Mr. Joseph T. Green
General Counsel
TCF National Bank Minnesota
801 Marquette Avenue
Minneapolis, MN 55402

Dear Mr. Green:

This is in response to your letter of March 11, 1999, to Ms. Sue F. Harris concerning TCF National Bank Minnesota ("TCF Minnesota") and vault cash. In particular, you have inquired whether certain currency for use in automatic teller machines ("ATMs") operated by TCF National Bank Illinois ("TCF Illinois") constitutes vault cash of TCF Minnesota for purposes of Regulation D (12 CFR Part 204) in light of an "Agreement for ATM Cash Management and Currency Supply Services" dated as of February 18th, 1999 (the "Agreement") and certain factual assertions concerning Bank's ability to recall such cash. [Sentence deleted]

The Agreement between TCF Minnesota and TCF Illinois states that (1) TCF Minnesota will at all times retain full rights of ownership in all currency it supplies for these ATMS, whether located in the ATMs, in transit, or in the vaults of TCF Illinois; (2) TCF Illinois will under no circumstances include the currency supplied by TCF Minnesota in its vault cash for calculating regulatory reserve requirements; (3) TCF Minnesota will be solely responsible for securing and maintaining insurance coverage, if any, governing the loss or theft of the currency it supplies; and (4) in the event TCF Minnesota requires currency it has supplied to TCF Illinois to satisfy the demands of customers of TCF Minnesota, TCF Minnesota will have full rights and powers immediately to retrieve this currency, and TCF Illinois will have in place alternative means of obtaining currency and related services for these ATMs.

Under TCF Minnesota's cash retrieval plan, as detailed in a letter dated March 10, 1999 from United Armored Services of Illinois, fourteen two-person routes will be deployed to retrieve the cash from 326 ATMs in Illinois and transport it to Broadview, Illinois (6 3/4 hours); balance, consolidate, and package it (6 hours); and truck it 400 miles to TCF Minnesota (8 hours). Therefore, the total estimated elapsed time is estimated at 20.75 hours.

Section 204.2(k)(1) of Regulation D defines vault cash as "currency and coin owned and held by a depository institution that may, at any time, be used to satisfy depositors' claims." Section 204.2(k)(2) adds "currency and coin in transit to a Federal Reserve Bank or a correspondent depository institution for which the reporting depository institution has not yet received credit." Board staff has applied section 204.2(k)(2) to currency held in ATMs (Staff letters dated August 9, 1982 and January 1, 1988 from the Associate General Counsel of the Board, G.T. Schwartz and the undersigned, respectively). Four conditions must be satisfied before the currency qualifies as vault cash: (1) the institution must book the currency as an asset; (2) the institution must have full rights of ownership to the currency; (3) the currency must be immediately available to the institution (or a branch thereof) to satisfy depositors' needs and the currency must therefore be reasonably nearby; and (4) no other institution may use the currency to satisfy its reserve requirements. Implicit in the first condition is that the institution will know how much currency is in the ATMs at some point in each banking day.

Board staff historically has interpreted the "reasonably nearby" requirement to mean that the currency is reliably available to satisfy withdrawals at one or more of the bank's brick and mortar branches during the same banking day on which the need arises. In light of the geographic factors and based on your representations as to your cash retrieval plan, you will not be able to retrieve the currency during the same banking day if recalled before 10:00 AM that day. Therefore, in this particular case, staff believes that the currency may not be considered "reasonably nearby."

Based on these facts and representations, it appears that the currency covered by the Agreement does not satisfy the considerations historically relied upon by the staff to determine when off-premises currency is available to satisfy depositors' claims and may be considered vault cash. Accordingly, staff believes that TCF Minnesota may not count the currency held at these ATMs as vault cash for purposes of Regulation D.

I hope this information is helpful. Please let me or Rick Heyke of my staff (202/452-3688) know if we can be of further assistance.

Very truly yours,

(Signed) Oliver Ireland

Oliver Ireland