TCF Financial (TCF)

Jason Korstange Director of IR
Craig Dahl Chairman & CEO
Brian Maass CFO
Tom Jasper COO
Mike Jones EVP, Consumer Banking
Bill Henak EVP of Wholesale Banking
Jim Costa Chief Risk Officer & Chief Credit Officer
Jon Arfstrom RBC Capital Markets
Scott Siefers Sandler O'Neill
Dave Rochester Deutsche Bank
Chris McGratty KBW
Kevin Reevey D.A. Davidson
Nathan Race Piper Jaffray
Ken Zerbe Morgan Stanley
Lana Chan BMO Capital Markets
Steven Alexopoulos JPMorgan
Jared Shaw Wells Fargo
David Chiaverini Wedbush
Call transcript
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Good morning, and welcome to TCF's 2018 First Quarter Earnings Call. My name is Jamie, and I’ll be your conference operator today. [Operator Instructions] Please note today's conference call is being recorded. At this time, I’d like to introduce Jason Korstange, TCF’s Director of Investor Relations to begin the conference call.

Jason Korstange

Good morning, everyone and thanks for joining us for the TCF’s first quarter 2018 earnings call.

Consumer be Chief Chairman Chief Jim Operating Mike EVP will Officer; Chief Financial Costa, today EVP Jones, Jasper, Henak, and Tom Officer; of Officer. Chief me Risk Craig Banking; Chief and Dahl, Executive Officer; of Officer Joining Wholesale Bill Credit and Banking; Brian Maass, overview first quarter results. In just Brian Craig, our moments, and Jim of a few will provide an of is They will available that TCF's be website, Relations Investor presentation ir.tcfbank.com. referencing on section a the slide

questions. for up open will we remarks, their Following

During information make information. the will about accurate in today provide and Chairman statements financial earnings we quarter We undertake today’s may events regarding to risks may we materially to future are performance Dahl. over company. or may forward-looking no presentation, and XX, other actual differ statements and Please and uncertainties, the we is projections the information The TCF and CEO, affect XXXX such events XXXX, I future for Craig caution disclosure duty release see now the our first more turn us. conference will that results statement predictions call as March the of or that which of update forward-looking

Craig Dahl

Reported continued net diluted quarter $XX strategic everyone. which morning first you, EPS and of Jason. a here delivered pillars, X, financial drove income on Slide four $X.XX. our performance. up growth of on and first start Thank Good to quarter XX% strong profitable million XXXX of to focus the compared improved I’ll first our with the quarter out start our a We themes. year in

income redemption took of per included Series preferred of results share March a related which net available common to stockholders the quarter $X.XX on XXXX. stock, first our B X, to place onetime reduction Our in

positively to our from lease loan interest as sheet recent continued sensitive rate quarter, the asset balance impacted earnings hikes and During benefit yields.

expansion and expansion lease been we've as strong on able cost our our a a loan to exceeded year-over-year deposit basis, In and maintain result, a yield fact, margin. interest

the exceeded reduction efficiency days runoff driving are reinvested our ratio progressing and lease We we also finance growth year-over-year. across investment progress with growth runoff in driving improvements and auto the being expected, the as but is organization into revenue portfolio for portfolios, made as note XXX in still and our The only a loan efficiency in. expense that

the charge-offs We sheet, our reduce and also to of excluding stable during declined quality of first estate profile the the sale, which strong of our first credit primarily a performance balance in the quarter year-over-year took impact loan on Net non-accrual XXXX. and the auto risk portfolio. consumer off of basis through place quarter maintained run real continue the the

XXXX, in net first in of points businesses nine first While totaled points quarter basis from our quarter basis the XXXX. of the XX charge-offs just in non-auto down

stock our Lastly, we we result $XXX additional repurchase redemption of the quarter. expense stock the shares second a including of as completed and continue authorization also preferred preferred our beginning to execute on in of dividend share the repurchase several million Series will capital reduced which part B initiatives in

trends very expect we Turing in encouraging summary. for forward. moving four for returns on our as that on opportunities execute our as improved to Brian strategic to Slide We more about talk X, support in improves. quarter XXXX we that the continue outlook forward, first pillars. Going presentation. risk this our may our we additional saw profile capital the initiatives will I'm start with see later many to our revenue pleased capital

and larger yields interest interest portion quality in total. loan higher being average income and by growth. income a to and growth We revenue year-over-year revenue lease net driven becoming is leases The strong higher continue net see the generating of while with on increase loans

up Our increased sensitivity $XX in and basis a our finance balance demonstrating Strong to leasing the now points are business resulting be investments million revenue year-over-year revenue. net in we total. strategic of assets of equipment the net XX% lease interest consistent driver are true which making margin of makes income The strong leasing sheet. of first XX in non-interest growth, more and the this operating quarter continues creates

bottom a non-interest $XX is added an view of a have the increase million $XX income appreciation quarter, operating million. in of year-over-year. $X in leasing on a new slide results non-interest netting income of the We the net lease net on leasing right the out first This of million portion which

net be customer $XX and remains driven. of Going forward, XXXX quarterly expect would income to million mind keeping portion in that revenue the million, leasing non-interest we between $XX a

