BORROWINGS

6 Months Ended

Jun. 30, 2013

BorrowingsAbstract

BORROWINGS

8. BORROWINGS

Borrowings as of June 30, 2013 consisted of an FHLB borrowing of $0.7 million with an interest rate of 0.50% that matures in 2020 and a capital lease of $0.2 million with an interest rate of 1.60%. Borrowings as of December 31, 2012 consisted of an FHLB borrowing of $0.7 million with an interest rate of 0.50% that matures in 2020, a capital lease of $0.2 million with an interest rate of 1.60%, and $2.0 million in loan participations sold (that did not qualify for Sales Accounting under GAAP), with an effective interest rate of 4.45%. During the first quarter of 2013, loan participation agreements were updated to conform for Sales Accounting treatment; therefore, loan participations are now netted within the loans category.

The Company has federal funds lines of credit with three correspondent banks totaling $10.0 million at June 30, 2013 and December 31, 2012. The Company periodically tests its federal funds lines of credit with its correspondent banks. These lines were tested during the three and six months ended June 30, 2013. The Company had unused borrowing capacity with the FHLB of $6.1 million as of June 30, 2013 and $7.5 million as of December 31, 2012. In addition, the Company has the ability to borrow from the Federal Reserve Bank to the extent of investment securities pledged to the Federal Reserve.