Edgar Filing: TCF FINANCIAL CORP

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

June 30, 2012

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-10253

TCF FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		41-1591444
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

200 Lake Street East, Mail Code EX0-03-A,

Wayzata, Minnesota 55391-1693

(Address and Zip Code of principal executive offices)

(952) 745-2760

(Registrant’s telephone number, including area code)

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 [X]

No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes [X]

No [ ]

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

Large accelerated filer [X]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [ ]

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

Yes [ ]

No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

			Outstanding at
Class			July 19, 2012
Common Stock, $.01 par value			162,937,366 shares

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

INDEX

Part I. Financial Information		Pages


Item 1. Financial Statements
Consolidated Statements of Financial Condition at June 30, 2012 and December 31, 2011		1


Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2012 and 2011		2


Consolidated Statements of Equity for the Six Months Ended June 30, 2012 and 2011		3


Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011		4


Notes to Consolidated Financial Statements		5


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		35


Item 3. Quantitative and Qualitative Disclosures About Market Risk		61


Item 4. Controls and Procedures		62


Supplementary Information		63


Part II. Other Information


Items 1-6		64


Signatures		66


Index to Exhibits		67

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Condition

	At			At
	June 30,			December 31,
(Dollars in thousands, except per-share data)	2012			2011
	(Unaudited)
Assets

Cash and due from banks	$	865,257		$	1,389,704
Investments	120,814			157,780
Securities available for sale	757,233			2,324,038
Loans and leases held for sale	9,664			14,321
Loans and leases:
Consumer real estate	6,811,784			6,895,291
Commercial	3,523,070			3,449,492
Leasing and equipment finance	3,151,105			3,142,259
Inventory finance	1,457,263			624,700
Auto finance	262,188			3,628
Other	29,094			34,885
Total loans and leases	15,234,504			14,150,255
Allowance for loan and lease losses	(274,161		)	(255,672		)
Net loans and leases	14,960,343			13,894,583
Premises and equipment, net	442,311			436,281
Goodwill	225,640			225,640
Other assets	489,335			537,041
Total assets	$	17,870,597		$	18,979,388

Liabilities and Equity

Deposits:
Checking	$	4,701,917		$	4,629,749
Savings	6,227,133			5,855,263
Money market	880,545			651,377
Certificates of deposit	1,894,711			1,065,615
Total deposits	13,704,306			12,202,004
Short-term borrowings	7,487			6,416
Long-term borrowings	2,075,923			4,381,664
Total borrowings	2,083,410			4,388,080
Accrued expenses and other liabilities	326,973			510,677
Total liabilities	16,114,689			17,100,761
Equity:
Preferred stock, par value $.01 per share, 30,000,000 shares authorized; and 6,900 shares issued	166,721			-
Common stock, par value $.01 per share, 280,000,000 shares authorized; 162,790,655 and 160,366,380 shares issued, respectively	1,628			1,604
Additional paid-in capital	738,437			715,247
Retained earnings, subject to certain restrictions	860,560			1,127,823
Accumulated other comprehensive income	15,703			56,826
Treasury stock at cost, 42,566 shares, and other	(42,078		)	(33,367		)
Total TCF Financial Corporation stockholders’ equity	1,740,971			1,868,133
Non-controlling interest in subsidiaries	14,937			10,494
Total equity	1,755,908			1,878,627
Total liabilities and equity	$	17,870,597		$	18,979,388

See accompanying notes to consolidated financial statements.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

		Three Months Ended June 30,							Six Months Ended June 30,
(In thousands, except per-share data)		2012			2011				2012			2011
Interest income:
Loans and leases	$		208,766		$	213,823		$		414,750		$	428,496
Securities available for sale		5,816			20,639				24,928			40,068
Investments and other		3,633			1,836				6,066			3,637
Total interest income		218,215			236,298				445,744			472,201
Interest expense:
Deposits		10,197			11,430				19,258			23,434
Borrowings		9,794			48,718				48,089			98,577
Total interest expense		19,991			60,148				67,347			122,011
Net interest income		198,224			176,150				378,397			350,190
Provision for credit losses		54,106			44,005				102,648			89,279
Net interest income after provision for credit losses		144,118			132,145				275,749			260,911
Non-interest income:
Fees and service charges		48,090			56,396				89,946			109,909
Card revenue		13,530			28,219				26,737			54,803
ATM revenue		6,276			7,091				12,475			13,796
Subtotal		67,896			91,706				129,158			178,508
Leasing and equipment finance		23,207			22,279				46,074			49,029
Gains on sales of auto loans		5,496			-				7,746			-
Other		3,168			384				5,523			1,078
Fees and other revenue		99,767			114,369				188,501			228,615
Gain (loss) on securities, net		13,116			(227		)		89,727			(227		)
Total non-interest income		112,883			114,142				278,228			228,388
Non-interest expense:
Compensation and employee benefits		97,787			89,082				193,754			178,439
Occupancy and equipment		32,731			30,783				64,977			62,942
FDIC insurance		8,469			7,542				14,855			14,737
Advertising and marketing		5,404			3,479				8,021			6,639
Deposit account premiums		1,690			6,166				7,661			9,364
Other		36,956			37,067				74,252			71,633
Subtotal		183,037			174,119				363,520			343,754
Loss on termination of debt		-			-				550,735			-
Foreclosed real estate and repossessed assets, net		12,059			12,617				23,106			25,485
Operating lease depreciation		6,417			7,859				13,148			15,787
Other credit costs, net		1,476			496				1,188			3,044
Total non-interest expense		202,989			195,091				951,697			388,070
Income (loss) before income tax expense		54,012			51,196				(397,720		)	101,229
Income tax expense (benefit)		20,542			19,086				(149,702		)	37,858
Income (loss) after income tax expense		33,470			32,110				(248,018		)	63,371
Income attributable to non-controlling interest		1,939			1,686				3,345			2,675
Net income (loss) available to common stockholders	$		31,531		$	30,424		$		(251,363	)	$	60,696
Other comprehensive income (loss):
Reclassification adjustment for securities gains included in net income	$		-		$	-		$		(76,967	)	$	-
Unrealized holding gains arising during the period on securities available for sale		19,868			31,084				12,100			10,014
Foreign currency hedge		268			(93		)		(136		)	(600		)
Foreign currency translation adjustment		(324		)	120				61			534
Recognized postretirement prior service cost and transition obligation		(7		)	1				(14		)	2
Income tax (expense) benefit		(7,375		)	(11,362		)		23,833			(3,458		)
Total other comprehensive income (loss)		12,430			19,750				(41,123		)	6,492
Comprehensive income (loss) attributable to common stockholders	$		43,961		$	50,174		$		(292,486	)	$	67,188
Net income (loss) per common share:
Basic	$		.20		$	.19		$		(1.58	)	$	.40
Diluted		.20			.19				(1.58		)	.40
Dividends declared per common share	$		.05		$	.05		$		.10		$	.10

See accompanying notes to consolidated financial statements.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Equity

(Unaudited)

	TCF Financial Corporation
(Dollars in thousands)	Number of Common Shares Issued		Preferred Stock		Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock and Other			Total			Non- controlling Interests		Total Equity
Balance, December 31, 2010	142,965,012		$	-	$	1,430		$	459,884		$	1,049,156		$	(15,692	)	$	(23,115	)	$	1,471,663		$	8,500	$	1,480,163
Comprehensive income:
Income after income tax expense	-		-		-			-			60,696			-			-			60,696			2,675		63,371
Other comprehensive income	-		-		-			-			-			6,492			-			6,492			-		6,492
Comprehensive income	-		-		-			-			60,696			6,492			-			67,188			2,675		69,863
Public offering of common stock	15,081,968		-		151			219,515			-			-			-			219,666			-		219,666
Net investment by non-controlling interest	-		-		-			-			-			-			-			-			2,205		2,205
Dividends on common stock	-		-		-			-			(14,975		)	-			-			(14,975		)	-		(14,975		)
Grants of restricted stock	1,188,000		-		12			(158		)	-			-			146			-			-		-
Common shares purchased by TCF employee benefit plans	641,799		-		7			9,907			-			-			-			9,914			-		9,914
Cancellation of shares of restricted stock	(27,850	)	-		-			(177		)	15			-			-			(162		)	-		(162		)
Cancellation of common shares for tax withholding	(184,325	)	-		(3		)	(2,788		)	-			-			-			(2,791		)	-		(2,791		)
Amortization of stock compensation	-		-		-			5,259			-			-			-			5,259			-		5,259
Stock compensation tax benefits	-		-		-			477			-			-			-			477			-		477
Change in shares held in trust for deferred compensation plans, at cost	-		-		-			10,273			-			-			(10,273		)	-			-		-
Balance, June 30, 2011	159,664,604		$	-	$	1,597		$	702,192		$	1,094,892		$	(9,200	)	$	(33,242	)	$	1,756,239		$	13,380	$	1,769,619

Balance, December 31, 2011	160,366,380		$	-	$	1,604		$	715,247		$	1,127,823		$	56,826		$	(33,367	)	$	1,868,133		$	10,494	$	1,878,627
Comprehensive (loss) income:
(Loss) income after income tax benefit	-		-		-			-			(251,363		)	-			-			(251,363		)	3,345		(248,018		)
Other comprehensive loss	-		-		-			-			-			(41,123		)	-			(41,123		)	-		(41,123		)
Comprehensive (loss) income	-		-		-			-			(251,363		)	(41,123		)	-			(292,486		)	3,345		(289,141		)
Investment by non-controlling interest	-		-		-			-			-			-			-			-			1,098		1,098
Dividends on common stock	-		-		-			-			(15,905		)	-			-			(15,905		)	-		(15,905		)
Issuance of preferred stock	-		166,721		-			-			-			-			-			166,721			-		166,721
Grants of restricted stock	1,654,525		-		17			(17		)	-			-			-			-			-		-
Common shares purchased by TCF employee benefit plans	960,076		-		9			10,632			-			-			-			10,641			-		10,641
Cancellation of shares of restricted stock	(31,432	)	-		-			(72		)	5			-			-			(67		)	-		(67		)
Cancellation of common shares for tax withholding	(158,894	)	-		(2		)	(1,707		)	-			-			-			(1,709		)	-		(1,709		)
Amortization of stock compensation	-		-		-			5,862			-			-			-			5,862			-		5,862
Stock option expirations	-		-		-			(56		)	-			-			-			(56		)	-		(56		)
Stock compensation tax benefits	-		-		-			(163		)	-			-			-			(163		)	-		(163		)
Change in shares held in trust for deferred compensation plans, at cost	-		-		-			8,711			-			-			(8,711		)	-			-		-
Balance, June 30, 2012	162,790,655		$	166,721	$	1,628		$	738,437		$	860,560		$	15,703		$	(42,078	)	$	1,740,971		$	14,937	$	1,755,908

See accompanying notes to consolidated financial statements.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

		Six Months Ended June 30,
(In thousands)		2012			2011
Cash flows from operating activities:
Net (loss) income available to common stockholders	$		(251,363	)	$	60,696
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Provision for credit losses		102,648			89,279
Depreciation and amortization		38,425			36,647
Proceeds from sales of loans and leases held for sale		47,164			-
Originations of auto loans held for sale, net of repayments		(55,278		)	-
Net (decrease) increase in other assets and accrued expenses and other liabilities		(90,781		)	78,132
Gains on sales of assets, net		(100,761		)	(7,499		)
Loss on termination of debt		550,735			-
Net income attributable to non-controlling interest		3,345			2,675
Other, net		11,488			14,491
Total adjustments		506,985			213,725
Net cash provided by operating activities		255,622			274,421
Cash flows from investing activities:
Loan originations and purchases, net of principal collected on loans and leases		(995,598		)	300,961
Purchases of equipment for lease financing		(467,809		)	(417,862		)
Purchase of leasing and equipment finance portfolios		-			(9,735		)
Purchase of inventory finance portfolios		(37,526		)	-
Proceeds from sales of loans		172,090			4,013
Proceeds from sales of lease receivables		51,733			50,944
Proceeds from sales of securities available for sale		1,901,460			-
Proceeds from sales of other securities		13,116			-
Purchases of securities available for sale		(455,336		)	(512,762		)
Proceeds from maturities of and principal collected on securities available for sale		132,471			264,125
Purchases of Federal Home Loan Bank stock		(141,509		)	(4,439		)
Redemption of Federal Home Loan Bank stock		181,561			22,250
Proceeds from sales of real estate owned		57,412			56,698
Purchases of premises and equipment		(26,928		)	(15,602		)
Other, net		11,637			18,359
Net cash provided by (used in) investing activities		396,774			(243,050		)
Cash flows from financing activities:
Net increase in deposits		1,487,306			358,758
Net increase (decrease) in short-term borrowings		957			(117,276		)
Proceeds from long-term borrowings		1,169,294			1,347
Payments on long-term borrowings		(3,996,664		)	(402,884		)
Net proceeds from public offering of preferred stock		166,721			-
Net proceeds from public offering of common stock		-			219,666
Net investment by non-controlling interest		1,098			2,205
Dividends paid on common stock		(15,905		)	(14,975		)
Stock compensation tax (expenses) benefits		(163		)	477
Common shares sold to TCF employee benefit plans		10,513			9,914
Net cash (used in) provided by financing activities		(1,176,843		)	57,232
Net (decrease) increase in cash and due from banks		(524,447		)	88,603
Cash and due from banks at beginning of period		1,389,704			663,901
Cash and due from banks at end of period	$		865,257		$	752,504

Supplemental disclosures of cash flow information:
Cash paid for:
Interest on deposits and borrowings	$		72,183		$	118,117
Income taxes, net		14,579			519
Transfer of loans to other assets	$		80,574		$	93,100

See accompanying notes to consolidated financial statements.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

(1) Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all the information and notes necessary for complete financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”). The information in this Quarterly Report on Form 10-Q is written with the presumption that the users of the interim financial statements have read or have access to the most recent Annual Report on Form 10-K of TCF Financial Corporation (“TCF” or the “Company”), which contains the latest audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2011 and for the year then ended. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. For Consolidated Statements of Cash Flow purposes, cash and cash equivalents include cash and due from banks.

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. In the opinion of management, the accompanying unaudited consolidated financial statements contain all 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.

(2) Business Combinations

On November 30, 2011, TCF National Bank (“TCF Bank”), a wholly-owned subsidiary of TCF, acquired 100% of the outstanding common shares of Gateway One Lending & Finance, LLC (“Gateway One”), a privately-held lending company that indirectly originates loans on new and used autos to consumers through established dealer relationships. The acquisition of Gateway One further diversifies the Company’s lending business and provides growth opportunities within the U.S. auto lending marketplace. As a result of the acquisition, Gateway One became a wholly-owned subsidiary of TCF Bank and accordingly, TCF’s Consolidated Statements of Comprehensive Income for the three months ended June 30, 2012 included net interest income, non-interest income and net income of Gateway One totaling $4.5 million, $7 million, and $295 thousand, respectively. TCF’s Consolidated Statements of Comprehensive Income for the six months ended June 30, 2012 included net interest income, non-interest income and net loss of Gateway One totaling $6.3 million, $10.9 million, and $1.5 million, respectively.

The following unaudited pro forma financial information presents the combined results of operations of TCF and Gateway One as if the acquisition had been effective January 1, 2011. These results include the impact of amortizing certain purchase accounting adjustments such as intangible assets, compensation expenses and the related impact of the acquisition on income tax expense. There were no material nonrecurring pro forma adjustments directly attributable to the acquisition included within the following pro forma financial information. The pro forma financial information does not necessarily reflect the results of operations that would have occurred had TCF and Gateway One constituted a single entity during such periods. Growth opportunities are expected to be achieved in various amounts at various times during the years subsequent to the acquisition and not ratably over, or at the beginning or end of such periods. No adjustments have been reflected in the following pro forma financial information for anticipated growth opportunities.

		Three Months Ended		Six Months Ended
(In thousands, except per-share data)		June 30, 2011		June 30, 2011
Interest income	$		238,125	$	475,866
Net interest income		177,717		353,322
Non-interest income		118,847		236,014
Net income available to common stockholders		31,425		61,761
Basic net income per common share	$		.19	$	.40
Diluted net income per common share	$		.19	$	.40

The total purchase price was allocated to Gateway One’s net tangible and identifiable intangible assets based on their estimated fair values as of November 30, 2011, as set forth below.

The following table summarizes the consideration paid for Gateway One and the amounts of the assets acquired and liabilities assumed as of the acquisition date.

		At
		November 30,
(In thousands)		2011
Cash consideration	$		115,218
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$		2,210
Restricted cash		18,685
Loans held for sale		13,711
Loans held for investment		3,879
Intangible assets		6,170
Interest-only strip		21,210
Deferred tax asset		11,286
Deferred stock compensation		2,600
Other assets		1,588
Accounts payable		(1,043		)
Loan sale liability		(6,072		)
Debt assumed		(9,988		)
Servicing funds to be remitted		(17,901		)
Other liabilities		(4,158		)
Total identifiable net assets	$		42,177
Goodwill		73,041
Total net assets acquired	$		115,218

At the time of acquisition, all of Gateway One’s loans held for investment, which was 22.1% of the total loans at the time of acquisition or $3.9 million, had evidence of deteriorated credit quality, at June 30, 2012 $2.1 million remained. The goodwill of $73 million arising from the acquisition consists largely of expected incremental balance sheet and fee growth and cross selling opportunities. The goodwill was assigned to TCF’s Lending segment. None of the goodwill recognized is expected to be deductible for income tax purposes.

Pursuant to the terms of the acquisition agreement, three key members of Gateway One’s management team were required to utilize a portion of the consideration paid to them by TCF to acquire Gateway One to separately purchase TCF common stock in the aggregate amount of $2.6 million. These shares of TCF common stock will be retained by a trustee for three years pursuant to the terms of custodial agreements entered into between the trustee, TCF and each individual. Ownership of these shares will be forfeited to TCF if during the three-year period the individual terminates his employment with TCF without cause, or TCF terminates their employment for

cause, and has been accounted for separately from the acquisition. Due to the fact that this portion of the purchase consideration is tied to continuing employment, and at risk, the value of these shares has been recorded within other assets and will be recognized as compensation expense ratably throughout the duration of the three-year period. In addition, TCF provided Gateway One $10 million in interim funding prior to the acquisition to facilitate its closing in a timely manner. This loan was executed at prevailing market pricing and terms.

(3) Cash and Due from Banks

At June 30, 2012 and December 31, 2011, TCF was required by Federal Reserve Board regulations to maintain reserves of $87.9 million and $42.1 million, respectively, in cash on hand or at the Federal Reserve Bank.

TCF maintains cash balances that are restricted as to their use in accordance with certain contractual agreements related to the sale and servicing of auto loans. Cash proceeds from loans serviced for third parties are held in restricted accounts until remitted. TCF also retains restricted cash balances for potential loss recourse on certain sold auto loans. Restricted cash totaling $19.4 million and $17.5 million was included within cash and due from banks at June 30, 2012 and December 31, 2011, respectively.

(4) Investments

The carrying values of investments consist of the following.

	At		At
	June 30,		December 31,
(In thousands)	2012		2011
Federal Home Loan Bank stock, at cost	$	79,034	$	119,086
Federal Reserve Bank stock, at cost	35,316		31,711
Other	6,464		6,983
Total investments	$	120,814	$	157,780

The investments in Federal Home Loan Bank (“FHLB”) stock are required investments related to TCF’s current borrowings from the FHLB of Des Moines. FHLBs obtain their funding primarily through issuance of consolidated obligations of the FHLB system. The U.S. Government does not guarantee these obligations, and each of the 12 FHLBs are generally jointly and severally liable for repayment of each other’s debt. Therefore, TCF’s investments in these banks could be adversely impacted by the financial operations of the FHLBs and actions of their regulator, the Federal Housing Finance Agency. Other investments primarily consist of non-traded mortgage-backed securities and other bonds which qualify for investment credit under the Community Reinvestment Act of 1977, as amended.

During the first six months of 2012, TCF recorded impairment charges of $356 thousand on other investments, which had a carrying value of $6.5 million at June 30, 2012. TCF did not record any impairment charges during the three months ended June 30, 2012. During the second quarter and first six months of 2011, TCF recorded impairment charges of $16 thousand on other investments, which had a carrying value of $7.4 million at June 30, 2011.

(5) Securities Available for Sale

Securities available for sale consist of the following.

		June 30, 2012								December 31, 2011
(Dollars in thousands)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Mortgage-backed securities:
U.S. Government sponsored enterprises and federal agencies	$	731,382		$	23,511	$	-	$	754,893	$	2,233,307		$	89,029	$	-	$	2,322,336
Other		140		-		-		140		152			-		-		152
Other securities		1,742		458		-		2,200		1,742			-		192		1,550
Total	$	733,264		$	23,969	$	-	$	757,233	$	2,235,201		$	89,029	$	192	$	2,324,038
Weighted-average yield		3.16	%							3.79		%

Gains on securities available for sale of $76.6 million were recognized during the first six months of 2012, resulting from sales of mortgage-backed securities during the first quarter of 2012. Impairment charges of $211 thousand were recognized on other securities during the second quarter and first six months of 2011. No impairment charges were recorded during the second quarter and first six months of 2012.

The following table shows the securities available for sale portfolio’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2011. There were no securities available for sale in a gross unrealized loss position at June 30, 2012. Unrealized losses on securities available for sale are due to lower values for equity securities or changes in interest rates and not due to credit quality issues. TCF has the ability and intent to hold these investments until a recovery of fair value occurs.

		Less than 12 months				12 months or more				Total
(In thousands)		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At December 31, 2011
Other securities	$		1,450	$	192	$	-	$	-	$	1,450	$	192
Total	$		1,450	$	192	$	-	$	-	$	1,450	$	192

The amortized cost and fair value of securities available for sale at June 30, 2012, by contractual maturity, are shown below. The remaining contractual principal maturities do not consider prepayments. Remaining expected maturities will differ from contractual maturities because borrowers may have the right to prepay.

	Amortized
(In thousands)	Cost		Fair Value
Due in one year or less	$	101	$	101
Due in 1-5 years	117		123
Due in 5-10 years	125		125
Due after 10 years	731,279		754,784
No stated maturity	1,642		2,100
Total	$	733,264	$	757,233

(6) Loans and Leases

The following table sets forth information about loans and leases.

	At			At
	June 30,			December 31,			Percentage
(Dollars in thousands)	2012			2011			Change
Consumer real estate:
First mortgage lien	$	4,610,837		$	4,742,423		(2.8)	%
Junior lien	2,200,947			2,152,868			2.2
Total consumer real estate	6,811,784			6,895,291			(1.2)
Commercial:
Commercial real estate:
Permanent	3,133,812			3,039,488			3.1
Construction and development	116,685			159,210			(26.7)
Total commercial real estate	3,250,497			3,198,698			1.6
Commercial business	272,573			250,794			8.7
Total commercial	3,523,070			3,449,492			2.1
Leasing and equipment finance:(1)
Equipment finance loans	1,186,762			1,110,803			6.8
Lease financings:
Direct financing leases	1,962,041			2,039,096			(3.8)
Sales-type leases	29,244			29,219			.1
Lease residuals	125,954			129,100			(2.4)
Unearned income and deferred lease costs	(152,896		)	(165,959		)	7.9
Total lease financings	1,964,343			2,031,456			(3.3)
Total leasing and equipment finance	3,151,105			3,142,259			.3
Inventory finance	1,457,263			624,700			133.3
Auto finance	262,188			3,628			N.M.
Other	29,094			34,885			(16.6)
Total loans and leases	$	15,234,504		$	14,150,255		7.7	%

N.M. Not Meaningful.

