Borrowings

12 Months Ended

Dec. 31, 2011

Borrowings [Abstract]

Borrowings

Note 9 – Borrowings

As of December 31, 2011 and 2010 borrowings consisted of the following:

	2011		2010
Securities sold under agreements to repurchase	$	132,380	$	94,057
Federal Home Loan Bank advances:
Fixed-term advances		19,750		22,750
Subordinated debentures		20,620		20,620
Other borrowings:
Due in one year or less		8,250		-
Total	$	181,000	$	137,427

Aggregate annual maturities of long-term borrowings at December 31, 2011 are:

2012	$	14,750
2013		-
2014		-
2015		-
2016		-
Thereafter		25,620
	$	40,370

FHLB advances represent borrowings by First Mid Bank to economically fund loan demand.  The fixed term advances totaling $19.75 million are as follows:

·   $5 million advance at 4.82% with a 5-year maturity, due January 19, 2012, two year lockout, callable quarterly

·   $5 million advance at 4.69% with a 5-year maturity, due February 23, 2012, two year lockout, callable quarterly

·   $4.75 million advance at 1.60% with a 5-year maturity, due December 24, 2012

·   $5 million advance at 4.58% with a 10-year maturity, due July 14, 2016, one year lockout, callable quarterly

Securities sold under agreements to repurchase have overnight maturities and a weighted average rate of .16%. First Mid Bank has collateral pledge agreements whereby it has agreed to keep on hand at all times, free of all other pledges, liens, and encumbrances, whole first mortgages on improved residential property with unpaid principal balances aggregating no less than 133% of the outstanding advances and letters of credit ($0 on December 31, 2011) from the FHLB.  The securities underlying the repurchase agreements are under the Company’s control.

	2011		2010		2009
Securities sold under agreements to repurchase:
Maximum outstanding at any month-end	$	132,380	$	94,530	$	83,826
Average amount outstanding for the year		108,240		76,758		72,589

At December 31, 2011 and 2010, there was no outstanding loan balance on a revolving credit agreement with The Northern Trust Company. This loan was renewed on April 22, 2011. The revolving credit agreement has a maximum available balance of $20 million with a term of one year from the date of closing. The interest rate (2.375% at December 31, 2011) is floating at 2.25% over the federal funds rate. The loan is unsecured and subject to a borrowing agreement containing requirements for the Company and First Mid Bank to maintain various operating and capital ratios. The Company and First Mid Bank were in compliance with all the existing covenants at December 31, 2011 and 2010.

As described under Note 1 — “Preferred Stock” above, the Remaining Investors have not yet been issued their shares of Series C Preferred Stock because of unanticipated delays in applying for and obtaining the approval of the Federal Reserve Board, which the these investors must secure to be issued their shares of Series C Preferred Stock.  The Company has previously accepted from the Remaining Investors subscriptions for $8,250,000 of the Series C Preferred Stock pursuant to their respective subscription agreements. In November 2011, the disinterested members of the Board of Directors of the Company approved and authorized, and the Remaining Investors agreed to, certain amendments to the Series C Preferred Stock subscription agreements resulting in the release to the Company of the funds escrowed by the Remaining Investors for their subscribed shares of the Series C Preferred Stock and the issuance by the Company of short-term unsecured promissory notes, which are dated November 21, 2011, to the Remaining Investors. The Notes collectively have an aggregate principal amount of $8,250,000 and each have an 8% annual interest rate. The notes have a maturity date of January 20, 2012 and were subsequently renewed on that date for an additional 60 days. Each Note also contains a prepayment provision applicable when approval from the Federal Reserve Board is received to allow the Remaining Investors to purchase the shares of Series C Preferred Stock originally subscribed. Additionally, if the Company experiences an Event of Default as defined in the Note, such as becoming insolvent or generally failing to pay its debts as they become due, then a Remaining Investor may, at his, her or its option, declare the entire unpaid amount of the Note immediately due and payable, without presentment, demand, portents or notice of any kind, and the Remaining Investor shall be entitled to recover from the Company all costs and expenses, including reasonable attorneys' fees and disbursements and court costs, incurred in enforcing the Remaining Investor's rights under the Note.

On February 27, 2004, the Company completed the issuance and sale of $10 million of floating rate trust preferred securities through Trust I, a statutory business trust and wholly-owned unconsolidated subsidiary of the Company, as part of a pooled offering.  The Company established Trust I for the purpose of issuing the trust preferred securities.  The $10 million in proceeds from the trust preferred issuance and an additional $310,000 for the Company’s investment in common equity of the Trust, a total of $10,310 000, was invested in junior subordinated debentures of the Company.  The underlying junior subordinated debentures issued by the Company to Trust I mature in 2034, bear interest at three-month London Interbank Offered Rate (“LIBOR”) plus 280 basis points, reset quarterly, and are callable, at the option of the Company, at par on or after April 7, 2009. At December 31, 2011 and 2010 the rate was 3.10% and 3.15%, respectively. The Company used the proceeds of the offering for general corporate purposes.

On April 26, 2006, the Company completed the issuance and sale of $10 million of fixed/floating rate trust preferred securities through Trust II, a statutory business trust and wholly-owned unconsolidated subsidiary of the Company, as part of a pooled offering.  The Company established Trust II for the purpose of issuing the trust preferred securities. The $10 million in proceeds from the trust preferred issuance and an additional $310,000 for the Company’s investment in common equity of Trust II, a total of $10,310 000, was invested in junior subordinated debentures of the Company.  The underlying junior subordinated debentures issued by the Company to Trust II mature in 2036, bore interest at a fixed rate of 6.98% paid quarterly until June 15, 2011 and then converted to floating rate (LIBOR plus 160 basis points) after June 15, 2011 (1.95% at December 31, 2011). The net proceeds to the Company were used for general corporate purposes, including the Company’s acquisition of Mansfield.

The trust preferred securities issued by Trust I and Trust II are included as Tier 1 capital of the Company for regulatory capital purposes.  On March 1, 2005, the Federal Reserve Board adopted a final rule that allows the continued limited inclusion of trust preferred securities in the calculation of Tier 1 capital for regulatory purposes.  The final rule provided a five-year transition period, ending September 30, 2010, for application of the revised quantitative limits. On March 17, 2009, the Federal Reserve Board adopted an additional final rule that delayed the effective date of the new limits on inclusion of trust preferred securities in the calculation of Tier 1 capital until September 30, 2011. The Company does not expect the application of the revised quantitative limits to have a significant impact on its calculation of Tier 1 capital for regulatory purposes or its classification as well-capitalized. The Dodd-Frank Act, signed into law July 21, 2010, removes trust preferred securities as a permitted component of a holding company’s Tier 1 capital after a three-year phase-in period beginning January 1, 2013 for larger holding companies. For holding companies with less than $15 billion in consolidated assets, existing issues of trust preferred securities are grandfathered and not subject to this new restriction. Therefore, the existing trust preferred securities issued by Trust I and Trust II will continue to count as Tier I capital. New issuances of trust preferred securities, however would not count as Tier 1 regulatory capital.