Note 8.Borrowings and Subordinated Debentures

Advances from the Federal Home Loan Bank

As of September 30, 2014, Royal Bank had $180.0 million of available borrowing capacity at the FHLB, which is based on qualifying collateral. Total advances from the FHLB were $55.0 million at September 30, 2014 and $65.0 million at December 31, 2013. The advances and the line of credit are collateralized by FHLB stock, government agencies and mortgage-backed securities. As of September 30, 2014, investment securities with a market value of $51.5 million were pledged as collateral to the FHLB.

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


	As of				As of
	September 30, 2014				December 31, 2013
(Dollars in thousands)	Amount		Rate		Amount		Rate
Advances maturing in
2014	$	—	—	%	$	10,000	0.24	%
2015		10,000	0.71	%		10,000	0.71	%
2016		10,000	1.11	%		10,000	1.11	%
2017		25,000	1.46	%		25,000	1.46	%
2018		10,000	2.01	%		10,000	2.01	%
Total FHLB borrowings	$	55,000			$	65,000

Other borrowings

The Company has a note payable with PNC Bank (“PNC”) at September 30, 2014 in the amount of $2.5 million compared to $2.9 million at December 31, 2013. The note’s maturity date is August 25, 2016. The interest rate is a variable rate equal to one month LIBOR + 15 basis points and adjusts monthly. The interest rate at September 30, 2014 was 0.31%.

At September 30, 2014 and December 31, 2013, the Company had additional borrowings of $40.0 million from PNC which will mature on January 7, 2018. These borrowings have a weighted average interest rate of 3.65%. The note payable and the borrowings are secured by government agencies and mortgage-backed securities.

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 debt securities to Trust II. Both debt securities bear an interest rate of 2.38% at September 30, 2014, 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 initially 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.

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. The Company received approval and paid all accumulated deferred interest in 2013 and the required interest payments through the first nine months of 2014.