Securities Sold Under Agreements and Other Borrowed Funds

6 Months Ended

Jun. 30, 2012

Securities Sold Under Agreements and Other Borrowed Funds [Abstract]

SECURITIES SOLD UNDER AGREEMENTS AND OTHER BORROWED FUNDS

NOTE 7 – SECURITIES SOLD UNDER AGREEMENTS AND OTHER BORROWED FUNDS

The securities sold under agreements to repurchase as of June 30, 2012 (unaudited) and December 31, 2011 are securities sold on a short-term basis by the Company that have been accounted for not as sales but as borrowings. The securities consisted of U.S. government and federal agency obligations. The securities were held in the Company’s safekeeping account at the Federal Home Loan Bank of Boston under the control of the Company. The securities are pledged to the purchasers of the securities. The purchasers have agreed to sell to the Company substantially identical securities at the maturity of the agreements.

Other borrowed funds consist of the balance of loans sold with recourse. On March 16, 2006, seventeen loans with an aggregate principal balance of $10.5 million were sold to another financial institution (investor). At June 30, 2012 (unaudited) and December 31, 2011, the principal balance of these loans totaled $1.5 million. The agreement related to this sale contains provisions requiring the Company during the initial 120 months to repurchase any loan that becomes 90 days past due. The Company will repurchase the past due loan for 100 percent of the unpaid principal plus interest to repurchase date.