TCF Bank 2001 Annual Report Download - page 70

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68
LOANS – The fair value of residential loans is estimated using quoted
market prices. For certain variable-rate loans that reprice frequently
and that have experienced no significant change in credit risk, fair
values are based on carrying values. The fair values of other loans are
estimated by discounting contractual cash flows adjusted for prepay-
ment estimates, using interest rates currently being offered for loans
with similar terms to borrowers with similar credit risk characteristics.
DEPOSITS – The fair value of checking, savings and money market
deposits is deemed equal to the amount payable on demand. The fair
value of certificates is estimated based on discounted cash flow analy-
ses using interest rates offered by TCF for certificates with similar
remaining maturities. The intangible value of long-term relationships
with depositors is not taken into account in the fair values disclosed
in the table below.
BORROWINGS – The carrying amounts of short-term borrowings
approximate their fair values. The fair values of TCF’s long-term
borrowings are estimated based on quoted market prices or discounted
cash flow analyses using interest rates for borrowings of similar
remaining maturities.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET
RISK – The fair values of TCF’s commitments to extend credit and
standby letters of credit are estimated using fees currently charged to
enter into similar agreements. For fixed-rate loan commitments and
standby letters of credit issued in conjunction with fixed-rate loan
agreements, fair value also considers the difference between current
levels of interest rates and the committed rates. The fair value of VA
loans serviced with partial recourse approximates the carrying value
recorded in other liabilities. The fair values of forward settlements
of FHLB advances are based on the difference between current lev-
els of interest rates and the committed rates.
As discussed above, the carrying amounts of certain of the Company’s financial instruments approximate their fair value. The carrying
amounts and fair values of the Company’s remaining financial instruments are set forth in the following table:
At December 31,
2001 2000
2
Carrying Estimated Carrying Estimated
(In thousands) Amount Fair Value Amount Fair Value
Financial instrument assets:
Loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 451,609 $ 454,536 $ 227,779 $ 231,306
Forward mortgage loan sales commitments. . . . . . . . . . . . . . . . . 7,352 7,352 ––
Loans:
Consumer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,509,333 2,548,617 2,234,134 2,408,672
Commercial real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,622,461 1,644,263 1,371,841 1,381,222
Commercial business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422,381 417,896 410,422 410,003
Equipment finance loans . . . . . . . . . . . . . . . . . . . . . . . . . . 271,398 275,148 207,059 210,434
Residential real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,733,290 2,795,894 3,673,831 3,712,568
Allowance for loan losses(1) . . . . . . . . . . . . . . . . . . . . . . . . . (66,876) – (60,816) –
$ 7,943,596 $ 8,136,354 $ 8,064,250 $ 8,354,205
Financial instrument liabilities:
Checking, savings and money market deposits . . . . . . . . . . . . . . $ 4,778,714 $ 4,778,714 $ 4,086,219 $ 4,086,219
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,320,244 2,357,872 2,805,605 2,836,340
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 719,859 719,859 898,695 898,695
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,303,166 2,410,329 2,285,550 2,309,323
$10,121,983 $10,266,774 $10,076,069 $10,130,577
Financial instruments with off-balance-sheet risk:(2)
Commitments to extend credit(3) . . . . . . . . . . . . . . . . . . . . . . . $ 13,767 $ 13,767 $ 12,045 $ 12,045
Standby letters of credit(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,409 2,409 (2) (2)
Federal Home Loan Bank advance forward settlements. . . . . . . . –– – (6,985)
$ 16,176 $ 16,176 $ 12,043 $ 5,058
(1) Excludes the allowance for lease losses.
(2)Positive amounts represent assets, negative amounts represent liabilities.
(3)Carrying amounts are included in other assets.
(4)Carrying amounts are included in accrued expenses and other liabilities.