Trust Preferred Securities and Notes Payable

9 Months Ended

Sep. 30, 2014

Trust Preferred Securities / Preferred Capital Offering [Abstract]

Trust Preferred Securities

NOTE 7 – TRUST PREFERRED SECURITIES AND NOTES PAYABLE

On July 3, 2014, the Company informed the trustee of RST I of the Company’s intention to redeem all of the junior subordinated debentures underlying the trust preferred securities prior to their contractual maturity date of September 7, 2030. The Company subsequently redeemed the junior subordinated debentures on September 7, 2014 for an aggregate amount of $11.2 million, which included accrued interest to the redemption date and approximately $0.43 million in prepayment penalties, which was expensed in full during the current quarter. The Company used cash and a term loan from a correspondent bank in the principal amount of $7.0 million to fund the redemption of the junior subordinated debentures. The loan has a term of five years and requires the Company to make quarterly payments of interest and principal based on a 7-year amortization schedule. The loan carries a variable interest rate equal to the 90-day LIBOR index rate (0.2331% as of September 30, 2014) plus 2.85%. The loan may be prepaid, in whole or in part, by the Company at any time without penalty or premium.  The covenants for the loan are to maintain certain capital and asset quality metrics in excess of target levels. The Company was in compliance with all of the covenants at September 30, 2014.