Standby Letters of Credit Standby letters of credit are condi- tional commitments issued by TCF guaranteeing the performance of a customer to a third party. The standby letters of credit expire in various years through the year 2007 and totaled $20.9 million and $12.7 million at December 31, 2002 and 2001, respectively. Collateral held primarily consists of commercial real estate mortgages. Since the conditions under which TCF is required to fund standby letters of credit may not materialize, the cash requirements are expected to be less than the total outstanding commitments.  Securities available for sale are carried at fair value, which is based on quoted market prices. Certain financial instruments, including lease financings and discounted lease rentals, and all non-financial instru- ments are excluded from fair value of financial instrument disclosure requirements.  The following methods and assumptions are used by the Company in estimating fair value disclosures for its remaining financial instru- ments, all of which are issued or held for purposes other than trading. Loans The fair value of residential loans is estimated based on quoted market prices. For certain variable-rate loans that reprice frequently and that have experienced no significant change in credit risk, fair val- ues 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. Loans Serviced with Recourse Loans serviced with recourse consist of Veterans Administration (“VA”) loans and loans sold with recourse to the Federal National Mortgage Association (“FNMA”). As is typical of a servicer of VA loans, TCF must cover any principal loss in excess of the VA’s guarantee if the VA elects its “no-bid” option upon the foreclosure of a loan. The liability relating to this VA “no- bid” exposure on VA loans serviced with partial recourse was $100,000 at December 31, 2002 and 2001 and was recorded in other liabilities. No claims have been made under the “no-bid” option during 2002 or 2001. Loans sold with recourse to FNMA represent residential real estate loans sold to FNMA prior to 1982. TCF no longer sells loans on a recourse basis. The contingent guarantee related to both types of recourse remains in effect for the duration of the loans and thus expires in various years through the year 2032. All loans sold with recourse are collateralized by residential real estate. 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 analyses using interest rates offered by TCF for certificates with similar remain- ing 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.  TCF is required to disclose the estimated fair value of financial instru- ments, both assets and liabilities on and off the balance sheet, for which it is practicable to estimate fair value. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. Fair value estimates are subjective in nature, involving uncertainties and matters of signifi- cant judgment, and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.  The carrying amounts of cash and due from banks, investments and accrued interest payable and receivable approximate their fair values due to the short period of time until their expected realization. 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 loans serviced with recourse approximates the carrying value recorded in other liabilities.  21. Fair Values of Financial Instruments page 69