regarding Troubled Debt Restructurings

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

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

Table of Contents

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

Recently Issued but Not Yet Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which reduces the complexity of accounting for certain financial instruments with characteristics of both debt and equity. The adoption of this ASU will be required beginning with the Corporation's Quarterly Report on Form 10-Q for the quarter ending March 31, ~~2020. CECL represents a significant change in GAAP and~~2022. Early adoption is ~~expected to result in a material impact to our consolidated financial statements and capital ratios. The impact of these ASUs will depend on~~allowed, but no earlier than the composition of TCF's portfolios, the current economic conditions, and forecasted macroeconomic conditions at the date of adoption. Additionally, industry practice and interpretation of the ASUs continues to evolve which may impact management's implementation of the standard.

TCF has established a governance structure to implement these ASUs and has developed a majority of the methodology and models to be used upon adoption. Based on parallel runs of the CECL process that TCF has performed alongside our current allowance for loan and lease losses process, we preliminarily estimated that the adoption of the standard will increase the allowance for loan and lease losses between 35% to 45% on Legacy TCF portfolios, when compared to current allowance for loan and lease loss levels. At September 30, 2019, Legacy TCF loan and lease portfolios totaled approximately $17.8 billion with a corresponding allowance for loans and lease losses of approximately $117.1 million. The largest impact is anticipated to be to our consumer segment given the longer duration of the portfolios.quarter ending March 31, 2021. Management is in the process of finalizing model validations and approval of all key design decisions through its governance structure, which includes decisions about the methodology for estimating reserves for unfunded commitments and disclosures. The estimated impact of the standard depends on the composition of the portfolio, credit quality, economic conditions and forecasts at the time of adoption, as well as final decisions by management, all of which could result in a change to management’s estimate.

~~With the close of the Merger on August 1, 2019, management is~~currently evaluating the impact of ~~CECL~~this guidance on the ~~acquired legacy Chemical portfolio~~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 ~~will then be included in~~provides a number of optional expedients to general accounting guidance intended to ease the ~~combined portfolio~~burden of ~~TCF upon adoption. The loans~~the accounting impacts of reference rate reform related to contract modifications and ~~leases acquired in~~hedge accounting elections. Adoption of the ~~Merger were recorded at estimated fair value~~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 ~~Merger Date,~~consolidated financial statements.

In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force), which ~~includes an estimate~~clarifies the interactions between Topic 321, Topic 323 and Topic 815, including accounting for the transition into and out of ~~credit losses. Under current GAAP, an allowance for loan~~the equity method and ~~lease losses is not recorded on these loans~~measuring certain purchased options and ~~leases until there is evidence of credit deterioration post acquisition. However, upon~~forward contracts to acquire investments. The adoption of ~~CECL an allowance for loan and lease loss~~this ASU will ~~need to~~ be ~~recorded~~required beginning with the Corporation's Quarterly Report on Form 10-Q for the ~~acquired loans based~~quarter ending March 31, 2021. Early adoption is allowed. Management is currently evaluating the impact of this guidance on the ~~lifetime loss concept within CECL. We are~~consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify the accounting for income taxes by removing certain exceptions to the general rules found in Topic 740 - Income Taxes. The adoption of this ASU will be required beginning with the ~~process~~Corporation's Quarterly Report on Form 10-Q for the quarter ending March 31, 2021. Early adoption is allowed. Management is currently evaluating the impact of ~~developing CECL assumptions~~this guidance on the acquired Chemical portfolios with those used by Legacy TCF. Since these assumptions could materially impact the estimate of the allowance for loan and lease losses under CECL, we are unable to estimate the impact on the Chemical portfolio at this time.

The initial increase to TCF's allowance for loan and lease losses will be recorded as an adjustment to beginning of the year retained earnings. Post adoption, as loans and leases are added to the portfolio, we expect higher levels of allowance for loan and lease losses determined by CECL assumptions, resulting in higher levels of provision for credit losses. Management will continue to refine this process during the fourth quarter of 2019 as well as consider the impacts the Merger will have on the adoption of the standard.consolidated financial statements.

Note 4. Cash and Cash Equivalents

AtCash and cash equivalents include cash and due from banks and interest-bearing deposits in other banks. Total cash and cash equivalents were $1.8 billion and $1.2 billion at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

As of March 26, 2020, TCF Bank was 0 longer required by Federal Reserve regulations to maintain reserves ~~of $149.6 million and $106.2 million, respectively,~~ in cash on hand or at the Federal Reserve Bank.

~~TCF~~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. ~~TCF~~The Corporation may also retain cash balances for collateral on certain borrowings and derivatives. ~~TCF~~The Corporation maintained restricted cash totaling ~~$72.7~~$103.9 million and ~~$38.3~~$68.6 million at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

Table of Contents

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

Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stocks were as follows:


(In thousands)	At September 30, 2019		At December 31, 2018		At September 30, 2020		At December 31, 2019
FHLB stock, at cost	$	184,483	$	54,019	$	176,459	$	318,473
FRB stock, at cost	105,755		37,635		123,985		123,967
Total investments					$	300,444	$	442,440

The investments in FHLB stock are required investments related to ~~TCF's~~the Corporation's membership and borrowings in the FHLB of Des Moines, and additional ~~current borrowings~~commitments from the FHLB of Indianapolis and Cincinnati. ~~TCF's~~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. ~~TCF~~The Corporation periodically evaluates investments for ~~other than temporary~~ impairment. There was no0 impairment of these investments at September 30, ~~2019~~2020 and December 31, ~~2018.~~2019.

Note 6. Investment Securities

The amortized cost and fair value of investment securities were as follows:

Investment Securities Available-for-sale, At Fair Value
(In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
At September 30, 2019
Debt securities:

Government and government-sponsored enterprises $ 247,666
$ 2
$ 521
$ 247,147
Obligations of states and political subdivisions 779,263
11,017
609
789,671
Mortgage-backed:

Agency mortgage-backed securities 3,456,110
66,929
4,327
3,518,712
Non-agency mortgage-backed securities —
—
—
—
Agency collateralized mortgage obligations 565,959
12,484
101
578,342
Non-agency collateralized mortgage obligations 445,174
934
570
445,538
Total mortgage-backed debt securities 4,467,243
80,347
4,998
4,542,592
Corporate debt and trust preferred securities 450
—
25
425
Total debt securities available-for-sale 5,494,622
91,366
6,153
5,579,835
Total investment securities available-for-sale $ 5,494,622
$ 91,366
$ 6,153
$ 5,579,835
At December 31, 2018
Debt securities:

Government and government-sponsored enterprises $ —
$ —
$ —
$ —
Obligations of states and political subdivisions 566,304
46
9,479
556,871
Mortgage-backed:

Agency mortgage-backed securities 1,845,451
8,026
26,728
1,826,749
Non-agency mortgage-backed securities —
—
—
—
Agency collateralized mortgage obligations 85,245
1,196
—
86,441
Non-agency collateralized mortgage obligations 4
—
—
4
Total mortgage-backed debt securities 1,930,700
9,222
26,728
1,913,194
Corporate debt and trust preferred securities —
—
—
—
Total debt securities available-for-sale 2,497,004
9,268
36,207
2,470,065
Total investment securities available-for-sale $ 2,497,004
$ 9,268
$ 36,207
$ 2,470,065



	Investment Securities Available-for-sale, At Fair Value
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At September 30, 2020
Debt securities:
Obligations of states and political subdivisions	$	836,691	$	41,081	$	1,008	$	876,764
Government and government-sponsored enterprises	205,213		372		500		205,085
Mortgage-backed securities:
Residential agency	5,229,551		171,039		580		5,400,010
Residential non-agency	205,029		4,571		3		209,597
Commercial agency	671,387		40,373		180		711,580
Commercial non-agency	39,368		3,295		0		42,663
Total mortgage-backed debt securities	6,145,335		219,278		763		6,363,850
Corporate debt and trust preferred securities	453		11		0		464
Total investment securities available-for-sale	$	7,187,692	$	260,742	$	2,271	$	7,446,163
At December 31, 2019
Debt securities:
Obligations of states and political subdivisions	$	852,096	$	12,446	$	687	$	863,855
Government and government-sponsored enterprises	235,045		18		678		234,385
Mortgage-backed securities:
Residential agency	4,492,427		68,797		6,103		4,555,121
Residential non-agency	374,046		1,166		616		374,596
Commercial agency	645,814		8,639		2,049		652,404
Commercial non-agency	39,398		17		205		39,210
Total mortgage-backed debt securities	5,551,685		78,619		8,973		5,621,331
Corporate debt and trust preferred securities	451		0		21		430
Total investment securities available-for-sale	$	6,639,277	$	91,083	$	10,359	$	6,720,001

Table of Contents

Investment Securities Held-to-Maturity
(In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
At September 30, 2019
Agency mortgage-backed securities $ 140,324
$ 6,122
$ 194
$ 146,252
Corporate debt and trust preferred securities 3,676
—
—
3,676
Total investment securities held-to-maturity $ 144,000
$ 6,122
$ 194
$ 149,928
At December 31, 2018
Agency mortgage-backed securities $ 146,052
$ 1,460
$ 1,045
$ 146,467
Corporate debt and trust preferred securities 2,800
—
—
2,800
Total investment securities held-to-maturity $ 148,852
$ 1,460
$ 1,045
$ 149,267



	Investment Securities Held-to-Maturity
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At September 30, 2020
Residential agency mortgage-backed securities	$	166,594	$	10,262	$	207	$	176,649
Corporate debt and trust preferred securities	3,715		0		0		3,715
Total investment securities held-to-maturity ⁽¹⁾	$	170,309	$	10,262	$	207	$	180,364
At December 31, 2019
Residential agency mortgage-backed securities	$	135,769	$	5,576	$	177	$	141,168
Corporate debt and trust preferred securities	3,676		0		0		3,676
Total investment securities held-to-maturity	$	139,445	$	5,576	$	177	$	144,844


(1)	The adoption of CECL was inconsequential to held-to-maturity investment securities. At September 30, 2020 there was 0 ACL for investment securities held-to-maturity.

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

Gross unrealized losses and fair value of available-for-sale investment securities aggregated by investment category and the length of time the securities were in a continuous loss position were as follows:

At September 30, 2019
Less than 12 months 12 months or more Total
(In thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
Investment securities available-for-sale
Debt securities:

Government and government sponsored enterprises $ 233,756
$ 521
$ —
$ —
$ 233,756
$ 521
Obligations of states and political subdivisions 273,967
609
—
—
273,967
609
Mortgage-backed:
Agency mortgage-backed securities 241,408
1,479
210,896
2,848
452,304
4,327
Agency collateralized mortgage obligations 37,750
101
—
—
37,750
101
Non-agency collateralized mortgage obligations 152,895
570
—
—
152,895
570
Total mortgage-backed debt securities 432,053
2,150
210,896
2,848
642,949
4,998
Corporate debt and trust preferred securities 425
25
—
—
425
25
Total debt securities available-for-sale 940,201
3,305
210,896
2,848
1,151,097
6,153
Total investment securities available-for-sale $ 940,201
$ 3,305
$ 210,896
$ 2,848
$ 1,151,097
$ 6,153
Investment securities held-to-maturity

Agency mortgage-backed securities 4,031
52
11,674
142
15,705
194
Total investment securities held-to-maturity $ 4,031
$ 52
$ 11,674
$ 142
$ 15,705
$ 194

At December 31, 2018
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 carried at fair value
Debt securities:

Obligations of states and political subdivisions $ 3,620
$ —
$ 526,817
$ 9,479
$ 530,437
$ 9,479
Agency mortgage-backed securities 102,709
184
838,482
26,544
941,191
26,728
Total debt securities available-for-sale 106,329
184
1,365,299
36,023
1,471,628
36,207
Total investment securities available-for-sale $ 106,329
$ 184
$ 1,365,299
$ 36,023
$ 1,471,628
$ 36,207
Investment securities held-to-maturity
Agency mortgage-backed securities 3,074
14
31,738
1,031
34,812
1,045
Total investment securities held-to-maturity $ 3,074
$ 14
$ 31,738
$ 1,031
$ 34,812
$ 1,045



	At September 30, 2020
	Less than 12 months				12 months or more				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment securities available-for-sale
Debt securities:
Obligations of states and political subdivisions	$	47,548	$	1,008	$	0	$	0	$	47,548	$	1,008
Government and government sponsored enterprises	100,992		500		0		0		100,992		500
Mortgage-backed securities:
Residential agency	177,611		580		0		0		177,611		580
Residential non-agency	3,691		3		0		0		3,691		3
Commercial agency	58,349		180		0		0		58,349		180
Commercial non-agency	0		0		0		0		0		0
Total mortgage-backed debt securities	239,651		763		0		0		239,651		763
Total investment securities available-for-sale	$	388,191	$	2,271	$	0	$	0	$	388,191	$	2,271
Investment securities held-to-maturity
Residential agency mortgage-backed securities	51,766		207		0		0		51,766		207
Total investment securities held-to-maturity	$	51,766	$	207	$	0	$	0	$	51,766	$	207

Table of Contents



	At December 31, 2019
	Less than 12 months				12 months or more				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment securities available-for-sale
Debt securities:
Obligations of states and political subdivisions	$	60,639	$	687	$	0	$	0	$	60,639	$	687
Government and government sponsored enterprises	226,177		678		0		0		226,177		678
Mortgage-backed securities:
Residential agency	667,511		3,586		200,534		2,517		868,045		6,103
Residential non-agency	140,403		616		0		0		140,403		616
Commercial agency	176,880		2,049		0		0		176,880		2,049
Commercial non-agency	25,560		205		0		0		25,560		205
Total mortgage-backed debt securities	1,010,354		6,456		200,534		2,517		1,210,888		8,973
Corporate debt and trust preferred securities	430		21		0		0		430		21
Total investment securities available-for-sale	$	1,297,600	$	7,842	$	200,534	$	2,517	$	1,498,134	$	10,359

The adoption of CECL was inconsequential to available-for-sale investment securities. At September 30, ~~2019~~2020 there was 0 ACL for investment securities available-for-sale. At September 30, 2020 there were ~~1,056~~144 available-for-sale investment securities in an unrealized loss position. ~~We have~~Management assessed each investment security with unrealized losses for credit impairment. Substantially all unrealized losses on investment securities were due to credit spreads and interest rates rather than credit impairment. As part of that assessment wemanagement evaluated and concluded that it is ~~more likely than not~~more-likely-than-not that wethe Corporation will not be required and dodoes not intend to sell any of the investment securities prior to recovery of the amortized cost. ~~Unrealized losses on investment securities were primarily due to changes in interest rates.~~

The gross gains and losses on sales of investment securities were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2019		2018		2019		2018		2020		2019		2020		2019
Gross realized gains	$	7,717	$	—	$	10,872	$	—	$	2,309	$	7,717	$	2,309	$	10,872
Gross realized losses	1,849		—		3,491		—		0		1,849		0		3,491
Recoveries on previously impaired investment securities held-to-maturity	32		94		36		181		15		32		23		36
Net gains (losses) on investment securities	$	5,900	$	94	$	7,417	$	181
Net gains on investment securities									$	2,324	$	5,900	$	2,332	$	7,417

Table of Contents

The amortized cost and fair value of investment securities by final contractual maturity were as follows. Securities with multiple maturity dates are classified in the period of final maturity. The final contractual maturities do not consider possible prepayments and therefore expected maturities may differ because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	At September 30, 2019				At December 31, 2018				At September 30, 2020				At December 31, 2019
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Investment Securities Available-for-Sale
Due in one year or less	$	60,739	$	60,652	$	—	$	—	$	45,229	$	45,518	$	66,124	$	66,112
Due in 1-5 years	199,777		199,399		24,464		24,375		171,134		176,145		191,364		192,065
Due in 5-10 years	483,336		492,755		509,832		503,768		664,743		703,227		547,813		555,523
Due after 10 years	4,750,770		4,827,029		1,962,708		1,941,922		6,306,586		6,521,273		5,833,976		5,906,301
Total investment securities available-for-sale	$	5,494,622	$	5,579,835	$	2,497,004	$	2,470,065	$	7,187,692	$	7,446,163	$	6,639,277	$	6,720,001
Investment Securities Held-to-Maturity
Due in one year or less									$	400	$	400	$	0	$	0
Due in 1-5 years	$	3,150	$	3,150	$	2,400	$	2,400	$	3,150	$	3,150	$	3,550	$	3,550
Due in 5-10 years	460		467		430		432		49		55		58		64
Due after 10 years	140,390		146,311		146,022		146,435		166,710		176,759		135,837		141,230
Total investment securities held-to-maturity	$	144,000	$	149,928	$	148,852	$	149,267	$	170,309	$	180,364	$	139,445	$	144,844

At September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, investment securities with a carrying value of ~~$761.4 million~~$1.2 billion and ~~$1.6~~$627.0 million, 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 September 30, 2019		At December 31, 2018		At September 30, 2020		At December 31, 2019
Commercial loan and lease portfolio:
Commercial and industrial	$	10,810,534	$	6,220,632	$	11,557,237	$	11,439,602
Commercial real estate	8,876,779		2,908,313		9,627,330		9,136,870
Lease financing	2,594,373		2,530,163		2,724,686		2,699,869
Total commercial loan and lease portfolio	22,281,686		11,659,108		23,909,253		23,276,341
Consumer loan portfolio:
Residential mortgage	6,057,404		2,335,835		5,790,251		6,179,805
Home equity					3,302,983		3,498,907
Consumer installment	1,562,252		2,003,572		1,341,204		1,542,411
Home equity	3,609,410		3,074,505
Total consumer loan portfolio	11,229,066		7,413,912		10,434,438		11,221,123
Total loans and leases⁽¹⁾	$	33,510,752	$	19,073,020	$	34,343,691	$	34,497,464

(1)

Loans and leases are reported at historical cost including net direct fees and costs associated with originating and acquiring loans and leases, lease residuals, unearned income and unamortized purchase premiums and discounts. The aggregate amount of these loan and lease adjustments was ~~a net deferred cost of $234.4~~$(174.2) million and ~~$1.5~~$(201.5) million at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

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

Financial Condition.

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

See "Note 3. Summary of Significant Accounting Policies" for further acquired loans and leases at fair value in the Merger and in previous acquisitions completed by Legacy TCF. Certain loans acquired were classified as PCI and are accounted for under ASC 310-30, which recognizes the expected shortfall of expected future cash flows, as compared to the contractual amount due, as nonaccretable difference. Any excess of the net present value of expected future cash flows over the acquisition date fair value is recognized as the accretable yield. The accretable yield is recognized over the expected remaining life of the acquired loan. In the event an acquired loan is renewed or extended, the loan continues to be accounted for as an acquired loan in accordance with ASC 310-30.

~~The carrying value and changes in accretable yield of all PCI loans were as follows:~~

At or For the Three Months Ended September 30, At or For the Nine Months Ended September 30,
(In thousands) 2019 2018 2019 2018
Balance of PCI loans, beginning of period $ 2,273
$ 7,033
$ 3,816
$ 11,844
Accretable Yield
Balance, beginning of period $ 401
$ 439
$ 961
$ 1,051
Addition attributable to the Merger 39,733
—
39,733
—
Accretion recognized in interest income (4,312 ) (38 ) (5,015 ) (188 )
Net reclassification (to) from nonaccretable difference (517 ) —
179
370
Payments received (824 ) 26
(1,377 ) (806 )
Balance, end of period $ 34,481
$ 427
$ 34,481
$ 427
Balance of PCI loans, end of period $ 293,713
$ 4,802
$ 293,713
$ 4,802

~~Leases~~ ~~Effective January 1, 2019, TCF adopted ASU No. 2016-02,~~ ~~Leases (Topic 842)~~ and related ASUs on a modified retrospective basis, electing the practical expedients and optional transition method. As such, the following leasing disclosures include information at or for the three and nine months ended September 30, 2019.

~~The components of the net investment in direct financing and sales-type leases were as follows:~~

(In thousands) At September 30, 2019
Carrying amount $ 2,682,097
Unguaranteed residual assets 148,669
Net direct fees and costs and unearned income (236,393 )
Total net investment in direct financing and sales-type leases $ 2,594,373

~~The carrying amount of the direct financing and sales-type leases subject to residual value guarantees was $263.3 million at September 30, 2019.~~

~~The components of total lease income were as follows:~~

Three Months Ended Nine Months Ended
(In thousands) September 30, 2019
Interest income - loans and leases:
Interest income on net investment in direct financing and sales-type leases $ 32,832
$ 98,116
Leasing revenue (noninterest income):
Lease income from operating lease payments 25,444
76,140
Profit (loss) recorded on commencement date on sales-type leases 7,983
22,289
Gains (losses) on sales of leased equipment 6,163
18,603
Leasing revenue 39,590
117,032
Total lease income $ 72,422
$ 215,148

Lease financing equipment depreciation on equipment leased to others was $19.4 million and $57.8 million for the three and nine months ended September 30, 2019, respectively. The net book value of equipment leased to others and related initial direct costs under operating leases was $285.4 million at September 30, 2019.policy information.

Table of Contents

~~Undiscounted future minimum~~Lease Income The components of total lease ~~payments receivable for direct financing and sales-type leases, and a reconciliation to the carrying amount recorded at September 30, 2019~~income were as follows:

(In thousands)
Remainder of 2019 $ 51,851
2020 333,516
2021 459,359
2022 554,951
2023 563,752
Thereafter 612,063
Equipment under leases not yet commenced 47,948
Total undiscounted future minimum lease payments receivable for direct financing and sales-type leases 2,623,440
Third-party residual value guarantees 58,657
Total carrying amount of direct financing and sales-type leases $ 2,682,097



	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2020		2019		2020		2019
Interest income - loans and leases:
Interest income on net investment in direct financing and sales-type leases	$	32,696	$	32,833	$	100,655	$	98,116
Leasing revenue (noninterest income):
Lease income from operating lease payments	23,542		25,492		71,243		76,388
Profit recorded on commencement date on sales-type leases	4,503		7,983		13,690		22,289
Gains on sales of leased equipment	3,860		6,115		17,709		18,355
Leasing revenue	31,905		39,590		102,642		117,032
Total lease income	$	64,601	$	72,423	$	203,297	$	215,148

~~Undiscounted future minimum lease payments expected to be received for operating leases at September 30, 2019 were as follows:~~

(In thousands)
Remainder of 2019 $ 20,087
2020 71,120
2021 48,885
2022 25,915
2023 9,777
Thereafter 4,717
Total undiscounted future minimum lease payments $ 180,501

Loan and Lease Sales The following table summarizes the net gains on sales of loans and leases. ~~TCF~~The Corporation retains servicing on a majority of loans sold. See ~~Note 11.~~"Note 10. Loan Servicing ~~Rights~~Rights" for further information.

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2019 2018 2019 2018
Sale proceeds, net $ 472,800
$ 410,389
$ 1,066,576
$ 940,134
Recorded investment in loans and leases sold, including accrued interest 458,697
393,078
1,033,961
911,218
Interest-only strips at initial value and other (20,087 ) (8,809 ) (19,241 ) (4,016 )
Net (losses) gains on sales of loans and leases $ (5,984 ) $ 8,502
$ 13,374
$ 24,900



	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2020			2019			2020			2019
Sale proceeds, net	$	667,807		$	472,800		$	1,802,193		$	1,066,576
Recorded investment in loans and leases sold, including accrued interest	635,149			458,697			1,727,687			1,033,961
Other	(9,168		)	(20,087		)	(1,392		)	(19,241		)
Net gains on sales of loans and leases	$	23,490		$	(5,984	)	$	73,114		$	13,374

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


(In thousands)	At September 30, 2019		At December 31, 2018		At September 30, 2020		At December 31, 2019
Interest-only strips	$	14,078	$	16,835	$	9,555	$	12,813

~~TCF~~The Corporation recorded 0 impairment charges during the three months ended September 30, 2020 and $224 thousand of impairment charges on interest-only strips for the nine months ended September 30, 2020, and $22 thousand and $43 thousand of impairment charges ~~on interest-only strips during~~for the three and nine months ended September 30, 2019, ~~respectively,~~respectively.

The Corporation's agreements to sell consumer loans typically contain certain representations, warranties and ~~$45 thousand~~covenants regarding the loans sold or securitized. These representations, warranties and ~~$0.7 million during~~covenants generally relate to, among other things, the ~~same periods~~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 ~~2018.~~the agreement, the manner in which the loans will be serviced, payment delinquency and compliance with applicable laws and regulations. These agreements generally require the repurchase of loans or indemnification of the purchaser in the event these representations are breached, warranties or covenants and such breaches are not cured. In addition, some agreements contain a requirement to repurchase loans as a result of early payoffs by the borrower, early payment default of the borrower or the failure to obtain valid title. Losses related to repurchases pursuant to such representations, warranties and covenants were immaterial for the three and nine months ended September 30, 2020 and 2019.

Note 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. Financial information at June 30, 2020 reflects this adoption, and historical financial information disclosed is in accordance with ASC Topic 310.

Table of Contents

~~Note 8. Allowance for Loan and Lease Losses and Credit Quality~~

Allowance for ~~Loan and Lease~~Credit Losses The rollforwards of the allowance for ~~loan and lease~~credit losses were as follows:


(In thousands)	Consumer Loan Portfolio			Commercial Loan and Lease Portfolio			Total Loans and Leases			Consumer Loan Portfolio			Commercial Loan and Lease Portfolio			Total Allowance for Loan and Lease Losses			Reserve for Unfunded Lending Commitments⁽¹⁾			Total Allowance for Credit Losses
At or For the Three Months Ended September 30, 2020
Balance, beginning of period										$	157,685		$	303,429		$	461,114		$	42,788		$	503,902
Charge-offs										(5,768		)	(26,467		)	(32,235		)	0			(32,235		)
Recoveries										3,698			3,961			7,659			0			7,659
Net (charge-offs) recoveries										(2,070		)	(22,506		)	(24,576		)	0			(24,576		)
Provision for credit losses⁽²⁾										(20,835		)	99,158			78,323			(8,659		)	69,664
Other										357			11			368			0			368
Balance, end of period										$	135,137		$	380,092		$	515,229		$	34,129		$	549,358
At or For the Three Months Ended September 30, 2019
Balance, beginning of period	$	70,711		$	75,792		$	146,503		$	70,711		$	75,792		$	146,503		$	1,936		$	148,439
Charge-offs	(14,098		)	(21,449		)	(35,547		)	(14,098		)	(21,449		)	(35,547		)	0			(35,547		)
Recoveries	5,330			1,639			6,969			5,330			1,639			6,969			0			6,969
Net (charge-offs) recoveries	(8,768		)	(19,810		)	(28,578		)	(8,768		)	(19,810		)	(28,578		)	0			(28,578		)
Provision for credit losses	4,693			22,495			27,188
Other⁽¹⁾	(23,849		)	(46		)	(23,895		)
Provision for credit losses⁽²⁾										4,693			22,495			27,188			(342		)	26,846
Other⁽³⁾										(23,849		)	(46		)	(23,895		)	0			(23,895		)
Addition due to merger										0			0			0			1,867			1,867
Balance, end of period	$	42,787		$	78,431		$	121,218		$	42,787		$	78,431		$	121,218		$	3,461		$	124,679
At or For the Three Months Ended September 30, 2018
At or For the Nine Months Ended September 30, 2020
Balance, beginning of period	$	91,241		$	74,378		$	165,619		$	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	(15,942		)	(3,506		)	(19,448		)	(16,613		)	(40,309		)	(56,922		)	0			(56,922		)
Recoveries	11,711			947			12,658			12,035			11,439			23,474			0			23,474
Net (charge-offs) recoveries	(4,231		)	(2,559		)	(6,790		)	(4,578		)	(28,870		)	(33,448		)	0			(33,448		)
Provision for credit losses	(847		)	3,117			2,270
Other⁽¹⁾	(299		)	(179		)	(478		)
Provision for credit losses⁽²⁾										3,449			225,990			229,439			15,894			245,333
Other										357			(163		)	194			0			194
Balance, end of period	$	85,864		$	74,757		$	160,621		$	135,137		$	380,092		$	515,229		$	34,129		$	549,358

(In thousands)	Consumer Loan Portfolio			Commercial Loan and Lease Portfolio			Total Loans and Leases
At or For the Nine Months Ended September 30, 2019
Balance, beginning of period	$	80,017		$	77,429		$	157,446		$	80,017		$	77,429		$	157,446		$	1,428		$	158,874
Charge-offs	(43,922		)	(37,122		)	(81,044		)	(43,922		)	(37,122		)	(81,044		)	0			(81,044		)
Recoveries	15,840			3,890			19,730			15,840			3,890			19,730			0			19,730
Net (charge-offs) recoveries	(28,082		)	(33,232		)	(61,314		)	(28,082		)	(33,232		)	(61,314		)	0			(61,314		)
Provision for credit losses	16,644			34,235			50,879
Other⁽¹⁾	(25,792		)	(1		)	(25,793		)
Provision for credit losses⁽²⁾										16,644			34,235			50,879			166			51,045
Other⁽³⁾										(25,792		)	(1		)	(25,793		)	0			(25,793		)
Addition due to merger										0			0			0			1,867			1,867
Balance, end of period	$	42,787		$	78,431		$	121,218		$	42,787		$	78,431		$	121,218		$	3,461		$	124,679
At or For the Nine Months Ended September 30, 2018
Balance, beginning of period	$	98,085		$	72,956		$	171,041
Charge-offs	(48,120		)	(9,381		)	(57,501		)
Recoveries	21,299			2,491			23,790
Net (charge-offs) recoveries	(26,821		)	(6,890		)	(33,711		)
Provision for credit losses	18,872			9,002			27,874
Other⁽¹⁾	(4,272		)	(311		)	(4,583		)
Balance, end of period	$	85,864		$	74,757		$	160,621


(1)	~~Includes~~RULC is recognized within other liabilities.


(2)	As a result of the adoption of CECL, effective January 1, 2020, the provision for credit losses includes the provision for unfunded lending commitments that was previously included within other noninterest expense.


(3)	Primarily includes the transfer of the allowance for ~~loan and lease~~credit losses to loans and leases ~~held-for-sale (inclusive of the transfer of Legacy TCF auto loan portfolio for the three and nine months ended September 30, 2019).~~held-for-sale.

Table of Contents

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

The allowance for loan and lease losses and loans and leases outstanding by type of allowance methodology ~~were~~was as follows:

At September 30, 2019
(In thousands) Consumer Loan Portfolio Commercial Loan and Lease Portfolio Total Loans and Leases
Allowance for loan and lease losses
Collectively evaluated for impairment $ 26,024
$ 70,219
$ 96,243
Individually evaluated for impairment 16,763
8,212
24,975
Total $ 42,787
$ 78,431
$ 121,218
Loans and leases outstanding
Collectively evaluated for impairment $ 11,016,429
$ 21,956,151
$ 32,972,580
Individually evaluated for impairment 132,900
111,559
244,459
PCI loans 79,737
213,976
293,713
Total $ 11,229,066
$ 22,281,686
$ 33,510,752


	At December 31, 2018						At December 31, 2019
(In thousands)	Consumer Loan Portfolio		Commercial Loan and Lease Portfolio		Total Loans and Leases		Consumer Loan Portfolio		Commercial Loan and Lease Portfolio		Total Loans and Leases
Allowance for loan and lease losses
Collectively evaluated for impairment	$	57,113	$	68,140	$	125,253	$	26,430	$	75,756	$	102,186
Individually evaluated for impairment	22,904		9,289		32,193		1,468		5,769		7,237
Loans acquired with deteriorated credit quality							674		2,955		3,629
Total	$	80,017	$	77,429	$	157,446	$	28,572	$	84,480	$	113,052
Loans and leases outstanding
Collectively evaluated for impairment	$	7,285,753	$	11,587,373	$	18,873,126	$	11,087,534	$	22,986,607	$	34,074,141
Individually evaluated for impairment	128,159		67,919		196,078		60,694		115,843		176,537
PCI loans	—		3,816		3,816
Loans acquired with deteriorated credit quality							72,895		173,891		246,786
Total	$	7,413,912	$	11,659,108	$	19,073,020	$	11,221,123	$	23,276,341	$	34,497,464

Information on impaired loans and leases at December 31, 2019 was as follows:



	At December 31, 2019
(In thousands)	Unpaid Contractual Balance		Loan and Lease Balance		Related Allowance Recorded
Impaired loans and leases with an allowance recorded:
Commercial loan and lease portfolio:
Commercial and industrial	$	20,069	$	20,090	$	2,844
Commercial real estate	4,225		3,962		333
Lease financing	10,956		10,956		2,592
Total commercial loan and lease portfolio	35,250		35,008		5,769
Consumer loan portfolio:
Residential mortgage	24,297		22,250		1,030
Home equity	9,418		8,791		438
Total consumer loan portfolio	33,715		31,041		1,468
Total impaired loans and leases with an allowance recorded	68,965		66,049		7,237
Impaired loans and leases without an allowance recorded:
Commercial loan and lease portfolio:
Commercial and industrial	55,889		39,098		—
Commercial real estate	69,143		41,737		0
Total commercial loan and lease portfolio	125,032		80,835		0
Consumer loan portfolio:
Residential mortgage	31,142		22,594		—
Home equity	24,709		6,179		—
Consumer installment	2,095		880		—
Total consumer loan portfolio	57,946		29,653		0
Total impaired loans and leases without an allowance recorded	182,978		110,488		0
Total impaired loans and leases	$	251,943	$	176,537	$	7,237

Table of Contents

Accruing and Nonaccrual Loans and Leases ~~TCF's~~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. ~~TCF's~~In addition, loans and leases that have requested payment deferral under the CARES Act of greater than 180 days are generally placed on nonaccrual status. The Corporation's accruing and nonaccrual loans and leases were as follows:


(In thousands)	Current		30-89 Days Delinquent and Accruing		90 Days or More Delinquent and Accruing		Total Accruing		Nonaccrual		Total		Current		30-89 Days Delinquent and Accruing		90 Days or More Delinquent and Accruing		Total Accruing		Nonaccrual⁽¹⁾		Total
At September 30, 2019
At September 30, 2020
Commercial loan and lease portfolio:
Commercial and industrial	$	10,615,519	$	49,595	$	2,241	$	10,667,355	$	55,039	$	10,722,394	$	11,357,324	$	56,320	$	3,101	$	11,416,745	$	140,492	$	11,557,237
Commercial real estate	8,677,350		39,023		8,054		8,724,427		26,518		8,750,945		9,492,853		63,981		244		9,557,078		70,252		9,627,330
Lease financing	2,551,326		29,123		2,421		2,582,870		11,503		2,594,373		2,648,447		30,652		3,564		2,682,663		42,023		2,724,686
Total commercial loan and lease portfolio	21,844,195		117,741		12,716		21,974,652		93,060		22,067,712		23,498,624		150,953		6,909		23,656,486		252,767		23,909,253
Consumer loan portfolio:
Residential mortgage	5,919,947		14,533		886		5,935,366		48,816		5,984,182		5,700,715		22,954		1,347		5,725,016		65,235		5,790,251
Home equity													3,160,742		90,057		0		3,250,799		52,184		3,302,983
Consumer installment	1,557,320		3,667		6		1,560,993		636		1,561,629		1,329,989		4,680		0		1,334,669		6,535		1,341,204
Home equity	3,550,652		13,569		—		3,564,221		39,296		3,603,517
Total consumer loan portfolio	11,027,919		31,769		892		11,060,580		88,748		11,149,328		10,191,446		117,691		1,347		10,310,484		123,954		10,434,438
PCI loans⁽¹⁾	261,082		16,578		16,052		293,712		—		293,712
Total	$	33,133,196	$	166,088	$	29,660	$	33,328,944	$	181,808	$	33,510,752	$	33,690,070	$	268,644	$	8,256	$	33,966,970	$	376,721	$	34,343,691
At December 31, 2018
At December 31, 2019
Commercial loan and lease portfolio:
Commercial and industrial	$	6,176,341	$	13,653	$	760	$	6,190,754	$	26,061	$	6,216,815	$	11,283,832	$	29,780	$	331	$	11,313,943	$	53,812	$	11,367,755
Commercial real estate	2,903,795		—		—		2,903,795		4,518		2,908,313		8,993,360		10,291		1,440		9,005,091		29,735		9,034,826
Lease financing	2,498,811		21,477		1,882		2,522,170		7,993		2,530,163		2,662,354		24,657		1,901		2,688,912		10,957		2,699,869
Total commercial loan and lease portfolio	11,578,947		35,130		2,642		11,616,719		38,572		11,655,291		22,939,546		64,728		3,672		23,007,946		94,504		23,102,450
Consumer loan portfolio:
Residential mortgage	2,291,435		10,014		1,275		2,302,724		33,111		2,335,835		6,056,817		17,245		559		6,074,621		38,577		6,113,198
Home equity													3,434,771		22,568		0		3,457,339		35,863		3,493,202
Consumer installment	1,951,302		40,340		3,349		1,994,991		8,581		2,003,572		1,536,714		4,292		108		1,541,114		714		1,541,828
Home equity	3,042,968		5,883		—		3,048,851		25,654		3,074,505
Total consumer loan portfolio	7,285,705		56,237		4,624		7,346,566		67,346		7,413,912		11,028,302		44,105		667		11,073,074		75,154		11,148,228
PCI loans⁽¹⁾	3,639		—		178		3,817		—		3,817
Purchased credit impaired loans⁽¹⁾													217,206		3,843		25,737		246,786		0		246,786
Total	$	18,868,291	$	91,367	$	7,444	$	18,967,102	$	105,918	$	19,073,020	$	34,185,054	$	112,676	$	30,076	$	34,327,806	$	169,658	$	34,497,464

(1)

~~PCI~~Prior to the adoption of CECL as of January 1, 2020, purchased credit impaired loans ~~that are~~were not ~~performing in accordance with contractual terms are not reported~~classified as nonaccrual loans because ~~these loans~~they were recorded at their net realizable value based on the principal and interest ~~TCF expects~~expected to ~~collect~~be collected on the loans. At January 1, 2020, $73.4 million of previous purchased credit impaired loans were reclassified to nonaccrual loans as a result of the adoption of CECL.

Table of Contents

Loans and leases that are 90 days or more delinquent and accruing by year of origination were as follows:



			Amortized Cost Basis
(In thousands)	Term Loans and Leases by Origination Year												Revolving Loans and Leases		Revolving Loans and Leases Converted to Term Loans and Leases
At September 30, 2020	2020		2019		2018		2017		2016		2015 and Prior		Revolving Loans and Leases				Total
Commercial loan and lease portfolio:
Commercial and industrial	$	142	$	86	$	0	$	4	$	0	$	2,468	$	401	$	0	$	3,101
Commercial real estate	0		0		0		0		0		244		0		0		244
Lease financing	139		906		697		1,308		482		32		0		0		3,564
Total commercial loan and lease portfolio	281		992		697		1,312		482		2,744		401		0		6,909
Consumer loan portfolio:
Residential mortgage	85		134		0		0		0		1,128		0		0		1,347
Total consumer loan portfolio	85		134		0		0		0		1,128		0		0		1,347
Total 90 days or more delinquent and accruing	$	366	$	1,126	$	697	$	1,312	$	482	$	3,872	$	401	$	0	$	8,256

Nonaccrual loans and leases by year of origination were as follows:



			Amortized Cost Basis
(In thousands)	Term Loans and Leases by Origination Year												Revolving Loans and Leases		Revolving Loans and Leases Converted to Term Loans and Leases
At September 30, 2020	2020		2019		2018		2017		2016		2015 and Prior		Revolving Loans and Leases				Total
Commercial loan and lease portfolio:
Commercial and industrial	$	3,739	$	38,211	$	34,112	$	17,978	$	12,395	$	16,424	$	17,629	$	4	$	140,492
Commercial real estate	0		1,079		11,937		11,618		8,810		36,808		0		0		70,252
Lease financing	1,810		9,695		12,289		7,204		4,532		4,863		100		1,530		42,023
Total commercial loan and lease portfolio	5,549		48,985		58,338		36,800		25,737		58,095		17,729		1,534		252,767
Consumer loan portfolio:
Residential mortgage	476		2,895		2,902		2,112		2,392		54,458		0		0		65,235
Home equity	675		1,604		458		341		211		4,502		43,360		1,033		52,184
Consumer installment	42		163		656		285		248		4,973		168		0		6,535
Total consumer loan portfolio	1,193		4,662		4,016		2,738		2,851		63,933		43,528		1,033		123,954
Total nonaccrual loans and leases	$	6,742	$	53,647	$	62,354	$	39,538	$	28,588	$	122,028	$	61,257	$	2,567	$	376,721

Table of Contents

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



	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
(In thousands)	Average Loan and Lease Balance⁽¹⁾		Interest Income Recognized⁽¹⁾		Average Loan and Lease Balance		Interest Income Recognized		Average Loan and Lease Balance⁽¹⁾		Interest Income Recognized⁽¹⁾		Average Loan and Lease Balance		Interest Income Recognized
Commercial loan and lease portfolio:
Commercial and industrial	$	119,338	$	2,544	$	36,761	$	40	$	97,153	$	6,212	$	40,550	$	162
Commercial real estate	63,885		2,452		13,531		35		49,993		5,982		15,518		97
Lease financing	30,390		31		12,195		55		26,489		102		9,748		116
Total commercial loan and lease portfolio	213,613		5,027		62,487		130		173,635		12,296		65,816		375
Consumer loan portfolio:
Residential mortgage	66,498		769		41,788		68		51,906		2,133		40,963		205
Home equity	49,872		3,000		35,991		79		44,023		3,283		32,476		174
Consumer installment	4,102		143		4,634		0		3,625		209		4,608		0
Total consumer loan portfolio	120,472		3,912		82,413		147		99,554		5,625		78,047		379
Total nonaccrual loans and leases	$	334,085	$	8,939	$	144,900	$	277	$	273,189	$	17,921	$	143,863	$	754


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

In addition to the ~~receivables~~receivable's payment performance status, credit quality is also analyzed using credit risk ~~categories,~~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 ~~categories~~classifications also measure the quality of the borrower's management and the repayment support offered by any guarantors. Loan and lease credit risk classifications are derived from standard regulatory rating definitions, which include: pass, special mention, substandard, doubtful and loss. Substandard and doubtful loans and leases have well-defined weaknesses, but may never result in a loss.

