Federal Home Loan Bank Advances

12 Months Ended

Dec. 31, 2012

Federal Home Loan Bank Advances [Abstract]

Federal Home Loan Bank Advances

Note 9 - Federal Home Loan Bank Advances

The Bank's total credit availability under the FHLB's credit availability program was $171,060,000 and $184,400,000 at December 31, 2012 and 2011, respectively. The Bank is able to borrow up to 20% of total assets. There were no short-term borrowings with the FHLB at December 31, 2012 and 2011. Long-term advances outstanding were $115,000,000 at both December 31, 2012 and 2011. The maturities of these long-term advances at December 31, 2012 are as follows (dollars in thousands):

Rate	Amount		Maturity
1.81% to 1.83%	$	15,000		2016
2.43% to 4.05%		70,000		2017
2.58% to 4.00%		30,000	Thereafter
	$	115,000

The Bank's stock in the FHLB is pledged as security for the advances and under a blanket floating lien security agreement with the FHLB. The Bank is required to maintain as collateral for its advances, qualified loans in varying amounts depending on the loan type. Loans with an approximate fair value of $218,033,000 are pledged as collateral at December 31, 2012.

During the third quarter 2012, the Bank restructured a portion of its FHLB Atlanta borrowings by repaying $65 million of existing advances and replacing them with $65 million of lower cost advances. The transaction resulted in $5.3 million in prepayment penalties that were deferred and will be recognized in interest expense through yield adjustments on the new borrowings in future periods. The existing borrowings had an average cost of 3.87%. The new borrowings had an average cost of 2.72% including the deferred adjustment. The relevant accounting treatment for this transaction was provided in ASC 470-50. This transaction was executed as an earnings strategy.