CHFC 2017 Annual Report

deposits with defined maturities are based on the discounted value of contractual cash flows, using the Corporation's interest rates currently being offered for deposits of similarmaturities, and are therefore classified as Level 2 valuations. However, if the estimated fair value is less than the carrying value, the carrying value is reported as the fair value. Securities sold under agreements to repurchase: Fair valuemeasurements are based on the present value of future estimated cash flows using current interest rates offered to the Corporation under similar terms and are Level 2 valuations. Short-term borrowings: Short-term borrowings consist of short-term FHLB advances. Fair value measurements for short- term borrowings are based on the present value of future estimated cash flows using current interest rates offered to the Corporation for debt with similar terms and are Level 2 valuations. Long-term borrowings: Long-term borrowings consist of long-term FHLB advances, securities sold under agreements to repurchase with an unaffiliated financial institution, a term line-of-credit and subordinated debt obligations. Fair value measurements for long-term borrowings are based on the present value of future estimated cash flows using current interest rates offered to the Corporation for debt with similar terms and are therefore classified as Level 2 valuations. Financial guarantees: The Corporation's unused commitments to extend credit, standby letters of credit and loan commitments have no carrying amount and have been estimated to have no realizable fair value. Historically, a majority of the unused commitments to extend credit have not been drawn upon and, generally, the Corporation does not receive fees in connection with these commitments other than standby letter of credit fees, which are not significant. A summary of carrying amounts and estimated fair values of the Corporation's financial instruments not recorded at fair value in their entirety on a recurring basis on the Consolidated Statements of Financial Position was as follows: December 31, Level in Fair Value Measurement Hierarchy 2017 2016 (Dollars in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Financial assets: Cash and cash equivalents Level 1 $ 455,991 $ 455,991 $ 474,402 $ 474,402 Investment securities: Held-to-maturity Level 2 676,593 662,516 622,927 608,221 Held-to-maturity Level 3 500 390 500 310 Nonmarketable equity securities Level 2 180,091 180,091 97,350 97,350 Net loans (1) Level 3 14,063,380 14,114,545 12,912,511 13,069,315 Interest receivable Level 2 50,710 50,710 42,235 42,235 Bank-owned life insurance Level 2 147,584 147,584 143,718 143,718 Financial liabilities: Deposits: Deposits without defined maturities Level 2 $ 10,425,596 $ 10,425,596 $ 9,862,755 $ 9,862,755 Time deposits Level 2 3,217,207 3,225,847 3,010,367 3,010,048 Total deposits 13,642,803 13,651,443 12,873,122 12,872,803 Interest payable Level 2 6,329 6,329 5,415 5,415 Securities sold under agreements to repurchase with customers Level 2 415,236 415,236 343,047 343,047 Short-term borrowings Level 2 2,000,000 1,999,137 825,000 825,000 Long-term borrowings Level 2 372,882 367,984 597,847 591,227 (1) Included $70.6 million and $62.2 million of impaired loans recorded at fair value on a nonrecurring basis at December 31, 2017 and 2016, respectively. Chemical Financial Corporation Notes to Consolidated Financial Statements December 31, 2017 108