Note 8 – Long-term Borrowings

Under the terms of its collateral agreement with the FHLB, the Company provides a blanket lien covering all of its residential first mortgage loans, second mortgage loans and home equity lines of credit. In addition, the Company pledges as collateral its capital stock in the FHLB and deposits with the FHLB. The Company has a line of credit with the FHLB equal to 30% of the Company's assets, subject to the amount of collateral pledged. As of June 30, 2011, $86,359,000 in 1-4 family residential mortgage loans and $58,441,000 in home equity lines of credit were pledged under the blanket floating lien agreement which covers both short-term and long-term borrowings. Long-term borrowings consisted of the following fixed rate, long term advances as of June 30, 2011 and December 31, 2010 (in thousands):


June 30, 2011						December 31, 2010
Due by	Advance Amount		Weighted Average Rate			Due by	Advance Amount		Weighted Average Rate

						March 2011	$	8,000		2.93
April 2014	$	413		3.78		April 2014		488		3.78
	$	413		3.78	%		$	8,488		2.97	%

In the regular course of conducting its business, the Company takes deposits from political subdivisions of the States of Virginia and North Carolina. At June 30, 2011, the Company's public deposits totaled $88,261,000. The Company is required to provide collateral to secure the deposits that exceed the insurance coverage provided by the Federal Deposit Insurance Corporation. This collateral can be provided in the form of certain types of government or agency bonds or letters of credit from the FHLB. At June 30 2011, the Company had $40 million in letters of credit with the FHLB outstanding to provide collateral for such deposits.