(1) Operating leases of $65.2 million and $69.6 million at June 30, 2012 and December 31, 2011, respectively, are included in other assets in the Consolidated Statements of Financial Condition.

From time to time, TCF sells minimum lease payments to third-party financial institutions at fixed rates. For those transactions which achieve sale treatment, the related lease cash flow stream is not recognized on TCF’s Consolidated Statements of Financial Condition. During the three months ended June 30, 2012 and 2011, TCF sold $23.9 million and $18.2 million, respectively, of minimum lease payment receivables, received cash of $23.6 million and $18.5 million, respectively, and recognized a net loss of $314 thousand and net gain of $276 thousand, respectively. During the six months ended June 30, 2012 and 2011, TCF sold $56.6 million and $44.8 million, respectively, of minimum lease payment receivables, received cash of $57.1 million and $50.9 million, respectively, and recognized a net gain of $494 thousand and $6.1 million, respectively. At June 30, 2012 and December 31, 2011, TCF’s lease residuals reported within the table above include $12.8 million and $9.1 million, respectively, related to all historical sales of minimum lease payment receivables.

During the three months ended June 30, 2012, TCF sold $144.1 million of consumer auto loans with servicing retained and received cash of $141.1 million, resulting in gains of $5.5 million. Related to these sales, TCF retained an interest-only strip of $10.1 million. During the six months ended June 30, 2012, TCF sold $216.1 million of consumer auto loans with servicing retained and received cash of $211.3 million, resulting in gains of $7.7 million. Related to these sales, TCF retained an interest-only strip of $14.7 million. At June 30, 2012, interest-only strips and contractual recourse liabilities totaled $30.7 million and $4.7 million, respectively. None of the recourse liabilities outstanding at June 30, 2012 related to consumer auto loans sold during the three or six months ended June 30, 2012. At December 31, 2011, interest-only strips and contractual recourse liabilities totaled $22.4 million and $6 million, respectively. No servicing assets or liabilities related to consumer auto loans were recorded within TCF’s Consolidated Statements of Financial Condition, as the contractual servicing fees are adequate to compensate TCF for its servicing responsibilities. The unpaid principal balance of auto loans serviced for third parties was $508.5 million and $387.1 million at June 30, 2012 and December 31, 2011,

respectively. Excluding loans in bankruptcy and loans in the process of repossession, .1% of the auto loans serviced for third parties were 60 or more days past due at June 30, 2012.

(7) Allowance for Loan and Lease Losses and Credit Quality Information

Allowance for Loan and Lease Losses The following tables provide information regarding the allowance for loan

and lease losses.

(In thousands)	Consumer Real Estate			Commercial			Leasing and Equipment Finance			Inventory Finance			Auto Finance			Other			Total
At or For the Three Months Ended June 30, 2012
Balance, at beginning of quarter	$	183,825		$	50,444		$	21,537		$	7,556		$	1,019		$	912		$	265,293
Charge-offs	(35,980		)	(8,693		)	(2,667		)	(283		)	(82		)	(2,128		)	(49,833		)
Recoveries	1,124			238			1,494			58			1			2,059			4,974
Net charge-offs	(34,856		)	(8,455		)	(1,173		)	(225		)	(81		)	(69		)	(44,859		)
Provision for credit losses	39,118			8,710			5,086			(223		)	1,356			59			54,106
Transfers and other	-			-			-			(36		)	(343		)	-			(379		)
Balance, at end of quarter	$	188,087		$	50,699		$	25,450		$	7,072		$	1,951		$	902		$	274,161

At or For the Three Months Ended June 30, 2011
Balance, at beginning of quarter	$	174,097		$	50,119		$	26,272		$	3,344		$	-		$	1,476		$	255,308
Charge-offs	(37,344		)	(3,030		)	(4,855		)	(336		)	-			(2,892		)	(48,457		)
Recoveries	673			346			1,377			8			-			2,208			4,612
Net charge-offs	(36,671		)	(2,684		)	(3,478		)	(328		)	-			(684		)	(43,845		)
Provision for credit losses	38,290			3,348			1,817			(79		)	-			629			44,005
Other	-			-			-			4			-			-			4
Balance, at end of quarter	$	175,716		$	50,783		$	24,611		$	2,941		$	-		$	1,421		$	255,472

(In thousands)	Consumer Real Estate			Commercial			Leasing and Equipment Finance			Inventory Finance			Auto Finance			Other			Total
At or For the Six Months Ended June 30, 2012
Balance, at beginning of year	$	183,435		$	46,954		$	21,173		$	2,996		$	-		$	1,114		$	255,672
Charge-offs	(73,142		)	(10,343		)	(4,443		)	(953		)	(84		)	(5,544		)	(94,509		)
Recoveries	2,597			364			3,119			85			1			4,550			10,716
Net charge-offs	(70,545		)	(9,979		)	(1,324		)	(868		)	(83		)	(994		)	(83,793		)
Provision for credit losses	75,197			13,724			5,601			4,968			2,376			782			102,648
Transfers and other	-			-			-			(24		)	(342		)	-			(366		)
Balance, at end of period	$	188,087		$	50,699		$	25,450		$	7,072		$	1,951		$	902		$	274,161

At or For the Six Months Ended June 30, 2011
Balance, at beginning of year	$	172,850		$	62,478		$	26,301		$	2,537		$	-		$	1,653		$	265,819
Charge-offs	(73,532		)	(20,942		)	(8,805		)	(571		)	-			(5,711		)	(109,561		)
Recoveries	1,558			480			2,538			35			-			5,293			9,904
Net charge-offs	(71,974		)	(20,462		)	(6,267		)	(536		)	-			(418		)	(99,657		)
Provision for credit losses	74,840			8,767			4,577			909			-			186			89,279
Other	-			-			-			31			-			-			31
Balance, at end of period	$	175,716		$	50,783		$	24,611		$	2,941		$	-		$	1,421		$	255,472

The following tables provide other information regarding the allowance for loan and lease losses and balances by type of

allowance methodology.

	At June 30, 2012

(In thousands)	Consumer Real Estate		Commercial		Leasing and Equipment Finance		Inventory Finance		Auto Finance		Other		Total
Allowance for loan and lease losses:
Collectively evaluated for loss potential	$	186,739	$	25,722	$	17,925	$	6,659	$	1,951	$	902	$	239,898
Individually evaluated for loss potential	1,348		24,977		7,525		413		-		-		34,263
Total	$	188,087	$	50,699	$	25,450	$	7,072	$	1,951	$	902	$	274,161
Loans and leases outstanding:

Collectively evaluated for loss potential	$	6,804,456	$	2,943,859	$	3,115,652	$	1,446,930	$	260,101	$	29,094	$	14,600,092
Individually evaluated for loss potential	7,328		579,211		30,646		10,333		-		-		627,518
Loans acquired with deteriorated credit quality	-		-		4,807		-		2,087		-		6,894

Total	$	6,811,784	$	3,523,070	$	3,151,105	$	1,457,263	$	262,188	$	29,094	$	15,234,504

	At December 31, 2011

(In thousands)	Consumer Real Estate		Commercial		Leasing and Equipment Finance		Inventory Finance		Auto Finance		Other		Total
Allowance for loan and lease losses:
Collectively evaluated for loss potential	$	182,315	$	24,842	$	17,339	$	2,583	$	-	$	1,114	$	228,193
Individually evaluated for loss potential	1,120		22,112		3,834		413		-		-		27,479
Total	$	183,435	$	46,954	$	21,173	$	2,996	$	-	$	1,114	$	255,672
Loans and leases outstanding:

Collectively evaluated for loss potential	$	6,887,627	$	2,811,046	$	3,112,864	$	616,496	$	-	$	34,885	$	13,462,918
Individually evaluated for loss potential	7,664		638,446		22,200		8,204		-		-		676,514
Loans acquired with deteriorated credit quality	-		-		7,195		-		3,628		-		10,823

Total	$	6,895,291	$	3,449,492	$	3,142,259	$	624,700	$	3,628	$	34,885	$	14,150,255

Performing and Non-accrual Loans and Leases The following tables set forth information regarding TCF’s performing and non-accrual loans and leases. Performing loans and leases are considered to have a lower risk of loss and are on accruing status and less than 60 days delinquent. Non-accrual loans and leases and loans and leases that are 60 days or more delinquent are those which management believes have a higher risk of loss than performing loans and leases. Delinquent balances are determined based on the contractual terms of the loan or lease. TCF’s key credit quality indicator is the receivable’s status as accruing or non-accruing.

		At June 30, 2012
(In thousands)		Performing		60-89 Days Delinquent and Accruing		90 Days or More Delinquent and Accruing		Total 60+ Days Delinquent and Accruing		Accruing		Non-Accrual		Total
Consumer real estate:
First mortgage lien	$		4,401,717	$	33,393	$	53,321	$	86,714	$	4,488,431	$	122,406	$	4,610,837
Junior lien		2,168,708		6,952		7,015		13,967		2,182,675		18,272		2,200,947
Total consumer real estate		6,570,425		40,345		60,336		100,681		6,671,106		140,678		6,811,784
Commercial real estate		3,109,317		5,505		-		5,505		3,114,822		135,675		3,250,497
Commercial business		257,922		111		-		111		258,033		14,540		272,573
Total commercial		3,367,239		5,616		-		5,616		3,372,855		150,215		3,523,070
Leasing and equipment finance:
Middle market		1,645,297		911		109		1,020		1,646,317		11,022		1,657,339
Small ticket		795,062		970		345		1,315		796,377		5,091		801,468
Winthrop		401,289		4		-		4		401,293		12,725		414,018
Other		235,206		-		-		-		235,206		591		235,797
Total leasing and equipment finance		3,076,854		1,885		454		2,339		3,079,193		29,429		3,108,622
Inventory finance		1,455,157		182		24		206		1,455,363		1,900		1,457,263
Auto finance		260,039		24		38		62		260,101		-		260,101
Other		26,856		17		17		34		26,890		2,204		29,094
Subtotal		14,756,570		48,069		60,869		108,938		14,865,508		324,426		15,189,934
Portfolios acquired with deteriorated credit quality		43,934		293		343		636		44,570		-		44,570
Total	$		14,800,504	$	48,362	$	61,212	$	109,574	$	14,910,078	$	324,426	$	15,234,504

		At December 31, 2011
(In thousands)		Performing		60-89 Days Delinquent and Accruing		90 Days or More Delinquent and Accruing		Total 60+ Days Delinquent and Accruing		Accruing		Non-Accrual		Total
Consumer real estate:
First mortgage lien	$		4,525,951	$	32,571	$	54,787	$	87,358	$	4,613,309	$	129,114	$	4,742,423
Junior lien		2,110,334		7,813		14,464		22,277		2,132,611		20,257		2,152,868
Total consumer real estate		6,636,285		40,384		69,251		109,635		6,745,920		149,371		6,895,291
Commercial real estate		3,092,855		98		1,001		1,099		3,093,954		104,744		3,198,698
Commercial business		227,970		49		-		49		228,019		22,775		250,794
Total commercial		3,320,825		147		1,001		1,148		3,321,973		127,519		3,449,492
Leasing and equipment finance:
Middle market		1,627,369		1,260		84		1,344		1,628,713		13,185		1,641,898
Small ticket		792,566		2,368		613		2,981		795,547		5,535		801,082
Winthrop		447,334		235		-		235		447,569		1,253		448,822
Other		185,563		198		-		198		185,761		610		186,371
Total leasing and equipment finance		3,052,832		4,061		697		4,758		3,057,590		20,583		3,078,173
Inventory finance		623,717		153		7		160		623,877		823		624,700
Auto finance		-		-		-		-		-		-		-
Other		34,829		20		21		41		34,870		15		34,885
Subtotal		13,668,488		44,765		70,977		115,742		13,784,230		298,311		14,082,541
Portfolios acquired with deteriorated credit quality		65,820		766		1,128		1,894		67,714		-		67,714
Total	$		13,734,308	$	45,531	$	72,105	$	117,636	$	13,851,944	$	298,311	$	14,150,255

The following table provides interest income recognized on loans and leases in non-accrual status and contractual interest that would have been recorded had the loans and leases performed in accordance with their original contractual terms.

		Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)		2012		2011		2012		2011
Contractual interest due on non-accrual loans and leases	$		8,614	$	9,698	$	17,633	$	19,360
Interest income recognized on loans and leases in non-accrual status		1,563		1,841		3,487		4,037
Unrecognized interest income	$		7,051	$	7,857	$	14,146	$	15,323

The following table summarizes consumer real estate loans to customers in bankruptcy.

	At June 30,		At December 31,
(In thousands)	2012		2011
Consumer real estate loans to customers in bankruptcy:
0-59 days delinquent and accruing	$	70,683	$	74,347
60+ days delinquent and accruing	1,038		1,112
Non-accrual	22,242		17,531
Total consumer real estate loans to customers in bankruptcy	$	93,963	$	92,990

Loan Modifications for Borrowers with Financial Difficulties Included within the loans and leases in previous tables are certain loans that have been modified in order to maximize collection of loan balances. If, for economic or legal reasons related to the customer’s financial difficulties, TCF grants a concession the modified loan is classified as a troubled debt restructuring (“TDR”).

Based on clarifying guidance from regulatory agencies, beginning in the second quarter of 2012, TCF classifies trial modifications as TDRs at the beginning of the trial period. Previously, these loans were not classified as TDRs until performance was demonstrated at a reduced payment amount during a short trial period. This change in policy resulted in a one-time $13.4 million increase of consumer real estate TDRs during the second quarter of 2012.

TCF held consumer real estate TDRs of $520.1 million and $479.8 million at June 30, 2012 and December 31, 2011, respectively, of which $465.6 million and $433.1 million were accruing at June 30, 2012 and December 31, 2011, respectively. TCF also held $208.7 million and $181.6 million of commercial loan TDRs at June 30, 2012 and December 31, 2011, respectively, of which $103.1 million and $98.4 million were accruing at June 30, 2012 and December 31, 2011, respectively. The amount of additional funds committed to borrowers in TDR status was $7.2 million and $8.5 million at June 30, 2012 and December 31, 2011, respectively.

When a loan is modified as a TDR, there is not a direct, material impact on the loans within the Consolidated Statements of Financial Condition, as principal balances are generally not forgiven. Loan modifications are not reported as TDRs in calendar years after modification if the loans were modified at an interest rate equal to the yields of new loan originations with comparable risk and the loans are performing based on the terms of the restructuring agreements. All loans classified as TDRs are considered to be impaired.

The financial effects of TDRs are presented in the following tables and represent the difference between interest income recognized on accruing TDRs and the contractual interest that would have been recorded under the original contractual terms.

		Three Months Ended June 30,
		2012							2011
(In thousands)		Contractual Interest Due on TDRs		Interest Income Recognized on TDRs		Unrecognized Interest Income, Net			Contractual Interest Due on TDRs		Interest Income Recognized on TDRs		Unrecognized Interest Income, Net
Consumer real estate:
First mortgage lien	$		7,224	$	3,906	$	3,318		$	5,770	$	2,978	$	2,792
Junior lien		580		361		219			407		231		176
Total consumer real estate		7,804		4,267		3,537			6,177		3,209		2,968
Commercial real estate		1,300		1,311		(11		)	486		483		3
Commercial business		105		96		9			82		82		—
Total commercial		1,405		1,407		(2		)	568		565		3
Leasing and equipment finance:
Middle market		14		16		(2		)	21		22		(1		)
Total leasing and equipment finance		14		16		(2		)	21		22		(1		)
Total	$		9,223	$	5,690	$	3,533		$	6,766	$	3,796	$	2,970

		Six Months Ended June 30,
		2012							2011
(In thousands)		Contractual Interest Due on TDRs		Interest Income Recognized on TDRs		Unrecognized Interest Income, Net			Contractual Interest Due on TDRs		Interest Income Recognized on TDRs		Unrecognized Interest Income, Net
Consumer real estate:
First mortgage lien	$		14,290	$	7,535	$	6,755		$	11,361	$	5,964	$	5,397
Junior lien		1,147		710		437			814		455		359
Total consumer real estate		15,437		8,245		7,192			12,175		6,419		5,756
Commercial real estate		2,616		2,645		(29		)	869		852		17
Commercial business		215		206		9			82		82		-
Total commercial		2,831		2,851		(20		)	951		934		17
Leasing and equipment finance:
Middle market		29		32		(3		)	43		44		(1		)
Total leasing and equipment finance		29		32		(3		)	43		44		(1		)
Total	$		18,297	$	11,128	$	7,169		$	13,169	$	7,397	$	5,772

The table below summarizes TDRs that defaulted during the three and six months ended June 30, 2012 and 2011, and which were modified within 12 months of the beginning of the respective reporting period. TCF considers a loan to have defaulted when it becomes 90 or more days delinquent under the modified terms, has been transferred to non-accrual status or has been transferred to other real estate owned.

	Three Months Ended June 30,										Six Months Ended June 30,
	2012					2011					2012					2011
(Dollars in thousands)	Number of Loans		Loan Balance			Number of Loans		Loan Balance			Number of Loans		Loan Balance			Number of Loans		Loan Balance
Consumer real estate:
First mortgage lien	37		$	7,260		22		$	5,234		65		$	12,574		40		$	8,399
Junior lien	11		338			6		601			17		687			13		1,314
Total consumer real estate	48		7,598			28		5,835			82		13,261			53		9,713
Commercial real estate	7		11,978			2		5,436			11		25,605			3		5,957
Total commercial	7		11,978			2		5,436			11		25,605			3		5,957
Total defaulted modified loans	55		$	19,576		30		$	11,271		93		$	38,866		56		$	15,670
Loans modified in the applicable period	1,629		$	406,885		832		$	244,632		1,775		$	447,532		1,073		$	283,783
Defaulted modified loans as a percent of loans modified in the applicable period	3.4	%	4.8		%	3.6	%	4.6		%	5.2	%	8.7		%	5.2	%	5.5		%

Consumer real estate TDRs are evaluated separately in TCF’s allowance methodology based on the present value of expected cash flows for such loans as the repayments are not expected to result from the foreclosure and liquidation of the collateral at the time of the modification. The allowance on accruing consumer real estate loan TDRs was $65.6 million, or 14.1% of the outstanding balance, at June 30, 2012, and $58.3 million, or 13.5% of the outstanding balance, at December 31, 2011. For consumer real estate TDRs, TCF utilized average re-default rates ranging from 10% to 25%, depending on modification type, in determining impairment, which is consistent with actual experience. Consumer real estate loans remain on accruing status upon modification if they are less than 150 days past due, or six payments owing, and payment in full under the modified loan terms is expected. Otherwise, the loans are placed on non-accrual status and reported as non-accrual until there is sustained repayment performance for six consecutive payments. All eligible loans are re-aged to current delinquency status upon modification.

Commercial TDRs are individually evaluated for loss potential. Impairment is generally based upon the present value of the expected future cash flows or the fair value of the collateral less selling expenses for fully collateral-dependent loans. The allowance on accruing commercial loan TDRs was $1.6 million, or 1.5% of the outstanding balance, at June 30, 2012, and $1.4 million, or 1.4% of the outstanding balance, at December 31, 2011.

Impaired Loans TCF considers impaired loans to include non-accrual commercial loans, non-accrual equipment finance loans and non-accrual inventory finance loans, as well as consumer TDR loans, commercial TDR loans, and leasing and equipment finance TDR loans. Impaired loans are included in the previous tables within the amounts disclosed as non-accrual and the accruing consumer real estate TDRs. Accruing consumer and commercial TDRs that are less than 60 days delinquent have been disclosed as performing within the previous tables of performing and non-accrual loans and leases. In the following table, the loan balance of impaired loans represents the amount recorded within loans and leases on the Consolidated Statements of Financial Condition whereas the unpaid contractual balance represents the balances legally owed by the borrowers, excluding write-downs.

The following tables summarize impaired loans.

		At June 30, 2012
(In thousands)		Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded
Impaired loans with an allowance recorded:
Consumer real estate:
First mortgage lien	$		423,618	$	423,048	$	62,040
Junior lien		36,556		36,588		7,308
Total consumer real estate		460,174		459,636		69,348
Commercial real estate		258,643		231,606		16,475
Commercial business		24,370		21,665		3,459
Total commercial		283,013		253,271		19,934
Leasing and equipment finance:
Middle market		8,127		8,127		1,078
Small ticket		676		676		157
Other		591		591		305
Total leasing and equipment finance		9,394		9,394		1,540
Inventory finance		1,900		1,900		364
Other		9		9		1
Total impaired loans with an allowance recorded		754,490		724,210		91,187
Impaired loans without an allowance recorded:
Consumer real estate:
First mortgage lien		78,555		56,724		-
Junior lien		7,886		3,699		-
Total consumer real estate		86,441		60,423		-
Total impaired loans	$		840,931	$	784,633	$	91,187

		At December 31, 2011
(In thousands)		Unpaid Contractual Balance		Loan Balance		Related Allowance Recorded
Impaired loans with an allowance recorded:
Consumer real estate:
First mortgage lien	$		396,754	$	395,513	$	55,642
Junior lien		33,796		33,404		5,397
Total consumer real estate		430,550		428,917		61,039
Commercial real estate		224,682		196,784		13,819
Commercial business		36,043		29,183		4,019
Total commercial		260,725		225,967		17,838
Leasing and equipment finance:
Middle market		9,501		9,501		1,130
Small ticket		532		532		114
Other		610		610		127
Total leasing and equipment finance		10,643		10,643		1,371
Inventory finance		823		823		44
Total impaired loans with an allowance recorded		702,741		666,350		80,292
Impaired loans without an allowance recorded:
Consumer real estate:
First mortgage lien		67,954		49,099		-
Junior lien		3,810		1,790		-
Total consumer real estate		71,764		50,889		-
Total impaired loans	$		774,505	$	717,239	$	80,292

The increase in the loan balance of impaired loans from December 31, 2011 was primarily due to an increase of $32.6 million in accruing consumer real estate loan TDRs and a $27.1 million increase in commercial TDRs. Included in impaired loans were $441.6 million and $413.7 million of accruing consumer real estate loan TDRs less than 90 days past due as of June 30, 2012 and December 31, 2011, respectively.

The average loan balance of impaired loans and interest income recognized on impaired loans during the three and six months ended June 30, 2012 and 2011 are included within the following tables.

