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## Consolidated Income Statement Analysis 

Net Interest Income Net interest income, which is the difference between interest earned on loans and leases, securities available for sale and other interest-earning assets (interest income), and interest paid on deposits and borrowings (interest expense), represented 54.4% of TCF’s revenue in 2002. Net interest income divided by average interest-earning assets is referred to as the net interest margin, expressed as a percentage. Net interest income and net interest margin are affected by changes in interest rates, loan pric- ing strategies and competitive conditions, the volume and the mix of 

interest-earning assets and interest-bearing liabilities, and the level of non-performing assets. 

Net interest income was $499.2 million for the year ended December 31, 2002, compared with $481.2 million in 2001 and $438.5 million in 2000. This represents an increase of 3.7% in 2002, compared with an increase of 9.7% in 2001 and an increase of 3.4% in 2000. Total average interest-earning assets decreased .7% in 2002, following increases of 5.9% in 2001 and 6.1% in 2000. The net interest margin for 2002 was 4.71%, compared with 4.51% in 2001 and 4.35% in 2000. 

The following table presents TCF’s average balance sheets, interest and dividends earned or paid, and the related yields and rates on major categories of TCF’s interest-earning assets and interest-bearing liabilities: 

<img src='content_image/48868.jpg'>

$^{(1)}$Tax-exempt income was not significant and thus interest income and related yields have not been presented on a tax equivalent basis. Tax-exempt income of $354,000, $156,000 and $181,000 was recognized during the years ended December 31, 2002, 2001 and 2000, respectively. 

$^{(2)}$Average balance and yield of securities available for sale are based upon the historical amortized cost. 

$^{(3)}$Average balance of loans and leases includes non-accrual loans and leases, and is presented net of unearned income. 

$^{(4)}$Average balance is based upon month-end balances. 

