Note 8 - Borrowed Funds

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

8. Borrowed Funds

There were no outstanding securities sold under agreements to repurchase at December 31, 2019, and December 31, 2018.

Securities sold under agreements to repurchase, if any, are accounted for as collateralized financing transactions and recorded at the amounts at which the securities were sold.

The table below provides comparative data for securities sold under agreements to repurchase for the years indicated:

	2019			2018			2017
	(Dollars in thousands)
Average amount outstanding during the year (1)	$	—		$	49,589		$	136,849
Maximum amount outstanding at month-end (2)		—			100,000			150,000
Balance, December 31		—			—			100,000
Rate, December 31		—	%		—	%		2.86	%
Weighted average interest rate for the year		—	%		—	%		3.11	%

(1) Average balances were computed using daily averages.

(2) Highest month-end balances were January 2018, and January 2017.

The Company had $25.7 million of short-term borrowings outstanding as of December 31, 2019. This funding was entered into by the Company's Hong Kong office, and will mature in 2020. As of December 31, 2019, short-term borrowings had a weighted average interest rate of 2.69%

As of December 31, 2019, over-night borrowings from the FHLB were $450.0 million at a rate of 1.66% compared to $200.0 million at a rate of 2.56% at December 31, 2018. As of December 31, 2019, the advances from the FHLB were $220 million at a weighted average rate of 2.26% compared to $330 million at a weighted average rate of 2.42% as of December 31, 2018. As of December 31, 2019, final maturity for the FHLB advances is $75 million in May 2021, $50 million in June 2021, $75 million in July 2021, and $20 million in May 2023.

In connection with the Company’s acquisition of SinoPac Bancorp, the Company paid $100 million of the purchase price on November 14, 2017. The residual payable cash balance has a floating rate of three-month LIBOR rate plus 150 basis points. As of December 31, 2019, the outstanding payable balance of $7.0 million has an interest rate of 3.4%. The remaining balance plus accrued interest are due and payable in July 2020.

On October 12, 2017, the Bank entered into a term loan agreement of $75.0 million with U.S. Bank. The principal amount outstanding as of December 31, 2018 was $70.3 million. The loan had a floating rate of one-month LIBOR plus 175 basis points. As of December 31, 2018, the term loan had an interest rate of 4.125%. The principal amount of the long-term debt from U.S. Bank is due and payable in consecutive quarterly installments in the amount of $4.7 million each on the last day of each calendar quarter commencing December 31, 2018, with the final installment due and payable on October 12, 2020. In November 2019 the Bank prepaid in full its term loan with U.S. Bank at par.

Other Liabilities. On November 23, 2004, the Company entered into an agreement with Mr. Dunson K. Cheng, pursuant to which he agreed to defer any bonus amounts in excess of $225,000 for the year ended December 31, 2005, until the later of January 1 of the first year following his separation from service from the Company or the first day of the seventh month following his separation from service from the Company. Accordingly, an amount equal to $610,000 was deferred in 2004 and was accrued in other liabilities in the consolidated balance sheet. The Company agreed to accrue interest on the deferred portion of the bonus at 7.0% per annum compounded quarterly. The deferred amount will be increased each quarter by the amount of interest computed for that quarter. On November 23, 2014, the interest rate was reset to 5.06% based on 275 basis points above the interest rate on the ten-year Treasury Note on that date. On March 13, 2014, the Compensation Committee of the Company awarded Mr. Cheng a cash bonus in the amount of $300,000 for the quarter ended December 31, 2013, and provided as part of the award that payment of the bonus would be deferred until the later of January 1 of the first year following his separation from service from the Company or the first day of the seventh month following his separation from service from the Company. The Company accrues interest on the deferred bonus at 5.02% per annum compounded quarterly. On March 28, 2019, the interest rate was reset to 5.72% based on 350 basis points above the interest rate on the five-year Treasury Note on that date.

Interest of $99,000 during 2019, $92,000 during 2018, and $87,000 during 2017 was accrued on the deferred bonuses. The balance was $2.0 million at December 31, 2019, and $1.9 million at December 31, 2018.

We established three special purpose trusts in 2003 and two in 2007 for the purpose of issuing Guaranteed Preferred Beneficial Interests in their Subordinated Debentures to outside investors (“Capital Securities”). The proceeds from the issuance of the Capital Securities as well as our purchase of the common stock of the special purpose trusts were invested in Junior Subordinated Notes of the Company (“Junior Subordinated Notes”). The trusts exist for the purpose of issuing the Capital Securities and investing in Junior Subordinated Notes. Subject to some limitations, payment of distributions out of the monies held by the trusts and payments on liquidation of the trusts, or the redemption of the Capital Securities, are guaranteed by the Company to the extent the trusts have funds on hand at such time. The obligations of the Company under the guarantees and the Junior Subordinated Notes are subordinate and junior in right of payment to all indebtedness of the Company and will be structurally subordinated to all liabilities and obligations of the Company’s subsidiaries. The Company has the right to defer payments of interest on the Junior Subordinated Notes at any time or from time to time for a period of up to twenty consecutive quarterly periods with respect to each deferral period. Under the terms of the Junior Subordinated Notes, the Company may not, with certain exceptions, declare or pay any dividends or distributions on its capital stock or purchase or acquire any of its capital stock if it has deferred payment of interest on any Junior Subordinated Notes.

At December 31, 2019, Junior Subordinated Notes totaled $119.1 million with a weighted average interest rate of 4.09%, compared to $119.1 million with a weighted average rate of 4.96% at December 31, 2018. The Junior Subordinated Notes have a stated maturity term of 30 years. Interest expense, excluding impact of cash flow interest rate swaps entered into during June 2014, on the Junior Subordinated Notes was $5.6 million for 2019, $5.2 million for 2018, and $4.1 million for 2017.