Federal Home Loan Bank Advances

12 Months Ended

Dec. 31, 2011

Federal Home Loan Bank Advances [Abstract]

Federal Home Loan Bank Advances

8. FEDERAL HOME LOAN BANK ADVANCES

No Federal Home Loan Bank advances were outstanding at December 31, 2011.  The Company was eligible to borrow from the FHLB additional amounts up to $136.1 million and $66.2 million at December 31, 2011 and 2010, respectively.  The Bank has pledged eligible assets totaling $277.4 million to support additional borrowings.  The assets include securities and qualifying loans on residential properties, multifamily properties and commercial real estate.

In 2011 the Company, as part of a balance sheet restructuring strategy, repaid $55 million of FHLB advances through the liquidation of securities.  In addition the Company paid a $1.4 million prepayment penalty associated with these advances which were originally issued in 2010.  In 2010, the Company repaid $55.0 million of FHLB advances by rolling the net present value of the advances being repaid into the funding cost of $55.0 million which was subsequently repaid in 2011.  The present value of the cash flows under the terms of the 2010 FHLB advances was less than ten percent different from the present value of the remaining cash flows under the terms of the original FHLB advances.  Based on these criteria, the $2.5 million penalty associated with prepaying the original FHLB advances was amortized as an adjustment of interest expense over the remaining term of the FHLB advances issued in 2010 using the interest method.