TCF Bank 2007 Annual Report Download - page 49

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2007 Form 10-K | 29
Consumer Lending TCF’s consumer home equity loan
portfolio represented 53% and 52% of its total loan and lease
portfolio as of December 31, 2007 and 2006, respectively and
has increased by 10.9% in 2007 and 14.3% in 2006.
TCF’s consumer home equity portfolio is secured by
mortgages filed on residential real estate. At December 31,
2007, 64% of loan balances were secured by first mortgages.
The average loan size secured by a first mortgage was $114
thousand and the average balance of loans secured by a
junior lien position was $35 thousand at December 31, 2007.
At December 31, 2007, 78% of TCF’s consumer home equity
loans consisted of closed-end loans, compared with 79%
at December 31, 2006. TCF’s closed-end home equity loans
require payments of principal and interest over a fixed
term. The average home value based on most recent values
known to TCF securing the loans and lines of credit in this
portfolio was $248 thousand as of December 31, 2007. TCF’s
home equity lines of credit require regular payments of
interest and do not require regular payments of principal.
The average FICO (Fair Isaac Company) credit score at loan
origination for the home equity portfolio was 721 as of
December 31, 2007 and December 31, 2006.
TCF’s consumer home equity underwriting standards
produce adequately secured loans to customers with good
credit scores. Loans with loan-to-value (LTV) ratios in excess
of 90% are only made to very creditworthy customers based
on credit scoring models and other credit underwriting cri-
teria. TCF does not have any subprime lending programs
and does not originate 2/28 adjustable-rate mortgages
(ARM) or Option ARM loans. TCF also does not originate
home equity loans with multiple payment options or loans
with “teaser” interest rates. Although TCF does not have
any programs that target subprime borrowers, in the normal
course of lending to customers loans have been originated
with FICO scores below 620 at lower LTV ratios. Approximately
6% of the consumer home equity portfolio, as of December
31, 2007, was originated at FICO scores below 620.
At December 31, 2007, 24% of the home equity portfolio
carried a variable interest rate tied to the prime rate,
compared with 25% at December 31, 2006. Outstanding
balances on home equity lines of credit were 52% of total
lines of credit at December 31, 2007, compared with 50%
at December 31, 2006.
Commercial Lending Commercial real estate loans
increased $166.7 million from December 31, 2006 to $2.6
billion at December 31, 2007. Variable – and adjustable –
rate loans represented 67% of commercial real estate loans
outstanding at December 31, 2007. Commercial business
loans increased $6.3 million in 2007 to $558.3 million at
December 31, 2007. TCF continues to expand its commercial
business and commercial real estate lending activity gen-
erally to borrowers located in its primary markets. With
a focus on secured lending, approximately 98% of TCF’s
commercial real estate and commercial business loans
were secured either by properties or other business assets
at December 31, 2007. At December 31, 2007, approximately
93% of TCF’s commercial real estate loans outstanding
were secured by properties located in its primary markets.
At December 31, 2007, the construction and development
portfolio had $1.4 million in loans over 30-days delinquent
compared with no such loans at December 31, 2006.