Federal Home Loan Bank Advances

12 Months Ended

Dec. 31, 2013

Federal Home Loan Bank Advances

Federal Home Loan Bank Advances

Note 9: Federal Home Loan Bank Advances

At December 31, 2013, advances from the Federal Home Loan Bank were as follows:

Interest Rate Range	Maturing year ending December 31,	Amount
		(In thousands)
1.70% - 2.85%	2014	$	9,000
2.23% - 2.49%	2015		7,500
1.21%	2016		3,000
1.42%	2017		3,000
		$	22,500

The Federal Home Loan Bank advances are secured by mortgage loans totaling $124.5 million at December 31, 2013.

At December 31, 2013, required annual principal payments on Federal Home Loan Bank advances were as follows:

For the year ended December 31,	(In thousands)
2014	$	9,000
2015		7,500
2016		3,000
2017		3,000
		22,500
Deferred prepayment penalty, net of amortization		(164	)
	$	22,336

Each advance is payable at its maturity date and has a prepayment penalty if repaid prior to maturity. During the quarter ended December 31, 2010, the Company prepaid $8.5 million of Federal Home Loan Bank advances which resulted in a prepayment penalty of $526,000. The Company replaced these advances with lower rate advances of $8.5 million whose present value, based on a discount rate equal to the cost of funds rate of the original advances, was not substantially different than the value of the original advances immediately prior to prepayment. As such, the Company was required to defer the $526,000 penalty over the life of the new advances. As of December 31, 2013, the Bank had $164,000 in unamortized prepayment penalties.

Additionally, as a member of the Federal Home Loan Bank system at December 31, 2013, the Bank had the ability to obtain up to $77.5 million in additional borrowings. Borrowings from the FHLB are secured by a blanket pledge of the one-to-four family residential real estate loan portfolio. The Bank’s borrowing capacity can be further increased by the pledge of additional collateral, including additional types of loans from the Bank’s loan portfolio and unpledged investment securities.

At December 31, 2013, the Bank had a cash management line of credit with the Federal Reserve Bank in the amount of $23.5 million, none of which was drawn. The Bank had approximately $24.3 million of state and political subdivision bonds pledged as collateral for this line of credit.