TCF Financial Corporation (NYSE:TCB) Q3 2018 Earnings Conference Call - Final Transcript

Oct 22, 2018 • 10:00 am ET


TCF Financial Corporation (NYSE:TCB) Q3 2018 Earnings Conference Call - Final Transcript


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Good morning, and welcome to TCF's 2018 Third Quarter Earnings Call. My name is Denise, and I will be your conference operator today. (Operator Instructions) Please note, the conference call is being recorded.

At this time, I would like to introduce Mr. Tim Sedabres from Investor Relations to begin the conference call.

Tim Sedabres

Good morning, and thank you for joining us for TCF's third quarter 2018 earnings call. Joining me on today's call will be Craig Dahl, Chairman and Chief Executive Officer; Tom Jasper, Chief Operating Officer; Brian Maass, Chief Financial Officer; Mike Jones, EVP of Consumer Banking; Bill Henak , EVP of Wholesale Banking; and Jim Costa, Chief Risk Officer & Chief Credit Officer.

In just a few moments, Craig, Brian and Jim will provide an overview of our third quarter results. They will be referencing a slide presentation that is available on the Investor Relations section of TCF's website, Following their remarks, we will open up for questions.

(Forward-Looking Cautionary Statements)

I would now like to turn the call over to TCF's, Chairman and CEO, Craig Dahl.

Craig Dahl

Thank you, Tim. Good morning, and thank you all again for joining us today. I will be speaking from side 2, our third quarter themes.

I'm pleased to report another strong quarter of financial performance as we produced net income of $86 million and diluted earnings per share of $0.51. Our strong results this quarter were highlighted by positive operating leverage, the stable net interest margin, improved mix and growth of earning assets, continued reduction of our risk profile and improving returns on capital.

First, we continued to deliver positive operating leverage. I've talked all year about our focus on improving our efficiency ratio. Our third quarter efficiency ratio of 67.4% was down over 100 basis points year-over-year and was our lowest reported efficiency ratio over the past several years. On a year-to-date basis, our efficiency ratio was 67.5%, in line with our full year guidance. We've been able to lower the efficiency ratio while generating strong revenue growth along with a more stable asset mix, all while making investments in people and technology that position us to grow the business going forward.

From a revenue standpoint, we saw strong year-over-year growth, driven by both net interest income and non-interest income despite lower gain on sale and servicing fee income. On the expense side, we are investing in our digital banking strategy, enhancing our overall customer experience and building out our TCF Home Loans business with the addition of key talent. We believe our investments in TCF Home Loans will support our branch network, fill the gap that has existed in our suite of products and will help to better serve our customer needs. Overall, we have made good progress on improving the efficiency ratio during '18 and this will remain a key focus for us as we move forward.

Secondly, our net interest margin was stable in the third quarter. Despite the continued remix of our balance sheet, we were able