The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Cash and Cash Equivalents: The carrying amounts of cash and short-term instruments approximate their fair value. The carrying amounts of interest-bearing deposits maturing within ninety days approximate their fair values.  Loans: The fair value of mortgage loans receivable was estimated based on present values using entry-value rates at December 31, 2002 and 2001, weighted for varying maturity dates. Other loans receivable were valued based on present values using entry-value interest rates at December 31, 2002 and 2001 applicable to each category of loans. Fair values of mortgage loans held for sale are based on commitments on hand from investors or prevailing market prices. Deposits: The fair value of NOW accounts, money market deposits and savings accounts was the amount payable on demand at the reporting date. Certificates of deposit were valued using a weighted average rate calculated based upon rates at December 31, 2002 and 2001 for deposits of similar remaining maturities. Investment Securities: Fair value equals quoted market prices and dealer quotes. Short-term Borrowings: The carrying amounts of short-term borrowings maturing within ninety days approximate their fair values. Long-term Borrowings: The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. Derivative Instruments: Fair values are estimated using independent pricing sources. Off-Balance Sheet Items: The Company has outstanding commitments to extend credit and standby letters of credit. These off-balance sheet financial instruments are generally exercisable at the market rate prevailing at the date the underlying transaction will be completed and, therefore, have no current fair value. The estimated fair values and carrying amounts of the Company's financial instruments are as follows: December 31, 2002 December 31, 2001 Carrying Fair Carrying Fair (dollars in thousands) Amount Value Amount Value Financial Assets Cash and cash equivalents $ 63,775 $ 63,775 $ 51,681 $ 51,681 Investment securities 368,122 370,236 321,907 321,941 Loans and loans held for sale, net 1,040,074 1,054,414 960,765 990,079 Financial Liabilities Deposits $1,242,232 $1,245,646 1 $1,237,394 $1,245,014 Short-term borrowings 96,803 96,803 12,339 12,339 Long-term debt 75,458 77,180 31,437 31,230 Derivative instruments 1,822 1,822 - - 57