TCF Bank 2006 Annual Report Download - page 26

Under the Bank Holding Company Act (“BHCA”), a bank
holding company must obtain FRB approval before acquir-
ing more than 5% control, or substantially all of the assets,
of another bank, or bank or financial holding company,
or merging or consolidating with such a bank or holding
company. The BHCA also generally prohibits a bank holding
company, with certain exceptions, from acquiring direct or
indirect ownership or control of more than 5% of the voting
shares of any company which is not a bank or bank holding
company, or from engaging directly or indirectly in activi-
ties other than those of banking, managing or controlling
banks, providing services for its subsidiaries, or conducting
activities permitted by the FRB as being closely related to
the business of banking.
Restrictions on Change in Control Federal and state
laws and regulations contain a number of provisions which
impose restrictions on changes in control of financial insti-
tutions such as TCF Bank, and which require regulatory
approval prior to any such changes in control. The Restated
Certificate of Incorporation of TCF Financial and a Share-
holder Rights Plan adopted by TCF Financial contain, among
other items, features which may inhibit a change in control
of TCF Financial.
Acquisitions and Interstate Operations Under federal
law, interstate merger transactions may be approved by
federal bank regulators without regard to whether such
transactions are prohibited by the law of any state, unless
the home state of one of the banks opted out of the Riegle-
Neal Interstate Banking and Branching Act of 1994 by
adopting a law after the date of enactment of such act, and
prior to June 1, 1997, which applies equally to all out-of-
state banks and expressly prohibits merger transactions
involving out-of-state banks. Interstate acquisitions of
branches by banks are permitted only if the law of the state
in which the branches are located permits such acquisitions.
Interstate mergers and branch acquisitions may also be
subject to certain nationwide and statewide insured deposit
maximum concentration levels or other limitations.
Insurance of Accounts; Depositor Preference In
February 2006, the Federal Deposit Insurance Act of 2005
(“FDIC Act”) was enacted into law reforming the bank
deposit insurance system. The FDIC has finalized regulations
or has drafted proposed regulations to implement many of
the FDIC Act provisions.
The deposits of TCF Bank are insured by the FDIC up to
$100,000 per insured depositor, except certain types of
retirement accounts, which are insured up to $250,000 per
insured depositor. During 2006, FDIC regulations merged
the former Saving Association Insurance Fund (“SAIF”) and
Bank Insurance Fund (“BIF”) into the Deposit Insurance
Fund (“DIF”).
The FDIC has set a designated reserve ratio of 1.25%
($1.25 against $100 of insured deposits) for the DIF. The
FDIC Act provides the FDIC Board of Directors the authority
to set the designated reserve ratio between 1.15% and 1.50%.
The FDIC must adopt a restoration plan when the reserve ratio
falls below 1.15% and begin paying dividends when the
reserve ratio exceeds 1.35%. There is no requirement to
achieve a specific ratio within a given time frame. The FDIC
Board of Directors has not declared any dividends as of
December 31, 2006. The DIF reserve ratio calculated by the
FDIC that was in effect at December 31, 2006 was 1.22%.
In 2006, the annual insurance premiums on bank deposits
insured by the DIF varied between $0 per $100 of deposits
for banks classified in the highest capital and supervisory
evaluation categories to $.27 per $100 of deposits for banks
classified in the lowest capital and supervisory evaluation
categories. Annual insurance premiums have not been
required for TCF Bank for 2006, 2005, and 2004.
In 2006, FDIC regulations established a new risk-based
assessment system under which deposit insurance assess-
ments are based upon supervisory ratings for all insured
institutions, financial ratios for most institutions, and long-
term debt issuer ratings for large institutions that have
them. Starting in the second quarter of 2007, under new FDIC
regulations, annual insurance premiums on bank deposits
insured by the DIF may vary between $.05 per $100 of deposits
for banks assigned in the lowest risk category to $.43 per
$100 of deposits for banks assigned in the highest risk
category. As of December 31, 2006, TCF Bank has not been
assigned to a new risk category by the FDIC.
The FDIC Act required the FDIC to establish a one-time
historical assessment credit that provides banks a credit
that can be used to offset insurance assessments starting
6TCF Financial Corporation and Subsidiaries