2527

Table of Contents

The ~~following schedule presents~~amortized cost basis of loans and leases by credit risk classifications and year of origination was as follows:



	Amortized Cost Basis
(In thousands)	Term Loans and Leases by Origination Year												Revolving Loans and Leases⁽¹⁾		Revolving Loans and Leases Converted to Term Loans and Leases⁽²⁾
At September 30, 2020	2020		2019		2018		2017		2016		2015 and Prior						Total
Commercial loan and lease portfolio:
Commercial and industrial
Pass	$	3,046,289	$	2,070,267	$	1,165,510	$	650,511	$	412,527	$	354,391	$	3,173,255	$	45,162	$	10,917,912
Special mention	9,996		55,414		34,345		44,613		14,564		13,127		142,520		0		314,579
Substandard	7,238		51,459		88,920		36,442		19,116		23,474		97,984		113		324,746
Total commercial and industrial	3,063,523		2,177,140		1,288,775		731,566		446,207		390,992		3,413,759		45,275		11,557,237
Commercial real estate
Pass	930,314		2,152,099		1,932,737		1,371,335		784,174		1,672,418		0		0		8,843,077
Special mention	289		100,532		55,678		168,496		62,608		102,896		0		0		490,499
Substandard	1,056		5,129		34,754		119,637		43,004		90,174		0		0		293,754
Total commercial real estate	931,659		2,257,760		2,023,169		1,659,468		889,786		1,865,488		0		0		9,627,330
Lease financing
Pass	718,133		797,020		449,720		270,567		143,098		47,280		31,963		172,653		2,630,434
Special mention	2,703		11,432		4,687		5,731		2,469		1,658		3,837		5,299		37,816
Substandard	5,428		11,672		15,082		9,305		5,501		5,926		418		3,104		56,436
Total lease financing	726,264		820,124		469,489		285,603		151,068		54,864		36,218		181,056		2,724,686
Total commercial	4,721,446		5,255,024		3,781,433		2,676,637		1,487,061		2,311,344		3,449,977		226,331		23,909,253
Consumer loan portfolio:
Residential mortgage
Pass	1,024,652		1,243,341		743,949		507,124		497,004		1,702,326		0		0		5,718,396
Special mention	0		0		0		0		161		214		0		0		375
Substandard	677		3,076		3,387		2,488		3,173		58,679		0		0		71,480
Total residential mortgage	1,025,329		1,246,417		747,336		509,612		500,338		1,761,219		0		0		5,790,251
Home equity
Pass	24,496		56,729		54,356		44,760		32,586		146,650		2,871,820		8,501		3,239,898
Substandard	698		1,753		580		483		569		7,181		50,379		1,442		63,085
Total home equity	25,194		58,482		54,936		45,243		33,155		153,831		2,922,199		9,943		3,302,983
Consumer installment
Pass	198,591		407,891		211,270		209,484		141,032		139,869		26,018		70		1,334,225
Substandard	397		1,262		1,382		1,062		547		1,860		469		0		6,979
Total consumer installment	198,988		409,153		212,652		210,546		141,579		141,729		26,487		70		1,341,204
Total consumer	1,249,511		1,714,052		1,014,924		765,401		675,072		2,056,779		2,948,686		10,013		10,434,438
Total loans and leases	$	5,970,957	$	6,969,076	$	4,796,357	$	3,442,038	$	2,162,133	$	4,368,123	$	6,398,663	$	236,344	$	34,343,691


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


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

Table of Contents

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


(In thousands)	Pass		Special Mention		Substandard		Doubtful		Total		Pass		Special Mention		Substandard		Total
At September 30, 2019
At December 31, 2019
Commercial loan and lease portfolio:
Commercial and industrial	$	10,307,229	$	309,440	$	193,865	$	—	$	10,810,534	$	10,930,939	$	315,097	$	193,566	$	11,439,602
Commercial real estate	8,645,910		150,132		80,737		—		8,876,779		8,891,361		170,114		75,395		9,136,870
Lease financing	2,540,637		27,007		26,729		—		2,594,373		2,646,874		28,091		24,904		2,699,869
Total commercial loan and lease portfolio	21,493,776		486,579		301,331		—		22,281,686		22,469,174		513,302		293,865		23,276,341
Consumer loan portfolio:
Residential mortgage	6,001,380		1,543		54,481		—		6,057,404		6,135,096		565		44,144		6,179,805
Home equity											3,457,292		456		41,159		3,498,907
Consumer installment	1,561,506		—		746		—		1,562,252		1,541,524		0		887		1,542,411
Home equity	3,565,763		1,284		42,363		—		3,609,410
Total consumer loan portfolio	11,128,649		2,827		97,590		—		11,229,066		11,133,912		1,021		86,190		11,221,123
Total loans and leases	$	32,622,425	$	489,406	$	398,921	$	—	$	33,510,752	$	33,603,086	$	514,323	$	380,055	$	34,497,464
At December 31, 2018
Commercial loan and lease portfolio:
Commercial and industrial	$	5,955,713	$	158,296	$	106,623	$	—	$	6,220,632
Commercial real estate	2,869,711		12,864		25,738		—		2,908,313
Lease financing	2,480,964		25,195		24,004		—		2,530,163
Total commercial loan and lease portfolio	11,306,388		196,355		156,365		—		11,659,108
Consumer loan portfolio:
Residential mortgage	2,294,740		3,606		37,489		—		2,335,835
Consumer installment	1,981,844		1,302		20,426		—		2,003,572
Home equity	3,043,296		3,747		27,462		—		3,074,505
Total consumer loan portfolio	7,319,880		8,655		85,377		—		7,413,912
Total loans and leases	$	18,626,268	$	205,010	$	241,742	$	—	$	19,073,020

Troubled Debt RestructuringsIn certain circumstances, ~~TCF~~the Corporation may consider modifying the terms of a loan for economic or legal reasons related to the customer's financial difficulties. If ~~TCF~~the Corporation grants a concession, the modified loan iswould generally be classified as a ~~troubled debt restructuring ("TDR").~~TDR. However, Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications provide banks the option to temporarily suspend the application of TDR accounting guidance for loans modified due to the effects of COVID-19 when certain conditions are met. See "Note 3. Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements for information regarding recent updated guidance on TDR accounting provided by the CARES Act and Interagency guidance. TDRs typically involve a deferral of the principal balance of the loan, a reduction of the stated interest rate of the loan or, in certain limited circumstances, a reduction of the principal balance of the loan or the loan's accrued interest. ~~All loans classified as TDR loans are considered to be impaired.~~

The following table presents the recorded investment of loan modifications first classified as TDRs during the periods presented:


	Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018				2020				2019				2020				2019
(In thousands)	Pre-modification Investment		Post-modification Investment		Pre-modification Investment		Post-modification Investment		Pre-modification Investment		Post-modification Investment		Pre-modification Investment		Post-modification Investment		Pre-modification Investment		Post-modification Investment		Pre-modification Investment		Post-modification Investment		Pre-modification Investment		Post-modification Investment		Pre-modification Investment		Post-modification Investment
Commercial loan and lease portfolio:
Commercial and industrial	$	—	$	—	$	11	$	11	$	—	$	—	$	11	$	11	$	5,378	$	5,344	$	0	$	0	$	10,742	$	10,709	$	0	$	0
Commercial real estate	—		—		—		—		31,518		31,518		5,228		5,228		29,735		29,735		0		0		32,267		32,177		31,518		31,518
Total commercial loan and lease portfolio	—		—		11		11		31,518		31,518		5,239		5,239		35,113		35,079		0		0		43,009		42,886		31,518		31,518
Consumer loan portfolio:
Residential mortgage	1,724		1,723		2,132		2,119		4,023		4,016		4,385		4,315		4,994		4,994		1,724		1,723		10,423		10,423		4,023		4,016
Consumer installment																	88		88		0		0		481		391		0		0
Home equity	1,115		1,115		983		983		3,589		3,577		1,792		1,790		2,796		2,796		1,115		1,115		4,553		4,494		3,589		3,577
Total consumer loan portfolio	2,839		2,838		3,115		3,102		7,612		7,593		6,177		6,105		7,878		7,878		2,839		2,838		15,457		15,308		7,612		7,593
Total	$	2,839	$	2,838	$	3,126	$	3,113	$	39,130	$	39,111	$	11,416	$	11,344	$	42,991	$	42,957	$	2,839	$	2,838	$	58,466	$	58,194	$	39,130	$	39,111

The following table presents TDR loans:



	At September 30, 2020						At December 31, 2019
(In thousands)	Accruing TDR Loans		Nonaccrual TDR Loans		Total TDR Loans		Accruing TDR Loans		Nonaccrual TDR Loans		Total TDR Loans
Commercial loan and lease portfolio	$	36,947	$	13,250	$	50,197	$	12,986	$	5,356	$	18,342
Consumer loan portfolio	17,956		21,526		39,482		12,403		14,875		27,278
Total	$	54,903	$	34,776	$	89,679	$	25,389	$	20,231	$	45,620

2629

Table of Contents

~~The following table presents TDR loans:~~

At September 30, 2019 At December 31, 2018
(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 $ 10,068
$ 1,953
$ 12,021
$ 12,665
$ 6,153
$ 18,818
Consumer loan portfolio 75,836
19,284
95,120
85,794
22,554
108,348
Total $ 85,904
$ 21,237
$ 107,141
$ 98,459
$ 28,707
$ 127,166

Commitments to lend additional funds to borrowers whose terms have been modified in TDRs were ~~$0.5~~$1.3 million and ~~$0.6 million~~$638 thousand at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

Loan modifications to troubled borrowers are no longer disclosed as TDR loans in the calendar years after modification if the loans were modified to an interest rate equal to or greater than the yields of new loan originations with comparable risk at the time of restructuring and if the loan is performing based on the restructured terms; however, these loans are still considered impaired and follow ~~TCF's~~the Corporation's impaired loan reserve policies.

The following table summarizes the TDR loans that defaulted during the periods presented that were modified during the respective reporting period or within one year of the beginning of the respective reporting period. ~~TCF~~The Corporation considers a loan to have defaulted when under the modified terms it becomes 90 or more days delinquent, has been transferred to nonaccrual status, has been charged down or has been transferred to other real estate owned or repossessed and returned assets.

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2019 2018 2019 2018
Defaulted TDR loan balances modified during the applicable period
Commercial loan and lease portfolio:
Commercial and industrial $ —
$ 87
$ 297
$ 4,784
Total commercial loan and lease portfolio —
87
297
4,784
Consumer loan portfolio:

Residential mortgage 212
778
964
2,556
Consumer installment 452
217
1,555
950
Home equity 82
176
328
435
Total consumer loan portfolio 746
1,171
2,847
3,941
Defaulted TDR loan balances $ 746
$ 1,258
$ 3,144
$ 8,725

~~Impaired Loans and Leases~~ ~~Effective January 1, 2019, in conjunction with the adoption of ASU No. 2016-02,~~ ~~Leases (Topic 842)~~ and related ASUs, TCF considers impaired loans and leases to include nonaccrual commercial loans and leases, as well as all commercial and consumer TDR loans. Previously, TCF did not include impaired leases within the following tables. For purposes of this disclosure, PCI loans have been excluded. In the following table, the balance of impaired loans and leases 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.

~~Table of Contents~~

~~Information on impaired loans and leases at September 30, 2019 and information on impaired loans at December 31, 2018 was as follows:~~

At September 30, 2019 At December 31, 2018
(In thousands) Unpaid
Contractual
Balance Loan and Lease Balance Related
Allowance
Recorded Unpaid
Contractual
Balance Loan Balance Related
Allowance
Recorded
Impaired loans and leases with an allowance recorded:

Commercial loan and lease portfolio:
Commercial and industrial $ 27,748
$ 24,775
$ 5,151
$ 35,444
$ 32,326
$ 6,354
Commercial real estate 4,257
3,922
330
4,905
4,474
1,108
Lease financing 11,503
11,503
2,731
—
—
—
Total commercial loan and lease portfolio 43,508
40,200
8,212
40,349
36,800
7,462
Consumer loan portfolio:

Residential mortgage 81,658
78,247
13,630
63,004
60,172
17,216
Consumer installment —
—
—
919
647
81
Home equity 30,584
29,228
2,916
27,386
25,836
5,288
Total consumer loan portfolio 112,242
107,475
16,546
91,309
86,655
22,585
Total impaired loans and leases with an allowance recorded 155,750
147,675
24,758
131,658
123,455
30,047
Impaired loans and leases without an allowance recorded:

Commercial loan and lease portfolio:
Commercial and industrial 56,284
36,409
—
2,239
2,237
—
Commercial real estate 63,069
34,950
—
4,275
4,208
—
Total commercial loan and lease portfolio 119,353
71,359
—
6,514
6,445
—
Consumer loan portfolio:

Residential mortgage 27,420
19,370
—
11,636
9,494
—
Consumer installment 1,878
635
—
15,400
10,770
—
Home equity 16,771
5,420
—
10,620
1,429
—
Total consumer loan portfolio 46,069
25,425
—
37,656
21,693
—
Total impaired loans and leases without an allowance recorded 165,422
96,784
—
44,170
28,138
—
Total impaired loans and leases $ 321,172
$ 244,459
$ 24,758
$ 175,828
$ 151,593
$ 30,047

~~Table of Contents~~

The average balance of impaired loans and leases and interest income recognized on impaired loans and leases and the average loan balance of impaired loans and interest income recognized on impaired loans were as follows:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018				Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	Average Loan and Lease Balance		Interest Income Recognized		Average Loan Balance		Interest Income Recognized		Average Loan and Lease Balance		Interest Income Recognized		Average Loan Balance		Interest Income Recognized		2020		2019		2020		2019
Impaired loans and leases with an allowance recorded
Defaulted TDR loan balances modified during the applicable period
Commercial loan and lease portfolio:
Commercial and industrial	$	22,845	$	3	$	22,917	$	49	$	28,551	$	32	$	15,213	$	251	$	60	$	0	$	283	$	297
Commercial real estate	4,175		51		5,192		—		4,198		120		5,929		—
Lease financing	12,195		55		—		—		5,751		117		8,552		—
Total commercial loan and lease portfolio	39,215		109		28,109		49		38,500		269		29,694		251
Consumer loan portfolio:
Residential mortgage	77,852		770		60,737		380		69,209		1,864		69,268		1,221		265		212		1,404		964
Home equity																	170		82		426		328
Consumer installment	289		—		454		—		324		—		713		—		35		452		50		1,555
Home equity	30,225		94		26,462		301		27,532		681		29,583		1,326
Total consumer loan portfolio	108,366		864		87,653		681		97,065		2,545		99,564		2,547		470		746		1,880		2,847
Total impaired loans and leases with an allowance recorded	$	147,581	$	973	$	115,762	$	730	$	135,565	$	2,814	$	129,258	$	2,798
Impaired loans and leases without an allowance recorded
Commercial loan and lease portfolio:
Commercial and industrial	$	20,448	$	37	$	403	$	31	$	19,323	$	129	$	1,510	$	136
Commercial real estate	39,222		437		4,315		58		19,579		1,087		4,385		174
Lease financing	—		—		—		—		—		—		—		—
Total commercial loan and lease portfolio	59,670		474		4,718		89		38,902		1,216		5,895		310
Consumer loan portfolio:
Residential mortgage	12,609		121		9,982		160		14,431		450		10,013		502
Consumer installment	6,476		83		8,757		77		5,703		256		8,630		211
Home equity	3,551		23		1,683		55		3,425		110		1,648		177
Total consumer loan portfolio	22,636		227		20,422		292		23,559		816		20,291		890
Total impaired loans and leases without an allowance recorded	82,306		701		25,140		381		62,461		2,032		26,186		1,200
Total impaired loans and leases	$	229,887	$	1,674	$	140,902	$	1,111	$	198,026	$	4,846	$	155,444	$	3,998
Defaulted TDR loan balances																	$	530	$	746	$	2,163	$	3,144

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

(In thousands) At September 30, 2019 At December 31, 2018
Other real estate owned $ 27,638
$ 17,403
Repossessed and returned assets 14,598
14,574
Consumer loans in process of foreclosure 15,509
15,540



(In thousands)	At September 30, 2020		At December 31, 2019
Other real estate owned	$	35,554	$	34,256
Repossessed and returned assets	11,104		8,045
Consumer loans in process of foreclosure	14,555		17,758

~~On August 1, 2019, TCF acquired $14.6 million of other real estate owned and $0.3 million of repossessed and returned assets in connection with the Merger.~~ Other real estate owned and repossessed and returned assets were written down $1.1 million and $2.3 million, and $2.3 million and $5.5 million during the three and nine months ended September 30, 2020 and September 30, 2019, respectively, and ~~$0.7 million and $2.7 million during the same periods in 2018,~~were included in other assets on the Consolidated Statements of Financial Condition.

~~Table of Contents~~

Note 9. ~~Premises and Equipment, Net~~Goodwill

~~Premises and equipment, net were~~Goodwill was as follows:

(In thousands) At September 30, 2019 At December 31, 2018
Land $ 156,380
$ 144,754
Office buildings 345,663
268,495
Leasehold improvements 57,274
51,868
Furniture, equipment and computer software 450,739
404,743
Premises and equipment leased under capital leases 3,180
3,180
Subtotal 1,013,236
873,040
Less: Accumulated depreciation and amortization (459,042 ) (445,506 )
Premises and equipment, net $ 554,194
$ 427,534



(In thousands)	At September 30, 2020		At December 31, 2019
Goodwill related to consumer banking segment	$	771,555	$	764,389
Goodwill related to commercial banking segment	541,491		535,489
Goodwill, net	$	1,313,046	$	1,299,878

~~Depreciation and amortization expense~~The Corporation recorded goodwill in the amount of $1.2 billion related to ~~premises~~the merger with Legacy TCF completed on August 1, 2019. Goodwill was allocated to the appropriate reporting unit based on the relative fair value of assets acquired and ~~equipment~~deposits held by the reporting unit. This methodology allocates goodwill in proportion to the assets held by each reporting unit as well as incorporating the value of the funding source provided by the in place deposits. The reporting units aggregate between the Consumer Banking and Commercial Banking segments. See "Note 2. Merger" for further information. There was ~~$14.9 million and $52.1 million~~0 impairment of goodwill for the three and nine months ended September 30, ~~2019, respectively,~~2020 and ~~$12.6 million and $36.0 million for the same periods in 2018.~~

~~Note 10. Other Intangible Assets~~

~~The following table sets forth the carrying amount and accumulated amortization of intangible assets that are amortizable and arose from business combinations or other acquisitions.~~

(In thousands) Core deposit intangibles Program agreements Non-compete agreements Customer relationships Total
At September 30, 2019
Gross carrying value $ 180,837
$ 14,700
$ 9,250
$ 24,380
$ 229,167
Accumulated amortization (6,372 ) (868 ) (5,334 ) (683 ) (13,257 )
Net carrying amount $ 174,465
$ 13,832
$ 3,916
$ 23,697
$ 215,910
At December 31, 2018
Gross carrying value $ 3,049
$ 14,700
$ 9,250
$ 2,000
$ 28,999
Accumulated amortization (2,502 ) (408 ) (3,643 ) (1,950 ) (8,503 )
Net carrying amount $ 547
$ 14,292
$ 5,607
$ 50
$ 20,496

Amortization expense recognized on intangible assets was $4.5 million and $6.2 million for the three and nine months ended September 30, 2019, respectively, and $0.9 million and $2.6 million for the same periods in 2018.

~~Estimated amortization expense for the remainder of 2019 through 2023 is as follows:~~

(In thousands) Total
Remainder of 2019 $ 9,509
2020 27,393
2021 24,892
2022 22,531
2023 20,762

2019.

Table of Contents

Note ~~11.~~10. Loan Servicing Rights

Information regarding LSRs was as follows:


(Dollars in thousands)	At or For the Three Months Ended September 30, 2019			At or For the Nine Months Ended September 30, 2019
							Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)							2020			2019			2020			2019
Balance, beginning of period	$	18		$	23		$	38,816		$	18		$	56,313		$	23
Acquired in the Merger	59,567			59,567			0			59,567			0			59,567
New servicing assets created	1,906			1,906			5,280			1,906			11,238			1,906
Impairment (charge) recovery	(4,520		)	(4,520		)	(154		)	(4,520		)	(17,248		)	(4,520		)
Amortization	(1,670		)	(1,675		)	(5,689		)	(1,670		)	(12,050		)	(1,675		)
Balance, end of period	$	55,301		$	55,301		$	38,253		$	55,301		$	38,253		$	55,301
Valuation allowance, end of period	$	(4,520	)	$	(4,520	)	$	(21,131	)	$	(4,520	)	$	(21,131	)	$	(4,520	)
Loans serviced for others that have servicing rights capitalized, end of period	$	6,647,153		$	6,647,153		$	6,179,464		$	6,647,153		$	6,179,464		$	6,647,153

~~LSRs are stratified into relatively homogeneous pools based on products with similar characteristics.~~

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

Note ~~12. Operating Lease Right-of-Use Assets and Liabilities~~

Operating lease right-of-use assets, included in other assets, were $114.2 million at September 30, 2019. Operating lease liabilities, included in accrued expenses and other liabilities, were $135.1 million at September 30, 2019. In connection with the Merger, TCF recorded $39.8 million and $41.6 million of operating lease right-of-use assets and operating lease liabilities, respectively. Undiscounted future minimum operating lease payments and a reconciliation to the amount recorded as operating lease liabilities at September 30, 2019 were as follows:

(In thousands)
Remainder of 2019 $ 9,137
2020 32,687
2021 23,902
2022 18,624
2023 15,807
Thereafter 48,737
Total undiscounted future minimum operating lease payments 148,894
Discount (13,751 )
Total operating lease liabilities $ 135,143

As of September 30, 2019, TCF had approximately $250.1 million in additional leases for real property that have not yet commenced and are excluded from the operating lease liability table above. Of this amount, $231.7 million was related to a lease agreement for TCF Financial's new headquarters building in Detroit, Michigan signed on May 31, 2019 by Legacy Chemical, with an organization 50% owned by indirect related parties. The new headquarter lease has a term of 22.5 years commencing January 1, 2022 with renewal options.

~~The weighted-average discount rate and remaining lease term for operating leases were as follows:~~



	~~At September 30, 2019~~
~~Weighted-average discount rate~~	~~2.66~~	%
~~Weighted-average remaining lease term (years)~~	~~6.6~~

~~Table of Contents~~

~~The components of total lease cost for operating leases, included in occupancy and equipment noninterest expense, were as follows:~~

Three Months Ended Nine Months Ended
(In thousands) September 30, 2019
Lease expense $ 10,367
$ 28,488
Short-term and variable lease cost 241
332
Sublease income (447 ) (1,189 )
Total lease cost for operating leases $ 10,161
$ 27,631

~~Supplemental cash flow information related to operating leases was as follows:~~

Three Months Ended Nine Months Ended
(In thousands) September 30, 2019
Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ 395
$ 118,100
Cash paid for amounts included in the measurement of lease liabilities - operating 8,807
23,841

~~Note 13.~~11. Investments in Qualified Affordable Housing Projects and Federal ~~Historical~~Historic Projects ~~and New Market Tax Credits~~

~~TCF~~The Corporation invests in qualified affordable housing projects and federal ~~historical~~historic projects ~~and new market tax credits~~ for the purposes of community reinvestment and to obtain tax credits. Return on ~~TCF's~~the Corporation's investment in these projects comes in the form of ~~pass through~~pass-through tax credits and tax losses. The carrying value of the investments is included in other assets. ~~TCF~~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, ~~TCF~~the Corporation amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits. ~~TCF~~The Corporation recognized amortization expense of investments in qualified affordable housing projects of $5.2 million and $15.6 million for the three and nine months ended September 30, 2020, respectively, and $3.6 million and $8.5 million for the three and nine months ended September 30, 2019, ~~respectively,~~respectively. Amortization expense was more than offset by tax credits and ~~$2.4~~other benefits of $6.5 million and ~~$7.2~~$19.4 million for the three and nine months ended September 30, ~~2018, respectively. Amortization expense was offset by tax credits~~2020, respectively, and ~~other benefits of~~ $4.5 million and $10.5 million for the three and nine months ended September 30, 2019, ~~respectively, and $2.9 million and $8.5 million for the three and nine months ended September 30, 2018,~~ respectively. ~~TCF's~~The Corporation's remaining investment in qualified affordable housing projects totaled ~~$231.4~~$219.9 million and $195.8 million at September 30, ~~2019~~2020 and ~~$90.9 million at~~ December 31, ~~2018.~~2019, respectively.

Under the equity method, ~~TCF's~~the Corporation's share of the earnings or losses is included in other noninterest expense. ~~TCF's~~The Corporation's remaining investment in the federal ~~historical~~historic projects ~~all of which were acquired in the Merger,~~and Ohio historic preservation tax credits totaled ~~$38.5~~$52.4 million and $43.6 million at September 30, ~~2019.~~2020 and December 31, 2019, respectively. During the three months ended September 30, 2020, $0.5 million of income tax benefit was recognized due to the federal historic tax credits, which was partially offset by amortization expense, inclusive of impairment, of $0.4 million. During the nine months ended September 30, 2020, $1.1 million of income tax benefit was recognized due to the federal historic tax credits, which was partially offset by amortization expense, inclusive of impairment, of $0.8 million. During the three months ended September 30, 2020, the amount of state tax credits recognized, inclusive of impairment, was $0.4 million. During the nine months ended September 30, 2020, the amount of state tax credits recognized, inclusive of impairment, was $0.9 million.

~~TCF's~~The Corporation's unfunded equity contributions relating to investments in qualified affordable housing projects and federal ~~historical~~historic projects ~~and new market tax credits~~ are included in other liabilities. ~~TCF's~~The Corporation's remaining unfunded equity contributions totaled ~~$128.1~~$134.2 million and $131.3 million at September 30, ~~2019~~2020 and ~~$56.2 million at~~ December 31, ~~2018.~~2019, respectively.

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

Table of Contents

Investments in qualified affordable housing projects and federal ~~historical~~historic projects ~~and new market tax credits~~ 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 ~~require~~only take place if the managing entity ~~to fail~~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.

~~Table of Contents~~

~~Note 14. Deposits~~

~~Deposits were as follows:~~

(In thousands) At September 30, 2019 At December 31, 2018
Checking:
Noninterest-bearing $ 7,959,455
$ 3,921,710
Interest-bearing 6,260,136
2,452,954
Total checking 14,219,591
6,374,664
Savings 8,362,170
6,122,257
Money market 3,621,729
1,193,782
Certificates of deposit 6,949,082
3,797,241
Brokered deposits 2,133,502
1,415,742
Total deposits $ 35,286,074
$ 18,903,686

~~Excluded from total deposits are account overdrafts which have been classified as loans. At September 30, 2019 and December 31, 2018, overdrafts totaled $18.4 million and $9.6 million, respectively.~~

Scheduled maturities for certificates of deposits, including Certificate of Deposit Account Registry Service ("CDARS") deposits, IRA deposits and other brokered funds at September 30, 2019 were as follows:

(In thousands)
Remainder of 2019 $ 4,813,249
2020 3,138,314
2021 266,425
2022 97,139
2023 40,823
Thereafter 30,022

The aggregate amount of certificates of deposit with balances equal to or greater than the Federal Deposit Insurance Corporation ("FDIC") insurance limit of $250,000 was $3.0 billion at September 30, 2019 and $782.4 million at December 31, 2018.

Note ~~15.~~12. Borrowings

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

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

Short-term borrowings (borrowings with an original maturity of less than one year) were as follows:


	At September 30, 2019				At December 31, 2018				At September 30, 2020				At December 31, 2019
(Dollars in thousands)	Amount		Weighted-average Rate		Amount		Weighted-average Rate		Amount		Weighted-average Rate		Amount		Weighted-average Rate
FHLB advances	$	2,335,960	1.63	%	$	—	—	%	$	400,000	0.37	%	$	2,450,000	1.85	%
Collateralized Deposits	271,340		1.00		—		—		253,959		0.14		219,145		0.64
Line-of-Credit - TCF Commercial Finance Canada, Inc.									1,502		1.50		0		0
Total short-term borrowings	$	2,607,300	1.56		$	—	—		$	655,461	0.28		$	2,669,145	1.75

On ~~August 5, 2019,~~June 29, 2020, TCF Financial ~~entered into a $50.0~~voluntarily prepaid the outstanding $80.0 million on its $150.0 million unsecured 364-day revolving credit facility ~~bearing interest at~~with an unaffiliated bank and subsequently closed the ~~then applicable Eurocurrency Rate plus 150 basis points, available to be used, as needed, to fund growth, common stock repurchases or other general corporate purposes. The revolving~~ credit facility contains covenants related to certain thresholds that must be maintained related to various capital adequacy levels, asset quality and profitability ratios, and certain restrictions on levels of indebtedness. TCF Financial had no outstanding balance under the revolving credit facility and was in compliance with all covenants at September 30, 2019.

~~Table of Contents~~

facility.

Long-term borrowings were as follows:


(In thousands)	At September 30, 2019		At December 31, 2018		At September 30, 2020		At December 31, 2019
FHLB advances	$	322,674	$	1,100,000	$	210,372	$	1,822,058
Subordinated debt obligations	430,178		253,391		586,729		428,470
Discounted lease rentals	104,571		92,976		71,738		100,882
Capital lease obligation	3,059		3,105
Finance lease obligation					3,006		3,038
Total long-term borrowings	$	860,482	$	1,449,472	$	871,845	$	2,354,448

~~FHLB Advances~~ ~~As a result of the Merger, TCF assumed long-term FHLB advances of $322.7 million. These acquired long-term FHLB advances have maturity dates ranging from~~On May 6, 2020, ~~to 2025 and carried interest rates ranging from of 1.30% to 2.72% at September 30, 2019. FHLB advances are collateralized by residential mortgage and commercial real estate loans.~~

~~Subordinated Debt Obligations~~ As a result of the Merger, TCF assumed subordinated debt securities totaling $19.0 million. Included in the obligations assumed in the Merger were $5.6 million of obligations due in 2032 with a carrying interest rate based on the three-month LIBOR plus 3.25% and $13.4 million of obligations due in 2034 and 2035 with carrying interest rates based on the three-month LIBOR plus 1.45% to 2.85%.

~~On July 2, 2019,~~ TCF Bank issued $150.0 million of fixed-to-floating rate subordinated notes (the ~~"2029 Notes"~~“2030 Notes”) at par. The fixed-to-floating rate subordinated notes, due ~~July 2, 2029,~~May 6, 2030, bear an initial fixed interest rate of ~~4.13%~~5.50% per annum, payable semi-annually in arrears on ~~January 2~~May 6 and ~~July 2,~~November 6, commencing on ~~January 2,~~November 6, 2020. The ~~2029~~2030 Notes are redeemable at TCF Bank's option beginning on ~~July 2, 2024. Effective July 2, 2024,~~May 6, 2025. Commencing May 6, 2025, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR rate plus ~~237.5~~509 basis points, payable quarterly in arrears on ~~January 2, April 2, July 2~~February 6, May 6, August 6 and ~~October 2, commencing on October 2, 2024.~~November 6. TCF Bank incurred issuance costs of ~~$1.5~~$1.6 million that are amortized as interest expense over the full term of the ~~2029~~2030 Notes using the effective interest method.

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

At September 30, 2020, TCF Bank had pledged $2.5 billion of loans secured by assets to provide borrowing capacity from the Federal Reserve Bank discount window. NaN borrowings were sourced from this facility at September 30, 2020.

Table of Contents

The contractual maturities of long-term borrowings at September 30, ~~2019~~2020 were as follows:


(In thousands)
Remainder of 2019	$	11,138
2020	150,274
Remainder of 2020			$	501
2021	29,508		10,955
2022	126,721		135,533
2023	5,960		24,055
2024			8,806
Thereafter	536,881		691,995
Total long-term borrowings	$	860,482	$	871,845

~~Table of Contents~~

Note ~~16.~~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 September 30,																		Three Months Ended September 30,
	2019									2018									2020									2019
(In thousands)	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax			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	$	24,236		$	(5,606	)	$	18,630		$	(18,086	)	$	4,516		$	(13,570	)	$	(8,489	)	$	1,992		$	(6,497	)	$	24,236		$	(5,606	)	$	18,630
Reclassification of net (gains) losses from accumulated other comprehensive income (loss) to:
Total interest income	844			(205		)	639			263			(65		)	198			777			(183		)	594			844			(205		)	639
Net gains (losses) on investment securities	—			—			—			—			—			—			(2,309		)	542			(1,767		)	0			0			0
Other noninterest expense	(53		)	14			(39		)	(84		)	22			(62		)	(32		)	8			(24		)	(53		)	14			(39		)
Amounts reclassified from accumulated other comprehensive income (loss)	791			(191		)	600			179			(43		)	136			(1,564		)	367			(1,197		)	791			(191		)	600
Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips	25,027			(5,797		)	19,230			(17,907		)	4,473			(13,434		)	(10,053		)	2,359			(7,694		)	25,027			(5,797		)	19,230
Recognized postretirement prior service cost:
Reclassification of amortization of prior service cost to other noninterest expense	(12		)	3			(9		)	(12		)	3			(9		)	(12		)	3			(9		)	(12		)	3			(9		)
Foreign currency translation adjustment⁽¹⁾	(1,968		)	—			(1,968		)	2,899			—			2,899			3,721			0			3,721			(1,968		)	0			(1,968		)
Net unrealized gains (losses) on net investment hedges	2,170			(529		)	$	1,641		(2,537		)	633			(1,904		)	(3,469		)	814			$	(2,655	)	2,170			(529		)	1,641
Total other comprehensive income (loss)	$	25,217		$	(6,323	)	$	18,894		$	(17,557	)	$	5,109		$	(12,448	)	$	(9,813	)	$	3,176		$	(6,637	)	$	25,217		$	(6,323	)	$	18,894

	Nine Months Ended September 30,																		Nine Months Ended September 30,
	2019									2018									2020									2019
(In thousands)	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax			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	$	114,263		$	(27,519	)	$	86,744		$	(62,521	)	$	15,688		$	(46,833	)	$	180,391		$	(42,562	)	$	137,829		$	114,263		$	(27,519	)	$	86,744
Reclassification of net (gains) losses from accumulated other comprehensive income (loss) to:
Total interest income	2,495			(607		)	1,888			810			(202		)	608			3,156			(741		)	2,415			2,495			(607		)	1,888
Net gains (losses) on investment securities	(1,513		)	368			(1,145		)	—			—			—			(2,309		)	542			(1,767		)	(1,513		)	368			(1,145		)
Other noninterest expense	(350		)	86			(264		)	221			(55		)	166			95			(22		)	73			(350		)	86			(264		)
Amounts reclassified from accumulated other comprehensive income (loss)	632			(153		)	479			1,031			(257		)	774			942			(221		)	721			632			(153		)	479
Net unrealized gains (losses) on available-for-sale investment securities and interest-only strips	114,895			(27,672		)	87,223			(61,490		)	15,431			(46,059		)	181,333			(42,783		)	138,550			114,895			(27,672		)	87,223
Recognized postretirement prior service cost:
Reclassification of amortization of prior service cost to other noninterest expense	(35		)	10			(25		)	(35		)	9			(26		)	(35		)	8			(27		)	(35		)	10			(25		)
Foreign currency translation adjustment⁽¹⁾	5,014			—			5,014			(4,136		)	—			(4,136		)	(4,298		)	0			(4,298		)	5,014			0			5,014
Net unrealized gains (losses) on net investment hedges	(3,761		)	915			(2,846		)	4,637			(1,158		)	3,479			4,272			(1,003		)	3,269			(3,761		)	915			(2,846		)
Total other comprehensive income (loss)	$	116,113		$	(26,747	)	$	89,366		$	(61,024	)	$	14,282		$	(46,742	)	$	181,272		$	(43,778	)	$	137,494		$	116,113		$	(26,747	)	$	89,366


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

3533

Table of Contents

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			Net Unrealized Gains (Losses) on Available-for-Sale Investment Securities and Interest-only Strips			Net Unrealized Gains (Losses) on Net Investment Hedges			Foreign Currency Translation Adjustment			Recognized Postretirement Prior Service Cost			Total
At or For the Three Months Ended September 30, 2020
Balance, beginning of period																$	202,342		$	15,724		$	(19,716	)	$	58		$	198,408
Other comprehensive income (loss)																(6,497		)	(2,655		)	3,721			0			(5,431		)
Amounts reclassified from accumulated other comprehensive income (loss)																(1,197		)	0			0			(9		)	(1,206		)
Net other comprehensive income (loss)																(7,694		)	(2,655		)	3,721			(9		)	(6,637		)
Balance, end of period																$	194,648		$	13,069		$	(15,995	)	$	49		$	191,771
At or For the Three Months Ended September 30, 2019
Balance, beginning of period	$	39,971		$	10,499		$	(13,229	)	$	93		$	37,334		$	39,971		$	10,499		$	(13,229	)	$	93		$	37,334
Other comprehensive income (loss)	18,630			1,641			(1,968		)	—			18,303			18,630			1,641			(1,968		)	0			18,303
Amounts reclassified from accumulated other comprehensive income (loss)	600			—			—			(9		)	591			600			0			0			(9		)	591
Net other comprehensive income (loss)	19,230			1,641			(1,968		)	(9		)	18,894			19,230			1,641			(1,968		)	(9		)	18,894
Balance, end of period	$	59,201		$	12,140		$	(15,197	)	$	84		$	56,228		$	59,201		$	12,140		$	(15,197	)	$	84		$	56,228
At or For the Three Months Ended September 30, 2018
At or For the Nine Months Ended September 30, 2020
Balance, beginning of period	$	(48,978	)	$	9,919		$	(13,878	)	$	126		$	(52,811	)	$	56,098		$	9,800		$	(11,697	)	$	76		$	54,277
Other comprehensive income (loss)	(13,570		)	(1,904		)	2,899			—			(12,575		)	137,829			3,269			(4,298		)	0			136,800
Amounts reclassified from accumulated other comprehensive income (loss)	136			—			—			(9		)	127			721			0			0			(27		)	694
Net other comprehensive income (loss)	(13,434		)	(1,904		)	2,899			(9		)	(12,448		)	138,550			3,269			(4,298		)	(27		)	137,494
Balance, end of period	$	(62,412	)	$	8,015		$	(10,979	)	$	117		$	(65,259	)	$	194,648		$	13,069		$	(15,995	)	$	49		$	191,771
At or For the Nine Months Ended September 30, 2019
Balance, beginning of period	$	(28,022	)	$	14,986		$	(20,211	)	$	109		$	(33,138	)	$	(28,022	)	$	14,986		$	(20,211	)	$	109		$	(33,138	)
Other comprehensive income (loss)	86,744			(2,846		)	5,014			—			88,912			86,744			(2,846		)	5,014			0			88,912
Amounts reclassified from accumulated other comprehensive income (loss)	479			—			—			(25		)	454			479			0			0			(25		)	454
Net other comprehensive income (loss)	87,223			(2,846		)	5,014			(25		)	89,366			87,223			(2,846		)	5,014			(25		)	89,366
Balance, end of period	$	59,201		$	12,140		$	(15,197	)	$	84		$	56,228		$	59,201		$	12,140		$	(15,197	)	$	84		$	56,228
At or For the Nine Months Ended September 30, 2018
Balance, beginning of period	$	(16,353	)	$	4,536		$	(6,843	)	$	143		$	(18,517	)
Other comprehensive income (loss)	(46,833		)	3,479			(4,136		)	—			(47,490		)
Amounts reclassified from accumulated other comprehensive income (loss)	774			—			—			(26		)	748
Net other comprehensive income (loss)	(46,059		)	3,479			(4,136		)	(26		)	(46,742		)
Balance, end of period	$	(62,412	)	$	8,015		$	(10,979	)	$	117		$	(65,259	)

~~Table of Contents~~

Note ~~17.~~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 ~~$296.6~~$73.6 million at September 30, ~~2019,~~2020, without prior approval of the Office of the Comptroller of the Currency ("OCC"). The OCC also has the authority to prohibit the payment of dividends by a national bank when it determines such payments would constitute an unsafe and unsound banking practice. TCF Bank's ability to make capital distributions in the future may require regulatory approval and may be restricted by its federal banking regulators. TCF Bank's ability to make any such distributions will also depend on its earnings and ability to meet minimum regulatory capital requirements in effect during future periods. In the future, these capital adequacy standards may be higher than existing minimum regulatory capital requirements.

~~Regulatory~~The Basel III capital ~~information for~~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 ~~was as follows:~~

TCF TCF Bank
At September 30, At December 31, At September 30, At December 31, Well-capitalized Standard under Prompt Corrective Action Provisions Minimum Capital Requirement for Capital Adequacy Plus Conservation Buffer
(Dollars in thousands) 2019 2018 2019 2018
Regulatory Capital:
Common equity Tier 1 capital $ 4,009,214
$ 2,224,183
$ 3,991,895
$ 2,282,013

Tier 1 capital 4,197,706
2,408,393
4,015,208
2,300,472

Total capital 4,652,708
2,750,581
4,487,968
2,675,347

Regulatory Capital Ratios:
Common equity Tier 1 capital ratio 10.88 % 10.82 % 10.85 % 11.10 % 6.50 % 7.00 %
Tier 1 risk-based capital ratio 11.40
11.72
10.91
11.19
8.00
8.50
Total risk-based capital ratio 12.63
13.38
12.20
13.01
10.00
10.50
Tier 1 leverage ratio 11.16
10.44
10.68
9.97
5.00
4.00

made the one-time permanent election to not include accumulated other comprehensive income (loss) in regulatory capital.

~~Table of Contents~~

~~Note 18. Derivative Instruments~~

~~Derivatives Designated as Hedging Instruments~~ TCF entered into an interest rate contract (interest rate swap agreement) in February 2015 related to its contemporaneously issued subordinated debt, which settles through a central clearing house. The swap was designated as a fair value hedge and effectively converts the fixed interest rate to a floating rate based on the three-month LIBOR plus a fixed number of basis points on the $150.0 million notional amount through February 27, 2025, the maturity date of the subordinated debt.

The interest rate swap substantially offsets the change in fair value of the hedged underlying subordinated debt that is attributable to the changes in market risk. The gains and losses related to changes in the fair value of the interest rate swap, as well as the offsetting changes in fair value of the hedged debt, are recorded in interest expense.

~~Forward foreign exchange contracts, which generally settle within~~ 34 days, are used to manage the foreign exchange risk associated with TCF's net investment in TCF Commercial Finance Canada, Inc., a wholly-owned indirect Canadian subsidiary of TCF Bank. These forward foreign exchange contracts have been designated as net investment hedges. Changes in net investment hedges recorded within other comprehensive income (loss) are subsequently reclassified to noninterest expense during the period in which the foreign investment is substantially liquidated or when other elements of the currency translation adjustment are reclassified to income.

~~Derivatives Not Designated as Hedges~~ TCF executes interest rate contracts with commercial banking customers to facilitate their respective risk management strategies. Those interest rate contracts are simultaneously hedged with offsetting interest rate contracts that TCF executes with a third party and generally settles through a central clearing house, minimizing TCF's net risk exposure. As the interest rate contracts do not meet hedge accounting requirements, changes in the fair value of both the customer contracts and the offsetting contracts are recorded in other noninterest income. These contracts have original fixed maturity dates ranging from 27 days to 16 years.

TCF executes its forward foreign exchange contracts in the over-the-counter market with large financial institutions pursuant to International Swaps and Derivatives Association, Inc. agreements. These agreements include credit risk-related features that enhance the creditworthiness of these instruments, as compared with other obligations of the respective counterparty with whom TCF has transacted, by requiring that additional collateral be posted under certain circumstances. The amount of collateral required depends on the contract and is determined daily based on market and currency exchange rate conditions. Changes in the fair value of these forward foreign exchange contracts are recorded in other noninterest expense.

TCF enters into interest rate lock commitments in conjunction with the sale of certain consumer real estate loans. These interest rate lock commitments are agreements to extend credit under certain specified terms and conditions at fixed rates with original lock expirations generally within three months. They are not designated as hedges and accordingly, changes in the valuation of these commitments are recorded in net (losses) gains on sales of loans and leases.

Residential mortgage loan commitments, forward loan sales commitments, are generally entered into at the time interest rate locks are accepted to protect the value of the mortgage loans from increases in market interest rates during the period held and are generally settled with the investor in the secondary market within 90 days after entering into the forward commitment. Certain forward loan commitments are accounted for as derivatives and recorded at fair value, with changes in fair value recorded through earnings. In the normal course of business, TCF may decide to settle a forward contract rather than fulfill the contract. Cash received or paid in this settlement manner is recorded in net (losses) gains on sales of loans and leases in the Consolidated Statements of Income and is considered a cost of executing a forward contract.

Power Equity CDs are time deposits that provide the purchaser a guaranteed return of principal at maturity plus a potential equity return (a written option), while TCF receives a known stream of funds based on the equity return (a purchased option). The written and purchased options are mirror derivative instruments which are carried at fair value. Power Equity CDs include written and purchased option derivatives consisting of instruments to facilitate an equity-linked time deposit product.

TCF's swap agreement is related to the sale of TCF's Visa Class B stock. The fair value of the swap agreement is based on TCF's estimated exposure related to the Visa covered litigation through a probability analysis of the funding and estimated settlement amounts. Changes, if any, in the valuation of this swap agreement, which has no determinable maturity date, are recorded in other noninterest expense.

