Advances from the Federal Home Loan Bank

12 Months Ended

Dec. 31, 2013

Advances from the Federal Home Loan Bank

Advances from the Federal Home Loan Bank

(11) Advances from the Federal Home Loan Bank

Bancorp had outstanding borrowings of $34.3 million at December 31, 2013, via seven separate advances.  For two advances totaling $30 million, both of which are non-callable, interest payments are due monthly, with principal due at maturity.  For the final five advances totaling $4,329,000, principal and interest payments are due monthly based on an amortization schedule.

Bancorp did not prepay any advances in 2013.  In the third quarter of 2012, Bancorp restructured and extended terms on three advances with FHLB resulting in lower interest cost over the remaining term of these advances.  Prepayment penalties totaling $872,000 were incurred.  In accordance with US GAAP, prepayment penalties associated with the modification of advances were amortized over the life of the new advances, and were recorded as interest expense, resulting in effective interest rates greater than the contractual rate paid to FHLB.  In the fourth quarter of 2012, Bancorp prepaid these same three advances, incurring prepayment penalties totaling $265,000.  These new prepayment penalties and the remaining unamortized prepayment penalties totaling $790,000 were each recorded as interest expense in the fourth quarter of 2012.

The following is a summary of the contractual maturities and average effective rates of outstanding advances:

	December 31, 2013				December 31, 2012
(In thousands)	Advance		Rate		Advance		Rate
2013	$	—	—		$	10,000	1.90	%
2014	10,000		0.21	%	—		—
2015	20,000		3.34	%	20,000		3.34	%
2020	1,931		2.23	%
2021	564		2.12	%
2024	408		2.40	%	420		2.40	%
2028	1,426		1.46	%	1,462		1.46	%
	$	34,329	2.26	%	$	31,882	2.79	%

Advances from the FHLB are collateralized by certain commercial and residential real estate mortgage loans under a blanket mortgage collateral agreement and FHLB stock. Bancorp views the borrowings as an effective alternative to higher cost time deposits to fund loan growth.  At December 31, 2013, the amount of available credit from the FHLB totaled $361.4 million.