TCF Bank 2011 Annual Report Download - page 52

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TCF Inventory Finance The following table summarizes the TCF Inventory Finance portfolio by marketing segment.
At December 31,
(Dollars in thousands) 2011 2010
Equipment Type Balance
Percent
of Total Balance
Percent
of Total
Lawn and garden $324,607 52.0% $441,691 55.8%
Powersports and other 247,490 39.6 220,472 27.8
Electronics and appliances 52,603 8.4 130,191 16.4
Total $624,700 100.0% $792,354 100.0%
TCF Inventory Finance continues to expand its core
programs during 2011 and signed exclusive agreements with
Alumacraft Boat Co. (“Alumacraft”) and BRP. TCF expects
to ramp-up funding of BRP dealers during the first half of
2012. Decreases in inventory finance loans were primarily
due to the termination of one lawn and garden program and
the transitioning of an electronics and appliance program to
a servicing-only program. In the third quarter of 2010, TCF
expanded into the powersports industry by entering into an
agreement with Arctic Cat Sales Inc. to become the exclusive
inventory finance source for Arctic Cat’s Canadian dealers.
This agreement led to the acquisition of $125.8 million in
loans towards the end of the third quarter of 2010.
Credit Quality The following tables summarize TCF’s loan
and lease portfolio based on what TCF believes are the
most important credit quality data that should be used to
understand the overall condition of the portfolio.
• Within the performing loans and leases, TCF classifies
customers within regulatory classification guidelines.
Loans and leases that are “classified” mean that
management has concerns regarding the ability of the
borrowers to meet existing loan or lease terms and
conditions, but may never become non-performing or
result in a loss.
• Performing loans that are 60+ days delinquent have
a higher potential to become non-performing and
generally are a leading indicator for future charge-
off trends.
• Accruing TDRs include loans to borrowers where a
payment modification (but not a reduction of principal)
has been made such that TCF has granted a concession
in terms to improve the likelihood of collection of
all principal and interest owed.
• Non-accrual loans and leases generally have been
charged down to the estimated fair value of the
collateral less selling costs or reserved for expected
loss upon workout.
Included in Note 7 of Notes to Consolidated Financial
Statements are disclosures of loans considered to be
“impaired” for accounting purposes. Impaired loans
comprise a portion of non-accrual loans and accruing
TDRs and therefore are not additive to the information
in the following table. Impaired loan accounting policies
prescribe specific methodologies for determining the
related allowance for loan and lease losses. In addition,
TCF has modified certain loans and leases to troubled
borrowers where a concession was not granted and thus
are not considered TDRs. These other modified loans and
leases totaled $39.4 million and $135.5 million at December
31, 2011 and 2010, respectively, and are further discussed
under “Loan Modifications”.
34 TCF Financial Corporation and Subsidiaries