Table of Contents

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

Regulatory capital information for TCF and TCF Bank was as follows:



	TCF						TCF Bank
	At September 30,			At December 31,			At September 30,			At December 31,			Well-capitalized Standard		Minimum Capital Requirement⁽¹⁾
(Dollars in thousands)	2020			2019			2020			2019
Regulatory Capital:
Common equity Tier 1 capital	$	4,053,931		$	4,050,826		$	4,029,278		$	4,039,191
Tier 1 capital	4,244,609			4,236,648			4,050,654			4,059,417
Total capital	4,972,715			4,681,630			4,769,055			4,524,051

Regulatory Capital Ratios:
Common equity Tier 1 capital ratio	11.45		%	10.99		%	11.39		%	10.97		%	6.50	%	7.00	%
Tier 1 risk-based capital ratio	11.98			11.49			11.45			11.03			8.00		8.50
Total risk-based capital ratio	14.04			12.70			13.48			12.29			10.00		10.50
Tier 1 leverage ratio	8.83			9.49			8.43			9.10			5.00		4.00


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

Note 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 September 30, 2019
Fair Value
(In thousands)
Notional Amount⁽¹⁾
Derivative Assets Derivative Liabilities
Derivatives designated as hedging instruments
Interest rate contract $ 150,000
$ —
$ 11
Forward foreign exchange contracts 171,075
1,252
—
Total derivatives designated as hedging instruments $ 321,075
$ 1,252
$ 11
Derivatives not designated as hedging instruments
Interest rate contracts $ 4,694,964
$ 130,391
$ 101,899
Forward foreign exchange contracts 291,999
414
315
Interest rate lock commitments 266,949
4,554
113
Forward loan sales commitments 218,061
166
253
Power Equity CDs 31,870
617
617
Swap agreement 12,644
—
356
Total derivatives not designated as hedging instruments $ 5,516,487
$ 136,142
$ 103,553
Total derivatives before netting $ 5,837,562
137,394
103,564
Netting⁽²⁾
(2,152 ) (93,785 )
Total derivatives, net $ 135,242
$ 9,779


	At December 31, 2018								At September 30, 2020
			Fair Value								Fair Value
(In thousands)	Notional Amount⁽¹⁾		Derivative Assets			Derivative Liabilities			Notional Amount⁽¹⁾		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments
Interest rate contract	$	150,000	$	393		$	—		$	150,000	$	0		$	84
Forward foreign exchange contracts	157,271		2,980			—			196,852		2,237			85
Total derivatives designated as hedging instruments	$	307,271	$	3,373		$	—				$	2,237		$	169
Derivatives not designated as hedging instruments
Interest rate contracts	$	1,095,449	$	7,516		$	3,732		$	5,773,205	$	279,710		$	14,001
Risk participation agreements									445,120		163			171
Forward foreign exchange contracts	254,274		3,709			13			95,052		537			125
Interest rate lock commitments	28,007		652			28			579,456		18,596			4
Forward loan sales commitments									805,887		117			786
Power Equity CDs									21,958		442			443
Swap agreement	13,020		—			583			12,652		0			141
Total derivatives not designated as hedging instruments	$	1,390,750	$	11,877		$	4,356				$	299,565		$	15,671
Total derivatives before netting			15,250			4,356					301,802			15,840
Netting⁽²⁾			(6,982		)	(991		)			(2,861		)	498
Total derivatives, net			$	8,268		$	3,365				$	298,941		$	16,338


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


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

3935

Table of Contents



	At December 31, 2019
			Fair Value
(In thousands)	Notional Amount⁽¹⁾		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments
Interest rate contract	$	150,000	$	0		$	168
Forward foreign exchange contracts	177,593		0			3,251
Total derivatives designated as hedging instruments			$	0		$	3,419
Derivatives not designated as hedging instruments
Interest rate contracts	$	5,095,969	$	102,893		$	5,872
Risk participation agreements	316,353		202			354
Forward foreign exchange contracts	262,656		0			3,268
Interest rate lock commitments	158,111		2,772			20
Forward loan sales commitments	174,013		41			289
Power Equity CD	29,009		734			734
Swap agreement	12,652		0			356
Total derivatives not designated as hedging instruments			$	106,642		$	10,893
Total derivatives before netting			$	106,642		$	14,312
Netting⁽²⁾			(540		)	(5,109		)
Total derivatives, net			$	106,102		$	9,203


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


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

Derivative instruments may be subject to master netting arrangements and collateral arrangements and qualify for offset in the Consolidated Statements of Financial Condition. A master netting arrangement with a counterparty creates a right of offset for amounts due to and from that same counterparty that is enforceable in the event of a default or bankruptcy. Derivative instruments subject to master netting arrangements and collateral arrangements are recognized on a net basis in the Consolidated Statements of Financial Condition. The gross amounts recognized, gross amounts offset and net amount presented of derivative instruments were as follows:


	At September 30, 2019							At September 30, 2020
(In thousands)	Gross Amounts Recognized		Gross Amounts Offset⁽¹⁾			Net Amount Presented		Gross Amounts Recognized		Gross Amounts Offset⁽¹⁾			Net Amount Presented
Derivative assets
Interest rate contracts	$	130,391	$	(312	)	$	130,079	$	279,710	$	0		$	279,710
Risk participation agreements								163		0			163
Forward foreign exchange contracts	1,666		(1,666		)	—		2,774		(2,740		)	34
Interest rate lock commitments	4,554		(8		)	4,546		18,596		(4		)	18,592
Forward loan sales commitments	166		(166		)	—		117		(117		)	0
Power Equity CDs	617		—			617		442		0			442
Total derivative assets	$	137,394	$	(2,152	)	$	135,242	$	301,802	$	(2,861	)	$	298,941
Derivative liabilities
Interest rate contracts	$	101,910	$	(93,099	)	$	8,811	$	14,085	$	0		$	14,085
Risk participation agreements								171		0			171
Forward foreign exchange contracts	315		(156		)	159		210		760			970
Interest rate lock commitments	113		(8		)	105		4		(4		)	0
Forward loan sales commitments	253		(166		)	87		786		(117		)	669
Power Equity CDs	617		—			617		443		0			443
Other contracts	356		(356		)	—
Swap agreement								141		(141		)	0
Total derivative liabilities	$	103,564	$	(93,785	)	$	9,779	$	15,840	$	498		$	16,338


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

At December 31, 2018
(In thousands) Gross Amounts Recognized
Gross Amounts
Offset⁽¹⁾
Net Amount Presented
Derivative assets
Interest rate contracts $ 7,909
$ (395 ) $ 7,514
Forward foreign exchange contracts 6,689
(6,587 ) 102
Interest rate lock commitments 652
—
652
Total derivative assets $ 15,250
$ (6,982 ) $ 8,268
Derivative liabilities
Interest rate contracts $ 3,732
$ (395 ) $ 3,337
Forward foreign exchange contracts 13
(13 ) —
Interest rate lock commitments 28
—
28
Swap agreement 583
(583 ) —
Total derivative liabilities $ 4,356
$ (991 ) $ 3,365

Table of Contents



	At December 31, 2019
(In thousands)	Gross Amounts Recognized		Gross Amounts Offset⁽¹⁾			Net Amount Presented
Derivative assets
Interest rate contracts	$	102,893	$	(492	)	$	102,401
Risk participation agreements	202		0			202
Forward foreign exchange contracts	0		0			0
Interest rate lock commitments	2,772		(7		)	2,765
Forward loan sales commitments	41		(41		)	0
Power Equity CDs	734		0			734
Total derivative assets	$	106,642	$	(540	)	$	106,102
Derivative liabilities
Interest rate contracts	$	6,040	$	(491	)	$	5,549
Risk participation agreements	354		0			354
Forward foreign exchange contracts	6,519		(4,214		)	2,305
Interest rate lock commitments	20		(7		)	13
Forward loan sales commitments	289		(41		)	248
Power Equity CD	734		0			734
Swap agreement	356		(356		)	0
Total derivative liabilities	$	14,312	$	(5,109	)	$	9,203


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

Derivatives Designated as Hedging Instruments

Interest rate ~~contract~~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					Carrying Amount of the Hedged Liability				Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Liability
(In thousands)	At September 30, 2019		At December 31, 2018		At September 30, 2019		At December 31, 2018			At September 30, 2020		At December 31, 2019		At September 30, 2020		At December 31, 2019
Subordinated bank note - 2025	$	153,307	$	144,296	$	4,682	$	(4,165	)	$	160,694	$	151,454	$	11,840	$	2,773

~~Table of Contents~~

The following table summarizes the effect of fair value hedge accounting on the Consolidated Statements of Income for the three and nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2019			2018			2019			2018			2020			2019			2020			2019
Statement of income line where the gain (loss) on the fair value hedge was recorded:
Interest expense on borrowings	$	17,115		$	10,726		$	48,050		$	31,850		$	11,429		$	17,115		$	51,147		$	48,050
Gain (loss) on interest rate contract (fair value hedge)
Hedged item	$	(2,100	)	$	1,206		$	(8,847	)	$	6,337		680			(2,100		)	(9,068		)	(8,847		)
Derivative designated as a hedging instrument	2,195			(1,165		)	8,938			(6,621		)	(731		)	2,195			9,134			8,938
Net income (expense) recognized on fair value hedge in interest expense on borrowings	$	95		$	41		$	91		$	(284	)
Gain (loss) on interest rate contract recognized in interest expense on borrowings													$	(51	)	$	95		$	66		$	91

Table of Contents

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


	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2019		2018			2019			2018		2020			2019		2020		2019
Forward foreign exchange contracts	$	2,170	$	(2,537	)	$	(3,761	)	$	4,637	$	(3,469	)	$	2,170	$	4,272	$	(3,761	)

Derivatives Not Designated as Hedging Instruments Certain other interest rate contracts, forward foreign exchange contracts, interest rate lock commitments ~~Power Equity CDs~~ and other contracts have not been designated as hedging instruments. The effect of these derivatives on the Consolidated Statements of Income was as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	Location of Gain (Loss)	2019			2018			2019			2018			Location of Gain (Loss)	2020			2019			2020			2019
Interest rate contracts⁽¹⁾	Other noninterest income	$	(19,764	)	$	51		$	(21,307	)	$	157		Other noninterest income	$	(2,314	)	$	(20,085	)	$	3,459		$	(21,345	)
Risk participation agreements														Other noninterest expense	(310		)	321			(523		)	38
Forward foreign exchange contracts	Other noninterest expense	3,307			(3,706		)	(5,302		)	8,050			Other noninterest expense	(1,606		)	3,307			9,615			(5,302		)
Interest rate lock commitments	Net (losses) gains on sales of loans and leases	337			(244		)	1,117			798			Net gains on sales of loans and leases	68			337			15,840			1,117
Forward loan sales commitments	Net (losses) gains on sales of loans and leases	(11		)	—			(11		)	—			Net gains on sales of loans and leases	3,881			(11		)	(421		)	(11		)
Swap agreement	Other noninterest income	4			(292		)	4			(274		)	Other noninterest income	0			4			(1		)	4
Net gain (loss) recognized		$	(16,127	)	$	(4,191	)	$	(25,499	)	$	8,731			$	(281	)	$	(16,127	)	$	27,969		$	(25,499	)


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

At September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, credit risk-related contingent features existed on forward foreign exchange contracts with a notional value of ~~$30.2~~$26.3 million and ~~$25.7~~$23.1 million, respectively. In the event ~~TCF~~the Corporation is rated less than BB- by Standard and Poor's, the contracts could be terminated or ~~TCF~~the Corporation may be required to provide approximately ~~$0.6 million~~$526 thousand and ~~$0.5 million~~$462 thousand in additional collateral at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. There were 0 forward foreign exchange contracts containing credit risk-related features in a liability position at both September 30, ~~2019~~2020 and December 31, ~~2018.~~2019.

At September 30, ~~2019, TCF~~2020, the Corporation had posted ~~$58.1~~$67.9 million and ~~$0.1~~$0.8 million of cash collateral related to its interest rate contracts and forward foreign exchange contracts, respectively, and received ~~$1.9~~$3.5 million of cash collateral related to its forward foreign exchange contracts.

~~Table of Contents~~

Note ~~19.~~16. Fair Value Measurements

~~TCF~~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 ~~carried at fair value,~~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 wethe Corporation may be required to record at fair value other assets on a non-recurring basis, such as certain investment securities ~~held to maturity,~~held-to-maturity, loans and leases, goodwill, loan servicing rights, other intangible assets, other real estate owned, repossessed and returned assets or ~~the~~ securitization ~~receivable.~~receivables. These non-recurring fair value adjustments typically involve application of lower of cost or fair value accounting or write-downs of individual assets.

~~TCF~~

Table of Contents

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 ~~Corporation~~ model-based techniques that use at least one significant unobservable ~~inputs.~~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 ~~Carried at Fair Value:~~Available-for-Sale: The fair value of investment securities ~~carried at fair value,~~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: ~~TCF~~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, ~~TCF~~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 ~~TCF~~the Corporation on certain assets. ~~TCF~~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 ~~TCF~~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: ~~TCF~~The Corporation executes interest rate contracts as described in ~~Note 18.~~"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: ~~TCF's~~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.

~~Table of Contents~~

Interest Rate Lock Commitments: ~~TCF's~~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, ~~TCF~~the Corporation categorized these instruments as Level 2.

Table of Contents

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 ~~derivate~~derivative instruments.

Swap Agreement: ~~TCF's~~The Corporation's swap agreement, categorized as Level 3, is related to the sale of Legacy TCF's Visa Class B stock. The fair value of the swap agreement is based on ~~TCF's~~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: ~~TCF~~The Corporation enters into forward loan sales commitments to sell certain mortgage loans which are recorded at fair value based on valuation models. ~~TCF’s~~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 ~~treasury stock and~~ other equity, and U.S. Treasury notes. The fair value of these assets, categorized as Level 1, is based on prices obtained from independent asset pricing services based on active markets. The fair value of the liabilities equals the fair value of the assets.

The balances of assets and liabilities measured at fair value on a recurring basis were as follows:


	September 30, 2019								September 30, 2020
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Investment securities carried at fair value	$	—	$	5,579,407	$	428	$	5,579,835
Investment securities available-for-sale									$	0	$	7,445,696	$	467	$	7,446,163
Loans held-for-sale	—		114,831		—		114,831		0		460,172		0		460,172
Interest-only strips	—		—		14,078		14,078		0		0		9,555		9,555
Derivative assets:⁽¹⁾
Interest rate contracts	—		130,391		—		130,391		0		279,710		0		279,710
Risk participation agreements									0		163		0		163
Forward foreign exchange contracts	—		1,666		—		1,666		0		2,774		0		2,774
Interest rate lock commitments	—		4,554		—		4,554		0		18,596		0		18,596
Forward loan sales commitments	—		166		—		166		0		117		0		117
Power Equity CDs	—		617		—		617		0		442		0		442
Total derivative assets	—		137,394		—		137,394		0		301,802		0		301,802
Forward loan sales commitments	—		404		—		404
Assets held in trust for deferred compensation plans	40,784		—		—		40,784		46,210		0		0		46,210
Total assets at fair value	$	40,784	$	5,832,036	$	14,506	$	5,887,326	$	46,210	$	8,207,670	$	10,022	$	8,263,902
Liabilities
Derivative liabilities:⁽¹⁾
Interest rate contracts	$	—	$	101,910	$	—	$	101,910	$	0	$	14,085	$	0	$	14,085
Risk participation agreements									0		171		0		171
Forward foreign exchange contracts	—		315		—		315		0		210		0		210
Interest rate lock commitments	—		113		—		113		0		4		0		4
Forward loan sales commitments	—		253		—		253		0		786		0		786
Power Equity CDs	—		617		—		617		0		443		0		443
Swap agreement	—		—		356		356		0		0		141		141
Total derivative liabilities	—		103,208		356		103,564		0		15,699		141		15,840
Forward loan sales commitments	—		284		—		284
Liabilities held in trust for deferred compensation plans	40,784		—		—		40,784		46,210		0		0		46,210
Total liabilities at fair value	$	40,784	$	103,492	$	356	$	144,632	$	46,210	$	15,699	$	141	$	62,050


(1)	As permitted under GAAP, ~~TCF~~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.

4340

Table of Contents


	December 31, 2018								December 31, 2019
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Investment securities carried at fair value	$	—	$	2,470,061	$	4	$	2,470,065
Investment securities available-for-sale									$	0	$	6,719,568	$	433	$	6,720,001
Loans held-for-sale	—		—		18,070		18,070		0		91,202		0		91,202
Interest-only strips	—		—		16,835		16,835		0		0		12,813		12,813
Derivative assets:⁽¹⁾
Interest rate contracts	—		7,909		—		7,909		0		102,893		0		102,893
Forward foreign exchange contracts	—		6,689		—		6,689
Risk participation agreements									0		202		0		202
Interest rate lock commitments	—		—		652		652		0		2,772		0		2,772
Forward loan sales commitments									0		41		0		41
Power Equity CDs									0		734		0		734
Total derivative assets	—		14,598		652		15,250		0		106,642		0		106,642
Forward loan sales commitments	—		—		152		152
Forward loan sales commitments, non-derivative									0		46		0		46
Assets held in trust for deferred compensation plans	33,217		—		—		33,217		43,743		0		0		43,743
Total assets at fair value	$	33,217	$	2,484,659	$	35,713	$	2,553,589	$	43,743	$	6,917,458	$	13,246	$	6,974,447
Liabilities
Derivative liabilities:⁽¹⁾
Interest rate contracts	$	—	$	3,732	$	—	$	3,732	$	0	$	6,040	$	0	$	6,040
Risk participation agreements									0		354		0		354
Forward foreign exchange contracts	—		13		—		13		0		6,519		0		6,519
Interest rate lock commitments	—		—		28		28		0		20		0		20
Forward loan sales commitments									0		289		0		289
Power Equity CDs									0		734		0		734
Swap agreement	—		—		583		583		0		0		356		356
Total derivative liabilities	—		3,745		611		4,356		0		13,956		356		14,312
Forward loan sales commitments	—		—		178		178
Liabilities held in trust for deferred compensation plans	33,217		—		—		33,217		43,743		0		0		43,743
Total liabilities at fair value	$	33,217	$	3,745	$	789	$	37,751	$	43,743	$	13,956	$	356	$	58,055


(1)	As permitted under GAAP, ~~TCF~~the Corporation has elected to net derivative assets and derivative liabilities when a legally enforceable master netting agreement exists as well as the related cash collateral received and paid. For purposes of this table, the derivative assets and derivative liabilities are presented gross of this netting adjustment.

Management assesses the appropriate classification of financial assets and liabilities within the fair value hierarchy by monitoring the level of available observable market information. Changes in markets or economic conditions, as well as changes to ~~our~~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.

4441

Table of Contents

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:


(In thousands)	Investment securities carried at fair value			Loans held-for-sale			Interest-only strips			Interest rate lock commitments			Other derivative contracts			Forward loan sales commitments			Investment securities available-for-sale			Loans held-for-sale			Interest-only strips			Interest rate lock commitments			Swap agreement			Forward loan sales commitments
At or For the Three Months Ended September 30, 2020
Asset (liability) balance, beginning of period																			$	441		$	0		$	11,811		$	0		$	(213	)	$	0
Total net gains (losses) included in:
Net income																			1			0			277			0			0			0
Other comprehensive income (loss)																			25			0			(1,211		)	0			0			0
Principal paydowns / settlements																			0			0			(1,322		)	0			72			0
Asset (liability) balance, end of period																			$	467		$	0		$	9,555		$	0		$	(141	)	$	0
Unrealized gains (losses) included in other comprehensive income for assets held at the end of the period																			$	25		$	0		$	(1,211	)	$	0		$	0		$	0
At or For the Three Months Ended September 30, 2019
Asset (liability) balance, beginning of period	$	3		$	29,211		$	15,236		$	1,402		$	(435	)	$	(145	)	$	3		$	29,211		$	15,236		$	1,402		$	(435	)	$	(145	)
Transfers out of Level 3⁽¹⁾	—			(29,211		)	—			(1,402		)	—			145			0			(29,211		)	0			(1,402		)	0			145
Acquired through the Merger	450			—			—			—			—			—
Total net gains (losses) included in:
Net income	—			—			611			—			—			—			0			0			610			0			0			0
Other comprehensive income (loss)	(25		)	—			(65		)	—			—			—			(25		)	0			(65		)	0			0			0
Acquired	—			—			—			—			—			—			450			0			0			0			0			0
Originations	—			—			628			—			—			—			0			0			628			0			0			0
Principal paydowns / settlements	—			—			(2,332		)	—			79			—			0			0			(2,332		)	0			79			0
Asset (liability) balance, end of period	$	428		$	—		$	14,078		$	—		$	(356	)	$	—		$	428		$	0		$	14,077		$	0		$	(356	)	$	0
At or For the Three Months Ended September 30, 2018
Unrealized gains (losses) included in other comprehensive income for assets held at the end of the period																			$	(25	)	$	0		$	(65	)	$	0		$	0		$	0
At or For the Nine Months Ended September 30, 2020
Asset (liability) balance, beginning of period	$	4		$	18,554		$	19,887		$	858		$	(441	)	$	110		$	433		$	0		$	12,813		$	0		$	(356	)	$	0
Total net gains (losses) included in:
Net income	—			(184		)	732			(242		)	(292		)	359			3			0			763			0			(1		)	0
Other comprehensive income (loss)	—			—			246			—			—			—			31			0			430			0			0			0
Sales	—			(97,866		)	—			—			—			—
Originations	—			98,018			—			—			—			—
Principal paydowns / settlements	—			(3		)	(3,153		)	—			75			—			0			0			(4,451		)	0			216			0
Asset (liability) balance, end of period	$	4		$	18,519		$	17,712		$	616		$	(658	)	$	469		$	467		$	0		$	9,555		$	0		$	(141	)	$	0
Unrealized gains (losses) included in other comprehensive income for assets held at the end of the period																			$	31		$	0		$	430		$	0		$	0		$	0
At or For the Nine Months Ended September 30, 2019
Asset (liability) balance, beginning of period	$	4		$	18,070		$	16,835		$	624		$	(583	)	$	(26	)	$	4		$	18,070		$	16,835		$	624		$	(583	)	$	(26	)
Total net gains (losses) included in:
Acquired through the Merger	450			—			—			—			—			—
Net income	—			534			1,976			778			—			(119		)	0			534			1,975			778			0			(119		)
Other comprehensive income (loss)	(25		)	—			246			—			—			—			(25		)	0			246			0			0			0
Acquired																			450
Sales	—			(164,693		)	—			—			—			—			0			(164,693		)	0			0			0			0
Originations	—			175,304			2,180			—			—			—			0			175,304			2,180			0			0			0
Principal paydowns / settlements	(1		)	(4		)	(7,159		)	—			227			—			(1		)	(4		)	(7,159		)	0			227			0
Transfers out of Level 3⁽¹⁾	—			(29,211		)	—			(1,402		)	—			145			0			(29,211		)	0			(1,402		)	0			145
Asset (liability) balance, end of period	$	428		$	—		$	14,078		$	—		$	(356	)	$	—		$	428		$	0		$	14,077		$	0		$	(356	)	$	0
At or For the Nine Months Ended September 30, 2018
Asset (liability) balance, beginning of period	$	6		$	3,356		$	21,386		$	223		$	(615	)	$	63
Total net gains (losses) included in:
Net income	—			254			1,913			393			(274		)	406
Other comprehensive income (loss)	—			—			1,015			—			—			—
Sales	—			(232,747		)	—			—			—			—
Originations	—			247,667			3,849			—			—			—
Principal paydowns / settlements	(2		)	(11		)	(10,451		)	—			231			—
Asset (liability) balance, end of period	$	4		$	18,519		$	17,712		$	616		$	(658	)	$	469
Unrealized gains (losses) included in other comprehensive income for assets held at the end of the period																			$	(25	)	$	0		$	246		$	0		$	0		$	0


(1)	Certain assets (liabilities) previously classified as Level 3 were transferred to Level 2 because current period prices are derived from Level 2 observable market data.

4542

Table of Contents

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 Held-for-sale:~~ Auto loans held-for-sale, which were previously classified as held-for-investment were transferred to held-for-sale and recorded at the lower of the loan carrying amount or fair value. The fair value is determined based on internal estimates and/or assessments.

Loans and Leases: Loans and leases for which repayment is expected to be provided solely by the value of the underlying collateral, categorized as Level 3 and recorded at fair value on a non-recurring basis, are valued based on the fair value of that collateral less estimated selling costs. The fair value of the collateral is determined based on internal estimates and/or assessments provided by third-party appraisers and the valuation relies on discount rates ranging from ~~10.00%~~10% to ~~54.00%~~15%. ~~Effective January 1, 2019, in conjunction with the adoption of ASU No. 2016-02,~~

Loan servicing rights: ~~Leases (Topic 842)~~ and the related ASUs, such loans and leases include nonaccrual impaired loans and leases as well as certain delinquent nonaccrual consumer loans. Previously, TCF did not include nonaccrual impaired leases. The fair value of ~~the collateral~~loan servicing rights, categorized as Level 3, is ~~determined~~ based on ~~internal estimates and/~~a third party valuation model utilizing a discounted cash flow analysis using interest rates and prepayment speed assumptions currently quoted for comparable instruments and a discount rate determined by management. The valuation relies on discount rates ranging from 10% to 15% and prepayment speeds ranging from 9% to 25%. Loan servicing rights are recorded at the lower of cost or ~~assessments provided by third-party appraisers.~~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 ~~8.00%~~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, isare based on available pricing guides, auction results or price opinions, less estimated selling costs. ~~Unobservable inputs used to value repossessed and returned assets categorized as Level 3 include discount rates ranging from 20.00% to 30.00%.~~ 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 no0 liabilities measured at fair value on a non-recurring basis at September 30, ~~2019~~2020 and December 31, ~~2018.~~2019.



(In thousands)	Level 1		Level 2		Level 3		Total
At September 30, 2020
Loans and leases	$	0	$	0	$	261,885	$	261,885
Loan servicing rights	0		0		38,253		38,253
Other real estate owned	0		0		15,730		15,730
Repossessed and returned assets	0		10,077		0		10,077
Total non-recurring fair value measurements	$	0	$	10,077	$	315,868	$	325,945
At December 31, 2019
Loans and leases	$	0	$	0	$	141,199	$	141,199
Loan servicing rights	0		0		56,298		56,298
Other real estate owned	0		0		17,577		17,577
Repossessed and returned assets	0		6,968		0		6,968
Total non-recurring fair value measurements	$	0	$	6,968	$	215,074	$	222,042

(In thousands) Level 1 Level 2 Level 3 Total
At September 30, 2019
Loans held-for-sale $ —
$ 136
$ 1,220,621
$ 1,220,757
Loans and leases —
—
130,991
130,991
Other real estate owned —
—
17,924
17,924
Repossessed and returned assets —
6,841
5,762
12,603
Total non-recurring fair value measurements $ —
$ 6,977
$ 1,375,298
$ 1,382,275
At December 31, 2018
Loans $ —
$ —
$ 57,663
$ 57,663
Other real estate owned —
—
9,397
9,397
Repossessed and returned assets —
4,358
5,165
9,523
Total non-recurring fair value measurements $ —
$ 4,358
$ 72,225
$ 76,583

~~Table of Contents~~

Fair Value Option

~~TCF~~The Corporation has elected the fair value option for residential mortgage loans held-for-sale. This election facilitates the offsetting of changes in fair value of the loans held-for-sale and the derivative financial instruments used to economically hedge them. The difference between the aggregate fair value and aggregate unpaid principal balance of these loans held-for-sale was as follows:


(In thousands)	September 30, 2019		December 31, 2018		September 30, 2020		December 31, 2019
Fair value carrying amount	$	114,831	$	18,070	$	460,172	$	91,202
Aggregate unpaid principal amount	111,540		17,517		436,216		88,192
Fair value carrying amount less aggregate unpaid principal	$	3,291	$	553	$	23,956	$	3,010

Table of Contents

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. NaN loans recorded under the fair value option were delinquent or on nonaccrual status at September 30, ~~2019~~2020 and December 31, ~~2018.~~2019. The net gain from initial measurement of the loans held-for-sale, any subsequent changes in fair value while the loans are outstanding and any actual adjustment to the gains realized upon sales of the loans totaled ~~$12.4~~$31.4 million and ~~$18.3~~$79.0 million for the three and nine months ended September 30, ~~2019, respectively,~~2020 and ~~$2.7~~$12.4 million and ~~$6.9~~$18.3 million for the same periods in ~~2018,~~2019, and are included in net ~~(losses)~~ gains on sales of loans and leases. These amounts exclude the impacts from the interest rate lock commitments and forward loan sales commitments which are also included in net ~~(losses)~~ gains on sales of loans and leases.

Disclosures about Fair Value of Financial Instruments

Management discloses the estimated fair value of financial instruments, including assets and liabilities on and off the Consolidated Statements of Financial Condition, for which it is practicable to estimate fair value. These fair value estimates were made at September 30, ~~2019~~2020 and December 31, ~~2018~~2019 based on relevant market information and information about the financial instruments. Fair value estimates are intended to represent the price at which an asset could be sold or a liability could be settled. However, given there is no active market or observable market transactions for many of TCF's financial instruments, the estimates of fair value are subjective in nature, involve uncertainties and include matters of significant judgment. Changes in assumptions could significantly affect the estimated values.

The carrying amounts and estimated fair values of ~~TCF's~~the financial instruments, excluding short-term financial assets and liabilities as their carrying amounts approximate fair value and ~~excluding~~ financial instruments recorded at fair value on a recurring basis, ~~were as follows.~~are included below. This information represents only a portion of ~~TCF's~~the Consolidated Statements of Financial Condition not recorded in their entirety on a recurring basis and not the estimated value of ~~TCF~~the Corporation as a whole. Non-financial instruments such as the intangible value of ~~TCF's branches~~the Corporation's banking centers and core deposits, leasing operations, goodwill, premises and equipment and the future revenues from ~~TCF's~~the Corporation's customers are not reflected in this disclosure. Therefore, this information is of limited use in assessing the value of ~~TCF.~~the Corporation.

At September 30, 2019
Carrying Estimated Fair Value
(In thousands) Amount Level 1 Level 2 Level 3 Total
Financial instrument assets

FHLB and FRB stocks $ 290,238
$ —
$ 290,238
$ —
$ 290,238
Investment securities held-to-maturity 144,000
—
146,252
3,676
149,928
Loans and leases held-for-sale 100,216
—
84,959
18,331
103,290
Net loans⁽¹⁾
30,916,379
—
—
30,897,046
30,897,046
Loan servicing rights 55,301
—
—
55,301
55,301
Securitization receivable⁽²⁾
19,624
—
—
19,355
19,355
Deferred fees on commitments to extend credit 18,485
—
18,485
—
18,485
Total financial instrument assets $ 31,544,243
$ —
$ 539,934
$ 30,993,709
$ 31,533,643
Financial instrument liabilities

Certificates of deposits $ 8,385,972
$ —
$ 8,385,496
$ —
$ 8,385,496
Long-term borrowings 860,482
—
875,864
—
875,864
Deferred fees on standby letters of credit 38
—
38
—
38
Total financial instrument liabilities $ 9,246,492
$ —
$ 9,261,398
$ —
$ 9,261,398



	At September 30, 2020
	Carrying		Estimated Fair Value
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
Financial instrument assets
FHLB and FRB stocks	$	300,444	$	0	$	300,444	$	0	$	300,444
Investment securities held-to-maturity	170,309		0		176,649		3,715		180,364
Loans and leases held-for-sale	255		0		0		262		262
Net loans⁽¹⁾	31,140,162		0		0		31,323,032		31,323,032
Securitization receivable⁽²⁾	0		0		0		19,802		19,802
Deferred fees on commitments to extend credit⁽²⁾	21,222		0		21,222		0		21,222
Total financial instrument assets	$	31,632,392	$	0	$	498,315	$	31,346,811	$	31,845,126
Financial instrument liabilities
Certificates of deposits	$	6,334,760	$	0	$	6,355,057	$	0	$	6,355,057
Long-term borrowings	871,845		0		901,221		0		901,221
Total financial instrument liabilities	$	7,206,605	$	0	$	7,256,278	$	0	$	7,256,278


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


(2)	Carrying amounts are included in other assets.


(3)	Carrying amounts are included in other liabilities.

4744

Table of Contents


	At December 31, 2018										At December 31, 2019
	Carrying		Estimated Fair Value								Carrying		Estimated Fair Value
(In thousands)	Amount		Level 1		Level 2		Level 3		Total		Amount		Level 1		Level 2		Level 3		Total
Financial instrument assets
FHLB and FRB stocks	$	91,654	$	—	$	91,654	$	—	$	91,654	$	442,440	$	0	$	442,440	$	0	$	442,440
Investment securities held-to-maturity	148,852		—		146,467		2,800		149,267		139,445		0		141,168		3,676		144,844
Loans held-for-sale	72,594		—		—		74,078		74,078		108,584		0		110,252		2,273		112,525
Net loans⁽¹⁾	16,384,702		—		—		16,399,551		16,399,551		31,699,285		0		0		31,804,513		31,804,513
Securitization receivable⁽²⁾	19,432		—		—		19,025		19,025		19,689		0		0		19,466		19,466
Deferred fees on commitments to extend credit(2)	18,555		—		18,555		—		18,555		19,300		0		19,300		0		19,300
Total financial instrument assets	$	16,735,789	$	—	$	256,676	$	16,495,454	$	16,752,130	$	32,428,743	$	0	$	713,160	$	31,829,928	$	32,543,088
Financial instrument liabilities
Certificates of deposits	$	4,790,680	$	—	$	4,820,442	$	—	$	4,820,442	$	7,455,556	$	0	$	7,460,577	$	0	$	7,460,577
Long-term borrowings	1,449,472		—		1,451,550		—		1,451,550		2,354,448		0		2,368,469		0		2,368,469
Deferred fees on standby letters of credit(3)	77		—		77		—		77		56		0		56		0		56
Total financial instrument liabilities	$	6,240,229	$	—	$	6,272,069	$	—	$	6,272,069	$	9,810,060	$	0	$	9,829,102	$	0	$	9,829,102


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


(2)	Carrying amounts are included in other assets.


(3)	Carrying amounts are included in other liabilities.

~~Table of Contents~~

Note ~~20.~~17. Revenue from Contracts with Customers

~~TCF~~The Corporation earns a variety of revenue, including interest and fees, from customers, as well as revenues from noncustomers. The majority of ~~TCF's~~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.

~~TCF~~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. ~~TCF's~~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. ~~TCF~~The Corporation also provides investment management services. Revenue is recognized over the period of time the services are rendered. Wealth management revenue also includes commissions that are earned for placing a brokerage transaction for execution. Revenue is recognized once the transaction is completed and ~~TCF~~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 ~~transactional based~~transaction-based and, therefore, the performance obligation is satisfied and the related revenue is recognized at the point in time when the transaction occurs. Other debit card fees satisfied over a period of time are recognized over the period in which the service is provided.

•

Other Noninterest Income Other noninterest income includes wire transfer fees, safe deposit box income and check orders. The consideration includes both fixed (e.g., safe deposit box fees) and transaction ~~(i.e.~~(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.


•	~~Net Foreclosed Real Estate and Repossessed Assets Expense~~ Net foreclosed real estate and repossessed assets expense includes net gain or loss on sales of other real estate owned and repossessed assets. Revenue is recognized at the time the sale is complete and TCF is entitled to receive consideration, including sales that are seller financed as receipt of all payment is expected.

4945

Table of Contents

The following tables present total noninterest income segregated between contracts with customers within the scope of ASC 606 and those within the scope of other GAAP topics.


	Three Months Ended September 30, 2019														Three Months Ended September 30, 2020
	Within the scope of ASC 606								Out of scope of ASC 606			Total			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			Consumer Banking		Commercial Banking		Enterprise Services		Out of scope of ASC 606		Total
Noninterest income
Fees and service charges on deposit accounts	$	29,198		$	1,308		$	—	$	3,878		$	34,384		$	23,010	$	2,425	$	0	$	35	$	25,470
Wealth management revenue	1,047			—			—		3,194			$	4,241		1,334		0		0		5,172		6,506
Card and ATM revenue	21,476			23			—		1,816			$	23,315		21,635		64		0		1,684		23,383
Other noninterest income	137			(2,887		)	2,610		(12,169		)	$	(12,309	)	1,461		1,413		199		60,378		63,451
Total	$	51,858		$	(1,556	)	$	2,610	$	(3,281	)	$	49,631		$	47,440	$	3,902	$	199	$	67,269	$	118,810
Noninterest expense
Net foreclosed real estate and repossessed assets	$	(593	)	$	214		$	—	$	2,582		$	2,203


	Three Months Ended September 30, 2018												Three Months Ended September 30, 2019
	Within the scope of ASC 606								Out of scope of ASC 606		Total		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		Consumer Banking			Commercial Banking		Enterprise Services		Out of scope of ASC 606			Total
Noninterest income
Fees and service charges on deposit accounts	$	28,055		$	1,082		$	—	$	38	$	29,175	$	32,552		$	2,046	$	0	$	(214	)	$	34,384
Wealth management revenue	—			—			—		—		$	—	1,047			0		0		3,194			4,241
Card and ATM revenue	19,999			14			—		61		$	20,074	21,479			2		0		1,834			23,315
Other noninterest income	(100		)	(2,649		)	4,686		4,306		$	6,243	(455		)	1,592		163		31,018			32,318
Total	$	47,954		$	(1,553	)	$	4,686	$	4,405	$	55,492	$	54,623		$	3,640	$	163	$	35,832		$	94,258
Noninterest expense
Net foreclosed real estate and repossessed assets	$	215		$	(59	)	$	—	$	3,724	$	3,880


	Nine Months Ended September 30, 2019														Nine Months Ended September 30, 2020
	Within the scope of ASC 606								Out of scope of ASC 606			Total			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			Consumer Banking		Commercial Banking		Enterprise Services		Out of scope of ASC 606		Total
Noninterest income
Fees and service charges on deposit accounts	$	81,098		$	3,504		$	—	$	3,902		$	88,504		$	75,130	$	7,459	$	0	$	310	$	82,899
Wealth management revenue	1,047			—			—		3,194			$	4,241		3,846		0		0		15,017		18,863
Card and ATM revenue	60,581			62			—		1,827			$	62,470		59,041		66		0		6,597		65,704
Other noninterest income	1,504			(5,271		)	9,986		(6,531		)	$	(312	)	1,293		4,466		767		214,835		221,361
Total	$	144,230		$	(1,705	)	$	9,986	$	2,392		$	154,903		$	139,310	$	11,991	$	767	$	236,759	$	388,827
Noninterest expense
Net foreclosed real estate and repossessed assets	$	(152	)	$	536		$	—	$	8,897		$	9,281


	Nine Months Ended September 30, 2018												Nine Months Ended September 30, 2019
	Within the scope of ASC 606							Out of scope of ASC 606			Total		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		Consumer Banking		Commercial Banking		Enterprise Services		Out of scope of ASC 606			Total
Noninterest income
Fees and service charges on deposit accounts	$	80,468	$	3,137		$	—	$	98		$	83,703	$	84,453	$	4,243	$	0	$	(192	)	$	88,504
Wealth management revenue	—		—			—		—			$	—	1,047		0		0		3,194			4,241
Card and ATM revenue	58,095		39			—		179			$	58,313	60,584		3		0		1,883			62,470
Other noninterest income	33,729		(6,771		)	15,112		(21,450		)	$	20,620	395		6,908		245		144,717			152,265
Total	$	172,292	$	(3,595	)	$	15,112	$	(21,173	)	$	162,636	$	146,479	$	11,154	$	245	$	149,602		$	307,480
Noninterest expense
Net foreclosed real estate and repossessed assets	$	719	$	(108	)	$	—	$	12,043		$	12,654

~~Table of Contents~~

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. ~~TCF's~~The noninterest income streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is most often received immediately or shortly after ~~TCF~~the Corporation satisfies its performance obligation and revenue is recognized. ~~TCF~~The Corporation does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances.

Table of Contents

Note ~~21. Stock Based~~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 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”"~~2019") and the TCF Financial 2015 Omnibus Incentive Plan (the "Legacy TCF Omnibus Incentive Plan"). At September 30, ~~2019,~~2020, there were ~~2,270,795~~1,440,141 shares reserved for issuance under the Legacy TCF Omnibus Incentive Plan and there were ~~1,914,083~~1,147,952 shares reserved for issuance under the Stock Incentive Plan of 2019.

In connection with the Merger, each equity award granted under Legacy TCF’s equity plans, including the Legacy Omnibus Incentive Plan, was legally assumed by the combined company and adjusted so that its holder is entitled to receive a number of shares of TCF Financial's common stock equal to the product of (a) the number of shares of Legacy TCF common stock subject to such award multiplied by (b) the Exchange Ratio and (c) rounded, as applicable, to the nearest whole share, and otherwise subject to the same terms and conditions (including, without limitation, with respect to vesting conditions (taking into account any vesting that occurred at the Merger Date) and cash dividend equivalent rights). For any Legacy TCF equity awards that were subject to performance-based vesting at multiple achievement levels, the number of shares of Legacy TCF common stock underlying such award was calculated and fixed as of the Merger Date assuming achievement of the applicable performance conditions at the greater of target level performance or the actual level of achievement of Legacy TCF’s performance results through the latest practicable date before the Merger Date, and such awards converted into service-based vesting awards with the applicable vesting date to be the last day of the original performance period. For purposes of Legacy TCF equity awards for which performance was achievable at a single level, the performance condition was deemed satisfied as of the Merger Date.

In connection with the Merger, all outstanding stock options, performance-based restricted stock units and time-vesting restricted stock units of Chemical, which we refer to as the Chemical equity awards, which were outstanding immediately before the Merger Date continue to be awards in respect of TCF Financial common stock following the Merger, subject to the same terms and conditions that were applicable to such awards before the Merger Date, except with respect to performance-based restricted stock units. Because the Merger constituted a change in control for purposes of the Chemical equity awards, the performance-based restricted stock units for which performance results had not been measured were measured as of the latest practicable date before the Merger Date and the number of performance-based restricted stock units was fixed at the greater of the target (100%) performance level or actual performance, which we refer to as the “Chemical Earned Awards,” and such Chemical Earned Awards will continue to vest based on the executive’s continued service through the end of the applicable performance period.

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 ~~$4.8~~$11.9 million and ~~$9.5~~$33.6 million for the three and nine months ended September 30, ~~2019,~~2020, respectively, and ~~$3.5~~$9.8 million and ~~$13.1~~$13.6 million for the same ~~periods~~period in ~~2018.~~2019, respectively. The excess tax ~~benefit~~ realized from share-based compensation transactions during the three and nine months ended September 30, ~~2019~~2020 was ~~a benefit~~an expense of ~~$0.7 million~~$897 thousand and $2.0 million, respectively, and ~~$0.3 million~~a benefit of $743 thousand and ~~$2.4~~$2.0 million for the same ~~periods~~period in ~~2018.~~2019, respectively.

Restricted Stock Units

WeThe 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 ~~former~~new employees hired after the merger or employees who previously were employees of Legacy TCF. At September 30, ~~2019,~~2020, there were 0407,323 PRSUs outstanding dependent on achieving certain performance target levels and the grantee completing the requisite service period. The TRSUs vest upon satisfaction of a service condition. Upon achievement of the ~~performance target level and/or~~ satisfaction of a service condition and/or performance target level, as applicable, the ~~RSUs~~TRSUs are converted into shares of TCF Financial's common stock on a ~~one-to-one basis.~~1-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.

~~Table of Contents~~

A summary of the activity for RSUs at and for the nine months ended September 30, ~~2019~~2020 is presented below:



	Number of Units		Weighted-average Grant Date Fair Value Per Unit
Outstanding at December 31, 2019	1,511,820		$	44.49
Granted	1,465,165		24.59
Forfeited/canceled	(45,388	)	28.93
Vested	(601,651	)	43.99
Outstanding at September 30, 2020	2,329,946		$	32.41

Number of Units Weighted-average Grant Date Fair Value Per Unit
Outstanding at December 31, 2018 406,575
$ 17.33
Outstanding at December 31, 2018 as adjusted for conversion 206,580
34.11
Granted 533,267
41.51
Converted in the Merger⁽¹⁾
55,022
42.06
Acquired in the Merger 824,757
47.71
Forfeited/canceled (20,648 ) 41.64
Vested (104,652 ) 28.85
Outstanding at September 30, 2019 1,494,326
$ 38.46


~~(1)~~	~~In connection with the Merger, certain Legacy TCF PRSUs were converted at their maximum payout into 55,022 TRSUs.~~

Unrecognized compensation expense related to RSUs totaled ~~$45.8~~$52.1 million at September 30, 2020 and is expected to be recognized over the remaining weighted-average period of ~~2.4 years at September 30, 2019.~~2.7 years.

Restricted Stock Awards

~~TCF's~~The Corporation's restricted stock award transactions were as follows:



	Number of Awards		Weighted-Average Grant Date Fair Value Per Award
Outstanding at December 31, 2019	888,305		$	40.67
Granted	54,040		25.91
Forfeited/canceled	(7,959	)	39.91
Vested	(379,485	)	41.11
Outstanding at September 30, 2020	554,901		$	38.63

Number of Awards Weighted-Average Grant Date Fair Value Per Award
Outstanding at December 31, 2018 2,289,446
$ 16.70
Outstanding at December 31, 2018 as adjusted for conversion 1,163,232
32.87
Granted 269,915
40.82
Forfeited/canceled (135,760 ) 34.15
Vested (368,291 ) 31.07
Outstanding at September 30, 2019 929,096
$ 40.47

Table of Contents

At September 30, ~~2019,~~2020, there were 0 shares of performance-based restricted stock awards outstanding. Unrecognized stock compensation expense for restricted stock awards was ~~$22.5~~$11.5 million at September 30, 2020 with a weighted-average remaining amortization period of ~~2.5 years at September 30, 2019.~~1.9 years.

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



	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2020		2019		2020		2019
Restricted stock expense related to employees⁽¹⁾	$	7,600	$	4,779	$	17,995	$	9,455
Restricted stock expense related to directors⁽²⁾	352		391		566		709
Total restricted stock expense	$	7,952	$	5,170	$	18,561	$	10,164


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


⁽²⁾	Included in "Other noninterest expense" in the Consolidated Statements of Income.

