NOTE 9. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The Company has repurchase agreements with a carrying amount of $66.3 million as of both March 31, 2015 and December 31, 2014.

Under the terms of the agreements, the collateral is subject to adjustment determined by the counterparty and must be pledged in amounts equal to the debt plus the fair market value of the debt that is in excess of the principal amount of the debt. As a result, the Company had $81.5 million and $75.6 million in investment securities posted as collateral for these instruments as of March 31, 2015 and December 31, 2014, respectively. The Company will be required to post additional collateral if the gap between the fair market value of the liability and the contractual amount of the liability increases. In the event the Company prepays the agreements prior to maturity, it must do so at fair value, which as of March 31, 2015 exceeded the book value of the individual agreements by $5.9 million.

Information concerning repurchase agreements as of and for the three months ending March 31, 2014, and as of and for the year ended December 31, 2014 is summarized as follows:

	March 31, 2015			December 31, 2014
	(Dollars in Thousands)

Average daily balance	$	66,300		$	69,075
Weighted average coupon interest rate during the period		4.94	%		4.96	%
Maximum month-end balance during the period	$	66,300		$	78,300
Weighted average coupon interest rate at end of period		4.94	%		4.94	%
Weighted average maturity (months)		27			30

The repurchase agreements as of March 31, 2015 mature as follows:

	Amount Maturing
	(Dollars in Thousands)

2015 (1)	$	10,000
2016		5,000
2017		25,000
2018		26,300
2019		-
Thereafter		-
Total	$	66,300

____________

(1)

Remaining maturities between April 1, 2015 and December 31, 2015.

Under the repurchase agreements, the buyer has the option to terminate individual transactions in whole the following quarter. There is no termination penalty if terminated by the buyer. There have been no early terminations. Under the terms of a revised repurchase agreement that the Company entered into on August 2, 2012 with the counterparty on $51.3 million in carrying amount of the repurchase transactions, the Company is required to pledge additional collateral if its capital ratios decrease below the Prompt Corrective Action (PCA) defined levels of well-capitalized or adequately capitalized. The Company was above the PCA defined levels of well-capitalized at March 31, 2015. Failure to maintain required collateral levels is in violation of the default provision under the terms of the agreement and could result in a termination penalty. At March 31, 2015, the fair value of the $51.3 million of the debt exceeded the carrying value by approximately $4.4 million, which approximates the termination penalty.