TCF Bank 2001 Annual Report Download - page 53

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3Investments
The carrying values of investments, which approximate their fair values, consist of the following:
At December 31,
(In thousands) 2001 2000
Federal Home Loan Bank stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $131,181 $110,441
Federal Reserve Bank stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,847 23,286
Interest-bearing deposits with banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 914 332
$155,942 $134,059
The carrying value, which approximates fair value, and yield of investments at December 31, 2001, by contractual maturity, are shown below:
Carrying
(Dollars in thousands) Value Yield
Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 914 2.64%
No stated maturity(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,028 4.17
$ 155,942 4.16
(1) Balance represents FRB and Federal Home Loan Bank (“FHLB”) stock, required regulatory investments.
PREMISES AND EQUIPMENT – Premises and equipment are
carried at cost and are depreciated or amortized on a straight-line
basis over their estimated useful lives.
OTHER REAL ESTATE OWNED – Other real estate owned is
recorded at the lower of cost or fair value minus estimated costs to
sell at the date of transfer to other real estate owned. If the fair value
of an asset minus the estimated costs to sell should decline to less than
the carrying amount of the asset, the deficiency is recognized in the
period in which it becomes known and is included in other non-
interest expense.
INTANGIBLE ASSETS – Goodwill resulting from acquisitions is
amortized over 20 to 25 years on a straight-line basis. Deposit base
intangibles are amortized over 10 years on an accelerated basis. The
Company reviews the recoverability of the carrying values of these
assets whenever an event occurs indicating that they may be impaired.
On January 1, 2002, TCF adopted Statement of Financial Accounting
Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,”
which requires that goodwill and intangible assets with indefinite lives
no longer be amortized, but instead tested for impairment annually.
DERIVATIVE FINANCIAL INSTRUMENTS – TCF utilizes
derivative financial instruments to meet the ongoing credit needs
of its customers and in order to manage the market exposure of its
residential loans held for sale and its commitments to extend credit
for residential loans. Derivative financial instruments include com-
mitments to extend credit and forward mortgage loan sales commit-
ments. TCF does not use interest rate contracts (e.g. swaps, caps,
floors) or other derivatives to manage interest rate risk and has none
of these instruments outstanding. See Notes 18 and 19 for additional
information concerning these derivative financial instruments.
2Cash and Due from Banks
At December 31, 2001, TCF was required by Federal Reserve Board
(“FRB”) regulations to maintain reserve balances of $39 million in
cash on hand or at various Federal Reserve Banks.