Stock Options

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



	Non-Vested Stock Options Outstanding				Stock Options Outstanding
	Number of Options		Weighted-average Exercise Price		Number of Options		Weighted-average Exercise Price
Outstanding at December 31, 2019	120,809		$	39.63	495,165		$	29.48
Exercised	0		0		(82,276	)	22.03
Forfeited/canceled	(3,659	)	38.18		0		0
Expired	0		0		(74,626	)	38.89
Vested	(57,262	)	38.38		57,262		38.38
Outstanding at September 30, 2020	59,888		$	40.92	395,525		$	30.55
Exercisable/vested at September 30, 2020					395,525		$	30.55

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, 2018 —
$ —
—
$ —
Acquired⁽¹⁾
127,906
39.38
520,379
29.48
Forfeited/canceled (3,094 ) 32.81
—
—
Expired —
—
(756 ) 32.81
Vested (1,144 ) 46.95
1,144
46.95
Outstanding at September 30, 2019 123,668
$ 39.47
520,767
$ 29.51
Exercisable/vested at September 30, 2019 520,767
$ 29.51


~~(1)~~	~~Options acquired in the Merger expire ten years from the date of grant and vest ratably over a five-year period.~~

The weighted-average remaining contractual term was ~~4.28~~4.1 years for all outstanding stock options and ~~3.7~~3.9 years for exercisable stock options at September 30, 2020.

Note 19. Retirement Plans

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

Qualified Defined Benefit Pension Plans

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

The Board of Directors of Legacy TCF approved the termination of the Legacy TCF Pension Plan effective November 1, 2019. The ~~intrinsic value of~~Corporation believes all ~~outstanding in-the-money stock options and exercisable in-the-money stock options was $5.8 million and $5.3 million, respectively, at~~participants will have their benefits paid in full. During the three months ended September 30, ~~2019.~~2020, distributions were made to all participants electing a lump sum payment. Due to the TCF Pension Plan’s funding level, assets were liquidated and additional funding was made for the annuity purchase in October 2020. The ~~aggregate intrinsic values~~weighted-average interest crediting rate was 2.05% as of ~~outstanding and exercisable options at~~ September 30, ~~2019 were calculated based on~~2020. TCF does not consolidate the ~~closing market price of~~assets and liabilities associated with the Legacy TCF ~~Financial's common stock on September 30, 2019 of $38.07 per share less the~~Pension Plan.

5248

Table of Contents

~~exercise price. Options with intrinsic values less than zero, or "out-of-the-money" options, are not included in the aggregate intrinsic value reported.~~

~~No cash was received from option exercises during the nine months ended September 30, 2019 and for the same period in 2018.~~

~~At September 30, 2019, unrecognized compensation expense related to stock options totaled $0.7 million and is expected to be recognized over a remaining weighted average period of 1.88 years.~~

~~Note 22. Retirement Plans~~

TCF maintains four Legacy TCF employee benefit plans: (i) the TCF 401K Plan (the "TCF 401K"), (ii) the TCF 401k Supplemental Plan (the "Legacy TCF Supplemental Plan"), (iii) the TCF Cash Balance Pension Plan (the "Legacy TCF Pension Plan"), a defined benefit pension plan, and (iv) the TCF Postretirement Plan (the "Legacy TCF Postretirement Plan"), a postretirement benefit plan, each of which were discussed in Legacy TCF's Annual Report on Form 10-K for the year ended December 31, 2018.

TCF also maintains the Chemical employee benefit plans that existed before the Merger: (i) the Chemical Financial Corporation Nonqualified Postretirement Benefit Plan (the "Chemical Postretirement Benefit Plan"), a postretirement benefit plan, and (ii) the Chemical Financial Corporation 401k Savings Plan (the "Chemical 401k").

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

Nonqualified Postretirement Benefit Plans

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

The Chemical Postretirement Benefit Plan provides medical and dental benefits, ~~upon~~during retirement, to a limited number of active and retired employees. The majority of the retirees are required to make contributions toward the cost of their benefits based on their years of credited service and age at retirement. Covered employees include those who were at least age 50 as of January 1, 2012, that retire at age 60 or older, have at least twenty-five years of service with Chemical and are participants in the active employee group health insurance plan. Eligible employees may also cover their spouse until age 65 as long as the spouse is not offered health insurance coverage through his or her employer. Employees and their spouses eligible to participate in the Chemical Postretirement Benefit Plan are required to make contributions toward the cost of their benefits upon retirement, with the contribution levels designed to cover the projected overall cost of these benefits over the long-term. Retiree contributions are generally adjusted annually. The accounting for these postretirement benefits anticipates changes in future cost-sharing features such as retiree contributions, deductibles, copayments and coinsurance. The benefits can be amended, modified or terminated by usthe Corporation at any time.

401(k) Savings Plans

The TCF 401K Plan (the "TCF 401K"), a qualified postretirement benefit and employee stock ownership plan provides, and until December 31, 2019 the Chemical ~~401k is available to all former Chemical employees that continue to be employed following the Merger Date, and provides tax deferred salary deductions and alternative investment options. We provide~~Financial Corporation 401K Savings Plan (the "Chemical 401K"), a safe harbor matching contribution of the participants elective deferrals up to a maximum of 6.0% of eligible compensation up to the maximum amount allowed under the Internal Revenue Code. The Chemical 401k providesqualified postretirement benefit plan provided the option to invest in TCF ~~Financial~~ common stock. Effective December 31, 2019, the Chemical 401K merged with and into the TCF 401K. All participant balances remaining in the Chemical 401K were transferred into the TCF 401K on December 31, 2019.

Nonqualified Supplemental Retirement Plans

The ~~Board of Directors approved~~TCF 401K Supplemental Plan (the "Legacy TCF SERP") and the ~~termination of the Legacy~~ TCF ~~Pension~~Financial Corporation Deferred Compensation Plan ~~effective November 1, 2019.~~(the "TCF Deferred Compensation Plan") are both defined as nonqualified supplemental retirement plans. The Legacy TCF ~~Pension Plan was fully funded as of September 30, 2019. The weighted-average interest crediting rate was 2.24% as of September 30, 2019.~~SERP's assets, which include investments in TCF ~~does not consolidate~~common stock, are held in trust and included in equity in the ~~assets and liabilities associated with the Legacy TCF Pension Plan.~~other line item.

~~Table of Contents~~

Net Periodic Benefit

The net periodic benefit plan (income) cost included in other noninterest expense for defined benefit pension plans and postretirement benefit plans were as follows:

Defined Benefit Pension Plans
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2019 2018 2019 2018
Interest cost $ 1,046
$ 246
$ 1,574
$ 738
Service cost —
—
—
—
Contractual termination cost —
—
—
—
Return on plan assets (949 ) (133 ) (1,223 ) (397 )
Amortization of prior service credit —
—
—
—
Amortization of unrecognized net loss —
—
—
—
Recognized actuarial (gain) loss —
—
—
—
Net periodic benefit plan (income) cost $ 97
$ 113
$ 351
$ 341



	Defined Benefit Pension Plans
	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2020			2019			2020			2019
Interest cost	$	946		$	1,046		$	2,839		$	1,574
Return on plan assets	(864		)	(949		)	(2,594		)	(1,223		)
Net periodic benefit plan (income) cost	$	82		$	97		$	245		$	351


	Postretirement Benefit Plans												Postretirement Benefit Plans
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2019			2018			2019			2018			2020			2019			2020			2019
Interest cost	$	41		$	28		$	101		$	83		$	36		$	41		$	107		$	101
Service cost	—			—			—			—			0			0			1			0
Recognized actuarial (gain) loss	—			—			—			—
Amortization of prior service cost	(11		)	(12		)	(35		)	(35		)	(12		)	(11		)	(35		)	(35		)
Amortization of unrecognized net loss	—			—			—			—
Net periodic benefit plan (income) cost	$	30		$	16		$	66		$	48		$	24		$	30		$	73		$	66

Table of Contents

TCF made 0 cash contributions to the defined benefit pension plans during the three and nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019. Due to the funding level upon final termination, assets were liquidated and additional funding was made for the annuity purchase in October 2020. TCF contributed $0.1 million and ~~$0.3~~$0.2 million to the Legacy TCF Postretirement Plan during the three and nine months ended September 30, ~~2019, and~~2020, respectively, compared to $0.1 million and $0.3 million during the ~~same periods in 2018.~~three and nine months ended September 30, 2019, respectively. TCF made 0 contributions to the Chemical Postretirement Benefit Plan during both the three and nine months ended September 30, 2020 and 2019.

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

Effective January 1, 2020, the TCF Deferred Compensation Plan (previously the Chemical Deferred Compensation Plan), a nonqualified supplemental retirement plan, was amended to allow certain employees to contribute up to 60% of their salary and ~~$2.5 million~~up to 85% of bonus compensation. The amounts deferred under this plan are invested in a selection of participant designated mutual funds.

Note 20. Earnings Per Common Share

The computations of basic and ~~$9.7 million during the same periods in 2018.~~diluted earnings per common share were as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands, except per share data)	2020		2019		2020		2019
Basic earnings per common share
Net income attributable to TCF Financial Corporation	$	55,738	$	22,148	$	131,401	$	183,069
Preferred stock dividends	2,494		2,494		7,481		7,481
Net income available to common shareholders	53,244		19,654		123,920		175,588
Less: Earnings allocated to participating securities	0		0		0		19
Earnings allocated to common stock	$	53,244	$	19,654	$	123,920	$	175,569
Weighted-average common shares outstanding used in basic earnings per common share calculation	151,768,337		128,575,171		151,761,299		97,876,262
Basic earnings per common share	$	0.35	$	0.15	$	0.82	$	1.79
Diluted earnings per common share
Earnings allocated to common stock	$	53,244	$	19,654	$	123,920	$	175,569
Weighted-average common shares outstanding used in basic earnings per common share calculation	151,768,337		128,575,171		151,761,299		97,876,262
Net dilutive effect of:
Non-participating restricted stock	26,163		73,698		12,383		139,795
Stock options	27,092		105,719		53,246		39,222
Weighted-average common shares outstanding used in diluted earnings per common share calculation	151,821,592		128,754,588		151,826,928		98,055,279
Diluted earnings per common share	$	0.35	$	0.15	$	0.82	$	1.79
Anti-dilutive shares outstanding not included in the computation of diluted earnings per common share
Non-participating restricted stock	2,303,249		1,271,045		2,531,355		1,271,045
Stock options	323,386		97,980		228,106		97,980

5450

Table of Contents

Note ~~23. Earnings Per Common Share~~

The number of shares issued and outstanding, earnings per share, additional paid-in-capital and all references to share quantities of TCF have been retrospectively adjusted to reflect the equivalent number of shares issued in the Merger. The computations of basic and diluted earnings per common share and the anti-dilutive shares outstanding not included in the computation of diluted earnings per share were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands, except per share data) 2019 2018 2019 2018
Basic earnings per common share

Net income attributable to TCF Financial Corporation $ 22,148
$ 86,196
$ 183,069
$ 218,706
Preferred stock dividends 2,494
2,494
7,481
9,094
Impact of preferred stock redemption⁽¹⁾
—
—
—
3,481
Net income available to common shareholders 19,654
83,702
175,588
206,131
Less: Earnings allocated to participating securities —
13
19
30
Earnings allocated to common stock $ 19,654
$ 83,689
$ 175,569
$ 206,101
Weighted-average common shares outstanding used in basic earnings per common share calculation 128,575,171
83,762,625
97,876,262
84,522,519
Basic earnings per common share $ 0.15
$ 1.00
$ 1.79
$ 2.44
Diluted earnings per common share

Earnings allocated to common stock $ 19,654
$ 83,689
$ 175,569
$ 206,101
Weighted-average common shares outstanding used in basic earnings per common share calculation 128,575,171
83,762,625
97,876,262
84,522,519
Net dilutive effect of:

Non-participating restricted stock 73,698
—
139,795
—
Stock options 105,719
—
39,222
1,670
Warrants —
45,438
—
266,935
Weighted-average common shares outstanding used in diluted earnings per common share calculation 128,754,588
83,808,063
98,055,279
84,791,124
Diluted earnings per common share $ 0.15
$ 1.00
$ 1.79
$ 2.43
Anti-dilutive shares outstanding not included in the computation of diluted earnings per common share
Non-participating restricted stock 1,369,025
1,058,202
1,369,025
1,058,202


~~(1)~~	~~Represents the amount of deferred stock issuance costs originally recorded in preferred stock that were reclassified to retained earnings.~~

~~Note 24.~~21. Other Noninterest Income and Expense

Other noninterest income and expense was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2019		2018		2019		2018		2020			2019			2020			2019
Other Noninterest Income
Gain on branch sales⁽¹⁾									$	0		$	0		$	14,717		$	0
Termination of interest rate swaps									0			(17,302		)	0			(17,302		)
Loan servicing rights impairment									(154		)	(4,520		)	(17,248		)	(4,520		)
Other									5,565			9,513			35,650			21,510
Total other noninterest income									$	5,411		$	(12,309	)	$	33,119		$	(312	)

Other Noninterest Expense
Outside processing	$	12,084	$	5,052	$	23,475	$	15,936	$	15,697		$	12,084		$	42,414		$	23,475
Loan and lease expense	9,323		3,313		15,986		10,430		7,849			6,750			23,988			13,413
Professional fees	7,113		5,949		18,026		16,035		6,552			7,406			18,749			18,319
Advertising and marketing	7,101		7,674		19,229		22,075		8,251			7,101			21,091			19,229
FDIC insurance	6,298		4,376		11,708		12,165		5,138			6,298			18,439			11,708
Card processing and issuance costs	5,746		4,090		14,437		12,759		6,064			5,746			20,585			14,437
Consumer Financial Protection Bureau and OCC settlement charge	—		—		—		32,000
Other	40,111		25,231		91,920		79,908		33,872			42,391			100,409			94,200
Total other noninterest expense	$	87,776	$	55,685	$	194,781	$	201,308	$	83,423		$	87,776		$	245,675		$	194,781

(1) Represents the completion of the sale of 7 banking centers in conjunction with deposits associated with those banking centers.

~~Table of Contents~~

Note ~~25.~~22. Reportable Segments

~~TCF's~~The Corporation's reportable segments are Consumer Banking, Commercial Banking and Enterprise Services. Consumer Banking is comprised of all of ~~TCF's~~the Corporation's consumer-facing businesses and includes retail banking, consumer lending, wealth management and small business banking. Commercial Banking, previously named Wholesale Banking, is comprised of commercial and industrial and commercial real estate banking and lease financing. Enterprise Services is comprised of (i) corporate treasury, which includes ~~TCF's~~the Corporation's investment and borrowing portfolios and management of capital, debt and market risks, (ii) corporate functions, such as information technology, risk and credit management, bank operations, finance, investor relations, corporate development, internal audit, legal and human capital management that provide services to the operating segments, (iii) the Holding Company and (iv) eliminations.

In connection with the Merger, effective August 1, 2019, ~~TCF~~the Corporation renamed its Wholesale Banking segment to Commercial Banking to align with the way ~~TCF~~it is now managed. In addition, activity that was related to small business banking and private banking were moved from the Wholesale Banking (now named Commercial Banking) segment to the Consumer Banking segment. The revised presentation of previously reported segment data has been applied retroactively to all periods presented in these financial statements.

~~TCF~~The Corporation evaluates performance and allocates resources based on each reportable segment's net income or loss. The reportable segments follow GAAP as described in Note 1. Basis of Presentation, except for the accounting for intercompany interest income and interest expense, which are eliminated in consolidation and presenting net interest income on a fully tax-equivalent basis. ~~TCF~~The Corporation generally accounts for inter-segment sales and transfers at cost.

Table of Contents

Certain information for each of ~~TCF's~~the Corporation's reportable segments, including reconciliations of ~~TCF's~~the consolidated totals, was as follows:


(In thousands)	Consumer Banking			Commercial Banking		Enterprise Services			Consolidated			Consumer Banking			Commercial Banking			Enterprise Services			Consolidated
At or For the Three Months Ended September 30, 2019
Net interest income (expense)	$	191,940		$	157,437	$	22,416		$	371,793
Provision for credit losses	4,489			22,699		—			27,188
Net interest income (expense) after provision for credit losses	187,451			134,738		22,416			344,605
At or For the Three Months Ended September 30, 2020
Net interest income												$	216,851		$	167,160		$	(6,844	)	$	377,167
Provision (benefit) for credit losses												(27,217		)	96,881			0			69,664
Net interest income after provision for credit losses												244,068			70,279			(6,844		)	307,503
Noninterest income	57,102			47,929		(10,773		)	94,258			78,587			35,105			5,118			118,810
Noninterest expense	210,728			102,841		112,051			425,620			204,239			105,646			63,555			373,440
Income tax expense (benefit)	6,817			8,172		(26,724		)	(11,735		)
Income (loss) after income tax expense (benefit)	27,008			71,654		(73,684		)	24,978
Income attributable to non-controlling interest	—			2,830		—			2,830
Preferred stock dividends	—			—		2,494			2,494
Net income (loss) available to common shareholders	$	27,008		$	68,824	$	(76,178	)	$	19,654
Total assets⁽¹⁾	$	14,906,457		$	22,076,203	$	8,709,851		$	45,692,511
At or For the Three Months Ended September 30, 2018
Net interest income (expense)	$	143,015		$	94,252	$	16,235		$	253,502
Provision (benefit) for credit losses	(953		)	3,223		—			2,270
Net interest income (expense) after provision for credit losses	143,968			91,029		16,235			251,232
Noninterest income	66,621			44,934		509			112,064
Noninterest expense	162,034			77,863		6,526			246,423
Income (loss) before income tax expense (benefit)												118,416			(262		)	(65,281		)	52,873
Income tax expense (benefit)	11,613			12,813		3,608			28,034			19,744			(8,613		)	(15,560		)	(4,429		)
Income (loss) after income tax expense (benefit)	36,942			45,287		6,610			88,839			98,672			8,351			(49,721		)	57,302
Income attributable to non-controlling interest	—			2,643		—			2,643			0			1,564			0			1,564
Preferred stock dividends	—			—		2,494			2,494			0			0			2,494			2,494
Net income (loss) available to common shareholders	$	36,942		$	42,644	$	4,116		$	83,702		98,672			6,787			(52,215		)	53,244
Total assets	$	8,226,522		$	11,553,453	$	3,124,810		$	22,904,785		$	13,935,521		$	23,466,019		$	10,164,249		$	47,565,789
Revenues from external customers
Interest income												$	139,827		$	237,060		$	43,561		$	420,448
Noninterest income												78,587			35,105			5,118			118,810
Total												$	218,414		$	272,165		$	48,679		$	539,258
At or For the Three Months Ended September 30, 2019
Net interest income												$	191,940		$	157,437		$	22,416		$	371,793
Provision for credit losses												4,489			22,699			0			27,188
Net interest income after provision for credit losses												187,451			134,738			22,416			344,605
Noninterest income												57,102			47,929			(10,773		)	94,258
Noninterest expense												210,728			102,841			112,051			425,620
Income (loss) before income tax expense (benefit)												33,825			79,826			(100,408		)	13,243
Income tax expense (benefit)												6,817			8,172			(26,724		)	(11,735		)
Income (loss) after income tax expense (benefit)												27,008			71,654			(73,684		)	24,978
Income attributable to non-controlling interest												0			2,830			0			2,830
Preferred stock dividends												0			0			2,494			2,494
Net income available to common shareholders												27,008			68,824			(76,178		)	19,654
Total assets												$	13,701,633		$	19,045,367		$	12,945,511		$	45,692,511
Revenues from external customers
Interest income												$	153,843		$	265,678		$	40,287		$	459,808
Noninterest income												57,102			47,929			(10,773		)	94,258
Total												$	210,945		$	313,607		$	29,514		$	554,066


~~(1)~~	As a result of the Merger, we recorded $1.1 billion of goodwill. Due to the timing of the Merger, we are in the process of completing our analysis of the allocation of goodwill across business segments, and, therefore, goodwill is presented as part of Enterprise Services at September 30, 2019.

5652

Table of Contents


(In thousands)	Consumer Banking		Commercial Banking		Enterprise Services			Consolidated		Consumer Banking		Commercial Banking		Enterprise Services			Consolidated
At or For the Nine Months Ended September 30, 2019
Net interest income (expense)	$	470,738	$	350,848	$	58,693		$	880,279
At or For the Nine Months Ended September 30, 2020
Net interest income										$	616,968	$	522,619	$	17,420		$	1,157,007
Provision for credit losses	16,406		34,473		—			50,879		6,228		239,105		0			245,333
Net interest income (expense) after provision for credit losses	454,332		316,375		58,693			829,400
Net interest income after provision for credit losses										610,740		283,514		17,420			911,674
Noninterest income	183,767		132,883		(9,170		)	307,480		245,277		134,709		8,841			388,827
Noninterest expense	520,007		267,147		128,390			915,544		640,417		325,425		182,438			1,148,280
Income (loss) before income tax expense (benefit)										215,600		92,798		(156,177		)	152,221
Income tax expense (benefit)	26,529		30,271		(27,934		)	28,866		37,478		11,133		(33,741		)	14,870
Income (loss) after income tax expense (benefit)	91,563		151,840		(50,933		)	192,470		178,122		81,665		(122,436		)	137,351
Income attributable to non-controlling interest	—		9,401		—			9,401		0		5,950		0			5,950
Preferred stock dividends	—		—		7,481			7,481		0		0		7,481			7,481
Net income (loss) available to common shareholders	$	91,563	$	142,439	$	(58,414	)	$	175,588	178,122		75,715		(129,917		)	123,920
Total assets	$	14,906,457	$	22,076,203	$	8,709,851		$	45,692,511	$	13,935,521	$	23,466,019	$	10,164,249		$	47,565,789
At or For the Nine Months Ended September 30, 2018
Net interest income (expense)	$	429,132	$	289,315	$	36,895		$	755,342
Revenues from external customers
Interest income										$	430,162	$	788,745	$	135,303		$	1,354,210
Noninterest income										245,277		134,709		8,841			388,827
Total										$	675,439	$	923,454	$	144,144		$	1,743,037
At or For the Nine Months Ended September 30, 2019
Net interest income										$	470,738	$	350,848	$	58,693		$	880,279
Provision for credit losses	18,900		8,974		—			27,874		16,406		34,473		0			50,879
Net interest income (expense) after provision for credit losses	410,232		280,341		36,895			727,468
Total noninterest income	196,827		132,794		908			330,529
Total noninterest expense	511,915		229,094		23,433			764,442
Net interest income after provision for credit losses										454,332		316,375		58,693			829,400
Noninterest income										183,767		132,883		(9,170		)	307,480
Noninterest expense										520,007		267,147		128,390			915,544
Income (loss) before income tax expense (benefit)										118,092		182,111		(78,867		)	221,336
Income tax expense (benefit)	23,037		40,505		2,541			66,083		26,529		30,271		(27,934		)	28,866
Income (loss) after income tax expense (benefit)	72,107		143,536		11,829			227,472		91,563		151,840		(50,933		)	192,470
Income attributable to non-controlling interest	—		8,766		—			8,766		0		9,401		0			9,401
Preferred stock dividends	—		—		9,094			9,094		0		0		7,481			7,481
Impact of preferred stock redemption	—		—		3,481			3,481
Net income (loss) available to common shareholders	$	72,107	$	134,770	$	(746	)	$	206,131
Net income available to common shareholders										91,563		142,439		(58,414		)	175,588
Total assets	$	8,226,522	$	11,553,453	$	3,124,810		$	22,904,785	$	13,701,633	$	19,045,367	$	12,945,511		$	45,692,511
Revenues from external customers
Interest income										$	370,016	$	619,419	$	88,048		$	1,077,483
Noninterest income										183,767		132,883		(9,170		)	307,480
Total										$	553,783	$	752,302	$	78,878		$	1,384,963

Note ~~26.~~23. Commitments, Contingent Liabilities and Guarantees

Financial Instruments with Off-Balance Sheet Risk In the normal course of business, ~~TCF~~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.

~~TCF's~~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. ~~TCF~~The Corporation uses the same credit policies in making these commitments as it does for making direct loans. ~~TCF~~The Corporation evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained is based on a credit evaluation of the customer.

Financial instruments with off-balance sheet risk were as follows:


(In thousands)	At September 30, 2019		At December 31, 2018		At September 30, 2020		At December 31, 2019
Commitments to extend credit:
Commercial	$	5,269,843	$	1,280,707	$	4,522,128	$	5,743,072
Consumer	2,266,913		1,627,960		2,171,676		2,305,096
Total commitments to extend credit	7,536,756		2,908,667		6,693,804		8,048,168
Standby letters of credit and guarantees on industrial revenue bonds	125,438		20,662		116,792		129,192
Total	$	7,662,194	$	2,929,329	$	6,810,596	$	8,177,360

Table of Contents

Commitments to Extend ~~Credit~~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.

~~Table of Contents~~

Standby Letters of Credit and Guarantees on Industrial Revenue ~~Bonds~~Bonds: Standby letters of credit and guarantees on industrial revenue bonds are conditional commitments issued by ~~TCF~~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 ~~TCF~~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 ~~TCF~~The Corporation has originated and sold certain loans, and additionally acquired the potential liability for ~~those historical~~loans originated and sold ~~loans~~ by merged or acquired entities, for which the buyer has limited recourse to usthe Corporation in the event the loans do not perform as specified in the agreements. ~~The~~These loans had an outstanding balance of $6.6 million and ~~the~~$6.2 million at September 30, 2020 and December 31, 2019, respectively. The maximum potential amount of undiscounted future payments that ~~TCF~~the Corporation could be required to make in the event of nonperformance by the borrower totaled ~~$0.7~~$6.6 million and $6.0 million at September 30, ~~2019.~~2020 and December 31, 2019, respectively. In the event of nonperformance, ~~TCF~~the Corporation has rights to the underlying collateral securing the loans. At ~~September 30,~~December 31, 2019 ~~TCF~~the Corporation had recorded a liability of $0.1 million, in connection with the recourse agreements, in other liabilities. There was 0 recorded liability at September 30, 2020.

In addition, ~~TCF~~the Corporation acquired, through the Merger, certain Small Business Administration ("SBA") guaranteed loans in which the guaranteed portion had been sold to a third party investor. In the event these loans default and the SBA guaranty is no longer intact (i.e. an issue is found to have occurred during the origination or the liquidation of the loans) ~~TCF~~the Corporation would be liable to make the loan whole to the third party investor. The maximum potential amount of undiscounted future payments that ~~TCF~~the Corporation could be required to make in the event of default by the borrower was ~~$17.6~~$13.9 million and $16.7 million at September 30, ~~2019.~~2020 and December 31, 2019, respectively. In the event of default, ~~TCF~~the Corporation has rights to the underlying collateral securing the loans. At September 30, 2020 and December 31, 2019, ~~TCF~~the Corporation had recorded a liability of $0.8 million and $0.9 million, respectively, in other liabilities.

Representations, Warranties and Contractual LiabilitiesIn connection with ~~TCF's~~the Corporation's residential mortgage loan sales, and the historical sales of merged or acquired entities, ~~TCF~~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. ~~TCF~~The Corporation may be required to repurchase individual loans and/or indemnify the purchaser against losses if the loan fails to meet established criteria. In addition, some agreements contain a requirement to repurchase loans as a result of early payoffs by the borrower, early payment default of the borrower or the failure to obtain valid title. At September 30, ~~2019~~2020 and December 31, ~~2018~~2019 the liability recorded in connection with these representations and warranties was ~~$4.0~~$3.8 million and ~~$1.3~~$5.7 million, respectively, included in other liabilities.

Litigation Contingencies From time to time, ~~TCF is~~we are a party to legal proceedings arising out of ~~its~~our lending, leasing and deposit operations, including foreclosure proceedings and other collection actions as part of ~~its~~our lending and leasing collections activities. ~~TCF~~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 ~~Consumer Financial Protection Bureau~~CFPB which may impose sanctions on ~~TCF~~us for failures related to regulatory compliance. From time to time borrowers and other customers, and employees and former employees have also brought actions against ~~TCF,~~us, in some cases claiming substantial damages. ~~TCF and~~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 ~~TCF's~~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 ~~the~~our consolidated financial position, operating results or cash ~~flows of TCF.~~flows.

5854

Table of Contents

~~Note 27~~. ~~Parent Company Financial Information~~

~~TCF Financial's condensed statements of financial condition, income and cash flows were as follows:~~

~~Condensed Statements of Financial Condition~~

(In thousands) September 30, 2019 December 31, 2018
Assets
Cash and cash equivalents $ 165,457
$ 91,132
Premises and equipment, net 3,883
78
Deferred tax asset 13,485
2,974
Investment in TCF Bank 5,483,484
2,426,329
Accounts receivable from TCF Bank 19,849
23,780
Other assets 25,823
1,201
Total assets $ 5,711,981
$ 2,545,494
Liabilities and Equity
Long term borrowings $ 19,005
$ —
Other liabilities 22,872
7,693
Total liabilities 41,877
7,693
Equity 5,670,104
2,537,801
Total liabilities and equity $ 5,711,981
$ 2,545,494

~~Condensed Statements of Income~~

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2019 2018 2019 2018
Interest income $ 89
$ 48
$ 166
160
Interest expense 199
—
199
—
Net interest income (110 ) 48
(33 ) 160
Noninterest income
Dividends from TCF Bank —
32,001
150,001
331,000
Management fees —
—
—
—
Other 1,979
5,383
8,742
14,352
Total noninterest income 1,979
37,384
158,743
345,352
Noninterest expense
Compensation and employee benefits 4,838
4,739
12,255
15,320
Occupancy and equipment 141
82
296
220
Other 1,675
1,420
3,689
4,186
Total noninterest expense 6,654
6,241
16,240
19,726
Income (loss) before income tax benefit and equity in undistributed earnings (loss) of TCF Bank (58,744 ) 31,191
77,970
325,786
Income tax benefit 11,409
116
14,572
1,633
Income before equity in undistributed earnings (loss) of TCF Bank (47,335 ) 31,307
92,542
327,419
Equity in undistributed earnings (loss) of TCF Bank 69,483
54,892
90,527
(108,713 )
Net income 22,148
86,199
183,069
218,706
Preferred stock dividends 2,494
2,493
7,482
12,574
Impact of preferred stock redemption —
—
—
—
Net income available to common shareholders $ 19,654
$ 83,706
$ 175,587
$ 206,132

~~Table of Contents~~

~~Condensed Statements of Cash Flows~~

Nine Months Ended September 30,
(In thousands) 2019 2018
Cash flows from operating activities
Net income $ 183,069
$ 218,706
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in undistributed (earnings) loss of TCF Bank (90,527 ) 108,713
Share-based compensation expense 17,762
14,041
Depreciation and amortization 99
26
Provision (benefit) for deferred income taxes 14
—
Net (losses) gains on sales of assets (8 ) (387 )
Net change in other assets (887 ) 975
Net change in other liabilities (13,104 ) (374 )
Other, net (2,756 ) (100 )
Net cash provided by (used in) operating activities 93,662
341,600
Cash flows from investing activities
Purchases of premises and equipment and lease equipment (51 ) (3 )
Proceeds from sales of premises and equipment 28
17
Net cash acquired in business combination 155,154
—
Other, net —
665
Net cash provided by (used in) investing activities 155,131
679
Cash flows from financing activities
Redemption of Series B preferred stock —
(100,000 )
Repurchases of common stock (58,805 ) (149,912 )
Common shares sold to TCF employee benefit plans —
715
Dividends paid on preferred stock (7,482 ) (9,094 )
Dividends paid on common stock (102,368 ) (74,916 )
Payments related to tax-withholding upon conversion of share-based awards (5,813 ) (6,563 )
Exercise of stock options —
(998 )
Net cash provided by (used in) financing activities (174,468 ) (340,768 )
Net change in cash and cash equivalents 74,325
1,511
Cash and cash equivalents at beginning of period 91,132
80,471
Cash and cash equivalents at end of period $ 165,457
$ 81,982

~~Table of Contents~~

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

Forward-looking Information

Any statements contained in this Quarterly Report on Form 10-Q regarding the outlook for ~~our~~the Corporation's businesses and ~~our~~their respective markets, such as projections of future performance, targets, guidance, statements ~~regarding our~~of the Corporation's plans and objectives, forecasts of market trends and other matters are forward-looking statements based on ~~our~~the Corporation's assumptions and beliefs. Such statements may be identified by such words or phrases as ~~“will,” “believe,” “expect,”~~ "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, except as required by law.~~events.

These statements include, among others, statements related to: our strategic plan to develop customer relationships that will drive core deposit growth and stability, management's belief that our commercial and commercial real estate loan portfolios are generally well-secured, the impact of projected changes in net interest income assuming changes to short-term market interest rates, statements regarding our risk exposure, statements related to integration following our Merger, including statements related to the anticipated effects on results of operations and financial condition from expected developments.All statements referencing future time periods are forward-looking.

~~Certain factors~~Management's determination of the allowance for credit losses and related provision; the carrying value of goodwill and loan servicing rights; the fair value of investment securities (including whether there is any credit impairment); and management's assumptions concerning postretirement benefit plans involve judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated. All of the information concerning interest rate sensitivity is forward-looking. The future effect of changes in the financial and credit markets and the national and regional economies on the banking industry, generally, and on us, specifically, are also inherently uncertain.

These forward-looking statements are subject to certain risks, uncertainties and assumptions ("risk factors") that could cause ~~our future~~actual results to differ materially from those expressed or implied in such statements, and no assurance can be given that the results in any forward-looking ~~statements contained herein.~~statement will be achieved. Any forward-looking statement speaks only as of the date on which it is made and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events, except as required by law. These factors include the factors discussed in Item 1A. in ~~each of TCF’s and Legacy TCF’s~~our Annual ~~Reports~~Report on Form 10-K for the year ended December 31, ~~2018, and~~2019 under the heading "Risk Factors" or otherwise disclosed in ~~TCF’s other SEC filings, including the Joint Proxy Statement/Prospectus regarding the Merger that TCF~~documents filed or furnished by us with or to the SEC after the filing of the Annual Reporting on ~~May 3, 2019 pursuant to Rule 424(b)(3),~~Form 10-K, the factors discussed below and any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statements. Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive: ~~deterioration~~macroeconomic and other challenges and uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, financial markets and consumer and corporate customers and clients, including economic activity, employment levels and market liquidity, as well as the various actions taken in ~~general economic, political~~response to the challenges and ~~banking industry conditions;~~uncertainties by governments, central banks and others, including TCF; a failure to manage credit risk; cyber-security breaches involving us or third parties, hacking, denial of service, ~~security breaches,~~ loss or theft of information, or other cyber-attacks that disrupt ~~our~~TCF's business operations or damage ~~our~~its reputation; fluctuation in interest rates that result in decreases in the value of assets or a mismatch between yields earned on our interest-earning assets and the rates paid on our deposits and borrowings; lack of access to liquidity;adverse developments affecting TCF's banking centers, including supermarket banking centers; inability to ~~pay and receive dividends;~~successfully execute on TCF's growth strategy through acquisitions or expanding existing business relationships; adverse effects related to competition from traditional competitors, non-bank providers of financial services and new technologies; ~~soundness of other financial institutions and other counterparty risk,~~technological difficulties, including those related to system upgrades or the risk of default, operational disruptions, security breaches, or diminished availability of counterparties who satisfy our credit quality requirements; adverse developments affecting our branches, including supermarket branches;failure to keep pace with technological changes in response to customer demands; risks related to developing new products, markets or lines of business; the possible unavailability of LIBOR as a published benchmark rate and the potential uncertainties it could create for market participants, including TCF; changes in the allowance for loan and lease losses dictated by new market conditions, regulatory requirements or accounting standards, including CECL; new consumer protection and supervisory requirements or regulatory reformrisks related to ~~capital, leverage,~~TCF's loan origination and sales activity; lack of access to liquidity or ~~risk management;~~ability to raise capital that isn’t dilutive; adverse changes in monetary, fiscal or tax policies; litigation or government enforcement actions; heightened consumer protection, supervisory or regulatory practices or ~~requirements related to enterprise risk management, the Bank Secrecy Act and anti-money laundering compliance activity;~~requirements; deficiencies in ~~our~~TCF's compliance programs or risk mitigation frameworks; the effect of any negative publicity or reputational damage; technological or operational difficulties; failure to keep pace with technological change, including with respect to customer demands or system upgrades; risks related to our loan sales activity; dependence on accurate and complete information from customers and counterparties; the failure to attract and retain key employees; ineffective

Table of Contents

internal controls; soundness of other financial institutions and other counterparty risk, including the risk of default, operational disruptions, or diminished availability of counterparties who satisfy our credit quality requirements; inability to ~~successfully execute on our growth strategy through acquisitions~~grow deposits, increase earnings and revenue, manage operating expenses, or ~~expanding existing business relationships;~~pay and receive dividends; interruptions, systems failures information technology and telecommunications systems failures of third-party services; deficiencies in TCF's quantitative models; the effect of any negative publicity or reputational damage; changes in accounting standards or interpretations of existing standards; adverse federal, state or foreign tax assessments; ~~risks associated with actual or potential litigation or investigations by customers, regulatory agencies or others; ineffective internal controls;~~and the effects of man-made and natural disasters, any of which may negatively affect our operations and/or our ~~customers;~~customers.

This Quarterly Report on Form 10-Q also contains forward-looking statements regarding our outlook or expectations with respect to post-merger integration. Examples of forward-looking statements include, but are not limited to, statements regarding outlook and expectations with respect to the ~~possibility that the anticipated~~strategic and financial benefits of the Merger, including ~~anticipated cost savings~~the expected impact on TCF's future financial performance (including operating and ~~strategic gains, are not realized when expected~~return metrics operational aspects of post-Merger integration). TCF disclaims any obligation to update or ~~at all, including~~revise any forward-looking statements contained in this communication, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.

Overview

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

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

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

Supporting Team Members, Customers and Communities through the ~~two companies or as~~COVID-19 Pandemic and Civil Unrest

To support our team members we have:

Implemented health and safety policies, protocols and guidelines while ensuring adequate PPE and cleaning supplies are available at all locations in response to the COVID-19 pandemic;

developed a ~~result of the strength of the economy, competitive factors~~thoughtful return to work approach where team members are returning in phases based on safety guidelines and local restrictions while evaluating lessons learned and opportunities for a more flexible workspace strategy in the ~~areas where TCF does business, or as a result~~future; and

established various internal initiatives to increase awareness of ~~other unexpected factors or events;~~diversity and inclusion issues including launching the ~~impact of purchase accounting~~Executive Diversity and Inclusion Council, providing executive office hours for team members to have candid discussions with ~~respect~~leaders regarding diversity issues, and required unconscious bias training for all team members.

To support our customers we have:

Assisted customers in response to the ~~Merger, or any change in~~COVID-19 pandemic via loan and lease deferrals, evaluated under the ~~assumptions used regarding~~CARES Act, with $403.6 million on deferral status as of September 30, 2020 ($289.5 million of commercial balance and $114.1 million of consumer balance); and

assisted business and commercial customers via $1.9 billion of total loans funded through the ~~assets purchased and liabilities assumed to determine their fair value; diversion~~Paycheck Protection Program ("PPP"), of ~~management's attention from ongoing business operations and opportunities as a result~~which $1.8 billion of the Merger; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the Merger; the integration of the businesses and operations of Legacy TCF and Chemical may take longer than anticipated or be more costly than anticipated or have unanticipated adverse results relating to our businesses; business disruptions resulting from the Merger; and the potential impact of the Merger on relationships with third parties, including customers, vendors, employees and competitors.PPP loan balance was outstanding at September 30, 2020.

6156

Table of Contents

~~Overview~~

To support our communities we have:

Established a $1 billion loan commitment for minority communities and minority- and women-owned small businesses over 5 years;

expanded closing costs assistance program through the Heart and Home Lending Program providing up to $10 million of grants to help cover closing costs for qualified low-to-moderate income home buyers over 5 years;

partnered with Wayne County, Michigan to provide fast relief through low-interest loans to help small businesses in the Detroit area;


•	provided $700 thousand in donations to organizations that offered programs and resources to underserved communities impacted by COVID-19; and

committed $250 thousand for relief efforts supporting Great Lakes Bay Region community organizations and a $10 million Hardship Lending Program to support residents and business impacted by dam failures and historic flooding in the Midland, Michigan area.

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

Merger of Equals

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

The Merger was accounted for as a reverse merger using the acquisition method of accounting, ~~which means that for accounting and financial reporting purposes,~~therefore, Legacy TCF was deemed ~~to have acquired Chemical in~~ the ~~Merger,~~acquirer for financial reporting purposes, even though Chemical was the legal acquirer. Accordingly, Legacy TCF's historical financial statements are the historical financial statements of the combined company for all periods before the Merger Date. Our results of operations for the ~~third quarter of 2019 and the first nine months of 2019 include the results of operations of Chemical on and after August 1, 2019. Results for~~ periods before August 1, 2019 reflect ~~only those~~financial data of Legacy TCF, ~~and do not include~~while periods after the ~~results of operations of Chemical.~~Merger reflect financial data for the combined company. Accordingly, comparisons of our results for the third quarter of 2020 to the third quarter of 2019 and the ~~first~~ nine months ofended September 30, 2020 to the nine months ended September 30, 2019 ~~with those of prior periods~~ may not be meaningful. The number of shares issued and outstanding, earnings per share, additional paid-in-capital and all references to share quantities of TCF have been retrospectively adjusted to reflect the equivalent number of shares issued in the Merger. See ~~Note~~"Note 2. ~~Merger~~Merger" of the Notes to Consolidated Financial Statements for further information. In addition, the assets, including the intangible assets identified, and liabilities of Chemical as of the Merger Date have been recorded at their estimated fair value and added to those of Legacy TCF.

Table of September 30, 2019, TCF had more than 500 branches primarily located in Michigan, Illinois and Minnesota with additional locations in Arizona, Colorado, Indiana, Ohio, South Dakota and Wisconsin. TCF also conducts business across all 50 states and Canada through its specialty lending and leasing businesses. Through its direct subsidiaries, TCF provides consumer and commercial banking, trust and wealth management, and specialty leasing and lending products and services to consumers, small businesses and commercial customers.Contents

Business Overview

Net interest income, the difference between interest income earned on loans and leases, investments securities and other earning assets (interest income) and interest paid on deposits and borrowings (interest expense), represented 76.0% of our total revenue for the three months ended September 30, 2020, compared to 74.0% and 79.8% of our total revenue for the three months ended June 30, 2020 and September 30, 2019, respectively. Net interest income represented 74.8% of our total revenue for the nine months ended September 30, 2020, compared to 74.1% of our total revenue for the ~~three and~~ nine months ended September 30, ~~2019, respectively, compared with 69.3% and 69.6% for the same periods in 2018.~~2019. Net interest income can change significantly from period to period based on interest rates, customer prepayment patterns and the volume and mix of ~~interest earning~~interest-earning assets, noninterest-bearing deposits and interest-bearing liabilities. We manage the risk of changes in interest rates on our net interest income through TCF's Asset & Liability Committee ("ALCO") and through related interest rate risk monitoring and management policies. See "Part I, Item 3. Quantitative and Qualitative Disclosures about Market Risk" for further discussion.

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

The following portions of this Management's Discussion and Analysis of Financial Condition and Results of Operations ("Management's Discussion and Analysis") focus in more detail on the results of operations for the three and nine months ended September 30, ~~2019~~2020, the three months ended June 30, 2020, and ~~2018~~the three and nine months ended September 30, 2019 and on information about ~~TCF's~~our financial condition, loan and lease portfolio, liquidity, ~~management,~~funding resources, capital and other matters. This discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes appearing in this report and ~~in conjunction with~~ the Consolidated Financial Statements and related notes and disclosures in ~~the Legacy TCF 2018~~our 2019 Annual Report on Form ~~10-K filed as Exhibit 99.1 to TCF’s Current Report on Form 8-K filed with the SEC on August 1, 2019.~~10-K.

~~Table of Contents~~

~~LIBOR Transition~~

In 2017, the U.K. Financial Conduct Authority (the “FCA”) noted that market conditions raised serious questions about the future sustainability of LIBOR benchmarks. Many financial products, including mortgages and other consumer loans, commercial loans, corporate loans, various types of debt, derivatives and other securities, reference LIBOR to determine their applicable interest rate. The expected cessation of publication of LIBOR will impact the mechanics of floating rate financial instruments and contracts that reference LIBOR and mature after 2021. Certain of these financial products do not provide for alternative reference rates, and those that do may differ from the prior benchmark rates. The FCA subsequently announced that it had secured voluntary panel bank support of LIBOR through only 2021. As a result, central banks and regulators have convened working groups to find a suitable replacement index for LIBOR, and TCF is working to identify, assess and monitor risks associated with the expected discontinuation or unavailability of LIBOR, achieve operational readiness and engage impacted customers in connection with the transition.

