CHFC 2017 Annual Report

(Dollars in thousands) Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total December 31, 2016 Investment securities — available-for-sale: U.S. Treasury securities $ 5,793 $ — $ — $ 5,793 Government sponsored agencies — 215,011 — 215,011 State and political subdivisions — 300,088 — 300,088 Residential mortgage-backed securities — 272,282 — 272,282 Collateralized mortgage obligations — 320,025 — 320,025 Corporate bonds — 89,474 — 89,474 Preferred stock and trust preferred securities — 32,291 — 32,291 Total investment securities — available-for-sale 5,793 1,229,171 — 1,234,964 Loans held-for-sale — 81,830 — 81,830 Loan servicing rights — — 48,085 48,085 Derivative assets: Customer-initiated derivatives — 4,406 — 4,406 Forward contracts related to mortgage loans to be delivered for sale — 635 — 635 Interest rate lock commitments — 956 — 956 Power Equity CD — 2,218 — 2,218 Total derivatives — 8,215 — 8,215 Total assets at fair value $ 5,793 $ 1,319,216 $ 48,085 $ 1,373,094 Derivative liabilities: Customer-initiated derivatives — 4,141 — 4,141 Power Equity CD — 2,218 — 2,218 Total derivatives — 6,359 — 6,359 Total liabilities at fair value $ — $ 6,359 $ — $ 6,359 There were no transfers between levels within the fair value hierarchy during the year ended December 31, 2017. The following table summarizes the changes in Level 3 assets measured at fair value on a recurring basis. ar Ended December 31, 2017 2016 (Dollars in thousands) Loan servicing rights Balance, beginning of period $ 48,085 $ — Additions due to acquisition — 42,462 Transfer in based on new accounting policy election (1) 15,891 — Gains (losses): Recorded in earnings (realized): Recorded in "Net gain on sale of loans and other mortgage banking revenue" (8,880) 4,593 New originations 8,745 1,030 Balance, end of period $ 63,841 $ 48,085 (1) Refer to Note 1, Basis of Presentation and Significant Accounting Policies, for further details. Chemical Financial Corporation Notes to Consolidated Financial Statements December 31, 2017 104