TCF Bank 2011 Annual Report Download - page 58

Allowance for Loan and Lease Losses The
determination of the allowance for loan and lease losses
is a critical accounting estimate. TCF’s methodologies for
determining and allocating the allowance for loan and
lease losses focus on ongoing reviews of larger individual
loans and leases, historical net charge-offs, delinquencies
in the loan and lease portfolio, the level of impaired and
non-accrual assets, values of underlying loan and lease
collateral, the overall risk characteristics of the portfolios,
changes in character or size of the portfolios, geographic
location, year of origination, prevailing economic
conditions and other relevant factors. The various factors
used in the methodologies are reviewed on a periodic basis.
The Company considers the allowance for loan and
lease losses of $255.7 million appropriate to cover
probable losses incurred in the loan and lease portfolios
as of December 31, 2011. However, no assurance can be
given that TCF will not, in any particular period, sustain
loan and lease losses that are sizable in relation to the
amount reserved, or that subsequent evaluations of the
loan and lease portfolio, in light of factors then prevailing,
including economic conditions, TCF’s ongoing credit
review process or regulatory requirements, will not require
significant changes in the balance of the allowance for
loan and lease losses. Among other factors, an economic
slowdown, increasing levels of unemployment and/or a
decline in commercial or residential real estate values in
TCF’s markets may have an adverse impact on the current
adequacy of the allowance for loan and lease losses by
increasing credit risk and the risk of potential loss.
The total allowance for loan and lease losses is generally
available to absorb losses from any segment of the
portfolio. The allocation of TCF’s allowance for loan and
lease losses disclosed in the following table is subject to
change based on changes in the criteria used to evaluate
the allowance and is not necessarily indicative of the trend
of future losses in any particular portfolio.
In conjunction with Note 7 of Notes to Consolidated
Financial Statements, the following includes detailed
information regarding TCF’s allowance for loan and lease
losses and net charge-offs.
The allocation of TCF’s allowance for loan and lease losses and credit loss reserves is as follows.
Allowance as a Percentage of Total
Loans and Leases Outstanding
At December 31, At December 31,
(Dollars in thousands) 2011 2010 2009 2008 2007 2011 2010 2009 2008 2007
Consumer real estate:
First mortgage lien $115,740 $105,634 $ 89,542 $ 47,279 $16,494 2.44% 2.16% 1.80% .97% .35%
Junior lien 67,695 67,216 75,424 51,157 15,102 3.14 2.97 3.25 2.11 .64
Total consumer real estate 183,435 172,850 164,966 98,436 31,596 2.66 2.42 2.27 1.35 .45
Consumer other 1,114 1,653 2,476 2,664 2,059 2.89 4.22 4.82 4.26 .92
Total consumer real estate
and other 184,549 174,503 167,442 101,100 33,655 2.66 2.43 2.28 1.37 .46
Commercial real estate 40,446 50,788 37,274 39,386 25,891 1.26 1.53 1.14 1.32 1.01
Commercial business 6,508 11,690 6,230 11,865 7,077 2.59 3.68 1.39 2.34 1.27
Total commercial 46,954 62,478 43,504 51,251 32,968 1.36 1.71 1.17 1.47 1.06
Leasing and equipment finance 21,173 26,301 32,063 20,058 14,319 .67 .83 1.04 .81 .68
Inventory finance 2,996 2,537 1,462 33 – .48 .32 .31 .75 –
Total allowance for loan
and lease losses $255,672 $265,819 $244,471 $172,442 $80,942 1.81 1.80 1.68 1.29 .66
Other credit loss reserves:
Reserves for unfunded
commitments 1,829 2,353 3,850 1,510 399 N.A. N.A. N.A. N.A. N.A.
Total credit loss reserves $257,501 $268,172 $248,321 $173,952 $81,341 1.82% 1.81% 1.70% 1.30% .66%
N.A. Not Applicable.
40 TCF Financial Corporation and Subsidiaries