Note 13 - Term Debt

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Long-term Debt [Text Block]

NOTE

13

. TERM DEBT

Term debt at

December

31,

2016

and

2015

consisted of the following.

(Amounts in thousands)	2016			2015
Federal Home Loan Bank of San Francisco borrowings	$	—		$	75,000
Senior debt		8,917			9,917
Unamortized debt issuance costs		(12	)		(15	)
Subordinated debt		10,000			10,000
Unamortized debt issuance costs		(172	)		(208	)
Net term debt	$	18,733		$	94,694

Future contractual maturities of term debt at

December

31,

2016

are as follows.

(Amounts in thousands)	2017		2018		2019		2020		2021		Thereafter		Total
Senior debt	$	917	$	1,000	$	1,000	$	6,000	$	—	$	—	$	8,917
Subordinated debt		—		—		—		—		—		10,000		10,000
Total future maturities	$	917	$	1,000	$	1,000	$	6,000	$	—	$	10,000	$	18,917

Federal Home Loan Bank of San Francisco borrowings

The maximum amount outstanding from the Federal Home Loan Bank of San Francisco under term advances at any month end during

2016

and

2015

was

$80.0

million and

$120.0

million, respectively. The average balance outstanding on Federal Home Loan Bank of San Francisco term advances during

2016

and

2015

was

$18.0

million and

$87.6

million, respectively. During the

three

months ended

March

31,

2016,

all outstanding Federal Home Loan Bank of San Francisco term advances were repaid. The weighted average interest rate on the borrowings outstanding at

December

31,

2015,

was

0.33%.

The Federal Home Loan Bank of San Francisco line of credit is secured by an investment in Federal Home Loan Bank of San Francisco stock, certain real estate mortgage loans which have been specifically pledged to the Federal Home Loan Bank of San Francisco pursuant to collateral requirements, and pledged securities held in the Bank’s investment securities portfolio. As of

December

31,

2016,

the Bank was required to hold an investment in Federal Home Loan Bank of San Francisco stock of

$4.5

million recorded in other assets in the

Consolidated Balance Sheets

.

Our investments in Federal Home Loan Bank of San Francisco stock are restricted investment securities, carried at cost, evaluated for impairment, and excluded from securities accounted for under

ASC Topic

320

and ASC Topic

321

. Furthermore, we have

$373.0

million of our commercial and real estate mortgage loans held for the line of credit with the Federal Home Loan Bank of San Francisco for pledging purposes. As of

December

31,

2016,

we held

$15.1

million in securities with the Federal Home Loan Bank of San Francisco for pledging purposes. All of the securities held for pledging purposes with the Federal Home Loan Bank of San Francisco were unused as collateral as of

December

31,

2016.

Senior Debt

In

December

of

2015,

the Holding Company, entered into a senior debt loan agreement to borrow

$10.0

million from another financial institution. The loan is payable in monthly installments of

$83

thousand principal, plus accrued and unpaid interest, commencing on

January

1,

2016

and continuing to and including

December

10,

2020.

A final scheduled payment of

$5.0

million is due on the maturity date of

December

10,

2020.

The loan

may

be prepaid in whole or in part at any time without any prepayment penalty. The principal amount of the loan bears interest at a variable rate, resetting monthly that is equal to the sum of the current

three

month LIBOR plus

400

basis points. In

December

of

2015,

the Holding Company incurred senior debt issuance costs of

$15

thousand, which are being amortized over the life of the loan as additional interest expense. The loan is secured by a pledge from the Holding Company of all of the outstanding stock of Redding Bank of Commerce.

Subordinated Debt

In

December

of

2015,

the Holding Company issued

$10.0

million in aggregate principal amount of fixed to floating rate subordinated notes due in

2025.

The subordinated debt initially bears interest at

6.88%

per annum for a

five

-year term, payable semi-annually. Thereafter, interest on the subordinated debt will be paid at a variable rate equal to

three

month LIBOR plus

526

basis points, payable quarterly until the maturity date. In

December

of

2015,

the Holding Company incurred subordinated debt issuance costs of

$210

thousand, which are being amortized over the initial

five

year term as additional interest expense.

The subordinated debt is subordinate and junior in right of payment to the prior payment in full of all existing and future claims of creditors and depositors of the Holding Company and its subsidiaries, whether now outstanding or subsequently created. The subordinated debt ranks equally with all other unsecured subordinated debt, except any which by its terms is expressly stated to be subordinated to the subordinated debt. The subordinated debt ranks senior to all future junior subordinated debt obligations, preferred stock and common stock of the Holding Company. The subordinated debt is recorded as term debt on the Holding Company’s balance sheet; however, for regulatory purposes, it is treated as Tier

2

capital by the Holding Company.

The subordinated debt will mature on

December

10,

2025

but

may

be prepaid at the Holding Company’s option and with regulatory approval at any time on or after

five

years after the Closing Date or at any time upon certain events, such as a change in the regulatory capital treatment of the subordinated debt or the interest on the subordinated debt is no longer deductible by the Holding Company for United States federal income tax purposes.