Deposits Other Borrowings and Subordinated Debenture Off-Balance-Sheet Instruments Loans Derivatives Securities Cash and Cash Equivalents The fair value of loans, excluding loans held for sale, are based ‘on discounted cash flow analyses using interest rates currently being offered for loans with similar remaining terms to maturity and credit risk, adjusted for the impact of interest rate floors and ceilings. The fair values of classified loans were estimated to approximate their carrying values less loan loss reserves allocated to these loans of $29 million and $26 million at December 31,2001 and 2000, respectively. The fair values of residential mortgage loans held for sale are based upon quoted market prices of such loans sold in securitization transactions, including related unfunded loan commitments and hedging transactions. The fair values of commercial loan commitments and letters of credit are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements. The fair values of these off-balance- sheet instruments were not significant at December 31, 2001 and 2000. The fair values of these instruments are based upon discounted cash flow analyses using interest rates currently being offered on similar instruments. The fair values of time deposits are based on discounted - cash flow analyses using interest rates currently being offered on similar transactions. Statement of Financial Accounting Standard No. 107, “Disclosures about Fair Value of Financial Instruments,” (“FAS 107”) defines the estimated fair value of deposits with no stated maturity, which includes demand deposits, transaction deposits, money market deposits and savings accounts, to equal the amount payable on demand. Although market premiums paid reflect an additional value for these low cost deposits, FAS 107 prohibits adjusting fair value for the expected benefit of these deposits. Accordingly, the positive effect of such deposits is not included in this table. The book value reported in the consolidated balance sheet for cash and short-term instruments approximates those assets’ fair values. The fair values of securities are based on quoted market prices or dealer quotes, when available. If quotes are not available, fair values are based on quoted prices of comparable instruments. Fair value is calculated by a third party based on discounted cash flows using a yield curve and current applicable market rates. The following methods and assumptions were used in estimating the fair value of these financial instruments: 57