		Three Months Ended
		June 30, 2012				June 30, 2011
(In thousands)		Average Balance		Interest Income Recognized		Average Balance		Interest Income Recognized
Impaired loans with an allowance recorded:
Consumer real estate:
First mortgage lien	$		412,692	$	3,698	$	333,412	$	2,987
Junior lien		35,304		366		23,188		233
Total consumer real estate		447,996		4,064		356,600		3,220
Commercial real estate		227,340		1,312		134,765		495
Commercial business		22,077		96		38,206		82
Total commercial		249,417		1,408		172,971		577
Leasing and equipment finance:
Middle market		8,607		4		14,365		24
Small ticket		735		-		870		8
Other		590		-		186		-
Total leasing and equipment finance		9,932		4		15,421		32
Inventory finance		1,505		20		1,036		13
Other		5		-		-		-
Total impaired loans with an allowance recorded		708,855		5,496		546,028		3,842
Impaired loans without an allowance recorded:
Consumer real estate:
First mortgage lien		53,704		378		38,064		237
Junior lien		3,429		41		1,713		21
Total consumer real estate		57,133		419		39,777		258
Total impaired loans	$		765,988	$	5,915	$	585,805	$	4,100

		Six Months Ended
		June 30, 2012				June 30, 2011

(In thousands)		Average Balance		Interest Income Recognized		Average Balance		Interest Income Recognized
Impaired loans with an allowance recorded:
Consumer real estate:
First mortgage lien	$		409,281	$	7,101	$	328,137	$	5,988
Junior lien		34,996		681		22,801		457
Total consumer real estate		444,277		7,782		350,938		6,445
Commercial real estate		214,195		2,646		151,349		864
Commercial business		25,424		206		39,829		83
Total commercial		239,619		2,852		191,178		947
Leasing and equipment finance:
Middle market		8,814		9		13,683		57
Small ticket		604		-		579		9
Other		601		1		177		-
Total leasing and equipment finance		10,019		10		14,439		66
Inventory finance		1,362		33		845		42
Other		5		-		-		-
Total impaired loans with an allowance recorded		695,282		10,677		557,400		7,500
Impaired loans without an allowance recorded:
Consumer real estate:
First mortgage lien		52,912		711		35,199		436
Junior lien		2,745		86		1,649		40
Total consumer real estate		55,657		797		36,848		476
Total impaired loans	$		750,939	$	11,474	$	594,248	$	7,976

(8) Deposits

Deposits are summarized as follows.

	At June 30, 2012						At December 31, 2011
	Rate at				% of		Rate at				% of
(Dollars in thousands)	Quarter-end		Amount		Total		Year-end		Amount		Total
Checking:
Non-interest bearing	-	%	$	2,380,486	17.4	%	-	%	$	2,442,522	20.0	%
Interest bearing	.15		2,321,431		17.0		.16		2,187,227		18.0
Total checking	.07		4,701,917		34.4		.07		4,629,749		38.0
Savings	.33		6,227,133		45.4		.37		5,855,263		48.0
Money market	.40		880,545		6.4		.36		651,377		5.3
Total checking, savings and money market	.23		11,809,595		86.2		.25		11,136,389		91.3
Certificates of deposit	1.08		1,894,711		13.8		.75		1,065,615		8.7
Total deposits	.35	%	$	13,704,306	100.0	%	.29	%	$	12,202,004	100.0	%

Certificates of deposit had the following remaining maturities at June 30, 2012 and December 31, 2011.

(In thousands)	At June 30, 2012						At December 31, 2011
Maturity	$	100,000+	Other		Total		$	100,000+	Other		Total
0-3 months	$	194,833	$	165,040	$	359,873	$	213,611	$	146,035	$	359,646
4-6 months	151,939		195,755		347,694		67,993		155,394		223,387
7-12 months	280,319		307,072		587,391		89,169		246,880		336,049
13-24 months	200,946		192,556		393,502		35,175		93,481		128,656
Over 24 months	145,726		60,525		206,251		3,225		14,652		17,877
Total	$	973,763	$	920,948	$	1,894,711	$	409,173	$	656,442	$	1,065,615

On June 1, 2012, TCF Bank assumed approximately $778 million of deposits from Prudential Bank & Trust, FSB (“PB&T”). The deposits consist primarily of IRA accounts with certificates of deposit or checking accounts and IRA related brokerage sweep accounts gathered by PB&T through their relationship with Prudential Retirement. Deposit base intangibles of $3 million, and $35 thousand of related amortization, were recorded during the second quarter of 2012 in connection with this assumption of deposits.

(9) Goodwill and Other Intangible Assets

Goodwill and other intangible assets are summarized as follows.

	At June 30, 2012							At December 31, 2011
	Weighted-							Weighted-
	Average							Average
	Amortization							Amortization
	Period	Gross		Accumulated		Net		Period	Gross		Accumulated		Net
(Dollars in thousands)	(In Years)	Amount		Amortization		Amount		(In Years)	Amount		Amortization		Amount
Amortizable intangible assets:
Deposit base intangibles	10	$	3,049	$	35	$	3,014	-	$	-	$	-	$	-
Customer base intangibles	11	2,730		457		2,273		11	2,730		360		2,370
Non-compete agreement	5	4,590		573		4,017		5	4,590		113		4,477
Tradename	2	300		88		212		2	300		13		287
Total	8	$	10,669	$	1,153	$	9,516	7	$	7,620	$	486	$	7,134
Unamortizable intangible assets:
Goodwill		$	225,640			$	225,640		$	225,640			$	225,640

TCF’s goodwill balance is related to its Lending segment. Total amortization expense related to intangible assets was $336 thousand and $667 thousand for the three and six months ended June 30, 2012, respectively. Total amortization expense related to intangible assets was $43 thousand and $86 thousand for the three and six months ended June 30, 2011, respectively.

(10) Long-term Borrowings

The following table sets forth information about long-term borrowings.

			At June 30, 2012				At December 31, 2011
					Weighted-				Weighted-
	Stated				Average				Average
(Dollars in thousands)	Maturity		Amount		Rate		Amount		Rate
Federal Home Loan Bank advances and securities sold under repurchase agreements	2013	$		680,000	.74	%	$	400,000	.97	%
	2014		448,000		.44		-		-
	2015		125,000		.46		900,000		4.18
	2016		297,000		1.12		1,100,000		4.49
	2017		-		-		1,250,000		4.60
	2018		-		-		300,000		3.51
Subtotal			1,550,000		.70		3,950,000		4.02
Subordinated bank notes	2014		71,020		2.13		71,020		2.21
	2015		50,000		2.06		50,000		2.14
	2016		74,782		5.59		74,661		5.63
	2022		109,000		6.37		-		-
Subtotal			304,802		4.48		195,681		3.49
Junior subordinated notes (trust preferred)	2068		114,807		12.95		114,236		12.83
Discounted lease rentals	2012		25,834		5.29		57,622		5.32
	2013		34,357		5.26		36,009		5.28
	2014		15,764		5.11		16,641		5.12
	2015		5,668		5.04		5,662		5.04
	2016		4,026		4.98		4,026		4.98
	2017		1,787		4.98		1,787		4.98
Subtotal			87,436		5.21		121,747		5.25
Other long-term	2012		148		6.60		-		-
	2013		3,062		2.46		-		-
	2014		3,170		2.54		-		-
	2015		3,282		2.63		-		-
	2016		3,406		2.72		-		-
	2017		3,540		2.81		-		-
	2018		1,082		6.60		-		-
	2019		1,188		6.60		-		-
Subtotal			18,878		3.15		-		-
Total long-term borrowings		$		2,075,923	2.15	%	$	4,381,664	4.26	%

During June 2012, TCF Bank issued $110 million of subordinated notes, at a price to investors of 99.086% of par, which will be due on June 8, 2022. The subordinated notes bear interest at a fixed rate of 6.25% until maturity. The notes qualify as Tier 2 or supplementary capital for regulatory purposes, subject to certain limitations. TCF Bank intends to use the proceeds for general corporate purposes.

In 2008, TCF Capital I, a statutory trust formed under the laws of the state of Delaware and wholly-owned finance subsidiary of TCF issued 10.75% trust preferred junior subordinated notes (the “Trust Preferred Securities”). During June 2012, TCF announced that it had submitted a redemption notice to the property trustee for full redemption of the $115 million of Trust Preferred Securities. The determination to redeem the Trust Preferred Securities followed a notice of proposed rulemaking, approved for publication in the Federal Register by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) on June 7, 2012, which would phase out the Tier 1 capital treatment of the Trust Preferred Securities. TCF has determined that the Federal Reserve’s approval for publication of the notice of proposed rulemaking constituted a “capital treatment event” (as defined in the indenture governing the Trust Preferred Securities), which allows TCF to redeem the Trust Preferred Securities. The Trust Preferred Securities will be redeemed on July 30, 2012 at the redemption price of $25 per Trust Preferred Security plus accumulated and unpaid distributions to the redemption date.

(11) Equity

Treasury stock and other consist of the following:

	At		At
	June 30,		December 31,
(In thousands)	2012		2011
Treasury stock, at cost	$	1,102	$	1,102
Shares held in trust for deferred compensation plans, at cost	40,976		32,265
Total	$	42,078	$	33,367

On June 25, 2012, TCF completed the public offering of depositary shares, each representing a 1/1,000th interest in a share of Series A Non-Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”), par value $.01 per share. In connection with the offering, TCF issued 6,900,000 depositary shares, including 900,000 depositary shares issued pursuant to the full exercise of the underwriters’ over-allotment option, at a public offering price of $25 per depositary share. Dividends will be payable on the Series A Preferred Stock when, as and if declared by TCF’s Board of Directors on a non-cumulative basis on March 1, June 1, September 1, and December 1 of each year, commencing on September 1, 2012, at a per annum rate of 7.5%. Net proceeds of the offering to TCF, after deducting underwriting discounts and commissions and estimated offering expenses of $5.8 million, were $166.7 million.

At June 30, 2012, TCF had 3,199,988 outstanding warrants to purchase common stock with a strike price of $16.93 per share. Upon completion of the U.S. Treasury’s secondary public offering of the warrants issued under the Capital Purchase Program (“CPP”) in December of 2009, the warrants became publicly traded on the New York Stock Exchange under the symbol “TCBWS.” As a result, TCF has no further obligations to the Federal Government in connection with the CPP.

TCF has a joint venture with The Toro Company (“Toro”) called Red Iron Acceptance, LLC (“Red Iron”). Red Iron provides U.S. distributors and dealers and select Canadian distributors of the Toro® and Exmark® branded products with reliable, cost-effective sources of financing. TCF and Toro maintain ownership interests of 55% and 45%, respectively, in Red Iron. As TCF has a controlling financial interest in Red Iron, its financial results are consolidated in TCF’s financial statements. Toro’s interest is reported as a non-controlling interest within equity and qualifies as Tier 1 regulatory capital.

The following table sets forth TCF’s and TCF Bank’s regulatory Tier 1 leverage, Tier 1 risk-based and total risk-based capital levels, and applicable percentages of adjusted assets, together with the stated minimum and well-capitalized capital ratio requirements. Decreases since December 31, 2011 in TCF’s Tier 1 and total risk-based capital are the result of the balance sheet repositioning completed during March 2012.

					Minimum				Well-Capitalized

		Actual			Capital Requirement (1)				Capital Requirement (1)

(Dollars in thousands)		Amount	Ratio		Amount		Ratio		Amount		Ratio
As of June 30, 2012
Tier 1 leverage capital:(2)
TCF	$	1,508,176	8.64	%	$	697,908	4.00	%	N.A.		N.A.
TCF Bank	1,447,464		8.29		698,108		4.00		$	872,635	5.00	%
Tier 1 risk-based capital:
TCF	1,508,176		10.53		572,776		4.00		859,164		6.00
TCF Bank	1,447,464		10.11		572,578		4.00		858,868		6.00
Total risk-based capital:
TCF	1,877,714		13.11		1,145,553		8.00		1,431,941		10.00
TCF Bank	1,816,810		12.69		1,145,157		8.00		1,431,446		10.00
As of December 31, 2011
Tier 1 leverage capital:(2)
TCF	$	1,706,926	9.15	%	$	745,887	4.00	%	N.A.		N.A.
TCF Bank	1,553,381		8.33		745,940		4.00		$	932,426	5.00	%
Tier 1 risk-based capital:
TCF	1,706,926		12.67		539,013		4.00		808,520		6.00
TCF Bank	1,553,381		11.53		538,829		4.00		808,243		6.00
Total risk-based capital:
TCF	1,994,875		14.80		1,078,026		8.00		1,347,533		10.00
TCF Bank	1,841,273		13.67		1,077,658		8.00		1,347,072		10.00

N.A. Not Applicable.

(1) The minimum and well-capitalized requirements are determined by the Federal Reserve for TCF and by the Office of the Comptroller of the Currency for TCF Bank pursuant to the FDIC Improvement Act of 1991.

(2) The minimum Tier 1 leverage ratio for bank holding companies and banks is 3.0 or 4.0 percent, depending on factors specified in regulations issued by federal banking agencies.

(12) Derivative Instruments

All derivative instruments are recognized within other assets or other liabilities at fair value within the Consolidated Statements of Financial Condition. These contracts typically settle within 30 days with the exception of contracts associated with cash flow hedges, which have maturities as long as seven months, and a swap agreement, with no determinable maturity date.

Forward foreign exchange contracts are used to manage the foreign exchange risk associated with certain assets, liabilities and forecasted transactions. Forward foreign exchange contracts represent agreements to exchange a foreign currency for U.S. dollars at an agreed-upon price and settlement date. Additionally, in conjunction with the sale of all of its Visa® Class B stock in June 2012, TCF and the purchaser entered into a derivative transaction whereby TCF will make, or receive, cash payments whenever the conversion ratio of the Visa Class B stock into Visa Class A stock is adjusted. See Note 19, Sales of Other Securities for additional information. The fair value of this derivative has been determined using estimated future cash flows using probability weighted scenarios for multiple estimates of Visa’s aggregate exposure to covered litigation matters, which include consideration of amounts funded by Visa into its escrow account for the covered litigation matters. See Note 22, Subsequent Events for additional information.

The value of derivative instruments will vary over their contractual term as the related underlying rates fluctuate. The accounting for changes in the fair value of a derivative instrument depends on whether or not the contract has been designated and qualifies as a hedge. To qualify as a hedge, a contract must be highly effective at reducing the risk associated with the exposure being hedged. In addition, for a contract to be designated as a hedge, the risk management objective and strategy must be documented at inception. Hedge documentation must also identify the hedging instrument, the asset or liability and type of risk to be hedged and how the effectiveness of the contract is assessed prospectively and retrospectively. To assess effectiveness, TCF uses statistical methods such as regression analysis. The extent to which a contract has been, and is expected to continue to be, effective at offsetting changes in cash flows or the net investment must be assessed and documented at least quarterly. If it is determined that a contract is not highly effective at hedging the

designated exposure, hedge accounting is discontinued.

Upon origination of a derivative instrument, the contract is designated either as a hedge of a forecasted transaction or the variability of cash flows to be paid related to a recognized asset or liability (“cash flow hedge”), or a hedge of the volatility of an investment in foreign operations driven by changes in foreign currency exchange rates (“net investment hedge”). To the extent that a hedge is effective, changes in fair value are recorded within accumulated other comprehensive income (loss), with any ineffectiveness recorded in non-interest expense. Amounts recorded within other comprehensive income (loss) are subsequently reclassified to non-interest expense upon completion of the related transaction. Changes in net investment hedges recorded within other comprehensive income (loss) are subsequently reclassified to non-interest 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. If a hedged forecasted transaction is no longer probable, hedge accounting is ceased and any gain or loss included in other comprehensive income (loss) is reported in earnings immediately. Changes in the values of forward foreign exchange contracts that are not designated as hedges are reflected in non-interest expense. Changes in the value of swap agreements that are not designated as hedges are reflected in non-interest income.

Cash Flow Hedges Foreign exchange contracts, which include forward contracts, were used to manage the foreign exchange risk associated with certain minimum lease payment streams. At June 30, 2012 and December 31, 2011, TCF had $4 thousand and less than $1 thousand, respectively, of unrealized gains on derivatives classified as cash flow hedges recorded in other comprehensive income (loss). For the three months ended June 30, 2012, losses of less than $1 thousand were excluded from the assessment of TCF’s cash flow hedge effectiveness. For the six months ended June 30, 2012, losses of $1 thousand were excluded from the assessment of TCF’s cash flow hedge effectiveness. The estimated amount to be reclassified from other comprehensive income (loss) into earnings during the next 12 months is a loss of $4 thousand.

Net Investment Hedges Foreign exchange contracts, which include forward contracts and currency options, are used to manage the foreign exchange risk associated with the Company’s net investment in TCF Commercial Finance Canada, Inc., a wholly-owned Canadian subsidiary of TCF Bank, along with certain assets, liabilities and forecasted transactions of that subsidiary. The gross amount of related gains or losses included in the cumulative translation adjustment within other comprehensive income (loss) for the three and six months ended June 30, 2012, were gains of $264 thousand and losses of $132 thousand, respectively. The gross amount of related gains or losses included in the cumulative translation adjustment within other comprehensive income (loss) for the three and six months ended June 30, 2011, were losses of $150 thousand and $576 thousand, respectively.

The following tables summarize the derivative instruments as of June 30, 2012 and December 31, 2011. See Note 13, Fair Value Measurement for additional information.

				At June 30, 2012
				Receivables						Payables

(In thousands)	Notional Amount		Designated as Hedges		Not Designated as Hedges		Total		Designated as Hedges			Not Designated as Hedges		Total
Forward foreign exchange contracts	$	336,860	$	-	$	10	$	10	$		258	$	3,541	$	3,799
Swap agreement	14,550		-		-		-		-			1,434		1,434
Netting adjustments(1)							(10)							(2,054)
Net receivable / payable							$	-						$	3,179

				At December 31, 2011
				Receivables							Payables

(In thousands)	Notional Amount		Designated as Hedges		Not Designated as Hedges		Total		Designated as Hedges			Not Designated as Hedges		Total
Forward foreign exchange contracts	$	176,979	$	-	$	396	$	396	$		3	$	662	$	665
Netting adjustments(1)							(396)							(381)
Net receivable / payable							$	-						$	284

(1) Derivative receivables and payables, and the related cash collateral received and paid, are netted when a legally enforceable master netting agreement exists between TCF and a counterparty.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2012			2011			2012			2011
Consolidated Statements of Comprehensive Income:
Foreign exchange (losses) gains	$	(6,672	)	$	1,070		$	(3,551	)	$	5,168
Forward foreign exchange contract gains (losses):
Cash flow hedge	-			(11		)	(1		)	(13		)
Not designated as hedges	5,920			(1,406		)	2,289			(5,690		)
Total forward foreign exchange contract losses	5,920			(1,417		)	2,288			(5,703		)
Net realized loss	$	(752	)	$	(347	)	$	(1,263	)	$	(535	)
Consolidated Statements of Financial Condition:
Accumulated other comprehensive (loss) income:
Foreign currency translation adjustment	$	(324	)	$	120		$	61		$	534
Net investment hedge	264			(150		)	(132		)	(576		)
Cash flow hedge	4			57			(4		)	(24		)
Net unrealized (loss) gain	$	(56	)	$	27		$	(75	)	$	(66	)

TCF executes all of its foreign exchange contracts in the over-the-counter market with large, international financial institutions pursuant to International Swaps and Derivatives Association, Inc. (“ISDA”) master 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. No such collateral was posted at June 30, 2012. The amount of collateral required depends on the contract and is determined daily based on market and currency exchange rate conditions. At June 30, 2012, TCF had received $410 thousand and posted $610 thousand of cash collateral related to its forward foreign exchange contracts and posted $1.5 million of cash collateral related to its swap agreement, of which $21 thousand was not utilized to offset derivative liability positions because the liability position was over-collateralized. At December 31, 2011, TCF had received $150 thousand of cash collateral and had posted $135 thousand of cash collateral.

(13) Fair Value Measurement

Fair values represent the estimated price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date under current market conditions.

The following tables present the balances of assets and liabilities measured at fair value on a recurring and non-recurring basis.

	Fair Value Measurements at June 30, 2012

(In thousands)	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value
Recurring Fair Value Measurements:
Securities available for sale:
Mortgage-backed securities:
U.S. Government sponsored enterprises and federal agencies	$	-	$	754,893	$	-	$	754,893
Other	-		-		140		140
Other securities	2,100		-		100		2,200
Forward foreign currency contracts	-		10		-		10
Assets held in trust for deferred compensation plans(4)	10,743		-		-		10,743
Total assets	$	12,843	$	754,903	$	240	$	767,986
Forward foreign currency contracts	$	-	$	3,799	$	-	$	3,799
Swap agreement	-		-		1,434		1,434
Total liabilities	$	-	$	3,799	$	1,434	$	5,233
Nonrecurring Fair Value Measurements:
Loans:(5):
Commercial	$	-	$	-	$	31,898	$	31,898
Real estate owned:(6):
Consumer	-		-		64,053		64,053
Commercial	-		-		33,907		33,907
Repossessed and returned assets(6)	-		2,853		384		3,237
Investments(7)	-		-		3,364		3,364
Total non-recurring fair value measurements	$	-	$	2,853	$	133,606	$	136,459

(1) Considered Level 1 under Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”).

(2) Considered Level 2 under ASC 820.

(3) Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

(4) A corresponding liability is recorded in other liabilities for TCF’s obligation to the participants in these plans.

(5) Represents the carrying value of loans for which impairment reserves are determined based on the appraisal value of the collateral.

(6) Amounts do not include assets held at cost at June 30, 2012.

(7) Represents the carrying value of other investments which were recorded at fair value determined by using quoted prices, when available, and incorporating results of internal pricing techniques and observable market information.

	Fair Value Measurements at December 31, 2011

(In thousands)	Readily Available Market Prices(1)		Observable Market Prices(2)		Company Determined Market Prices(3)		Total at Fair Value
Recurring Fair Value Measurements:
Securities available for sale:
Mortgage-backed securities:
U.S. Government sponsored enterprises and federal agencies	$	-	$	2,322,336	$	-	$	2,322,336
Other	-		-		152		152
Other securities	252		-		1,298		1,550
Forward foreign currency contracts	-		396		-		396
Assets held in trust for deferred compensation plans(4)	9,833		-		-		9,833
Total assets	$	10,085	$	2,322,732	$	1,450	$	2,334,267
Forward foreign currency contracts	$	-	$	665	$	-	$	665
Total liabilities	$	-	$	665	$	-	$	665
Nonrecurring Fair Value Measurements:
Loans:
Commercial(5)	$	-	$	-	$	29,003	$	29,003
Real estate owned:(6)
Consumer	-		-		77,126		77,126
Commercial	-		-		45,137		45,137
Repossessed and returned assets(6)	-		3,889		270		4,159
Investments(7)	-		-		4,244		4,244
Total non-recurring fair value measurements	$	-	$	3,889	$	155,780	$	159,669

(1) Considered Level 1 under ASC 820.

(2) Considered Level 2 under ASC 820.

(3) Considered Level 3 under ASC 820 and are based on valuation models that use significant assumptions that are not observable in an active market.

(4) A corresponding liability is recorded in other liabilities for TCF’s obligation to the participants in these plans.

