TCF Bank 2005 Annual Report Download - page 78

58 TCF Financial Corporation and Subsidiaries
The significant components of the Company’s deferred tax
assets and deferred tax liabilities are as follows:
At December 31,
(In thousands) 2005 2004
Deferred tax assets:
Restricted stock and deferred
compensation plans $ 33,225 $ 37,819
Allowance for loan and lease losses 20,780 27,422
Securities available for sale 12,028 796
Other 6,196 9,427
Total deferred tax assets 72,229 75,464
Deferred tax liabilities:
Lease financing 95,541 114,619
Loan fees and discounts 22,466 19,339
Mortgage servicing rights 10,996 14,090
Pension plan 8,124 9,464
Premises and equipment 5,429 8,273
Investments in FHLB Stock 3,116 3,066
Investments in affordable housing 3,021 2,101
Other 6,205 5,715
Total deferred tax liabilities 154,898 176,667
Net deferred tax liabilities $ 82,669 $101,203
The company has determined that a valuation allowance for
deferred tax assets is not necessary.
Note 14. Stockholders’ Equity
Restricted Retained Earnings Retained earnings at
December 31, 2005 includes approximately $134.4 million for
which no provision for federal income taxes has been made.
This amount represents earnings legally appropriated to bad
debt reserves and deducted for federal income tax purposes
and is generally not available for payment of cash dividends
or other distributions to shareholders. Future payments or dis-
tributions of these appropriated earnings could invoke a tax
liability for TCF based on the amount of the distributions and
the tax rates in effect at that time.
Shareholder Rights Plan Each share of TCF common stock
outstanding includes one preferred share purchase right. TCF’s
preferred share purchase rights will become exercisable only if
a person or group acquires or announces an offer to acquire 15%
or more of TCF’s common stock. When exercisable, each right will
entitle the holder to buy one one-hundredth of a share of a new
series of junior participating preferred stock at a price of $200.
In addition, upon the occurrence of certain events, holders of the
rights will be entitled to purchase either TCF’s common stock or
shares in an “acquiring entity” at half of the market value. TCF’s
Board of Directors (the “Board”) is generally entitled to redeem
the rights at $.001 per right at any time before they become
exercisable. The rights will expire on June 9, 2009, if not previously
redeemed or exercised.
Treasury Stock and Other Treasury stock and other consists
of the following:
At December 31,
(In thousands) 2005 2004
Treasury stock, at cost $ (945,159) $(862,543)
Shares held in trust for deferred
compensation plans, at cost (50,493) (70,775)
Unamortized stock compensation (20,386) (13,199)
Total $(1,016,038) $(946,517)
TCF purchased 3.5 million, 4 million and 6.9 million shares of its
common stock during the years ended December 31, 2005, 2004
and 2003, respectively. On May 21, 2005, TCF’s Board authorized
the repurchase of up to an additional 5% of TCF’s common stock,
or 6.7 million shares. At December 31, 2005, TCF had 6.7 million
shares remaining in its stock repurchase programs authorized by
the Board. The increase in unamortized stock compensation is pri-
marily due to a performance-based restricted stock grant to TCF’s
Chairman of 300,000 shares of TCF common stock. This grant was
made on January 25, 2005. The performance period for this grant
begins January 1, 2006 and ends December 31, 2008.
Shares Held in Trust for Deferred Compensation Plans
TCF has deferred compensation plans that allowed eligible execu-
tives, senior officers and certain other employees and Directors
to defer payment of up to 100% of their base salary and bonus
as well as grants of restricted stock. There are no company con-
tributions to these plans, other than payment of administrative
expenses. The amounts deferred are invested in TCF stock or other
publicly traded stocks, bonds or mutual funds. At December 31,
2005, the fair value of the assets in the plans totaled $179.8 mil-
lion and included $172.9 million invested in TCF common stock.
The cost of TCF common stock held by TCF’s deferred compensa-
tion plans is reported separately in a manner similar to treasury
stock (that is, changes in fair value are not recognized) with a
corresponding deferred compensation obligation reflected in
additional paid-in capital. The decrease in shares held in trust
for deferred compensation plans from December 31, 2004 to
December 31, 2005 was due to elections by certain executives
and senior management to un-defer previously deferred unvested
stock grants, as allowed under the new Section 409A of the
Internal Revenue Code.