Critical Accounting Estimates

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

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

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

Our significant accounting estimates related to the allowance for loan and lease losses is more fully described in Note 2 to the Legacy TCF audited Consolidated Financial Statements and notes thereto at and for the year ended December 31, 2018, filed as Exhibit 99.1 to TCF's Current Report on Form 8-K filed with the SEC on August 1, 2019.

~~Updates to Critical Accounting Estimates~~

~~Accounting for Business Combinations~~

Pursuant to the guidance of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 805, Business Combinations ("ASC 805"), we recognize assets acquired, including identified intangible assets, and the liabilities assumed in acquisitions at their fair values as of the acquisition date, with the merger-related transaction costs expensed in the period incurred. Determining the fair value of assets acquired, including identified intangible assets, and liabilities assumed often involves estimates based on third-party valuations, such as appraisals, or internal valuations based on discounted cash flow analysis or other valuation techniques that may include estimates of attrition, inflation, asset growth rates, discount rates, multiples of earnings or other relevant factors. In addition, the determination of the useful lives over which an intangible asset will be amortized is subjective.

~~Accounting for Loans Acquired in a Business Combination~~

We record loans and leases acquired in a business combination at fair value at the acquisition date and the fair value discount or premium is recognized as an adjustment to yield over the remaining life of each loan or lease. Credit

6358

Table of Contents

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

Updates to Critical Accounting Estimates

Allowance for Credit Losses

The allowance for credit losses ("ACL") represents management's estimate of current credit losses expected to be incurred in the loan and lease portfolios over the remaining expected life of each financial asset at the balance sheet date, including known or anticipated problem loans and leases, as well as for loans and leases which are not currently known to require specific allowances. The ACL includes the allowance for loan and lease losses ~~is not recorded at the acquisition date. Purchased loans are evaluated at the acquisition date~~("ALLL") and classified as either (i) loans purchased without evidence of deteriorated credit quality since origination, referred to as purchased loans, or (ii) loans purchased with evidence of deteriorated credit quality since originationa reserve for ~~which it is probable that all contractually required payments will not be collected, referred to as purchased credit impaired (“PCI”) loans.~~

~~PCI loans are considered to be impaired and are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality~~unfunded lending commitments ("~~ASC 310-30"~~RULC"). ~~In determining whether~~Determining the amount of the ACL is considered a ~~purchased loan should be classified as a PCI loan, we must make numerous assumptions, interpretations~~critical accounting estimate because it requires significant judgment and judgments using internal and third-party credit quality information to determine whether or not it is probable that we will be able to collect all contractually required payments. This is a point in time assessment and is inherently subjective duethe use of estimates related to the ~~nature~~amounts and timing of the available information and judgment involved. Evidence of credit quality deterioration as of the acquisition date may include statistics such as past due and nonaccrual status, recent borrower credit scores and loan-to-value percentages. The excess ofexpected future cash flows, ~~expected to be collected over the estimated fair value~~adjustments for forward-looking information, estimates of PCI loans is referred to as the accretable yield and is accreted into interest income over the estimated remaining life of the loan using the effective yield method. We estimate the expected cash flowslosses based on ~~the expected remaining life~~measurement date credit risk characteristics and consideration of ~~the loans, which includes the effects of estimated prepayments and estimates of future credit losses. Cash flow evaluations are inherently subjective as they require material estimates,~~other qualitative factors, all of which may be susceptible to significant change.

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

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

~~We do not classify PCI loans as nonperforming loans subsequent to acquisition because the loans are recorded at net realizable value based on the principal~~See "Note 3. Summary of Significant Accounting Policies" and ~~interest expected to be collected on the loan. Judgment is required to estimate the timing~~"Note 8. Allowance for Credit Losses and ~~amount of cash flows expected to be collected when the loans are not performing in accordance with the original contractual terms.~~

Purchased loans outside the scope of ASC 310-30 are accounted for under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs. For purchased loans, credit discounts representing the principal losses expected over the lifeCredit Quality" of the loan are a component of the initial fair value and the discount is accreted to interest income over the life of the loan. Subsequent to the purchase date, the method used to evaluate the sufficiency of the credit discount is similar to originated loans, and if necessary,Consolidated Financial Statements for additional ~~reserves are recognized in the allowance for loan and lease losses.~~disclosure regarding our ACL.

Goodwill

Goodwill represents the excess of the purchase price of our business acquisition and other purchases of ~~bank branches~~banking centers and other businesses over the fair value of the net assets acquired. Goodwill totaled $1.3 billion at September 30, 2019, compared with $154.8 million at December 31, 2018. The increase in goodwill during the nine months ended September 30, 2019 was due to the Merger. Goodwill is not amortized, but rather is tested by management annually in the fourth quarter for impairment, or more frequently if triggering events occur and indicate potential impairment, in accordance with ASC Topic 350-20, Goodwill (ASC 350-20). ASC 350-20 allows an entity to assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. ASC 350-20 also allows an entity to bypass the qualitative assessment approach and determine if goodwill is impaired utilizing a quantitative assessment approach.

~~In evaluating~~Given the economic deterioration due to the COVID-19 pandemic, during each quarter of 2020, we evaluated whether it iswas more-likely-than-not that the fair value of aany reporting unit iswas less than its carrying ~~amount, we assess relevant events~~amount. We assessed economic conditions, including projections of the duration of current conditions and ~~circumstances, including macroeconomic conditions,~~timing of a potential recovery; industry and market ~~considerations, overall~~considerations; government intervention and regulatory updates; the impact of recent events to financial performance ~~changes in~~and cost factors of the ~~composition or carrying amount of assets and liabilities,~~reporting units including Merger synergies; the market price of our common stock and other relevant ~~factors. TCF has historically performed its annual~~events. At the conclusion of each assessment, ~~as of December 31~~^st~~. As a result of its Merger, TCF has elected to perform its annual test in the fourth quarter utilizing September 30~~^th ~~financial data. The change in assessment date is~~we determined that it was not material to the financial statements and allows management more time to perform the analysis of the significant goodwill generated as a result of the merger. We do not believe that any events or circumstances changed as of September 30, 2019 that would indicate that is it more likely than notmore-likely-than-not that the fair value of aeach reporting unit iswas less than its carrying amount. ~~However, we could incur impairment charges related to goodwill in~~If economic conditions deteriorate, or the ~~future due to changes in financial results~~pandemic’s effects prolong or ~~other matters~~worsen, it may be more-likely-than-not that ~~could affect~~ the fair value of ~~our~~one or more of TCF's reporting ~~units.~~units falls below its respective carrying amount and would need to be evaluated for impairment.

6459

Table of Contents

Selected Financial Data

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


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended									For the Nine Months Ended
(Dollars in thousands, except per share data)	2019			2018			2019			2018			September 30, 2020			June 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Consolidated Income:
Interest income	$	459,808		$	291,707		$	1,077,483		$	861,420		$	420,448		$	438,370		$	459,808		$	1,354,210		$	1,077,483
Interest expense	88,015			38,205			197,204			106,078			43,281			60,011			88,015			197,203			197,204
Net interest income	371,793			253,502			880,279			755,342			377,167			378,359			371,793			1,157,007			880,279
Noninterest income	94,258			112,064			307,480			330,529			118,810			133,054			94,258			388,827			307,480
Total revenue	466,051			365,566			1,187,759			1,085,871			495,977			511,413			466,051			1,545,834			1,187,759
Provision for credit losses	27,188			2,270			50,879			27,874			69,664			78,726			27,188			245,333			50,879
Noninterest expense	425,620			246,423			915,544			764,442			373,440			400,241			425,620			1,148,280			915,544
Income before income tax expense	13,243			116,873			221,336			293,555			52,873			32,446			13,243			152,221			221,336
Income tax (benefit) expense	(11,735		)	28,034			28,866			66,083			(4,429		)	6,213			(11,735		)	14,870			28,866
Income attributable to non-controlling interest	2,830			2,643			9,401			8,766			1,564			2,469			2,830			5,950			9,401
Net income attributable to TCF	22,148			86,196			183,069			218,706			55,738			23,764			22,148			131,401			183,069
Preferred stock dividends	2,494			2,494			7,481			9,094			2,494			2,494			2,494			7,481			7,481
Impact of preferred stock redemption	—			—			—			3,481
Net income available to common shareholders	$	19,654		$	83,702		$	175,588		$	206,131		$	53,244		$	21,270		$	19,654		$	123,920		$	175,588
Earnings per common share:
Basic	$	0.15		$	1.00		$	1.79		$	2.44		$	0.35		$	0.14		$	0.15		$	0.82		$	1.79
Diluted	0.15			1.00			1.79			2.43			0.35			0.14			0.15			0.82			1.79
Financial Ratios:
Return on average assets ("ROAA")⁽¹⁾	0.26		%	1.55		%	0.88		%	1.32		%	0.46		%	0.21		%	0.26		%	0.38		%	0.88		%
Return on average common equity ("ROACE")⁽¹⁾	1.75			14.44			7.50			11.80			3.87			1.56			1.75			3.02			7.50
Return on average tangible common equity ("ROATCE")⁽¹⁾⁽²⁾	2.68			15.76			9.05			12.89			5.71			2.57			2.68			4.57			9.05
Net interest margin													3.31			3.33			4.12			3.45			4.35
Net interest margin (FTE)^(1)(3)(4)	4.14			4.73			4.36			4.70			3.34			3.35			4.14			3.48			4.36
Dividend payout ratio	233.33			29.41			52.54			36.59			100.00			250.00			233.33			128.05			52.54
Efficiency ratio	91.32			67.41			77.08			70.40			75.29			78.26			91.32			74.28			77.08
Credit Quality Ratios:
Net charge-offs as a percentage of average loans and leases⁽¹⁾	0.39			0.15			0.36			0.24			0.28			0.04			0.39			0.13			0.36
Adjusted Financial Results (non-GAAP):
Adjusted net income attributable to TCF⁽²⁾	$	128,301		$	86,196		$	299,638		$	244,215		$	98,696		$	84,862		$	128,301		$	273,413		$	299,638
Adjusted diluted earnings per common share⁽²⁾	$	0.98		$	1.00		$	2.98		$	2.73		$	0.63		$	0.54		$	0.98		$	1.75		$	2.98
Adjusted ROAA⁽¹⁾⁽²⁾	1.34		%	1.55		%	1.41		%	1.46		%	0.81		%	0.70		%	1.34		%	0.76		%	1.41		%
Adjusted ROACE⁽¹⁾⁽²⁾	11.21			14.44			12.48			13.26			6.99			6.03			11.21			6.48			12.48
Adjusted ROATCE⁽¹⁾⁽²⁾	14.96			15.76			14.90			14.47			9.96			8.70			14.96			9.31			14.90
Adjusted efficiency ratio (non-GAAP)⁽²⁾	58.74			64.91			61.57			65.08			61.17			59.80			58.74			59.69			61.57


(1)	Annualized.


(2)	See section entitled "Non-GAAP Financial Measures" for further information.


(3)	Net interest income on a fully tax-equivalent ("FTE") basis divided by average interest-earning assets.


(4)	Presented on a tax-equivalent basis using a 21% tax rate for each period presented.

6560

Table of Contents


(Dollars in thousands)	At September 30, 2019			At December 31, 2018			At September 30, 2020			At December 31, 2019
Consolidated Financial Condition:
Loans and leases	$	33,510,752		$	19,073,020		$	34,343,691		$	34,497,464
Total assets	45,692,511			23,699,612			47,565,789			46,651,553
Deposits	35,286,074			18,903,686			39,172,097			34,468,463
Borrowings	3,467,782			1,449,472			1,527,306			5,023,593
Total equity	5,693,417			2,556,260			5,658,420			5,727,241
Financial Ratios:
Common equity to assets	12.04		%	9.99		%	11.50		%	11.87		%
Tangible common equity as a percent of tangible assets (non-GAAP)⁽¹⁾	9.09		%	9.32		%	8.68			9.01
Total risk-based capital ratio	12.63		%	13.38		%	14.04			12.70
Book value per common share	$	35.82		$	26.85		$	35.88		$	36.20
Tangible book value per common share (non-GAAP)⁽¹⁾	26.18			24.87			26.27			26.60
Credit Quality Ratios:
Nonaccrual loans and leases as a percentage of total loans and leases(2)	0.54		%	0.56		%	1.10		%	0.49		%
Nonperforming assets as a percentage of total loans and leases and other real estate owned(2)	0.62		%	0.65		%	1.20			0.59
Allowance for loan and lease losses as a percentage of total nonaccrual loans and leases(2)	66.67		%	148.65		%	136.77			66.64
Allowance for credit losses as a percentage of total nonaccrual loans and leases⁽²⁾							145.83			68.71
Allowance for loan and lease losses as a percentage of total loans and leases							1.50			0.33
Allowance for credit losses as a percentage of total loans and leases							1.60			0.34


(1)	See section entitled "Non-GAAP Financial Measures" for further ~~information~~. information.


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

Results of Operations

Performance Summary ~~TCF~~We reported net income of ~~$22.1 million and $183.1~~$55.7 million for the three ~~and nine~~ months ended September 30, ~~2019, respectively,~~2020, compared ~~with $86.2 million and $218.7~~to $23.8 million for the ~~same periods in 2018. For~~three months ended June 30, 2020, and $22.1 million for the three ~~and nine~~ months ended September 30, ~~2019,~~2019. Merger-related expenses included in net income ~~included merger-related expenses of~~totaled $54.0 million for the three months ended September 30, 2020, $81.6 million for the three months ended June 30, 2020 and $111.3 million ~~in addition~~for the three months ended September 30, 2019. Notable items, on a pre-tax basis, for the three months ended September 30, 2020, included $0.2 million of loan servicing rights impairment. Notable items, on a pre-tax basis, for the three months ended June 30, 2020, included $14.2 million of gains on sales of branches, net of expense related to ~~non-core items~~branch exit costs, $8.9 million of ~~$41.1 million. Non-core~~loan servicing rights impairment and $0.9 million of expenses related to the sale of the Legacy TCF auto finance portfolio. Notable items, for ~~both~~ the three ~~and nine~~ months ended September 30, 2019, included ~~the~~a $19.3 million net loss on transfer of ~~legacy~~Legacy TCF auto finance portfolio to held-for-sale, ~~($19.3 million), the~~a $17.3 million loss on termination of interest rate swaps, ~~($17.3 million),~~$5.9 million of expense associated with the write-down of company-owned vacant land parcels due to an intent to sell, ~~($5.9 million),~~ and $4.5 million of loan servicing rights impairment, ~~($4.5 million),~~ partially offset by ~~the~~$5.9 million of gain on ~~sale~~sales of certain investment securities ($5.9 million). Net income included non-core items for the nine months ended September 30, 2018 a $32.0 million charge related to the settlement with the Consumer Financial Protection Bureau (the "CFPB") and Office of the Comptroller of the Currency (the "OCC").securities. Adjusted net income, ~~excluding~~a non-GAAP financial measure that excludes merger-related expenses and the identified ~~non-core~~notable items, net of tax, ~~a non-GAAP financial measure,~~ was ~~$128.3 million and $299.6~~$98.7 million for the three ~~and nine~~ months ended September 30, ~~2019, respectively,~~2020, compared to ~~$86.2 million and $244.2~~$84.9 million for the ~~same periods in 2018.~~three months ended June 30, 2020 and $128.3 million for the three months ended September 30, 2019. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

~~TCF~~

Table of Contents

We reported ~~diluted earnings per common share~~net income of ~~$0.15 and $1.79~~$131.4 million for the ~~three~~nine months ended September 30, 2020, compared to $183.1 million for the nine months ended September 30, 2019. Merger-related expenses included in net income totaled $172.4 million for the nine months ended September 30, 2020, compared to $124.9 million for the nine months ended September 30, 2019. Notable items, on a pre-tax basis, for the nine months ended September 30, 2020, included $17.2 million of loan servicing rights impairment, $14.2 million of gains on sales of branches, net of expense related to branch exit costs and $4.0 million of expense related to the sale of the Legacy TCF auto finance portfolio. Notable items, on a pre-tax basis, for the nine months ended September 30, 2019, ~~respectively, compared~~included a $19.3 million net loss on transfer of Legacy TCF auto finance portfolio to held-for-sale, a $17.3 million loss on termination of interest rate swaps, $5.9 million of expense associated with ~~$1.00~~the write-down of company-owned vacant land parcels due to an intent to sell, and ~~$2.43 for the same periods in 2018.~~$4.5 million of loan servicing rights impairment, partially offset by $5.9 million of gain on sales of certain investment securities. Adjusted ~~diluted earnings per common share,~~net income, a non-GAAP financial measure that excludes merger-related expenses and the identified notable items, net of tax, was $273.4 million for the ~~three and~~ nine months ended September 30, ~~2019 was $0.98 and $2.98, respectively, excluding merger-related expenses and non-core items. Adjusted diluted earnings per common share, a non-GAAP financial measure,~~2020, compared to $299.6 million for the ~~three and~~ nine months ended September 30, ~~2018 was $1.00 and $2.73, respectively.~~2019. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

~~Table~~We reported diluted earnings per common share of ~~Contents~~

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

The following table provides ~~TCF's~~our financial ratios and the adjusted ratios ~~a non-GAAP financial measure~~(non-GAAP), which ~~excludes merger~~exclude merger-related expenses and ~~non-core~~notable items.


Summary of Financial Ratios																		Summary of Financial Ratios
	Three Months Ended September 30,					Nine Months Ended September 30,						Change From						For the Three Months Ended									For the Nine Months Ended						Change From
	2019		2018			2019			2018			Three Months Ended September 30,			Nine Months Ended September 30,			September 30, 2020			June 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019			Three Months Ended						Nine Months Ended
(Dollars in thousands, except per share data)	2019					2019		2018																						September 30, 2019
																		September 30, 2020		September 30, 2020				September 30, 2019		June 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019			March 31, 2020			September 30, 2019
Return on average assets ("ROAA")⁽¹⁾	0.26	%	2018		1.55	%		0.88	2018		%		1.32	%		(129	)	bps	(44	September 30, 2020		)	bps						September 30, 2019		25	September 30, 2020			September 30, 2019		bps	20		bps	(50	)	bps
ROACE⁽¹⁾	1.75		14.44			7.50			11.80			(1,269	)		(430	)		3.87			1.56			1.75		June 30, 2020			3.02			7.50			231			212			(448	)
ROATCE (non-GAAP)⁽¹⁾⁽²⁾	2.68		15.76			9.05			12.89			(1,308	)		(384	)
ROATCE⁽¹⁾⁽²⁾																		5.71			2.57			2.68			4.57			9.05			314			303			(448	)
Efficiency ratio																		75.29			78.26			91.32			74.28			77.08			(297	)		(1,603	)		(280	)
Adjusted Financial Results (non-GAAP)
Adjusted ROAA⁽¹⁾⁽²⁾	1.34	%	1.55	%		1.41	%		1.46	%		(21	)	bps	(5	)	bps	0.81	%		0.70	%		1.34	%		0.76	%		1.41	%		11		bps	(53	)	bps	(65	)	bps
Adjusted ROACE⁽¹⁾⁽²⁾	11.21		14.44			12.48			13.26			(323	)		(78	)		6.99			6.03			11.21			6.48			12.48			96			(422	)		(600	)
Adjusted ROATCE⁽¹⁾⁽²⁾	14.96		15.76			14.90			14.47			(80	)		43			9.96			8.70			14.96			9.31			14.90			126			(500	)		(559	)
Adjusted efficiency ratio⁽²⁾																		61.17			59.80			58.74			59.69			61.57			137			243			(188	)


(1)	Annualized.


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

Table of Contents

Consolidated Income Statement Analysis

Net Interest Income Net interest income was ~~$371.8 million and $880.3~~$377.2 million for the three months ended September 30, 2020, compared to $378.4 million for the three months ended June 30, 2020 and $371.8 million for the three months ended September 30, 2019. Net interest income was $1.2 billion for the nine months ended September 30, ~~2019, respectively,~~2020, compared ~~with $253.5 million and $755.3~~to $880.3 million for the ~~same periods in 2018.~~nine months ended September 30, 2019. Net interest income, our largest source of net revenue (net interest income plus noninterest income), represented ~~79.78% and 74.11%~~76.0% of our total revenue for the three months ended September 30, 2020, 74.0% for the three months ended June 30, 2020 and 79.8% for the three months ended September 30, 2019. Net interest income represented 74.8% of our total revenue for the nine months ended September 30, ~~2019, respectively,~~2020, compared ~~with 69.35% and 69.56%~~to 74.1% for the ~~same periods~~nine months ended September 30, 2019. The decrease in ~~2018.~~net interest income for the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to a decrease in average loan and lease balances, partially offset by lower cost of funds. The ~~increases~~increase in net interest income for the three and nine months ended September 30, ~~2019,~~2020, compared to the ~~same periods in 2018, were~~three and nine months ended September 30, 2019, was primarily ~~attributable~~due to the increase in interest-earning assets acquired in the Merger, partially offset by the increase in interest-bearing liabilities acquired in the Merger.

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

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

Table of Contents

Net interest margin was 3.31% for the three months ended September 30, 2020, compared to 3.33% for the three months ended June 30, 2020 and 4.12% for the three months ended September 30, 2019. Net interest margin was 3.45% for the nine months ended September 30, 2020, compared to 4.35% for the nine months ended September 30, 2019. Net interest margin (FTE), a non-GAAP financial measure, is calculated by dividing net interest income (FTE) by average interest-earning assets, expressed as a percentage, annualized as applicable. Net interest income and net interest margin are affected by (i) changes in prevailing short- and long-term interest rates, (ii) loan, lease and deposit pricing strategies and competitive conditions, (iii) the volume and mix of interest-earning assets, noninterest-bearing deposits and interest-bearing liabilities, (iv) the level of nonaccrual loans and leases and other real estate owned, ~~and~~ (v) the impact of modified loans and ~~leases.~~leases, and (vi) changes in customer demand for products due to economic events. Net interest margin (FTE) was ~~4.14% and 4.36%~~3.34% for the three months ended September 30, 2020, compared to 3.35% for the three months ended June 30, 2020 and 4.14% for the three months ended September 30, 2019. Net interest margin (FTE) was 3.48% for the nine months ended September 30, ~~2019, respectively,~~2020, compared ~~with 4.73% and 4.70%~~to 4.36% for the ~~same periods in 2018.~~nine months ended September 30, 2019. The decrease in both net interest margin and net interest margin (FTE) for the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to higher average cash balances and lower yields on loans, leases and securities, partially offset by lower cost of funds. The decreases in both net interest margin and net interest margin (FTE) for the three and nine months ended September 30, ~~2019,~~2020, compared to the ~~same periods in 2018,~~three and nine months ended September 30, 2019, was primarily due to a decrease in the yield earned on loans and leases added as a result of the lower average yields added to the portfolio through the ~~Merger.~~

~~Table~~Merger in addition to the impact of ~~Contents~~

the Federal Reserve's rate cuts, partially offset by lower cost of funds. Adjusted net interest margin (FTE), excluding purchase accounting accretion and amortization and the impact of PPP loans, a non-GAAP financial measure, was 3.19% for the three months ended September 30, 2020, compared to 3.20% for the three months ended June 30, 2020 and 3.83% for the three months ended September 30, 2019. Adjusted net interest margin (FTE), excluding purchase accounting accretion and amortization and the impact of PPP loans, a non-GAAP financial measure, was 3.28% for the nine months ended September 30, 2020, compared to 4.22% for the nine months ended September 30, 2019. See the tables following for a reconciliation of net interest margin (FTE) and adjusted net interest margin (FTE) and "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

The following tables present the average balances of our major categories of assets and liabilities, interest income and expense on a FTE basis, average interest rates earned and paid on the assets and liabilities, net interest income (FTE), net interest spread and net interest margin for the three months ended September 30, ~~2019~~2020, June 30, 2020 and September 30, ~~2018~~2019, and for the nine months ended September 30, ~~2019~~2020 and September 30, ~~2018.~~2019. The presentation of net interest income on a FTE basis is not in accordance with GAAP but is customary in the banking industry. This non-GAAP measure ensures comparability of net interest income arising from both taxable and tax-exempt loans and investment securities.

Table of Contents


	Three Months Ended September 30,														Three Months Ended
	2019							2018							September 30, 2020						June 30, 2020						September 30, 2019
(Dollars in thousands)	Average Balance		Interest⁽¹⁾			Yields and Rates⁽¹⁾⁽²⁾		Average Balance		Interest⁽¹⁾			Yields and Rates⁽¹⁾⁽²⁾		Average Balance		Interest⁽¹⁾		Yields & Rates⁽¹⁾⁽²⁾		Average Balance		Interest⁽¹⁾		Yields & Rates⁽¹⁾⁽²⁾		Average Balance		Interest⁽¹⁾		Yields & Rates⁽¹⁾⁽²⁾
Assets:
Federal Home Loan Bank and Federal Reserve Bank stocks	$	230,767	$	806		1.39	%	$	87,485	$	1,057		4.81	%	$	361,320	$	2,973	3.27	%	$	401,532	$	4,376	4.38	%	$	230,767	$	806	1.39	%
Investment securities held-to-maturity	143,078		602			1.68		153,652		988			2.57		135,332		573		1.69		132,054		71		0.21		143,078		602		1.68
Investment securities available-for-sale:
Taxable	4,232,878		30,436			2.88		1,525,665		10,511			2.76		6,021,643		35,076		2.33		5,730,762		32,434		2.26		4,232,878		30,436		2.88
Tax-exempt⁽³⁾	643,576		4,283			2.66		823,854		5,478			2.66		685,652		4,971		2.90		743,744		5,221		2.81		643,576		4,283		2.66
Loans and leases held-for-sale	118,482		1,408			4.74		216,669		3,625			6.64		490,886		3,829		3.13		356,671		3,322		3.73		118,482		1,408		4.74
Loans and leases^(1)(3)(4)	29,503,475		418,960			5.62		18,416,310		270,129			5.82
Loans and leases⁽³⁾⁽⁴⁾
Commercial and industrial															11,740,727		127,751		4.30		12,713,714		140,576		4.41		9,290,978		146,865		6.25
Commercial real estate															9,616,301		95,779		3.90		9,658,124		95,373		3.91		6,964,643		97,042		5.45
Lease financing															2,679,142		32,696		4.88		2,712,291		33,803		4.99		2,570,567		32,833		5.11
Residential mortgage															5,987,754		57,609		3.86		6,326,227		62,023		3.93		4,853,627		51,511		4.23
Home equity															3,399,468		43,489		5.09		3,509,107		45,314		5.19		3,433,830		56,166		6.49
Consumer installment															1,386,448		17,551		5.04		1,459,446		17,703		4.88		2,389,830		34,543		5.73
Total loans and leases⁽³⁾⁽⁴⁾															34,809,840		374,875		4.26		36,378,909		394,792		4.33		29,503,475		418,960		5.62
Interest-bearing deposits with banks and other	933,014		5,800			2.44		218,771		2,031			3.69		2,572,254		994		0.16		1,587,665		1,186		0.30		933,014		5,800		2.44
Total interest-earning assets	35,805,270		462,295			5.11		21,442,406		293,819			5.44		45,076,927		423,291		3.72		45,331,337		441,402		3.88		35,805,270		462,295		5.11
Other assets	3,289,096							1,461,998							4,462,673						4,384,779						3,289,096
Total assets	$	39,094,366						$	22,904,404						$	49,539,600					$	49,716,116					$	39,094,366
Liabilities and Equity:
Noninterest-bearing deposits	$	6,564,195						$	3,874,421						$	10,654,288					$	9,830,687					$	6,564,195
Interest-bearing deposits:
Savings															9,301,198		4,050		0.17		9,082,184		8,930		0.40		7,676,165		14,110		0.73
Certificates of deposit															6,657,697		18,446		1.10		7,491,502		26,744		1.44		7,320,720		38,233		2.07
Checking	4,805,843		5,520			0.46		2,427,288		234			0.04		7,029,914		2,025		0.11		6,649,288		2,329		0.14		4,805,843		5,520		0.46
Savings	7,676,165		14,110			0.73		5,620,161		4,994			0.35
Money market	3,490,922		13,037			1.48		1,496,223		2,941			0.78		5,501,747		7,331		0.53		5,380,547		8,782		0.66		3,490,922		13,037		1.48
Certificates of deposit	7,320,720		38,233			2.07		4,868,286		19,310			1.57
Total interest-bearing deposits	23,293,650		70,900			1.21		14,411,958		27,479			0.76		28,490,556		31,852		0.44		28,603,521		46,785		0.66		23,293,650		70,900		1.21
Total deposits	29,857,845		70,900			0.94		18,286,379		27,479			0.60		39,144,844		31,852		0.32		38,434,208		46,785		0.49		29,857,845		70,900		0.94
Borrowings:
Short-term borrowings	1,884,228		5,345			1.11		3,357		21			2.44		2,153,030		2,511		0.46		3,016,490		4,085		0.54		1,884,228		5,345		1.11
Long-term borrowings	1,472,150		11,769			3.17		1,351,585		10,705			3.13		910,149		8,917		3.91		1,072,394		9,141		3.40		1,472,150		11,769		3.17
Total borrowings	3,356,378		17,114			2.01		1,354,942		10,726			3.13		3,063,179		11,428		1.48		4,088,884		13,226		1.29		3,356,378		17,114		2.01
Total interest-bearing liabilities	26,650,028		88,014			1.31		15,766,900		38,205			0.96		31,553,735		43,280		0.55		32,692,405		60,011		0.74		26,650,028		88,014		1.31
Total deposits and borrowings	33,214,223		88,014			1.05		19,641,321		38,205			0.77		42,208,023		43,280		0.41		42,523,092		60,011		0.57		33,214,223		88,014		1.05
Accrued expenses and other liabilities	1,197,014							751,100
Other liabilities															1,633,850						1,534,769						1,197,014
Total liabilities	34,411,237							20,392,421							43,841,873						44,057,861						34,411,237
Total TCF Financial Corporation shareholders' equity	4,657,613							2,488,435							5,675,089						5,630,133						4,657,613
Non-controlling interest in subsidiaries	25,516							23,548							22,638						28,122						25,516
Total equity	4,683,129							2,511,983							5,697,727						5,658,255						4,683,129
Total liabilities and equity	$	39,094,366						$	22,904,404						$	49,539,600					$	49,716,116					$	39,094,366
Net interest spread (FTE)						4.06							4.67						3.31						3.31						4.06
Net interest income (FTE) and net interest margin (FTE)			$	374,281		4.14				$	255,614		4.73				$380,011		3.34	%			$381,391		3.35	%			$374,281		4.14	%
Reconciliation to Reported Net Interest Income
Net interest income (FTE)			$	374,281						$	255,614
Reconciliation of Net Interest Income (FTE) and Net Interest Margin (FTE)
Net interest income and net interest margin (GAAP)																	$	377,167	3.31	%			$	378,359	3.33	%			$	371,793	4.12%
Adjustments for taxable equivalent interest⁽¹⁾⁽³⁾
Loans and leases			$	(1,590	)					$	(962	)					$	1,763					$	1,966					$	1,590
Tax-exempt investment securities			(898		)					(1,150		)					1,079						1,066						898
Total FTE adjustments			(2,488		)					(2,112		)					2,842						3,032						2,488
Net interest income (GAAP)			$	371,793						$	253,502
Net interest margin (GAAP)			4.12		%					4.69		%
Net interest income (FTE) and net interest margin (FTE)																	$	380,009	3.34	%			$	381,391	3.35	%			$	374,281	4.14%


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


(2)	Annualized.


(3)	The yield on tax-exempt loans, leases and investment securities available-for-sale is computed on a FTE basis using a statutory federal income tax rate of 21%.


(4)	Average balances of loans and leases include nonaccrual loans and leases and are presented net of unearned income.

Table of Contents



	Nine Months Ended
	September 30, 2020						September 30, 2019
(Dollars in thousands)	Average Balance		Interest⁽¹⁾		Yields and Rates⁽¹⁾⁽²⁾		Average Balance		Interest⁽¹⁾		Yields and Rates⁽¹⁾⁽²⁾
Assets:
Federal Home Loan Bank and Federal Reserve Bank stocks	$	405,680	$	10,501	3.46	%	$	149,801	$	2,860	2.55	%
Investment securities held-to-maturity	134,557		1,204		1.19		145,627		2,061		1.89
Investment securities available-for-sale:
Taxable	5,881,983		107,870		2.45		3,029,754		67,684		2.98
Tax-exempt⁽³⁾	734,110		15,695		2.85		461,499		9,210		2.66
Loans and leases held-for-sale	329,131		8,712		3.53		71,739		2,832		5.27
Loans and leases⁽³⁾⁽⁴⁾
Commercial and industrial	12,092,629		429,129		4.70		7,499,975		363,260		6.59
Commercial real estate	9,522,333		308,895		4.26		4,332,238		173,983		5.30
Lease financing	2,691,208		100,655		4.99		2,554,521		98,116		5.12
Residential mortgage	6,141,855		181,011		3.93		3,188,294		109,634		4.59
Home equity	3,474,012		139,906		5.38		3,161,083		160,206		6.78
Consumer installment	1,454,187		54,996		5.05		1,945,059		82,305		5.66
Total loans and leases⁽³⁾⁽⁴⁾	35,376,224		1,214,592		4.55		22,681,170		987,504		5.80
Interest-bearing deposits with banks and other	1,569,968		4,494		0.38		494,007		10,878		2.92
Total interest-earning assets	44,431,653		1,363,068		4.07		27,033,597		1,083,029		5.33
Other assets	4,318,287						2,249,678
Total assets	$	48,749,940					$	29,283,275
Liabilities and Equity:
Noninterest-bearing deposits	$	9,475,952					$	4,831,271
Interest-bearing deposits:
Savings	8,992,197		26,649		0.40		6,799,432		37,094		0.73
Certificates of deposit	7,157,779		78,255		1.46		5,500,105		83,635		2.03
Checking	6,558,232		10,184		0.21		3,256,409		6,347		0.26
Money market	5,225,858		30,968		0.79		2,144,697		22,078		1.38
Total interest-bearing deposits	27,934,066		146,056		0.70		17,700,643		149,154		1.13
Total deposits	37,410,018		146,056		0.52		22,531,914		149,154		0.88
Borrowings:
Short-term borrowings	2,617,891		17,178		0.86		838,750		9,433		1.48
Long-term borrowings	1,527,986		33,968		2.95		1,543,398		38,616		3.32
Total borrowings	4,145,877		51,146		1.63		2,382,148		48,049		2.67
Total interest-bearing liabilities	32,079,943		197,202		0.82		20,082,791		197,203		1.31
Total deposits and borrowings	41,555,895		197,202		0.63		24,914,062		197,203		1.06
Other liabilities	1,531,759						1,052,709
Total liabilities	43,087,654						25,966,771
Total TCF Financial Corp. shareholders' equity	5,636,933						3,289,946
Non-controlling interest in subsidiaries	25,353						26,558
Total equity	5,662,286						3,316,504
Total liabilities and equity	$	48,749,940					$	29,283,275
Net interest spread (FTE)					3.44						4.27
Net interest income (FTE) and net interest margin (FTE)			$	1,165,866	3.48	%			$	885,826	4.36	%
Reconciliation of Net Interest Income (FTE) and Net Interest Margin (FTE)
Net interest income and net interest margin (GAAP)			$	1,157,007	3.45	%			$	880,279	4.35%
Adjustments for taxable equivalent interest⁽¹⁾⁽³⁾
Loans and leases			5,558						3,614
Tax-exempt investment securities			3,299						1,933
Total FTE adjustments			8,857						5,547
Net interest income (FTE) and net interest margin (FTE)			$	1,165,864	3.48	%			$	885,826	4.36%


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


(2)	Annualized.


(3)	The yield on tax-exempt loans, leases and investment securities available-for-sale is computed on a FTE basis using a statutory federal income tax rate of 21%.


(4)	Average balances of loans and leases include nonaccrual loans and leases and are presented net of unearned income.

~~Table of Contents~~

Nine Months Ended September 30,
2019 2018
(Dollars in thousands) Average
Balance
Interest⁽¹⁾

Yields and Rates⁽¹⁾⁽²⁾
Average
Balance
Interest⁽¹⁾

Yields and Rates⁽¹⁾⁽²⁾
Assets:
Federal Home Loan Bank and Federal Reserve Bank stocks $ 149,801
$ 2,860
2.55 % $ 90,600
$ 2,698
3.98 %
Investment securities held-to-maturity 145,627
2,061
1.89
156,170
3,005
2.57
Investment securities available-for-sale:
Taxable 3,029,754
67,684
2.98
1,258,708
24,487
2.59
Tax-exempt⁽³⁾
461,499
9,210
2.66
824,551
16,444
2.66
Loans and leases held-for-sale 71,739
2,832
5.27
108,992
5,281
6.48
Loans and leases^(1)(3)(4)
22,681,170
987,504
5.80
18,918,591
809,751
5.71
Interest-bearing deposits with banks and other 494,007
10,878
2.92
225,203
6,023
3.58
Total interest-earning assets 27,033,597
1,083,029
5.33
21,582,815
867,689
5.36
Other assets 2,249,678
1,448,293

Total assets $ 29,283,275
$ 23,031,108

Liabilities and Equity:
Noninterest-bearing deposits $ 4,831,271
$ 3,833,543

Interest-bearing deposits:
Checking 3,256,409
6,347
0.26
2,449,723
466
0.03
Savings 6,799,432
37,094
0.73
5,520,287
11,895
0.29
Money market 2,144,697
22,078
1.38
1,588,210
7,970
0.67
Certificates of deposit 5,500,105
83,635
2.03
4,924,804
53,897
1.46
Total interest-bearing deposits 17,700,643
149,154
1.13
14,483,024
74,228
0.69
Total deposits 22,531,914
149,154
0.88
18,316,567
74,228
0.54
Borrowings:
Short-term borrowings 838,750
9,433
1.48
3,473
58
2.23
Long-term borrowings 1,543,398
38,616
3.32
1,435,088
31,792
2.94
Total borrowings 2,382,148
48,049
2.67
1,438,561
31,850
2.93
Total interest-bearing liabilities 20,082,791
197,203
1.31
15,921,585
106,078
0.89
Total deposits and borrowings 24,914,062
197,203
1.06
19,755,128
106,078
0.72
Accrued expenses and other liabilities 1,052,709
741,222

Total liabilities 25,966,771
20,496,350

Total TCF Financial Corp. shareholders' equity 3,289,946
2,509,625

Non-controlling interest in subsidiaries 26,558
25,133

Total equity 3,316,504
2,534,758

Total liabilities and equity $ 29,283,275
$ 23,031,108

Net interest spread (FTE) 4.27
4.64
Net interest income (FTE) and net interest margin (FTE) $ 885,826
4.36
$ 761,611
4.70
Reconciliation to Reported Net Interest Income
Net interest income (FTE) $ 885,826
$ 761,611

Adjustments for taxable equivalent interest⁽¹⁾⁽³⁾

Loans (3,614 ) (2,816 )
Tax-exempt investment securities (1,933 ) (3,453 )
Total FTE adjustments (5,547 ) (6,269 )
Net interest income (GAAP) $ 880,279
$ 755,342

Net interest margin (GAAP) 4.35 % 4.68 %


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


~~(2)~~	~~Annualized.~~


~~(3)~~	~~The yield on tax-exempt loans, leases and investment securities available-for-sale is computed on a FTE basis using a statutory federal income tax rate of 21%.~~


~~(4)~~	~~Average balances of loans and leases include nonaccrual loans and leases and are presented net of unearned income.~~

6966

Table of Contents

Volume and Rate Variance Analysis


	Three Months Ended September 30, 2019 vs. 2018									Nine Months Ended September 30, 2019 vs. 2018									Three Months Ended September 30, 2020 vs. June 30, 2020									Three Months Ended September 30, 2020 vs. September 30, 2019
	Increase (Decrease) Due to Changes in									Increase (Decrease) Due to Changes in									Increase (Decrease) Due to Changes in									Increase (Decrease) Due to Changes in
(Dollars in thousands)	Average Volume⁽¹⁾			Average Yield/Rate⁽¹⁾			Total Change			Average Volume⁽¹⁾			Average Yield/Rate⁽¹⁾			Total Change			Average Volume⁽¹⁾			Average Yield/Rate⁽¹⁾			Total Change			Average Volume⁽¹⁾			Average Yield/Rate⁽¹⁾			Total Change
Changes in Interest Income on Interest-Earning Assets:
Federal Home Loan Bank and Federal Reserve Bank stocks	$	873		$	(1,124	)	$	(251	)	$	1,355		$	(1,193	)	$	162		$	(407	)	$	(996	)	$	(1,403	)	$	636		$	1,531		$	2,167
Investment securities held to maturity	(64		)	(322		)	(386		)	(192		)	(752		)	(944		)
Investment securities available for sale:
Investment securities held-to-maturity																			2			500			502			(33		)	4			(29		)
Investment securities available-for-sale:
Taxable	19,446			479			19,925			39,077			4,120			43,197			1,677			965			2,642			11,177			(6,537		)	4,640
Tax-exempt	(1,200		)	5			(1,195		)	(7,246		)	12			(7,234		)	(417		)	167			(250		)	291			397			688
Loans and leases held for sale	(1,358		)	(859		)	(2,217		)	(1,586		)	(863		)	(2,449		)
Loans and leases held-for-sale																			1,116			(609		)	507			3,046			(625		)	2,421
Loans and leases	158,371			(9,540		)	148,831			164,581			13,172			177,753			(15,237		)	(4,680		)	(19,917		)	67,481			(111,566		)	(44,085		)
Interest-bearing deposits with banks and other	4,670			(901		)	3,769			6,149			(1,294		)	4,855			532			(724		)	(192		)	3,916			(8,722		)	(4,806		)
Total interest-earning assets	$	180,738		$	(12,262	)	$	168,476		$	202,138		$	13,202		$	215,340		$	(12,734	)	$	(5,377	)	$	(18,111	)	$	86,514		$	(125,518	)	$	(39,004	)
Changes in Interest Expense on Interest-Bearing Liabilities:
Interest-bearing deposits:
Savings																			$	215		$	(5,095	)	$	(4,880	)	$	2,477		$	(12,537	)	$	(10,060	)
Certificates of deposit																			(2,755		)	(5,543		)	(8,298		)	(3,210		)	(16,577		)	(19,787		)
Checking	$	435		$	4,851		$	5,286		$	202		$	5,679		$	5,881		130			(434		)	(304		)	1,814			(5,309		)	(3,495		)
Savings	2,325			6,791			9,116			3,311			21,888			25,199
Money market	6,028			4,068			10,096			3,527			10,581			14,108			198			(1,649		)	(1,451		)	5,198			(10,904		)	(5,706		)
Certificates of deposit	11,616			7,307			18,923			6,865			22,873			29,738
Interest-bearing deposits	20,404			23,017			43,421			13,905			61,021			74,926			(2,212		)	(12,721		)	(14,933		)	6,279			(45,327		)	(39,048		)
Short-term borrowings	5,342			(18		)	5,324			9,401			(26		)	9,375			(1,034		)	(540		)	(1,574		)	674			(3,508		)	(2,834		)
Long-term borrowings	940			124			1,064			2,516			4,308			6,824			(1,490		)	1,266			(224		)	(5,172		)	2,320			(2,852		)
Total interest-bearing liabilities	$	26,686		$	23,123		$	49,809		$	25,822		$	65,303		$	91,125		$	(4,736	)	$	(11,995	)	$	(16,731	)	$	1,781		$	(46,515	)	$	(44,734	)
Total change in net interest income (FTE)⁽²⁾	$	154,052		$	(35,385	)	$	118,667		$	176,316		$	(52,101	)	$	124,215		$	(7,998	)	$	6,618		$	(1,380	)	$	84,733		$	(79,003	)	$	5,730


(1)	Changes attributable to the combined impact of volume and rate have been allocated proportionately to the change due to volume and the change due to rate.


(2)	FTE basis using a federal income tax rate of 21% ~~for~~. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the ~~three~~banking industry.