(5) Represents the carrying value of loans for which impairment reserves are determined based on the appraisal value of the collateral.

(6) Amounts do not include assets held at cost at December 31, 2011.

The change in total assets carried at fair value using Company Determined Market Prices, from $1.5 million at December 31, 2011 to $240 thousand at June 30, 2012, was the result of decreases in fair value of $100 thousand recorded within other comprehensive income (loss), reductions due to principal paydowns of $12 thousand, and transfers to securities measured at fair value using Readily Available Market Prices from securities measured using Company Determined Market Prices of $1.1 million. The transfer was recognized as of the date of TCF’s adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The change in total liabilities measured at fair value using Company Determined Market Prices from December 31, 2011 to $1.4 million at June 30, 2012, was due to the fair value measurement of a swap agreement entered into during the second quarter of 2012.

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value on a recurring basis.

Securities Available for Sale Securities available for sale consist primarily of U.S. Government sponsored enterprise and federal agency securities. The fair value of U.S. Government sponsored enterprise securities is recorded using prices obtained from independent asset pricing services that are based on observable transactions, but not quoted markets, and are classified as Level 2 assets. Management reviews the prices obtained from independent asset pricing services for unusual fluctuations and comparisons to current market trading activity, but did not adjust these prices.

Other securities, for which there is little or no market activity, are categorized as Level 3 assets. Other securities classified as Level 3 assets include foreign debt securities and previously included equity investments in other thinly traded financial institutions. The fair value of these assets is determined by using quoted prices, when available, and incorporating results of internal pricing techniques and observable market information, which is adjusted for security

specific information, such as financial statement strength, earnings history, disclosed fair value measurements, recorded impairments and key financial ratios, to determine fair value. Other securities, for which there are active markets and routine trading volume, are categorized as Level 1 assets.

Forward Foreign Exchange Contracts TCF’s forward foreign exchange contracts are executed in over-the-counter markets and are valued using a cash flow model that includes key inputs such as foreign exchange rates and, in accordance with GAAP, an assessment of the risk of counterparty non-performance. The risk of counterparty non-performance is based on external assessments of credit risk. The majority of these contracts are based on observable transactions, but not quoted markets, and are classified as Level 2 assets and liabilities. As permitted under GAAP, TCF has elected to net derivative receivables and derivative payables and the related cash collateral received and paid, when a legally enforceable master netting agreement exists. For purposes of the previous tables, the derivative receivable and payable balances are presented gross of this netting adjustment.

Swap Agreement TCF’s swap agreement relates to the sale of TCF’s Visa Class B stock, and is classified as a Level 3 liability. See Note 19, Sales of other Securities for additional information. The value of the swap agreement is based upon TCF’s estimated exposure related to the Visa covered litigation through a probability analysis of the funding and estimated settlement amounts. As permitted under GAAP, TCF has elected to net derivative receivables and derivative payables and the related cash collateral received and paid, when a legally enforceable master netting agreement exists. For purposes of the previous tables, any derivative receivable and payable balances are presented gross of this netting adjustment.

Assets Held in Trust for Deferred Compensation Assets held in trust for deferred compensation plans include investments in publicly traded stocks, excluding TCF common stock reported in treasury and other equity, and U.S. Treasury notes. The fair value of these assets is based upon prices obtained from independent asset pricing services based on active markets.

The following is a description of valuation methodologies used for assets measured on a non-recurring basis.

Loans Impaired loans for which repayment of the loan is expected to be provided solely by the value of the underlying collateral are considered collateral dependent and are valued based on the fair value of such collateral, less estimated selling costs. Selling costs are generally calculated as 5% to 10% of the fair value of the underlying collateral.

Real Estate Owned and Repossessed and Returned Assets The fair value of real estate owned is based on independent full appraisals, real estate broker’s price opinions, or automated valuation methods, less estimated selling costs. Selling costs are generally calculated as 5% to 10% of the fair value of the underlying collateral. Certain properties require assumptions that are not observable in an active market in the determination of fair value. The fair value of repossessed and returned assets is based on available pricing guides, auction results or price opinions, less estimated selling costs. Assets acquired through foreclosure, 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 real estate owned or repossessed and returned assets. Real estate owned and repossessed and returned assets were written down $6.3 million and included in foreclosed real estate and repossessed assets, net expense, for the six months ended June 30, 2012.

(14) Fair Value of Financial Instruments

TCF is required to disclose the estimated fair value of financial instruments, both assets and liabilities on and off the balance sheet, for which it is practicable to estimate fair value. These fair value estimates were made at June 30, 2012 and December 31, 2011, based on relevant market information and information about the financial instruments. Fair value estimates are intended to represent the price at which an orderly transaction to sell an asset or transfer liability would take place between market participants at the measurement date under current market conditions. However, given there is no active market or observable market transactions for many of TCF’s financial instruments, the Company has made estimates of fair values which are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimated values.

The carrying amounts and estimated fair values of the Company’s financial instruments are set forth in the following table. This information represents only a portion of TCF’s balance sheet, and not the estimated value of the Company as a whole. Non-financial instruments such as the value of TCF’s branches and core deposits, leasing operations and the future revenues from TCF’s customers are not reflected in this disclosure. Therefore, this information is of limited use in assessing the value of TCF.

	Level in		At June 30,					At December 31,
	Fair Value		2012					2011
	Measurement		Carrying		Estimated			Carrying			Estimated
(In thousands)	Hierarchy		Amount		Fair Value			Amount			Fair Value
Financial instrument assets:
Cash and due from banks	Level 1	$	865,257		$	865,257		$	1,389,704		$	1,389,704
Investments	Level 2	114,350			114,350			150,797			150,797
Investments	Level 3	6,464			6,464			6,983			6,983
Securities available for sale	Level 1	2,100			2,100			252			252
Securities available for sale	Level 2	754,893			754,893			2,322,336			2,322,336
Securities available for sale	Level 3	240			240			1,450			1,450
Loans and leases held for sale	Level 3	9,664			9,913			14,321			14,524
Interest-only strips	Level 3	30,679			30,679			22,436			22,436
Loans:
Consumer real estate	Level 3	6,811,784			6,544,004			6,895,291			6,549,277
Commercial real estate	Level 3	3,250,497			3,204,552			3,198,698			3,154,724
Commercial business	Level 3	272,573			265,158			250,794			242,331
Equipment finance loans	Level 3	1,186,762			1,194,809			1,110,803			1,118,271
Inventory finance loans	Level 3	1,457,263			1,446,318			624,700			623,651
Auto finance	Level 3	262,188			268,056			3,628			3,628
Other	Level 3	29,094			25,326			34,885			30,665
Total financial instrument assets		$	15,053,808		$	14,732,119		$	16,027,078		$	15,631,029
Financial instrument liabilities:
Checking, savings and money market deposits	Level 1	$	11,809,595		$	11,809,595		$	11,136,389		$	11,136,389
Certificates of deposit	Level 2	1,894,711			1,910,637			1,065,615			1,068,793
Short-term borrowings	Level 1	7,487			7,487			6,416			6,416
Long-term borrowings	Level 2	2,075,923			2,084,925			4,381,664			4,913,637
Forward foreign exchange contracts	Level 2	3,179			3,179			284			284
Total financial instrument liabilities		$	15,790,895		$	15,815,823		$	16,590,368		$	17,125,519
Financial instruments with off-balance sheet risk: (1)
Commitments to extend credit (2)	Level 2	$	30,195		$	30,195		$	31,210		$	31,210
Standby letters of credit (3)	Level 2	(94		)	(94		)	(71		)	(71		)
Total financial instruments with off-balance sheet risk		$	30,101		$	30,101		$	31,139		$	31,139

(1) Positive amounts represent assets, negative amounts represent liabilities.

(2) Carrying amounts are included in other assets.

(3) Carrying amounts are included in accrued expenses and other liabilities.

The carrying amounts of cash and due from banks and accrued interest payable and receivable approximate their fair values due to the short period of time until their expected realization. Securities available for sale, forward foreign exchange contracts and assets held in trust for deferred compensation plans are carried at fair value see Note 13, Fair Value Measurement. Certain financial instruments, including lease financings, discounted lease rentals and all non-financial instruments are excluded from fair value of financial instrument disclosure requirements. The following methods and assumptions are used by TCF in estimating fair value for its remaining financial instruments, all of which are issued or held for purposes other than trading.

Investments The carrying value of investments in FHLB stock and Federal Reserve stock approximates fair value. The fair value of other investments is estimated based on discounted cash flows using current market rates and consideration of credit exposure.

Loans and Leases Held for Sale Auto loans and equipment finance leases held for sale are carried at the lower of cost or fair value. The cost of auto loans held for sale includes the unpaid principal balance, net of deferred loan fees and costs and dealer participation premiums. Estimated fair values are based upon recent loan sale transactions and any available price quotes on loans with similar coupons, maturities and credit quality.

Interest-Only Strips The fair value of the interest-only strips represents the present value of future cash flows to be generated by the loans, in excess of the interest paid to investors and servicing revenue received on the loans, and is included in other assets in the Consolidated Statements of Financial Condition. This excess interest represents future proceeds and is calculated as the contractual loan rate less the fixed rate that will be paid to the investor as specified in the loan sale agreements. TCF uses available market data, along with its own empirical data and discounted cash flow models, to arrive at the estimated 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 the Company believes are commensurate with the risks associated with the cash flows. These assumptions are inherently subject to volatility and uncertainty. As a result, the estimated fair value of the interest-only strips may fluctuate from period to period, and such fluctuations could be significant.

Loans The fair value of loans is estimated based on discounted expected cash flows or the underlying value of the collateral. Expected discounted cash flows include assumptions for prepayment estimates over the loans’ remaining life, consideration of the current interest rate environment compared to the weighted average rate of each portfolio, a credit risk component based on the historical and expected performance of each portfolio and a liquidity adjustment related to the current market environment.

Forward Foreign Exchange Contracts Forward foreign exchange contract assets and liabilities are carried at fair value, which is net of the related cash collateral received and paid when a legally enforceable master netting agreement exists between TCF and the counterparty.

Swap Agreement Swap agreement assets and liabilities are carried at fair value, which is net of the related cash collateral received and paid when a legally enforceable master netting agreement exists between TCF and the counterparty.

Deposits The fair value of checking, savings and money market deposits is deemed equal to the amount payable on demand. The fair value of certificates of deposit is estimated based on discounted cash flows using currently offered market rates. The intangible value of long-term relationships with depositors is not taken into account in the fair values disclosed.

Borrowings The carrying amounts of short-term borrowings approximate their fair values. The fair values of TCF’s long-term borrowings are estimated based on observable market prices and discounted cash flows using interest rates for borrowings of similar remaining maturities and characteristics.

Financial Instruments with Off-Balance Sheet Risk The fair values of TCF’s commitments to extend credit and standby letters of credit are estimated using fees currently charged to enter into similar agreements as commitments and standby letters of credit similar to TCF’s are not actively traded. Substantially all commitments to extend credit and standby letters of credit have floating rates and do not expose TCF to interest rate risk; therefore fair value is approximately equal to carrying value.

(15) Stock Compensation

The following table reflects TCF’s restricted stock and stock option transactions under the TCF Financial Incentive Stock Program during the six months ended June 30, 2012.

	Restricted Stock					Stock Options
			Weighted-Average						Weighted-Average
	Shares		Grant Date Fair Value			Shares		Price Range	Exercise Price
Outstanding at December 31, 2011	2,284,114			$	12.95	2,198,744		$ 12.85 - $ 15.75		$	14.43
Granted	1,602,200			9.19		-		-		-
Forfeited	(31,432	)		13.40		(42,640	)	$ 15.75		15.75
Vested	(454,873	)		11.82		-		-		-
Outstanding at June 30, 2012	3,400,009			$	11.32	2,156,104		$ 12.85 - $ 15.75		$	14.40
Exercisable at June 30, 2012	N.A.			N.A.		2,156,104				$	14.40

N.A. Not applicable

Unrecognized stock compensation for restricted stock was $24.8 million with a weighted-average remaining amortization period of 2.4 years at June 30, 2012. As of June 30, 2012, the weighted average remaining contractual life of stock options outstanding was 5.2 years.

At June 30, 2012, there were 1,257,751 shares of performance-based restricted stock that will vest only if certain return on assets goals, return on equity goals, and service conditions are achieved. Failure to achieve the goals and service conditions will result in all or a portion of the shares being forfeited.

(16) Employee Benefit Plans

The following tables set forth the net periodic benefit cost (income) included in compensation and employee benefits expense for TCF’s Pension Plan and Postretirement Plan for the three and six months ended June 30, 2012 and 2011.

		Pension Plan
		Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)		2012			2011			2012			2011
Interest cost	$		441		$	556		$	881		$	1,112
Return on plan assets		(206		)	(678		)	(412		)	(1,356		)
Net periodic benefit cost (income)	$		235		$	(122	)	$	469		$	(244	)

		Postretirement Plan
		Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)		2012			2011		2012			2011
Interest cost	$		73		$	107	$	146		$	215
Service cost		-			1		-			1
Amortization of transition obligation		-			1		-			2
Amortization of prior service cost		(7		)	-		(14		)	-
Net periodic benefit cost	$		66		$	109	$	132		$	218

TCF made no cash contributions to the Pension Plan in either of the six months ended June 30, 2012 or 2011. During the second quarter and first six months of 2012, TCF paid $121 thousand and $276 thousand, respectively, for benefits of the Postretirement Plan, compared with $150 thousand and $268 thousand, respectively, for the same periods in 2011.

During the fourth quarter of 2011, TCF retrospectively changed its method of accounting for pension and other postretirement benefits. TCF’s policy for actuarial gains and losses is now to immediately recognize them in its operating results in the year in which the gains and losses occur. Additionally, for purposes of calculating the expected return on plan assets, TCF no longer uses an averaging technique for the market-related value of plan assets, but instead uses the

actual fair value of plan assets adjusted annually as of December 31. As such, actual results could differ from estimates recorded by TCF during interim periods.

(17) Business Segments

Lending, Funding and Support Services and Other have been identified as reportable operating segments. Lending includes retail lending, commercial banking, leasing and equipment finance, inventory finance and auto finance. Funding includes branch banking and treasury services. Support Services and Other includes holding company and corporate functions that provide data processing, bank operations and other professional services to the operating segments. In 2012, TCF changed the management structure and therefore its segments. Prior periods have been restated to reflect the current structure.

TCF evaluates performance and allocates resources based on each segment’s net income. The business segments follow generally accepted accounting principles as described in the Summary of Significant Accounting Policies in the most recent Annual Report on Form 10-K. TCF generally accounts for inter-segment sales and transfers at cost.

The following tables set forth certain information of each of TCF’s reportable segments, including a reconciliation of TCF’s consolidated totals.

									Support	Eliminations
(In thousands)			Lending		Funding				Services	and Other(1)		Consolidated
For the Three Months Ended June 30, 2012
Revenues from external customers:
Interest income	$	210,532		$		7,683	$	-		$	-	$	218,215
Non-interest income	33,357			66,271			13,255			-		112,883
Total	$	243,889		$		73,954	$	13,255		$	-	$	331,098
Net interest income	$	128,832		$		70,027	$	(5)		$	(630)	$	198,224
Provision for credit losses	53,745			361			-			-		54,106
Non-interest income	33,357			66,280			50,478			(37,232)		112,883
Non-interest expense	92,698			108,377			39,146			(37,232)		202,989
Income tax expense	5,606			13,256			2,310			(630)		20,542
Income after income tax expense	10,140			14,313			9,017			-		33,470
Income attributable to non-controlling interest	1,939			-			-			-		1,939
Net income attributable to common stockholders	$	8,201		$		14,313	$	9,017		$	-	$	31,531
Total assets	$	15,498,135		$		6,586,483	$	153,735		$	(4,367,756)	$	17,870,597

For the Three Months Ended June 30, 2011
Revenues from external customers:
Interest income	$	213,917		$		22,381	$	-		$	-	$	236,298
Non-interest income	24,351			89,953			(162)			-		114,142
Total	$	238,268		$		112,334	$	(162)		$	-	$	350,440
Net interest income	$	118,569		$		58,083	$	16		$	(518)	$	176,150
Provision for credit losses	43,427			578			-			-		44,005
Non-interest income	24,351			94,252			34,156			(38,617)		114,142
Non-interest expense	79,525			117,270			37,829			(39,533)		195,091
Income tax expense (benefit)	6,877			13,688			(1,290)			(189)		19,086
Income (loss) after income tax expense	13,091			20,799			(2,367)			587		32,110
Income attributable to non-controlling interest	1,686			-			-			-		1,686
Net income (loss) attributable to common stockholders	$	11,405		$		20,799	$	(2,367)		$	587	$	30,424
Total assets	$	14,818,791		$		7,222,212	$	165,088		$	(3,371,675)	$	18,834,416

(1) Includes the portion of pension and other postretirement benefits (expense) attributable to the determination of actuarial gains and losses.

					Support		Eliminations
(In thousands)	Lending		Funding		Services		and Other(1)		Consolidated
For the Six Months Ended June 30, 2012
Revenues from external customers:
Interest income	$	417,091	$	28,653	$	-	$	-	$	445,744
Non-interest income	62,417		202,492		13,319		-		278,228
Total	$	479,508	$	231,145	$	13,319	$	-	$	723,972
Net interest income	$	251,787	$	127,871	$	5	$	(1,266)	$	378,397
Provision for credit losses	102,687		(39)		-		-		102,648
Non-interest income	62,417		202,513		87,807		(74,509)		278,228
Non-interest expense	177,731		772,389		76,086		(74,509)		951,697
Income tax expense (benefit)	11,940		(161,269)		893		(1,266)		(149,702)
Income (loss) after income tax expense	21,846		(280,697)		10,833		-		(248,018)
Income attributable to non-controlling interest	3,345		-		-		-		3,345
Net income (loss) attributable to common stockholders	$	18,501	$	(280,697)	$	10,833	$	-	$	(251,363)
Total assets	$	15,498,135	$	6,586,483	$	153,735	$	(4,367,756)	$	17,870,597

For the Six Months Ended June 30, 2011
Revenues from external customers:
Interest income	$	428,678	$	43,523	$	-	$	-	$	472,201
Non-interest income	53,251		175,243		(106)		-		228,388
Total	$	481,929	$	218,766	$	(106)	$	-	$	700,589
Net interest income	$	234,538	$	116,610	$	30	$	(988)	$	350,190
Provision for credit losses	89,165		114		-		-		89,279
Non-interest income	53,251		184,035		68,221		(77,119)		228,388
Non-interest expense	158,987		236,887		71,146		(78,950)		388,070
Income tax expense (benefit)	13,956		25,188		(956)		(330)		37,858
Income (loss) after income tax expense	25,681		38,456		(1,939)		1,173		63,371
Income attributable to non-controlling interest	2,675		-		-		-		2,675
Net income (loss) attributable to common stockholders	$	23,006	$	38,456	$	(1,939)	$	1,173	$	60,696
Total assets	$	14,818,791	$	7,222,212	$	165,088	$	(3,371,675)	$	18,834,416

(1) Includes the portion of pension and other postretirement benefits (expense) attributable to the determination of actuarial gains and losses.

(18) Earnings Per Common Share

The computation of basic and diluted earnings (loss) per common share is presented in the following table.

		Three Months Ended						Six Months Ended
		June 30,							June 30,
(Dollars in thousands, except per-share data)		2012			2011				2012			2011
Basic Earnings (Loss) Per Common Share
Net income (loss) available to common stockholders	$		31,531		$	30,424		$		(251,363	)	$	60,696
Earnings allocated to participating securities		62			89			33				198
Earnings (loss) allocated to common stock	$		31,469		$	30,335		$		(251,396	)	$	60,498
Weighted-average shares outstanding		162,167,183			158,885,491			161,696,496				152,299,889
Restricted stock		(3,054,531		)	(1,821,178		)	(2,886,959			)	(1,535,337)
Weighted-average common shares outstanding for basic earnings per common share		159,112,652			157,064,313			158,809,537				150,764,552
Basic earnings (loss) per share	$		.20		$	.19		$		(1.58	)	$	.40

Diluted Earnings (Loss) Per Common Share
Earnings (loss) allocated to common stock	$		31,469		$	30,334		$		(251,396	)	$	60,498
Weighted-average common shares outstanding used in basic earnings per common share calculation		159,112,652			157,064,313			158,809,537				150,764,552
Net dilutive effect of:
Non-participating restricted stock		397,035			202,785			-				150,923
Stock options		29,632			195,659			-				220,614
Weighted-average common shares outstanding for diluted earnings per common share		159,539,319			157,462,757			158,809,537				151,136,089
Diluted earnings (loss) per share	$		.20		$	.19		$		(1.58	)	$	.40

All shares of restricted stock are deducted from weighted-average shares outstanding for the computation of basic earnings per common share. Shares of performance-based restricted stock are included in the calculation of diluted earnings per common share, using the treasury stock method, at the beginning of the quarter in which the performance goals have been achieved. All other shares of restricted stock, which vest over specified time periods, stock options, and warrants are included in the calculation of diluted earnings per common share, using the treasury stock method.

For the three months ended June 30, 2012, 2 million shares related to non-participating restricted stock and stock options and 3.2 million warrants were outstanding and not included in the computation of diluted earnings per common share because these shares were anti-dilutive. For the three months ended June 30, 2011, 634 thousand shares related to non-participating restricted stock and 3.2 million warrants were outstanding and not included in the computation of diluted earnings per common share because these shares were anti-dilutive.

For the six months ended June 30, 2011, 626 thousand shares related to non-participating restricted stock and stock options and 3.2 million warrants were outstanding and not included in the computation of diluted earnings per common share because these shares were anti-dilutive.

(19) Sales of Other Securities

During the second quarter of 2012, TCF sold its Visa Class B stock, resulting in a net $13.1 million pretax gain recorded in non-interest income within the Consolidated Statements of Comprehensive Income and within Support Services for purposes of business segment reporting. In conjunction with the sale, TCF and the purchaser entered into a derivative transaction whereby TCF will make, or receive, cash payments whenever the conversion ratio of Visa Class B stock into Visa Class A stock is adjusted. See Note 12, Derivative Instruments for additional information.

(20) Other Expense

Other expense consists of the following.

