TCF Bank 2010 Annual Report Download - page 89

• 73 •
2010 Form 10-K
The $71 million of subordinated notes due 2014 will
reprice quarterly at the three-month LIBOR rate plus 1.63%.
These subordinated notes may be redeemed by TCF Bank at
par once a quarter at TCF’s discretion. The $50 million of
subordinated notes due 2015 will reprice quarterly at the
three-month LIBOR rate plus 1.56%. These subordinated
notes may be redeemed by TCF Bank at par once a quarter at
TCF’s discretion. The $74.6 million of subordinated notes due
2016 have a fixed-rate coupon of 5.5% until February 1, 2016.
All of these subordinated notes qualify as Tier 2 or supple-
mentary capital for regulatory purposes, subject to certain
limitations.
TCF’s trust preferred securities are callable, with Federal
Reserve approval, at par beginning August 15, 2013 or within
90 days of the occurrence of a Capital Treatment Event, as
defined by TCF’s trust preferred securities Supplemental
Indenture dated August 19, 2008.
During the second quarter of 2010, TCF entered into a $90
million senior unsecured variable-rate term note maturing in
July 2012. The loan is prepayable and contains certain cov-
enants common to such agreements. TCF was not in default
with respect to any covenants at December 31, 2010.
For certain equipment leases, TCF sells its minimum
lease rentals to other financial institutions at fixed rates
on a non-recourse basis with its underlying equipment as
collateral as a credit risk reduction tool and such transaction
did not qualify as sales. In the event of a default by customer
on these leases, the other financial institution has a first lien
on the underlying leased equipment and TCF is only entitled
to residual proceeds in excess of the outstanding borrowing
balance. In these 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, 2010:
Federal $49,462 $24,740 $74,202
State 11,695 1,868 13,563
Total $61,157 $26,608 $87,765
Year ended December 31, 2009:
Federal $ 4,311 $33,775 $38,086
State 6,285 1,483 7,768
Total $10,596 $35,258 $ 45,854
Year ended December 31, 2008:
Federal $46,627 $24,191 $70,818
State 1,715 4,169 5,884
Total $48,342 $28,360 $ 76,702
The effective income tax rate differs from the federal
income tax rate of 35% as a result of the following.
Year Ended December 31,
2010 2009 2008
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 3.71 3.81 1.86
Investments in
affordable housing (.78) (1.42) (.77)
Deductible stock dividends (.25) (.85) (1.60)
Changes in uncertain
tax positions (.15) (3.42) .57
Compensation deduction
limitations .18 .75 .77
Deferred tax adjustments
due to law changes – .35 1.40
Non-controlling interest
tax effect (.49) .11 –
Other, net (.29) .27 .07
Effective income tax rate 36.93% 34.60% 37.30%
A reconciliation of the change in the gross amount,
before related tax effects, of unrecognized tax benefits
from January 1, 2010 to December 31, 2010 is as follows:
(In thousands)
Balance at January 1, 2010 $2,857
Increases for tax positions related to the current year 562
Decreases for tax positions related to prior years (251)
Decreases related to lapses of applicable statutes
of limitation (704)
Balance at December 31, 2010 $2,464
The total amount of unrecognized tax benefits that,
if recognized, would affect the tax provision and the
effective income tax rate is $1 million, net of related
tax benefit effects. The gross amount of accrued interest
on unrecognized tax benefits was $218 thousand at
December 31, 2010. TCF recorded a reduction of accrued
interest of $154 thousand and $419 thousand during 2010
and 2009, respectively.