	Nine Months Ended September 30, 2020 vs. September 30, 2019
	Increase (Decrease) Due to Changes in
(Dollars in thousands)	Average Volume⁽¹⁾			Average Yield/Rate⁽¹⁾			Total Change
Changes in Interest Income on Interest-Earning Assets:
Federal Home Loan Bank and Federal Reserve Bank stocks	$	6,296		$	1,345		$	7,641
Investment securities held-to-maturity	(147		)	(710		)	(857		)
Investment securities available-for-sale:
Taxable	54,131			(13,945		)	40,186
Tax-exempt	5,787			698			6,485
Loans and leases held-for-sale	7,101			(1,221		)	5,880
Loans and leases	471,187			(244,099		)	227,088
Interest-bearing deposits with banks and other	8,947			(15,331		)	(6,384		)
Total interest-earning assets	$	553,302		$	(273,263	)	$	280,039
Changes in Interest Expense on Interest-Bearing Liabilities:
Interest-bearing deposits:
Savings	$	9,683		$	(20,128	)	$	(10,445	)
Certificates of deposit	21,416			(26,796		)	(5,380		)
Checking	5,321			(1,484		)	3,837
Money market	21,266			(12,376		)	8,890
Interest-bearing deposits	57,686			(60,784		)	(3,098		)
Short-term borrowings	13,080			(5,335		)	7,745
Long-term borrowings	(384		)	(4,264		)	(4,648		)
Total interest-bearing liabilities	$	70,382		$	(70,383	)	$	(1	)
Total change in net interest income (FTE)⁽²⁾	$	482,920		$	(202,880	)	$	280,040


(1)	Changes attributable to the combined impact of volume and ~~nine months ended September 30, 2019~~rate have been allocated proportionately to the change due to volume and ~~2018.~~the change due to rate.


(2)	FTE basis using a federal income tax rate of 21%. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry.

Table of Contents

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



	Three Months Ended								Nine Months Ended
(In thousands)	September 30, 2020			June 30, 2020		September 30, 2019			September 30, 2020		September 30, 2019
Provision for credit losses
Provision for credit losses related to loans and leases	$	78,323		$	58,126	$	27,188		$	229,439	$	50,879
Provision (benefit) for credit losses related to unfunded lending commitments⁽¹⁾	(8,659		)	20,600		(342		)	15,894		166
Total provision for credit losses⁽¹⁾	$	69,664		$	78,726	$	26,846		$	245,333	$	51,045


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

The increase in provision for credit losses related to loans and leases of $20.2 million in the three months ended September 30, 2020 from the three months ended June 30, 2020 was primarily due to commercial portfolio credit risk management activities and associated risk rating downgrades, as evidenced by the increase in special mention and classified balances during the quarter. Downgrades were primarily in commercial sectors more heavily impacted by COVID-19, driven by motor coach, shuttle bus and hotel. The increases of $51.1 million and $178.6 million in the three and nine months ended September 30, 2020 from the three and nine months ended September 30, 2019, respectively, ~~compared with $2.3~~were primarily due to impacts from the adoption of CECL at January 1, 2020, high levels of change in both current and forecasted macroeconomic conditions, which are impacted by COVID-19 and commercial portfolio credit risk management activities. Prior to the adoption of CECL on January 1, 2020, the allowance for credit losses was calculated under an incurred loss model which delayed recognition of loss until it was probable the loss had been incurred. The accounting under CECL considers current credit losses expected to be incurred in the loan and lease portfolios over the remaining expected life of each financial asset and considers expected future changes in macroeconomic conditions. In addition, as a result of the adoption of CECL, the provision for credit losses now includes the provision (benefit) for unfunded lending commitments that was previously included within other noninterest expense. The decreases in provision (benefit) for credit losses related to unfunded lending commitments of $29.3 million and ~~$27.9~~$8.3 million ~~for the same periods~~ in ~~2018. The increases from both~~ the three months ended September 30, 2020 from the three months ended June 30, 2020, and the three months ended September 30, 2019, respectively, were primarily rate-driven and also impacted by declines in the total unfunded lending commitment balance. The increase in the provision for unfunded lending commitments in the nine months ended September 30, ~~2018 were~~2020, compared to the prior period, was primarily due to ~~an increase~~changes in ~~commercial and industrial net charge-offs~~macroeconomic conditions impacted by the COVID-19 pandemic, partially offset by a decline in the ~~three and nine months ended September 30, 2019 primarily due to one loan relationship.~~total unfunded commitment balance. The provision for credit losses is predominantly a function of our reserving methodology used to determine the appropriate level of the allowance for ~~loan and lease~~credit losses, which is a critical accounting estimate.

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

7068

Table of Contents

Noninterest Income The components of noninterest income were as follows:


												Three Months Ended									Change from
	Three Months Ended September 30,						Change					September 30, 2020			June 30, 2020			September 30, 2019			June 30, 2020					September 30, 2019
(Dollars in thousands)	2019			2018			$			% / bps		September 30, 2020			June 30, 2020			September 30, 2019			$			% / bps		$			% / bps
Leasing revenue												$	31,905		$	37,172		$	39,590		(5,267		)	(14.2	)	(7,685		)	(19.4	)
Fees and service charges on deposit accounts	$	34,384		$	29,175		$	5,209		17.9	%	25,470			22,832			34,384			2,638			11.6		(8,914		)	(25.9	)
Leasing revenue	39,590			41,944			(2,354		)	(5.6	)
Net gains (losses) on sales of loans and leases												23,490			29,034			(5,984		)	(5,544		)	(19.1	)	29,474			N.M.
Card and ATM revenue												23,383			20,636			23,315			2,747			13.3		68			0.3
Wealth management revenue	4,241			—			4,241			N.M.		6,506			6,206			4,241			300			4.8		2,265			53.4
Card and ATM revenue	23,315			20,074			3,241			16.1
Net (losses) gains on sales of loans and leases	(5,984		)	8,502			(14,486		)	N.M.
Servicing fee revenue	5,121			6,032			(911		)	(15.1	)	321			3,041			5,121			(2,720		)	(89.4	)	(4,800		)	(93.7	)
Net gains (losses) on investment securities	5,900			94			5,806			N.M.
Net gains on investment securities												2,324			8			5,900			2,316			N.M.		(3,576		)	(60.6	)
Other	(12,309		)	6,243			(18,552		)	N.M.		5,411			14,125			(12,309		)	(8,714		)	(61.7	)	17,720			N.M.
Total noninterest income	$	94,258		$	112,064		$	(17,806	)	(15.9	)	$	118,810		$	133,054		$	94,258		$	(14,244	)	(10.7	)	$	24,552		26.0
Total noninterest income as a percentage of total revenue	20.2		%	30.7		%				(1,050) bps		24.0		%	26.0		%	20.2		%				(200) bps					380 bps

	Nine Months Ended September 30,						Change
(Dollars in thousands)	2019			2018			$			%
Fees and service charges on deposit accounts	$	88,504		$	83,703		$	4,801		5.7	%
Leasing revenue	117,032			121,001			(3,969		)	(3.3	)
Wealth management revenue	4,241			—			4,241			N.M.
Card and ATM revenue	62,470			58,313			4,157			7.1
Net (losses) gains on sales of loans and leases	13,374			24,900			(11,526		)	(46.3	)
Servicing fee revenue	14,754			21,811			(7,057		)	(32.4	)
Net gains (losses) on investment securities	7,417			181			7,236			N.M.
Other	(312		)	20,620			(20,932		)	N.M.
Total noninterest income	$	307,480		$	330,529		$	(23,049	)	(7.0	)
Total noninterest income as a percentage of total revenue	25.9		%	30.4		%				(450) bps

N.M. Not Meaningful



	Nine Months Ended						Change
(Dollars in thousands)	September 30, 2020			September 30, 2019			$			%
Leasing revenue	$	102,642		$	117,032		$	(14,390	)	(12.3	)%
Fees and service charges on deposit accounts	82,899			88,504			(5,605		)	(6.3	)
Net gains (losses) on sales of loans and leases	73,114			13,374			59,740			N.M.
Card and ATM revenue	65,704			62,470			3,234			5.2
Wealth management revenue	18,863			4,241			14,622			N.M.
Servicing fee revenue	10,154			14,754			(4,600		)	(31.2	)
Net gains on investment securities	2,332			7,417			(5,085		)	(68.6	)
Other	33,119			(312		)	33,431			N.M.
Total noninterest income	$	388,827		$	307,480		$	81,347		26.5
Total noninterest income as a percentage of total revenue	25.2		%	25.9		%				(70) bps

N.M. Not Meaningful

Noninterest income was $118.8 million for the three months ended September 30, 2020, compared to $133.1 million for the three months ended June 30, 2020 and $94.3 million ~~and $307.5 million in~~for the three months ended September 30, 2019. Noninterest income included notable items of $154 thousand of loan servicing rights impairment for the three months ended September 30, 2020, compared to notable items of $14.7 million gain on the sale of our Arizona branches and ~~nine~~$8.9 million of loan servicing rights impairment for the three months ended June 30, 2020. For the three months ended September 30, 2019 compared to $112.1 million and $330.5 million for the same periods in 2018. Following the Merger, we repositioned our balance sheet to lower our risk profile, reduce asset sensitivity and enhance capital and efficiency. As a result, noninterest incomenotable items included ~~the following balance sheet repositioning actions considered to be non-core items in the three and nine months ended September 30, 2019:~~ a $19.3 million net loss ~~related to the~~on transfer of ~~the~~ Legacy TCF auto finance portfolio to held-for-sale, ~~(net (losses) gains on sales of loans and leases),~~ a $17.3 million loss ~~related to the~~on termination of interest rate swaps ~~(other noninterest income)~~ and a gain of $5.9 million related to the sale of $1.6 billion of certain investment securities (net gains on investment securities). Noninterest income in the three and nine months ended September 30, 2019 additionally included $4.5 million of loan servicing rights impairment, ~~(other~~partially offset by $5.9 million of gain on sales of certain investment securities. The gain on sales of branches, loan servicing rights impairment and the loss on termination of interest rate swaps are recorded within other noninterest ~~income), also considered a non-core item. Excluding the non-core items, adjusted~~income. The net loss on transfer of Legacy TCF auto finance portfolio to held-for-sale is recorded within net gains (losses) on sales of loans and leases. Adjusted noninterest income, a non-GAAP financial measure that excludes the identified notable items, was ~~$129.5~~$119.0 million ~~and $342.7 million in~~for the three ~~and nine~~ months ended September 30, ~~2019,~~2020, compared to ~~$112.1 million and $330.5~~$127.2 million for the ~~same periods in 2018.~~three months ended June 30, 2020 and $129.5 million for the three months ended September 30, 2019. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

Table of Contents

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

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

Fees and service charges on deposit accounts Fees and service charges on deposit accounts were $25.5 million for the three months ended September 30, 2020, compared to $22.8 million for the three months ended June 30, 2020 and $34.4 million for the three months ended September 30, 2019. Fees and service charges on deposit accounts were $82.9 million in the nine months ended September 30, 2020, compared to $88.5 million for the nine months ended September 30, 2019. The increase for the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was customers increased account activity. The decreases for the three and nine months ended September 30, ~~2019, respectively,~~2020, compared ~~with $29.2 million and $83.7 million for the same periods in 2018. The increase from~~to the three ~~months ended September 30, 2018~~ and ~~from the~~ nine months ended September 30, ~~2018~~2019, was primarily attributable to customer account balances maintaining excess liquidity resulting in a decline in fees charged, partially offset by incremental fees resulting from the Merger.

~~Leasing revenue~~Net gains (losses) on sales of loans and leases ~~Leasing revenue~~Net gains (losses) on sales of loans and leases were a gain of $23.5 million for the three months ended September 30, 2020, compared to gain of $29.0 million for the three months ended June 30, 2020 and a loss of $6.0 million for the three months ended September 30, 2019. The decrease for three months ended September 30, 2020, compared to the three months ended June 30, 2020, was ~~$39.6~~primarily due to the strong demand during the three months ended June 30, 2020. The increase for three months ended September 30, 2020, compared to the three months ended September 30, 2019, was primarily due to higher volume of consumer loans sold. The $59.7 million increase in net gains on sales of loans and leases in the nine months ended September 30, 2020, compared to $13.4 million for the nine months ended September 30, 2019, was primarily attributable to higher volume of consumer loans sold resulting from the Merger. We sold $634.1 million and ~~$117.0~~$1.7 billion of loans and leases during the three and nine months ended September 30, 2020, respectively, compared to $554.2 million ~~for~~during the three months ended June 30, 2020 and $457.9 million and $1.0 billion during the three and nine months ended September 30, 2019, ~~respectively, compared with $41.9~~respectively.

Card and ATM revenue Card and ATM revenue was $23.4 million ~~and $121.0 million~~ for ~~the same periods in 2018. The decrease from~~ the three months ended September 30, ~~2018~~2020, compared to $20.6 million for the three months ended June 30, 2020 and ~~from~~$23.3 million for the three months ended September 30, 2019. The increase for three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to an increase in debit card and ATM activity partly related to the easing of governmental imposed restrictions on activities as a result of the COVID-19 pandemic. The $3.2 million increase in card and ATM revenue in the nine months ended September 30, ~~2018~~2020, compared to $62.5 million for the nine months ended September 30, 2019, was primarily ~~due~~attributable to ~~decreases~~incremental revenue resulting from the Merger, partially offset by the decline in ~~operating lease revenue~~debit card and ~~sales-type lease revenue.~~ATM activity partly related to the COVID-19 pandemic.

Table of Contents

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

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

~~Card~~Net gains on investment securities There were $2.3 million of net gains on sales of investment securities for both the three and ~~ATM revenue~~ ~~Card~~nine months ended September 30, 2020, compared to $8 thousand of net gains on sales of investment securities for the three months ended June 30, 2020, and ~~ATM revenue was $23.3~~$5.9 million and ~~$62.5~~$7.4 million of net gains on sales of investment securities for the three and nine months ended September 30, 2019, respectively, compared with $20.1 million and $58.3 million for the same periods in 2018. The increase from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 was primarily due to incremental revenue resulting from the Merger.

~~Net (losses) gains on sales of loans and leases~~ Net losses on sales of loans and leases were $6.0 million and a net gains of $13.4 million for the three and nine months ended September 30, 2019, respectively, compared with net gains of $8.5 million and $24.9 million for the same periods in 2018. The decreases in the three and nine months ended September 30, 2019, compared to the same periods in 2018, were primarily due to a $19.3 million loss related to the transfer of the Legacy TCF auto finance portfolio to held-for-sale. Excluding the loss related to the auto finance portfolio transfer, the increase from both the three and nine months ended September 30, 2018 was primarily due to higher volume of consumer loans sold resulting from the Merger. We sold $457.9 million and $1.0 billion of consumer real estate loans during the three and nine months ended September 30, 2019, respectively, compared with $391.8 million and $908.2 million during the same periods in 2018.

~~Servicing fee revenue~~ Servicing fee revenue was $5.1 million and $14.8 million for the three and nine months ended September 30, 2019, respectively, compared with $6.0 million and $21.8 million for the same periods in 2018. The decrease from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 was primarily due to the continued run-off in the auto finance serviced for others portfolio, partially offset by the incremental revenue to the servicing portfolio resulting from the Merger.

~~Net gains (losses) on investment securities~~ Net gains on investment securities were $5.9 million and $7.4 million for the three and nine months ended September 30, 2019, respectively, compared with $0.1 million and $0.2 million for the same periods in 2018. The increase from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 was primarily due to a gain of $5.9 million related to the sale of $1.6 billion of investment securities resulting from the balance sheet repositioning following the completion of the Merger.2019.

Other Other noninterest income was $5.4 million for the three months ended September 30, 2020, compared to $14.1 million for the three months ended June 30, 2020 and a loss of $12.3 million ~~and a loss of $0.3 million~~ for the three months ended September 30, 2019. The decrease for the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to a $14.7 million gain on the sale of our Arizona branches in the three months ended June 30, 2020, partially offset by a decrease in loan servicing rights impairment. The increase for three months ended September 30, 2020, compared to the three months ended September 30, 2019, was primarily due to the $17.3 million loss on termination of interest rate swaps recognized in the three months ended September 30, 2019 and a decrease in loan servicing rights impairment. The $33.4 million increase in other noninterest income in the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, ~~respectively, compared with income~~was primarily due to the $17.3 million loss on termination of ~~$6.2 million and income of $20.6 million for the same periods~~interest rate swaps recognized in ~~2018. The decrease from the three months ended September 30, 2018 and from~~ the nine months ended September 30, ~~2018 was primarily due to a $17.3~~2019, the $14.7 million ~~loss related to~~gain on the ~~termination~~sale of ~~interest rate swaps and~~our Arizona branches recognized in the ~~recognition of $4.5 million of loan servicing rights impairment,~~nine months ended September 30, 2020, partially offset by an increase in ~~incremental revenue resulting from the Merger.~~loan servicing rights impairment.

7271

Table of Contents

Noninterest Expense The components of noninterest expense were as follows:

Three Months Ended September 30, Change
(Dollars in thousands) 2019 2018 $ % / bps
Compensation and employee benefits $ 155,745
$ 124,996
$ 30,749
24.6 %
Occupancy and equipment 49,229
42,337
6,892
16.3
Lease financing equipment depreciation 19,408
19,525
(117 ) (0.6 )
Net foreclosed real estate and repossessed assets 2,203
3,880
(1,677 ) (43.2 )
Merger-related expenses 111,259
—
111,259
N.M.
Other 87,776
55,685
32,091
57.6
Total noninterest expense $ 425,620
$ 246,423
$ 179,197
72.7
Full-time equivalent staff (at period end) 7,374
4,872
2,502
51.4
Efficiency ratio 91.32 % 67.41 %

2,391 bps
Adjusted efficiency ratio, Non-GAAP⁽¹⁾
58.74
64.91

(617 )

Nine Months Ended September 30, Change
(Dollars in thousands) 2019 2018 $ %
Compensation and employee benefits $ 395,953
$ 372,174
$ 23,779
6.4 %
Occupancy and equipment 132,789
123,562
9,227
7.5
Lease financing equipment depreciation 57,797
54,744
3,053
5.6
Net foreclosed real estate and repossessed assets 9,281
12,654
(3,373 ) (26.7 )
Merger-related expenses 124,943
—
124,943
N.M.
Other 194,781
201,308
(6,527 ) (3.2 )
Total noninterest expense $ 915,544
$ 764,442
$ 151,102
19.8
Efficiency ratio 77.08 % 70.40 % 668 bps
Adjusted efficiency ratio, Non-GAAP⁽¹⁾
61.57
65.08
(351 )



	Three Months Ended									Change from
	September 30, 2020			June 30, 2020			September 30, 2019			June 30, 2020					September 30, 2019
(Dollars in thousands)	September 30, 2020			June 30, 2020			September 30, 2019			$			% / bps		$			% / bps
Compensation and employee benefits	$	168,323		$	171,799		$	155,745		$	(3,476	)	(2.0	)%	$	12,578		8.1	%
Occupancy and equipment	48,233			54,107			49,229			(5,874		)	(10.9	)	(996		)	(2.0	)
Lease financing equipment depreciation	17,932			18,212			19,408			(280		)	(1.5	)	(1,476		)	(7.6	)
Net foreclosed real estate and repossessed assets	1,518			998			2,203			520			52.1		(685		)	(31.1	)
Merger-related expenses	54,011			81,619			111,259			(27,608		)	(33.8	)	(57,248		)	(51.5	)
Other	83,423			73,506			87,776			9,917			13.5		(4,353		)	(5.0	)
Total noninterest expense	$	373,440		$	400,241		$	425,620		$	(26,801	)	(6.7	)	$	(52,180	)	(12.3	)
Full-time equivalent staff (at period end)	7,140			7,183			7,374			(43		)	(0.6	)	(234		)	(3.2	)
Efficiency ratio	75.29		%	78.26		%	91.32		%				(297	) bps				(1,603	) bps
Adjusted efficiency ratio (non-GAAP)⁽¹⁾	61.17			59.80			58.74						137					243

N.M. Not Meaningful


(1)	See "Consolidated Financial Condition Analysis - Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.



	Nine Months Ended						Change
(Dollars in thousands)	September 30, 2020			September 30, 2019			$			%
Compensation and employee benefits	$	511,650		$	395,953		$	115,697		29.2	%
Occupancy and equipment	159,628			132,789			26,839			20.2
Lease financing equipment depreciation	54,594			57,797			(3,203		)	(5.5	)
Net foreclosed real estate and repossessed assets	4,375			9,281			(4,906		)	(52.9	)
Merger-related expenses	172,358			124,943			47,415			37.9
Other	245,675			194,781			50,894			26.1
Total noninterest expense	$	1,148,280		$	915,544		$	232,736		25.4
Efficiency ratio	74.28		%	77.08		%				(280	) bps
Adjusted efficiency ratio, Non-GAAP⁽¹⁾	59.69			61.57						(188	)

N.M. Not Meaningful


(1)	See "Consolidated Financial Condition Analysis - Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

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

Table of Contents

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

Compensation and employee benefits expense Compensation and employee benefits expense was $168.3 million for the three months ended September 30, 2020, compared to $171.8 million for the three months ended June 30, 2020 and $155.7 million for the three months ended September 30, 2019. Compensation and employee benefits expense was $511.7 million for the nine months ended September 30, 2020, compared to $396.0 million for the nine months ended September 30, 2019. The increases in both the three and nine months ended September 30, 2020, compared to the three and nine months ended September 30, 2019, respectively, compared with $125.0 million and $372.2 million for the same periods in 2018. The increase from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 waswere primarily due to the staff additions beginning August 1, 2019 resulting from the Merger.

Occupancy and equipment Occupancy and equipment expense was $48.2 million for the three months ended September 30, 2020, compared to $54.1 million for the three months ended June 30, 2020 and $49.2 million ~~and~~for the three months ended September 30, 2019. Occupancy expense for the nine months ended September 30, 2020 was $159.6 million, compared to $132.8 million for the nine months ended September 30, 2019. The decrease in the three ~~and~~months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to a reduction in our software related expense due to the completion of our system integration. The increase in the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, respectively, compared with $42.3 million and $123.6 million for the same periods in 2018. The increase from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 waswere primarily due to the incremental operating costs associated with the Merger.

Lease financing equipment depreciation Lease financing equipment depreciation was ~~$19.4 million and $57.8~~$17.9 million for the three months ended September 30, 2020, compared to $18.2 million for the three months ended June 30, 2020 and $19.4 million for the three months ended September 30, 2019. Lease financing equipment depreciation was $54.6 million for the nine months ended September 30, ~~2019, respectively,~~2020, compared ~~with $19.5 million and $54.7~~to $57.8 million for the ~~same periods in 2018.~~nine months ended September 30, 2019. Shifts in lease financing equipment depreciation are the result of changes in balances of leased equipment.

~~Net foreclosed real estate and repossessed assets~~Merger-related expenses ~~Net foreclosed real estate and repossessed assets expense was $2.2 million and $9.3~~Merger-related expenses were $54.0 million for the three months ended September 30, 2020, compared to $81.6 million for the three months ended June 30, 2020 and $111.3 million for the three months ended September 30, 2019. Merger-related expenses were $172.4 million for the nine months ended September 30, 2020, an increase of $47.4 million compared to $124.9 million for the nine months ended September 30, 2019. Merger-related expenses consist primarily of employment related expenses, professional fees and merger-related branch closing expenses. Through the remainder of 2020, we anticipate incurring less merger-related expenses as compared to the three months ended September 30, 2020.

Other noninterest expense Other noninterest expense was $83.4 million for the three months ended September 30, 2020, compared to $73.5 million for the three months ended June 30, 2020 and $87.8 million for the three months ended September 30, 2019. Other noninterest expense was $245.7 million for the nine months ended September 30, 2020, compared to $194.8 million for the nine months ended September 30, 2019. The increase in the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to increases in marketing and outside processing expense. The increase in the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, ~~respectively, compared with $3.9 million and $12.7 million for the same periods in 2018.~~

~~Merger-related expenses~~ ~~Merger-related expenses related~~was primarily due to the ~~Merger were $111.3 million and $124.9 million for~~incremental operating costs associated with the ~~three and nine months ended September 30, 2019, respectively, and consisted primarily of professional fees and employment related expenses.~~Merger.

Table of Contents

~~Other noninterest expense~~ Other noninterest expense was $87.8 million and $194.8 million for the three and nine months ended September 30, 2019, respectively, compared with $55.7 million and $201.3 million for the same periods in 2018. The increase from the three months ended September 30, 2018 was primarily due to a $5.9 million expense related to the write-down of company-owned vacant land parcels and incremental costs associated with the Merger. The decrease from the nine months ended September 30, 2018 was primarily due to the $32.0 million settlement with the CFPB and OCC, partially offset by the $5.9 million expense related to the write-down of company-owned vacant land parcels and incremental costs due to the Merger.

Income Tax (Benefit) Expense Income tax benefit was $4.4 million for the three months ended September 30, 2020, compared to income tax expense of $6.2 million, or 19.1% of income before income tax expense for the three months ended June 30, 2020, and a benefit of $11.7 million ~~and~~for the three months ended September 30, 2019. Income tax expense was $14.9 million, or 9.8% of income before income tax expense for the nine months ended September 30, 2020, compared to $28.9 million, or 13.0% of income before income tax expense for the nine months ended September 30, 2019. Income tax for the three and nine months ended September 30, ~~2019, respectively, compared~~2020 included a benefit of $16.0 million attributable to tax net operating loss ("NOL") carryback benefits associated with ~~expense of $28.0~~the CARES Act. The $16.0 million ~~or 24.0% of income before income tax expense,~~benefit included a $9.0 million benefit associated with pre-2020 depreciation method changes and ~~expense of $66.1~~a $7.0 million ~~or 22.5% of income before income tax expense, for the same periods in 2018.~~benefit related to estimated current year activity. The three and nine months ended September 30, 2019 included an $8.0 million tax basis adjustment benefit in addition to a $5.7 million benefit provided by the repricing of TCF's net deferred tax position in connection with the completion of the Merger. The remaining fluctuations in ~~TCF's~~our effective income tax rate reflect changes each period in the proportion of tax-exempt interest income, ~~exempt~~nondeductible expenses and credits relative to income before income tax expense.

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

Reportable Segment Results In connection with the Merger, effective August 1, 2019, we renamed our Wholesale Banking segment to Commercial Banking to align with the way we are now managed. In addition, activity that was related to small business banking and private banking were moved from the Wholesale Banking (now named Commercial Banking) segment to the Consumer Banking segment. The revised presentation of previously reported segment data has been applied retroactively to all periods presented in these financial statements. Our reportable segments are Consumer Banking, Commercial Banking and Enterprise Services. Due to the timing of the Merger, TCF is in the process of completing its analysis of the allocation of the goodwill across business segments, therefore goodwill is presented as part of Enterprise Services at September 30, 2019. See ~~Note 25.~~"Note 22. Reportable ~~Segments~~Segments" of the Notes to Consolidated Financial Statements for further information regarding net income (loss), revenues and assets for each of our reportable segments.

Consumer Banking

Consumer Banking is comprised of all of ~~the~~our consumer and small business-facing businesses and includes Retail Banking, Wealth Management, Residential ~~Lending,~~and Consumer Lending, and Business Banking. Our consumer banking strategy is primarily to generate deposits and originate high credit quality loans for investment and sale. Deposits are generated from consumers and small businesses to provide a source of low cost funds, with a focus on building and maintaining quality customer relationships.



	Three Months Ended								Nine Months Ended
(In thousands)	September 30, 2020			June 30, 2020			September 30, 2019		September 30, 2020		September 30, 2019
Consumer Banking
Net interest income	$	216,851		$	206,285		$	191,940	$	616,968	$	470,738
Provision (benefit) for credit losses	(27,217		)	(10,924		)	4,489		6,228		16,406
Net interest income after provision (benefit) for credit losses	244,068			217,209			187,451		610,740		454,332
Noninterest income	78,587			85,276			57,102		245,277		183,767
Noninterest expense	204,239			207,319			210,728		640,417		520,007
Income before income tax expense	118,416			95,166			33,825		215,600		118,092
Income tax expense	19,744			15,752			6,817		37,478		26,529
Net income available to common shareholders	98,672			79,414			27,008		178,122		91,563
Total assets (at period end)	$	13,935,521		$	14,693,227		$	13,701,633	$	13,935,521	$	13,701,633

Table of Contents

Consumer Banking generated net income available to common shareholders of $98.7 million for the three months ended September 30, 2020, compared to $79.4 million for the three months ended June 30, 2020 and $27.0 million ~~and~~for the three months ended September 30, 2019. Consumer Banking generated net income available to common shareholders of $178.1 million for the nine months ended September 30, 2020, compared to $91.6 million for the nine months ended September 30, 2019. The increase in the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to increases in the provision (benefit) for credit losses, largely due to lower loan originations, and net interest income. The increases in the three and nine months ended September 30, 2020, compared to the three and nine months ended September 30, 2019, ~~respectively, compared with $36.9 million and $72.1 million for~~were primarily due to the ~~same periods in 2018.~~

~~Consumer Banking net interest~~incremental income was $191.9 million and $470.7 million for the three and nine months ended September 30, 2019, respectively, compared with $143.0 million and $429.1 million for the same periods in 2018. The increase in net interest incomeresulting from the ~~three months ended September 30, 2018 and from the nine months ended September 30, 2018 was primarily attributable~~Merger in addition to ~~the impact of the loans acquired~~a decrease in ~~the Merger, partially offset by the deposits acquired in the Merger.~~

~~Consumer Banking~~ provision for credit losses, ~~was $4.5 million and $16.4 million for the three and nine months ended September 30, 2019, respectively, compared with a benefit of $953 thousand and a provision of $18.9 million for the same periods~~partially offset by increases in 2018. The increase from the three months ended September 30, 2018 was primarily due to a decrease in recoveries on previous charge-offs related to consumer loans. The decrease from the nine months ended September 30, 2018 was primarily due to a decrease in the provision for credit losses attributable to run-off and maturation of the auto finance portfolio.incremental operating costs. The provision for credit losses is predominantly a function of our reserving methodology used to determine the appropriate level of the allowance for ~~loan and lease~~credit losses. For further information, see "Consolidated Income Statement Analysis — Provision for Credit Losses" and "Consolidated Financial Condition Analysis — Credit Quality" in this Management's Discussion and Analysis and ~~Note 7.~~"Note 8. Allowance for ~~Loan and Lease~~Credit Losses and Credit ~~Quality~~Quality" of the Notes to Consolidated Financial Statements.

~~Table of Contents~~

Consumer Banking noninterest income was $57.1 million and $183.8 million for the three and nine months ended September 30, 2019, respectively, compared with $66.6 million and $196.8 million for the same periods in 2018. The decrease in noninterest income from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 was primarily due to a $19.3 million loss related to the transfer of the Legacy TCF auto finance portfolio to held-for-sale. Excluding the loss related to the auto finance portfolio transfer, the increase from both the three and nine months ended September 30, 2018 was primarily due to a higher volume of consumer loans sold resulting from the Merger. Servicing fee income attributable to the Consumer Banking segment was $32.4 million and $84.3 million for the three and nine months ended September 30, 2019, respectively, compared with $28.1 million and $80.6 million for the same periods in 2018. Average Consumer Banking loans serviced for others were $6.9 billion and~~$4.4 billionfor the three and nine months ended September 30, 2019, respectively, compared with $3.3 billion and $3.7 billion for the same periods in 2018.~~

Consumer Banking noninterest expense was $210.7 million and $520.0 million for the three and nine months ended September 30, 2019, respectively, compared with $162.0 million and $511.9 million for the same periods in 2018. The increase from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 was primarily due to the incremental operating cost due to the Merger.

Commercial Banking

Commercial Banking is comprised of commercial and industrial, commercial real estate banking ~~leasing~~ and ~~equipment finance, and inventory finance.~~lease financing. Our ~~wholesale~~commercial banking strategy ~~is primarily to originate~~focuses on building full commercial relationships including originating high credit quality ~~secured~~ loans and leases ~~for investment.~~and providing deposit and treasury services.



	Three Months Ended							Nine Months Ended
(In thousands)	September 30, 2020			June 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Commercial Banking
Net interest income	$	167,160		$	169,473	$	157,437	$	522,619	$	350,848
Provision for credit losses	96,881			89,650		22,699		239,105		34,473
Net interest income after provision for credit losses	70,279			79,823		134,738		283,514		316,375
Noninterest income	35,105			43,831		47,929		134,709		132,883
Noninterest expense	105,646			105,324		102,841		325,425		267,147
Income (loss) before income tax expense	(262		)	18,330		79,826		92,798		182,111
Income tax (benefit) expense	(8,613		)	3,440		8,172		11,133		30,271
Income after income tax (benefit) expense	8,351			14,890		71,654		81,665		151,840
Income attributable to non-controlling interest	1,564			2,469		2,830		5,950		9,401
Net income available to common shareholders	6,787			12,421		68,824		75,715		142,439
Total assets (at period end)	$	23,466,019		$	22,219,240	$	19,045,367	$	23,466,019	$	19,045,367

Commercial Banking generated net income available to common shareholders of $6.8 million for the three months ended September 30, 2020, compared to $12.4 million for the three months ended June 30, 2020 and $68.8 million ~~and~~for the three months ended September 30, 2019. Commercial Banking generated net income available to common shareholders of $75.7 million for the nine months ended September 30, 2020, compared to $142.4 million for the nine months ended September 30, 2019. The decrease in the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily due to an increase in provision for credit losses and a decrease in leasing revenue, partially offset by the benefit attributable to tax net operating loss carryback benefits associated with the CARES Act. The decreases in the three and nine months ended September 30, 2020, compared to the three and nine months ended September 30, 2019, ~~respectively, compared with $42.6 million and $134.8 million for the same periods in 2018.~~

Commercial Banking net interest income was $157.4 million and $350.8 million for the three and nine months ended September 30, 2019, respectively, compared with $94.3 million and $289.3 million for the same periods in 2018. The increase in net interest income from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 was primarily due to the impact of the loans acquired in the Merger, partially offset by the deposits acquired in the Merger.

Commercial Banking provision for credit losses was $22.7 million and $34.5 million for the three and nine months ended September 30, 2019, respectively, compared with $3.2 million and $9.0 million for the same periods in 2018. The increase from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 waswere primarily due to an increase in ~~commercial and industrial net charge-offs in~~provision for credit losses, partially offset by the ~~three months ended September 30, 2019 primarily~~incremental income resulting from ~~one loan relationship.~~the Merger. The provision for credit losses is predominantly a function of our reserving methodology used to determine the appropriate level of the allowance for ~~loan and lease~~credit losses. For further information, see "Consolidated Income Statement Analysis — Provision for Credit Losses" and "Consolidated Financial Condition Analysis — Credit Quality" in this Management's Discussion and Analysis and ~~Note 7.~~"Note 8. Allowance for ~~Loan and Lease~~Credit Losses and Credit ~~Quality~~Quality" of the Notes to Consolidated Financial Statements.

Commercial Banking noninterest income was $47.9 million and $132.9 million for the three and nine months ended September 30, 2019, respectively, compared with $44.9 million and $132.8 million for the same periods in 2018. The increase from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 was primarily due to incremental revenue resulting from the Merger, partially offset by a decrease in leasing and equipment finance noninterest income as a result of decreased operating lease revenue and sales-type lease revenue.

Commercial Banking noninterest expense was $102.8 million and $267.1 million for the three and nine months ended September 30, 2019, respectively, compared with $77.9 million and $229.1 million for the same periods in 2018. The increase from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 was primarily due to an increase in merger-related expenses and other expenses related to the incremental costs due to the Merger.

Table of Contents

Enterprise Services

Enterprise Services is comprised of (i) corporate treasury, which includes our investment and borrowing portfolios and management of capital, debt and market risks, (ii) corporate functions, such as information technology, risk and credit management, bank operations, finance, investor relations, corporate development, internal audit, legal and human capital management that provide services to the operating segments, (iii) ~~the Holding Company~~TCF Financial and (iv) eliminations. Our investment portfolio accounts for ~~our~~the earning assets within this segment. Borrowings may be used to offset reductions in deposits or to support lending activities. This segment also includes residual revenues and expenses representing the difference between actual amounts incurred by Enterprise Services and amounts allocated to the operating segments, including interest rate risk residuals such as funds transfer pricing mismatches.



	Three Months Ended									Nine Months Ended
(In thousands)	September 30, 2020			June 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Enterprise Services
Net interest income	$	(6,844	)	$	2,601		$	22,416		$	17,420		$	58,693
Noninterest income	5,118			3,947			(10,773		)	8,841			(9,170		)
Noninterest expense	63,555			87,598			112,051			182,438			128,390
Income (loss) before income tax (benefit) expense	(65,281		)	(81,050		)	(100,408		)	(156,177		)	(78,867		)
Income tax (benefit) expense	(15,560		)	(12,979		)	(26,724		)	(33,741		)	(27,934		)
Income (loss) after income tax (benefit) expense	(49,721		)	(68,071		)	(73,684		)	(122,436		)	(50,933		)
Preferred stock dividends	2,494			2,494			2,494			7,481			7,481
Net loss available to common shareholders	(52,215		)	(70,565		)	(76,178		)	(129,917		)	(58,414		)
Total assets (at period end)	$	10,164,249		$	13,149,993		$	12,945,511		$	10,164,249		$	12,945,511

Enterprise Services generated net loss available to common shareholders of $76.2 million and $58.4 million for the three and nine months ended September 30, 2019, respectively, compared with net income available to common shareholders of $4.1 million andgenerated a net loss available to common shareholders of ~~$0.7 million for the same periods in 2018.~~

~~Enterprise Services net interest income was $22.4 million and $58.7~~$52.2 million for the three months ended September 30, 2020, compared to a net loss of $70.6 million for the three months ended June 30, 2020 and a net loss of $76.2 million for the three months ended September 30, 2019. Enterprise Services generated a net loss available to common shareholders of $129.9 million for the nine months ended September 30, 2020, compared to a net loss of $58.4 million for the nine months ended September 30, 2019. The reduced net loss in the three months ended September 30, 2020, compared to the three months ended June 30, 2020 and September 30, 2019, was primarily due to a decrease in merger-related expenses, included in noninterest expense, and partially offset by a decrease in net interest income. The increase in net loss in the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, respectively, compared with $16.2 million and $36.9 million for the same periods in 2018. The increase in from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 was primarily due to ~~the increase in average balances of investment securities acquired in the Merger.~~

Enterprise Services noninterest expense was $112.1 million and $128.4 million for the three and nine months ended September 30, 2019, respectively, compared with $6.5 million and $23.4 million for the same periods in 2018. The increase from the three months ended September 30, 2018 and from the nine months ended September 30, 2018 was primarily due to an increaseincreases in merger-related expenses and ~~other expenses related to the incremental costs due to the Merger.~~

~~Preferred stock dividends were $2.5 million~~compensation and ~~$7.5 million for the three~~employee benefits and ~~nine months ended September 30, 2019, respectively, compared with $2.5 million and $9.1 million for preferred stock dividends and the impact of the preferred stock redemption for the same periods~~a decrease in ~~2018. The decrease was due to the redemption of the 6.45% Series B non-cumulative perpetual preferred stock in the first quarter of 2018.~~net interest income.

Consolidated Financial Condition Analysis

Investment Securities Total investment securities available-for-sale, at fair value, were ~~$5.6~~$7.4 billion at September 30, ~~2019,~~2020, compared ~~with $2.5~~to $6.7 billion at December 31, ~~2018.~~2019. Our investment securities available-for-sale are debt securities consisting primarily of fixed-rate mortgage-backed securities issued by the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"), and obligations of states and political subdivisions. The increase in investment securities available-for-sale was primarily due to purchases of additional residential and commercial mortgage-backed securities.

Total investment securities held-to-maturity were ~~$144.0~~$170.3 million at September 30, ~~2019,~~2020, compared ~~with $148.9~~to $139.4 million at December 31, ~~2018.~~2019. Our investment securities held-to-maturity portfolio consists primarily of fixed-rate mortgage-backed securities issued by the FNMA. The increase in investment securities was primarily due to the addition of $3.8 billion of investment securities as a result of the Merger, partially offset by the subsequent sale of $1.6 billion of investment securities during the three months ended September 30, 2019 as we repositioned our balance sheet. See Note 2. Merger for further information. We may, from time to time, sell investment securities available-for-sale and utilize the proceeds to reduce borrowings, fund growth in loans and leases or for other corporate purposes. We sold $1.6 billion and $2.0 billion of investment securities during the three and nine months ended September 30, 2019, respectively, which included select floating rate, corporate, non-agency and municipal securities. There were no sales of available-for-sale investment securities during the three and nine months ended September 30, 2018.

Table of Contents

The ~~carrying~~amortized cost and fair value of investment securities available-for-sale and held-to-maturity were as follows:


					At September 30, 2020				At December 31, 2019
(In thousands)	At September 30, 2019		At December 31, 2018		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Investment securities available-for-sale, at fair value
Debt securities:
Residential mortgage-backed securities					$	5,434,580	$	5,609,607	$	4,866,473	$	4,929,717
Obligations of states and political subdivisions					836,691		876,764		852,096		863,855
Commercial mortgage-backed securities					710,755		754,243		685,212		691,614
Government and government-sponsored enterprises	$	247,147	$	—	205,213		205,085		235,045		234,385
Obligations of states and political subdivisions	789,671		556,871
Mortgage-backed securities	4,542,592		1,913,194
Corporate debt and trust preferred securities	425		—		453		464		451		430
Total debt securities available-for-sale	5,579,835		2,470,065
Total investment securities available-for-sale	5,579,835		2,470,065		7,187,692		7,446,163		6,639,277		6,720,001
Investment securities held-to-maturity
Mortgage-backed securities	140,324		146,052
Residential mortgage-backed securities					166,594		176,649		135,769		141,168
Corporate debt and trust preferred securities	3,676		2,800		3,715		3,715		3,676		3,676
Total investment securities held-to-maturity	144,000		148,852		170,309		180,364		139,445		144,844
Total investment securities	$	5,723,835	$	2,618,917	$	7,358,001	$	7,626,527	$	6,778,722	$	6,864,845

The carrying value and FTE yield of investment securities available-for-sale and investment securities held-to-maturity by final contractual maturity were as follows. The final contractual maturities do not consider possible prepayments and therefore expected maturities may differ because borrowers may have the right to ~~prepay.~~call or prepay obligations with or without call or prepayment penalties.


	At September 30, 2019																				September 30, 2020
	Government and Government-sponsored Enterprises				Obligations of States and Political Subdivisions				Mortgage-backed Securities				Corporate Debt And Trust Preferred Securities				Total				Residential Mortgage-backed securities				Obligations of States and Political Subdivisions				Commercial Mortgage-backed Securities					Government and Government-sponsored Enterprises				Corporate Debt And Trust Preferred Securities				Total
(Dollars in thousands)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield⁽¹⁾		Amount		Yield⁽¹⁾		Amount		Yield⁽¹⁾			Amount		Yield⁽¹⁾		Amount		Yield⁽¹⁾		Amount		Yield⁽¹⁾
Investment securities available-for-sale
Due in one year or less	$	—	—	%	$	60,652	2.23	%	$	—	—	%	$	—	—	%	$	60,652	2.23	%	$	—	—	%	$	45,518	2.64	%	$	—	—		%	$	—	—	%	$	—	—	%	$	45,518	2.64	%
Due in 1-5 years	—		—		169,736		2.61		29,663		1.93		—		—		199,399		2.51		16,486		1.88		147,076		2.85		12,583		1.57			—		—		—		—		176,145		2.67
Due in 5-10 years	27,186		3.60		161,469		2.76		304,100		2.60		—		—		492,755		2.71		125,628		2.01		251,172		2.57		307,404		2.02			19,023		1.13		—		—		703,227		2.19
Due after 10 years	219,961		3.44		397,814		2.89		4,208,829		2.95		425		6.87		4,827,029		2.97		5,467,493		2.22		432,998		2.75		434,256		2.55			186,062		1.64		464		4.74		6,521,273		2.26
Total	$	247,147	3.46		$	789,671	2.75		$	4,542,592	2.92		$	425	6.87		$	5,579,835	2.92		$	5,609,607	2.21	%	$	876,764	2.71	%	$	754,243	2.32		%	$	205,085	1.59	%	$	464	4.74	%	$	7,446,163	2.26	%
Investment securities held-to-maturity
Due in one year or less	$	—	—	%	$	—	—	%	$	—	—	%	$	—	—	%	$	—	—	%	$	—	—	%	$	—	—	%	$	—	$	—		$	—	—	%	$	400	2.50	%	$	400	2.50	%
Due in 1-5 years	—		—		—		—		—		—		3,150		2.82		3,150		2.82		—		—		—		—		—		—			—		—		3,150		2.88		3,150		2.88
Due in 5-10 years	—		—		—		—		60		6.50		400		3.00		460		3.46		49		6.50		—		—		—		—			—		—		—		—		49		6.50
Due after 10 years	—		—		—		—		140,264		2.47		126		6.00		140,390		2.47		166,545		1.99		—		—		—		—			—		—		165		6.00		166,710		1.99
Total	$	—	—		$	—	—		$	140,324	2.47		$	3,676	2.95		$	144,000	2.48		$	166,594	1.99	%	$	—	—	%	$	—	—		%	$	—	—	%	$	3,715	2.98	%	$	170,309	2.01	%


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

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

Loans and Leases Held-for-Sale

Our loans and leases held-for-sale were ~~$1.4 billion~~$460.4 million at September 30, ~~2019,~~2020, an increase of ~~$1.3 billion,~~$260.6 million, compared to ~~$90.7~~$199.8 million at December 31, ~~2018.~~2019. The increase was primarily due to ~~the transfer~~an increase in timing to settle sale transactions.