		Three Months Ended				Six Months Ended
		June 30,				June 30,
(In thousands)		2012	2011			2012	2011
Card processing and issuance cost	$	3,700	$	4,635	$	7,774	$	9,098
Outside processing	3,274		2,988		6,222		6,022
Professional fees	2,909		3,036		5,793		6,719
Telecommunications	2,665		3,067		6,183		6,009
Postage and courier	2,639		2,597		5,404		5,082
Deposit account losses	2,000		2,083		4,185		4,154
Office supplies	1,779		1,637		3,641		3,354
ATM processing	1,140		1,269		2,234		2,462
Other	16,850		15,755		32,816		28,733
Total other expense	$	36,956	$	37,067	$	74,252	$	71,633

(21) Litigation Contingencies

From time to time, TCF is a party to legal proceedings arising out of its lending, leasing and deposit operations. TCF is and expects to become engaged in a number of foreclosure proceedings and other collection actions as part of its lending and leasing collections activities. TCF may also be subject to enforcement action by federal regulators, including the Securities and Exchange Commission, the Federal Reserve, the Office of the Comptroller of the Currency (the “OCC”) and the Consumer Financial Protection Bureau. From time to time, borrowers and other customers, or employees or former employees, have also brought actions against TCF, in some cases claiming substantial damages. Financial services companies are subject to the risk of class action litigation, and TCF is subject to such actions brought against it from time to time. 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 these 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 consolidated financial position, operating results or cash flows of TCF. TCF is also subject to regulatory examinations and TCF’s regulatory authorities may impose sanctions on TCF for a failure to maintain regulatory compliance. TCF is currently subject to a Consent Order with the OCC relating to its Bank Secrecy Act compliance. The Consent Order does not call for the payment of a civil money penalty; however, the OCC has issued a written notice to TCF related to TCF’s Bank Secrecy Act compliance deficiencies. After the OCC’s review of TCF’s response to the notice, the OCC may impose a monetary penalty related to these findings. TCF is currently not able to estimate a reasonable range of costs relating to that possibility.

(22) Subsequent Events

On July 13, 2012, Visa announced that it, along with MasterCard and certain U.S. financial institution defendants have signed a memorandum of understanding to enter into a settlement agreement to resolve the Class Plaintiffs’ claims in the multi-district interchange litigation (“MDL”). The claims originally were brought by a class of U.S. retailers in 2005. Visa also has reached an agreement in principle to resolve the claims brought against Visa by a group of individual retailers in the same MDL. The proposed settlement payments for both the class plaintiffs’ and individual plaintiffs’ claims would be approximately $6.6 billion, of which Visa’s share would represent approximately $4.4 billion. Visa’s share will be paid from the litigation escrow account established pursuant to Visa’s Retrospective Responsibility Plan. The proposed settlement payments had no impact on TCF’s results of operations for the six months ended June 30, 2012.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial

Condition and Results of Operations

OVERVIEW

TCF Financial Corporation (“TCF” or the “Company”), a Delaware corporation, is a bank holding company based in Wayzata, Minnesota. Its principal subsidiary, TCF National Bank (“TCF Bank”), is headquartered in South Dakota. TCF had 431 banking offices in Minnesota, Illinois, Michigan, Colorado, Wisconsin, Indiana, Arizona and South Dakota (TCF’s primary banking markets) at June 30, 2012.

TCF provides convenient financial services through multiple channels in its primary banking markets. TCF has developed products and services designed to meet the needs of all consumers. The Company focuses on attracting and retaining customers through service and convenience, including branches that are open seven days a week and on most holidays, extensive full-service supermarket branches, automated teller machine (“ATM”) networks and internet, mobile and telephone banking. TCF’s philosophy is to generate interest income, fees and other revenue growth through business lines that emphasize higher yielding assets and low or no interest-cost deposits. TCF’s growth strategies include the development of new products and services, new branch expansion and acquisitions. New products and services are designed to build on existing businesses and expand into complementary products and services through strategic initiatives.

TCF’s core businesses include Lending and Funding. Lending includes retail lending, commercial banking, leasing and equipment finance, inventory finance and auto finance. Funding includes branch banking and treasury services. Treasury services includes the Company’s investment and borrowing portfolios and management of capital, debt and market risks, including interest rate and liquidity risks.

TCF’s lending strategy is to originate high credit quality, primarily secured, loans and leases. TCF’s retail lending operation offers fixed- and variable-rate loans and lines of credit secured by residential real estate properties. Commercial loans are generally made on properties or to customers located within TCF’s primary banking markets. The leasing and equipment finance businesses consist of TCF Equipment Finance, Inc., which delivers equipment finance solutions to businesses in select markets, and Winthrop Resources Corporation, which primarily leases technology and data processing equipment. TCF’s leasing and equipment finance businesses have equipment installations in all 50 states and, to a limited extent, in foreign countries. TCF Inventory Finance originates commercial variable-rate loans to businesses in the United States, Canada and Latin America which are secured by equipment under a floorplan arrangement and supported by repurchase agreements from original equipment manufacturers. In November 2011, TCF entered into the auto finance business with its acquisition of Gateway One Lending & Finance, LLC (“Gateway One”). Gateway One currently originates loans on new and used autos in 35 states, and services loans nationwide.

Net interest income, the difference between interest income earned on loans and leases, securities available for sale, investments and other interest-earning assets and interest paid on deposits and borrowings, represented 66.7% of TCF’s total revenue, excluding gains on securities for the six months ended June 30, 2012. Net interest income can change significantly from period to period based on general levels of interest rates, customer prepayment patterns, the mix of interest-earning assets and the mix of interest-bearing and non-interest bearing deposits and borrowings. TCF manages the risk of changes in interest rates on its net interest income through an Asset/Liability Management Committee and through related interest-rate risk monitoring and management policies. See Part I, Item 3. Quantitative and Qualitative Disclosures about Market Risk, for further information.

Non-interest income is a significant source of revenue for TCF and an important factor in TCF’s results of operations. Increasing fee and service charge revenue has been challenging as a result of economic conditions, changing customer behavior and the impact of the implementation of new regulation. Providing a wide range of retail banking services is an integral component of TCF’s business philosophy and a major strategy for generating additional non-interest income. Key drivers of non-interest income are the fee structure, number of deposit accounts and related transaction activity.

The following portions of Management’s Discussion and Analysis of Financial Condition and Results of Operations focus

in more detail on the results of operations for the three and six months ended June 30, 2012 and 2011, and on information about TCF’s balance sheet, loan and lease portfolio, liquidity, funding resources, capital and other matters.

RESULTS OF OPERATIONS

Performance Summary

TCF had net income of $31.5 million and a net loss of $251.4 million for the second quarter and first six months of 2012, respectively, compared with net income of $30.4 million and $60.7 million for the same 2011 periods. TCF’s net loss for the first six months of 2012 included a net, after tax charge of $295.8 million, or $1.87 per share, related to the repositioning of TCF’s balance sheet completed in the first quarter of 2012. TCF’s diluted earnings per common share was 20 cents and a loss of $1.58 for the second quarter and first six months of 2012, respectively, compared with earnings per common share of 19 cents and 40 cents for the same 2011 periods.

On March 13, 2012, TCF announced the repositioning of its balance sheet by prepaying $3.6 billion of long-term debt and selling $1.9 billion of mortgage-backed securities, which it anticipated would increase net interest margin and reduce interest rate risk going forward. TCF’s current asset growth strategy and the outlook of the interest rate environment made it prudent for TCF to develop and execute a comprehensive balance sheet repositioning transaction. A reliance on longer term, fixed-rate debt was appropriate for TCF’s previous strategy of growth in real estate assets with longer durations, such as residential and commercial real estate loans and mortgage-backed securities. Given TCF’s current strategic focus on growth in nationally-oriented lending businesses with shorter loan durations and/or variable interest rates, a more flexible funding structure is expected to significantly increase TCF’s ability to maximize net interest income and net interest margin going forward.

TCF’s long-term, fixed-rate debt was originated at market rates prior to the 2008 economic crisis. At the time of the balance sheet repositioning, the interest rates on these borrowings were significantly above current market rates. In addition, in late January 2012, the Federal Reserve forecasted interest rates to remain at historically low levels through at least 2014. As a result, this action better positioned TCF for the current interest rate outlook while reducing interest rate risk tied to longer duration, fixed-rate mortgage-backed securities.

Return on average assets was .76% and negative 2.71% for the second quarter and first six months of 2012, respectively, compared with .68% for both of the same 2011 periods. Return on average common equity was 8.13% and negative 29.84% for the second quarter and first six months of 2012, respectively, compared with 7% and 7.46% for the same 2011 periods.

Operating Segment Results

The financial results of TCF’s operating segments are located in Note 17 of the Notes to Consolidated Financial Statements included in Part 1, Item 1. Financial Statements.

Lending reported net income of $8.2 million and $18.5 million for the second quarter and first six months of 2012, respectively, compared with $11.4 million and $23 million for the same period 2011 periods. Lending net interest income for the second quarter and first six months of 2012 was $128.8 million and $251.8 million, respectively, compared with $118.6 million and $234.5 million for the same 2011 periods. The increase in net interest income for both periods was primarily due to loan growth in the inventory finance and auto finance portfolios, partially offset by decreases in the consumer real estate and commercial real estate average portfolio balances and average yields. The decrease in the average consumer real estate portfolio reflects a decline in production of new fixed-rate loans as market rates available for fixed-rate first mortgage loans were not as attractive to TCF.

Lending’s provision for credit losses totaled $53.7 million and $102.7 million for the second quarter and first six months of 2012, respectively, compared with $43.4 million and $89.2 million for the same 2011 periods. The increase in provision from the second quarter of 2011 was primarily due to increased loss reserves on commercial real estate loans and a reserve for one large lease exposure. The increase in provision expense from the first six months of 2011 was primarily due to increased loss reserves on commercial real estate loans and increased reserves on the inventory finance and auto finance

portfolios as a result of increased loan balances. See Results of Operations – Provision for Credit Losses in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“Management’s Discussion and Analysis”) for further discussion.

Lending non-interest income totaled $33.4 million and $62.4 million for the second quarter and first six months of 2012, respectively, compared with $24.4 million and $53.3 million for the same 2011 periods. The increase for both periods was primarily due to gains on sales of auto finance loans and increased auto loan servicing income. Lending non-interest expense totaled $92.7 million and $177.7 million for the second quarter and first six months of 2012, respectively, compared with $79.5 million and $159 million for the same 2011 periods. The increase from the second quarter and first six months of 2011 was primarily due to the newly acquired auto finance business as well as increased headcount related to achieving staffing levels to support the Bombardier Recreational Products, Inc. (“BRP”) program in Inventory Finance.

Funding reported net income of $14.3 million and a net loss of $280.7 million for the second quarter and first six months of 2012, respectively, compared with net income of $20.8 million and $38.5 million for the same 2011 periods. The net loss for the first six months of 2012 was due to the balance sheet repositioning completed in the first quarter of 2012. Funding net interest income totaled $70 million and $127.9 million for second quarter and first six months of 2012, respectively, compared with $58.1 million and $116.6 million for the same 2011 periods.

Funding non-interest income totaled $66.3 million and $202.5 million for the second quarter and first six months of 2012, respectively, compared with $94.3 million and $184 million for the same 2011 periods. The decrease from the second quarter of 2011 was primarily due to lower fee income related to card revenue and customer behavior. The increase from the first six months of 2011 was primarily due to gains on securities in the first quarter of 2012 related to the balance sheet repositioning, partially offset by lower fee income related to card revenue and customer behavior. Non-interest expense totaled $108.4 million and $772.4 million for the second quarter and first six months of 2012, respectively, compared with $117.3 and $236.9 million for the same 2011 periods. The decrease from the second quarter of 2011 was primarily due to decreased deposit account premiums. The increase from the first six months of 2011 was primarily due to the loss on termination of debt in the first quarter of 2012 in connection with the balance sheet repositioning.

Consolidated Net Interest Income

Net interest income for the second quarter of 2012 increased $22.1 million, or 12.5%, compared with the second quarter of 2011. This increase was primarily due to the balance sheet repositioning completed in the first quarter of 2012, which resulted in a $37.9 million reduction to the cost of borrowings, partially offset by a $13.9 million reduction of interest income on mortgage-backed securities. Additionally, average balances of inventory finance loans and auto finance loans were higher during the second quarter of 2012 as a result of the newly acquired auto finance business and BRP program and the average cost of deposits was lower. Offsetting the increase were lower yields on leasing and equipment finance leases and consumer and commercial real estate. Net interest income for the second quarter of 2012 increased $18.1 million, or 10%, compared with the first quarter of 2012. This increase was primarily due to the full quarter impact of the balance sheet repositioning completed in March 2012, resulting in a $28.6 million reduction to the cost of borrowings, and higher average balances of inventory finance and auto finance loans, partially offset by a $12.4 million reduction of interest income on mortgage-backed securities and reduced interest income on loans and leases, driven by lower yields on consumer and commercial loans. Net interest income for the first six months of 2012 totaled $378.4 million, up $28.2 million, or 8.1%, from $350.2 million from the same 2011 period. This increase was primarily due to the balance sheet repositioning completed in the first quarter of 2012, which resulted in a $47.9 million reduction to the cost of borrowings, partially offset by a $14.3 million reduction of interest income on mortgage-backed securities. Additionally, higher average balances of inventory finance and auto finance loans and lower average cost of deposits were offset by decreased income from consumer and commercial real estate loans due to a change in the consumer real estate portfolio mix and lower average balances of commercial real estate loans.

Net interest margin in the second quarter of 2012 was 4.86%, compared with 4.02% in the second quarter of 2011. This increase was primarily due to lower average cost of borrowings due to the effects of the balance sheet repositioning completed in March 2012, which increased net interest margin by 92 basis points, as well as decreased rates on various deposit products and favorable mix changes toward higher yielding assets with increases in the inventory finance and auto finance portfolio balances. These increases were partially offset by a decrease in yields in the consumer, commercial, and leasing and equipment finance portfolios as a result of the lower interest rate environment. Net interest margin increased by 72 basis points in the second quarter from 4.14% in the first quarter of 2012. This increase was primarily due to a

lower average cost of borrowings due to the effects of the balance sheet repositioning completed in March 2012, which increased net interest margin by 69 basis points, and growth in the higher yielding inventory finance and auto finance portfolios. These increases were partially offset by lower levels of higher yielding loans in the consumer portfolio as a result of the lower interest rate environment and increased balances in higher rate deposit accounts. Net interest margin for the first six months of 2012 was 4.49%, compared with 4.04% from the same 2011 period. This increase was primarily due to lower average cost of borrowings due to the effects of the balance sheet repositioning completed in the first quarter of 2012, which increased net interest margin by 56 basis points, partially offset by lower portfolio yields and interim rents in the leasing and equipment finance business and lower yields on commercial loans primarily due to production at rates lower than current portfolio yields. See Consolidated Financial Condition Analysis – Borrowings and Liquidity in this Management’s Discussion and Analysis for further discussion.

Achieving net interest income growth over time depends primarily on TCF’s ability to generate growth in higher-yielding assets and low or no interest-cost deposits. While interest rates and consumer preferences continue to change over time, TCF is currently asset sensitive as measured by its interest rate gap (the difference between interest-earning assets and interest-bearing liabilities maturing, repricing, or prepaying during the next twelve months). A positive interest rate gap position exists when the amount of interest-earning assets maturing or re-pricing exceeds the amount of interest-bearing liabilities maturing or re-pricing, including assumed prepayments, within a particular time period. Since TCF is primarily deposit funded, the degree of the impact on net interest income is somewhat controlled by TCF, but is impacted by how its competitors price comparable products.

See Consolidated Financial Condition Analysis – Deposits in this Management’s Discussion and Analysis and Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk for further discussion on TCF’s interest rate risk position.

The following tables summarizes TCF’s average balances, interest, dividends and yields and rates on major categories of TCF’s interest-earning assets and interest-bearing liabilities on a fully tax equivalent basis.

		Three Months Ended June 30,
		2012						2011
	Average					Yields and		Average				Yields and
(Dollars in thousands)	Balance			Interest		Rates (1)		Balance		Interest		Rates (1)
Assets:
Investments and other	$		430,084	$	2,654	2.48	%	$	693,678	$	1,836	1.06	%
U.S. Government sponsored entities:
Mortgage-backed securities, fixed rate	733,796			5,813		3.17		2,104,294		20,614		3.92
U.S. Treasury securities	-			-		-		135,613		20		.06
Other securities	225			3		4.14		353		5		5.68
Total securities available for sale (2)	734,021			5,816		3.17		2,240,260		20,639		3.69
Loans and leases held for sale	44,788			979		8.80		-		-		-
Loans and leases:
Consumer real estate:
Fixed-rate	4,365,670			63,432		5.84		4,655,198		70,615		6.08
Variable-rate	2,427,745			30,202		5.00		2,379,250		30,566		5.15
Total consumer real estate	6,793,415			93,634		5.54		7,034,448		101,181		5.77
Commercial:
Fixed- and adjustable-rate	2,730,085			37,242		5.49		2,877,903		41,442		5.78
Variable-rate	761,964			7,550		3.99		719,741		7,757		4.32
Total commercial	3,492,049			44,792		5.16		3,597,644		49,199		5.49
Leasing and equipment finance	3,145,914			43,109		5.48		3,068,550		46,184		6.02
Inventory finance	1,571,004			23,690		6.07		978,505		17,340		7.11
Auto finance	223,893			3,835		6.89		-		-		-
Other	17,647			336		7.66		19,463		437		9.01
Total loans and leases (3)	15,243,922			209,396		5.52		14,698,610		214,341		5.85
Total interest-earning assets	16,452,815			218,845		5.34		17,632,548		236,816		5.38
Other assets	1,202,003							1,163,783
Total assets	$		17,654,818					$	18,796,331
Liabilities and Equity:
Non-interest bearing deposits:
Retail	$		1,316,767					$	1,475,191
Small business	725,052							683,323
Commercial and custodial	310,321							278,808
Total non-interest bearing deposits	2,352,140							2,437,322
Interest-bearing deposits:
Checking	2,306,810			883		.15		2,152,646		1,221		.23
Savings	6,031,015			5,164		.34		5,608,824		7,279		.52
Money market	748,016			718		.39		648,862		731		.45
Subtotal	9,085,841			6,765		.30		8,410,332		9,231		.44
Certificates of deposit	1,608,653			3,432		.86		1,092,368		2,199		.82
Total interest-bearing deposits	10,694,494			10,197		.38		9,502,700		11,430		.48
Total deposits	13,046,634			10,197		.31		11,940,022		11,430		.38
Borrowings:
Short-term borrowings	705,888			535		.30		35,227		21		.24
Long-term borrowings	1,986,182			9,259		1.87		4,513,301		48,697		4.33
Total borrowings	2,692,070			9,794		1.46		4,548,528		48,718		4.29
Total interest-bearing liabilities	13,386,564			19,991		.60		14,051,228		60,148		1.72
Total deposits and borrowings	15,738,704			19,991		.51		16,488,550		60,148		1.46
Other liabilities	335,113							556,641
Total liabilities	16,073,817							17,045,191
Total TCF Financial Corp. stockholders’ equity	1,563,158							1,739,523
Non-controlling interest in subsidiaries	17,843							11,617
Total equity	1,581,001							1,751,140
Total liabilities and equity	$		17,654,818					$	18,796,331
Net interest income and margin				$	198,854	4.86	%			$	176,668	4.02	%

(1) Annualized.

(2) Average balances and yields of securities available for sale are based upon the historical amortized cost and excludes equity securities.

(3) Average balances of loans and leases include non-accrual loans and leases, and are presented net of unearned income.

		Six Months Ended June 30,
		2012						2011
		Average			Yields and			Average			Yields and
(Dollars in thousands)		Balance		Interest	Rates (1)			Balance		Interest	Rates (1)
Assets:
Investments and other	$	587,802	$	5,042	1.72	%	$	636,190	$	3,637	1.15	%
U.S. Government sponsored entities:
Mortgage-backed securities, fixed rate		1,410,407		24,924	3.53			2,033,159		40,025	3.94
U.S. Treasury securities		-		-	-			91,685		33	.07
Other securities		227		4	4.13			370		10	5.44
Total securities available for sale (2)		1,410,634		24,928	3.53			2,125,214		40,068	3.77
Loans and leases held for sale		25,330		1,024	8.13			-		-	-
Loans and leases:
Consumer real estate:
Fixed-rate		4,404,410		129,584	5.92			4,694,690		142,421	6.12
Variable-rate		2,414,829		60,270	5.02			2,373,328		60,846	5.17
Total consumer real estate		6,819,239		189,854	5.60			7,068,018		203,267	5.80
Commercial:
Fixed- and adjustable-rate		2,733,967		75,452	5.55			2,895,151		83,484	5.81
Variable-rate		740,918		15,062	4.09			715,330		15,414	4.35
Total commercial		3,474,885		90,514	5.24			3,610,481		98,898	5.52
Leasing and equipment finance		3,137,122		87,109	5.55			3,093,969		93,741	6.06
Inventory finance		1,353,469		42,416	6.30			925,913		32,665	7.11
Auto finance		154,728		5,418	7.04			-		-	-
Other		17,612		705	8.04			20,603		913	8.94
Total loans and leases (3)		14,957,055		416,016	5.59			14,718,984		429,484	5.87
Total interest-earning assets		16,980,821		447,010	5.29			17,480,388		473,189	5.45
Other assets		1,290,585						1,158,886
Total assets	$	18,271,406					$	18,639,274
Liabilities and Equity:
Non-interest bearing deposits:
Retail	$	1,338,539					$	1,466,507
Small business		716,734						675,861
Commercial and custodial		307,427						285,125
Total non-interest bearing deposits		2,362,700						2,427,493
Interest-bearing deposits:
Checking		2,260,499		1,785	.16			2,128,673		2,577	.24
Savings		5,956,874		10,602	.36			5,517,084		14,776	.54
Money market		705,255		1,328	.38			661,114		1,639	.50
Subtotal		8,922,628		13,715	.31			8,306,871		18,992	.46
Certificates of deposit		1,372,164		5,543	.81			1,092,452		4,442	.82
Total interest-bearing deposits		10,294,792		19,258	.38			9,399,323		23,434	.50
Total deposits		12,657,492		19,258	.31			11,826,816		23,434	.40
Borrowings:
Short-term borrowings		571,019		865	.30			59,000		113	.39
Long-term borrowings		2,901,673		47,224	3.27			4,607,492		98,464	4.30
Total borrowings		3,472,692		48,089	2.78			4,666,492		98,577	4.25
Total interest-bearing liabilities		13,767,484		67,347	.98			14,065,815		122,011	1.75
Total deposits and borrowings		16,130,184		67,347	.84			16,493,308		122,011	1.49
Other liabilities		435,210						508,983
Total liabilities		16,565,394						17,002,291
Total TCF Financial Corp. stockholders’ equity		1,690,337						1,627,238
Non-controlling interest in subsidiaries		15,675						9,745
Total equity		1,706,012						1,636,983
Total liabilities and equity	$	18,271,406					$	18,639,274
Net interest income and margin			$	379,663	4.49	%			$	351,178	4.04	%

(1) Annualized.

(2) Average balances and yields of securities available for sale are based upon the historical amortized cost and excludes equity securities.

(3) Average balances of loans and leases include non-accrual loans and leases, and are presented net of unearned income.

Provision for Credit Losses

The following tables summarize the composition of TCF’s provision for credit losses and percentage of the total provision expense for the three and six months ended June 30, 2012 and 2011.

