TCF Bank 2005 Annual Report Download - page 77

572005 Form 10-K
rate of interest for the remaining term-to-maturity, subject
to standard terms and conditions. The probability that these
advances and repurchase agreements will be called depends pri-
marily on the level of related interest rates during the call period.
At December 31, 2005, the contract rate exceeded the market
rate on all of the fixed-rate callable advances and repurchase
agreements. The next call year and stated maturity year for
the callable advances and repurchase agreements outstanding
at December 31, 2005 were as follows:
(Dollars in thousands)
Weighted- Weighted-
Next Average Stated Average
Year Call Rate Maturity Rate
2006 $ 425,500 5.23% $ 3,000 5.46%
2008 1,100,000 4.11 – –
2009 – – 122,500 5.24
2010 300,000 4.33 100,000 6.00
2011 – – 200,000 4.85
2015 – – 1,400,000 4.16
Total $1,825,500 4.41 $1,825,500 4.41
TCF Bank has $75 million of subordinated notes due 2014 and
$50 million of subordinated notes due 2015. The $75 million notes
bear interest at a fixed rate of 5.00% through June 14, 2009, and
will reprice quarterly thereafter at the three-month LIBOR rate
plus 1.63%. The $50 million notes bear interest at a fixed rate of
5.00% through March 14, 2010, and will reprice quarterly thereafter
at the three-month LIBOR rate plus 1.56%. These subordinated
notes may be redeemed by TCF Bank at par after June 14, 2009, and
March 14, 2010, respectively. In February 2006, TCF Bank issued
$75 million of subordinated notes with a fixed-rate of 5.50% until
maturity in 2016. These notes qualify as Tier 2 or supplementary
capital for regulatory purposes, subject to certain limitations.
For certain equipment leases, TCF utilizes its lease rentals
and underlying equipment as collateral to borrow from other
financial institutions at fixed rates on either a partial recourse
or non-recourse basis. In the event of a default by the customer
on these financings, the other financial institution has a first
lien on the underlying leased equipment. In the case of non-
recourse financings, the other financial institution has no further
recourse against TCF.
Note 13. Income Taxes
Income tax expense consists of:
(In thousands) Current Deferred Total
Year ended December 31, 2005:
Federal $120,793 $ (7,241) $113,552
State 1,788 (62) 1,726
Total $122,581 $ (7,303) $115,278
Year ended December 31, 2004:
Federal $148,043 $(21,765) $ 126,278
State 3,918 (713) 3,205
Total $151,961 $(22,478) $ 129,483
Year ended December 31, 2003:
Federal $111,922 $ (4,649) $ 107,273
State 4,830 (198) 4,632
Total $116,752 $ (4,847) $ 111,905
The effective income tax rate differs from the federal income tax rate of 35% as a result of the following:
Year Ended December 31,
(In thousands) 2005 2004 2003
Federal income tax rate 35.00% 35.00% 35.00%
Increase (decrease) in income tax expense resulting from:
State income tax, net of federal income tax benefit .29 .80 .92
Deductible stock dividends (1.17) (1.01) (1.00)
Investments in affordable housing limited partnerships (.64) (.65) (.43)
Changes in uncertain tax positions (3.67) (.68) –
Other, net .49 .22 (.35)
Effective income tax rate 30.30% 33.68% 34.14%