Other Borrowed Funds

12 Months Ended

Mar. 31, 2013

Other Borrowed Funds

Note 10 – Other Borrowed Funds

Other borrowed funds consist of the following:

			March 31,
			2013					2012
	Matures During Year  Ending March 31,		Amount		Weighted Average Rate			Amount		Weighted Average Rate
			(Dollars in thousands)
FHLB advances:		2013	$	—		0.00	%	$	10,000		4.12	%
		2014		11,500		1.93			11,500		1.93
		2015		—		0.00			150,000		1.62
		2018		100,000		3.36			100,000		3.36
		2019		86,000		2.87			86,000		2.87
Total FHLB advances				197,500		3.06			357,500		2.49
Credit agreement				116,300		15.00			116,300		15.00
Repurchase agreements				3,425		0.14			2,303		0.21
			$	317,225		7.41	%	$	476,103		5.53	%

FHLB Advances

The Bank pledges certain loans that meet underwriting criteria established by the FHLB as collateral for outstanding advances. The unpaid principal balance of loans pledged to secure FHLB borrowings totaled $717.0 million and $744.6 million at March 31, 2013 and 2012, respectively. The FHLB borrowings are also collateralized by mortgage-related securities with a fair value of $152.1 million and $184.6 million at March 31, 2013 and 2012, respectively. FHLB borrowings of $181.0 million have call features that may be exercised quarterly by the FHLB.

On December 21, 2012, FHLB advances totaling $150.0 million were prepaid. The prepaid advances were floating rate, maturing in January 2015, with a then current weighted average rate of 1.41%. The prepayment triggered an early termination penalty of $3.5 million which was recorded in non-interest expense.

Credit Agreement

As of March 31, 2013 and 2012, a total of $116.3 million had been drawn at a weighted average interest rate of 15.00%, on a short term line of credit to various lenders led by U.S. Bank. The total line of credit available is $116.3 million.

On November 30, 2012, the Corporation entered into Amendment No. 9 (the “Amendment”) to the Amended and Restated Credit Agreement, dated as of June 9, 2008, (the “Credit Agreement”), among the Corporation, the lenders from time to time a party thereto, and U.S. Bank National Association, as administrative agent for such lenders, or the “Agent.” The Corporation is currently in default on the Credit Agreement as a result of failure to make principal payments beginning on March 2, 2009. Under the Amendment, the Agent and the Lenders agreed to forbear from exercising their rights and remedies against the Corporation until the earliest to occur of the following: (i) the occurrence of any Event of Default (other than a failure to make principal payments on the outstanding balance under the Credit Agreement); or (ii) June 30, 2013. Notwithstanding the agreement to forbear, the Agent may at any time, in its sole discretion, take any action reasonably necessary to preserve or protect its interest in the stock of the Bank, IDI, or any other collateral securing any of the obligations against the actions of the Corporation or any third party without notice to or the consent of any party.

The Amendment also provides that the outstanding balance under the Credit Agreement shall continue to bear interest at 15% per annum. Interest accruing under the Credit Agreement is due on the earlier of (i) the date the Credit Agreement is paid in full or (ii) June 30, 2013. At March 31, 2013, the Corporation had accrued interest and amendment fees payable related to the Credit Agreement of $53.3 million and $6.9 million, respectively.

Within two business days after the Corporation has knowledge of an “event,” the chief financial officer is required to submit a statement of the event to the Agent, together with a statement of the actions which the Corporation proposes to take in response to the event. An event may include: (i) any event which, either of itself or with the lapse of time or the giving of notice or both, would constitute a Default under the Credit Agreement; (ii) a default or an event of default under any other material agreement to which the Corporation or Bank is a party; or (iii) any pending or threatened litigation or certain administrative proceedings.

The Amendment requires the Bank to maintain the following financial covenants:

• Tier 1 leverage ratio of not less than 4.00% at all times.

• Total risk based capital ratio of not less than 8.00% at all times.

• Ratio of the sum of non-performing loans plus other real estate owned to the sum of gross loans plus other real estate owned not to exceed 13.00% at any time.

The Bank is in compliance with these covenants at March 31, 2013.

The Credit Agreement and the Amendment also contain customary representations, warranties, conditions and events of default for agreements of such type. At March 31, 2013, the Corporation was in compliance with all covenants contained in the Credit Agreement and the Amendment. Under the terms of the Credit Agreement and Amendment, the Agent and the lenders have certain rights, including the right to accelerate the maturity of the borrowings if the Corporation is not in compliance with all covenants. Currently, no such action has been taken by the Agent or the Lenders. However, the default creates significant uncertainty related to the Corporation’s ability to continue as a going concern.

Temporary Liquidity Guarantee Program

In October 2008, the Secretary of the United States Department of the Treasury invoked the systemic risk exception of the FDIC Improvement Act of 1991 and the FDIC announced the Temporary Liquidity Guarantee Program (the “TLGP”). The TLGP provides a guarantee, through the earlier of maturity or December 31, 2012, of certain senior unsecured debt issued by participating Eligible Entities (including the Corporation) between October 14, 2008 and December 31, 2009. The Bank signed a master agreement with the FDIC on December 5, 2008 for issuance of bonds under the program and subsequently issued $60.0 million of bonds in February 2009 bearing interest at a fixed rate of 2.74%. The bonds matured on February 11, 2012 and were paid in full.