		Three Months Ended
		June 30,										Change
(Dollars in thousands)		2012					2011					$		%
Consumer real estate	$	39,118		72.3	%	$	38,290		87.1	%	$	828		2.2	%
Commercial		8,710		16.1			3,348		7.6			5,362		160.2
Leasing and equipment finance		5,086		9.4			1,817		4.1			3,269		179.9
Inventory finance		(223	)	(.4	)		(79	)	(.2	)		(144	)	182.3
Auto finance		1,356		2.5			-		-			1,356		N.M	.
Other		59		.1			629		1.4			(570	)	(90.6	)
Total	$	54,106		100.0	%	$	44,005		100.0	%	$	10,101		23.0	%

		Six Months Ended
		June 30,								Change
(Dollars in thousands)		2012				2011				$	%
Consumer real estate	$	75,197	73.2	%	$	74,840	83.9	%	$	357	.5	%
Commercial		13,724	13.4			8,767	9.8			4,957	56.5
Leasing and equipment finance		5,601	5.5			4,577	5.1			1,024	22.4
Inventory finance		4,968	4.8			909	1.0			4,059	N.M	.
Auto finance		2,376	2.3			-	-			2,376	N.M	.
Other		782	.8			186	.2			596	N.M	.
Total	$	102,648	100.0	%	$	89,279	100.0	%	$	13,369	15.0	%

N.M. Not Meaningful

TCF recorded provision expense of $54.1 million and $102.6 million in the second quarter and first six months of 2012, respectively, compared with $44 million and $89.3 million in the same 2011 periods. The increase from the second quarter of 2011 was primarily due to increased provision expense on commercial real estate, a $4 million reserve for loss on one large lease exposure and provision expense on auto finance loans. The increase from the first six months of 2011 was primarily due to increased loss reserves on commercial real estate loans and increased loss reserves on the inventory finance and auto finance portfolios as a result of growth in these businesses.

Net loan and lease charge-offs for the second quarter and first six months of 2012 were $44.9 million, or 1.18% (annualized) of average loans and leases, and $83.8 million, or 1.12% (annualized), respectively, compared with $43.8 million, or 1.19% (annualized), and $99.7 million, or 1.35% (annualized), in the same periods of 2011.

Consumer real estate net charge-offs for the second quarter and first six months of 2012 were $34.9 million and $70.5 million, respectively, down slightly from $36.7 million and $72 million for the same 2011 periods. Commercial net charge-offs for the second quarter and first six months of 2012 were $8.5 million and $10 million, respectively, compared to $2.7 million and $20.5 million for the same 2011 periods. The increase from the second quarter of 2011 was primarily due to increased net charge-offs in retail commercial real estate and land development. The decrease in net charge-offs from the first six months of 2011 was primarily due to decreased commercial real estate net charge-offs on office buildings and manufactured housing and decreased commercial business net charge-offs. Leasing and equipment finance net charge-offs for the second quarter and first six months of 2012 totaled $1.2 million and $1.3 million, respectively, compared with $3.5 million and $6.3 million for the same 2011 periods. The decrease in net charge-offs was primarily due to decreased net charge-offs in the middle market and small ticket segments.

The provision for credit losses is calculated as part of the determination of the allowance for loan and lease losses. The determination of the allowance for loan and lease losses and the related provision for credit losses is a critical accounting estimate which involves a number of factors such as historical trends in net charge-offs, delinquencies in the loan and lease portfolio, year of loan or lease origination, value of collateral, general economic conditions and management’s assessment of credit risk in the current loan and lease portfolio. See also Consolidated Financial Condition Analysis — Allowance for Loan and Lease Losses in this Management’s Discussion and Analysis.

Consolidated Non-Interest Income

Non-interest income is a significant source of revenue for TCF and is an important factor in TCF’s results of operations. Providing a wide range of retail banking services is an integral component of TCF’s business philosophy and a major strategy for generating additional non-interest income. Non-interest income totaled $112.9 million and $278.2 million for the second quarter and first six months of 2012, respectively, compared with $114.1 million and $228.4 million for the same 2011 periods.

Fees and Service Charges

Fees and service charges totaled $48.1 million and $89.9 million for the second quarter and first six months of 2012, respectively, compared with $56.4 million and $109.9 million for the same 2011 periods. The decrease in banking fees and revenues from both the second quarter and first six months of 2011 was primarily due to changes in checking account programs that resulted in a lower number of accounts and changes in customer behaviors in reaction to changes in product offerings.

Card Revenues

Card revenues totaled $13.5 million and $26.7 million for the second quarter and first six months of 2012, respectively, compared with $28.2 million and $54.8 million for the same 2011 periods. The decrease in both periods was due to a decrease in the average interchange rate per transaction due to new debit card interchange regulations which took effect on October 1, 2011.

TCF is the 12th largest issuer of Visa® small business debit cards and the 14th largest issuer of Visa consumer debit cards in the United States, based on payments volume for the three months ended March 31, 2012, as provided by Visa. TCF earns interchange revenue from customer card transactions paid by merchants, not from TCF’s customers. Card products represented 18% and 18.7% of banking fee revenue for the three and six months ended June 30, 2012, respectively. Visa has significant litigation against it regarding interchange pricing and there is a risk this revenue could be impacted by any settlement or adverse rulings in such litigation. The continued success of TCF’s debit card program depends significantly on the success and viability of Visa and the continued use by customers and acceptance by merchants of its cards.

The following tables set forth information about TCF’s card business.

	Three Months Ended
	June 30,						Change
(Dollars in thousands)	2012			2011			Amount			%
Sales volume for the three months ended:
Off-line (Signature)	$	1,636,082		$	1,722,158		$	(86,076	)	(5.0	)
On-line (PIN)	294,003			246,346			47,657			19.3
Total	$	1,930,085		$	1,968,504		(38,419		)	(2.0	)
Average transaction size (in dollars)	$	35		$	36		(1		)	(2.8	)
Average number of transactions per card per month	25.7			23.7			2.0			8.4
Percentage off-line (sales volume)	84.8		%	87.5		%				(270	)bps
Average interchange per transaction (in dollars)	$	.22		$	.49		(.3		)	(55.1	)%
Average interchange rate per transaction	.63		%	1.36		%				(73	)bps

	Six Months Ended
	June 30,						Change
(Dollars in thousands)	2012			2011			Amount			%
Sales volume for the three months ended:
Off-line (Signature)	$	3,268,261		$	3,353,337		$	(85,076	)	(2.5	)
On-line (PIN)	561,890			482,615			79,275			16.4
Total	$	3,830,151		$	3,835,952		(5,801		)	(.2	)
Average transaction size (in dollars)	$	35		$	36		(1		)	(2.8	)
Average number of transactions per card per month	25.0			23.0			2.0			8.7
Percentage off-line (sales volume)	85.3		%	87.4		%				(210	)bps
Average interchange per transaction (in dollars)	$	.22		$	.50		(0.3		)	(56	)%
Average interchange rate per transaction	.63		%	1.36		%				(73	)bps

ATM Revenue

For the second quarter and first six months of 2012, ATM revenue was $6.3 million and $12.5 million, respectively, compared with $7.1 million and $13.8 million for the same 2011 periods. The decrease in ATM revenue was primarily due to fewer fee generating transactions and a reduced number of available ATMs.

Gain (Loss) on Securities, Net

During the second quarter of 2012, TCF recognized $13.1 million related to the sale of Visa Class B stock. During the six months ended June 30, 2012, TCF recognized $89.7 million related to sales of mortgage-backed securities and the sale of the Visa stock. During both the three and six months ended June 30, 2011, TCF recorded impairment charges on securities totaling $227 thousand.

Consolidated Non-Interest Expense

Non-interest expense totaled $203 million and $951.7 million for the second quarter and first six months of 2012, compared with $195.1 million and $388.1 million for the same 2011 periods.

Compensation and Employee Benefits

Compensation and employee benefits expense totaled $97.8 million and $193.8 million for the second quarter and first six months of 2012, compared with $89.1 million and $178.4 million for the same 2011 periods. The increases were primarily due to the expansion of the auto finance business, as well as increased staffing levels to support growth in TCF’s lending businesses.

FDIC Insurance

FDIC insurance expense totaled $8.5 million and $14.9 million for the second quarter and first six months of 2012, respectively, compared with $7.5 million and $14.7 million for the same 2011 periods. The increase from the three months ended June 30, 2011 was primarily due to the increased insurance rates as a result of the net loss associated with the balance sheet repositioning completed in the first quarter of 2012. The increase from the six months ended June 30, 2011 was primarily due to the aforementioned balance sheet repositioning as well as changes in the FDIC insurance rate calculations for banks over $10 billion in total assets, which were implemented on April 1, 2011.

Advertising and Marketing

Advertising and marketing expense totaled $5.4 million and $8 million for the second quarter and first six months of 2012, compared with $3.5 million and $6.6 million for the same 2011 periods. The increases were primarily the result of changes in retail banking product strategies and a related increase in spending on media advertising.

Deposit Account Premiums

Deposit account premium expense totaled $1.7 million and $7.7 million for the second quarter and first six months of 2012, compared with $6.2 million and $9.4 million for the same 2011 periods. These decreases were primarily due to reductions in the premium programs.

Loss on Termination of Debt

In connection with the balance sheet repositioning completed in March 2012, TCF restructured $3.6 billion of long-term borrowings that had a 4.3% weighted average rate at a pre-tax loss of $551 million. TCF also replaced $2.1 billion of 4.4% weighted average fixed-rate, Federal Home Loan Bank advances with a mix of floating and fixed-rate, long- and short-term borrowings with a current weighted average rate of .5%. In addition, TCF terminated $1.5 billion of 4.2% weighted average fixed-rate borrowings under repurchase agreements.

Foreclosed Real Estate and Repossessed Assets, Net

Foreclosed real estate and repossessed assets, net expenses totaled $12.1 million and $23.1 million for the second quarter and first six months of 2012, compared with $12.6 million and $25.5 million for the same 2011 periods. The decreases were primarily due to fewer consumer real estate properties owned.

Other Credit Costs, Net

Other credit costs, net has historically been comprised of consumer real estate loan pool insurance, write-downs on operating leases and reserves for expected losses on unfunded commitments. Other credit costs, net totaled $1.5 million and $1.2 million for the second quarter and first six months of 2012, compared with $496 thousand and $3 million for the same 2011 periods. The increase from the three months ended June 30, 2011 was primarily due to an increase in reserves for unfunded commitments on one commercial letter of credit during the second quarter of 2012. The decrease from the six months ended June 30, 2011 was primarily due to reduced premium related expense on consumer real estate loan pool insurance, partially offset by an increase in reserves for unfunded commitments.

Income Taxes

TCF recorded income tax expense of $20.5 million for the second quarter of 2012, or 38% of the income before income tax expense, compared with income tax expense of $19.1 million, or 37.3%, in 2011. For the first six months of 2012, income tax benefit totaled $149.7 million, or 37.6% of the loss before income tax expense, compared with income tax expense of $37.9 million, or 37.4%, in 2011.

The determination of current and deferred income taxes is a critical accounting estimate which is based on complex analyses of many factors, including interpretation of income tax laws, the evaluation of uncertain tax positions, differences between the tax and financial reporting basis of assets and liabilities (temporary differences), estimates of amounts due or owed such as the timing of reversal of temporary differences and current financial accounting standards. Additionally, there can be no assurance that estimates and interpretations used in determining income tax liabilities may not be challenged by taxing authorities. Actual results could differ significantly from the estimates and tax law interpretations used in determining the current and deferred income tax liabilities.

In addition, under generally accepted accounting principles in the United States (“GAAP”), deferred income tax assets and liabilities are recorded at the income tax rates expected to apply to taxable income in the periods in which the deferred income tax assets or liabilities are expected to be realized. If such rates change, deferred income tax assets and liabilities must be adjusted in the period of change through a charge or credit to the Consolidated Statements of Comprehensive Income. Also, if current period income tax rates change, the impact on the annual effective income tax rate is applied year-to-date in the period of enactment.

CONSOLIDATED FINANCIAL CONDITION ANALYSIS

Loans and Leases

The following table sets forth information about loans and leases held in TCF’s portfolio.

	At			At
	June 30,			December 31,		Percentage
(Dollars in thousands)	2012			2011		Change
Consumer real estate:
Consumer real estate:
First mortgage lien	$	4,610,837		$	4,742,423	(2.8)%
Junior lien	2,200,947			2,152,868		2.2
Total consumer real estate	6,811,784			6,895,291		(1.2)
Commercial:
Commercial real estate:
Permanent	3,133,812			3,039,488		3.1
Construction and development	116,685			159,210		(26.7)
Total commercial real estate	3,250,497			3,198,698		1.6
Commercial business	272,573			250,794		8.7
Total commercial	3,523,070			3,449,492		2.1
Leasing and equipment finance:(1)
Equipment finance loans	1,186,762			1,110,803		6.8
Lease financings:
Direct financing leases	1,962,041			2,039,096		(3.8)
Sales-type leases	29,244			29,219		.1
Lease residuals	125,954			129,100		(2.4)
Unearned income and deferred lease costs	(152,896		)	(165,959)		7.9
Total lease financings	1,964,343			2,031,456		(3.3)
Total leasing and equipment finance	3,151,105			3,142,259		.3
Inventory finance	1,457,263			624,700		133.3
Auto finance	262,188			3,628		N.M.
Other	29,094			34,885		(16.6)
Total loans and leases	$	15,234,504		$	14,150,255	7.7%

N.M. Not meaningful.

(1)	Operating leases of $65.2 million and $69.6 million at June 30, 2012 and December 31, 2011, respectively, are included in other assets in the Consolidated Statements of Financial Condition.

Approximately 72.6% of the consumer real estate portfolio at June 30, 2012 consisted of closed-end amortizing loans. TCF’s consumer real estate lines of credit require regular payments of interest and do not require regular payments of principal. Outstanding balances on consumer real estate lines of credit were $1.9 billion and $1.8 billion at June 30, 2012 and December 31, 2011, respectively. The average Fair Isaac Corporation (“FICO”) credit score at loan origination for the retail lending portfolio was 728 as of June 30, 2012 and 727 at December 31, 2011. As part of TCF’s credit risk monitoring, TCF obtains updated FICO score information quarterly. The average updated FICO score for the retail lending portfolio was 728 at June 30, 2012, compared with 727 at December 31, 2011. As of June 30, 2012, 30.9% of the consumer real estate loan balance has been originated since January 1, 2009, with 2012 net charge offs of .2% (annualized).

TCF continues to expand its commercial lending activities, generally to borrowers located in its primary markets, with a focus on secured lending. At June 30, 2012, approximately 93% of TCF’s commercial real estate loans outstanding were secured by real estate located in its primary banking markets. At June 30, 2012, approximately 99% of TCF’s commercial real estate and commercial business loans were secured either by real estate or other business assets.

The leasing and equipment finance backlog of approved transactions was $520.1 million at June 30, 2012, up from $455.3 million at December 31, 2011.

Credit Quality

The following tables summarize TCF’s loan and lease portfolio based on what TCF believes are the most important credit quality data that should be used to understand the overall condition of the portfolio. Performing classified loans and leases have well-defined weaknesses, but may never become non-performing or result in a loss.

		At June 30, 2012
		Performing Loans and Leases (1)					60+ Days		Non-accrual
							Delinquent		Loans and		Total Loans
(Dollars in thousands)		Non-classified	Classified (2)		Total		and Accruing		Leases		and Leases
Consumer real estate	$	6,547,940	$	22,485	$	6,570,425	$	100,681	$	140,678	$	6,811,784
Commercial		3,070,917	296,322		3,367,239		5,616		150,215		3,523,070
Leasing and equipment finance		3,103,094	15,687		3,118,781		2,895		29,429		3,151,105
Inventory finance		1,446,730	8,427		1,455,157		206		1,900		1,457,263
Auto finance		262,046	-		262,046		142		-		262,188
Other		26,856	-		26,856		34		2,204		29,094
Total loans and leases	$	14,457,583	$	342,921	$	14,800,504	$	109,574	$	324,426	$	15,234,504
Percent of total loans and leases		94.9%	2.3%		97.2%		.7%		2.1%		100.0%

		At December 31, 2011
		Performing Loans and Leases (1)					60+ Days		Non-accrual
							Delinquent		Loans and		Total Loans
(Dollars in thousands)		Non-classified	Classified (2)		Total		and Accruing		Leases		and Leases
Consumer real estate	$	6,614,679	$	21,606	$	6,636,285	$	109,635	$	149,371	$	6,895,291
Commercial		2,990,515	330,310		3,320,825		1,148		127,519		3,449,492
Leasing and equipment finance		3,093,194	22,227		3,115,421		6,255		20,583		3,142,259
Inventory finance		616,677	7,040		623,717		160		823		624,700
Auto finance		3,231	-		3,231		397		-		3,628
Other		34,829	-		34,829		41		15		34,885
Total loans and leases	$	13,353,125	$	381,183	$	13,734,308	$	117,636	$	298,311	$	14,150,255
Percent of total loans and leases		94.4%	2.7%		97.1%		.8%		2.1%		100.0%

(1) Includes all loans and leases that are not 60+ days delinquent or on non-accrual status.

(2) Excludes classified loans and leases that are 60+ days delinquent. Classified loans and leases are those for which management has concerns regarding the borrower’s ability to meet the existing terms and conditions, but may never become non-performing or result in a loss.

Performing loans and leases includes all loans and leases that are not over 60-days delinquent or on non-accrual status. Performing loans and leases were 97.2% of total loans and leases at June 30, 2012, a slight increase from 97.1% at December 31, 2011. The increase was due to the growth of higher credit quality inventory finance and auto finance loans.

Total non-accrual loans at June 30, 2012 increased $26.1 million from December 31, 2011. The increase was primarily due to commercial and leasing and equipment finance non-accrual loans and leases increasing $31.5 million, partially offset by an $8.7 million decrease in consumer real estate non-accrual loans. During the six months ended June 30, 2012, non-accrual loans totaling $55.6 million were transferred to real estate owned and $43.4 million returned to accruing status.

Past Due Loans and Leases

The following tables set forth information regarding TCF’s delinquent loan and lease portfolio, excluding non-accrual loans and leases. Delinquent balances are determined based on the contractual terms of the loan or lease. See Note 7 of the Notes to Consolidated Financial Statements included in Part I, Item 1. Financial Statements for additional information.

	At June 30,			At December 31,
(Dollars in thousands)	2012			2011
Principal balances:
60-89 days	$	48,362		$	45,531
90 days or more	61,212			72,105
Total	$	109,574		$	117,636

Percentage of loans and leases:
60-89 days	.32		%	.33		%
90 days or more	.41			.52
Total	.73		%	.85		%

The following table summarizes TCF’s over 60-day delinquent loan and lease portfolio by loan type.

		At June 30, 2012			At December 31, 2011
(Dollars in thousands)		Principal Balances	Percentage of Portfolio		Principal Balances		Percentage of Portfolio
Consumer real estate:
First mortgage lien	$	86,714	1.93	%	$	87,358	1.89	%
Junior lien		13,967	.64		22,277		1.04
Total consumer real estate		100,681	1.51		109,635		1.63
Commercial real estate		5,505	.18		1,099		.04
Commercial business		111	.04		49		.02
Total commercial		5,616	.17		1,148		.03
Leasing and equipment finance:
Middle market		812	.05		1,061		.07
Small ticket		676	.09		2,018		.28
Winthrop		4	-		235		.07
Other		-	-		198		.11
Total leasing and equipment finance		1,492	.05		3,512		.13
Inventory finance		206	.01		160		.03
Auto finance		62	.02		-		-
Other		34	.13		41		.12
Subtotal (1)		108,091	.74		114,496		.85
Delinquencies in acquired portfolios (2)		1,483	.58		3,140		.84
Total	$	109,574	.73	%	$	117,636	.85	%

(1) Excludes delinquencies and non-accrual loans in acquired portfolios as delinquency and non-accrual migration in these portfolios are not expected to result in losses exceeding the credit reserves netted against the loan balances.

(2) Remaining balances of acquired loans and leases were $267 million and $371.9 at June 30, 2012 and December 31, 2011, respectively.

Loan Modifications-Consumer Real Estate

TCF has several programs designed to assist consumer real estate customers by extending payment dates or reducing customers’ contractual payments (but not a reduction of principal). Under these programs, TCF reduces a customer’s contractual payments for a period of time appropriate for the borrower’s condition. All loan modifications are made on a case-by-case basis.

Based on clarifying guidance from regulatory bodies, beginning in the second quarter of 2012, TCF now classifies trial modifications as troubled debt restructurings (“TDRs”) at the beginning of the trial period. Previously, these loans were not classified as TDRs until performance was demonstrated at a reduced payment amount for a short trial period. This change resulted in a $13.4 million increase in TDRs in the second quarter of 2012. Loan modifications are not reported as

TDRs in the calendar years after modification if the loans were modified at an interest rate equal to or greater than the yields of new loan originations with comparable risk and the loan is performing based on the restructured terms.

If TCF has not granted a concession as a result of the modification, the loan is not considered a TDR. Modifications that are not classified as TDRs primarily involve interest rate changes to current market rates for similarly situated borrowers who have access to alternative funds. Loan modifications to borrowers who are not experiencing financial difficulties are not included in the following reporting of loan modifications.

Although loans classified as TDRs are considered impaired, TCF was able to receive more than 54% and 53% of the contractual interest due on accruing consumer real estate TDRs for the three and six months ended June 30, 2012, respectively, by modifying the loan to a qualified customer instead of foreclosing on the property. Only 8.1% of accruing consumer real estate TDRs were more than 60-days delinquent at June 30, 2012. Approximately 3.3% of the $229.6 million accruing consumer real estate TDRs modified during the 15 months preceding June 30, 2012 defaulted during the three months ended June 30, 2012.

The following table summarizes the balance of accruing modified consumer real estate loans as of June 30, 2012 and December 31, 2011.

	At June 30, 2012		At December 31, 2011
	Loan	60+ Days Delinquent	Loan	60+ Days Delinquent
(Dollars in thousands)	Balance	As a % of Balance	Balance	As a % of Balance
Permanently modified accruing TDRs	$ 317,125	5.39 %	$ 198,882	4.63 %
Temporarily modified accruing TDRs	148,522	14.00	234,196	9.01
Total accruing TDRs	465,647	8.13	433,078	7.00
Other loan modifications	4,287	52.39	13,397	20.66
Total accruing loan modifications	$ 469,934	8.54	$ 446,475	7.41

The following table summarizes the regulatory classification of accruing consumer real estate TDRs at June 30, 2012 and December 31, 2011.

	At June 30, 2012		At December 31, 2011
(Dollars in thousands)	Balance	Percent of Total	Balance	Percent of Total
Pass	$ 336,437	72.3 %	$ 267,491	61.8 %
Special mention	68,854	14.7	113,673	26.2
Substandard	60,356	13.0	51,914	12.0
Total Accruing TDRs	$ 465,647	100.0 %	$ 433,078	100.0 %

Consumer real estate TDRs classified as “Pass” are loans that are current and have demonstrated at least six months of non-delinquent payment performance. Loans classified as “Special Mention” are accruing TDRs that are current, but have not yet made six payments following modification. Loans classified as “Substandard” are all accruing TDRs that are 30 or more days past due.

Loan Modifications-Other

A commercial loan may be modified through a term extension with a reduction of contractual payments or a change in interest rate. Commercial loan modifications which are not classified as TDRs primarily involve loans on which interest rates were modified to current market rates for similarly situated borrowers who have access to alternative funds or on which TCF received additional collateral or loan conditions. Loan modifications to borrowers who are not experiencing financial difficulties are not included in the following reporting of loan modifications.

