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Debt:

12 Months Ended

Dec. 31, 2011

Note 4. Debt:

Information on our debt was as follows:

		September 30,		September 30,		September 30,			September 30,
	Carrying Value at December 31, (1)				Weighted Average Coupon Rate at December 31,
	2011		2010		2011			2010
	(Dollars in thousands, except footnotes)
Structured notes payable:
2003 Joint Venture	$	5,264	$	7,094		3.08	%		2.80	%
2000 Joint Venture		—		11,724		NA			7.28	%
1998 Partnership		—		3,339		NA			2.25	%

		5,264		22,157


Junior subordinated notes		27,070		27,070		3.62	%		3.54	%


Revolving credit facility		17,800		13,800		2.47	%		3.25	%


Debentures payable		13,181		8,177		4.99	%		5.90	%


Secured borrowings—government guaranteed loans (2):
Loans sold for a premium and excess spread		26,569		15,664		3.77	%		3.87	%
Loans sold for excess spread		5,977		6,101		1.58	%		1.58	%

		32,546		21,765


Debt	$	95,861	$	92,969

(1)

The face amount of debt as of December 31, 2011 and 2010 was $95,870,000 and $92,982,000, respectively.

(2)

The weighted average interest rate on the underlying loans at December 31, 2011 was 5.96%.

Principal payments on our debt at December 31, 2011 were as follows:

		September 30,		September 30,		September 30,
Years Ending December 31,	Total		Structured Notes and Secured Borrowings (1)		All Other Debt (2)
	(In thousands)
2012	$	6,104	$	6,104	$	—
2013		5,059		869		4,190
2014		18,697		897		17,800
2015		4,929		929		4,000
2016		961		961		—
Thereafter		60,120		28,050		32,070

	$	95,870	$	37,810	$	58,060

(1)

Principal payments are generally dependent upon cash flows received from the underlying loans. Our estimate of their repayment is based on scheduled principal payments on the underlying loans. Our estimate will differ from actual amounts to the extent we experience prepayments and/or loan losses. No payment is due on the secured borrowings unless payments are received from the borrowers on the loans underlying them. The 2003 Joint Venture structured notes were repaid on February 15, 2012; therefore, they are shown above in the year ending December 31, 2012.

(2)

Includes the revolving credit facility, junior subordinated notes and SBIC debentures payable.

Structured notes payable

Structured notes payable are collateralized by the loans of the securitizations. Repayment of their principal is based on collections of principal on the underlying loans receivable. We have no obligation to pay these notes, nor do the noteholders have any recourse against our assets (other than the underlying loans receivable and restricted cash of the securitzation). We repaid the 2003 Joint Venture structured notes payable on February 15, 2012.

Junior subordinated notes

The Junior Subordinated Notes bear interest at a floating rate which resets on a quarterly basis at the 90-day LIBOR plus 3.25%. The Junior Subordinated Notes may be redeemed at par at our option. Interest payments are due on a quarterly basis.

Revolving credit facility

PMC Commercial has a revolving credit facility which initially provided credit availability up to $30 million which expires on June 30, 2014. The total amount available under the revolving credit facility increased to $35 million on January 1, 2012. In addition, the amount available under the revolving credit facility will automatically increase on January 1, 2013 by $5 million to $40 million provided there is no event of default or potential default on that date and the non-performing loan ratio, as defined, is not more than 20% on that date. We are charged interest on the balance outstanding under the revolving credit facility at our election of either the prime rate of the lender less 50 basis points or the 30-day LIBOR plus 2%. In addition, we are charged an unused fee equal to 37.5 basis points computed based on our daily available balance. The credit facility requires us to meet certain covenants. We have a minimum net worth covenant ($142 million) within our credit facility that may limit our ability to pay dividends. At December 31, 2011, we were in compliance with the covenants of this facility.

SBIC debentures payable

SBIC debentures represent amounts due to the SBA and have semi-annual interest only payments until maturity.

Secured borrowings – government guaranteed loans

Secured borrowings – government guaranteed loans represents sold SBA 7(a) Program loans which are treated as secured borrowings if the loans were sold solely for excess spread or if the loans were sold for excess spread and a cash premium of 10%. To the extent secured borrowings include cash premiums, these premiums are included in secured borrowings and amortized as a reduction to interest expense over the life of the loan using the effective interest method and fully amortized when the loan is repaid in full.

Interest Paid

During 2011, 2010 and 2009 interest paid was $3,733,000, $3,791,000, and $2,669,000, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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