Related Party Transactions

3 Months Ended

Mar. 31, 2013

Related Party Transactions

Related Party Transactions

Note 10.  Related Party Transactions

The Company and the Bank have engaged in and intend to continue to engage in banking and financial transactions in the conduct of its business with directors and executive officers of the Company and the Bank and their related parties.

The Bank has granted loans, letters of credit and lines of credit to directors, executive officers and their related parties.  The following table summarizes the changes in the total amounts of such outstanding loans, advances under lines of credit as well as repayments during the three months ended March 31, 2013 and 2012.

	March 31,
(in thousands)	2013			2012
Outstanding at beginning of the year	$	33,296		$	87,442
New loans and advances	12,188			9,870
Repayments / reductions	(10,853		)	$	(10,814	)
Other (1)	(256		)	—
Outstanding at end of period	$	34,375		$	86,498

(1) “Other” represents loans to related parties that ceased being related parties during the period.

At March 31, 2013, loans to directors, executive officers and their related parties which were not performing in accordance with the terms of the loan agreements totaled $190 thousand.

Included in related party loans is $6.6 million outstanding under a commercial line of credit (“line”) to a company owned by a director.  The Company also sold a participation interest in this line to the same director in the amount of $5.2 million, of which $2.6 million is outstanding.  The Bank receives a 25 basis point annual servicing fee from this director on the participation balance.

Deposits from directors, executive officers and their related parties held by the Bank at March 31, 2013 and December 31, 2012 amounted to $57.0 million and $66.7 million, respectively.  Interest paid on the deposits amounted to $35 thousand and $81 thousand for the three months ended on March 31, 2013 and 2012, respectively.

In the course of its operations, the Company acquires goods and services from and transacts business with various companies affiliated with related parties.  The Company believes these transactions were made on the same terms as those for comparable transactions with unrelated parties.  The Company recorded payments for these services of $1.2 million and $217 thousand for the three months ended March 31, 2013 and 2012, respectively.

Subordinated notes held by officers and directors and/or their related parties totaled $10 million at both March 31, 2013 and December 31, 2012.  There was no interest paid to directors on these notes for the three months ended on March 31, 2013 and 2012.  Interest accrued and unpaid on the notes totaled $2.4 million at March 31, 2013.