loan and lease losses of $77 million adequate to cover losses inher- ent in the loan and lease portfolios as of December 31, 2002. However, no assurance can be given that TCF will not, in any par- ticular period, sustain loan and lease losses that are sizable in rela- tion to the amount reserved, or that subsequent evaluations of the loan and lease portfolio, in light of factors then prevailing, includ- ing economic conditions and TCF’s on-going credit review process, will not require significant increases in the allowance for loan and lease losses. Among other factors, a protracted economic slowdown and/or a decline in commercial or residential real estate values in TCF’s markets may have an adverse impact on the adequacy of the allowance for loan and lease losses by increasing credit risk and the risk of potential loss. See “Forward-Looking Information” and Notes 1 and 7 of Notes to Consolidated Financial Statements for additional information concerning TCF’s allowance for loan and lease losses. The following table sets forth information detailing the allowance for loan and lease losses and selected statistics: Allowance for Loan and Lease Losses Credit risk is the risk of loss from a customer default on a loan or lease. TCF has in place a process to identify and manage its credit risk. The process includes initial credit review and approval, periodic monitoring to measure compliance with credit agreements and internal credit policies, mon- itoring changes in the risk ratings of loans and leases, identification of problem loans and leases and procedures for the collection of problem loans and leases. The risk of loss is difficult to quantify and is subject to fluctuations in values, general economic conditions and other factors. The determination of the allowance for loan and lease losses is a critical accounting policy which involves estimates and man- agement’s judgment on a number of factors such as net charge-offs, delinquencies in the loan and lease portfolio, general economic con- ditions and management’s assessment of credit risk in the current loan and lease portfolio. The Company considers the allowance for Year Ended December 31, (Dollars in thousands) 2002 2001 2000 1999 1998 Balance at beginning of year . . . . . . . . . . . . . . . . . . . $ 75,028 $ 66,669 $ 55,755 $ 80,013 $ 82,583 Transfers to loans held for sale . . . . . . . . . . . . . . . . . – – – (14,793) –  Charge-offs: Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,939) (6,605) (7,041) (31,509) (30,108) Commercial real estate . . . . . . . . . . . . . . . . . . . . (2,181) (122) (76) (674) (1,294) Commercial business . . . . . . . . . . . . . . . . . . . . . (5,952) (429) (143) (52) (42) Leasing and equipment finance . . . . . . . . . . . . . (9,230) (9,794) (2,426) (2,008) (979) Residential real estate . . . . . . . . . . . . . . . . . . . . . (59) (1) (15) (155) (291) (24,361) (16,951) (9,701) (34,398) (32,714) Recoveries: Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,965 3,487 4,576 5,831 5,222 Commercial real estate . . . . . . . . . . . . . . . . . . . . 43 103 295 1,381 559 Commercial business . . . . . . . . . . . . . . . . . . . . . 54 193 690 329 635 Leasing and equipment finance . . . . . . . . . . . . . 1,264 649 254 398 345 Residential real estate . . . . . . . . . . . . . . . . . . . . . 9 – 28 71 103 4,335 4,432 5,843 8,010 6,864 Net charge-offs . . . . . . . . . . . . . . . . . . . . . . (20,026) (12,519) (3,858) (26,388) (25,850) Provision charged to operations . . . . . . . . . . . . . . . . 22,006 20,878 14,772 16,923 23,280 Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . $ 77,008 $ 75,028 $ 66,669 $ 55,755 $ 80,013 Ratio of net loan and lease charge-offs to average loans and leases outstanding . . . . . . . . . . . . . . . . .25% .15% .05% .35% .36% Year-end allowance as a percentage of year-end total loans and leases . . . . . . . . . . . . . . . . . . . . . .95 .91 .78 .71 1.12 Year-end allowance as a percentage of year-end loans and leases excluding residential real estate loans . . 1.20 1.32 1.31 1.33 2.27 Year-end allowance as a multiple of net charge-offs . . . 3.8X 6.0X 17.3X 2.1X 3.1X page 35