Table of ~~$1.2 billion of Legacy TCF auto finance portfolio to held-for-sale.~~Contents

Loans and Leases

Our commercial loan and lease portfolio is comprised of commercial and industrial loans, commercial real estate loans, and lease financing. Our consumer loan portfolio is comprised of residential mortgages, ~~consumer installment loans and~~ home equity loans and lines of ~~credit.~~credit, and consumer installment loans. Our lending markets ~~generally~~primarily consist of communities throughout our primary banking markets ~~including Michigan, Minnesota, Illinois, Ohio, Indiana, Colorado, Wisconsin, Arizona~~in addition to Florida, Texas, New York, California and ~~South Dakota.~~

~~Table of Contents~~

Canada.

Total loans and leases were ~~$33.5~~$34.3 billion at September 30, ~~2019, an increase~~2020, a decrease of ~~$14.4 billion,~~$153.8 million, or ~~75.7%~~0.4%, compared to $34.5 billion at December 31, ~~2018. The increase~~2019. At September 30, 2020, commercial and industrial loans included $1.8 billion of PPP loans outstanding. Excluding the PPP loans, the decrease from December 31, 2019 was primarily due to ~~$15.7 billion of loans and leases acquired~~a decrease in the ~~Merger,~~commercial and industrial portfolio, primarily inventory finance related to seasonality, strong dealer activity and the lack of backfill from manufacturers as a result of the economic shutdown, in addition to a decrease in our consumer loan portfolio, partially offset by ~~the transfer of the Legacy TCF auto finance portfolio to held-for-sale which had a balance of $1.2 billion at September 30, 2019.~~an increase in our commercial real estate portfolio.

Information about our loans and leases was as follows:

At September 30, 2019 At December 31, 2018 Change
(Dollars in thousands) Amount % of Total Amount % of Total $ %
Commercial loan and lease portfolio:

Commercial and industrial $ 10,810,534
32.3 % $ 6,220,632
32.6 % $ 4,589,902
73.8 %
Commercial real estate 8,876,779
26.5
2,908,313
15.2
5,968,466
205.2
Lease financing 2,594,373
7.7
2,530,163
13.3
64,210
2.5
Total commercial loan and lease portfolio 22,281,686
66.5
11,659,108
61.1
10,622,578
91.1
Consumer loan portfolio:
Residential mortgage 6,057,404
18.0
2,335,835
12.2
3,721,569
159.3
Consumer installment 1,562,252
4.7
2,003,572
10.5
(441,320 ) (22.0 )
Home equity 3,609,410
10.8
3,074,505
16.2
534,905
17.4
Total consumer loan portfolio 11,229,066
33.5
7,413,912
38.9
3,815,154
51.5
Total loans and leases $ 33,510,752
100.0 % $ 19,073,020
100.0 % $ 14,437,732
75.7 %



	At September 30, 2020				At December 31, 2019				Change
(Dollars in thousands)	Amount		% of Total		Amount		% of Total		$			%
Commercial loan and lease portfolio:
Commercial and industrial	$	11,557,237	33.7	%	$	11,439,602	33.2	%	$	117,635		1.0	%
Commercial real estate	9,627,330		28.0		9,136,870		26.5		490,460			5.4
Lease financing	2,724,686		7.9		2,699,869		7.8		24,817			0.9
Total commercial loan and lease portfolio	23,909,253		69.6		23,276,341		67.5		632,912			2.7
Consumer loan portfolio:
Residential mortgage	5,790,251		16.9		6,179,805		17.9		(389,554		)	(6.3	)
Home equity	3,302,983		9.6		3,498,907		10.1		(195,924		)	(5.6	)
Consumer installment	1,341,204		3.9		1,542,411		4.5		(201,207		)	(13.0	)
Total consumer loan portfolio	10,434,438		30.4		11,221,123		32.5		(786,685		)	(7.0	)
Total loans and leases	$	34,343,691	100.0	%	$	34,497,464	100.0	%	$	(153,773	)	(0.4	)%

Commercial Loan and Lease Portfolio

Our commercial loan and lease portfolio was ~~$22.3~~$23.9 billion at September 30, ~~2019,~~2020, an increase of ~~$10.6 billion,~~$632.9 million, or ~~91.1%~~2.7%, compared to ~~$11.7~~$23.3 billion at December 31, ~~2018, primarily due to the $9.8 billion of commercial loans and leases acquired as a result of the Merger. Our~~2019. We believe that our commercial loan and lease portfolio is well diversified across business lines and has no material concentration in any one industry.

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

Table of Contents

Our C&I portfolio by North American Industry Classification System ("NAICS") code was as follows:



	At September 30, 2020
(In thousands)	Total		% of Total Loan and Lease Portfolio
Retail trade	$	2,091,972	6.1	%
Transportation and warehouse	1,387,743		4.0
Manufacturing	1,287,135		3.7
Real estate rental and leasing	947,770		2.8
Wholesale trade	853,542		2.5
Construction	686,970		2.0
Health care and social assistance	582,007		1.7
Finance and insurance	504,772		1.5
Administration and Support and Waste Management and Remediation	420,519		1.2
All other	2,794,807		8.2
Total	$	11,557,237	33.7	%

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

Our commercial real estate ~~including multi-family housing, office buildings, health care facilities, warehouse~~loan portfolio by property and ~~industrial buildings, hotel and motel buildings, self-storage buildings and retail services buildings.~~loan type was as follows:



	At September 30, 2020				At December 31, 2019
(In thousands)	Total		Percent of Total Loan and Lease Portfolio		Total		Percent of Total Loan and Lease Portfolio
Multifamily	$	2,022,758	5.9	%	$	1,799,949	5.2	%
Office	1,394,723		4.1		1,219,618		3.5
Retail	1,323,275		3.9		1,323,773		3.8
Warehouse	1,113,346		3.2		1,081,165		3.1
Hotel	786,656		2.3		759,773		2.2
Senior housing	780,338		2.3		729,169		2.1
Self‐storage	520,334		1.5		436,415		1.3
Mixed use	456,606		1.3		450,782		1.3
Other	1,229,294		3.5		1,336,226		3.9
Total	$	9,627,330	28.0	%	$	9,136,870	26.4	%

Table of Contents

Lease financing We provide a broad range of comprehensive lease products addressing the diverse financing needs of small to large companies in a growing number of select market segments including specialty vehicles, construction equipment, golf cart and turf equipment, manufacturing equipment, medical equipment, trucks and trailers, furniture and fixtures, technology and data processing equipment and agriculture equipment. The uninstalled backlog of approved transactions was $626.3 millioncompanies. Lease financings were $2.7 billion at both September 30, ~~2019, compared with $572.4 million at~~2020 and December 31, ~~2018.~~2019.

Our lease financing portfolio by equipment type was as follows:



	At September 30, 2020				At December 31, 2019
(Dollars in thousands)	Balance		Percent of Total Loan and Lease Portfolio		Balance		Percent of Total Loan and Lease Portfolio
Specialty vehicles	$	596,434	1.7	%	$	585,829	1.7	%
Golf cart and turf equipment	515,016		1.5		473,476		1.4
Medical equipment	384,571		1.1		377,998		1.1
Technology and data processing equipment	225,316		0.7		248,187		0.7
Construction equipment	195,804		0.6		180,963		0.5
Material handling	185,340		0.5		138,182		0.4
Manufacturing equipment	176,524		0.5		226,833		0.7
Trucks and trailers	100,993		0.3		91,711		0.3
Agricultural equipment	96,987		0.3		92,392		0.3
Other	247,701		0.7		284,298		0.7
Total	$	2,724,686	7.9	%	$	2,699,869	7.8	%

Consumer Loan Portfolio

Our consumer loan portfolio was ~~$11.2~~$10.4 billion at September 30, ~~2019, an increase~~2020, a decrease of ~~$3.8 billion,~~$786.7 million, or ~~51.5%~~7.0%, compared to ~~$7.4~~$11.2 billion at December 31, ~~2018, primarily due to $5.9 billion of consumer loans acquired as a result of the Merger, partially offset by the $1.2 billion of Legacy TCF auto loan portfolio transferred to held-for-sale.~~

~~Table of Contents~~

2019.

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

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

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

~~Home equity~~ ~~Home equity loans and lines~~Table of credit are comprised of loans to consumers who utilize equity in their personal residence, including junior lien mortgages, as collateral to secure the loan or line-of-credit. The majority of our home equity lines of credit are comprised of loans with a 10-year interest-only draw period and a 20-year amortization repayment period. These home equity lines of credit can include junior lien mortgages whereby the first lien mortgage is held by a nonaffiliated financial institution.Contents

Credit Quality

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

Loans and leases that are over 90-days delinquent and accruing generally are a leading indicator for future charge-off trends.

Nonaccrual loans and leases have been charged down to the estimated fair value of the collateral less estimated selling costs, or reserved for expected loss upon workout.

Within the performing loans and leases, we classify customers within regulatory classification guidelines. Loans and leases that are "classified" are loans or leases that management has concerns regarding the ability of the borrowers to meet existing loan ~~portfolios.~~or lease terms and conditions, but may never become nonaccrual or result in a loss.

Past due loans and leases Delinquent balances are determined based on the contractual terms of the loan or lease. See ~~Note~~"Note 8. Allowance for ~~Loan and Lease~~Credit Losses and Credit ~~Quality~~Quality" of Notes to Consolidated Financial Statements for further information.

~~Past Due Loans and Leases~~ Over 90-day delinquent loans and leases by type, excluding nonaccrual loans and leases, were as ~~follows. Delinquent balances are determined based on the contractual terms of the loan or lease.~~follows:


	At September 30, 2019				At December 31, 2018				At September 30, 2020				At December 31, 2019
(Dollars in thousands)	90 Days or More Delinquent and Accruing⁽¹⁾		Percentage of Period-end Loans and Leases		90 Days or More Delinquent and Accruing⁽¹⁾		Percentage of Period-end Loans and Leases		90 Days or More Delinquent and Accruing		Percentage of Period-end Loans and Leases		90 Days or More Delinquent and Accruing		Percentage of Period-end Loans and Leases
Commercial loan and lease portfolio:
Commercial and industrial	$	2,241	0.02	%	$	760	0.01	%	$	3,101	0.03	%	$	331	—	%
Commercial real estate	8,054		0.09		—		—		244		—		1,440		0.02
Lease financing	2,421		0.09		1,882		0.07		3,564		0.13		1,901		0.07
Total commercial loan and lease portfolio	12,716		0.06		2,642		0.02		6,909		0.03		3,672		0.02
Consumer loan portfolio:
Residential mortgage	886		0.01		1,275		0.06		1,347		0.02		559		0.01
Consumer installment	6		—		3,349		0.17		—		—		108		0.01
Total consumer loan portfolio	892		0.01		4,624		0.06		1,347		0.01		667		0.01
Portfolios acquired with deteriorated credit quality(1)	16,052		5.47		178		4.65		N/A		N/A		25,737		10.43
Total	$	29,660	0.09	%	$	7,444	0.04	%	$	8,256	0.02	%	$	30,076	0.09	%


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

~~Loan Modifications~~ ~~Troubled debt restructuring ("TDR") loans were as follows:~~

At September 30, 2019 At December 31, 2018
(Dollars in thousands)
Accruing
TDR Loans

Nonaccrual
TDR Loans

Total
TDR Loans

Accruing
TDR Loans

Nonaccrual
TDR Loans

Total
TDR Loans
Commercial loan and lease portfolio $ 10,068
$ 1,953
$ 12,021
$ 12,665
$ 6,153
$ 18,818
Consumer loan portfolio 75,836
19,284
95,120
85,794
22,554
108,348
Total $ 85,904
$ 21,237
$ 107,141
$ 98,459
$ 28,707
$ 127,166
Over 90-day delinquency as a percentage of total accruing TDR loans 34.53 % N.A.
N.A.
7.56 % N.A.
N.A.

~~N.A. Not Applicable~~

7981

Table of Contents

Loan modifications to borrowers who have not been granted concessions are not considered TDR loans and therefore are not included in the table above. TDR loans with an interest rate consistent with market rates on loans with comparable risk at the time of restructuring and performing based on the restructured terms are no longer disclosed as TDR loans in the calendar years after modification; however, these loans are still considered impaired and follow our impaired loan reserve policies.

TDRs typically involve a deferral of the principal balance of the loan, a reduction of the stated interest rate of the loan or, in certain limited circumstances, a reduction of the principal balance of the loan or the loan's accrued interest.

Nonperforming ~~Assets~~assets Nonperforming assets, consisting of nonaccrual loans and leases and other real estate owned, were as follows:


(Dollars in thousands)	At September 30, 2019			At December 31, 2018			At September 30, 2020			At December 31, 2019
Commercial loan and lease portfolio:
Commercial and industrial	$	55,039		$	26,061		$	140,492		$	53,812
Commercial real estate	26,518			4,518			70,252			29,735
Lease financing	11,503			7,993			42,023			10,957
Total commercial loan and lease portfolio	93,060			38,572			252,767			94,504
Consumer loan portfolio:
Residential mortgage	48,816			33,111			65,235			38,577
Home equity							52,184			35,863
Consumer installment	636			8,581			6,535			714
Home equity	39,296			25,654
Total consumer loan portfolio	88,748			67,346			123,954			75,154
Nonaccrual loans and leases	181,808			105,918			376,721			169,658
Other real estate owned	27,638			17,403			35,554			34,256
Total nonperforming assets	$	209,446		$	123,321		$	412,275		$	203,914
Nonaccrual loans and leases as a percentage of total loans and leases	0.54		%	0.56		%	1.10		%	0.49		%
Nonperforming assets as a percentage of total loans and leases and other real estate owned	0.62			0.65			1.20			0.59
Allowance for loan and lease losses as a percentage of nonaccrual loans and leases	66.67			148.65			136.77			66.64
Allowance for credit losses as a percentage of nonaccrual loans and leases							145.83			68.71

Nonperforming assets were ~~$209.4~~$412.3 million at September 30, ~~2019,~~2020, compared ~~with $123.3~~to $203.9 million at December 31, ~~2018.~~2019. The $208.4 million increase in nonperforming assets from December 31, 2019 was ~~primarily~~substantially driven by an increase in nonaccrual balances in our commercial loan and lease portfolio, driven by the motor coach and shuttle bus sectors which were more heavily impacted by COVID-19 and also the adoption of CECL ($73.4 million of loans previously accounted for as purchased credit impaired were reclassified to nonaccrual loans as of January 1, 2020 due to ~~loans acquired in~~ the ~~Merger.~~adoption of CECL).

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

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

8082

Table of Contents

Changes in the amount of nonaccrual loans and leases were as follows:


	At or For the Three Months Ended September 30, 2019									At or For the Three Months Ended September 30, 2020
(In thousands)	Consumer Loan Portfolio			Commercial Loan and Lease Portfolio			Total			Consumer Loan Portfolio			Commercial Loan and Lease Portfolio			Total
Balance, beginning of period	$	76,079		$	31,914		$	107,993		$	116,990		$	174,461		$	291,451
Acquired	16,414			64,830			81,244
Additions	24,592			54,059			78,651			27,188			160,802			187,990
Charge-offs	(2,020		)	(18,257		)	(20,277		)	(2,353		)	(27,956		)	(30,309		)
Transfers to other assets	(5,227		)	(4,294		)	(9,521		)	(2,341		)	(4,625		)	(6,966		)
Transfers (to) from loans and leases held for sale	(9,454		)	—			(9,454		)
Return to accrual status	(3,048		)	(10,419		)	(13,467		)	(5,573		)	(14,993		)	(20,566		)
Payments received	(8,597		)	(25,274		)	(33,871		)	(9,956		)	(35,972		)	(45,928		)
Other, net	9			501			510			(1		)	1,050			1,049
Balance, end of period	$	88,748		$	93,060		$	181,808		$	123,954		$	252,767		$	376,721

	At or For the Nine Months Ended September 30, 2019									At or For the Nine Months Ended September 30, 2020
(In thousands)	Consumer Loan Portfolio			Commercial Loan and Lease Portfolio			Total			Consumer Loan Portfolio			Commercial Loan and Lease Portfolio			Total
Balance, beginning of period	$	67,346		$	38,572		$	105,918		$	75,154		$	94,504		$	169,658
Acquired	16,414			64,830			81,244
Transfer in of loans previously accounted for as purchased credit impaired⁽¹⁾										20,560			52,825			73,385
Adjusted balance, beginning of period										95,714			147,329			243,043
Additions	60,875			94,190			155,065			73,736			303,259			376,995
Charge-offs	(6,407		)	(29,693		)	(36,100		)	(8,229		)	(38,925		)	(47,154		)
Transfers to other assets	(14,530		)	(12,174		)	(26,704		)	(5,784		)	(14,667		)	(20,451		)
Transfers (to) from loans and leases held-for-sale	(9,454		)	—			(9,454		)
Return to accrual status	(6,443		)	(17,636		)	(24,079		)	(11,383		)	(59,971		)	(71,354		)
Payments received	(18,676		)	(48,000		)	(66,676		)	(20,111		)	(83,305		)	(103,416		)
Other, net	(377		)	2,971			2,594			11			(953		)	(942		)
Balance, end of period	$	88,748		$	93,060		$	181,808		$	123,954		$	252,767		$	376,721


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

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

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

Table of Contents

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

Loans and leases by portfolio and ~~regulatory~~credit risk classification were as follows:


	At September 30, 2019										At September 30, 2020
	Non-classified				Classified				Total		Non-classified				Classified		Total
(In thousands)	Pass		Special Mention		Substandard		Doubtful				Pass		Special Mention		Substandard
Commercial loan and lease portfolio:
Commercial and industrial	$	10,307,229	$	309,440	$	193,865	$	—	$	10,810,534	$	10,917,912	$	314,579	$	324,746	$	11,557,237
Commercial real estate	8,645,910		150,132		80,737		—		8,876,779		8,843,077		490,499		293,754		9,627,330
Lease financing	2,540,637		27,007		26,729		—		2,594,373		2,630,434		37,816		56,436		2,724,686
Total commercial loan and lease portfolio	21,493,776		486,579		301,331		—		22,281,686		22,391,423		842,894		674,936		23,909,253
Consumer loan portfolio:
Residential mortgage	6,001,380		1,543		54,481		—		6,057,404		5,718,396		375		71,480		5,790,251
Home equity											3,239,898		—		63,085		3,302,983
Consumer installment	1,561,506		—		746		—		1,562,252		1,334,225		—		6,979		1,341,204
Home equity	3,565,763		1,284		42,363		—		3,609,410
Total consumer loan portfolio	11,128,649		2,827		97,590		—		11,229,066		10,292,519		375		141,544		10,434,438
Total loans and leases	$	32,622,425	$	489,406	$	398,921	$	—	$	33,510,752	$	32,683,942	$	843,269	$	816,480	$	34,343,691



	At December 31, 2019
	Non-classified				Classified		Total
(In thousands)	Pass		Special Mention		Substandard		Total
Commercial loan and lease portfolio:
Commercial and industrial	$	10,930,939	$	315,097	$	193,566	$	11,439,602
Commercial real estate	8,891,361		170,114		75,395		9,136,870
Lease financing	2,646,874		28,091		24,904		2,699,869
Total commercial loan and lease portfolio	22,469,174		513,302		293,865		23,276,341
Consumer loan portfolio:
Residential mortgage	6,135,096		565		44,144		6,179,805
Home equity	3,457,292		456		41,159		3,498,907
Consumer installment	1,541,524		—		887		1,542,411
Total consumer loan portfolio	11,133,912		1,021		86,190		11,221,123
Total loans and leases	$	33,603,086	$	514,323	$	380,055	$	34,497,464

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

8184

Table of Contents

Loan modifications Troubled debt restructuring ("TDR") loans are loans to financially troubled borrowers that have been modified such that we have granted a concession in terms to improve the likelihood of collection of all principal and modified interest owed. TDR loans were as follows:

At December 31, 2018
Non-classified Classified Total
(In thousands) Pass Special Mention Substandard Doubtful
Commercial loan and lease portfolio:
Commercial and industrial $ 5,955,713
$ 158,296
$ 106,623
$ —
6,220,632
Commercial real estate 2,869,711
12,864
25,738
—
2,908,313
Lease financing 2,480,964
25,195
24,004
—
2,530,163
Total commercial loan and lease portfolio 11,306,388
196,355
156,365
—
11,659,108
Consumer loan portfolio:
Residential mortgage 2,294,740
3,606
37,489
—
2,335,835
Consumer installment 1,981,844
1,302
20,426
—
2,003,572
Home equity 3,043,296
3,747
27,462
—
3,074,505
Total consumer loan portfolio 7,319,880
8,655
85,377
—
7,413,912
Total loans and leases $ 18,626,268
$ 205,010
$ 241,742
$ —
$ 19,073,020



	At September 30, 2020							At December 31, 2019
(Dollars in thousands)	Accruing TDR Loans			Nonaccrual TDR Loans		Total TDR Loans		Accruing TDR Loans			Nonaccrual TDR Loans		Total TDR Loans
Commercial loan and lease portfolio	$	36,947		$	13,250	$	50,197	$	12,986		$	5,356	$	18,342
Consumer loan portfolio	17,956			21,526		39,482		12,403			14,875		27,278
Total	$	54,903		$	34,776	$	89,679	$	25,389		$	20,231	$	45,620
Over 90-day delinquency as a percentage of total accruing TDR loans	0.91		%	N.A.		N.A.		0.52		%	N.A.		N.A.

N.A. Not Applicable

Total ~~classified loans and leases in the commercial loan and lease portfolio~~TDRs were ~~$398.9~~$89.7 million at September 30, ~~2019,~~2020, compared ~~with $241.7~~to $45.6 million at December 31, ~~2018. The increase was primarily~~2019.

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

Interest income recognized on TDR loans and contractual interest that would have been recorded had the TDR loans performed in accordance with their original contractual terms were as follows:



	Three Months Ended						Nine Months Ended
(In thousands)	September 30, 2020		June 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Contractual interest due on TDR loans	$	2,256	$	759	$	1,845	$	3,336	$	5,132
Interest income recognized on TDR loans	331		287		1,347		910		3,608
Unrecognized interest income	$	1,925	$	472	$	498	$	2,426	$	1,524

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

Table of Contents

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

The allowance for loan and leases losses on loans and leases acquired in the Merger was not carried over on the Merger Date. Instead, the acquired loans and leases were recorded at their estimated fair including a component for expected credit losses.

We consider our ~~allowance for loan~~ACL of $549.4 million, or 1.60% of total loans and ~~lease losses of $121.2 million~~leases, appropriate to cover current credit losses expected to be incurred in the loan and lease portfolios over the remaining expected life of each financial asset at September 30, ~~2019. However, no~~2020, including loans and leases which are not currently known to require specific allowances. The increase in ACL and the ACL as a percentage of total loans and leases from December 31, 2019 was primarily due to impacts from the adoption of CECL at January 1, 2020, high levels of change in both current and forecasted macroeconomic conditions, which are impacted by COVID-19 and commercial portfolio credit risk management activities. The ACL as a percentage of total loans and leases, excluding PPP loans was 1.69%, a non-GAAP financial measure. The PPP loans are individually guaranteed by the Small Business Administration and therefore the accounting under CECL does not require reserves to be recorded on such loans. No assurance can be given that we will not, in any particular period, sustain loan and lease losses that are sizable in relation to the amount reserved or will not require significant changes in the balance of the ~~allowance for loan and lease losses~~ACL due to subsequent evaluations of the loan and lease portfolios, in light of factors then prevailing, including economic conditions, information obtained during our ongoing credit review process or regulatory requirements. Among other factors, an economic slowdown, increasing levels of unemployment, ~~a decline~~declines in collateral values and/or rising interest rates may have an adverse impact on the current adequacy of our ~~allowance for loan and lease losses~~ACL by increasing credit risk and the risk of potential loss. See "Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

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

Prior to the adoption of CECL on January 1, 2020, the ACL was calculated under an incurred loss model which delayed recognition of loss until it was probable the loss had been incurred, in contrast to the accounting under CECL which considers current credit losses expected to be incurred in the loan and ~~is not necessarily indicative~~lease portfolios over the remaining expected life of ~~the trend of future losses in any particular portfolio.~~each financial asset.

8286

Table of Contents

Detailed ~~Information~~information regarding our ~~allowance for loan and lease losses~~credit loss reserves was as follows:


	At September 30, 2019				At December 31, 2018				At September 30, 2020							Adjusted for adoption of CECL⁽¹⁾								At December 31, 2019
	Credit Loss Reserves				Credit Loss Reserves				ACL⁽¹⁾				% of Category to Total Loan and Lease Portfolio			ACL⁽¹⁾					% of Category to Total Loan and Lease Portfolio			ACL⁽¹⁾					% of Category to Total Loan and Lease Portfolio
(Dollars in thousands)	Amount		As a Percentage of Portfolio		Amount		As a Percentage of Portfolio		Amount		Reserve Rate				Amount			Reserve Rate			% of Category to Total Loan and Lease Portfolio		Amount			Reserve Rate			% of Category to Total Loan and Lease Portfolio
Commercial loan and lease portfolio:													% of Category to Total Loan and Lease Portfolio
Commercial and industrial	$	39,974	0.37	%	$	41,103	0.66	%	$	145,814	1.26	%	33.7	%		$	93,884		0.82	%	29.4	%		$	42,430		0.38	%	33.2	%
Commercial real estate	24,090		0.27		22,877		0.79		197,892		2.06		28.0			67,620			0.74		21.2			27,308			0.29		26.5
Lease financing	14,367		0.55		13,449		0.53		36,386		1.34		7.9			21,631			0.80		6.8			14,742			0.55		7.8
Total commercial loan and lease portfolio	78,431		0.35		77,429		0.66		380,092		1.59		69.6			183,135			0.79		57.4			84,480			0.36		67.5
Consumer loan portfolio:
Residential mortgage	19,816		0.33		21,436		0.92		62,006		1.07		16.9			72,939			1.18		22.9			8,099			0.13		17.9
Home equity									49,003		1.48		9.6			47,003			1.34		14.7			17,795			0.51		10.1
Consumer installment	1,859		0.12		35,151		1.75		24,128		1.80		3.9			15,967			1.04		5.0			2,678			0.17		4.5
Home equity	21,112		0.58		23,430		0.76
Total consumer loan portfolio	42,787		0.38		80,017		1.08		135,137		1.30		30.4			135,909			1.21		42.6			28,572			0.25		32.5
Total allowance for loan and lease losses	121,218		0.36		157,446		0.83		515,229		1.50		100.0	%		319,044			0.92		100.0	%		113,052			0.33		100.0	%
Credit discount on acquired loans	177,402
Total allowance and discount on acquired loans	298,620		0.89
Other credit loss reserves:
Reserves for unfunded commitments	3,461		N.A.		1,429		N.A.
Total credit loss reserves	$	302,081	0.90	%	$	158,875	0.83	%
Reserve for unfunded lending commitments									34,129		N.A.					18,235			N.A.					3,528			N.A.
Allowance for credit losses⁽¹⁾									$	549,358	1.60	%				$	337,279		0.98	%				$	116,580		0.34	%

N.A. Not Applicable

Net loan and lease charge-offs for the three and nine months ended September 30, 2019 were $28.6 million, or 0.39% of average loans and leases (annualized), and $61.3 million, or 0.36% of average loans and leases (annualized), respectively, compared with $6.8 million, or 0.15%, and $33.7 million, or 0.24%, for the same periods ended September 30, 2018. The increases from both the three and nine months ended September 30, 2018 was primarily due to an increase in commercial and industrial net charge-offs in the three months ended September 30, 2019 primarily due to one loan relationship.

(1)

Allowance for credit losses effective January 1, 2020 are calculated under the guidance of CECL. At December 31, 2019 allowance for credit losses were calculated under the guidance of ASC Topic 310 prior to adoption of CECL, See "Note 3. Summary of Significant Accounting Policies" and "Note 8. Allowance for Credit Losses and Credit Quality" of Notes to Consolidated Financial Statements for further information.

8387

Table of Contents

The rollforward of the allowance for credit losses were as follows:



	Three Months Ended									Nine Months Ended
(Dollars in thousands)	Sep. 30, 2020			Jun. 30, 2020			Sep. 30, 2019			Sep. 30, 2020			Sep. 30, 2019
Allowance for loans and lease losses
Balance, beginning of period	$	461,114		$	406,383		$	146,503		$	113,052		$	157,446
Impact of CECL adoption	—			—			—			205,992			—
Adjusted balance, beginning of period	461,114			406,383			146,503			319,044			157,446
Charge-offs
Commercial loan and lease portfolio:
Commercial and industrial	(24,332		)	(2,562		)	(18,992		)	(34,478		)	(31,562		)
Commercial real estate	(804		)	(761		)	(1		)	(1,565		)	(1		)
Lease financing	(1,331		)	(1,638		)	(2,456		)	(4,266		)	(5,559		)
Total commercial loan and lease portfolio	(26,467		)	(4,961		)	(21,449		)	(40,309		)	(37,122		)
Consumer loan portfolio:
Residential mortgage	(3		)	(1,166		)	(518		)	(1,697		)	(1,851		)
Home equity	(1,052		)	(1,078		)	(346		)	(3,379		)	(2,212		)
Consumer installment	(4,713		)	(2,753		)	(13,234		)	(11,537		)	(39,859		)
Total consumer loan portfolio	(5,768		)	(4,997		)	(14,098		)	(16,613		)	(43,922		)
Total charge-offs	(32,235		)	(9,958		)	(35,547		)	(56,922		)	(81,044		)
Recoveries
Commercial loan and lease portfolio:
Commercial and industrial	2,131			2,571			1,361			8,264			2,852
Commercial real estate	660			117			14			1,340			28
Lease financing	1,170			246			264			1,835			1,010
Total commercial loan and lease portfolio	3,961			2,934			1,639			11,439			3,890
Consumer loan portfolio:
Residential mortgage	806			295			329			1,984			1,114
Home equity	815			743			751			2,561			2,402
Consumer installment	2,077			2,591			4,250			7,490			12,324
Total consumer loan portfolio	3,698			3,629			5,330			12,035			15,840
Total recoveries	7,659			6,563			6,969			23,474			19,730
Net charge-offs	(24,576		)	(3,395		)	(28,578		)	(33,448		)	(61,314		)
Provision for credit losses related to loans and leases⁽¹⁾	78,323			58,126			27,188			229,439			50,879
Other	368			—			(23,895		)	194			(25,793		)
Balance, end of period	515,229			461,114			121,218			515,229			121,218
Reserve for unfunded lending commitments
Balance, beginning of period	42,788			22,188			1,936			3,528			1,428
Impact of CECL adoption	—			—			—			14,707			—
Adjusted balance, beginning of period	42,788			22,188			1,936			18,235			1,428
Provision (benefit) for credit losses related to unfunded lending commitments⁽¹⁾	(8,659		)	20,600			(342		)	15,894			166
Addition due to merger	—			—			1,867			—			1,867
Balance, end of period	34,129			42,788			3,461			34,129			3,461
Total Allowance for Credit Losses	$	549,358		$	503,902		$	124,679		$	549,358		$	124,679


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

Table of Contents

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

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

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

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

TCF Bank had ~~$442.6~~$939.7 million of net liquidity qualifying interest-bearing deposits at the Federal Reserve Bank at September 30, ~~2019,~~2020, compared ~~with $208.4~~to $489.7 million at December 31, ~~2018.~~2019. Certain investment securities held-to-maturity and investment securities carried at fair value provide the ability to liquidate or pledge unencumbered securities as needed. At September 30, ~~2019,~~2020, $1.2 billion of our securities ~~with a carrying value of $5.7 billion~~ were ~~held, of which $761.4 million was~~ pledged as collateral to secure certain deposits and borrowings.

TCF Financial had net liquidity qualifying cash of ~~$164.4~~$198.2 million at September 30, ~~2019,~~2020, compared ~~with $90.4~~to $156.0 million at December 31, ~~2018.~~2019.

Deposits are the primary source of ~~TCF's~~our funds for use in lending and for other general business purposes. In addition to deposits, ~~TCF receives~~we receive funds from loan and lease repayments, loan sales and borrowings. Borrowings may be used to compensate for reductions in normal sources of funds, such as deposit inflows at less than projected levels, net deposit outflows or to fund balance sheet growth. ~~TCF~~We primarily ~~borrows~~borrow from the Federal Home Loan Bank (the "FHLB") of Des Moines. ~~TCF~~We had ~~$3.6~~$7.8 billion of additional borrowing capacity at the FHLB of Des Moines at September 30, ~~2019,~~2020, as well as access to the Federal Reserve Discount Window. In addition, ~~TCF maintains~~we maintain a diversified set of unsecured and uncommitted funding sources, including access to overnight federal funds purchased lines, brokered deposits and capital markets. Lending activities, such as loan originations, loan purchases and equipment purchases for lease financing are the primary uses of ~~TCF's~~our funds.

On ~~August 5, 2019,~~June 29, 2020, TCF Financial ~~entered into a $50.0~~voluntarily prepaid the outstanding $80.0 million on its $150.0 million unsecured 364-day revolving credit facility with an unaffiliated ~~bank. The revolving~~bank and subsequently closed the credit facility contains several restrictive covenants, including the maintenance of various capital adequacy levels, asset quality and profitability ratios, and certain restrictions on levels of indebtedness. At September 30, 2019, TCF had no outstanding balance under the revolving credit facility and was in compliance with all such covenants. The revolving credit facility is available to be used, as needed, to fund growth, common stock repurchases or other general corporate purposes. TCF was in compliance with all the covenants at September 30, 2019.facility.

Our wholly-owned subsidiary, TCF Commercial Finance Canada, Inc. ("TCFCFC"), maintains a $20.0 million Canadian dollar-denominated line of credit facility with ~~a counterparty,~~an unaffiliated bank, which is guaranteed by TCF Bank. TCFCFC had no$1.5 million (USD) outstanding under the line of credit with the counterparty at September 30, ~~2019~~2020 and no outstanding balance at December 31, ~~2018.~~2019.

Table of Contents

Deposits Deposits were ~~$35.3~~$39.2 billion at September 30, ~~2019,~~2020, an increase of $4.7 billion, compared ~~with $18.9~~to $34.5 billion at December 31, ~~2018.~~2019. The increase in deposits was primarily due to increases in noninterest-bearing deposits of $2.7 billion, interest-bearing checking account balances of $1.5 billion, money market deposits of $827.2 million and savings account balances of $789.4 million, reflecting lower consumer spending impacted by the ~~$16.4 billion deposits acquired in~~COVID-19 pandemic, partially offset by the ~~Merger.~~continued run-off of certificates of deposit which declined $1.1 billion.

~~Noninterest bearing~~Noninterest-bearing checking accounts represented ~~22.56%~~27.2% of total deposits at September 30, ~~2019,~~2020, compared ~~with 20.75%~~to 23.1% of total deposits at December 31, ~~2018. TCF's~~2019. Our weighted-average interest rate for deposits, including ~~noninterest bearing~~noninterest-bearing deposits, was ~~0.88%~~0.32% for the three months ended September 30, 2020, 0.49% for the three months ended June 30, 2020 and 0.94% for the three months ended September 30, 2019, and was 0.52% for the nine months ended September 30, ~~2019, respectively, compared with 0.54%~~2020 and 0.88% for the ~~same periods in 2018.~~nine months ended September 30, 2019.

Certificates of deposit including Certificate of Deposit Account Registry Service ("CDARS") deposits, IRA deposits and brokered deposits, were ~~$8.4~~$6.3 billion at September 30, ~~2019,~~2020, compared ~~with $4.8~~to $7.5 billion at December 31, ~~2018.~~2019. The maturities of certificates of deposit with denominations equal to or greater than $100,000 at September 30, ~~2019~~2020 were as follows:


(In thousands)
Three months or less	$	1,683,346	$	1,334,859
Over three through six months	1,574,030		899,643
Over six through 12 months	1,445,375		843,283
Over 12 months	392,054		234,716
Total	$	5,094,805	$	3,312,501

8490

Table of Contents

Borrowings Borrowings were ~~$3.5~~$1.5 billion at September 30, ~~2019,~~2020, compared ~~with $1.4~~to $5.0 billion at December 31, ~~2018.~~2019. The ~~increase~~decrease in borrowings was primarily due to ~~$3.1 billion of borrowings assumed~~a decrease in ~~the Merger, partially offset by subsequent repayments of long-term~~long and short-term FHLB advances. In addition, on July 2, 2019, TCF Bank issued $150.0 million of 4.125% fixed-to-floating rate subordinated notes. The subordinated notes quality as Tier 2 capital of TCF Financial Corporation and TCF Bank under the capital adequacy rules established by the Federal Reserve Board and the OCC, respectively, subject to applicable limitations. The proceeds are to be used for general corporate purposes which may include capital to support asset growth and reducing long-term borrowings. On August 5, 2019, TCF Financial entered into a $50.0 million revolving credit facility that was available to be used, as needed, to fund growth, common stock repurchases or other general corporate purposes. Through September 30, 2019, TCF Financial had not drawn on the revolving credit facility.

Information regarding short-term borrowings (borrowings with an original maturity of less than one year) was as follows:


	At or For the Three Months Ended September 30,						At or For the Nine Months Ended September 30,						At or For the Three Months Ended September 30,						At or For the Nine Months Ended September 30,
(Dollars in thousands)	2019			2018			2019			2018			2020			2019			2020			2019
FHLB advances
Maximum outstanding at any month-end	$	2,440,000		$	—		$	2,440,000		$	—		$	2,350,000		$	2,440,000		$	3,200,000		$	2,440,000
Balance outstanding at end of period	2,335,960			—			2,335,960			—			400,000			2,335,960			400,000			2,335,960
Weighted average interest rate at end of period	1.63		%	—		%	1.63		%	—		%	0.37		%	1.63		%	0.37		%	1.63		%
Average balance outstanding	$	1,698,763		$	—		$	773,576		$	—		$	1,921,739		$	1,698,763		$	2,370,073		$	773,576
Weighted average interest rate	1.62		%	—		%	2.07		%	—		%	0.48		%	1.62		%	0.88		%	2.07		%
Federal funds purchased
Maximum outstanding at any month-end	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Balance outstanding at end of period	—			—			—			—			—			—			—			—
Weighted average interest rate at end of period	—		%	—		%	—		%	—		%	—		%	—		%	—		%	—		%
Average balance outstanding	$	283		$	283		$	209		$	209		$	—		$	283		$	77		$	209
Weighted average interest rate	2.37		%	2.19		%	2.53		%	1.90		%	—		%	2.37		%	1.78		%	2.53		%
Collateralized Deposits
Maximum outstanding at any month-end	$	271,249		$	—		$	271,249		$	—		$	253,960		$	271,340		$	253,960		$	271,340
Balance outstanding at end of period	271,340			—			271,340			—			253,960			271,340			253,960			271,340
Weighted average interest rate at end of period	1.00		%	—		%	1.00		%	—		%	0.14		%	1.00		%	0.14		%	1.00		%
Average balance outstanding	$	184,290		$	1,669		$	63,771		$	2,077		$	230,499		$	184,290		$	217,059		$	63,771
Weighted average interest rate	1.01		%	2.24		%	0.55		%	2.07		%	0.22		%	1.01		%	0.39		%	0.55		%
Line-of-credit: TCF Financial Corporation
Maximum outstanding at any month-end													$	—		$	—		$	80,000		$	—
Balance outstanding at end of period													—			—			—			—
Weighted average interest rate at end of period													—		%	—		%	—		%	—		%
Average balance outstanding													$	—		$	—		$	30,146		$	—
Weighted average interest rate													—		%	—		%	2.40		%	—		%
Line-of-credit: TCF Commercial Finance Canada, Inc.
Maximum outstanding at any month-end	$	1,516		$	2,324		$	10,455		$	8,565		$	3,066		$	1,516		$	3,066		$	10,455
Balance outstanding at end of period	—			2,324			—			—			1,501			—			1,501			—
Weighted average interest rate at end of period	—		%	2.75		%	—		%	—		%	1.50		%	—		%	1.50		%	—		%
Average balance outstanding	$	892		$	1,405		$	1,194		$	1,187		$	792		$	892		$	536		$	1,194
Weighted average interest rate	2.94		%	2.74		%	2.99		%	2.59		%	1.70		%	2.94		%	2.12		%	2.99		%

Long-term borrowings were as follows:


(In thousands)	September 30, 2019		December 31, 2018		September 30, 2020		December 31, 2019
FHLB advances	$	322,674	$	1,100,000	$	210,372	$	1,822,058
Subordinated debt	430,178		253,391
Subordinated debt obligations					586,729		428,470
Discounted lease rentals	104,571		92,976		71,738		100,882
Capital lease obligation	3,059		3,105
Finance lease obligation					3,006		3,038
Total long-term borrowings	$	860,482	$	1,449,472	$	871,845	$	2,354,448

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

See ~~Note 15 Borrowings~~"Note 12. Borrowings" of Notes to Consolidated Financial Statements for further information regarding ~~TCF's~~our long-term borrowings.

8591

Table of Contents

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

~~At September 30, 2019, the aggregate contractual obligations and commitments were as follows:~~

Payments Due by Period
(In thousands) Total
Less than
1 year

1-3
years

3-5
years

More than
5 years
Contractual Obligations:
Certificates of deposit $ 8,385,972
$ 4,813,249
$ 3,404,739
$ 137,962
$ 30,022
Long-term borrowings 860,482
11,138
179,782
132,681
536,881
Lease obligations 399,825
9,517
59,709
53,990
276,609
Other contractual obligations ⁽¹⁾
129,916
12,256
115,786
1,026
848
Marketing related contracts 246,100
46,793
79,497
63,450
56,360
Construction contracts and land purchase
commitments for future branch sites
13,313
13,313
—
—
—
Liabilities related to acquisition and portfolio purchase ⁽²⁾
8,288
—
4,089
1,024
3,175
Total $ 10,043,896
$ 4,906,266
$ 3,843,602
$ 390,133
$ 903,895


~~(1)~~	~~Includes commitments to fund qualified low income housing and other tax investment projects, private equity capital investments and other similar types of investments.~~


~~(2)~~	~~Relates to TCF's acquisition of EFLC and a leasing and equipment finance loan and lease portfolio purchase in 2017.~~

Amount of Commitment - Expiration by Period
(In thousands) Total
Less than
1 year

1-3
years

3-5
years

More than
5 years
Commitments:
Commitments to extend credit:
Consumer $ 2,266,913
$ 116,212
$ 133,673
$ 181,397
$ 1,835,631
Commercial 5,269,843
2,616,356
1,442,146
894,466
316,875
Total commitments to extend credit 7,536,756
2,732,568
1,575,819
1,075,863
2,152,506
Standby letters of credit and guarantees on industrial revenue bonds 125,438
70,662
26,574
19,356
8,846
Total $ 7,662,194
$ 2,803,230
$ 1,602,393
$ 1,095,219
$ 2,161,352

Unrecognized tax benefits, projected benefit obligations, demand deposits with indeterminate maturities and discretionary credit facilities that do not obligate us to lend have been excluded from the contractual obligations table above.

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

~~On October 24,~~In 2019, our ~~board~~Board of ~~directors~~Directors approved an authorization to repurchase up to $150 million of our common stock. The repurchase program has no expiration, and permits shares to be repurchased in compliance with Rule 10b-18 of the Exchange Act, through one or more broker-dealers as part of “block purchases” made by TCF, and/or through privately negotiated purchases, accelerated stock repurchase agreements, or Rule 10b5-1 plans at our discretion. In response to the ~~discretion~~COVID-19 pandemic, TCF temporarily suspended buybacks under its share repurchase program, but retains the ability to resume repurchases as circumstances warrant. We did not repurchase any shares of our common stock during the ~~Corporation. Through November 11, 2019,~~three months ended September 30, 2020, and we repurchased ~~190,977~~873,376 shares of of our common stock totaling ~~$8.0 million.~~$33.1 million during the nine months ended September 30, 2020.

