Borrowings (Notes)

12 Months Ended

Dec. 31, 2013

The Company has a line of credit with the FHLB of Seattle approximating 13% of eligible assets, or $155.6 million at December 31, 2013. FHLB advances are subject to collateral criteria that require the Company to pledge assets under a blanket pledge arrangement as collateral for its borrowings from the FHLB. Additional advances are dependent on the availability of acceptable collateral such as marketable securities or real estate loans, although all FHLB advances are secured by a blanket pledge of the Company’s assets. The Company has an outstanding FHLB CIP advance of $2.2 million as of December 31, 2013 that was originated on March 22, 2013 and is included in long term borrowings. This advance was originated to match fund a loan to one borrower for the construction of a low income housing project that qualifies for a long term fixed interest rate; it has an eighteen year term with a 30 year amortization period, which mirrors the term of the term real estate loan made to the borrower. The Company did not have any outstanding FHLB advances at December 31, 2012.

The Company purchased its main office facility for $12.9 million on July 1, 2008. In this transaction, the Company, through NBL, assumed an existing loan secured by the building in an amount of $5.1 million. At December 31, 2013, the outstanding balance on this loan is $4.3 million. This is an amortizing loan and has a maturity date of April 1, 2014 and an interest rate of 5.95% as of December 31, 2013.

The Federal Reserve Bank is holding $89.9 million of loans as collateral to secure available borrowing lines through the discount window of $60.9 million at December 31, 2013. There were no discount window advances outstanding at December 31, 2013 and 2012. The Company paid less than $1,000 in 2013 and 2012 in interest on this agreement.

Securities sold under agreements to repurchase were $21.1 million and $19.0 million, respectively, for December 31, 2013 and 2012. The Company was paying 0.08% and 0.25% on these agreements at December 31, 2013 and 2012, respectively. The average balance outstanding of securities sold under agreement to repurchase during 2013 and 2012 was $19.4 million and $16.5 million, respectively, and the maximum outstanding at any month-end was $24.0 million and $22.6 million, respectively, during the same time periods. The securities sold under agreement to repurchase are held by the Federal Home Loan Bank under the Company’s control.

The Company had no other borrowings at December 31, 2013 and 2012.

The future principal payments that are required on the Company’s borrowings as of December 31, 2013, are as follows:



(In Thousands)
2014		$4,364
2015	45
2016	46
2017	48
2018	50
Thereafter	1,974
Total		$6,527

The Company recognized interest expense of $340,000, $329,000, and $352,000 in 2013, 2012, and 2011, respectively. The average interest rate paid rate on long term debt in the same periods was 5.13%, 5.95%, and 5.95%, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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