TCF Bank 2005 Annual Report Download - page 79

592005 Form 10-K
Note 15. Regulatory Capital Requirements
TCF is subject to various regulatory capital requirements adminis-
tered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory, and possibly
additional discretionary, actions by the federal banking agencies
that could have a direct material effect on TCF’s financial
statements. Also, in general, TCF Bank may not declare or pay a
dividend to TCF in excess of 100% of its net profits for that year
combined with its retained net profits for the preceding two cal-
endar years without prior approval of the Office of the Comptroller
of the Currency (“OCC”).
The following table sets forth TCF’s and TCF Bank’s regulatory tier 1 leverage, tier 1 risk-based and total risk-based capital levels, and
applicable percentages of adjusted assets, together with the minimum and well-capitalized capital requirements:
Minimum Well-Capitalized
Actual Capital Requirement Capital Requirement
(Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
As of December 31, 2005:
Tier 1 leverage capital
TCF $ 863,955 6.61% $392,306 3.00% N.A. N.A.
TCF Bank 835,121 6.39 392,000 3.00 653,333 5.00%
Tier 1 risk-based capital
TCF 863,955 8.79 393,128 4.00 589,693 6.00
TCF Bank 835,121 8.52 392,275 4.00 588,413 6.00
Total risk-based capital
TCF 1,049,615 10.68 786,257 8.00 982,821 10.00
TCF Bank 1,020,781 10.41 784,551 8.00 980,688 10.00
As of December 31, 2004:
Tier 1 leverage capital
TCF $ 803,870 6.63% $363,940 3.00% N.A. N.A.
TCF Bank 775,100 6.41 362,911 3.00 604,852 5.00%
Tier 1 risk-based capital
TCF 803,870 9.12 352,592 4.00 528,888 6.00
TCF Bank 775,100 8.81 351,865 4.00 527,798 6.00
Total risk-based capital
TCF 958,900 10.88 705,185 8.00 881,481 10.00
TCF Bank 930,130 10.57 703,730 8.00 879,663 10.00
N.A. Not Applicable.
At December 31, 2005, TCF and TCF Bank exceeded their regu-
latory capital requirements and are considered “well-capitalized”
under guidelines established by the FRB and the OCC pursuant to the
Federal Deposit Insurance Corporation Improvement Act of 1991.
Note 16. Incentive Stock Program
The TCF Financial 1995 Incentive Stock Program (the “Program”)
was adopted to enable TCF to attract and retain key personnel.
Under the Program, no more than 5% of the shares of TCF common
stock outstanding on the date of initial shareholder approval may
be awarded. At December 31, 2005, there were 4,692,003 shares
reserved for issuance under the Program, including 259,800
shares related to outstanding stock options.
At December 31, 2005, there were 1,074,676 shares of
performance-based restricted stock that will vest only if certain
earnings per share goals are achieved by 2008.
Failure to achieve the goals will result in all or a portion of
the shares being forfeited. Other restricted stock grants vest over
periods from three to seven years. The weighted-average grant
date fair value of restricted stock was $27.78, $28.14 and
$22.50 for shares granted in 2005, 2004 and 2003, respectively.
Compensation expense for restricted stock totaled $5.8 million,
$6.9 million and $9.7 million in 2005, 2004 and 2003, respectively.
TCF has also issued stock options under the Program that
generally become exercisable over a period of one to 10 years from
the date of the grant and expire after 10 years. All outstanding
options have a fixed exercise price equal to the market price of
TCF common stock on the date of grant. As of December 31, 2005
and 2004, all outstanding stock options are vested.