Turning to lease and our portfolio. Slide loan X,

well-diversified growth in equal year-over-year. Our finance, by This portfolio year-over-year driven existing lease programs grew and in XX% was X.X% had balances new basis and has Inventory first seasonal driven almost peak the a in continued growth portfolio. its with our very programs. strong by loan growth up on both which wholesale quarter

We expect to prior second decline consistent in balances with quarter these the seasonal a see years. in

and balances up while addition, finance X.X% equipment increased leasing X.X%. In were commercial balances

the auto I expected run-off million loan progressed and as As the $XXX down finance during now up and with balances making portfolio XX% lease earlier, the mentioned quarter of portfolio.

$X.X expect billion continue year of $X to auto billion XXXX, of portfolio run-off. full the and With between we

growth opportunities growth year-over-year for to our non-auto continuing year mid-single expected excluding auto. are full XXXX in as of see X.X% with was growth our the portfolios We digit

and lease Slide yields. our X, to Turning loan

increased points segments, of loan of increases loan in increases focus lease and by XX strategy all performance. our as our continue driven and in short-term Our our pricing discipline in portfolios. rates experts year-over-year The drive to basis yield competing yields strong

yield one-time quarter fourth program reminder, the inventory yield of usual the finance a XXXX the due a greater reduced XX expansion in the As was quarter which points to of extension in by of first basis and approximately the linked-quarter than XXXX. impact

yields auto portfolio, points year-over-year. the Excluding XX basis expanded by

loan the quarter yields X.XX% were banking. lease diversified with charge-offs business net nine Slide X We with portfolio, points. a focus basis a digital on pricing of is as loan discipline our plan credit and continue first to in just here and execute non-auto our

turn want I to we’ve to over I here. it about the made Brian, investments talk Before

we’ve and in mobile previously mentioned XXXX platform launch digital budgeting including facial enhanced recognition, advanced capture features of deposit successful which provides the completed our tools. we and As thumbprint digital

We are continuing to shift our preferences. with investment to from to branch align channels customer self-service

platform since the concurrent as enabled users billion. our by fact, our response significantly In our customers deposits account, are have reduced image The including growing digital the XXX now launch. utilizing exceeded our XXXX, ATM all $X.X from many four beginning of fleet, are we times has increased ATMs as expectations since branch the

strong create existing via put the position made retain channels has only In increased with new increased but of us digital account and the relationships. customers believe this competitive deposits platform have complying digital We in will ATM focus year-over-year, XXX% does not number XX%. that while addition, with peers, banking on the our customer and experience our a us to allow it openings

first the has We since checking XXXX. so the attrition account of quarter have seen as declined far

free. As it you, better is become forward. these our more our continues turn to to franchise remind providing deposit strong still Brian. account valuable, growth I'll moving investments I’ll And over opportunities are

Brian Maass

a little Page about the X. bit Talk Craig. on deposits Thanks,

on billion $X.X or a year-over-year X% increased deposits average basis. Our

need declined XX% quarter our linked the CD If for that's the growth. basis, concentration really you and linked at on look quarter CD to on reducing to auto due a Also our run-off, average interest four of our points, our rate and up balances the in more in growth driven again basis quarter. by decline only is basis, deposits checking savings and in on average CDs

savings checking on to to more and growth, balances and core driven by be we moderate. Going our CD growth to expected deposit we expect forward continue

some are nature mitigate. on costs, to we of deposits increase, the but As interest deposit competitive is rates seeing impact our helping retail

were branches, happened did closure Finally, late April. of those the two we of of three in complete as in the closing last branches, that mentioned quarter them and QX beginning we happened five we

a realize Turning increased. as we to asset from our sensitivity X, rates Slide positive impact continue to

expansion are If we all at you on these are look the the rate And in experiencing yield loan on And can our but up categories, between see the XX year-over-year you basis. a also points they're positive variable growing. higher is XX are that see not basis and in loans. upper can portfolios left, the only you the having rates these impact chart