Commercial loans that are 90 or more days past due and not well secured at the time of modification remain on non-accrual status. Regardless of whether contractual principal and interest payments are well-secured at the time of modification, equipment finance loans that are 90 or more days past due remain on non-accrual status. All loans modified when on non-accrual status continue to be reported as non-accrual loans until there is sustained repayment performance for six months. At June 30, 2012, over 49% of total commercial TDRs were accruing and TCF was able to recognize all of the contractual interest due on accruing commercial TDRs during the first six months of 2012. Only 7 of the 77 accruing commercial TDRs that were modified during the 15 months preceding June 30, 2012, totaling $12 million, defaulted during the three months ended June 30, 2012.

TCF utilizes a multiple note structure as a workout alternative for certain commercial loans. The multiple note structure restructures a troubled loan into two notes. The first note is established at a size and with market terms, that provide reasonable assurance of payment and performance. The second note is generally not reasonably assured of repayment and is typically charged-off. The second note is still outstanding with the borrower, and should the borrower’s financial position improve, may become recoverable. At June 30, 2012, five loans with a contractual balance of $13.6 million and a remaining book balance of $9.8 million had been restructured under this workout alternative.

For additional information regarding TCF’s loan modifications refer to Note 7 of the Notes to Consolidated Financial Statements included in Part I, Item 1. Financial Statements.

The following table summarizes the balance of accruing modified commercial and leasing and equipment finance loans as of June 30, 2012 and December 31, 2011.

	At June 30, 2012
	Commercial			Leasing and Equipment Finance
(Dollars in thousands)	Loan Balance		60+ Days Delinquent as a % of Balance	Loan Balance		60+ Days Delinquent as a % of Balance
TDRs	$	103,056	- %	$	714	- %
Other loan modifications	4,627		-	2,061		8.64
Total accruing loan modifications	$	107,683	-	$	2,775	6.41

	At December 31, 2011
	Commercial			Leasing and Equipment Finance
(Dollars in thousands)	Loan Balance		60+ Days Delinquent as a % of Balance	Loan Balance		60+ Days Delinquent as a % of Balance
TDRs	$	98,448	- %	$	776	- %
Other loan modifications	13,318		-	4,829		2.40
Total accruing loan modifications	$	111,766	-	$	5,605	2.07

Non-accrual Loans and Leases

Non-accrual loans and leases increased $26.1 million, or 8.8%, from December 31, 2011, primarily due to increases in non-accrual commercial real estate loans and one large lease. Consumer real estate loans are charged-off to their estimated realizable values less estimated selling costs upon entering non-accrual status. Any necessary additional reserves are established for commercial loans, leasing and equipment finance loans and leases and inventory finance loans when reported as non-accrual. Most of TCF’s non-accrual loans and past due loans are secured by real estate.

Non-accrual loans and leases are summarized in the following table.

	At		At
	June 30,		December 31,
(In thousands)	2012		2011
Consumer real estate:
First mortgage lien	$	122,406	$	129,114
Junior lien	18,272		20,257
Total consumer real estate	140,678		149,371
Commercial real estate	135,675		104,744
Commercial business	14,540		22,775
Total commercial	150,215		127,519
Leasing and equipment finance	29,429		20,583
Inventory finance	1,900		823
Other	2,204		15
Total non-accrual loans and leases	$	324,426	$	298,311

At June 30, 2012 and December 31, 2011, non-accrual loans and leases included $161.2 million and $130.9 million, respectively, of loans that were modified and categorized as TDRs. The increase in non-accrual TDRs at June 30, 2012, compared with December 31, 2011, was primarily due to a $22.5 million increase in commercial non-accrual TDRs.

Changes in the amount of non-accrual loans and leases for the three and six months ended June 30, 2012 are summarized in the following table.

		At or For the Three Months Ended June 30, 2012
(In thousands)		Consumer Real Estate		Commercial			Leasing and Equipment Finance			Inventory Finance			Other			Total
Balance, beginning of period	$	149,304		$	135,677		$	20,015		$	1,109		$	2,838		$	308,943
Additions		56,200		35,138			16,850			3,551			-			111,739
Charge-offs		(17,188	)	(8,639		)	(2,158		)	(218		)	(25		)	(28,228		)
Transfers to other assets		(24,766	)	(7,431		)	(1,320		)	(594		)	(362		)	(34,473		)
Return to accrual status		(20,464	)	-			(905		)	(831		)	-			(22,200		)
Payments received		(2,416	)	(5,247		)	(3,052		)	(1,299		)	(247		)	(12,261		)
Other, net		8		717			(1		)	182			-			906
Balance, end of period	$	140,678		$	150,215		$	29,429		$	1,900		$	2,204		$	324,426

		At or For the Six Months Ended June 30, 2012
(In thousands)		Consumer Real Estate		Commercial			Leasing and Equipment Finance			Inventory Finance			Other			Total
Balance, beginning of period	$	149,371		$	127,519		$	20,583		$	823		$	15		$	298,311
Additions		117,877		53,041			21,505			4,982			4			197,409
Charge-offs		(33,102	)	(10,101		)	(3,406		)	(219		)	(1,083		)	(47,911		)
Transfers to other assets		(47,588	)	(9,074		)	(2,299		)	(753		)	(362		)	(60,076		)
Return to accrual status		(40,988	)	(26		)	(1,005		)	(1,424		)	-			(43,443		)
Payments received		(4,794	)	(8,753		)	(5,948		)	(1,690		)	(278		)	(21,463		)
Other, net		(98	)	(2,391		)	(1		)	181			3,908			1,599
Balance, end of period	$	140,678		$	150,215		$	29,429		$	1,900		$	2,204		$	324,426

Allowance for Loan and Lease Losses

The determination of the allowance for loan and lease losses is a critical accounting estimate. TCF’s methodologies for determining and allocating the allowance for loan and lease losses focus on ongoing reviews of larger individual loans and leases, historical net charge-offs, delinquencies in the loan and lease portfolio, the level of impaired and non-accrual assets, values of underlying loan and lease collateral, the overall risk characteristics of the portfolios, changes in character or size of the portfolios, geographic location, year of origination, prevailing economic conditions and other relevant factors. The various factors used in the methodologies are reviewed on a periodic basis.

TCF considers the allowance for loan and lease losses of $274.2 million appropriate to cover probable losses incurred in the loan and lease portfolios as of June 30, 2012. However, no assurance can be given that TCF will not, in any particular period, sustain loan and lease losses that are sizable in relation to the amount reserved, or that subsequent evaluations of the loan and lease portfolio, in light of factors then prevailing, including economic conditions, and TCF’s ongoing credit review process or regulatory requirements, will not require significant changes in the balance of the allowance for loan and lease losses. Among other factors, a continued economic slowdown, increasing levels of unemployment and/or a decline in commercial or residential real estate values in TCF’s markets may have an adverse impact on the current adequacy of the allowance for loan and lease losses by increasing credit risk and the risk of potential loss.

The total allowance for loan and lease losses is generally available to absorb losses from any segment of the portfolio. The allocation of TCF’s allowance for loan and lease losses disclosed in the following table is subject to change based on changes in the criteria used to evaluate the allowance and is not necessarily indicative of the trend of future losses in any particular portfolio.

In conjunction with Note 7 of the Notes to Consolidated Financial Statements included in Part I, Item 1. Financial Statements, the following table includes detailed information regarding TCF’s allowance for loan and lease losses.

	At June 30, 2012			At December 31, 2011
		Total Loans	Allowance as		Total Loans	Allowance as
(Dollars in thousands)	Allowance	and Leases	a % of Balance	Allowance	and Leases	a % of Balance
Consumer real estate:
First mortgage lien	$ 119,177	$ 4,610,837	2.58 %	$ 115,740	$ 4,742,423	2.44 %
Junior lien	68,910	2,200,947	3.13	67,695	2,152,868	3.14
Consumer real estate	188,087	6,811,784	2.76	183,435	6,895,291	2.66
Commercial	50,699	3,523,070	1.44	46,954	3,449,492	1.36
Leasing and equipment finance	25,450	3,151,105	.81	21,173	3,142,259	.67
Inventory finance	7,072	1,457,263	.49	2,996	624,700	.48
Auto finance	1,951	262,188	.74	-	3,628	-
Other	902	29,094	3.10	1,114	34,885	3.19
Total allowance for loan and lease losses	$ 274,161	$ 15,234,504	1.80	$ 255,672	$ 14,150,255	1.81

The increase in the allowance from December 31, 2011, in inventory finance and auto finance was primarily due to increased loan balances and the related reserves. At June 30, 2012, the allowance as a percent of total loans and leases was 1.8%, compared with 1.81% at December 31, 2011. The decrease in the allowance as a percent of total loans and leases was primarily due to loan growth in the high credit quality inventory finance portfolio. The increase in allowance for the consumer real estate portfolio was primarily due to increases in the provision for credit losses as a result of increased reserves for TDRs. The level of commercial lending allowances is generally volatile due to reserves for specific loans based on individual facts and collateral values as loans migrate to classified commercial loans or to non-accrual. Charge-offs are taken against such specific reserves. The increase in the allowance for commercial loans from December 31, 2011 was primarily due to increased provision expense in the commercial real estate portfolio.

The following tables set forth additional information regarding net charge-offs:

		Three Months Ended
		June 30, 2012				June 30, 2011
		Net	Loss			Net	Loss
(Dollars in thousands)		Charge-offs	Rate (1)			Charge-offs	Rate (1)
Consumer real estate:
First mortgage liens	$	18,369	1.58	%	$	21,593	1.78 %
Junior liens		16,487	3.07			15,078	2.75
Total consumer real estate		34,856	2.05			36,671	2.09
Commercial real estate		8,492	1.05			2,090	.25
Commercial business		(37)	(.06	)		594	.78
Total commercial		8,455	.97			2,684	.30
Leasing and equipment finance		1,173	.15			3,478	.45
Inventory finance		225	.06			328	.13
Auto Finance		81	.14			-	-
Other		69	N.M	.		684	N.M.
Total	$	44,859	1.18	%	$	43,845	1.19 %

		Six Months Ended
		June 30, 2012				June 30, 2011
		Net	Loss			Net	Loss
(Dollars in thousands)		Charge-offs	Rate (1)			Charge-offs	Rate (1)
Consumer real estate:
First mortgage liens	$	37,895	1.62	%	$	43,543	1.80 %
Junior liens		32,650	3.05			28,431	2.56
Total consumer real estate		70,545	2.07			71,974	2.04
Commercial real estate		9,464	.59			16,571	1.00
Commercial business		515	.41			3,891	2.53
Total commercial		9,979	.57			20,462	1.13
Leasing and equipment finance		1,324	.08			6,267	.41
Inventory finance		868	.13			536	.12
Auto Finance		83	.11			-	-
Other		994	N.M	.		418	N.M.
Total	$	83,793	1.12	%	$	99,657	1.35 %

(1) Represents the ratio of net charge-offs to average loans and leases, annualized.

N.M. Not Meaningful.

For the six months ended June 30, 2012, commercial net charge-offs decreased $10.5 million, compared with the same 2011 period. The decrease in net charge-offs was primarily due to a reduction in net charge-offs on office buildings and apartments. Leasing and equipment finance net charge-offs for the six months ended June 30, 2012 decreased $4.9 million, compared with the same 2011 period, primarily due to decreases in the small ticket and middle market segments, as customer performance continued to improve in these areas.

Other Real Estate Owned and Repossessed and Returned Assets

Other real estate owned and repossessed and returned equipment are summarized in the following table.

		At		At
		June 30,		December 31,
(In thousands)		2012		2011
Other real estate owned: (1)
Residential real estate	$	83,176	$	87,792
Commercial real estate		42,700		47,106
Total other real estate owned		125,876		134,898
Repossessed and returned assets		5,280		4,758
Total other real estate owned and repossessed and returned equipment	$	131,156	$	139,656

(1) Includes properties owned and foreclosed properties subject to redemption.

Other real estate owned is recorded at the lower of cost or fair value less estimated costs to sell the property. At June 30, 2012, TCF owned 426 consumer real estate properties that were not subject to redemption, a decrease of 39 from December 31, 2011, as a result of the sale of 564 properties exceeding 525 property additions. The average length of time to sell consumer real estate properties during the second quarter of 2012 was 6.1 months from the date they were no longer subject to customer redemption.

The changes in the amount of other real estate owned for the three and six months ended June 30, 2012 are summarized in the following tables.

		At or For the Three Months Ended June 30, 2012
(In thousands)		Consumer		Commercial		Total
Balance, beginning of period	$	84,996	$	42,232	$	127,228
Transferred in, net of charge-offs		26,308		7,431		33,739
Sales		(25,340	)	(4,108	)	(29,448	)
Write-downs		(2,880	)	(3,357	)	(6,237	)
Other, net		92		502		594
Balance, end of period	$	83,176	$	42,700	$	125,876

		At or For the Six Months Ended June 30, 2012
(In thousands)		Consumer		Commercial		Total
Balance, beginning of period	$	87,792	$	47,106	$	134,898
Transferred in, net of charge-offs		51,473		7,890		59,363
Sales		(51,332	)	(6,717	)	(58,049	)
Write-downs		(5,434	)	(6,070	)	(11,504	)
Other, net		677		491		1,168
Balance, end of period	$	83,176	$	42,700	$	125,876

Deposits

Checking, savings and money market deposits are an important source of low-cost funds and fee income for TCF. Deposits totaled $13.7 billion at June 30, 2012, an increase of $1.5 billion, or 12.3%, from December 31, 2011. On June 1, 2012, TCF Bank assumed approximately $778 million of deposits from Prudential Bank & Trust, FSB (“PB&T”). The deposits consist primarily of IRA accounts with certificates of deposit or checking accounts and IRA related brokerage sweep accounts gathered by PB&T through their relationship with Prudential Retirement. The average interest cost of deposits in both the second quarter and first six months of 2012 was .31%, down 7 basis points and 9 basis points, respectively, from the same periods in 2011 and up 1 basis point from the first quarter of 2012. Decreases in the average interest cost of deposits from the second quarter and first six months of 2011 were primarily due to pricing strategies on certain deposit products, partially offset by changes in deposit mix. TCF’s weighted-average interest rate on deposits, including non-interest bearing deposits, was .35% at June 30, 2012 and .29% December 31, 2011.

Borrowings and Liquidity

During June 2012, TCF Bank issued $110 million of subordinated notes at a price to investors of 99.086% of par, which will be due on June 8, 2022. The subordinated notes bear interest at a fixed rate of 6.25% until maturity. The notes qualify as Tier 2 or supplementary capital for regulatory purposes, subject to certain limitations. TCF Bank intends to use the proceeds for general corporate purposes.

In 2008, TCF Capital I, a statutory trust formed under the laws of the state of Delaware and wholly-owned finance subsidiary of TCF issued 10.75% preferred junior subordinated notes (the “Trust Preferred Securities”). During June 2012, TCF announced that it had submitted a redemption notice to the property trustee for full redemption of the $115 million of 10.75% Trust Preferred Securities. The determination to redeem the Trust Preferred Securities followed a notice of proposed rulemaking, approved for publication in the Federal Register by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) on June 7, 2012, which would phase out the Tier 1 capital treatment of the Trust Preferred Securities. TCF has determined that the Federal Reserve’s approval for publication of the notice of proposed rulemaking constituted a “capital treatment event” (as defined in the indenture governing the Trust Preferred Securities), which allows TCF to redeem the Trust Preferred Securities. The Trust Preferred Securities will be redeemed on July 30, 2012 at the redemption price of $25 per Trust Preferred Security plus accumulated and unpaid distributions to the redemption date. The redemption will be funded with a portion of the net proceeds from TCF’s offering of depositary shares, each representing a 1/1,000th interest in a share of TCF’s Series A Non-Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”), par value $.01 per share, which closed on June 25, 2012.

Borrowings totaled $2.1 billion at June 30, 2012, down $2.3 billion from December 31, 2011. The weighted-average rate on borrowings was 2.14% at June 30, 2012, compared with 4.26% at December 31, 2011. Historically, TCF has borrowed primarily from the Federal Home Loan Bank (“FHLB”) of Des Moines, from institutional sources under repurchase agreements and from other sources. At June 30, 2012, TCF had $2.7 billion in unused, secured borrowing capacity at the FHLB of Des Moines.

At June 30, 2012, TCF, through its indirect subsidiary TCF Commercial Finance Canada, Inc., had $30.5 million available under a Canadian-denominated line of credit facility. Advances under this credit facility are fully collateralized by pledged securities, and TCF Commercial Finance Canada, Inc. could draw $9.8 million on the unused credit line without additional collateral being pledged.

At June 30, 2012, interest-bearing deposits held at the Federal Reserve and unencumbered securities were $1.1 billion, an increase of $395 million from the second quarter of 2011 and a decrease of $273 million from December 31, 2011.

See Note 10 of the Notes to Consolidated Financial Statements included in Part 1, Item 1. Financial Statements for additional information regarding TCF’s long-term borrowings.

Contractual Obligations and Commitments

TCF has certain obligations and commitments to make future payments under contracts. At June 30, 2012, the aggregate contractual obligations (excluding demand deposits) and commitments are as follows.

(In thousands)	Payments Due by Period
			Less than		1-3		3-5		More than
Contractual Obligations	Total		1 year		years		years		5 years
Total borrowings	$	2,083,410	$	291,259	$	1,293,530	$	386,853	$	111,768
Time deposits	1,894,711		1,294,958		482,828		41,994		74,931
Annual rental commitments under non-cancelable operating leases	211,624		26,599		54,704		46,502		83,819
Contractual interest payments(1)	166,505		50,873		50,945		26,791		37,896
Campus marketing agreements	45,138		3,995		6,957		6,004		28,182
Construction contracts and land purchase commitments for future branch sites	1,551		1,551		-		-		-
Total	$	4,402,939	$	1,669,235	$	1,888,964	$	508,144	$	336,596

(In thousands)	Amount of Commitment - Expiration by Period
			Less than		1-3		3-5		More Than
Commitments	Total		1 year		years		years		5 years
Commitments to lend:
Consumer real estate and other	$	1,188,154	$	67,628	$	92,307	$	92,781	$	935,438
Commercial	312,014		161,755		98,575		13,345		38,339
Leasing and equipment finance	207,775		207,775		-		-		-
Total commitments to lend	1,707,943		437,158		190,882		106,126		973,777
Standby letters of credit and guarantees on industrial revenue bonds	26,977		17,388		9,354		235		-
Total	$	1,734,920	$	454,546	$	200,236	$	106,361	$	973,777

(1) Includes accrued interest and future contractual interest obligations on borrowings and deposits.

Unrecognized tax benefits, projected benefit obligations and demand deposits with indeterminate maturities have been excluded from the contractual obligations presented above.

Campus marketing agreements consist of fixed or minimum obligations for exclusive marketing and naming rights with six campuses. TCF is obligated to make various annual payments for these rights in the form of royalties and scholarships through 2029. TCF also has various renewal options, which may extend the terms of these agreements. Campus marketing agreements are an important element of TCF’s campus banking strategy.

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 certain 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 these commitments predominantly consists of residential and commercial real estate. The credit facilities established for inventory finance customers are discretionary credit arrangements which do not obligate TCF to lend.

Standby letters of credit and guarantees on industrial revenue bonds are conditional commitments issued by TCF guaranteeing the performance of a customer to a third party. These conditional commitments expire in various years through 2016. Collateral held primarily consists of commercial real estate mortgages. Since the conditions under which TCF is required to fund these commitments may not materialize, the cash requirements are expected to be less than the total outstanding commitments.

Equity

Total equity at June 30, 2012 was $1.8 billion, or 9.83% of total assets, compared with $1.9 billion, or 9.9% of total assets, at December 31, 2011. On June 25, 2012, TCF completed the public offering of depositary shares, each representing a 1/1,000th interest in a share of the Series A Preferred Stock. In connection with the offering, TCF issued 6,900,000 depositary shares, including 900,000 depositary shares issued pursuant to the full exercise of the underwriters’ over-allotment option, at a public offering price of $25 per depositary share. Dividends will be payable on the Preferred Stock when, as and if declared by TCF’s Board of Directors on a non-cumulative basis on March 1, June 1, September 1, and December 1 of each year, commencing on September 1, 2012, at a per annum rate of 7.5%. Net proceeds of the offering to TCF, after deducting underwriting discounts and commissions and estimated offering expenses of $5.8 million, were $166.7 million.

Dividends to common stockholders on a per share basis totaled 5 cents for each of the quarters ended June 30, 2012 and June 30, 2011. TCF’s dividend payout ratio was 25.3% for the quarter ended June 30, 2012. The Company’s primary funding sources for dividends are earnings and dividends received from TCF Bank.

At June 30, 2012, TCF had 5.4 million shares remaining in its stock repurchase program authorized by its Board of Directors.

Tangible realized common equity at June 30, 2012 was $1.3 billion, or 7.5% of total tangible assets, compared with $1.6 billion, or 8.4% of total tangible assets, at December 31, 2011. Tangible realized common equity is a non-GAAP measure and represents common equity less goodwill, other intangible assets, accumulated other comprehensive income and non-controlling interest in subsidiaries. Tangible assets represent total assets less goodwill and other intangible assets. Management reviews tangible realized common equity to tangible assets as an ongoing measure and has included this information because of current interest by investors, rating agencies and banking regulators. The methodology for calculating tangible realized common equity may vary between companies.

The following table is a reconciliation of the non-GAAP measure of tangible realized common equity to tangible assets to the GAAP measure of total equity to total assets.

	At June 30,			At December 31,
(Dollars in thousands)	2012			2011
Computation of total equity to total assets:
Total equity	$	1,755,908		$	1,878,627
Total assets	17,870,597			18,979,388
Total equity to total assets	9.83		%	9.90		%

Computation of tangible realized common equity to tangible assets:
Total equity	$	1,755,908		$	1,878,627
Less: Non-controlling interest in subsidiaries	14,937			10,494
Total TCF Financial Corporation stockholders’ equity	1,740,971			1,868,133
Less:
Preferred Stock	166,721			-
Goodwill	225,640			225,640
Other intangibles	9,516			7,134
Accumulated other comprehensive income	15,703			56,826
Tangible realized common equity	$	1,323,391		$	1,578,533

Total assets	$	17,870,597		$	18,979,388
Less:
Goodwill	225,640			225,640
Other intangibles	9,516			7,134
Tangible assets	$	17,635,441		$	18,746,614

Tangible realized common equity to tangible assets	7.50		%	8.42		%

Total Tier 1 capital at June 30, 2012 was $1.5 billion, or 10.53% of risk-weighted assets, compared with $1.7 billion, or 12.67% of risk-weighted assets at December 31, 2011. Tier 1 common capital at June 30, 2012 was $1.3 billion, or 9.26% of risk-weighted assets, compared with $1.6 billion, or 11.74% of risk-weighted assets at December 31, 2011.

