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Borrowings

12 Months Ended

Dec. 31, 2011

(8) BORROWINGS

The Company’s borrowings consist of both short-term and long-term borrowings and provide the Bank with one of its primary sources of funding. The borrowings also serve the Bank by providing a contingent source of liquidity. As of December 31, 2011 and 2010, the Bank had $2.6 billion and $2.4 billion, respectively, of assets pledged as collateral against borrowings. These assets are primarily pledged to the FHLB of Boston and the Federal Reserve Bank of Boston.

The Company’s short-term borrowings consisted of the following as of the periods indicated:


	As of December 31,
	2011		2010
	(Dollars in Thousands)
FHLB Borrowings	$	190,091	$	195,003
Customer Repurchase Agreements		166,128		118,119
Treasury Tax & Loan		—		3,044

Total Short-Term Borrowings	$	356,219	$	316,166

The interest expense on short-term borrowings was $2.3 million and $5.0 million as of December 31, 2011 and 2010, respectively.

The table below sets forth additional information on short-term borrowings as of and for the periods indicated:


	2011					2010					2009
	Amount		Weighted Average Interest Rate			Amount		Weighted Average Interest Rate			Amount		Weighted Average Interest Rate
	(Dollars in Thousands)
Balance outstanding at end of year	$	356,219		0.58	%	$	316,163		0.84	%	$	352,604		1.17	%
Average daily balance outstanding		357,168		0.66	%		341,447		1.54	%		329,712		0.83	%
Maximum balance outstanding at any month end		392,323		N/A			361,060		N/A			352,604		N/A

The Company’s long-term borrowings consisted of the following as of the periods indicated:


	As of December 31,
	2011		2010
	(Dollars in Thousands)
Federal Home Loan Bank Borrowings	$	39,610	$	107,411
Federal Funds Purchased and Assets Sold
Under Repurchase Agreements(1)		50,000		50,000
Junior Subordinated Debentures
Capital Trust V(2)		51,547		51,547
Slades Ferry Trust I(3)		10,310		10,310
Subordinated Debentures(4)		30,000		30,000

Total Long-Term Borrowings	$	181,467	$	249,268

(1)	At December 31, 2011 there were no federal funds purchased and the assets sold under repurchase agreements were at a fixed rate of 2.29%.

(2)

The Capital Trust V Trust Preferred Securities were issued in connection with the issuance of variable rate (LIBOR plus 1.48%) capital securities due in 2037, which is callable in March 2012. The interest rate has been locked at a fixed rate of 6.52%, until December 28, 2016, through the use of an interest rate swap. The Company unconditionally guarantees all obligations under these trust preferred securities.

(3)	The Slades Ferry Trust I Preferred Securities were issued in connection with the issuance of variable rate (LIBOR plus 2.79%) capital securities due in 2034, which is callable quarterly until maturity. The Company unconditionally guarantees all obligations under these trust preferred securities.

(4)

The subordinated debentures were issued to USB Capital Resources, Inc., a wholly-owned subsidiary of U.S. Bank National Association. The subordinated debt matures on August 27, 2018, however with regulatory approval, the Bank may redeem the subordinated debt without penalty at any time on or after August 27, 2013. The interest rate is fixed at 7.02% until August 27, 2013, at which point if not redeemed, the subordinated debentures will have a floating interest rate determined at the option of the Bank, at either the then current LIBOR plus 3.00%; or the U.S. Bank base rate plus 1.25%.

The interest expense on long-term borrowings was $13.0 million and $13.5 million as of December 31, 2011 and 2010, respectively.

The following table sets forth information relating to the Company’s FHLB borrowings as of the periods indicated:


	As of and For the Years Ended December 31,
	2011							2010
	Weighted Average Interest Rate			Amount Outstanding		Amount Callable		Weighted Average Interest Rate			Amount Outstanding		Amount Callable
				(Dollars in Thousands)
Due in one year or less		0.84	%	$	190,091	$	30,000		1.14	%	$	195,003	$	20,000
Due in greater than one year to five years		4.82	%		8,507		8,000		3.43	%		76,976		66,000
Due in greater than five years		3.94	%		31,103		30,000		3.99	%		30,435		30,000

Total		1.41	%	$	229,701	$	68,000		2.01	%	$	302,414	$	116,000

The Company has entered into interest rate swaps to manage the interest rate risk of these borrowing, and has effectively hedged $190.0 million of the FHLB advances to fixed interest rates. These swaps carry a weighted average interest rate of 2.50% and have various maturity dates ranging from December 2013 through March 2019.

Additionally, the Company’s FHLB borrowings are collateralized by a blanket pledge agreement on the Bank’s FHLB stock, certain qualified investment securities, deposits at the Federal Home Loan Bank, residential mortgages held in the Bank’s portfolio, and certain commercial real estate loans. The Bank’s unused remaining available borrowing capacity at the Federal Home Loan Bank was approximately $526.6 million and $370.4 million at December 31, 2011 and 2010, respectively, inclusive of a $5.0 million line of credit with the FHLB. Also, as of December 31, 2011 and 2010 the Bank had an available borrowing capacity at the Federal Reserve Bank of Boston of $618.8 million and $630.8 million, respectively. At December 31, 2011 and 2010, the Bank had no outstanding borrowings with the Federal Reserve Bank of Boston.

The Bank has entered into repurchase agreements with both major brokerage firms (wholesale) and certain customers (retail). Both wholesale and retail repurchase agreements are collateralized by securities issued or guaranteed by government sponsored enterprises, however they are subject to different safekeeping provisions. All related securities, regardless of safekeeping arrangements, are included in the Company’s security portfolio.

The following table sets forth information relating to the Company’s repurchase agreements as of the periods indicated:


	As of December 31,
	2011				2010
	Amount		Investments Pledged		Amount		Investments Pledged
	(Dollars in Thousands)
Repurchase Agreements with Brokers	$	50,000	$	51,574	$	50,000	$	58,953
Customer Repurchase Agreements		166,128		166,323		118,119		141,376

Total	$	216,128	$	217,897	$	168,119	$	200,329

The following table sets forth the maturities of the borrowings over the next 5 years:


Years	Amounts Maturing
	(Dollars in Thousands)
2012	$	356,219
2013	$	27
2014	$	5,206
2015	$	53,247
2016	$	27