is billion XX% at variable a only versus the XX% of percentage greater year total end XX% our of at see being this make all that's up QX, and $X.X our there that’s last of last can loans rate up You loans versus year. year now

helping On the you go in looking side deposits composition as mitigate see deposits, really us is increase the deposit our rates right-hand higher. upper costs of can at

deposits over basis years And period point see circle the or right, time You red is same increase can - on we've X.X the only there can rates. over XX cost now you last our points. total of know see up you X a XXX-basis seen the in time that in

you when higher - interest of margin. net have our expected basis So, rates were to those be of investment two our left, it on we headwinds well both and our as as things together headwinds. trend, of a do those put of of variable can We going those had up in loans, was finance. gross auto lower basis, those the our quarter. you up But two see know, linked run-off, points. actually the growth to we, exempts, look be than into that inventory basis the quarter a our change tax interest offset well both as on in Part the versus on seasonal points round a fourth you you as net by more of down couple We margin in rate portfolio, the as were couple

factors this be expect of lease to portfolio, over portfolio going several to the other investment the as time. will additional headwind. as well impact rate and we into forward, finance loan is our margin reinvestment Going hikes help but offset partially categories, do to auto One our continue

second We be of well really then pricing. as strong and deposits, happens overall, interest growth upon our expect But our changes based lease the seasonality decline our than inventory the portfolio, have. quarter margin do to even net QX in the more year and last that and and those mix we will the be in addition, expect depending every In balances what of we're as they impacted in margin on margin by quarter we finance. about impacted upon performance that's do to loan also as were the our by optimistic we composition

Turning controlled first to well the were in quarter. Slide XX. Expenses

which had million of you which down XXXX, As expected, QX look at $XXX year, of is from if we million. last was $XXX expenses,

we Going year. look to and quarter flat versus when forward, at those of expect be third XXXX, we quarter the second prior

third range. and be one-time the a charges, expecting all so operating see you year somewhere the When Craig but be million fourth offset $XXX less bit to to probably with probably you year from the at X, revenue. red that the more million mentioned second million But $XX than little did look $XXX they quarter in be lease million obviously to which by we’re was $XXX for from is and that can bars it last around lease as that Slide million quarter up increase So, operating year. quarter, were last this will than growth may on the in $XX the chart, in depreciation

reminder, just as these quarters on that to and the XXXX. be expense for revenue a where will a expenses transaction think Craig remaining we really a guidance against net are in So those gave the

year still of at a XX% to be in So XXXX. overall, our efficiency full for expect range ratio XX% we the to

million we capital, our capital We million. Turning shares last $XXX did even recent to this our million On cost we after that quarter. of to We during announced $XX.X almost Slide initiatives maintain remaining quarter have a X.X at still repurchase XX. continue capital ratios, $XX of year. strong authorization million about the late

in we’re see, complete running expect and maybe we the could are can before saying third that do schedule what entire of our sometime quarter this on versus over might the you As year we XXXX. it program buybacks, ahead itself

see $X.X X, the on In annual impact $X.XX addition, did have we in completed March we negative now first B second a million quarter, here quarter. stock start the worth but preferred on of our that that will will savings the Series redemption of

for In for initiatives. buyback, organic of our addition, spoken well can as about of of it type we use you corporate four capital dividends, know being can we uses it we've use development we as use it stock frequently growth, for kind can

as with expect now that us credits. capital deploying areas. see well our position our Jim talk more capital about seen XXXX, to initiatives will we And those us over capital in And as capital to of all that, turn may XXXX. in managing You’ve levels additional for be lastly, with a strong for to I in as we focus continue opportunities will

Jim Costa

Brian. you, Thank

quality Slide the XX XX, attention quarter flat basis. start ended If overall we turn at the a year-over-year up at can relatively broader delinquencies, look the is We’ll your points, can with see on credit a we’ll take you which you to just basis trends.

for lower In fact, basis were quarters. auto, you for XX the basis XX-day remained the and at below delinquencies last delinquencies if XX points points or have remained have XX to quarters seven last exclude

provision in equipment to as seasonality quarter XXXX. finance, a well a basis first on delinquencies did of points come requirements inventory following trend, auto. at leasing basis. declined reserve auto finance quarter ending to four flat remained of and typical seasonal addition, net basis linked due linked NPAs increased It and compared also $XXX decline In on as XX% have the a the have in million, and quarter decreased XX% the quarter charge-offs and

the the net quarters have as third charge-offs sales XXXX, and of Excluding remained impact well. non-accrual in stable first of

If look ratios can in as is level basis remaining by Slide a charge-off across the business quarter the entire portfolio. you strong first overall. the Including evidence diversification benefit XX, remain we portfolio, detail our the see XX, points just the Slide turn we'll of net charge-offs. had at take to six you On the closer philosophy wholesale net line the and

charge-offs at charge-offs mentioned year, of the an platforms core levels look excluding sales has you which at If quarter and to operating Slide loan just the the recoveries of the lending first over last non-accrual Craig XX, low in basis bottom that’s very as from our last nine year. a of pleased quality the very of our Overall, in is points points we're of credit nine range basis the XX with portfolios.

it turn I’ll over Now to Craig.

