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Debt

12 Months Ended

Dec. 31, 2012

Note 4. Debt:

Information on our debt was as follows:


	Carrying Value at December 31, (1)				Weighted Average Coupon Rate at December 31,
	2012		2011		2012		2011
	(Dollars in thousands, except footnotes)

Secured borrowings - government guaranteed loans:
Loans sold for a premium and excess spread - principal	$	32,062	$	24,174		4.09%		4.15%
Loans sold for a premium and excess spread - deferred premiums		3,099		2,395		-		-
Loans sold for excess spread		5,847		5,977		1.58%		1.58%

		41,008		32,546

Junior subordinated notes		27,070		27,070		3.61%		3.62%
Debentures payable		17,190		13,181		4.47%		4.99%
Revolving credit facility (2)		11,900		17,800		2.30%		2.47%
Structured notes payable (3)		-		5,264		NA		3.08%

Debt	$	97,168	$	95,861

(1)

The face amount of debt as of December 31, 2012 and 2011 was $97,168,000 and $95,870,000, respectively.

(2)

Proceeds on the revolving credit facility were $48,300,000, $41,800,000 and $34,650,000 during the years ended December 31, 2012, 2011 and 2010, respectively. Repayments on the revolving credit facility were $54,200,000, $37,800,000 and $43,850,000 during the years ended December 31, 2012, 2011 and 2010, respectively.

(3)

We repaid the structured notes on February 15, 2012.

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.

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.

Debentures payable

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

Revolving credit facility

PMC Commercial has a revolving credit facility which expires on June 30, 2014. The amount available under the revolving credit facility automatically increased on January 1, 2013 from $35 million to $40 million. 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 within our credit facility that may limit our ability to pay dividends. The minimum net worth covenant is $134.5 million at December 31, 2012 and $132.0 million from January 1, 2013 and thereafter. At December 31, 2012, we were in compliance with the covenants of this facility.

Structured notes payable

Structured notes payable were collateralized by the loans of the securitizations.

Principal payments on, and estimated amortization of, our debt at December 31, 2012 was as follows:


	Secured Borrowings
Years Ending December 31,	Total		Principal (1)		Deferred Premiums (2)		All Other Debt (3)
	(In thousands)
2013	$	6,122	$	1,717	$	215	$	4,190
2014		13,173		1,121		152		11,900
2015		5,312		1,160		152		4,000
2016		1,353		1,201		152		-
2017		1,397		1,245		152		-
Thereafter		69,811		31,465		2,276		36,070

	$	97,168	$	37,909	$	3,099	$	56,160

(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 liquidations or charge-offs. No payment is due unless payments are received from the borrowers on the underlying loans.

(2)

Represents cash premiums collected on loans sold for excess spread and a cash premium of 10% which are amortized as a reduction to interest expense over the life of the loan. Our estimate of their amortization will differ from actual amounts to the extent we experience prepayments and/or loan liquidations or charge-offs.

(3)

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

During 2012, 2011 and 2010 interest paid was $3,495,000, $3,733,000, and $3,791,000, 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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