TCF Bank 2014 Annual Report Download - page 72

and financial reporting bases of assets and liabilities (temporary differences), estimates of amounts due or owed, the timing of
reversals of temporary differences and current financial accounting standards. Additionally, there can be no assurance that
estimates and interpretations used in determining income tax liabilities will not be challenged by taxing authorities. Actual results
could differ significantly from the estimates and tax law interpretations used in determining the current and deferred income tax
liabilities.
In the preparation of income tax returns, tax positions are taken based on interpretation of income tax laws for which the
outcome is uncertain. Management periodically reviews and evaluates the status of uncertain tax positions and makes estimates
of amounts ultimately due or owed. The benefits of tax positions are recorded in income tax expense in the Consolidated
Statements of Income, net of the estimates of ultimate amounts due or owed, including any applicable interest and penalties.
Changes in the estimated amounts due or owed may result from closing of the statute of limitations on tax returns, new
legislation, clarification of existing legislation through government pronouncements, judicial action and through the examination
process. TCF’s policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense in the
Consolidated Statements of Income.
Other Significant Accounting Policies
Investments Investments are carried at cost. TCF periodically evaluates investments for other than temporary impairment
with losses, if any, recorded in non-interest income within gains (losses) on securities, net.
Securities Held to Maturity Securities held to maturity are carried at cost and adjusted for amortization of premiums or
accretion of discounts using a level yield method; however, transfers of securities available for sale to securities held to maturity
are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of each transfer is retained in
accumulated other comprehensive income (loss) and in the carrying value of the held to maturity investment security. Such
amounts are then amortized over the remaining life of the transferred security as an adjustment of the yield on those securities.
TCF periodically evaluates securities held to maturity for other than temporary impairment. Declines in value considered other
than temporary, if any, would be recorded as non-interest income within gains (losses) on securities, net.
Securities Available for Sale Securities available for sale are carried at fair value with the unrealized gains or losses, net of
related deferred income taxes, reported within accumulated other comprehensive income (loss), a separate component of
equity. The cost of securities sold is determined on a specific identification basis and gains or losses on sales of securities
available for sale are recognized on trade dates. TCF evaluates securities available for sale for other than temporary impairment
on a quarterly basis. Declines in the value of securities available for sale that are considered other than temporary are recorded in
non-interest income within gains (losses) on securities, net. Discounts and premiums on securities available for sale are
amortized using a level yield method over the expected life of the security.
Loans and Leases Held for Sale Loans and leases designated as held for sale are carried at the lower of cost or fair value. Any
amount by which cost exceeds fair value is initially recorded as a valuation allowance and subsequently reflected in the gain or
loss on sale when sold. From time to time, management identifies and designates primarily consumer real estate and auto
finance loans held in the loan portfolios for sale. These loans are transferred to loans and leases held for sale at the lower of cost
or fair market value at the time of transfer. Any associated allowance for loan and lease losses is transferred to the valuation
allowance.
Loans and Leases Loans and leases are reported at historical cost including net direct fees and costs associated with
originating and acquiring loans and leases. The net direct fees and costs for sales-type leases are offset against revenues
recorded at the commencement of sales-type leases. Discounts and premiums on acquired loans, net direct fees and costs,
unearned discounts and finance charges and unearned lease income are amortized to interest income using methods which
approximate a level yield over the estimated remaining lives of the loans and leases. Net direct fees and costs on all lines of credit
are amortized on a straight line basis over the contractual life of the line of credit and adjusted for payoffs. Net deferred fees and
costs on consumer real estate lines of credit are amortized to service fee income.
Non-accrual Loans and Leases Loans and leases are generally placed on non-accrual status when the collection of interest
and principal is 90 days or more past due unless, in the case of commercial loans, they are well-secured and in the process of
collection. Auto loans are placed on non-accrual status when interest and principal is 120 days past due. Delinquent junior lien
loans are also placed on non-accrual status when there is evidence that the related third-party first lien mortgage may be 90 days
or more past due.
Loans on non-accrual status are generally reported as non-accrual loans until there is sustained repayment performance for six
consecutive months, with the exception of loans not reaffirmed upon discharge under Chapter 7 bankruptcy, which remain on
non-accrual status until TCF expects full repayment of the remaining pre-discharged contractual principal and interest. Income on
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