Short-Term Borrowings and Long-Term Debt

The following table stratifies COB’s borrowings as short-term and long-term at the periods indicated:



	December 31,
(dollars in thousands)	2015				2014
	Balance		Rate		Balance		Rate
Short-term borrowings:
Retail customer repurchase agreements	$	7,219	0.21	%	$	9,076	0.21	%
Federal Home Loan Bank advances	28,500		0.49	%	—		—	%
Total short-term borrowings	$	35,719			$	9,076
Long-term debt:
Federal Home Loan Bank advances	$	65,181	1.79		$	68,234	1.68
Long-term notes payable	5,415		1.43		5,338		1.43
Junior subordinated debt	56,702		1.92		56,702		1.78
Total long-term debt	$	127,298			$	130,274

Retail Repurchase Agreements and Federal Funds Purchased

Funds are borrowed on an overnight basis through retail repurchase agreements with bank customers and federal funds purchased from other financial institutions. Retail repurchase agreement borrowings are collateralized by securities of the U.S. Treasury and U.S. Government agencies and corporations.

At December 31, 2015, the Bank had no borrowings at the Federal Reserve Bank.

Information concerning retail repurchase agreements and federal funds purchased is as follows:



(dollars in thousands)	2015			2014			2013
	Retail Repurchase Agreements			Retail Repurchase Agreements			Retail Repurchase Agreements
Balance at December 31	$	7,219		$	9,076		$	6,917
Average balance during the year	10,033			7,713			9,852
Maximum month end balance	16,753			12,217			13,064
Weighted average interest rate:
At December 31	0.21		%	0.21		%	0.21		%
During the year	0.22			0.21			0.21

Federal Home Loan Bank (“FHLB”) Advances

At December 31, 2015, the Bank had an available borrowing capacity of $80.8 million and access to additional borrowings of $294.1 million by pledging additional collateral with the FHLB. At December 31, 2015, outstanding FHLB advances under the current line amounted to $93.7 million and were at interest rates ranging from 0.49% to 6.15%. These borrowings are secured by collateral on qualifying mortgage loans and, as required, by other qualifying collateral. At December 31, 2014, FHLB advances amounted to $68.2 million and were at interest rates ranging from 0.93% to 6.15%.

At December 31, 2015, the scheduled maturities of FHLB advances payable over the next five years and thereafter, certain of which are convertible to a variable rate at the option of the FHLB before scheduled maturity, are as follows:



(dollars in thousands)
Twelve Months Ended December 31,
2016	$	33,500
2017	5,000
2018	5,181
2019	—
2020	50,000
2021 and thereafter	—
Total FHLB advances	$	93,681

Long-term debt included the following advances from the FHLB at the periods indicated.



(dollars in thousands)
			December 31,
Maturity	Interest Rate		2015		2014
September 8, 2015	3.7100	%	—		3,000
September 27, 2016	0.9300		5,000		5,000
September 27, 2017	1.4200		5,000		5,000
August 27, 2018	6.1500		181		234
September 27, 2018	1.8400		5,000		5,000
June 15, 2020	1.8938		50,000		50,000
			$	65,181	$	68,234

During the second quarter of 2013 we restructured $50 million of Federal Home Loan Bank advances from fixed rate to floating rate, which we expect to further reduce interest costs. The restructured advances, per ASC 470-50 “Debt - Modifications and Extinguishments,” are not substantially different than the prior advances so there was no debt extinguishment.

Long-term Notes Payable

The amount reported as long-term notes payable consists of a note, secured by Bank stock, payable to Howe Barnes Hoefer & Arnett, Inc. (“Howe Barnes”) in connection with the settlement of legal proceedings between Howe Barnes and the Bank. The note bears an imputed interest rate of 1.43% and matures in 2017.

Junior Subordinated Deferrable Interest Debentures

COB has Junior Subordinated Deferrable Interest Debentures or Junior Subordinated Debentures outstanding. Two issues of Junior Subordinated Debentures resulted from funds invested from the sale of trust preferred securities by FNB United Statutory Trust I (“FNB Trust I”) and by FNB United Statutory Trust II (“FNB Trust II”), which are owned by COB. Two additional issues of Junior Subordinated Debentures were acquired on April 28, 2006 as a result of COB’s merger with Integrity Financial Corporation. These acquired issues resulted from funds invested from the sale of trust preferred securities by Catawba Valley Capital Trust I (“Catawba Trust I”) and by Catawba Valley Capital Trust II (“Catawba Trust II”), which were owned by Integrity and acquired by COB in the merger. COB initiated the redemption of the securities issued by Catawba Valley Trust I as of December 30, 2007 and that trust was subsequently dissolved.

COB fully and unconditionally guarantees the preferred securities issued by each trust through the combined operation of the debentures and other related documents. Obligations under these guarantees are unsecured and subordinate to senior and subordinated indebtedness of COB. The preferred securities qualify as Tier 1 and Tier 2 capital for regulatory capital purposes.

During the second quarter of 2010, COB suspended payment of interest on junior subordinated debt for liquidity purposes. The associated interest expense on junior subordinated debt has been fully accrued and is included in the Consolidated Statements of Operations. Payment of this interest was made in connection with the recapitalization in order to be able to redeem CommunityOne Bancorp preferred stock. COB again suspended payment of interest on the Junior Subordinated Debentures as of the first quarter 2012, but paid all deferred and current interest due on February 5, 2015, effective as of the quarterly payment due March 2015.

Information concerning the Junior Subordinated Debentures is as follows at the periods indicated.



(dollars in thousands)		Commencement
	Stated	of Early	As of December 31,
	Maturity	Redemption	2015				2014
Issuer	Date	Period	Principal		Unpaid Interest		Principal		Unpaid Interest		Interest Rate
FNB Trust I	12/15/2035	12/15/2010	$	20,619	$	18	$	20,619	$	1,107	3 month LIBOR + 1.37% = 1.88% at 12/31/15
FNB Trust II	6/30/2036	6/30/2011	30,928		—		30,928		1,588		3 month LIBOR + 1.32% = 1.65% at 12/31/15
Catawba Trust II	12/30/2032	12/30/2007	5,155		—		5,155		608		3 month LIBOR + 3.35% = 3.68% at 12/31/15
Total Junior Subordinated Debentures			$	56,702	$	18	$	56,702	$	3,303