TCF Bank 2009 Annual Report Download - page 69

2009 Form 10-K : 53
in other non-interest expense. Net operating expenses of
properties and recoveries on sales of other real estate owned
are recorded in foreclosed real estate and repossessed
assets, net. Other real estate owned at December 31, 2009
and 2008 was $105.8 million and $61.7 million, respectively.

 Investments in affordable housing consist
of investments in limited partnerships that operate quali-
ed affordable housing projects or that invest in other
limited partnerships formed to operate affordable housing
projects. TCF generally utilizes the effective yield method
to account for these investments with the tax credits net
of the amortization of the investment reected in the
Consolidated Statements of Income as a reduction of
income tax expense. However, depending on circumstances,
the equity or cost methods may be utilized. The amount of
the investment along with any unfunded equity contributions
which are unconditional and legally binding are recorded in
other assets. A liability for the unfunded equity contributions
is recorded in other liabilities. At December 31, 2009, TCF’s
investments in affordable housing limited partnerships
were $37 million, compared with $44.1 million at December
31, 2008, and were recorded in other assets.
Five of these investments in affordable housing limited
partnerships are considered variable interest entities.
These partnerships are not consolidated with TCF. As of
December 31, 2009 and 2008, the carrying amount of
these ve investments was $36.2 million and $43.1 million,
respectively. The maximum exposure to loss on these ve
investments was $36.2 million at December 31, 2009;
however, the general partner of these partnerships provides
various guarantees to TCF including guaranteed minimum
returns. These guarantees are backed by a BBB credit-rated
company and signicantly limit any risk of loss. In addition
to the guarantees, the investments are supported by the
performance of the underlying real estate properties which
also mitigates the risk of loss.
 Goodwill is tested for impairment
annually. Other intangibles are amortized over their esti-
mated useful life. The Company reviews the recoverability
of these assets at least annually or earlier whenever an
event occurs indicating that they may be impaired.
 The fair value of restricted
stock and stock options is determined on the date of grant
and amortized to compensation expense, with a corre-
sponding increase in additional paid-in capital, over the
longer of the service period or performance period, but in
no event beyond an employee’s retirement date. For perfor-
mance-based restricted stock, TCF estimates the degree
to which performance conditions will be met to determine
the number of shares that will vest and the related com-
pensation expense. Compensation expense is adjusted
in the period such estimates change. Non-forfeitable
dividends, if any, paid on shares of restricted stock are
recorded to retained earnings for shares that are expected
to vest and to compensation expense for shares that are
not expected to vest.
Income tax benets related to stock compensation
in excess of grant date fair value less any proceeds on
exercise are recognized as an increase to additional paid-
in capital upon vesting or exercising and delivery of the
stock. Any income tax benets that are less than grant
date fair value less any proceeds on exercise would be
recognized as a reduction of additional paid in capital
to the extent of previously recognized income tax benets
and then as income tax expense for the remaining amount.
See Note 15 for additional information concerning stock-
based compensation.
 Deposit account overdrafts
are reported in consumer or commercial loans. Net losses
on uncollectible overdrafts are reported as net charge-offs
in the allowance for loan and lease losses within 60 days
from the date of overdraft. Uncollectible deposit fees are
reversed against fees and service charges and a related
reserve for uncollectible deposit fees is maintained in other
liabilities. Other deposit account losses are reported in
other non-interest expense.
Note 2. Cash and Due from Banks
At December 31, 2009, TCF was required by Federal Reserve
Board regulations to maintain reserves of $48.8 million in
cash on hand or at the Federal Reserve Bank.