TCF Bank 2007 Annual Report Download - page 58

Commitments to lend are agreements to lend to a cus-
tomer provided there is no violation of any condition in the
contract. These commitments generally have fixed expira-
tion dates or other termination clauses and may require
payment of a fee. Since certain of the commitments are
expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future
cash requirements. Collateral predominantly consists of
residential and commercial real estate.
TCF is a member of Visa USA, Inc. (Visa USA) for issuance
and processing of its card transactions. On October 3, 2007,
Visa, Inc. (Visa) completed a restructuring including Visa
USA in preparation for its planned initial public offering
(IPO). As a member of Visa, TCF has an obligation to indem-
nify Visa USA under its bylaws and Visa under a retrospective
responsibility plan, approved as part of Visa’s restructuring,
for contingent losses in connection with certain covered
litigation (“the Visa indemnification”) disclosed in Visa’s
public filings with the Securities and Exchange Commission
(SEC) based on its membership proportion. TCF is not a party
to the lawsuits brought against Visa USA. TCF’s membership
proportion in Visa USA is .12554%. The SEC accounting staff
has concluded that Visa USA member institutions are required
to recognize their portion of the Visa indemnification at
the estimated fair value of such obligation in accordance
with FASB Interpretation No. 45, Guarantor’s Accounting and
Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. Although the deter-
mination of fair value of TCF’s Visa indemnification is highly
judgmental, TCF recognized a charge in the fourth quarter
of 2007 for this obligation totaling $7.7 million.
38 | TCF Financial Corporation and Subsidiaries
Contractual Obligations and Commitments As disclosed in the Notes to Consolidated Financial Statements, TCF has
certain obligations and commitments to make future payments under contracts. At December 31, 2007, the aggregate
contractual obligations (excluding bank deposits) and commitments are as follows.
(In thousands) Payments Due by Period
Less than 1-3 4-5 After 5
Contractual Obligations Total 1 Year Years Years Years
Total borrowings(1) $4,973,448 $582,614 $240,086 $202,008 $3,948,740
Annual rental commitments under non-cancelable
operating leases 220,072 27,304 49,539 40,880 102,349
Campus marketing agreements 49,675 1,985 5,818 5,318 36,554
Construction contracts and land purchase
commitments for future branch sites 8,928 8,928 – – –
Visa indemnification obligation(2) 7,696 7,696 – – –
$5,259,819 $628,527 $295,443 $248,206 $4,087,643
(In thousands) Amount of Commitment – Expiration by Period
Less than 1-3 4-5 After 5
Commitments Total 1 Year Years Years Years
Commitments to lend:
Consumer home equity and other $1,927,001 $ 11,246 $ 27,409 $202,445 $1,685,901
Commercial 621,025 320,003 240,190 31,254 29,578
Leasing and equipment finance 89,206 89,206 – – –
Other 83,686 83,686 – – –
Total commitments to lend 2,720,918 504,141 267,599 233,699 1,715,479
Standby letters of credit and guarantees
on industrial revenue bonds 76,357 52,298 20,971 2,516 572
$2,797,275 $556,439 $288,570 $236,215 $1,716,051
(1) Total borrowings excludes interest.
(2) The payment time is estimated to be less than one year, however the exact date of the payment can not be determined.