(4) Federal Home Loan Bank Advances
The Bank had outstanding borrowings of $60.4 million at September 30, 2012, via six separate advances. For five advances totaling $60.0 million, all of which are non-callable, interest payments are due monthly, with principal due at maturity. For the sixth advance of $423,000, principal and interest payments are due monthly based on a 15 year amortization schedule. In the third quarter of 2012, Bancorp restructured and extended terms on three advances with FHLB resulting in lower interest cost over the remaining term of these advances. Prepayment penalties totaling $872,000 were incurred. In accordance with US GAAP, prepayment penalties associated with the modification of advances are amortized over the life of the new advances, and are recorded as interest expense, resulting in effective interest rates greater than the contractual rate paid to FHLB.
The following is a summary of the contractual maturities and average effective rates:
|
|
September 30, 2012 |
|
December 31, 2011 |
|
(in thousands) |
|
Advance |
|
Rate |
|
Advance |
|
Rate |
|
2013 |
|
$ |
10,000 |
|
1.90 |
% |
$ |
20,000 |
|
1.55 |
% |
2014 |
|
10,000 |
|
1.11 |
% |
20,000 |
|
2.43 |
% |
2015 |
|
20,000 |
|
3.34 |
% |
20,000 |
|
3.34 |
% |
2017 |
|
10,000 |
|
1.74 |
% |
— |
|
— |
|
2018 |
|
10,000 |
|
2.02 |
% |
— |
|
— |
|
2024 |
|
423 |
|
2.40 |
% |
431 |
|
2.40 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
60,423 |
|
2.24 |
% |
$ |
60,431 |
|
2.44 |
% |
Advances from the FHLB are collateralized by certain commercial and residential real estate mortgage loans under a blanket mortgage collateral agreement and FHLB stock. The Bank views the borrowings as an effective alternative to higher cost time deposits to fund loan growth. At September 30, 2012, the amount of available credit from the FHLB totaled $102.9 million.
|