Craig Dahl

strong take rest XXXX year. Jim. with how the is which very Thanks, and results we’re I'll for first strategic to of themes. our quarter you Slide I'm our positioned pleased the XX,

themes As in to XXXX I go a view do a want mind. take to few of broader where you come

the First, to primarily we're reduce of the time. the lower of credit, equal. sheet by overall portfolio, with we operational by reduce liquidity risk charge-off which auto Eliminating risk and highest and else will the over driven our the profile being continuing portfolio run-off reserve to net balance risk expect all our the levels

and revenue. of more had the able will our to auto market, finance be associated has our We of we secondary the reduce volatile operating quality which as the risk already business benefit improving exit added

have more of also run-off which liquidity pressure to with deposits. that portfolio, We the the reduces pay out for

as very opportunities the organization, other am look rest in at have Second, the I the by we I encouraged our of businesses.

We have an have banking estate our finance sale and on commercial in or inventory our opportunity real revenue strong to consumer growth profitability additional In businesses. leasing a gain outlook and to we continue business in optimize see to business. addition the our look as business as hold have flexibility loans growth This to is TCF ourselves sheet returns we second balance to already originations, we mortgage new home in matures. our the and

continued have has digit portfolio in lease in valuable rate current auto deposit mind grow strong a become Keep mid-single environment. and with expansion. expect in XXXX franchise excluding we more investment rising that loan very We the

addition, well new banking customers platform by be in to In launch as since received by our its usage, the XXXX. continues significant digital increase evidenced in our

as continue needs forward. this Our look and teams I meeting our customers of the we to and executing forward business the changing for well are move

several to ROATCE the our quarter return on provided as and just Finally, been range that. saying do to past is we are over on of months, we've guidance XX.X%. the capital we on in improving track XXXX XX.X% focus primary Last

the upper are areas strategic we our full-year XX%. more meeting it to in now a with very for efficiency half our our and we that achieve for in additional to with ROATCE of reduced in to open months efficient to more mind our use we excited auto target our achieve believe rate past risk value. the expectations addition ability we ratio about several and XXXX the And addition, confident in that, in a for the full-year remain run-off target efficiency range. of the And we confident up hikes, focus Keep in to XX% narrow in expectations With ROATCE outlook of over portfolio drive overall profile will I'll I'm improvements and the shareholder expect significant as of targeting organization capital a the organization. XXXX, this that questions. an


Please question. [Operator our go ahead first Instructions] Jon And from question your Capital RBC comes Markets. Arfstrom from with today

Jon Arfstrom

I other growth that some drivers regular the give little you there categories the was out finance. the more that us in little on inventory of a but terms on big bit loan Craig, up. of a that elements were growth seasonality, One think Can you stood bit touched there? rate them took information

Craig Dahl

from I think, of continues my And for of that an I Jon, existing programs us asset was to be identified both and that this programs. addition class. comments, the growth in inside the expansion opportunity think new I

Jon Arfstrom

did was equal And of say that the drive new growth? would it maybe an split programs, more or the you

Craig Dahl

and equal the of this it an part more year and split outstandings. is probably say, to was of just addition the seasonal the It less of of it I would was

Jon Arfstrom

that question then a And you, side the really Brian, flip maybe question. of it's for

We seasonality in and finance. have have expected we the then run-off, inventory the auto

How bit your there's I loan income net next interest a mix, asset asset next earning margin, to want headwind earning you guess know of for do us So, quarter. think a in quarter? you next, through,

Brian Maass

if mixing there different right. say, margin is a So, are there, our factors you're in and lot I looking in of interest would net that

a But forward. saw of rate QX, - about know in headwind exempts, we on at point and was into So portfolio the changing happened you QX three was probably talking up are point kind couple basis probably what interest of headwinds margin you our as as you that headwind. net of I know, just three go QX. investment auto these about couple know a in in the of gross talked The run-off you portfolio the tax harder basis

You million that we partially cumulatively of auto progress impact as through the we because know that's right that will as which off larger cumulatively the three going a when last you bigger have points quarter. in go $XXX year, to only quarter's basis second is talking had so are ran get QX

over that said I know on some the time would You meaning over build be that pressure there potential would that margin time.

