SUBORDINATED DEBENTURES

12 Months Ended

Dec. 31, 2012

Subordinated Borrowings [Abstract]

SUBORDINATED DEBENTURES

SUBORDINATED DEBENTURES

As of December 31, 2012, the Company had 13 affiliated Delaware or Connecticut statutory and business trusts (collectively, the Trusts) that were created for the sole purpose of issuing trust preferred securities. The trust preferred securities were issued in private placements, with the exception of First Preferred Capital Trust IV, which was issued in a publicly underwritten offering. The Company owns all of the common securities of the Trusts. The sole assets of the statutory and business trusts are the Company's junior subordinated debentures. The gross proceeds of the offerings were used by the Trusts to purchase variable rate or fixed rate junior subordinated debentures from the Company. In connection with the issuance of the trust preferred securities, the Company made certain guarantees and commitments that, in the aggregate, constitute a full and unconditional guarantee by the Company of the obligations of the Trusts under the trust preferred securities. The following is a summary of the junior subordinated debentures issued to the Trusts in conjunction with the trust preferred securities offerings at December 31, 2012 and 2011:

Name of Trust	Issuance Date	Maturity Date	Call Date(1)	Interest Rate(2)		Trust Preferred Securities		Subordinated Debentures
						(dollars expressed in thousands)
Variable Rate
First Bank Statutory Trust II	September 2004	September 20, 2034	September 20, 2009	+205.0	bp	$	20,000	$	20,619
Royal Oaks Capital Trust I	October 2004	January 7, 2035	January 7, 2010	+240.0	bp	4,000		4,124
First Bank Statutory Trust III	November 2004	December 15, 2034	December 15, 2009	+218.0	bp	40,000		41,238
First Bank Statutory Trust IV	March 2006	March 15, 2036	March 15, 2011	+142.0	bp	40,000		41,238
First Bank Statutory Trust V	April 2006	June 15, 2036	June 15, 2011	+145.0	bp	20,000		20,619
First Bank Statutory Trust VI	June 2006	July 7, 2036	July 7, 2011	+165.0	bp	25,000		25,774
First Bank Statutory Trust VII	December 2006	December 15, 2036	December 15, 2011	+185.0	bp	50,000		51,547
First Bank Statutory Trust VIII	February 2007	March 30, 2037	March 30, 2012	+161.0	bp	25,000		25,774
First Bank Statutory Trust X	August 2007	September 15, 2037	September 15, 2012	+230.0	bp	15,000		15,464
First Bank Statutory Trust IX	September 2007	December 15, 2037	December 15, 2012	+225.0	bp	25,000		25,774
First Bank Statutory Trust XI	September 2007	December 15, 2037	December 15, 2012	+285.0	bp	10,000		10,310
Fixed Rate
First Bank Statutory Trust	March 2003	March 20, 2033	March 20, 2008	8.10%		25,000		25,774
First Preferred Capital Trust IV	April 2003	June 30, 2033	June 30, 2008	8.15%		46,000		47,423

(1) The junior subordinated debentures are callable at the option of the Company on the call date shown at 100% of the principal amount plus accrued and unpaid interest.

(2) The interest rates paid on the trust preferred securities are based on either a variable rate or a fixed rate. The variable rate is based on the three-month LIBOR plus the basis point spread shown.

The Company’s distributions accrued on the junior subordinated debentures were $14.8 million, $13.5 million and $12.9 million for the years ended December 31, 2012, 2011 and 2010, respectively, and are included in interest expense in the consolidated statements of operations. Deferred issuance costs associated with the Company’s junior subordinated debentures are included as a reduction of junior subordinated debentures in the consolidated balance sheets and are amortized on a straight-line basis to the maturity date of the respective junior subordinated debentures. The structure of the trust preferred securities currently satisfies the regulatory requirements for inclusion, subject to certain limitations, in the Company’s capital base, as further discussed in Note 14 to the consolidated financial statements.

In August 2009, the Company announced the deferral of its regularly scheduled interest payments on its outstanding junior subordinated debentures relating to its $345.0 million of trust preferred securities beginning with the regularly scheduled quarterly interest payments that would otherwise have been made in September and October 2009. The terms of the junior subordinated debentures and the related trust indentures allow the Company to defer such payments of interest for up to 20 consecutive quarterly periods without triggering a payment default or penalty. Such payment default or penalty would likely have a material adverse effect on the Company’s business, financial condition or results of operations. The Company has deferred such payments for 14 quarterly periods as of December 31, 2012. The current 20 consecutive quarterly deferral period ends with the respective payment dates of the trust preferred securities in September and October 2014. During the deferral period, the respective trusts will suspend the declaration and payment of dividends on the trust preferred securities. During the deferral period, the Company may not, among other things and with limited exceptions, pay cash dividends on or repurchase its common stock or preferred stock nor make any payment on outstanding debt obligations that rank equally with or junior to the junior subordinated debentures. Accordingly, the Company also suspended the payment of cash dividends on its outstanding common stock and preferred stock beginning with the regularly scheduled quarterly dividend payments on the preferred stock that would otherwise have been made in August and September 2009, as further described in Note 13 to the consolidated financial statements. The Company has deferred $43.8 million and $31.0 million of its regularly scheduled interest payments as of December 31, 2012 and 2011, respectively. In addition, the Company has accrued additional interest expense of $3.9 million and $1.9 million as of December 31, 2012 and 2011, respectively, on the regularly scheduled deferred interest payments based on the interest rate in effect for each junior subordinated note issuance in accordance with the respective terms of the underlying agreements.

Under its agreement with the FRB, the Company agreed, among other things, to provide certain information to the FRB, including, but not limited to, prior notice regarding the issuance of additional trust preferred securities. The Company also agreed not to make any distributions of interest or other sums on its outstanding trust preferred securities without the prior approval of the FRB, as further described in Note 14 to the consolidated financial statements.

On January 26, 2011, the Company, the holder of 100% of the outstanding common stock of First Preferred Capital Trust IV (the Trust), successfully completed a consent solicitation from the holders of the 8.15% cumulative trust preferred securities of the Trust, and entered into certain amendments that were approved in the consent solicitation. The Company solicited the consents in order to increase its capital planning flexibility under the terms of the documents and the provisions of the indentures, guarantee agreements and trust agreements relating to the Company’s other tranches of trust preferred securities. The amendments provide an opportunity for the Company to seek to improve its capital position and decrease its level of indebtedness during a period in which it is deferring interest payments in accordance with the terms of the indenture.