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## NOTE 18 

## FAIR VALUES OF FINANCIAL INSTRUMENTS continued 

CASH VALUE OF LIFE INSURANCE The fair value of cash value of life insurance approximates carrying value. 

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. 

## BORROWINGS 

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. 

## OFF-BALANCE SHEET COMMITMENTS 

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. 

The estimated fair values of the Corporation's financial instruments are as follows: 2003 2002 

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