Note 11 – 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, home equity lines of credit, and commercial real estate loans. 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 December 31, 2011, $432,107,000 in eligible collateral was 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 December 31, 2011 and 2010 (in thousands):


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

April 2014	$	337		3.78	%	March 2011	$	8,000		2.93	%
November 2017		9,869		2.98		April 2014		488		3.78
	$	10,206		3.01	%		$	8,488		2.98	%

The advance due in November 2017 is net of a valuation allowance of $131,000. The original valuation allowance recorded on July 1, 2011 was a result of the merger with MidCarolina. The adjustment to the face value will be amortized into interest expense over the life of the borrowing.

In the regular course of conducting its business, the Company takes deposits from political subdivisions of the States of Virginia and North Carolina. At December 31, 2011, the Bank's public deposits totaled $122,271,000. 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 year-end 2011, the Company had $72,000,000 in letters of credit with the FHLB outstanding as well as $67,609,000 in government and agency securities to provide collateral for such deposits.