TCF Bank 2010 Annual Report Download - page 94

• 78 • TCF Financial Corporation and Subsidiaries
Additional valuation and related assumption informa-
tion for TCF’s stock option plans related to options issued
in 2008 is presented below. No stock options were issued in
2009 or 2010.
Expected volatility 28.5%
Weighted-average volatility 28.5%
Expected dividend yield 3.5%
Expected term (in years) 6.25 – 6.75
Risk-free interest rate 2.58 – 2.91%
Note 16. Employee Benefit Plans
Employees Stock Purchase Plan The TCF Employees
Stock Purchase Plan, a qualified 401(K) and employee
stock ownership plan, generally allows participants to make
contributions of up to 50% of their covered compensation
on a tax-deferred basis, subject to the annual covered
compensation limitation imposed by the Internal Revenue
Service (“IRS”). TCF matches the contributions of all
participants with TCF common stock at the rate of 50 cents
per dollar for employees with one through four years of
service, up to a maximum company contribution of 3% of
the employee’s covered compensation, 75 cents per dollar
for employees with five through nine years of service, up to
a maximum company contribution of 4.5% of the employ-
ee’s covered compensation, and $1 per dollar for employees
with 10 or more years of service, up to a maximum company
contribution of 6% of the employee’s covered compensation,
subject to the annual covered compensation limitation
imposed by the IRS. Employee contributions vest immediately
while the Company’s matching contributions are subject to
a graduated vesting schedule based on an employee’s years
of service with full vesting after five years. Employees have
the opportunity to diversify and invest their account
balance, including matching contributions, in various
mutual funds or TCF common stock. At December 31, 2010,
the fair value of the assets in the plan totaled $163.4
million and included $116 million invested in TCF common
stock. The Company’s matching contributions are expensed
when made. TCF’s contributions to the plan were $6.9
million in 2010, 2009 and 2008, respectively.
Pension Plan The TCF Cash Balance Pension Plan (the
“Pension Plan”) is a qualified defined benefit plan covering
eligible employees who are at least 21 years old and have
completed a year of eligibility service with TCF. Employees
hired after June 30, 2004 are not eligible to participate in
the Pension Plan. Effective March 31, 2006, TCF amended
the Pension Plan to discontinue compensation credits
for all participants. Interest credits will continue to be
paid until participants’ accounts are distributed from the
Pension Plan. Each month TCF credits participant accounts
with interest on the account balance based on the five-
year Treasury rate plus 25 basis points determined at the
beginning of each year. All participant accounts are vested.
The measurement of the projected benefit obligation,
prepaid pension asset, pension liability and annual pension
expense involves complex actuarial valuation methods and
the use of actuarial and economic assumptions. Due to the
long-term nature of the pension plan obligation, actual
results may differ significantly from the actuarial-based
estimates. Differences between estimates and actual
experience are required to be deferred and under certain
circumstances amortized over the future expected working
lifetime of plan participants. As a result, these differences
are not recognized when they occur. TCF closely monitors
all assumptions and updates them annually. The Company
does not consolidate the assets and liabilities associated
with the Pension Plan.
Postretirement Plan TCF provides health care benefits
for eligible retired employees (the “Postretirement Plan”).
Effective January 1, 2000, TCF modified the Postretirement
Plan for employees not yet eligible for benefits under the
Postretirement Plan by eliminating the Company subsidy.
The plan provisions for full-time and retired employees then
eligible for these benefits were not changed. Employees
retiring after December 31, 2009 are no longer eligible to
participate in the Postretirement Plan. The Postretirement
Plan is not funded.