content_image/92835.jpg
The following table presents the components of the changes in net interest income by volume and rate: 

<img src='content_image/92835.jpg'>

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

Changes in net interest income are dependent upon the move- ment of interest rates, the volume and mix of interest-earning assets and interest-bearing liabilities and the level of non-performing assets. Achieving net interest margin growth is dependent on TCF’s ability to generate higher-yielding assets and lower-cost retail deposits. As a result of customer demand for variable-rate products, TCF’s variable-rate commercial and consumer loans (excluding loans at their floor rate) increased $703 million since December 31, 2001 compared with a decline in TCF’s fixed-rate and adjustable-rate commercial and consumer loans of $70 million since December 31, 2001. The net impact of these changes in interest-bearing assets and liabilities has positioned TCF to be more asset sensitive (i.e. more assets than liabilities will be maturing, repricing or prepaying dur- ing the next twelve months). Although this positive gap position 

will benefit TCF in a rising rate environment, if interest rates remain at current levels or fall further, net interest income may decline and the net interest margin may compress. Competition for check- ing, savings and money market deposits, important sources of lower cost funds for TCF, is intense. See “Consolidated Financial Condition Analysis – Market Risk – Interest-Rate Risk” on page 41 for further discussion of TCF’s interest rate risk position. 

In 2002, TCF’s net interest income increased $18 million, or 3.7%, and total average interest-earning assets decreased by $76.2 million, or .7%, compared with 2001 levels. TCF’s net interest income improved by $38 million due to volume changes, partially offset by a decrease of $20 million due to rate changes. The improve- ment in net interest income and net interest margin was primarily due to growth in average low-cost deposits (checking, savings and 

