10. BORROWED FUNDS

	Sold Under	Treasury						Total
	Agreements to	Direct	FHLB	Federal Funds	FRB	Notes	Term	Borrowed
(dollars in thousands)	Repurchase(a)	Investments(b)	Advances(c)	Line (d)	BIC Line (e)	Payable(f,g)	Loans(h)	Funds
2011
Balance at December 31	$ 11,382	$ -	$ -	$ -	$ -	$ 7,500	$ 35,000	$ 53,882
Highest balance at any month-end	11,382	-	-	-	-	7,500	39,000	57,882
Average balance	10,484	-	3	-	-	7,500	37,496	55,483
Weighted average interest rate:
Paid during the year	0.82%	0.00%	0.68%	1.53%	0.00%	5.87%	3.22%	3.13%
As of year-end	0.79%	0.00%	0.00%	0.00%	0.00%	5.87%	3.13%	3.01%
2010
Balance at December 31	$ 9,496	$ -	$ -	$ -	$ -	$ 7,500	$ 39,000	$ 55,996
Highest balance at any month-end	9,957	-	-	-	$ -	7,500	39,000	56,457
Average balance	8,703	-	-	-	1	7,500	37,866	54,070
Weighted average interest rate:
Paid during the year	1.05%	0.00%	0.00%	0.00%	0.75%	5.87%	3.28%	3.29%
As of year-end	0.94%	0.00%	0.00%	0.00%	0.00%	5.87%	3.20%	3.18%

(a) Securities sold under agreements to repurchase mature within 5 years. As of December 31, 2011 and 2010, repurchase agreements with original maturities of less than one year totaled $9,602,000 and $7,734,000, respectively. As of December 31, 2011 and 2010, repurchase agreements with original maturities greater than one year totaled $1,780,000 and $1,762,000, respectively. The carrying value of the underlying securities pledged at December 31, 2011 and 2010 was $15,631,000 and $11,658,000, respectively.

(b) Treasury Direct Investments consist of notes issued under the U.S. Treasury Department's program of investing balances in interest-bearing demand notes insured by depository institutions.

(c) FHLB Advances consist of an “Open RepoPlus” agreement with the Federal Home Loan Bank of Pittsburgh. FHLB “Open RepoPlus” advances are short-term borrowings that bear interest based on the Federal Home Loan Bank discount rate or Federal Funds rate, whichever is higher. The Company has a borrowing limit of $246,138,000, inclusive of any outstanding advances. FHLB advances are secured by a blanket security agreement that includes the Company's FHLB stock, as well as certain investment and mortgage-backed securities held in safekeeping at the FHLB and certain residential and commercial mortgage loans. At December 31, 2011 and 2010, the approximate carrying value of the securities collateral was $11,196,000 and $26,087,000, respectively.

(d) The federal funds line consists of an unsecured line from a third party bank at market rates. The Company has a borrowing limit of $10,000,000, inclusive of any outstanding balances. No specific collateral is required to be pledged for these borrowings.

(e) The Federal Reserve Bank Borrower in Custody (FRB BIC) Line consists of a borrower in custody in agreement open in January 2010 with the Federal Reserve Bank of Philadelphia secured by municipal loans maintained in the Company's possession. As of December 31, 2011, the Company has a borrowing limit of $14,249,000, inclusive of any outstanding advances. The approximate carrying value of the municipal loan collateral was $17,549,000 and $17,795,000 as of December 31, 2011 and 2010, respectively.

(f) In December 2003, the Company formed a special purpose entity (“Entity”) to issue $7,500,000 of floating rate obligated mandatory redeemable securities as part of a pooled offering. The rate was determined quarterly and floated based on the 3 month LIBOR plus 2.80. The Entity may redeem them, in whole or in part, at face value after December 17, 2008, and on a quarterly basis thereafter. The Company borrowed the proceeds of the issuance from the Entity in December 2003 in the form of a $7,500,000 note payable. Debt issue costs of $75,000 have been capitalized and fully amortized as of December 31, 2008. Under current accounting rules, the Company's minority interest in the Entity was recorded at the initial investment amount and is included in the other assets section of the balance sheet. The Entity is not consolidated as part of the Company's consolidated financial statements.

(g) In December, 2008, the Company entered into an interest rate swap agreement to convert floating-rate debt to fixed rate debt on a notional amount of $7,500,000. The interest rate swap instrument involves an agreement to receive a floating rate and pay a fixed rate, at specified intervals, calculated on the agreed-upon notional amount. The differentials paid or received on interest rate swap agreements are recognized as adjustments to interest expense in the period. The interest rate swap agreement was entered into on December 17, 2008 and expires December 17, 2013. The fair value of the interest rate swap at December 31, 2011 and 2010 was a liability of $348,000 and $409,000, respectively, and is included within other liabilities on the consolidated balance sheets.

(h) Term Loans consist of separate loans with a third party bank and the Federal Home Loan Bank of Pittsburgh as follows (in thousands):

		December 31,	December 31,
Interest Rate	Maturity	2011	2010
Fixed:
3.12%	May 9, 2011	-	1,000
3.73%	July 11, 2011	-	2,000
3.79%	August 22, 2011	-	1,000
3.70%	September 6, 2011	-	1,000
3.62%	September 6, 2011	-	2,000
3.57%	May 7, 2012	2,000	2,000
3.36%	May 9, 2012	2,000	2,000
3.89%	September 5, 2012	1,000	1,000
2.72%	March 31, 2013	1,150	1,150
2.58%	April 28, 2013	2,000	2,000
2.37%	May 5, 2013	2,000	2,000
3.75%	May 6, 2013	2,000	2,000
3.55%	May 9, 2013	2,000	2,000
2.26%	May 15, 2013	1,650	1,650
3.42%	December 2, 2013	5,000	5,000
3.52%	December 5, 2013	5,000	5,000
2.31%	January 27,2014	1,000	1,000
2.80%	April 17, 2014	3,200	3,200
2.29%	October 2, 2017	2,000	2,000
2.72%	July 12, 2018	1,000	-
3.52%	July 12, 2021	2,000	-
Total term loans		$ 35,000	$ 39,000

Following are maturities of borrowed funds as of December 31, 2011 (in thousands):

2012		$ 22,711
2013		20,800
2014		4,200
2015		637
2016		534
Thereafter		5,000
Total borrowed funds		$ 53,882