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## NOTESTO FINANCIAL STATEMENTS 

(Dollar Amounts in Thousands) 

## NOTE 29— Fair Values of Financial Instruments (continued) 

difficulty in predicting the timing of such cash flows, fair values were not estimated for these instruments for both periods. 

Deposit liabilities Deposit liabilities: Management estimates that the fair value of deposits is based on a market valuation of similar deposits. The carrying value of variable rate time deposit accounts and certificates of deposit approximate their fair values at the report date. Also, fair values of fixed rate time deposits for both periods are estimated by discounting the future cash flows using interest rates currently being offered and a schedule of aggregated expected maturities. 

Short-term borrowings Short-term borrowings: The estimated fair values of borrowings from the Federal Home Loan Bank were 

estimated based on the estimated incremental borrowing rate for similar types of borrowings. The carrying amounts of other short-term borrowings such as Federal funds purchased, securities sold under agreement to repurchase and treasury, tax and loan notes were used to approximate fair value. 

Long-term debt Long-term debt: The fair value of long-term debt is estimated by discounting the future cash flows using the Corporation’s estimated incremental borrowing rate for similar types of borrowing arrangements. 

The following table presents carrying amounts and estimated fair values of the Corporation’s financial instruments at December 31, 2003 and 2002: 

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