TCF Bank 2011 Annual Report Download - page 107

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Note 18. Financial Instruments with
Off-Balance Sheet Risk
TCF is a party to financial instruments with off-balance sheet
risk, primarily to meet the financing needs of its customers.
These financial instruments, which are issued or held for
purposes other than trading, involve elements of credit and
interest-rate risk in excess of the amount recognized in the
Consolidated Statements of Financial Condition.
TCF’s exposure to credit loss, in the event of non-
performance by the counterparty to the financial
instrument, for commitments to extend credit and standby
letters of credit is represented by the contractual amount
of the commitments. TCF uses the same credit policies in
making these commitments as it does for making direct
loans. TCF evaluates each customer’s creditworthiness on
a case-by-case basis. The amount of collateral obtained is
based on a credit evaluation of the customer.
Financial instruments with off-balance sheet risk are
summarized as follows.
At December 31,
(In thousands) 2011 2010
Commitments to extend credit:
Consumer real estate and other $1,349,779 $1,444,619
Commercial 279,076 277,427
Leasing and equipment finance 177,534 148,597
Total commitments to extend credit 1,806,389 1,870,643
Standby letters of credit and
guarantees on industrial revenue bonds 26,964 31,062
Total $1,833,353 $1,901,705
Commitments to Extend Credit Commitments to extend
credit are agreements to lend provided there is no violation
of any condition in the contract. These commitments
generally have fixed expiration dates or 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 to secure
these commitments predominantly consists of residential
and commercial real estate.
Standby Letters of Credit and Guarantees on
Industrial Revenue Bonds Standby letters of credit and
guarantees on industrial revenue bonds are conditional
commitments issued by TCF guaranteeing the performance
of a customer to a third-party. These conditional
commitments expire in various years through 2016.
Collateral held primarily consists of commercial real estate
mortgages. Since the conditions under which TCF is required
to fund these commitments may not materialize, the
cash requirements are expected to be less than the total
outstanding commitments.
892011 Form 10-K