TCF Bank 2012 Annual Report Download - page 30

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TCF is subject to examinations and challenges
by tax authorities.
TCF is subject to federal and state income tax regulations,
which often require interpretation due to their complexity.
Changes in income tax regulations or in how the regulations
are interpreted could have a material adverse effect on
TCF’s results of operations. In the normal course of business,
TCF is routinely subject to examinations and challenges
from federal and state taxing authorities regarding the
amount of taxes due in connection with investments TCF
has made and the businesses in which it has engaged.
Recently, federal and state taxing authorities have become
increasingly aggressive in challenging tax positions taken
by financial institutions. These tax positions may relate to
tax compliance, sales and use, franchise, gross receipts,
payroll, property and income tax issues, including tax base,
apportionment and tax credit planning. The challenges
made by taxing authorities may result in adjustments to the
timing or amount of taxable income or deductions, or the
allocation of income among tax jurisdictions. If any such
challenges are made and are not resolved in TCF’s favor,
they could have a material adverse effect on TCF’s financial
condition and results of operations.
Additionally, if TCF’s Real Estate Investment Trust
(“REIT”) affiliate fails to qualify as a REIT, or if states
enact legislation taxing REITs or related entities, TCF’s tax
expense would increase. TCF’s REIT and related companies
must meet specific provisions of the Internal Revenue
Code of 1986, as amended, and state tax laws. Use of
REITs is and has been the subject of federal and state
audits, litigation with state taxing authorities and tax
policy debates by various state legislatures.
Significant legal actions could subject TCF
to substantial uninsured liabilities.
TCF is subject to various claims related to its operations.
These claims and legal actions, including supervisory
actions by its regulators, could involve large monetary
claims or penalties, as well as significant defense costs.
To protect itself from the cost of these claims, TCF
maintains insurance coverage in amounts and with
deductibles that it believes are appropriate for its
operations. However, TCF’s insurance coverage only
covers certain types of liability, and such insurance may
not continue to be available to TCF at a reasonable cost,
or at all. As a result, TCF may be exposed to substantial
uninsured liabilities, which could have a material
adverse effect on TCF’s financial condition and results
of operations.
In addition, customers may make claims and take
legal action pertaining to the performance by TCF of its
fiduciary responsibilities. Whether customer claims and
legal action related to the performance of TCF’s fiduciary
responsibilities are founded or unfounded, such claims and
legal actions may result in significant financial liability and
could adversely affect the market perception of TCF and its
products and services, as well as impact customer demand
for those products and services. Any financial liability or
reputational damage could have a material adverse effect
on TCF’s financial condition and results of operations.
TCF is subject to environmental liability risk
associated with lending activities.
A significant portion of TCF’s loan portfolio is secured
by real property. In the ordinary course of business, TCF
may foreclose on and take title to properties securing
certain loans. In doing so, there is a risk that hazardous
or toxic substances could be found on these properties.
If hazardous or toxic substances are found, TCF may be
liable for remediation costs, as well as for personal injury
and property damage. Environmental laws may require
TCF to incur substantial expenses and may materially
reduce the affected property’s value or limit TCF’s ability
to use or sell the affected property. In addition, future
laws or more stringent interpretations or enforcement
policies with respect to existing laws may increase TCF’s
exposure to environmental liability. The remediation costs
and any other financial liabilities associated with an
environmental hazard could have a material adverse effect
on TCF’s financial condition and results of operations.
{ 14 } { TCF Financial Corporation and Subsidiaries }