Borrowings And Restricted Stock

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Borrowings And Restricted Stock

Borrowings and Restricted Stock

Federal Home Loan Bank (“FHLB”) borrowings consisted of long-term borrowings totaling $28,000 at June 30, 2014 and December 31, 2013.  The Company had $30,000 and $15,000 short-term borrowings at June 30, 2014 and December 31, 2013, respectively. Junior subordinated notes consisted of Trust Preferred Securities totaling $16,496 at June 30, 2014 and December 31, 2013 and a subordinated note with an outstanding balance of $10,920 at June 30, 2014 and $10,980 at December 31, 2013.

Through the six months ended June 30, 2014, interest expense on FHLB borrowings was $558, on junior subordinated debt was $476 and on fed funds purchased and securities sold under agreements to repurchase was $39.   In the same prior year period, interest expense on FHLB borrowings was $612, on junior subordinated debt was $182 and on fed funds purchased and securities sold under agreements to repurchase was $32.

Restricted stock, which represents a required investment in the common stock of a correspondent bank, is carried at cost, and as of June 30, 2014 and December 31, 2013, included the common stock of the FHLB which is included in other assets.   Restricted stock totaled $4,721 at June 30, 2014 and $4,221 at December 31, 2013.

Management evaluates the restricted stock for impairment in accordance with authoritative accounting guidance under ASC Topic 320, “Investments – Debt and Equity Securities.”  Management’s determination of whether these investments

are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value.  The determination of whether a decline affects the ultimate recoverability of the cost of an investment is influenced by criteria such as (1) the significance of the decline in net assets of the issuing bank as compared to the capital stock amount for that bank and the length of time this situation has persisted, (2) commitments by the issuing bank to make payments required by law or regulation and the level of such payments in relation to the operating performance of that bank, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the issuing bank.

The FHLB of Atlanta neither provides dividend guidance prior to the end of each quarter, nor conducts repurchases of excess activity-based stock on a daily basis, instead making such determinations quarterly. Based on evaluation of criteria under ASC Topic 320, management believes that no impairment charge in respect of the restricted stock is necessary as of June 30, 2014.