TCF Bank 2007 Annual Report Download - page 81

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2007 Form 10-K | 61
The $75 million of subordinated notes due 2014 have a
fixed-rate coupon of 5% through June 14, 2009, and will
reprice quarterly thereafter at the three-month LIBOR rate
plus 1.63%. The $50 million of subordinated notes due 2015
have a fixed-rate coupon of 5% through March 14, 2010, and
will reprice quarterly thereafter at the three-month LIBOR
rate plus 1.56%. These subordinated notes may be redeemed
by TCF Bank at par after June 14, 2009, and March 14, 2010,
respectively. The $75 million of subordinated notes due 2016
have a fixed-rate coupon of 5.5% until February 1, 2016. These
subordinated notes qualify as Tier 2 or supplementary capi-
tal for regulatory purposes, subject to certain limitations.
For certain equipment leases, TCF utilizes its lease rentals
and underlying equipment as collateral to borrow from other
financial institutions at fixed rates on a non-recourse basis.
In the event of a default by the customer on these financings,
the other financial institution has a first lien on the underly-
ing leased equipment and TCF is only entitled to residual
proceeds in excess of the outstanding borrowing balance.
Additionally, in the case of non-recourse financings, the other
financial institution has no further recourse against TCF.
Note 12. Income Taxes
(In thousands) Current Deferred Total
Year ended December 31, 2007:
Federal $ 91,170 $13,900 $105,070
State 3,100 (2,460) 640
Total $ 94,270 $11,440 $105,710
Year ended December 31, 2006:
Federal $ 112,465 $ (439) $ 112,026
State 1,830 (1,691) 139
Total $114,295 $(2,130) $ 112,165
Year ended December 31, 2005:
Federal $ 120,793 $(7,241) $ 113,552
State 1,788 (62) 1,726
Total $ 122,581 $(7,303) $ 115,278
The effective income tax rate differs from the federal
income tax rate of 35% as a result of the following.
Year Ended December 31,
(In thousands) 2007 2006 2005
Federal income tax rate 35.00% 35.00% 35.00%
Increase (decrease) in income
tax expense resulting from:
State income tax, net
of federal income
tax benefit .11 .03 .29
Deductible stock dividends (1.04) (1.14) (1.17)
Investments in affordable
housing limited
partnerships (.60) (.60) (.64)
Federal settlement of
prior year issue (2.27) ––
Changes in uncertain
tax positions (2.73) (1.72) (3.67)
Other, net (.09) (.16) .49
Effective income tax rate 28.38% 31.41% 30.30%
Effective January 1,2007, TCF adopted Financial Accounting
Standards Board Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, an Interpretation of FASB
Statement No.109 (the Interpretation). This Interpretation
provides guidance on financial statement recognition and
measurement of tax positions taken, or expected to be
taken, in tax returns. The initial adoption of this Interpretation
had no impact on TCF’s financial statements.
A reconciliation of the change in the gross amount,
before related tax effects, of unrecognized tax benefits
from January 1, 2007 to December 31, 2007 is as follows:
(In thousands)
Balance at January 1, 2007 $24,316
Increases for tax positions related to the
current year 2,305
Increases for tax positions related to prior years 211
Decreases for tax positions related to prior years (10,150)
Decreases related to lapse of applicable statutes
of limitation (3,642)
Balance at December 31, 2007 $13,040