However to is as interest that a you there it. higher, rates said, the that can chance we those extent going know I you have know offset

and if back to me guidance. So speak were to it's at for Last year full at our I stand kind full year. was look we to $XXX million for at, year easier even of on

that. I these year-over-year think chance it or stays basis off there's interest of that and on make we'll factors basis even on see a points flat our offsetting margin couple that possibly a net other so a only

So that's a I thing. good think

You to to know due the having it's partially assets. of this it’s more higher it’s composition rate partially due rates, variable

We the pressure. forward side, also very continue see deposit we’ll on to we additional know we price go but focused some deposit cost, on maintaining as be on

Craig Dahl

other our there of pull. I that on Craig. you're one of sensitive levers only is I'd it's a model. value point think the We're be mean, or out and not see asset sensitive is to we asset another can that. relying This a And classes. you’re and starting couple lot got of We've single the diversified thing thing thing to to it's say asset I

Jon Arfstrom

this in quarter, that we’re guess probably see fair to - this is assumption? up Brian, bigger And step a securities a a portfolio bit it’s of the likely I

Brian Maass

continue to we’ll right. build, I’d say

strategy think I changed we - haven’t the we as there.

a wind to cumulatively XXXX. least billion so of And $X will as the continue $X.X some impact correct could progress a that you the we those over time. portfolio, that at in auto, of the to the run-off up we of larger initially have investment proceeds see as So, will have investment portfolio we you’re billion know through building


Siefers question. your Scott ahead Sandler O'Neill. from from go with comes question Please next Our

Scott Siefers

to few do that's on Maybe draw just for could touch relative for you think that instance just you noticed the of given a a net guys provide there whole, decision be the to reserve? going to that know the transitory recoveries had to if this as the portfolios Jim, in first to down the of quarter, or you just company charge-offs I something hoping continue opportunity risk quarter. the aggregate to you profile is consumer I was an Is improving and

Jim Costa

seasonality had the bit first first also of unique, wholesale and portfolio, The had that charge-offs in and businesses finance, through quarter. not little the a in quarter the some losses were we was the evident the in which storm-related we were some quarter, fourth some inventory had we

forecast So, wouldn't favorable outlook that all in take provided of however. provision for I as being a a QX, terms relatively QX forward, in going

Scott Siefers

million, million. non-interest look $XXX like want an a the year-over-year mean, million? in also fairly guys I $XXX to $XXX then, as sound closer Are third understand to And correctly? And in which jump think would I year aggregate was talking I the have I that imply quarter, in sure, base make Did would that well. in expense guidance significant. guys XQ the that’s if can words actually cost I about said other I of we - all-in, to come so, XQ, last and running understand you’re as just million number were $XXX flat you and which out the to about quarter second

Jim Costa

good a It’s question.

operating clarify operating me depreciation. $XXX excluding so for and in so our XQ is Let XQ lease expense that, I that’s million mentioned that core the for

those it's to half relative at QX. in there, million So the kind the of the $XXX we we page that have of that numbers bottom that's had

are expenses in seasonally our QX. see higher we So

for second and million lease see in we them to operating around depreciation. we the quarter coming So quarter excluding level from third $XXX the had that QX million down $XXX

Scott Siefers

basically of number that’s the that... for that depreciation up all-in the gross estimate just lease So operating

Jim Costa



go Rochester next your question. Please from question Dave from with Deutsche Bank. Our comes ahead

Dave Rochester

the guidance stable XXXX? that ratio that NIM On your for XXXX feeling versus does that mentioned efficiency better include now, you’re about you right

Brian Maass

correct. That's

Dave Rochester

just NIM, hike, what on your for the about. dynamics you're curious impact And was all the portfolio I X then the talking for next the expectation

second June whatever? half the for I So or the of year, if we get hike guess the

Brian Maass

you able that to Yes, and I know really at was QX we the us mean year million. being guidance that full knowing obviously speak behind got to $XXX

So our on discipline to continue deposit see we really pricing. good

year at to higher. but if as And know year that net about interest NIM asset change we end the continues the we think that that even million, margin, even had level as efficiency to rates where even with driven or $XXX versus sensitivity come mix that some that versus well million the of where we that there's end it we within So a quality go it as helping where the we look $XXX there, that stand can higher being portfolio back you When back think at assets we in the took when place. offset will factors on you help started also we We've somewhere have started, us and same XXXX proves even is of generate also as close right at to a back stand range. able going these credit we that capital last we to headwinds and drag lot well. as the are to as asset that with we're have

Dave Rochester

Are in occur hikes guidance? more your in you rate guys assuming efficiency XXXX

Brian Maass

there's that probably rate on assuming, going at hikes. couple a be I'd guidance market to least We're say more Yes.

