TCF Bank 2001 Annual Report Download - page 56

At December 31, 2001 and 2000, the recorded investment in loans
that were considered to be impaired was $18.8 million and $6.8 mil-
lion, respectively. The related allowance for loan losses at those dates
was $5 million and $1.3 million, respectively. All of the impaired loans
were on non-accrual status. The average recorded investment in
impaired loans during the year ended December 31, 2001, 2000 and
1999 was $9.9 million, $4.5 million and $8.1 million, respectively.
For the year ended December 31, 2001, 2000 and 1999, TCF rec-
ognized interest income on impaired loans of $29,000, $40,000
and $519,000 all of which was recognized using the cash basis method
of income recognition.
At December 31, 2001, 2000 and 1999, loans and leases on non-
accrual status totaled $52 million, $35.2 million and $24.1 million,
respectively. Had the loans and leases performed in accordance with
their original terms for 2001, 2000 and 1999, TCF would have
recorded gross interest income of $5.4 million, $3.9 million and
$3.6 million, respectively, for these loans and leases. Interest income
of $1.7 million, $1.6 million and $1.4 million has been recorded on
these loans and leases for the years ended December 31, 2001, 2000
and 1999, respectively.
At December 31, 2001 and 2000, TCF had no loans outstand-
ing with terms that had been modified in troubled debt restructur-
ings. There were no material commitments to lend additional funds
to customers whose loans or leases were classified as non-accrual at
December 31, 2001.
The aggregate amount of loans to outside directors of TCF and
their related interests was $31.8 million and $27 million at December
31, 2001 and 2000, respectively. During 2001, $12 million of new
loans were made, repayments totaled $8.8 million and changes in
the composition of the outside directors and their related interests
increased loans outstanding by $1.6 million. All loans outside direc-
tors and their related interests were made in the ordinary course of
business on normal credit terms, including interest rates and col-
lateral, as those prevailing at the time for comparable transactions
with unrelated persons. The aggregate amount of loans to executive
officers of TCF was $9.1 million and $5.2 million at December 31,
2001 and 2000, respectively. Included in these amounts were loans
made to the Executive Deferred Compensation Plan trustee on behalf
of the executive officers. During 2001, $6.2 million of new loans
to the Executive Deferred Compensation Plan were made and repay-
ments totaled $2.3 million. See Note 14 for additional information
regarding loans to the deferred compensation plan. In the opinion
of management the above mentioned loans to outside directors and
their related interests and executive officers do not represent more
than a normal credit risk of collection.
During 2000, TCF purchased the equity interest in a leveraged
lease transaction for a Boeing 767 aircraft on lease to Delta Airlines
in the United States. The investment in a leveraged lease represents
net unpaid rentals and estimated unguaranteed residual values of the
leased assets, less related unearned income. TCF has no general oblig-
ation for principal and interest on notes representing third-party
participation related to the leveraged lease; such notes are recorded
as an offset against the related rental receivable. As the equity owner
in the leveraged lease, TCF is taxed on total lease payments received
and is entitled to tax deductions based on the cost of the leased asset
and tax deductions for interest paid to third-party participants. The
leveraged lease has renewal and purchase options by the lessee at the
end of the 9.75 year lease term. The aircraft is in service, the lessee
is current on the lease payments and the lease expires in 2010. This
lease represents TCF’s only material direct exposure to the com-
mercial airline industry.
TCF’s net investment in a leveraged lease is comprised of the following:
At December 31,
(In thousands) 2001 2000
Rental receivable (net of principal and interest on non-recourse debt) . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,134 $ 11,066
Estimated residual value of leased assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,056 18,056
Less: Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,582) (11,953)
Investment in leveraged lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,608 17,169
Less: Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,568) (1,929)
Net investment in leveraged lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,040 $ 15,240
54