~~Table~~Effective January 1, 2020, the Corporation adopted CECL. Consistent with the treatment of ~~Contents~~

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

At September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, TCF Bank's capital ratios exceeded the quantitative capital ratios required for an institution to be considered "well-capitalized." Significant factors that may affect capital adequacy include, but are not limited to, economic uncertainty, deteriorating economic conditions, a disproportionate growth in assets versus capital and a change in mix or credit quality of assets. There are no conditions or events since September 30, ~~2019~~2020 that management believes have changed TCF Bank's status as well-capitalized.

EquityTotal equity was $5.7 billion, or ~~12.5%~~11.9% of total assets, at September 30, ~~2019,~~2020, compared ~~with $2.6~~to $5.7 billion, or ~~10.8%~~12.3% of total assets, at December 31, 2018. The increase in equity during the nine months ended September 30, 2019 was primarily attributable to the 81.9 million shares of common stock issued in the Merger. See Note 2 Merger of Notes to Consolidated Financial Statements for further information.

~~Treasury Stock and Other~~ Treasury stock and other was $27.4 million at September 30, 2019, compared with $252.2 million at December 31, 2018. The $27.4 million at September 30, 2019 was comprised of shares held in trust for deferred compensation plans. The decrease was primarily due to the elimination of all previously outstanding Legacy TCF treasury stock in connection with the close of the Merger.2019.

Common Stock Dividends Dividends to common shareholders on a per share basis were ~~35 cents~~$0.35 for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, and ~~as adjusted to reflect the Merger Exchange Ratio, 94 cents~~were $1.05 for the nine months ended September 30, ~~2019.~~2020. Dividends to common shareholders on a per share basis, adjusted to reflect the Merger Exchange Ratio, were ~~29.5 cents for the three months ended September 30, 2018 and 88.5 cents~~$0.94 for the nine months ended September 30, ~~2018. TCF Financial's~~2019. Our common stock dividend payout ratio was ~~233.3%~~100.00% and ~~52.5%~~128.05% for the three and nine months ended September 30, 2020, respectively, compared to 250.00% for the three months ended June 30, 2020, and 233.33% and 52.54% for the three and nine months ended September 30, 2019, ~~compared with 29.4% and 36.6% for the same periods in 2018.~~respectively. TCF Financial's primary funding sources for dividends are dividends received from TCF Bank.

Table of Contents

On October ~~24, 2019,~~26, 2020, our ~~board~~Board of ~~directors declared~~Directors announced a regular quarterly cash dividend of $0.35 per common share payable on December ~~2, 2019~~1, 2020 to shareholders of record at the close of business on November ~~15, 2019,~~13, 2020, and ~~declared~~ a quarterly cash dividend of $0.35625 per depositary share ~~payable on December 2, 2019 to shareholders of record of the depositary shares, each~~ representing a 1/1,000th interest in a share of the 5.70% Series C Non-Cumulative Perpetual Preferred Stock, payable on December 1, 2020 to shareholders of record at the close of business on November ~~15, 2019.~~13, 2020.

Common Shareholders' Equity Total common shareholders' equity was $5.5 billion, or ~~12.04%~~11.50% of total assets, at September 30, ~~2019,~~2020, compared ~~with $2.4~~to $5.5 billion, or ~~9.99%~~11.87%, at December 31, ~~2018.~~2019. Tangible common equity was $4.0 billion, or ~~9.09%~~8.68% of total tangible assets, at September 30, ~~2019,~~2020, compared with ~~$2.2~~$4.1 billion, or ~~9.32%,~~9.01% of total tangible assets, at December 31, ~~2018.~~2019. Book value per common share was ~~$35.82~~$35.88 at September 30, ~~2019,~~2020, compared ~~with $26.85~~to $36.20 at December 31, ~~2018.~~2019. Tangible book value per common share was ~~$26.18~~$26.27 at September 30, ~~2019,~~2020, compared ~~with $24.87~~to $26.60 at December 31, ~~2018.~~2019. Tangible common equity and tangible book value are non-GAAP measures that exclude goodwill and other intangible assets See "Consolidated Financial Condition Analysis — Non-GAAP Financial Measures" in this Management's Discussion and Analysis for further information.

~~Table of Contents~~

Non-GAAP Financial Measures

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

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

8893

Table of Contents

The computation of the adjusted diluted earnings per common share and adjusted net income attributable to TCF was as follows:


		Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended									Nine Months Ended
(Dollars in thousands, except per share data)		2019			2018		2019			2018			September 30, 2020			June 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Net income available to common shareholders		$	19,654		$	83,702	$	175,588		$	206,131		$	53,244		$	21,270		$	19,654		$	123,920		$	175,588
Less: Earnings allocated to participating securities		—			13		19			30
Earnings allocated to participating securities													—			—			—			—			19
Earnings allocated to common shareholders	(a)	19,654			83,689		175,569			206,101		(a)	53,244			21,270			19,654			123,920			175,569
Plus: Merger-related expenses		111,259			—		124,943			—
Non-core items:
Plus: Loss on transfer of legacy TCF auto finance portfolio to held-for-sale⁽¹⁾		19,264			—		19,264			—
Plus: Termination of interest rate swaps⁽²⁾		17,302			—		17,302			—
Less: Gain on sale of certain investment securities⁽³⁾		(5,869		)	—		(5,869		)	—
Plus: Write-down of company-owned vacant land parcels⁽⁴⁾		5,890			—		5,890			—
Plus: Loan servicing rights impairment⁽²⁾		4,520			—		4,520			—
Plus: CFPB/OCC settlement adjustment⁽⁴⁾		—			—		—			32,000
Total non-core items		41,107			—		41,107			32,000
Less: Related income tax expense, net of benefits⁽⁵⁾		46,213			—		49,481			6,491
Merger-related expenses													54,011			81,619			111,259			172,358			124,943
Notable items:
Sale of legacy TCF auto finance portfolio and related expenses⁽¹⁾													—			901			19,264			3,964			19,264
Termination of interest rate swaps⁽²⁾													—			—			17,302			—			17,302
Gain on sale of certain investment securities⁽³⁾													—						(5,869		)	—			(5,869		)
Gains on sales of branches, write-down of company-owned vacant land parcels and branch exit costs, net⁽⁴⁾													—			(14,166		)	5,890			(14,166		)	5,890
Loan servicing rights impairment⁽²⁾													154			8,858			4,520			17,248			4,520
Total notable items													154			(4,407		)	41,107			7,046			41,107
Total merger-related expenses and notable items													54,165			77,212			152,366			179,404			166,050
Related income tax expense, net of benefits⁽⁵⁾													(11,207		)	(16,114		)	(46,213		)	(37,392		)	(49,481		)
Total adjustments, net of tax		106,153			—		116,569			25,509			42,958			61,098			106,153			142,012			116,569
Adjusted earnings allocated to common stock	(b)	$	125,807		$	83,689	$	292,138		$	231,610	(b)	$	96,202		$	82,368		$	125,807		$	265,932		$	292,138

Weighted-average common shares outstanding used in diluted earnings per common share calculation⁽⁶⁾	(c)	128,754,588			83,808,063		98,055,279			84,791,124		(c)	151,821,592			151,660,139			128,754,588			151,826,928			98,055,279

Diluted earnings per common share	(a) / (c)	$	0.15		$	1.00	$	1.79		$	2.43	(a)/(c)	$	0.35		$	0.14		$	0.15		$	0.82		$	1.79
Adjusted diluted earnings per common share	(b) / (c)	0.98			1.00		2.98			2.73		(b)/(c)	0.63			0.54			0.98			1.75			2.98

Net income attributable to TCF		$	22,148		$	86,196	$	183,069		$	218,706		$	55,738		$	23,764		$	22,148		$	131,401		$	183,069
Total adjustments, net of tax		106,153			—		116,569			25,509			42,958			61,098			106,153			142,012			116,569
Adjusted net income attributable to TCF		$	128,301		$	86,196	$	299,638		$	244,215		$	98,696		$	84,862		$	128,301		$	273,413		$	299,638

⁽¹⁾

~~Included~~Three months ended June 30, 2020 amount included within ~~Net~~other noninterest expense ($0.8 million) and compensation and employee benefits ($0.1 million). Three months ended September 30, 2019 amount included within net gains (losses) ~~gains~~ on sales of loans and ~~leases~~leases. Nine months ended September 30, 2020 amount included within occupancy and equipment ($1.6 million), other noninterest expense ($1.3 million) and compensation and employee benefits ($1.0 million). Nine months ended September 30, 2019 amount included within net gains (losses) on sales of loans and leases.


⁽²⁾	Included within ~~Other~~other noninterest income.


⁽³⁾	Included within ~~Net~~net gains ~~(losses)~~ on investment securities.


(4)	⁽⁴⁾	~~Included~~Three months ended June 30, 2020 amount included within ~~Other~~other noninterest income ($14.7 million net gain) and other noninterest expense ($0.6 million). Three months ended September 30, 2020 amount included within other noninterest expense. Nine months ended September 30, 2020 amount included within other noninterest income ($14.7 million net gain) and other noninterest expense ($0.6 million). Nine months ended September 30, 2019 amount included within other noninterest expense.


⁽⁵⁾	Included within ~~Income~~income tax (benefit) expense.


⁽⁶⁾	Assumes conversion of common shares, as applicable.

Table of Contents

The computation of the adjusted net interest income and margin was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended									Nine Months Ended
(Dollars in thousands, except per share data)	2019			2018			2019			2018			September 30, 2020			June 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Net Interest Income	$	371,793		$	253,502		$	880,279		$	755,342		$	377,167		$	378,359		$	371,793		$	1,157,007		$	880,279
Purchase accounting accretion and amortization	28,411			—			28,411			—			(17,710		)	(18,209		)	(28,411		)	(61,177		)	(28,411		)
Net interest income, excluding purchase accounting accretion and amortization	$	343,382		$	253,502		$	851,868		$	755,342
Adjusted net interest income, excluding purchase accounting accretion and amortization													359,457			360,150			343,382			1,095,830			851,868
Net fees recognized on PPP loans													(11,886		)	(7,805		)	—			(19,691		)	—
Interest recognition on PPP loans⁽¹⁾													(2,824		)	(1,759		)	—			(4,583		)	—
Total PPP loans impact													(14,710		)	(9,564		)	—			(24,274		)	—
Adjusted net interest income, excluding purchase accounting accretion and amortization and PPP impact													$	344,747		$	350,586		$	343,382		$	1,071,556		$	851,868
Net interest margin (FTE)	4.14		%	4.73		%	4.36		%	4.70		%	3.34		%	3.35		%	4.14		%	3.48		%	4.36		%
Purchase accounting accretion and amortization	0.31			—			0.14			—			(0.16		)	(0.16		)	(0.31		)	(0.21		)	(0.14		)
Net interest margin, excluding purchase accounting accretion and amortization (FTE)	3.83		%	4.73		%	4.22		%	4.70		%
Adjusted net interest margin, excluding purchase accounting accretion and amortization (FTE)													3.18			3.19			3.83			3.27			4.22
PPP loans impact⁽²⁾													0.01			0.01			—			0.01			—
Adjusted net interest margin, excluding purchase accounting accretion and amortization and PPP loans impact (FTE)													3.19		%	3.20		%	3.83		%	3.28		%	4.22		%


(1)	Interest income on PPP loans less funding costs.


(2)	The exclusion of PPP loans additionally reduces average earning assets by $1.8 billion and $1.2 billion in the three months ended September 30, 2020 and June 30, 2020, respectively and $1.0 billion in the nine months ended September 30, 2020.

8995

Table of Contents

The computation of the adjusted return on average assets, common equity ~~average tangible common equity~~ and average tangible common equity was as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended									Nine Months Ended
(Dollars in thousands)		2019			2018			2019			2018				September 30, 2020			June 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Adjusted net income after tax expense:
Income after tax expense	(a)	$	24,978		$	88,839		$	192,470		$	227,472		(a)	$	57,302		$	26,233		$	24,978		$	137,351		$	192,470
Plus: Merger-related expenses		111,259			—			124,943			—
Plus: Non-core items		41,107			—			41,107			32,000
Less: Related income tax expense, net of tax benefits		46,213			—			49,481			25,509
Merger-related expenses															54,011			81,619			111,259			172,358			124,943
Notable items															154			(4,407		)	41,107			7,046			41,107
Related income tax expense, net of tax benefits															(11,207		)	(16,114		)	(46,213		)	(37,392		)	(49,481		)
Adjusted net income after tax expense for ROAA calculation	(b)	$	131,131		$	88,839		$	309,039		$	233,963		(b)	100,260			87,331			131,131			279,363			309,039
Net income available to common shareholders	(c)	$	19,654		$	83,702		$	175,588		$	206,131		(c)	53,244			21,270			19,654			123,920			175,588
Plus: Other intangibles amortization		4,544			911			6,154			2,572
Less: Related income tax expense		1,085			220			1,470			620
Other intangibles amortization															5,498			5,516			4,544			16,494			6,154
Related income tax expense															(1,137		)	(1,151		)	(1,085		)	(3,437		)	(1,470		)
Net income available to common shareholders used in ROATCE calculation	(d)	$	23,113		$	84,393		$	180,272		$	208,083		(d)	57,605			25,635			23,113			136,977			180,272

Adjusted net income available to common shareholders:
Net income available to common shareholders		$	19,654		$	83,702		$	175,588		$	206,131			53,244			21,270			19,654			123,920			175,588
Plus: Non-core items		41,107			—			41,107			32,000
Plus: Merger-related expenses		111,259			—			124,943			—
Less: Related income tax expense, net of tax benefits		46,213			—			49,481			25,509
Notable items															154			(4,407		)	41,107			7,046			41,107
Merger-related expenses															54,011			81,619			111,259			172,358			124,943
Related income tax expense, net of tax benefits															(11,207		)	(16,114		)	(46,213		)	(37,392		)	(49,481		)
Net income available to common shareholders used in adjusted ROACE calculation	(e)	125,807			83,702			292,157			212,622			(e)	96,202			82,368			125,807			265,932			292,157
Plus: Other intangibles amortization		4,544			911			6,154			2,572
Less: Related income tax expense		1,085			220			1,470			620
Other intangibles amortization															5,498			5,516			4,544			16,494			6,154
Related income tax expense															(1,137		)	(1,151		)	(1,085		)	(3,437		)	(1,470		)
Net income available to common shareholders used in adjusted ROATCE calculation	(f)	$	129,266		$	84,393		$	296,841		$	214,574		(f)	100,563			86,733			129,266			278,989			296,841
Average balances:
Average assets	(g)	$	39,094,366		$	22,904,404		$	29,283,275		$	23,031,108		(g)	49,539,600			49,716,116			39,094,366			48,749,940			29,283,275
Total average equity		$	4,683,129		$	2,511,983		$	3,316,504		$	2,534,758			5,697,727			5,658,255			4,683,129			5,662,286			3,316,504
Less: Non-controlling interest in subsidiaries		25,516			23,548			26,558			25,133
Non-controlling interest in subsidiaries															(22,638		)	(28,122		)	(25,516		)	(25,353		)	(26,558		)
Total TCF Financial Corporation shareholders' equity		4,657,613			2,488,435			3,289,946			2,509,625				5,675,089			5,630,133			4,657,613			5,636,933			3,289,946
Less: Preferred stock		169,302			169,302			169,302			169,302
Preferred stock															(169,302		)	(169,302		)	(169,302		)	(169,302		)	(169,302		)
Average total common shareholders' equity used in ROACE calculation	(h)	$	4,488,311		$	2,319,133		$	3,120,644		$	2,340,323		(h)	5,505,787			5,460,831			4,488,311			5,467,631			3,120,644
Less: Average goodwill, net		890,155			154,757			402,583			154,757
Less: Average other intangibles, net		142,925			21,772			61,208			22,549
Average goodwill, net															(1,313,046		)	(1,313,046		)	(890,155		)	(1,309,072		)	(402,583		)
Average other intangibles, net															(155,142		)	(160,841		)	(142,925		)	(160,740		)	(61,208		)
Average tangible common shareholders' equity used in ROATCE calculation	(i)	$	3,455,231		$	2,142,604		$	2,656,853		$	2,163,017		(i)	$	4,037,599		$	3,986,944		$	3,455,231		$	3,997,819		$	2,656,853

ROAA⁽¹⁾	(a) / (g)	0.26		%	1.55		%	0.88		%	1.32		%	(a) / (g)	0.46		%	0.21		%	0.26		%	0.38		%	0.88		%
Adjusted ROAA⁽¹⁾	(b) / (g)	1.34			1.55			1.41			1.46			(b) / (g)	0.81			0.70			1.34			0.76			1.41
ROACE⁽¹⁾	(c) / (h)	1.75			14.44			7.50			11.80			(c) / (h)	3.87			1.56			1.75			3.02			7.50
Adjusted ROACE⁽¹⁾	(e) / (h)	11.21			14.44			12.48			13.26			(e) / (h)	6.99			6.03			11.21			6.48			12.48
ROATCE⁽¹⁾	(d) / (i)	2.68			15.76			9.05			12.89			(d) / (i)	5.71			2.57			2.68			4.57			9.05
Adjusted ROATCE⁽¹⁾	(f) / (i)	14.96			15.76			14.90			14.47			(f) / (i)	9.96			8.70			14.96			9.31			14.90


⁽¹⁾	Annualized.

9096

Table of Contents

The computation of the adjusted efficiency ratio, noninterest income and noninterest expense was as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended									Nine Months Ended
(Dollars in thousands)		2019			2018			2019			2018				September 30, 2020			June 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Noninterest expense	(a)	$	425,620		$	246,423		$	915,544		$	764,442		(a)	$	373,440		$	400,241		$	425,620		$	1,148,280		$	915,544
Less: Merger-related expenses		111,259			—			124,943			—
Less: CFPB/OCC settlement adjustment		—			—			—			32,000
Less: Write-down of company-owned vacant land parcels		5,890			—			5,890			—
Merger-related expenses															(54,011		)	(81,619		)	(111,259		)	(172,358		)	(124,943		)
Write-down of company-owned vacant land parcels and branch exit costs															—			(551		)	(5,890		)	(551		)	(5,890		)
Expenses related to the sale of Legacy TCF auto finance portfolio															—			(901		)	—			(3,964		)	—
Adjusted noninterest expense		$	308,471		$	246,423		$	784,711		$	732,442			319,429			317,170			308,471			971,407			784,711
Less: Lease financing equipment depreciation		19,408			19,525			57,797			54,744
Less: Other intangibles amortization		4,544			911			6,154			2,572
Lease financing equipment depreciation															(17,932		)	(18,212		)	(19,408		)	(54,594		)	(57,797		)
Amortization of intangibles															(5,498		)	(5,516		)	(4,544		)	(16,494		)	(6,154		)
Federal historic tax credit amortization															(1,758		)	(179		)	—			(3,459		)	—
Adjusted noninterest expense, efficiency ratio	(b)	$	284,519		$	225,987		$	720,760		$	675,126		(b)	$	294,241		$	293,263		$	284,519		$	896,860		$	720,760

Net interest income		$	371,793		$	253,502		$	880,279		$	755,342			$	377,167		$	378,359		$	371,793		$	1,157,007		$	880,279
Noninterest income		94,258			112,064			307,480			330,529				118,810			133,054			94,258			388,827			307,480
Total revenue	(c)	$	466,051		$	365,566		$	1,187,759		$	1,085,871		(c)	495,977			511,413			466,051			1,545,834			1,187,759

Noninterest income		$	94,258		$	112,064		$	307,480		$	330,529			118,810			133,054			94,258			388,827			307,480
Plus: Loss on transfer of legacy TCF auto loans to held-for-sale		19,264			—			19,264			—
Plus: Termination of interest rate swaps		17,302			—			17,302			—
Less: Gain on sales of certain investment securities		(5,869		)	—			(5,869		)	—
Plus: Loan servicing rights impairment		4,520			—			4,520			—
Loss on transfer of Legacy TCF auto loans to held-for-sale															—			—			19,264			—			19,264
Termination of interest rate swaps															—			—			17,302			—			17,302
Gain on sales of certain investment securities															—			—			(5,869		)	—			(5,869		)
Gain on sales of branches															—			(14,717		)	—			(14,717		)	—
Loan servicing rights impairment															154			8,858			4,520			17,248			4,520
Adjusted noninterest income		129,475			112,064			342,697			330,529				118,964			127,195			129,475			391,358			342,697
Net interest income		371,793			253,502			880,279			755,342				377,167			378,359			371,793			1,157,007			880,279
Plus: Net interest income FTE adjustment		2,488			2,112			5,547			6,269
Net interest income FTE adjustment															2,844			3,032			2,488			8,859			5,547
Adjusted net interest income		374,281			255,614			885,826			761,611				380,011			381,391			374,281			1,165,866			885,826
Less: Lease financing equipment depreciation		19,408			19,525			57,797			54,744
Lease financing equipment depreciation															(17,932		)	(18,212		)	(19,408		)	(54,594		)	(57,797		)
Adjusted total revenue, efficiency ratio	(d)	$	484,348		$	348,153		$	1,170,726		$	1,037,396		(d)	$	481,043		$	490,374		$	484,348		$	1,502,630		$	1,170,726

Efficiency ratio	(a) / (c)	91.32		%	67.41		%	77.08		%	70.40		%	(a)/(c)	75.29		%	78.26		%	91.32		%	74.28		%	77.08		%
Adjusted efficiency ratio	(b) / (d)	58.74			64.91			61.57			65.08			(b)/(d)	61.17			59.80			58.74			59.69			61.57

9197

Table of Contents

The computations of tangible common equity to tangible assets and tangible book value per common share were as follows:


(Dollars in thousands, except per share data)		At September 30, 2019			At December 31, 2018				At September 30, 2020			At December 31, 2019
Total equity		$	5,693,417		$	2,556,260			$	5,658,420		$	5,727,241
Less: Non-controlling interest in subsidiaries		23,313			18,459
Non-controlling interest in subsidiaries									(21,376		)	(20,226		)
Total TCF Financial Corporation shareholders' equity		5,670,104			2,537,801				5,637,044			5,707,015
Less: Preferred share		169,302			169,302
Preferred stock									(169,302		)	(169,302		)
Total common shareholders' equity	(a)	5,500,802			2,368,499			(a)	5,467,742			5,537,713
Less: Goodwill		1,265,111			154,757
Less: Other intangibles, net		215,910			20,496
Goodwill, net									(1,313,046		)	(1,299,878		)
Other intangibles, net									(151,875		)	(168,368		)
Tangible common shareholders' equity	(b)	$	4,019,781		$	2,193,246		(b)	$	4,002,821		$	4,069,467

Total assets	(c)	$	45,692,511		$	23,699,612		(c)	$	47,565,789		$	46,651,553
Less: Goodwill		1,265,111			154,757
Less: Other intangibles, net		215,910			20,496
Goodwill, net									(1,313,046		)	(1,299,878		)
Other intangibles, net									(151,875		)	(168,368		)
Tangible assets	(d)	$	44,211,490		$	23,524,359		(d)	$	46,100,868		$	45,183,307

Common stock shares outstanding	(e)	153,571,381			88,198,460			(e)	152,379,722			152,965,571

Common equity to assets	(a) / (c)	12.04		%	9.99		%	(a)/(c)	11.50		%	11.87		%
Tangible common equity to tangible assets	(b) / (d)	9.09			9.32			(b)/(d)	8.68			9.01

Book value per common share	(a) / (e)	$	35.82		$	26.85		(a)/(e)	$	35.88		$	36.20
Tangible book value per common share	(b) / (e)	26.18			24.87			(b)/(e)	26.27			26.60

The computations of loans and leases and the related allowance for credit losses excluding PPP were as follows:



							Change from December 31, 2019
(Dollars in thousands)	At September 30, 2020			At December 31, 2019			$			%
Commercial and industrial	$	11,557,237		$	11,439,602		$	117,635		1.0%
Commercial real estate	9,627,330			9,136,870			490,460			5.4
Lease financing	2,724,686			2,699,869			24,817			0.9
Total commercial loan and lease portfolio	23,909,253			23,276,341			632,912			2.7
Residential mortgage	5,790,251			6,179,805			(389,554		)	(6.3)
Home equity	3,302,983			3,498,907			(3,498,907		)	(100.0)
Consumer installment	1,341,204			1,542,411			(201,207		)	(13.0)
Total consumer loan portfolio	10,434,438			11,221,123			(786,685		)	(7.0)
Total loans and leases	34,343,691			34,497,464			(153,773		)	(0.4)
PPP (Commercial and industrial)	1,836,850			—			1,836,850			N.M.
Loans and leases excluding PPP loans
Commercial and industrial	9,720,387			11,439,602			(1,719,215		)	(15.0)
Commercial real estate	9,627,330			9,136,870			490,460			5.4
Lease financing	2,724,686			2,699,869			24,817			0.9
Total commercial loan and lease portfolio	22,072,403			23,276,341			(1,203,938		)	(5.2)
Residential mortgage	5,790,251			6,179,805			(389,554		)	(6.3)
Home equity	3,302,983			3,498,907			(195,924		)	(5.6)
Consumer installment	1,341,204			1,542,411			(201,207		)	(13.0)
Total consumer loan portfolio	10,434,438			11,221,123			(786,685		)	(7.0)
Total loans and leases, excluding PPP loans	$	32,506,841		$	34,497,464		$	(1,990,623	)	(5.8)%
Allowance for credit losses	$	549,358		$	116,580
Allowance for credit losses as a % of total loans and leases	1.60		%	0.34		%	126			bps
Allowance for credit losses as a % of loans and leases, excluding PPP loans	1.69		%	0.34		%	135

9298

Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

Interest Rate Risk

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

~~TCF's~~Our ALCO is responsible for reviewing ~~the Corporation's~~our interest rate sensitivity position and establishing policies to monitor and limit exposure to interest rate risk. ALCO manages ~~TCF's~~our interest rate risk based on interest rate expectations and other factors. The principal objective ~~of TCF~~ in managing ~~its~~our assets and liabilities is to provide maximum levels of net interest income and facilitate ~~the~~our funding needs, ~~of the Corporation,~~ while maintaining acceptable levels of interest rate risk and liquidity risk.

ALCO primarily uses two interest rate risk tools with policy limits to evaluate ~~TCF's~~our interest rate risk: net interest income simulation and economic value of equity ("EVE") analysis.

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

The following table presents changes in ~~TCF's~~our net interest income over a twelve month period if short- and long-term interest rates were to sustain an immediate change. These projections were based on our assets and liabilities remaining static over the next twelve months and factored into the simulation model.


	Impact on Net Interest Income					Impact on Net Interest Income
(Dollars in millions)	September 30, 2019
(Dollars in thousands)						September 30, 2020					December 31, 2019
Immediate change in interest rates:
+200 basis points	$	59,400		3.9	%	$	81,800		5.6	%	$	32,200	2.1	%
+100 basis points	35,500			2.3		43,200			3.0		20,900		1.4
-100 basis points(1)	(74,700		)	(4.9	)	(34,600		)	(2.4	)	60,900		(4.0	)

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

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

9399

Table of Contents

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

LIBOR Transition

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

Item 4. Controls and Procedures.

Disclosure Controls and Procedures TCF Financial carried out an evaluation, under the supervision and with the participation of ~~TCF's~~TCF Financial's management, including ~~TCF's~~its Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer) and Chief Accounting Officer (Principal Accounting Officer), of the effectiveness of the design and operation of ~~TCF’s~~TCF Financial's disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on that evaluation, TCF’s Principal Executive Officer and Principal Financial Officer concluded that TCF's disclosure controls and procedures were effective as of September 30, ~~2019.~~2020.

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

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

Changes in Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for ~~TCF.~~TCF Financial. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

100

Table of Contents

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

~~The Merger, which~~While we describe certain control activity below, there was ~~completed on August 1, 2019, had~~no change in internal control over financial reporting (as a ~~material impact on the financial position, results of operations and cash flows~~defined rule in Rule 13a-15(f) of the ~~combined company from~~Exchange Act) that occurred during the ~~date of acquisition through~~three months ended September 30, ~~2019.~~ 2020 that has materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

The ~~Merger also resulted in significant changes~~Corporation incorporated certain new controls related to the ~~combined company's~~final adoption of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments into the existing internal ~~controls over~~control environment.

During the three months ended September 30, 2020, the Corporation completed Merger-related integration activities, including converting and consolidating legacy financial ~~reporting. We are in~~systems and certain legacy control processes into the ~~process of assessing, as well as planning for~~previously existing internal control environment, which were undertaken to enhance our operating platform. The Corporation believes the ~~integration of,~~necessary steps were taken to maintain appropriate internal controls over financial reporting ~~for~~during this integration period, and has continuously monitored the ~~combined company~~controls to provide reasonable assurance that controls were effective during and ~~will report on our assessment~~after each step of ~~our internal controls over financial reporting in our next annual report.~~the integration process.

94101

Table of Contents

Part II - Other Information ��

Item 1. Legal Proceedings.

From time to time, ~~TCF is~~we are a party to legal proceedings arising out of ~~its~~our lending, leasing and deposit operations, including foreclosure proceedings and other collection actions as part of ~~its~~our lending and leasing collections activities. ~~TCF~~We may also be subject to regulatory examinations and enforcement actions brought by federal regulators, including the ~~Securities and Exchange Commission,~~SEC, the Federal Reserve, the ~~Office of the Comptroller of the Currency~~OCC and the ~~Consumer Financial Protection Bureau~~CFPB which may impose sanctions on ~~TCF~~us for failures related to regulatory compliance. From time to time borrowers and other customers, and employees and former employees have also brought actions against ~~TCF,~~us, in some cases claiming substantial damages. ~~TCF and~~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 ~~TCF's~~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 ~~the~~our consolidated financial position, operating results or cash ~~flows of TCF.~~flows.

Item 1A. Risk Factors.

~~There were no material changes in~~In addition to the risks detailed below, additional information concerning risk factors ~~for TCF~~facing the Corporation is contained in this report under the ~~quarter covered by this report. You should carefully consider the risks~~heading "Forward-Looking Statements" and ~~risk factors included under Part 1,~~in Item ~~1A.~~1A, “Risk Factors,” in ~~each of TCF’s and Legacy TCF’s~~our Annual ~~Reports~~Report on Form 10-K for the year ended December 31, ~~2018, and in TCF’s other SEC filings, including the Joint Proxy Statement/Prospectus regarding the Merger that TCF filed with the SEC on May 3, 2019 pursuant to Rule 424(b)(3).~~2019. TCF's business, financial condition or results of operations could be materially adversely affected by any of these risks.

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

As previously disclosed in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, our operations and profitability are impacted by business and economic conditions generally, as well as those in the primary banking markets in which we operate. The COVID-19 pandemic first declared in March by the World Health Organization resulted in historic job losses and decreases in economic activity, neither of which have returned to pre-pandemic levels. Although we have taken steps such as offering loan deferrals to attempt to mitigate the adverse consequences to our businesses, these steps may not be sufficient, and the effects of the pandemic may impact the ability of individuals and small businesses to make payments, the value of underlying collateral, and the ability of guarantors to make payments in the case of default, reduce our ability to access capital, subject us to increased liability, and otherwise adversely impact the financial condition, results of operations, prospects of our businesses and our credit ratings. While the United States and various state and local governments have implemented various programs designed to aid individuals and businesses, the duration of such programs and the impact of, and extent to which these efforts will be successful, cannot be determined at this time.

Many of our customers and counterparties have been and may continue to be adversely impacted by the COVID-19 pandemic and resulting economic downturn. As a result, we have faced and may continue to face a decrease in demand for certain products, and disruptions in the operations of our branch network and our vendors. The pandemic could also result in the recognition of additional credit losses in our loan and lease portfolios and increase our allowance for credit losses as both businesses and consumers are negatively impacted by the economic downturn. Additionally, customers that are increasingly forced to work remotely and may not have appropriately secured remote networks may be more vulnerable to cyber-attacks or phishing schemes. Any of these occurrences could have a material adverse effect on our financial condition, results of operations and prospects. The extent to which the pandemic impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning its severity and the actions necessary to contain it or address its impact, among others. The duration of these impacts resulting from the COVID-19 is unknown, and the resulting customer behavioral changes are not fully known and may not be temporary.

95102

Table of Contents

In addition, the COVID-19 outbreak has caused, and will continue to cause, substantial disruption to our employees as a result of illness, increased family responsibilities, self-isolation, travel limitations, and otherwise. Most areas within the United States have imposed business and other restrictions, and it is currently unclear for how long such restrictions will last. These restrictions have affected many of our customers and businesses through which we sell our products and services, and the increased reliance on remote work may result in increased vulnerabilities through heavy dependence on remote networks.

Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently known, could materially impact our team members and decrease our ability to serve customers, increase our costs, negatively impact our sales and damage our results of operations and our liquidity position, possibly to a significant degree. The duration of any such impacts cannot be predicted.

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

Share repurchase activity for the ~~quarter~~three months ended September 30, ~~2019~~2020 was as follows:


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
July 1 to July 31, 2019
July 1 to July 31, 2020
Share repurchase program⁽¹⁾	780,716	$	41.39	780,716	—	$	—	—	$	89,419,941
Employee transactions⁽²⁾	2,153	41.33		N.A.	1,953	27.80		N.A.	N.A.
August 1 to August 31, 2019
August 1 to August 31, 2020
Share repurchase program⁽¹⁾					—	$	—	—	$	89,419,941
Employee transactions⁽²⁾	6,899	38.14		N.A.	4,153	27.69		N.A.	N.A.
September 1 to September 30, 2019
September 1 to September 30, 2020
Share repurchase program⁽¹⁾					—	$	—	—	$	89,419,941
Employee transactions⁽²⁾	2,777	37.44		N.A.	36	23.36		N.A.	N.A.
Total
Share repurchase program⁽¹⁾	780,716	$	41.39	780,716	—	$	—	—	$	89,419,941
Employee transactions⁽²⁾	11,829	38.55		N.A.	6,142	27.70		N.A.	N.A.

N.A. Not Applicable

(1)

On ~~July 25, 2018,~~October 24, 2019, the ~~Legacy TCF~~ Board of Directors approved aan authorization to repurchase up to $150.0 million ~~increase to Legacy TCF's~~of our common ~~stock repurchase program, with repurchases to~~stock. Repurchases will be based on market conditions, the trading price of ~~TCF~~our shares and other factors. ~~This~~The ability to repurchase ~~authorization was terminated in connection with the completion of the Merger effective August 1, 2019. The total number of~~ shares ~~purchased and the average price paid have been retrospectively adjusted to reflect the equivalent number of shares issued~~ in the ~~Merger.~~future may be adversely affected by new legislation or regulations or by changes in regulatory policies.

(2)

Represents restricted stock withheld pursuant to the terms of awards granted under ~~either~~ the Legacy TCF Financial ~~Incentive Stock Program or the Legacy TCF~~ Omnibus Incentive Plan to offset tax withholding obligations that occur upon vesting and release of restricted stock. ~~Both plans provide~~The plan provides that the value of shares withheld shall be the average of the high and low prices of common stock of ~~Legacy~~ TCF Financial Corporation on the date the relevant transaction occurs. With respect to employee transactions from July 1 to July 31, 2019, the total number of shares purchased and the average price paid have been retrospectively adjusted to reflect the equivalent number of shares issued in the Merger.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

96103

Table of Contents

~~Item 5. Other Information.~~

The following information is being filed herewith in lieu of filing such information on a Current Report on Form 8-K under Item 5.02, Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers:

~~Amendment and Restatement of Employment Agreement with Craig R. Dahl~~

~~On November 6, 2019, TCF made and entered into an amended and restated employment agreement (the~~ ~~“Employment Agreement”) with Craig R. Dahl in order to align certain terms of Mr. Dahl’s employment with those of other executive officers of the Corporation.~~

~~The Employment Agreement changed certain terms of Mr. Dahl’s employment that were contained in that certain Amended and Restated Employment Agreement (the~~ ~~“Merger Employment Agreement”), dated January 27, 2019, which became effective on August 1, 2019. Below is a summary of the materially changed terms of Mr. Dahl’s employment following execution of the Employment Agreement:~~

The cash payment called for in the event of a termination by the Corporation without Cause, or by Mr. Dahl with Good Reason was changed from 2.5 times the sum of (i) his Annual Base Salary and (ii) his annual bonus (which was set as to equal 100% of his salary) to 2.5 times the sum of (i) Mr. Dahl’s Annual Base Salary and (ii) the average of Mr. Dahl’s annual bonus for the three most recently completed fiscal years;

in the event of a termination by the Corporation without Cause, by Mr. Dahl for Good Reason, or upon death, disability or retirement on one year's notice, all of Mr. Dahl’s outstanding equity awards will vest; and

The definition of Change in Control was changed by increasing the percentage of securities of the Corporation that any person would have to become the beneficial owner of in order to qualify as a Change in Control from 30% to 40% and the definition was expanded to include an “Active Change in Control Proposal Period” as defined in the Employment Agreement;

Other than as described above, the material terms of Mr. Dahl’s employment contained in the Merger Employment Agreement remain unchanged, and the description of them contained in the Corporation’s Current Report on Form 8-K filed on January 28, 2019 is incorporated herein by reference.

The foregoing description of the Employment Agreement is qualified in all respects by reference to the full text of the Employment Agreement, a copy of which is attached as Exhibit 10(a) to this Quarterly Report on Form 10-Q.

~~Table of Contents~~

Item 6. Exhibits.



Exhibit Number		Description
~~2(a)~~		Agreement and Plan of Merger between Chemical Financial Corporation and TCF Financial Corporation dated as of January 27, 2019 [incorporated by reference to Exhibit 2.1 of TCF Financial Corporation’s Current Report on Form 8-K filed with the SEC on January 28, 2019 (No. 19545732)]
3(a)		Restated Articles of Incorporation of TCF Financial Corporation [incorporated by reference to Exhibit 3.1 to our Form 10-Q for the quarter ended March 31, 2017 (No. 17829102)]
3(b)		Amendment to the Restated Articles of Incorporation of TCF Financial Corporation, including the Certificate of Designations of 5.70% Series C Non-Cumulative Perpetual Preferred Stock [incorporated by reference to Exhibit 3.2 of TCF Financial Corporation’s Current Report on Form 8-K filed with the SEC on August 1, 2019 (No. 19993087)]
3(c)		Bylaws of TCF Financial Corporation, as of August 1, 2019 [incorporated by reference to Exhibit 3.3 of TCF Financial Corporation’s Current Report on Form 8-K filed with the SEC on August 1, 2019 (No. 19993087)]
4(a)		Description of Capital Stock [incorporated by reference to Exhibit 4.1 of TCF Financial Corporation’s Current Report on Form 8-K filed with the SEC on August 1, 2019 (No. 19993087)]
10(a)#*		~~Amended and Restated Employment~~Consulting Agreement between ~~Craig R. Dahl~~Dennis L. Klaeser and TCF Financial Corporation, dated August 5, 2020. Previously filed as Exhibit 10(j) of ~~November 6, 2019~~
10(b)*		~~Letter Agreement dated July 31, 2019 between Chemical Financial Corporation and Brennan Ryan [incorporated by reference to Exhibit 10.2 of TCF Financial Corporation’s Current~~the registrant's Quarterly Report on Form ~~8-K~~10-Q filed with the SEC on August ~~1, 2019 (No. 19993087)]~~
10(c)*		~~Amended and Restated Employment Agreement dated July 31, 2019 between Chemical Financial Corporation and Thomas C. Shafer [incorporated~~7, 2020. Here incorporated by ~~reference to Exhibit 10.23 of TCF Financial Corporation’s Current Report on Form 8-K filed with the SEC on August 1, 2019 (No. 19993087)]~~
10(d)*		Form of Retention Time-Vesting Restricted Stock Unit Agreement [incorporated by reference to Exhibit 10.4 of TCF Financial Corporation’s Current Report on Form 8-K filed with the SEC on August 1, 2019 (No. 19993087)]reference.
31.1#		Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2#		Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1#		Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2#		Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH#		Inline XBRL Taxonomy Extension Schema Document
101.CAL#		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF#		Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB#		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE#		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and embedded within Exhibit 101)

* Executive Contract

# Filed herein

98104

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	TCF FINANCIAL CORPORATION


	/s/ ~~Craig R. Dahl~~David T. Provost
	~~Craig R. Dahl,~~David T. Provost,
	Chief Executive Officer ~~and President~~
	(Principal Executive Officer)

	/s/ ~~Dennis L. Klaeser~~Brian W. Maass
	~~Dennis L. Klaeser,~~Brian W. Maass,
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

	/s/ Kathleen S. Wendt
	Kathleen S. Wendt,
	Executive Vice President and Chief Accounting Officer
	(Principal Accounting Officer)

Dated: November ~~12, 2019~~6, 2020

99105



(In thousands)
Business combination
Fair value of tangible assets acquired	$	21,482,439
Goodwill, loan servicing rights and other identifiable intangible assets acquired	1,371,489
Liabilities assumed	19,835,372
Common stock and stock options converted	3,018,556



(In thousands)	At September 30, 2019
Carrying amount	$	2,682,097
Unguaranteed residual assets	148,669
Net direct fees and costs and unearned income	(236,393		)
Total net investment in direct financing and sales-type leases	$	2,594,373



(In thousands)
Remainder of 2019	$	51,851
2020	333,516
2021	459,359
2022	554,951
2023	563,752
Thereafter	612,063
Equipment under leases not yet commenced	47,948
Total undiscounted future minimum lease payments receivable for direct financing and sales-type leases	2,623,440
Third-party residual value guarantees	58,657
Total carrying amount of direct financing and sales-type leases	$	2,682,097



(In thousands)
Remainder of 2019	$	20,087
2020	71,120
2021	48,885
2022	25,915
2023	9,777
Thereafter	4,717
Total undiscounted future minimum lease payments	$	180,501



	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2019			2018			2019			2018
Sale proceeds, net	$	472,800		$	410,389		$	1,066,576		$	940,134
Recorded investment in loans and leases sold, including accrued interest	458,697			393,078			1,033,961			911,218
Interest-only strips at initial value and other	(20,087		)	(8,809		)	(19,241		)	(4,016		)
Net (losses) gains on sales of loans and leases	$	(5,984	)	$	8,502		$	13,374		$	24,900



(In thousands)	Core deposit intangibles			Program agreements			Non-compete agreements			Customer relationships			Total
At September 30, 2019
Gross carrying value	$	180,837		$	14,700		$	9,250		$	24,380		$	229,167
Accumulated amortization	(6,372		)	(868		)	(5,334		)	(683		)	(13,257		)
Net carrying amount	$	174,465		$	13,832		$	3,916		$	23,697		$	215,910
At December 31, 2018
Gross carrying value	$	3,049		$	14,700		$	9,250		$	2,000		$	28,999
Accumulated amortization	(2,502		)	(408		)	(3,643		)	(1,950		)	(8,503		)
Net carrying amount	$	547		$	14,292		$	5,607		$	50		$	20,496



(In thousands)
Remainder of 2019	$	9,137
2020	32,687
2021	23,902
2022	18,624
2023	15,807
Thereafter	48,737
Total undiscounted future minimum operating lease payments	148,894
Discount	(13,751		)
Total operating lease liabilities	$	135,143



(In thousands)
Remainder of 2019	$	4,813,249
2020	3,138,314
2021	266,425
2022	97,139
2023	40,823
Thereafter	30,022



	Number of Units		Weighted-average Grant Date Fair Value Per Unit
Outstanding at December 31, 2018	406,575		$	17.33
Outstanding at December 31, 2018 as adjusted for conversion	206,580		34.11
Granted	533,267		41.51
Converted in the Merger⁽¹⁾	55,022		42.06
Acquired in the Merger	824,757		47.71
Forfeited/canceled	(20,648	)	41.64
Vested	(104,652	)	28.85
Outstanding at September 30, 2019	1,494,326		$	38.46



	Payments Due by Period
(In thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Contractual Obligations:
Certificates of deposit	$	8,385,972	$	4,813,249	$	3,404,739	$	137,962	$	30,022
Long-term borrowings	860,482		11,138		179,782		132,681		536,881
Lease obligations	399,825		9,517		59,709		53,990		276,609
Other contractual obligations ⁽¹⁾	129,916		12,256		115,786		1,026		848
Marketing related contracts	246,100		46,793		79,497		63,450		56,360
Construction contracts and land purchase commitments for future branch sites	13,313		13,313		—		—		—
Liabilities related to acquisition and portfolio purchase ⁽²⁾	8,288		—		4,089		1,024		3,175
Total	$	10,043,896	$	4,906,266	$	3,843,602	$	390,133	$	903,895