TCF Bank 2007 Annual Report Download - page 82

62 | TCF Financial Corporation and Subsidiaries
The total amount of unrecognized tax benefits that, if
recognized, would affect the tax provision and the effective
income tax rate is $6.5 million, net of related tax benefit
effects.
TCF’s policy is to report interest and penalties, if any,
related to unrecognized tax benefits in income tax expense
in the Consolidated Statements of Income. The gross amount
of accrued interest at December 31, 2007 is $1.4 million.
TCF recorded a reduction of accrued interest of $768 thou-
sand during 2007.
TCF’s federal income tax returns are open and subject
to examination from the 2004 tax return year and forward.
TCF’s various state income tax returns are generally open
from the 2003 and later tax return years based on individual
state statutes of limitation. Changes in the amount of
unrecognized tax benefits within the next twelve months
from normal expirations of statutes of limitation are not
expected to be material. TCF is under examination by certain
states. TCF does not currently expect to resolve these
examinations within the next twelve months. Developments
in these examinations or other events could cause manage-
ment to change its judgment about the amount of unrecog-
nized tax benefits. Due to the amount and nature of these
possible events, an estimate of the range of reasonably
possible changes in the amount of unrecognized tax bene-
fits cannot be made.
The significant components of the Company’s deferred
tax assets and deferred tax liabilities are as follows.
At December 31,
(In thousands) 2007 2006
Deferred tax assets:
Stock compensation and deferred
compensation plans $ 30,766 $ 30,817
Allowance for loan and lease losses 30,968 21,531
Securities available for sale 5,868 11,748
Net operating losses and credits 7,065 6,010
Valuation allowance (2,131) (2,447)
Other 7,161 5,199
Total deferred tax assets 79,697 72,858
Deferred tax liabilities:
Lease financing 109,455 94,928
Loan fees and discounts 25,412 24,000
Premises and equipment 13,143 9,220
Prepaid expenses 7,907 6,941
Pension and postretirement benefits 5,078 1,241
Investments in affordable housing 4,455 3,244
Investment in FHLB Stock 3,169 3,112
Other 3,186 1,929
Total deferred tax liabilities 171,805 144,615
Net deferred tax liabilities $ 92,108 $ 71,757
Note 13. Stockholders’ Equity
Restricted Retained Earnings Retained earnings at
December 31, 2007 includes approximately $134.4 million
for which no provision for federal income taxes has been
made. This amount represents earnings legally appropriated
to thrift bad debt reserves and deducted for federal income
tax purposes in prior years and is generally not available
for payment of cash dividends or other distributions to
shareholders. Future payments or distributions of these
appropriated earnings could invoke a tax liability for TCF
based on the amount of the distributions and the tax rates
in effect at that time.
Shareholder Rights Plan Each share of TCF common
stock outstanding includes one preferred share purchase
right. TCF’s preferred share purchase rights will become
exercisable only if a person or group acquires or announces
an offer to acquire 15% or more of TCF’s common stock.
When exercisable, each right will entitle the holder to buy
one one-hundredth of a share of a new series of junior par-
ticipating preferred stock at a price of $200. In addition,
upon the occurrence of certain events, holders of the rights
will be entitled to purchase either TCF’s common stock or
shares in an “acquiring entity” at half of the market value.
TCF’s Board of Directors is generally entitled to redeem the
rights at $.001 per right at any time before they become
exercisable. The rights will expire on June 9, 2009, if not
previously redeemed or exercised.
Treasury Stock and Other Treasury stock and other
consists of the following.
At December 31,
(In thousands) 2007 2006
Treasury stock, at cost $(126,020) $(27,827)
Shares held in trust for deferred
compensation plans, at cost (39,666) (32,945)
Total $(165,686) $(60,772)
TCF purchased 3.9 million, 3.9 million and 3.5 million
shares of its common stock during the years ended December
31, 2007, 2006 and 2005, respectively. At December 31, 2007,
TCF had 5.4 million shares remaining in its stock repurchase
programs authorized by the Board.
Shares Held in Trust for Deferred Compensation
Plans TCF has certain deferred compensation plans that
previously allowed eligible executives, senior officers and
certain other employees to defer payment of up to 100% of
their base salary and bonus as well as grants of restricted