NOTE 8: Borrowings

The table below presents selected information on short-term borrowings:

	December 31,
(Dollars in thousands)	2011			2010
Customer repurchase agreements1	$	4,644		$	6,848
Federal Reserve Bank discount window2		-			-
FHLB advances3		-			-
Federal funds purchased4		2,900			3,770
Balance outstanding at year end	$	7,544		$	10,618
Maximum balance at any month end during the year	$	7,750		$	31,530
Average balance for the year	$	5,831		$	9,341
Weighted average rate for the year		0.69	%		0.78	%
Weighted average rate on borrowings at year end		0.56	%		0.52	%
Estimated fair value at year end	$	7,544		$	10,618

Secured transactions with customers, which generally mature the day following the day sold.

Short-term borrowings through the Federal Reserve Bank's discount window lending programs, which are secured by a loan-specific lien on certain qualifying loans. At December 31, 2011 and 2010 there were no short-term borrowings from the Federal Reserve Bank.

Short-term borrowings from the FHLB secured by a blanket floating lien on certain loans secured by 1-4 family residential properties. At December 31, 2011 and 2010 there were no short-term FHLB advances outstanding.

Advances against $59 million in federal funds lines with correspondent banks.

Long-term borrowings at December 31, 2011 consist of a repurchase agreement with a third-party broker, which is secured by investment securities; advances under a non-recourse revolving bank line of credit secured by loans at C&F Finance; and advances from the FHLB, which are secured by a blanket floating lien on all qualifying closed-end and revolving, open-end loans secured by 1-4 family residential properties. The interest rate on the repurchase agreement, which matures in 2018, is 3.55% (7.00% minus three-month LIBOR with a maximum rate of 3.55%) and the outstanding balance as of December 31, 2011 was $5.00 million. The interest rate on the revolving bank line of credit, which matures in 2014, floats at the one-month LIBOR rate plus a range of 200 basis points to 225 basis points, depending upon the average balance outstanding on the line, and the outstanding balance as of December 31, 2011 was $75.49 million. C&F Finance's revolving bank line of credit agreement contains covenants regarding C&F Finance's capital adequacy, collateral performance, adequacy of the allowance for loan losses and interest expense coverage. C&F Finance satisfied all such covenants during 2011. Long-term advances from the FHLB at December 31, 2011 consist of $45.00 million of convertible advances and a $7.50 million fixed rate hybrid advance. The convertible advances have fixed rates of interest unless the FHLB exercises its option to convert the interest on these advances from fixed rate to variable rate. The fixed rate hybrid advance provides fixed-rate funding until the stated maturity date. The Bank may add interest rate caps or floors at a future date, at which time the cost of the caps or floors will be added to the advance rate.

The table below presents selected information on the FHLB advances:

(Dollars in thousands)
Balance Outstanding at December 31, 2011	Interest Rate			Maturity Date	Next Conversion Option Date
Fixed Rate Hybrid Advance
$7,500		3.39	%	08/10/15
Convertible Advances
$5,000		3.90	%	08/30/12	02/29/12
$5,000		4.08		08/30/12	02/29/12
$5,000		3.95		11/17/14	02/17/12
$7,500		3.69		11/28/14	02/28/12
$7,500		3.70		10/19/17	04/19/12
$5,000		4.06		10/25/17	01/25/12
$5,000		2.93		11/27/17	02/27/12
$5,000		3.59		06/06/18	06/06/12

The contractual maturities of long-term borrowings at December 31, 2011 are as follows:

(Dollars in thousands)	Fixed Rate		Floating Rate		Total
2012	$	10,000	$	-	$	10,000
2013		-		-		-
2014		12,500		75,487		87,987
2015		7,500		-		7,500
2016		-		-		-
Thereafter		22,500		5,000		27,500
	$	52,500	$	80,487	$	132,987

The Corporation's unused lines of credit for future borrowings total approximately $221.87 million at December 31, 2011, which consists of $55.98 million available from the FHLB, $44.51 million on C&F Finance's revolving bank line of credit, $65.28 million available from the Federal Reserve Bank and $56.10 million under federal funds agreements with a third party financial institution. Additional loans are available that can be pledged as collateral for future borrowings from the Federal Reserve Bank or the FHLB above the current lendable collateral value.

In December 2007, C&F Financial Statutory Trust II (Trust II), a wholly-owned non-operating subsidiary of the Corporation, was formed for the purpose of issuing trust preferred capital securities for general corporate purposes including the refinancing of existing debt. On December 14, 2007, Trust II issued $10.00 million of trust preferred capital securities in a private placement to an institutional investor and $310,000 in common equity to the Corporation in exchange for cash. The securities mature in December 2037, are redeemable at the Corporation's option beginning after five years, and require quarterly distributions by Trust II to the holder of the securities at a fixed rate of 7.73% as to $5.00 million of the securities and at a rate equal to the three-month LIBOR rate plus 3.15% as to the remaining $5.00 million, which rate was 3.70% at December 31, 2011. The fixed rate portion of the securities converts to the three-month LIBOR rate plus 3.15% in December 2012. The principal asset of Trust II is $10.31 million of the Corporation's trust preferred capital notes with like maturities and like interest rates to the trust preferred capital securities. The interest payments by the Corporation on the debt securities will be used by Trust II to pay the quarterly distributions payable by Trust II to the holders of the trust preferred capital securities.

In July 2005, C&F Financial Statutory Trust I (Trust I), a wholly-owned non-operating subsidiary of the Corporation, was formed for the purpose of issuing trust preferred capital securities to partially fund the Corporation's purchase of 427,186 shares of its common stock. On July 21, 2005, Trust I issued $10.00 million of trust preferred capital securities in a private placement to an institutional investor and $310,000 in common equity to the Corporation in exchange for cash. The securities mature in September 2035, are redeemable at the Corporation's option beginning after five years, and require quarterly distributions by Trust I to the holder of the securities at a rate equal to the three-month LIBOR rate plus 1.57%. During 2010, in order to mitigate the effect of rising interest rates in the future, the Corporation entered into two interest rate swap agreements whereby the effective fixed interest rate on $5.00 million of the securities became 3.48% and the effective fixed interest rate on the remaining $5.00 million of the securities became 4.31%. The interest rate swaps mature in September 2015. The principal asset of Trust I is $10.31 million of the Corporation's trust preferred capital notes with like maturities and like interest rates to the trust preferred capital securities. The interest payments by the Corporation on the debt securities will be used by Trust I to pay the quarterly distributions payable by Trust I to the holders of the trust preferred capital securities.

Subject to certain exceptions and limitations, the Corporation may elect from time to time to defer interest payments on the junior subordinated debt securities, which would result in a deferral of distribution payments on the related capital securities.