Dave Rochester

yields the just your and yield those for seen have overall the then the you've you where you And bought, on - today? that the securities do

Craig Dahl

QX is were say I our yield a would think purchases around perspective X.X%. from I What

last and As up than days. I’ve more predominantly so slightly probably say they mentioned higher MBS, curve. as skewed the towards the XX-year rates the here before XX-year we're are agency I’d of buying the that of at run ticked long it's in couple moment

Dave Rochester

one last one you sure leasing is there saying finance that that to make income that the just on million the fee $XX I fees level, million understood decline and I should to Were the to it wanted and $XX right? heard right. guidance, just then equipment And side, right I

Brian Maass


we will was were million basically $XX around where be million. was at we're you to So $XX is at quarters QX, remaining it million that which basis and for somewhere if guidance it higher, look that net $XX the saying the for


go your KBW. Our next McGratty from question from ahead with Please comes Chris question.

Chris McGratty

Craig, charge-offs reserve in how maybe release finance, cycle? in the on about in of I today that about should book methodology. you kind inventory I’m talked the Thanks. be And are interested over assuming into the guys think, change you we versus the what thinking previously?

Craig Dahl

first and I'll close Jim come Sure. have comment out, in okay? I'll and that

Jim Costa

Sure, Chris, credit profile. that inventory been appreciate a overall quarter very the overall assessment mix very, I credit into lower the rate. of the finance the long-haul so a attract question. of seen factored from the Yes, came has for assets with performing that standpoint and our has growth we've Also in a that first

that it together put you So, lift a the provides and favorable in terms of reserve requirements quarter-over-quarter.

Tom Jasper

charge-offs this back of look Chris I mean, inside business. points X in annual have basis you to we finance, were if But, inventory

levels at And currently so, reserved that at. we're still well the we're

Chris McGratty

- own. normalized looking today they think couple just years? should you cycle XX how XX of a about points, basis of And basis points X of in losses basis terms but reserving go we their with do - the or it’s reserve out points are

Craig Dahl

want attracted we may this the little that lower that to and history bit. portfolio. the reserved our But, see we’ve I probably earnings that’s really the adequately reflective think, look that release outlook assets in at going make if what strong lower been history in that you the in you has of did done first overall forward. bring sure rates quarter a so might we're Again,

our basis you back seem if over to outlook. roughly think points we XX So, look would history, be a reasonable

Chris McGratty

the XX% little would imagine Is due lower to stock using options. the bit to rate And should I tax be benefit then, the from we perspective? number maybe right in a on XX% seasonal still

Brian Maass

drove impact compensation XX% There and to you equity-based XX% from year level. for in the it was is should down that XX% a it to favorable QX expect what full that yes.


comes question from question. D.A. Davidson. your next ahead Our with Kevin from Reevey Please go

Kevin Reevey

XX about looking So horizon? rationalization I a months? of the the digital we should announced banking branch more think your next rollout on of how branching any strategy or closures there out your success of platform, the couple you've with the know over

Craig Dahl

know You the closures many years. over announced we've branch last three

any of the there's of be so going not And strategy. that to acceleration part

branches, continue to continue them to the I that of pace I’m our now going closures use change But of overall. Kevin, there. We right support our We say to not customers just would the need branches. fewer

Kevin Reevey

the going expect then of it actions the front, more should capital remaining you're be buyback. this on capital other year early And like on actions the your aggressive Any close we with sounds out horizon? to

Brian Maass

still is the of we're you You the run-off would days know know auto. what XXX into only say I

a So that's - know the on I'd play out we days higher versus change see that thing quarter we’re before the have from might and we of going the ending the to continue saying third only buyback it The can ago pace XX been do slightly to where time. as the end see over to in were you say on we only year. that


comes question Nathan Jaffray. Race Please your question. from next Our Piper ahead from go with

Nathan Race

conversation, putting securities of where appreciate commentary the to on you're kind securities currently. back on reinvestment Brian I the Going your

mostly your of reinvest Just Agency want guys has pass-throughs product your and like? thoughts previous the over around in, curious, I course if changed on to from the the you think comments, were which last types to that

Brian Maass

this in What a Agency that point almost don't is that I see our small were at of time. changing XX-year XX-year we’d munis. I you – know purchases is, in all add amount strategy of would changing say here QX and MBS,