In contrast to GAAP-basis measures, the total Tier 1 common risk-based capital ratio excludes the effect of qualifying trust preferred securities, qualifying non-controlling interest in subsidiaries and cumulative perpetual preferred stock. Management reviews the total Tier 1 common risk-based capital ratio as an ongoing measure and has included this information because of current interest by investors, rating agencies and banking regulators. The methodology for calculating total Tier 1 common capital may vary between companies.

The following table is a reconciliation of the non-GAAP measure of total Tier 1 common risk-based capital ratio to the GAAP measure of total Tier 1 risk-based capital ratio.

	At			At
	June 30,			December 31,
(In thousands)	2012			2011
Tier 1 risk-based capital ratio:
Total Tier 1 capital	$	1,508,176		$	1,706,926
Total risk-weighted assets	14,319,406			13,475,330
Total Tier 1 risk-based capital ratio	10.53		%	12.67		%

Tier 1 common risk-based capital ratio:
Total Tier 1 capital	$	1,508,176		$	1,706,926
Less:
Preferred stock	166,721			-
Qualifying non-controlling interest in subsidiaries	14,937			10,494
Qualifying trust preferred securities	-			115,000
Total Tier 1 common capital	$	1,326,518		$	1,581,432
Total Tier 1 common risk-based capital ratio	9.26		%	11.74		%

RECENT ACCOUNTING DEVELOPMENTS

On December 23, 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (Topic 220), which defers the requirement to present the reclassification amounts from other comprehensive income to net income as a separate component on the income statement. The remaining requirements of ASU No. 2011-05 were adopted in TCF’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

On December 16, 2011, the FASB issued ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities (Topic 210), which requires companies that have financial and derivative instruments subject to a master netting agreement to disclose the gross amount of the financial assets and liabilities, the amounts that are offset on the balance sheet, the net amounts presented, and the amounts subject to a master netting arrangement that are not offset. The adoption of ASU will be required for TCF’s Quarterly Report on Form 10-Q for the first quarter of 2013, with retrospective application and is not expected to have a material impact on TCF.

LEGISLATIVE AND REGULATORY DEVELOPMENTS

Federal and state legislation imposes numerous legal and regulatory requirements on financial institutions. Future legislative or regulatory change, or changes in enforcement practices or court rulings, may have a dramatic and potentially adverse impact on TCF and its bank and other subsidiaries.

Bank Secrecy Act Consent Order

TCF is currently subject to a Consent Order with the OCC relating to its Bank Secrecy Act (“BSA”) compliance. The Consent Order does not call for the payment of a civil money penalty; however, the OCC has issued a written notice to TCF related to TCF’s BSA compliance deficiencies. After the OCC’s review of TCF’s response to the notice, the OCC may impose a penalty related to these findings.

Federal Reserve Notice of Proposed Rulemaking

The Board of Governors of the Federal Reserve System on June 7, 2012 approved for publication in the federal register three related notices of proposed rulemaking (the “Notices”) relating to the implementation of revised capital rules to reflect the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act as well as the Basel III international capital standards. Among other things, if adopted as proposed, the Notices establish a new capital standard consisting of common equity tier 1 capital; increase the capital ratios required for certain existing capital categories and add a requirement for a capital conservation buffer (failure to meet these standards would result in limitations on capital distributions as well as executive bonuses); and add more conservative standards for including securities in regulatory capital, which would phase-out trust preferred securities as a component of tier 1 capital commencing January 1, 2013. In addition, the Notice contemplated the deduction of more assets from regulatory capital and revisions to the methodologies for determining risk weighted assets, including applying a more risk-sensitive treatment to residential mortgage exposures and to past due or nonaccrual loans. The Notices provide for various phase-in periods over the next several years. TCF will be subject to many provisions in the Notices, but until final rules are issued TCF cannot predict the actual effect.

CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE SECURITIES LITIGATION REFORM ACT

Any statements contained in this Quarterly Report on Form 10-Q regarding the outlook for the Company’s businesses and their respective markets, such as projections of future performance, guidance, statements of the Company’s plans and objectives, forecasts of market trends and other matters, are forward-looking statements based on the Company’s assumptions and beliefs. Such statements may be identified by such words or phrases as “will likely result,” “are expected to,” “will continue,” “outlook,” “will benefit,” “is anticipated,” “estimate,” “project,” “management believes” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such statements and no assurance can be given that the results in any forward-looking statement will be achieved. For these statements, TCF claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.

Certain factors could cause the Company’s future results to differ materially from those expressed or implied in any forward-looking statements contained in this Quarterly Report on Form 10-Q. These factors include the factors discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 under the heading “Risk Factors,” 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.

Adverse Economic or Business Conditions, Credit and Other Risks. Deterioration in general economic and banking industry conditions, including defaults, anticipated defaults or rating agency downgrades of sovereign debt (including debt of the U.S.), or continued high rates of or increases in unemployment in TCF’s primary banking markets; adverse economic, business and competitive developments such as shrinking interest margins, deposit outflows, deposit account attrition or an inability to increase the number of deposit accounts; adverse changes in credit quality and other risks posed

by TCF’s loan, lease, investment and securities available for sale portfolios, including declines in commercial or residential real estate values or changes in the allowance for loan and lease losses dictated by new market conditions or regulatory requirements; interest rate risks resulting from fluctuations in prevailing interest rates or other factors that result in a mismatch between yields earned on TCF’s interest-earning assets and the rates paid on its deposits and borrowings; foreign currency exchange risks; counterparty risk, including the risk of defaults by our counterparties or diminished availability of counterparties who satisfy our credit quality requirements; decreases in demand for the types of equipment that TCF leases or finances; limitations on TCF’s ability to attract and retain manufacturers and dealers to expand the inventory finance business.

Legislative and Regulatory Requirements. New consumer protection and supervisory requirements and regulations, including those resulting from action by the Consumer Financial Protection Bureau and changes in the scope of Federal preemption of state laws that could be applied to national banks; the imposition of requirements with an adverse impact relating to TCF’s lending, loan collection and other business activities as a result of the Dodd-Frank Act, or other legislative or regulatory developments such as mortgage foreclosure moratorium laws or imposition of underwriting or other limitations that impact the ability to use certain variable-rate products; impact of legislative, regulatory or other changes affecting customer account charges and fee income; changes to bankruptcy laws which would result in the loss of all or part of TCF’s security interest due to collateral value declines; deficiencies in TCF’s compliance under the Bank Secrecy Act in past or future periods, which may result in regulatory enforcement action including monetary penalties; increased health care costs resulting from Federal health care reform legislation; adverse regulatory examinations and resulting enforcement actions or other adverse consequences such as increased capital requirements or higher deposit insurance assessments; heightened regulatory practices, requirements or expectations, including, but not limited to, requirements related to the Bank Secrecy Act and anti-money laundering compliance activity.

Earnings/Capital Risks and Constraints, Liquidity Risks. Limitations on TCF’s ability to pay dividends or to increase dividends because of financial performance deterioration, regulatory restrictions or limitations; increased deposit insurance premiums, special assessments or other costs related to adverse conditions in the banking industry, the economic impact on banks of the Dodd-Frank Act and other regulatory reform legislation; the impact of financial regulatory reform, including the phase out of trust preferred securities in tier 1 capital called for by the Dodd-Frank Act, or additional capital, leverage, liquidity and risk management requirements or changes in the composition of qualifying regulatory capital (including those resulting from U.S. implementation of Basel III requirements); adverse changes in securities markets directly or indirectly affecting TCF’s ability to sell assets or to fund its operations; diminished unsecured borrowing capacity resulting from TCF credit rating downgrades and unfavorable conditions in the credit markets that restrict or limit various funding sources; costs associated with new regulatory requirements or interpretive guidance relating to liquidity; uncertainties relating to customer opt-in preferences with respect to overdraft fees on point of sale and ATM transactions or the success of TCF’s reintroduction of the Free Checking product which may have an adverse impact on TCF’s fee revenue; uncertainties relating to future retail deposit account changes, including limitations on TCF’s ability to predict customer behavior and the impact on TCF’s fee revenues.

Competitive Conditions; Supermarket Branching Risk; Growth Risks. Reduced demand for financial services and loan and lease products; adverse developments affecting TCF’s supermarket banking relationships or any of the supermarket chains in which TCF maintains supermarket branches including the announcement on July 11, 2012 by SUPERVALU that it is exploring strategic alternatives; customers completing financial transactions without using a bank; the effect of any negative publicity; slower than anticipated growth in existing or acquired businesses; inability to successfully execute on TCF’s growth strategy through acquisitions or cross-selling opportunities; failure to expand or diversify TCF’s balance sheet through programs or new opportunities; failure to successfully attract and retain new customers; product additions and addition of distribution channels (or entry into new markets) for existing products.

Technological and Operational Matters. Technological or operational difficulties, loss or theft of information, counterparty failures and the possibility that deposit account losses (fraudulent checks, etc.) may increase; failure to keep pace with technological change.

Litigation Risks. Results of litigation, including class action litigation concerning TCF’s lending or deposit activities including account servicing processes or fees or charges, or employment practices, and possible increases in indemnification obligations for certain litigation against Visa U.S.A. and potential reductions in card revenues resulting from such litigation or other litigation against Visa.

Accounting, Audit, Tax and Insurance Matters. Changes in accounting standards or interpretations of existing standards; federal or state monetary, fiscal or tax policies, including adoption of state legislation that would increase state taxes; ineffective internal controls; adverse state or Federal tax assessments or findings in tax audits; lack of or inadequate insurance coverage for claims against TCF; potential for claims and legal action related to TCF’s fiduciary responsibilities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

TCF’s results of operations depend to a large degree on its net interest income and its ability to manage interest-rate risk. Although TCF manages other risks, such as credit risk, liquidity risk, operational and other risks, in the normal course of its business, the Company considers interest-rate risk to be one of its most significant market risks. Since TCF does not hold a trading portfolio, the Company is not exposed to market risk from trading activities. A mismatch between maturities, interest rate sensitivities and prepayment characteristics of assets and liabilities results in interest-rate risk. TCF, like most financial institutions, has material interest-rate risk exposure to changes in both short-term and long-term interest rates, as well as variable interest rate indices (e.g., the prime rate).

TCF’s Asset/Liability Management Committee manages TCF’s interest-rate risk based on interest rate expectations and other factors. The principal objective of TCF’s asset/liability management activities is to provide maximum levels of net interest income while maintaining acceptable levels of interest-rate risk and liquidity risk and facilitating the funding needs of the Company.

TCF utilizes net interest income simulation models to estimate the near-term effects (next 1-2 years) of changing interest rates on its 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 spreads between market interest rates. At June 30, 2012, net interest income is estimated to increase by 2.1%, compared with the base case scenario, over the next 12 months if short- and long-term interest rates were to sustain an immediate increase of 100 basis points.

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, such as customer behavior on loan and deposit activity and the effect that competition has on both loan and deposit pricing. These assumptions are inherently uncertain 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, changes in market conditions, customer behavior and management strategies, among other factors.

In addition to the net interest income simulation model, management utilizes an interest rate gap measure (difference between interest-earning assets and interest-bearing liabilities re-pricing within a given period). While the interest rate gap measurement has some limitations, including no assumptions regarding future asset or liability production and a static interest rate assumption (large quarterly changes may occur related to these items), the interest rate gap represents the net asset or liability sensitivity at a point in time. An interest rate gap measure could be significantly affected by external factors such as loan prepayments, early withdrawals of deposits, changes in the correlation of various interest-bearing instruments, competition, or a rise or decline in interest rates.

TCF’s one-year interest rate gap was a positive $856.2 million, or 4.8% of total assets, at June 30, 2012, compared with a positive $2.1 billion, or 10.9% of total assets, at December 31, 2011. The change in the gap from year-end is primarily due to the balance sheet repositioning and having more short-term and variable-rate borrowings, along with a smaller mortgage-backed securities portfolio. A positive interest rate gap position exists when the amount of interest-earning assets maturing or re-pricing exceeds the amount of interest-bearing liabilities maturing or re-pricing, including assumed prepayments, within a particular time period. A negative interest rate gap position exists when the amount of interest-bearing liabilities maturing or re-pricing exceeds the amount of interest-earning assets maturing or re-pricing, including assumed prepayments, within a particular time period.

TCF estimates that an immediate 50 basis point decrease in current mortgage loan interest rates would increase prepayments on the $5.1 billion of fixed rate consumer real estate loans and fixed-rate mortgage-backed securities at June 30, 2012, by approximately $124 million, or 22.8%, in the first year. An increase in prepayment would decrease the estimated life of the portfolios and may adversely impact net interest income or net interest margin in the future. Although prepayments on fixed-rate portfolios are currently at a relatively low level, TCF estimates that an immediate 100 basis point increase in current mortgage loan interest rates would decrease prepayments on the fixed-rate mortgage-backed securities, residential real estate loans and consumer loans at June 30, 2012, by approximately $134 million, or 24.7%, in the first year. A slowing in prepayments would increase the estimated life of the portfolios and may favorably impact net interest income or net interest margin in the future. The level of prepayments that would actually occur in any scenario will be impacted by factors other than interest rates. Such factors include lenders’ willingness to lend funds, which can be

impacted by the value of assets underlying loans and leases.

Item 4. Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer (Principal Executive Officer), the Company’s Chief Financial Officer (Principal Financial Officer) and its Controller and Managing Director of Corporate Development (Principal Accounting Officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, management concluded that the Company’s disclosure controls and procedures are effective as of June 30, 2012.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by TCF in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer (Principal Executive Officer), the Chief Financial Officer (Principal Financial Officer) and the Controller and Managing Director of Corporate Development (Principal Accounting Officer), as appropriate, to allow for timely decisions regarding required disclosure. TCF’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.

Any control system, 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.

Changes in Internal Control Over Financial Reporting

The company implemented new software supporting the documentation of its external financial reporting and transferred reporting capabilities of certain management reporting systems during the quarter. The impacted systems include new operational controls and procedures and were tested as part of the development and conversion process.

The company implemented an outsourced deposit activity system during the quarter to support the deposits assumed in the Prudential Bank & Trust, FSB transaction. The new system includes new operational and accounting controls and procedures that were tested and reconciled as part of the implementation process.

TCF FINANCIAL CORPORATION AND SUBSIDIARIES

Supplementary Information

The selected quarterly financial data presented below should be read in conjunction with the Consolidated Financial Statements and related notes.

SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

	At			At			At			At			At

(Dollars in thousands,	June 30,			March 31,			December 31,			September 30,			June 30,

except per-share data)	2012			2012			2011			2011			2011
SELECTED FINANCIAL CONDITION DATA:
Total loans and leases	$	15,234,504		$	15,207,936		$	14,150,255		$	14,339,715		$	14,631,945
Securities available for sale	757,233			728,894			2,324,038			2,600,806			2,463,367
Goodwill	225,640			225,640			225,640			152,599			152,599
Total assets	17,870,597			17,833,457			18,979,388			19,092,027			18,834,416
Deposits	13,704,306			12,759,040			12,202,004			12,320,502			11,939,476
Short-term borrowings	7,487			1,157,189			6,416			7,204			9,514
Long-term borrowings	2,075,923			1,962,053			4,381,664			4,397,750			4,415,362
Total equity	1,755,908			1,549,325			1,878,627			1,872,044			1,769,619

	Three Months Ended

	June 30,			March 31,			December 31,			September 30,			June 30,

	2012			2012			2011			2011			2011

SELECTED OPERATIONS DATA:
Net interest income	$	198,224		$	180,173		$	173,434		$	176,064		$	176,150
Provision for credit losses	54,106			48,542			59,249			52,315			44,005
Net interest income after provision for credit losses	144,118			131,631			114,185			123,749			132,145
Non-interest income:
Fees and other revenue	99,767			88,734			92,448			116,108			114,369
Gain (loss) on securities, net	13,116			76,611			5,842			1,648			(227		)
Total non-interest income	112,883			165,345			98,290			117,756			114,142
Non-interest expense	202,989			748,708			187,533			188,848			195,091
Income (loss) before income tax expense	54,012			(451,732		)	24,942			52,657			51,196
Income tax expense (benefit)	20,542			(170,244		)	7,424			19,159			19,086
Income (loss) after income tax expense (benefit)	33,470			(281,488		)	17,518			33,498			32,110
Income attributable to non-controlling interest	1,939			1,406			1,075			1,243			1,686
Net income (loss) available to common stockholders	31,531			(282,894		)	16,443			32,255			30,424
Per common share:
Basic earnings	$	0.20		$	(1.78	)	$	0.10		$	0.20		$	0.19
Diluted earnings	$	0.20		$	(1.78	)	$	0.10		$	0.20		$	0.19
Dividends declared	$	0.05		$	0.05		$	0.05		$	0.05		$	0.05

FINANCIAL RATIOS:
Return on average assets (1)	.76		%	(5.96		)%	.37		%	.71		%	.68		%
Return on average common equity (1)	8.13			(63.38		)	3.55			7.12			7.00
Net interest margin (1)	4.86			4.14			3.92			3.96			4.02
Net charge-offs as a percentage of average loans and leases (1)	1.18			1.06			1.63			1.48			1.19
Average total equity to average assets	8.96			9.52			9.81			9.58			9.32

(1) Annualized

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, TCF is a party to legal proceedings arising out of its lending, leasing and deposit operations. TCF is and expects to become engaged in a number of foreclosure proceedings and other collection actions as part of its lending and leasing collections activities. TCF may also be subject to enforcement action by federal regulators, including the Securities and Exchange Commission, the Federal Reserve, the Office of the Comptroller of the Currency (“OCC”) and the Consumer Financial Protection Bureau. From time to time, borrowers and other customers, or employees or former employees, have also brought actions against TCF, in some cases claiming substantial damages. Financial services companies are subject to the risk of class action litigation, and TCF is subject to such actions brought against it from time to time. 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 these 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 consolidated financial position, operating results or cash flows of TCF. TCF is also subject to regulatory examinations and TCF’s regulatory authorities may impose sanctions on TCF for a failure to maintain regulatory compliance. TCF is currently subject to a Consent Order with the OCC relating to its Bank Secrecy Act of 1970 (“BSA”) compliance. The OCC has issued a written notice to TCF related to TCF’s past BSA deficiencies. After the OCC’s review of TCF’s response, the OCC may impose a penalty related to these findings. TCF is currently not able to estimate a reasonable range of losses relating to that possibility.

Item 1A. Risk Factors

There were no material changes in risk factors for TCF in the quarter covered by this report. You should carefully consider the risks and the risk factors included under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. TCF’s business, financial condition or results of operations could be materially adversely affected by any of these risks.

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

The following table summarizes share repurchase activity for the quarter ended June 30, 2012.

				Total Number of	Maximum Number
	Total Number	Average		Shares Purchased	of Shares that May
	of Shares	Price Paid		as Part of Publicly	Yet Be Purchased
Period	Purchased	Per Share		Announced Plan	Under the Plan
April 1 to April 30,
Share repurchase program (1)	-	$	-	-	5,384,130
Employee transactions (2)	36,293	$	12.02	N.A.	N.A.


May 1 to May 31,
Share repurchase program (1)	-	$	-	-	5,384,130
Employee transactions (2)	2,104	$	11.60	N.A.	N.A.


June 1 to June 30,
Share repurchase program (1)	-	$	-	-	5,384,130
Employee transactions (2)	-	$	-	N.A.	N.A.
Total
Share repurchase program (1)	-	$	-	-	5,384,130
Employee transactions (2)	38,397	$	11.99	N.A.	N.A.

(1) The current share repurchase authorization was approved by the Board of Directors on April 14, 2007 and was announced in a press release dated April 16, 2007. The authorization was for a repurchase of up to an additional 5% of TCF’s common stock outstanding at the time of the authorization, or 6.5 million shares. TCF has not repurchased shares since October 2007. Future repurchases of shares will be based upon capital levels, growth expectations and market opportunities and may be subject to regulatory approval. The ability to repurchase shares in the future may be adversely affected by new legislation or regulations, or by changes in regulatory policies. This authorization does not have an expiration date.

(2) Restricted shares withheld pursuant to the terms of awards under the TCF Financial Incentive Stock Program to offset tax withholding obligations that occur upon vesting and release of restricted shares. The TCF Financial Incentive Stock Program provides that the value of shares withheld shall be the average of the high and low prices of common stock of TCF Financial Corporation on the date the relevant transaction occurs.

N.A. Not Applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

See Index to Exhibits on page 67 of this report.

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/ William A. Cooper
		William A. Cooper, Chairman and Chief Executive Officer (Principal Executive Officer)



		/s/ Michael S. Jones
		Michael S. Jones, Executive Vice President and Chief Financial Officer (Principal Financial Officer)



		/s/ David M. Stautz
		David M. Stautz, Senior Vice President, Controller and Managing Director of Corporate Development (Principal Accounting Officer)

Dated: July 26, 2012

TCF FINANCIAL CORPORATION

INDEX TO EXHIBITS

FOR FORM 10-Q

Exhibit Number		Description
3(a)#		Amended and Restated Certificate of Incorporation of TCF Financial Corporation

4(k)		Specimen Common Stock Certificate of TCF Financial Corporation [incorporated by reference to Exhibit 4.3 to TCF Financial Corporation’s Registration Statement on Form S-3ASR filed on May 29, 2012]

4(l)		Form of Certificate for Series A Non-Cumulative Perpetual Preferred Stock [incorporated by reference to Exhibit 4.1 to TCF Financial Corporation’s Current Report on Form 8-K filed June 22, 2012]

4(m)		Deposit Agreement dated June 25, 2012 by and among TCF Financial Corporation, Computershare Trust Company, N.A. and Computershare Inc. and the holders from time to time of the Depositary Receipts described therein [incorporated by reference to Exhibit 4.1 to TCF Financial Corporation’s Current Report on Form 8-K filed June 25, 2012]

4(n)		Form of Depositary Receipt (included as part of Exhibit 4(m)) [incorporated by reference to Exhibit 4.1 to TCF Financial Corporation’s Current Report on Form 8-K filed June 25, 2012]

10(b)-22		TCF Financial Incentive Stock Program, as amended and restated April 25, 2012 [incorporated by reference to TCF Financial Corporation’s Current Report on Form 8-K filed April 30, 2012]

10(j)#		Directors Stock Grant Program, as amended and restated on April 25, 2012

10(j)-1#		Form of Director’s Restricted Stock Agreement dated January 24, 2012

10(j)-2#		Form of Deferred Director’s Restricted Stock Agreement dated January 24, 2012

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

99.1		Form of Consent Order, dated July 20, 2010, issued by the Comptroller of the Currency in the matter of TCF National Bank [incorporated by reference to Exhibit 99.1 to TCF Financial Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010]

99.2		Form of Stipulation and Consent to the Issuance of a Consent Order dated July 20, 2010, issued by the Comptroller of the Currency in the matter of TCF National Bank [incorporated by reference to Exhibit 99.2 to TCF Financial Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010]

101#		Financial statements from the Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2012, formatted in XBRL: (i) the Consolidated Statements of Comprehensive Income, (ii) the Consolidated Statements of Financial Condition, (iii) the Consolidated Statements of Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements

# Filed herewith