LONG-TERM DEBT

Long-term debt consists of outstanding advances from the FHLB of $16.0 million as of December 31, 2012 and $21.0 million as of December 31, 2011. These advances are secured by blanket liens on all real estate and commercial and industrial loans with a combined weighted valuation for collateral purposes of $148.7 million as of September 30, 2012 that was the qualifying collateral in effect as of December 31, 2012. In addition, the Company voluntarily pledged approximately $2.1 million of mortgage-backed securities representing mortgages guaranteed by FNMA and FHLMC

The maturity and weighted-average interest rate of long-term debt as of the periods indicated is as follows:


		As of December 31,
		2012			2011
(dollars in thousands)		Amount	Rate		Amount	Rate

2013		$ -	-	%	$ 5,000	3.61	%
2016		16,000	5.26		16,000	5.26
	Total	$ 16,000	5.26	%	$ 21,000	4.87	%

The long-term debt outstanding as of December 31, 2012 and 2011consisted of a convertible select FHLB advance that has a fixed interest rate but may adjust quarterly should market rates increase beyond the issue's original or strike rate. A significant prepayment fee attached to the borrowing is a deterrent from paying off the high-cost advance in the near-term. However, in the event the underlying market rates rise above the rate currently paid on the borrowing, the FHLB rate will convert to a floating-rate instrument and the Company would then have the option to repay or to renegotiate the converted advance.In February 2012, the Company paid off the $5.0 million, 3.61% advance that was scheduled to mature in the fourth quarter of 2013. The Company incurred a prepayment fee of $0.2 million on the early payoff.