So where we're focused. to I continue be going to think that's

Nathan Race

days think And capital, in changing the of kind we're XXX about another and kind gears auto shift. just then of

targeted like Just updated next on a over months ratios curious, you'd to you on thoughts guys any of the trend or CTEX to months? your kind XX either basis XX TCE if have capital see where


necessarily at to of to level levels, something years the going right getting can as is to be of that a or the over our we're as, how ratio be But What would say - I targeted view we're capital to don't capital based you we ourselves have next we today. there. manage going it’s strong ratios as our a focus far and it's couple for area very on goal we having tell commentary, as our capital key looking do us

Craig Dahl

to in baseline is first portfolio really or too, organic wanted and loan our business period. is outside really not I know increasing comment inventory investments growth the big the you activity, quarter the just of a just the that finance investment

growth may So we loan and remain in the of move platforms portfolios opportunistic our as other to would own that may through or increase the forward year. of looking we and rest be come opportunities not


Ken next from Stanley. Morgan Zerbe question from ahead go comes your Our question. Please

Ken Zerbe

issue how additional about come stock to do of of of that structure? take about to guess Thanks. back up just advantage overall of just Just get kind redemption, to are press there you capital plans your guys again up go stock? preferred you thinking press the or rates how is kind Like, before back to the think part I they capital lower

Craig Dahl

had as ourselves in having that impact we point the both excess the perspective tax that tax as this of our year. know view the end result you rates, having took capital time, some of an as of At as we last a reform lower earnings place amount the just kind expectations capital, at of right, well from

preferred of the us preferreds our know about at have of to we middle XXXX, we out years. way a to have piece the interest time. some point really opportunity higher the was We this in you take fixed remaining piece at refinance stock know So, of other feel did in a for five preferred that’s that rate for of so is you good X.X% the

in that's to think the So, point - at call time. that X.X% we option with perpetually at that

as being good that the you At this capital line. part So, view down we feel excess of in somewhere long-term ourselves capital. point really know we about having time, our

little the that's But, You again see a I that there have possible. and it's know an not stock more to bit something preferred the optimize near in of opportunity is capital term.


Our next question. from Lana Capital question comes Markets. BMO Chan Please your with go ahead from

Lana Chan

XXXX the runs should be off? as than at it follow we around guess to provision question up and wanted think I that How reserve $XX the know correct? when Just I meaningfully the you about assume the provision the should lower that XXXX, that of reserves, And portfolio auto end which at is the the net-net, the that you about early just think about especially quarter. is on I for look million

Jim Costa

level the dollar, This Jim or about. you, shrinking you’re It a so talking we’re portfolio. with depends rate on the decline is the talking will reserve Thank about overall portfolio so Whether Lana. Costa. commensurate what obviously itself is

I that seasonality However, reserve levels. the some seeing you're to want in do point out up show

mix also relative some seeing driving that's You're to were where year-over-year so we it.

showing Additionally national and both Harvey so a part hurricane the fall, we up that's It did was over the Irma it has and time. of have this portfolio of impact in because presence.

portfolio. a light that we're is we're going do moving. to few What there's parts reserves because on the running So go not are

- So that we at the the risk where the that quarter every and going risk unreasonable don't the we saw set set an expectation, you to to we're is to a appropriate at level time this see set I that for that's want want we reserves quarter reserve.

things quality will of impact And and going there forward that will in that. so be changes terms seasonality

Lana Chan

as see is - expenses current second question for spending expenses my know - of business do of portfolio? are run-off some that again you the partly initial through to digital know this is And point? And auto. opportunities how from there reduce much around getting you expectations, the at your you're around Is you you further

Brian Maass

we've specifically, some already we business, Those - taken side seeing break of that as a you’re you we've know bit had. dollar don't quite out, you as some time, the out over personnel those so the the we it On closures have gateway well those in had expense expense out know expense savings will amounts branch you and are of know aggregate.

of to a as but you there goes reduction. one to expect to be in be will shouldn't continue will business, the drop decline going time, there's some that anywhere, it's continue just auto over down of things going book We servicing those the expense over be see big time offsetting expense to some

some of produce last it However, things revenue. handful on items are offsetting And that year. be versus there's my of that there flat of those those hence the are expense - a that saying will other guidance some to side reductions, are are helping

So year. bought we to quarter. quarter from mortgages in focus platform perspective, the bought the in a second last Rubicon We leasing on fourth that of

what when we’re technology we continue don't of making that I Now account. that's investments. spending that a some we are have in specifically the break refer of we as to is into the as specific but investments We that on, guidance project out to Loans, well all high TCF Home that level gave takes


