Borrowings and Subordinated Debentures

9 Months Ended

Sep. 30, 2017

Borrowings and Subordinated Debentures

Borrowings and Subordinated Debentures

Note 7.Borrowings and Subordinated Debentures

1. Advances from the Federal Home Loan Bank

As of September 30, 2017, Royal Bank had $326.0 million of available borrowing capacity at the FHLB, which is based on qualifying collateral.  Total advances from the FHLB were $40.0 million at September 30, 2017 and $69.0 million at December 31, 2016.  The advances and the line of credit are collateralized by FHLB stock, government agency securities, mortgage-backed securities, and a blanket lien on certain real estate loans.  As of September 30, 2017, investment securities with a market value of $8.6 million were pledged as collateral to the FHLB for the borrowings.

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, 2017				December 31, 2016
(Dollars in thousands)	Amount		Rate		Amount		Rate
Advances maturing in
2017	$	15,000	1.33	%	$	44,000	1.19	%
2018		10,000	2.01	%		10,000	2.01	%
2021		15,000	1.40	%		15,000	1.40	%
Total FHLB borrowings	$	40,000			$	69,000

2. Other borrowings

At September 30, 2017 and December 31, 2016, we had additional borrowings of $35.0 million from PNC which will mature on January 7, 2018.  These borrowings have a weighted average interest rate of 3.65%. The borrowings are secured by government agency securities and mortgage-backed securities.

Royal Bank has an additional $20.0 million in lines of credit with two local financial institutions, of which $0 was outstanding at September 30, 2017 and December 31, 2016, respectively.

3. Subordinated debentures

We have outstanding $25.8 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”).  We 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 3.47% at September 30, 2017, 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 issued to the Company an aggregate principal amount of $387 thousand of common securities bearing fixed and/or fixed/floating interest rates corresponding to the debt securities held by each trust.  We have fully and unconditionally guaranteed all of the obligations of the Trusts, including any distributions and payments on liquidation or redemption of the capital securities.