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Long-term Debt
 12 Months Ended
Dec. 31, 2016
Long-term debt:  
Long-term Debt Text Block

NOTE 11: LONG-TERM DEBT

At December 31, 2016 and 2015, the composition of long-term debt is presented below.

20162015
WeightedWeighted
(Dollars in thousands)AmountAvg. RateAmountAvg. Rate
Subordinated debentures, due 2033$3,2173.88%$7,2173.63%
Total long-term debt$3,2173.88%$7,2173.63%

The Company formed Auburn National Bancorporation Capital Trust I (the “Trust”), a wholly-owned statutory business trust, in 2003. The Trust issued $7.0 million of trust preferred securities that were sold to third parties. The proceeds from the sale of the trust preferred securities and trust common securities that we hold, were used to purchase junior subordinated debentures of $7.2 million from the Company, which are presented as long-term debt in the consolidated balance sheets and qualify for inclusion in Tier 1 capital for regulatory capital purposes, subject to certain limitations. The debentures mature on December 31, 2033 and have been redeemable since December 31, 2008.

In October 2016, the Company purchased $4.0 million par amount of outstanding trust preferred securities issued by the Trust. These securities were sold by the FDIC, as receiver of a failed bank that held the trust preferred securities. The Company used dividends from the Bank to purchase these trust preferred securities and has deemed an equivalent amount of the related subordinated debentures issued by the company as no longer outstanding. The Company realized a pre-tax gain of $0.8 million on the early extinguishment of debt in this transaction. Following the transaction, the Company had $3.2 million in junior subordinated debentures related to $3.0 million of trust preferred securities outstanding. The amount related to the trust preferred securities remains included in the Company’s Tier 1 capital for regulatory purposes.

The following is a schedule of contractual maturities of long-term debt:

(Dollars in thousands)20172018201920202021ThereafterTotal
Subordinated debentures—————3,2173,217
Total long-term debt$—————3,2173,217