Our question. JPMorgan. next from comes Alexopoulos Please question ahead with go from Steven your

Steven Alexopoulos

finance that quarter. I more the new actually in color in added give wanted the follow on inventory quarter? up programs the Could to the you on first you growth

Craig Dahl

that turn Head I’d one Wholesale. Bill over Henak, to of

Bill Henak

are were finance rolled there that transfer, are year the last last finance the in mobility, inventory out couple program a ramp The programs programs ramping of and marine programs in those that working and added this in specialty and business they exclusive year programs they of in and sensitive there auto we’re some branch started well December they're up up. of year as both to started middle or is

of and those, the programs types pipeline. in we other have So those both to of continue programs

Steven Alexopoulos

these, acquiring any And these not are you're of correct? loans that you're originating,

Bill Henak

organic all growth are these No, programs.

Steven Alexopoulos

now about given have be fairly new should the programs you pronounced new that we given programs it seasonal as then should And these coming or how typical not you have? XQ, decline in think

Brian Maass

previous add continued years programs other We’ve to as well. in

a that look seasonal. increase, is So of at of majority that lot QX I that would in the happened increase

should coming a of So from down you a see reduction perspective. that lot

at be, XX% of you and XQ So you of then towards level when higher that. about you X% know XQ some are to trying to I than would potential think guide should about what last think looking year level the

Steven Alexopoulos

quick a on comments question beyond you to just hear then might Did correctly opportunities prepared buybacks deploy capital? capital. I explore additional that And in follow-up your

Brian Maass

the to ratios, observation just very to capital know whether organic consider feel we buyback. have dividend, get those we we capital I’d - stock all it specific strong let the say of -- our you on are wasn't of you going general growth, that this, development, It I'll being comment, it's Craig know we’re uses making corporate


question. our with And Shaw Please Jared go Wells Fargo. from next your question from ahead comes

Jared Shaw

side? you On you the deposit a more the platform market competitors deposit the of side seeing pressure nature right more and national are on local some and pressure on locally geographically from from seeing maybe, or the indirect now, competitive are

Brian Maass

so growing on that's see see do depends there's you're in the differences hung checking which book for a our portion there. It in, Again, of rates markets. our book number in promotional are it's being of the promotion. part us And have We a savings. we that we new market out definitely some of being different and definitely

at total average up balances look balances, checking they X.X%. you if our checking year-over-year are fact In

come platforms. I our us, for only And customers at not the us that all our these features on we customer deposit rates are It’s look but And important to other and to experience they the digital help going of on $XXX to million rate, just should added on non-interest-bearing basis. you it's can us. say, it's it's for we've continue retail If what think portion year-over-year outperform also a new things. just that's necessarily focused we improving just side. again, the functionality have We're they not grew and when about not those


David question. comes your Please go question Wedbush. from next Our with Chiaverini from ahead Instructions] [Operator

David Chiaverini

on follow-up finance. had a I inventory

do business? auto I risk the similar transfer, profile a transfer legacy new finance, marine was these With as programs the curious especially have businesses

Craig Dahl

of similar underwritten support parts businesses risk the have or manufacture, similar. so profiles very very transactions, the and Yes, of deal other they including

David Chiaverini

programs, on somewhat? that given newer And improved in is it yields these fair the say a that is came profile lower to risk little bit the actually

Craig Dahl

most on I period Well, one-on-ones through dealer the gone period. the regarding think our and investors we've with of manufacturer

are period, So lower. in as assets rate shipped the the manufacturer is

more to the receivable. it So than receivable the is risk of due the profile of it's the freshness

Jim Costa

very know the came class, a comment. the and just businesses is out know one relatively say programs we risk with that within can as low from QX range what we've I so more something would that’s in The was on These relatively weighted see in profile. add what asset that you been a profile. have that QX lower But well business are history as has overall in, lower. familiar we’re as industries. towards risk I again just got something the we came businesses I'll

that your say yes, not new. So question yes I it's would but to an it's affirmatively, extent,


I'd like turn conference back for session. today's Dahl conclude question-and-answer Craig remarks. to over and that will the closing call to any And ladies gentlemen,

Craig Dahl

Okay, you. thank

every to all we’ve an the opportunity. We've signing really who recent exceptional members that TCF from express team want organization. to on our got at of delivering on off, changes focused Before great throughout my have made experience gratitude I customer customers feedback my fellow been these

So, And this thanks investment interest you TCF. listening for appreciate morning we that, all Thank in thank team. and your to the with you. and


We conference Ladies call. for and presentation. conclude that do today's thank attending gentlemen does today's you

now may lines. disconnect You your