TCF Bank 2003 Annual Report Download - page 58

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56 TCF Financial Corporation and Subsidiaries
Note 3. Investments
The carrying values of investments, which approximate their fair values, consist of the following:
At December 31,
(In thousands) 2003 2002
Federal Home Loan Bank stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,411 $128,855
Federal Reserve Bank stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,045 23,999
Interest-bearing deposits with banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 767 868
$ 75,223 $153,722
The carrying values and yields on investments at December 31, 2003, by contractual maturity, are shown below:
Carrying
(Dollars in thousands) Value Yield
Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 767 .88%
No stated maturity(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,456 4.19
$ 75,223 4.15
(1) Balance represents FRB and Federal Home Loan Bank (“FHLB”) stock, required regulatory investments.
Note 4. Securities Available for Sale
Securities available for sale consist of the following:
At December 31,
2003 2002
Gross Gross Gross Gross
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
(Dollars in thousands) Cost Gains Losses Value Cost Gains Losses Value
Mortgage-backed securities:
Federal agencies . . . . . . . . . . . . . . . . . . . $1,514,400 $ 13,744 $ (4,677) $1,523,467 $2,341,549 $ 73,225 $ (35) $2,414,739
Private issuer and collateralized
mortgage obligations . . . . . . . . . . 9,272 – (201) 9,071 12,178 4 (877) 11,305
Other securities . . . . . . . . . . . . . . . . . . . . . 750 – – 750 750 – – 750
$1,524,422 $ 13,744 $ (4,878) $1,533,288 $2,354,477 $ 73,229 $ (912) $2,426,794
Weighted-average yield . . . . . . . . . . . . . . . 5.33% 5.96%
Gross gains of $32.8 million, $11.5 million and $863 thousand were recognized on sales of securities available for sale during 2003, 2002 and
2001, respectively. Mortgage-backed securities aggregating $1.3 billion and $867.7 million were pledged as collateral to secure certain deposits
and borrowings at December 31, 2003 and 2002, respectively. See Notes 12 and 13 for additional information regarding securities pledged as col-
lateral to secure certain borrowings.
intrinsic value based method of accounting prescribed by Accounting
Principles Board (“APB”) Opinion No. 25, “Accounting for Stock
Issued to Employees,” as amended, for stock-based transactions
through December 31, 1999. Accordingly, no compensation expense
has been recognized for any stock option grants made prior to 2000.
Compensation expense for restricted stock is recorded as unearned
compensation in stockholders’ equity and amortized to compensation
expense over the vesting periods. The amount of pre-2000 stock
option grants accounted for under APB Opinion No. 25 and the
related pro-forma impact on net income and earnings per share
during 2002, 2001 and 2000 had the recognition provisions of SFAS
No. 123 been applied to such grants is not material. See Note 17 for
additional information concerning stock-based compensation.
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. See Notes 19 and 20 for additional information concerning
these derivative financial instruments.
Note 2. Cash and Due from Banks
At December 31, 2003, TCF was required by Federal Reserve Board
(“FRB”) regulations to maintain reserve balances of $34.3 million
in cash on hand or at the FRB.