The fair value of borrowings is estimated using a discounted cash flow calculation, based on current rates for similar debt, except for short-term and adjustable rate borrowing arrangements. At December 31, the fair value for these instruments approximates carrying value. Loan commitments and letters-of-credit generally have short-term, variable-rate features and contain clauses which limit the Banks' exposure to changes in customer credit quality. Accordingly, their carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair value. 55 DEPOSITS The fair values of noninterest-bearing demand accounts, interest- bearing demand accounts and savings deposits are equal to the amount payable on demand at the balance sheet date. The carrying amounts for variable rate, fixed-term certificates of deposit approximate their fair values at the balance sheet date. Fair values for fixed-rate certificates of deposit and other time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits. CASH VALUE OF LIFE INSURANCE The fair value of cash value of life insurance approximates carrying value. NOTE 18 FAIR VALUES OF FINANCIAL INSTRUMENTS continued BORROWINGS OFF-BALANCE SHEET COMMITMENTS 2003 2002 ---------------------------------------------------------------------------------------------------------------------------------- CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE ================================================================================================================================== Assets at December 31: Cash and cash equivalents .................................. $ 109,527 $ 109,527 $ 119,038 $ 119,038 Interest-bearing time deposits ............................. 8,141 8,141 3,568 3,568 Investment securities available for sale ................... 348,860 348,860 332,925 332,925 Investment securities held to maturity ..................... 7,937 8,326 9,137 9,585 Mortgage loans held for sale ............................... 3,043 3,043 21,545 21,545 Loans ...................................................... 2,328,010 2,383,666 1,981,960 2,008,189 FRB and FHLB stock ......................................... 15,502 15,502 11,409 11,409 Interest receivable ........................................ 16,840 16,840 17,346 17,346 Cash value of life insurance ............................... 37,927 37,927 14,309 14,309 Liabilities at December 31: Deposits ................................................... 2,362,101 2,378,669 2,036,688 2,063,474 Borrowings: Securities sold under repurchase agreements ............ 71,095 71,139 89,594 90,138 FHLB advances .......................................... 212,779 239,251 184,677 196,244 Trust preferred securities ............................. 57,188 62,719 53,188 57,655 Other borrowed funds.................................... 42,108 42,108 29,468 29,468 Interest payable ........................................... 4,680 4,680 6,019 6,019 The estimated fair values of the Corporation's financial instruments are as follows: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data)