Borrowings

6 Months Ended

Jun. 30, 2011

(7) Borrowings

Federal Home Loan Bank of Boston Advances

Advances payable to the FHLBB amounted to $558.4 million at June 30, 2011 and $498.7 million at December 31, 2010. In connection with the Corporation’s ongoing interest rate risk management efforts, in May 2011, the Corporation modified the terms to extend the maturity dates of $10 million of its FHLBB advances with original maturity dates in 2012. During the second quarter of 2011, the Corporation prepaid $5 million in advances payable to the FHLBB resulting in a debt prepayment penalty charge, recorded in noninterest expense, of $221 thousand. In July 2011, the Corporation modified the terms to extend the maturity dates of an additional $34 million of its FHLBB advances with original maturity dates in 2013. The following table presents maturities and weighted average interest rates paid on FHLBB advances outstanding at June 30, 2011, on a pro-forma basis, reflecting the July 2011 modification:

(Dollars in thousands)	Scheduled		Redeemed at		Weighted
	Maturity		Call Date (1)		Average Rate (2)
July 1, 2011 through December 31, 2011:	$	116,641	$	121,641		0.64	%
2112		42,078		42,078		3.66	%
2113		123,390		118,390		3.80	%
2114		98,109		98,109		3.70	%
2115		114,310		114,310		3.75	%
2116		20,100		20,100		5.33	%
2117 and after		43,813		43,813		4.95	%
Total	$	558,441	$	558,441

(1)	Callable FHLBB advances are shown in the respective periods assuming that the callable debt is redeemed at the call date while all other advances are shown in the periods corresponding to their scheduled maturity date.

(2) Weighted average rate based on scheduled maturity dates.

In addition to the outstanding advances, the Bank also has access to an unused line of credit with the FHLBB amounting to $8.0 million at June 30, 2011. Under agreement with the FHLBB, the Bank is required to maintain qualified collateral, free and clear of liens, pledges, or encumbrances that, based on certain percentages of book and fair values, has a value equal to the aggregate amount of the line of credit and outstanding advances. The FHLBB maintains a security interest in various assets of the Corporation including, but not limited to, residential mortgage loans, commercial mortgages and other commercial loans, U.S. government agency securities, U.S. government-sponsored enterprise securities, and amounts maintained on deposit at the FHLBB. The Corporation maintained qualified collateral in excess of the amount required to collateralize the line of credit and outstanding advances at June 30, 2011. Included in the collateral were securities available for sale with a fair value of $286.6 million and $273.7 million, respectively, which were specifically pledged to secure FHLBB borrowings at June 30, 2011 and December 31, 2010. See Note 5 for discussion on loans pledged as collateral for FHLBB borrowings. Unless there is an event of default under the agreement, the Corporation may use, encumber or dispose any portion of the collateral in excess of the amount required to secure FHLBB borrowings, except for that collateral which has been specifically pledged.