Federal Home Loan Bank Borrowings

12 Months Ended

Dec. 31, 2011

FEDERAL HOME LOAN BANK BORROWINGS [Abstract]

Federal Home Loan Bank Advances, Disclosure [Text Block]

FEDERAL HOME LOAN BANK BORROWINGS

The Bank is a member of the Federal Home Loan Bank ("FHLB") of Boston. As a member of the FHLB of Boston, the Bank has access to short- and long-term borrowings. Borrowings from the FHLB are secured by the Bank's stock investment in the FHLB and a blanket lien on “qualified collateral” defined principally as a percentage of the principal balance of certain types of mortgage loans. The percentage of collateral allowed varies between 15% and 83% based on the type of underlying collateral. As of December 31, 2011, the Bank had $521.8 million of borrowings outstanding and available credit of $509.5 million. The Bank had no federal funds borrowings outstanding at December 31, 2011.

As a member of the FHLB, the Bank is required to own FHLB stock based on a percentage of outstanding advances in addition to a membership stock ownership requirement. Prior to the 2011 merger of the Banks, each of the Banks was a member of its local FHLB located in either Boston, Seattle, or San Francisco. At the time of the merger there were outstanding FHLB borrowings with both the FHLBs of San Francisco and Seattle. Until these borrowings in the FHLBs of San Francisco and Seattle mature and are subsequently paid off, the FHLB stock associated with these borrowings cannot be redeemed.

The Bank is required to own FHLB stock at least equal to 4.0% to 4.7% of outstanding advances depending on the individual FHLB membership. FHLB stock owned in excess of the minimum requirements can be redeemed at par upon request by a member but may be subject to a waiting period, as discussed above. The FHLB redeems excess stock at its option at par from time to time. The Bank may not redeem additional purchases of stock prior to a five year minimum holding period.

As of December 31, 2011 and 2010, the Bank's FHLB stock holdings totaled $43.7 million and $45.8 million, respectively, of which $29.6 million was invested in the FHLB of Boston at both dates. The Bank's investment in FHLB stock is recorded at cost and is redeemable at par. In recent years, the FHLBs have paid little or no dividends as they are focusing on increasing capital in response to economic and financial difficulties.

At each period end, the Company evaluates its investments in the respective FHLB's stock for other-than-temporary impairment based on publicly available financial information on the respective FHLBs. The Company has concluded that based on the following considerations the FHLB stock is not other-than-temporarily impaired: the Company's evaluation of the underlying investments, including the long-term nature of the investments; the liquidity position of the respective FHLBs; the actions taken by the respective FHLBs to address their regulatory situations; the 2011 and 2010 net income reported by the respective FHLBs; and the recent redemptions at par of a portion of San Francisco FHLB stock held by the Bank.

A summary of borrowings from the FHLBs is as follows:

	December 31, 2011				December 31, 2010
	Amount		Weighted Average Rate		Amount		Weighted Average Rate
	(In thousands)
Within 1 year	$	125,977	2.65	%	$	120,076	3.67	%
Over 1 to 2 years	70,199		3.97	%	126,448		2.66	%
Over 2 to 3 years	51,320		3.28	%	121,807		2.74	%
Over 3 to 5 years	187,252		2.73	%	132,982		3.21	%
Over 5 years	87,079		3.33	%	74,369		4.03	%
Total	$	521,827	3.03	%	$	575,682	3.19	%

As of December 31, 2011, $57.0 million of the FHLB borrowings are callable by the FHLB prior to maturity.