Federal Home Loan Bank Advances

6 Months Ended

Jun. 30, 2015

Disclosure Federal Home Loan Bank Advances Additional Information [Abstract]

Federal Home Loan Bank (FHLB) advances amounted to $47,027 and $54,321 at June 30, 2015 and December 31, 2014 respectively. All advances were bullet maturities with no call features. At June 30, 2015, collateral pledged for FHLB advances consisted of qualified multi-family and residential real estate mortgage loans and investment securities of $98,714 and $5,040, respectively. The maximum borrowing capacity of the Bank at June 30, 2015 was $71,389. The Bank maintains a $40,000 cash management line of credit (CMA) with the FHLB. No amounts were outstanding under the CMA line of credit at June 30, 2015 and December 31, 2014.

Maturities of FHLB advances outstanding at June 30, 2015 and December 31, 2014 are as follows:



	June 30, 2015			December 31, 2014
	(Dollars in thousands)
Maturity January 2015 with fixed rate of 0.80%	$	—		$	20,000
Maturity March 2015 with fixed rate of 0.24%	—			7,400
Maturity December 2016 with fixed rate of 0.79%	10,000			10,000
Maturity January 2017 with a variable rate of 0.42%	20,000			—
Maturities June 2017 through December 2017, with fixed rates ranging from 0.89% to 0.99%	15,000			15,000
Maturity June 2018 fixed rate of 1.24%	2,500			2,500
Restructuring prepayment penalty	(473		)	(579		)
Total FHLB advances	$	47,027		$	54,321

In 2012, the Corporation prepaid $27,500 of fixed rate FHLB advances with an average contractual interest rate of 2.47% and a remaining maturity of 12 to 31 months. The prepaid FHLB advances were replaced with $27,500 of fixed rate FHLB advances with an average contractual interest rate of 0.88% and terms of 49 to 67 months. In accordance with the restructure, the Corporation was required to pay a prepayment penalty of $1,017 to the FHLB. The present value of the cash flows under the terms of the replacement FHLB advances (including the prepayment penalties) was not more than 10% different from the present value of the cash flows under the terms of the prepaid FHLB advances and therefore the replacement advances were not considered to be substantially different from the original advances in accordance with ASC 470-50, Debt – Modifications and Exchanges. As a result, the prepayment penalties have been treated as a discount on the replacement debt and are being amortized over the life of the new advances as an adjustment to rate. The prepayment penalty effectively increased the interest rate on the new advances over the lives of the new advances at the time of the transaction. The benefit of prepaying these advances was an immediate decrease in interest expense and a decrease in interest rate sensitivity as the maturity of each of the refinanced FHLB advances was extended at a lower rate.

At June 30, 2015, the advances were structured to contractually pay down as follows:



	Balance			Weighted Average Rate
2015	$	—		—%
2016	10,000			0.79%
2017	35,000			0.65
2018	2,500			1.24
2019	—			—
Thereafter	—			—
Total	$	47,500		0.71%
Restructuring prepayment penalty	(473		)
Total	$	47,027