TCF Bank 2011 Annual Report Download - page 110

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Note 20. Fair Value Measurement
Fair values represent the estimated price that would
be received from selling an asset or paid to transfer a
liability, otherwise known as an “exit price.” The following
is a descrip tion of valuation methodologies used for
assets recorded at fair value on a recurring basis at
December 31, 2011.
Securities Available for Sale Securities available
for sale consist primarily of U.S. Government sponsored
enterprise securities and federal agencies and U.S. Treasury
securities. The fair value of U.S. Government sponsored
enterprise securities is recorded using prices obtained
from independent asset pricing services that are based on
observable transactions, but not quoted markets, and are
classified as Level 2 assets. The fair value of U.S. Treasury
bills and notes is recorded using prices obtained from
independent asset pricing services that obtain prices from
brokers and active market participants, and are classified as
Level 1 assets. Management reviews the prices obtained from
independent asset pricing services for unusual fluctuations
and comparisons to current market trading activity.
However, management does not adjust these prices.
Other securities, for which there is little or no market
activity, are categorized as Level 3 assets. Other securities
classified as Level 3 assets include equity investments in
other thinly traded financial institutions and foreign debt
securities. The fair value of these assets is determined by
using quoted prices, when available, and incorporating
results of internal pricing techniques and observable
market information, which is adjusted for security specific
information, such as financial statement strength, earnings
history, disclosed fair value measurements, recorded
impairments and key financial ratios, to determine fair
value. Other securities, for which there are active markets
and routine trading volume, are categorized as Level 1 assets.
Forward Foreign Currency Contracts Forward foreign
currency contract assets and liabilities are carried at fair
value, which is net of the related cash collateral received
and paid when a legally enforceable master netting
agreement exists between TCF and the counterparty.
Assets Held in Trust for Deferred Compensation
Assets held in trust for deferred compensation plans
include investments in publicly traded stocks, excluding
TCF common stock reported in treasury and other equity,
and U.S. Treasury notes. The fair value of these assets is
based upon prices obtained from independent asset pricing
services based on active markets.
92 TCF Financial Corporation and Subsidiaries