NOTE 10 – BORROWINGS AND SUBORDINATED DEBENTURES

1. Advances from the Federal Home Loan Bank

The available borrowing capacity with the FHLB is based on qualified collateral. Royal Bank has a collateralized delivery requirement of 105% with the FHLB due to the level of Royal Bank's non-performing assets and net losses. The available amount for future borrowings will be based on the amount of collateral to be pledged. Total advances from the FHLB were $65.0 million at December 31, 2012 compared to $104.2 million at December 31, 2011. Royal Bank has a $150 million line of credit with the FHLB of which $0 was outstanding as of December 31, 2012. The FHLB advances had a weighted average interest rate of 2.35%. The advances and the line of credit are collateralized by FHLB stock, government agencies and mortgage-backed securities, residential loans, and commercial real estate loans. As of December 31, 2012, investment securities with a market value of $67.1 million and loans with a book value of $50.0 million were pledged as collateral to the FHLB. The average balance of advances with the FHLB during 2012 was $80.1 million.

At December 31, 2011, advances from FHLB totaled $104.2 million with maturities within one day to two years. These advances had a weighted average interest rate of 2.66%. The average balance of advances with the FHLB during 2011 was $107.7 million.

Presented below are the Company's FHLB borrowings allocated by the year in which they mature with their corresponding weighted average rates:

	As of December 31,
(Dollars in thousands)	2012					2011
	Amount		Rate			Amount		Rate
Advances maturing in
2012	$	-		-		$	52,000		2.64	%
2013		50,000		2.64	%		50,000		2.64	%
2017		15,000		1.39	%		-		-
Amortizing advance, due April 2012, requiring monthly principal and interest of $558		-					2,218		3.46	%
Total FHLB borrowings	$	65,000				$	104,218

As of December 31, 2012, there are no FHLB borrowings maturing in 2014 through 2016.

2. Other borrowings

The Company has a note payable with PNC Bank ("PNC") at December 31, 2012 in the amount of $3.3 million with a maturity date of August 25, 2016. The note payable balance at December 31, 2011 was $3.8 million. The interest rate is a variable rate using rate index of one month LIBOR + 15 basis points and adjusts monthly. The interest rate at December 31, 2012 and 2011 was 0.36% and 0.44%, respectively.

At December 31, 2012 and 2011, the Company had other borrowings of $40.0 million from PNC which will mature on January 7, 2018. These borrowings are secured by government agencies and mortgaged-backed securities. These borrowings have a weighted average interest rate of 3.65%. As of December 31, 2012, investment securities with a market value of $51.7 million were pledged as collateral to secure all borrowings with PNC.

3. Subordinated debentures

The Company has outstanding $25.0 million of Trust Preferred Securities issued through two Delaware trust affiliates, Royal Bancshares Capital Trust I ("Trust I") and Royal Bancshares Capital Trust II ("Trust II") (collectively, the "Trusts"). The Company issued an aggregate principal amount of $12.9 million of floating rate junior subordinated debt securities to Trust I and an aggregate principal amount of $12.9 million of fixed/floating rate junior subordinated deferrable interest to Trust II. Both debt securities bear an interest rate of 2.46% at December 31, 2012, and reset quarterly at 3-month LIBOR plus 2.15%.

Each of Trust I and Trust II issued an aggregate principal amount of $12.5 million of capital securities bearing fixed and/or fixed/floating interest rates corresponding to the debt securities held by each trust to an unaffiliated investment vehicle and an aggregate principal amount of $387,000 of common securities bearing fixed and/or fixed/floating interest rates corresponding to the debt securities held by each trust to the Company. The Company has fully and unconditionally guaranteed all of the obligations of the Trusts, including any distributions and payments on liquidation or redemption of the capital securities.

On August 13, 2009, the Company's Board of Directors determined to suspend interest payments on the trust preferred securities. Under the Federal Reserve Agreement as described in "Note 2 – Regulatory Matters and Significant Risks or Uncertainties" to the Consolidated Financial Statements, the Company and its non-bank subsidiaries may not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System. As of December 31, 2012 the trust preferred interest payment in arrears was $2.5 million and has been recorded in interest expense and accrued interest payable.