TCF Bank 2013 Annual Report Download - page 62

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The following table is a reconciliation of the non-GAAP financial measure of Tier 1 common capital to the GAAP measure of Tier 1
risk-based capital.
At December 31,
(Dollars in thousands) 2013 2012
Computation of Tier 1 risk-based capital ratio:
Total Tier 1 capital $ 1,763,682 $ 1,633,336
Total risk-weighted assets 15,455,706 14,733,203
Total Tier 1 risk-based capital ratio 11.41% 11.09%
Computation of Tier 1 common capital ratio:
Total Tier 1 capital $ 1,763,682 $ 1,633,336
Less:
Preferred stock 263,240 263,240
Qualifying non-controlling interest in subsidiaries 11,791 13,270
Total Tier 1 common capital $ 1,488,651 $ 1,356,826
Total risk-weighted assets $15,455,706 $14,733,203
Total Tier 1 common capital ratio 9.63% 9.21%
Total Tier 1 capital at December 31, 2013, was $1.8 billion, or 11.41% of risk-weighted assets, compared with $1.6 billion, or
11.09% of risk-weighted assets at December 31, 2012. Tier 1 common capital at December 31, 2013, was $1.5 billion, or 9.63%
of risk-weighted assets, compared with $1.4 billion, or 9.21% of risk-weighted assets at December 31, 2012. The increase in
Tier 1 risk-based capital ratio and Tier 1 common capital ratio from December 31, 2012 is due to retained earnings less dividends
supporting the asset growth of the organization.
Critical Accounting Policies
Critical accounting estimates occur in certain accounting policies and procedures and are particularly susceptible to significant
change. Policies that contain critical accounting estimates include the determination of the allowance for loan and lease losses,
lease financings and income taxes. See Note 1 of Notes to Consolidated Financial Statements for further discussion of critical
accounting policies.
Recent Accounting Developments
On January 17, 2014, the Financial Accounting Standards Board (‘‘FASB’’) issued Accounting Standards Update (‘‘ASU’’)
No. 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real
Estate Collateralized Consumer Loans upon Foreclosure, which clarifies when an in substance repossession or foreclosure
occurs and when a creditor is considered to have received physical possession of residential real estate property collateralizing a
consumer mortgage loan. The adoption of this ASU will be required, either on a modified retrospective basis or on a prospective
basis, beginning with TCF’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2015. The adoption of this ASU is
not expected to have a material impact on TCF.
On January 15, 2014, the FASB issued ASU No. 2014-01, Investments – Equity Method and Joint Ventures (Topic 323):
Accounting for Investments in Qualified Affordable Housing Projects, which permits an accounting policy election to account for
investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. The
adoption of this ASU will be required on a retrospective basis beginning with TCF’s Quarterly Report on Form 10-Q for the quarter
ending March 31, 2015. The adoption of this ASU is not expected to have a material impact on TCF.
On July 18, 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss
Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which addresses the financial statement presentation of an
unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating
loss carryforward, a similar tax loss, or a tax credit carryforward. The adoption of this ASU will be required on a prospective basis
beginning with TCF’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2014. The adoption of this ASU is not
expected to have a material impact on TCF.
On July 17, 2013, the FASB issued ASU No. 2013-10, Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective
Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes (a consensus of the
FASB Emerging Issues Task Force), which permits an entity to designate the Fed Funds Effective Swap Rate, also referred to as
the overnight index swap rate, as a benchmark interest rate for hedge accounting purposes. In addition, this ASU removes the
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