TCF Bank 2009 Annual Report Download - page 22

6 : TCF Financial Corporation and Subsidiaries
depositor. On October 3, 2008, the maximum amount
insured under FDIC deposit insurance was temporarily
increased from $100,000 to $250,000 per insured depositor
through December 31, 2009. This increase was part of the
Emergency Economic Stabilization Act of 2008. In May 2009,
the increase was extended through December 31, 2013.
Additionally, TCF has elected to participate in the FDIC’s
Temporary Liquidity Guarantee Program. Under this
program, all non-interest bearing deposit transaction
accounts at TCF with balances over $250,000 were fully
insured through December 31, 2009 at an additional cost
to TCF of 10 basis points per dollar over $250,000 on a per
account basis. This program was extended through June 30,
2010 at an additional cost to TCF of 15 basis points per
dollar over $250,000 on a per account basis.
The FDIC has set a designated reserve ratio of 1.25%
($1.25 against $100 of insured deposits) for the Deposit
Insurance Fund (“DIF”). The Federal Deposit Insurance Act
of 2005 (“FDIC Act”) provides the FDIC Board of Directors
the authority to set the designated reserve ratio between
1.15% and 1.50%. The FDIC must adopt a restoration plan
when the reserve ratio falls below 1.15% and begin paying
dividends when the reserve ratio exceeds 1.35%. There is no
requirement to achieve a specic ratio within a given time
frame. The DIF reserve ratio calculated by the FDIC in effect
at September 30, 2009 was a negative .16%.
In 2009, the annual insurance premiums on bank
deposits insured by the DIF varied between $.07 per $100
of deposits for banks classied in the highest capital
and supervisory evaluation categories to $.78 per $100
of deposits for banks classied in the lowest capital and
supervisory evaluation categories. TCF Bank was classied
in the highest capital and supervisory evaluation category.
As required by law, in October 2008, the FDIC Board
adopted a restoration plan that would increase the reserve
ratio to the 1.15% threshold within ve years. As part of
that plan, in December 2008, the FDIC Board of Directors
voted to increase risk-based assessment rates uniformly
by seven cents, on an annual basis, for the rst quarter
of 2009 due to deteriorating nancial conditions in the
banking industry. In February 2009, the FDIC extended the
length of the period during which the reserve ratio must be
restored to 1.15% from ve years to seven years. TCF Bank
paid a FDIC special assessment of $8.2 million in 2009 in
addition to higher premium rates.
On November 12, 2009, the FDIC adopted a nal rule requir-
ing depository institutions to prepay their estimated quarterly
insurance premium for fourth quarter 2009 and all of 2010,
2011 and 2012. TCF Bank prepaid $77.6 million of such premium
on December 30, 2009. The expense related to this prepayment
is anticipated to be recognized over the next three years
based on actual calculations of quarterly provisions.
In addition to risk-based deposit insurance premiums,
additional assessments may be imposed by the Financing
Corporation, a separate U.S. government agency afliated
with the FDIC, on insured deposits to pay for the interest
cost of Financing Corporation bonds. Financing Corporation
assessment rates for 2009 ranged from $.0102 to $.0114
per $100 of deposits. Financing Corporation assessments
of $1.2 million, $1.1 million and $1.1 million were paid by
TCF Bank for 2009, 2008 and 2007, respectively.
The FDIC is authorized to terminate a depository institu-
tion’s deposit insurance if it nds that the institution is being
operated in an unsafe and unsound manner or has violated
any rule, regulation, order or condition administered by the
institution’s regulatory authorities. Any such termination of
deposit insurance would likely have a material adverse effect
on TCF, the severity of which would depend on the amount
of deposits affected by such a termination.
Under federal law, deposits and certain claims for
administrative expenses and employee compensation
against an insured depository institution are afforded a
priority over other general unsecured claims against such
an institution, including federal funds and letters of credit,
in the liquidation or other resolution of such an institution
by any receiver appointed by regulatory authorities. Such
priority creditors would include the FDIC.
 TCF is subject
to periodic examination by the FRB, OCC and the FDIC. Bank
regulatory authorities may impose a number of restrictions
or new requirements on institutions found to be operating
in an unsafe or unsound manner, including but not limited
to growth limitations, dividend restrictions, individual