TCF Bank 2011 Annual Report Download - page 87

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Subsequent to the acquisition of Gateway One in
2011, TCF sold $37.4 million of consumer auto loans with
servicing retained and received cash of $37.4 million,
resulting in gains of $1.1 million. Related to these sales,
TCF retained an interest-only strip of $2.2 million and
assumed contractual recourse liabilities of $321 thousand.
At December 31, 2011, interest only strips and contractual
recourse liabilities totaled $22.4 million and $6 million,
respectively. No servicing assets or liabilities were
recorded within TCF’s Consolidated Statements of Financial
Condition, as the contractual servicing fees are adequate
to compensate TCF for its servicing responsibilities. The
unpaid principal balance of auto loans serviced for third
parties was $425.1 million at December 31, 2011.
Future minimum lease payments receivable for direct
financing, sales-type leases and operating leases as of
December 31, 2011 are as follows.
(In thousands) Total
2012 $ 838,237
2013 574,518
2014 354,925
2015 187,331
2016 77,801
Thereafter 23,499
Total $2,056,311
The aggregate amount of loans to non-management
directors of TCF and their related interests was $21.3
million and $7.4 million at December 31, 2011 and 2010,
respectively. During 2011, $19.5 million in new loans were
made and $5.5 million of loans were repaid. All loans to
outside directors and their related interests were made
in the ordinary course of business on normal credit terms,
including interest rates and collateral, as those prevailing
at the time for comparable transactions with unrelated
persons. The aggregate amount of loans to executive
officers of TCF was $97 thousand at December 31, 2011
and 2010. In the opinion of management, the above
mentioned loans to outside directors and their related
interests and executive officers do not represent more
than a normal risk of collection.
Acquired Loans and Leases During the year ended
2011, TCF paid $67.1 million to acquire leasing and equipment
finance loans and leases having remaining contractual
principal cash flows including residuals on leases of $69.9
million and paid $5.9 million to acquire inventory finance
loans having a portfolio balance of $6 million. See Note 2
for information regarding loans acquired with Gateway One.
During the year ended 2010, TCF paid $186.8 million and
$168.6 million to acquire leasing and equipment finance and
inventory finance loans and leases, respectively, with portfolio
balances of $186.8 million and $168.4 million, respectively.
Within TCF’s $371.9 million acquired loan and lease
portfolios at December 31, 2011, there are certain loans
which had experienced credit quality deterioration at the
time of acquisition. These loans had outstanding principal
balances of $10.8 million and $13.7 million at December 31,
2011 and December 31, 2010, respectively.
The excess of expected cash flows to be collected over
the initial fair value of the acquired portfolios is referred to
as the accretable yield and is accreted into interest income
over the estimated life of the acquired portfolios using the
effective yield method. The accretable yield is affected by
changes in interest rate indices for variable-rate acquired
portfolios, changes in prepayment assumptions and
changes in the expected principal and interest payments
over the estimated life of the loan or lease. These loans
and leases are classified as accruing and interest income
continues to be recognized unless expected credit losses
exceed the non-accretable discount. These acquired
loans and leases do not have an allowance for loan and
lease losses recorded against them as the non-accretable
discount is adequate to absorb expected remaining credit
losses. In the future, if TCF is unable to collect the expected
cash flows or reduces its expectations for cash flows below
the current level, an allowance for credit losses will be
established on these acquired portfolios.
The non-accretable discount on loans acquired with
deteriorated credit quality was $946 thousand and $769
thousand at December 31, 2011 and December 31, 2010,
respectively. The accretable discount to be recognized in
income for these loans was $754 thousand at December 31,
2011 and $207 thousand at December 31, 2010. Accretion
of $157 thousand and $169 thousand was recorded for the
years ended December 31, 2011 and 2010, respectively.
692011 Form 10-K