TCF Bank 2005 Annual Report Download - page 50

30 TCF Financial Corporation and Subsidiaries
Loan and leases outstanding at December 31, 2005 are shown in the following table by maturity:
At December 31, 2005(1)
Consumer Leasing and
Home Equity Commercial Commercial Equipment Residential Total Loans
(In thousands) and Other Real Estate Business Finance Real Estate and Leases
Amounts due:
Within 1 year $ 277,363 $ 295,257 $215,325 $ 557,442 $ 37,117 $ 1,382,504
After 1 year:
1 to 2 years 284,566 288,520 122,264 375,050 38,046 1,108,446
2 to 3 years 328,047 213,268 30,031 262,042 35,922 869,310
3 to 5 years 563,126 429,162 44,322 259,846 65,299 1,361,755
5 to 10 years 1,362,725 896,283 19,981 44,442 157,622 2,481,053
10 to 15 years 785,104 147,314 14 – 126,995 1,059,427
Over 15 years 1,566,787 29,227 – – 302,601 1,898,615
Total after 1 year 4,890,355 2,003,774 216,612 941,380 726,485 8,778,606
Total $5,167,718 $2,299,031 $431,937 $1,498,822 $763,602 $10,161,110
Amounts due after 1 year on:
Fixed-rate loans and leases $3,112,570 $ 452,654 $ 68,951 $ 941,380 $579,813 $ 5,155,368
Variable- and adjustable-rate loans 1,777,785 1,551,120 147,661 – 146,672 3,623,238
Total after 1 year $4,890,355 $2,003,774 $216,612 $ 941,380 $726,485 $ 8,778,606
(1) Gross of deferred fees and costs. This table does not include the effect of prepayments, which is an important consideration in management’s interest-rate risk analysis.
Company experience indicates that the loans remain outstanding for significantly shorter periods than their contractual terms.
Allowance for Loan and Lease Losses The determination
of the allowance for loan and lease losses is a critical accounting
estimate which involves management’s judgment on a number of
factors such as historical trends in net charge-offs, delinquencies
in the loan and lease portfolio, values of underlying loan and
lease collateral, impaired loan analysis, general economic condi-
tions and management’s assessment of credit risk in the current
loan and lease portfolio. The allowance for loan and lease losses
is increased by the provision for credit losses charged to expense
and reduced by loan and lease charge-offs, net of recoveries.
The leasing and equipment finance portfolio increased $128.4
million from December 31, 2004 to $1.5 billion at December 31,
2005. Winthrop primarily leases technology and data processing
equipment to companies nationwide. Total loan and lease origina-
tions and purchases for TCF Equipment Finance and Winthrop were
$728 million and $117.8 million, respectively, for 2005, compared
with $616 million and $101.8 million, respectively, for 2004. The
backlog of approved transactions increased to $249.2 million at
December 31, 2005, from $195.3 million at December 31, 2004.
TCF’s leasing activity is subject to risk of cyclical downturns and
other adverse economic developments. In an adverse economic
environment, there may be a decline in the demand for some
types of equipment, resulting in a decline in the amount of new
equipment being placed into service as well as a decline in equip-
ment values for equipment previously placed in service.
At December 31, 2005 and 2004, $55.2 million, and $48.5
million, respectively, of TCF’s lease portfolio, were discounted on
a non-recourse basis with other third-party financial institutions
and consequently TCF retains no credit risk on such amounts.
The leasing and equipment finance portfolio tables above include
lease residuals. Lease residuals represent the estimated fair
value of the leased equipment at the expiration of the initial
term of the transaction and are reviewed on an ongoing basis.
Any downward revisions are recorded in the periods in which they
become known. At December 31, 2005, lease residuals totaled
$32.8 million, down from $35.2 million, excluding the leveraged
lease residual, at December 31, 2004.
The decline in residential real estate loans during 2005 was due
to normal amortization of loan balances and loan prepayments.
Management expects that the residential loan portfolio will continue
to decline, which will provide funding for anticipated growth in other
loan or investment categories. At December 31, 2005, TCF’s resi-
dential real estate loan portfolio was comprised of $616.8 million
of fixed-rate loans and $153.6 million of adjustable-rate loans.