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Note 9 - Borrowed Funds | 12 Months Ended
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Dec. 31, 2018
Notes to Financial Statements |
Debt Disclosure [Text Block] |
9. | Borrowed Funds
Securities sold under agreements to repurchase were zero at December 31, 2018, compared to $100.0 million with a weighted average rate of 2.86% at December 31, 2017. As of December 31, 2017, two fixed rate non-callable securities sold under agreements to repurchase totaling $100 million with a weighted average rate of 2.86% as of December 31, 2017. These transactions are accounted for as collateralized financing transactions and recorded at the amounts at which the securities were sold. The Company may have to provide additional collateral for the repurchase agreements, as necessary. There were no repurchase agreements at December 31, 2018. The underlying collateral pledged for the repurchase agreements consists of U.S. Treasury securities and mortgage-backed securities with a fair value of $108.4 million as of December 31, 2017. The table below provides comparative data for securities sold under agreements to repurchase for the years indicated:
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | (Dollars in thousands) |
Average amount outstanding during the year (1) |  | $ | 49,589 |  |  | $ | 136,849 |  |  | $ | 381,967 |
Maximum amount outstanding at month-end (2) |  |  | 100,000 |  |  |  | 150,000 |  |  |  | 400,000 |
Balance, December 31 |  |  | - |  |  |  | 100,000 |  |  |  | 350,000 |
Rate, December 31 |  |  | - | % |  |  | 2.86 | % |  |  | 4.06 | %
Weighted average interest rate for the year |  |  | - | % |  |  | 3.11 | % |  |  | 4.01 | %
( 1 ) | Average balances were computed using daily averages.
( 2 ) | Highest month-end balances were January 2018, January 2017, and January 2016.
As of December 31, 2018, over-night borrowings from the FHLB were $200.0 million at a rate of 2.56% compared to $325.0 million at a rate of 1.41% at December 31, 2017. As of December 31, 2018, the advances from the FHLB were $330 million at a rate of 2.42% compared to $105 million at a rate of 1.41% as of December 31, 2017. As of December 31, 2018, final maturity for the FHLB advances is $260 million in January 2019, $50 million in December 2019, and $20 million in May 2023. Pursuant to the Stock Purchase Agreement with Bank SinoPac Co. Ltd, the Company paid $100 million of the purchase price on November 14, 2017. The residual payable balance of $35.2 million has a floating rate of three -month LIBOR rate plus 150 basis points. As of December 31, 2018, outstanding payable balance of $17.6 million has an interest rate of 4.30%. The remaining payments are $10.6 million in July 2019 and $7.0 million in July 2020 together with applicable accrued interest. On October 12, 2017, the Bank entered into a term loan agreement of $75.0 million with U.S. Bank. The principal amount outstanding as of December 31, 2018 was $70.3 million. The loan has a floating rate of one -month LIBOR plus 175 basis points. As of December 31, 2018, the term loan has an interest rate of 4.125% compared to 3.125% at December 31, 2017. The principal amount of the long-term debt from U.S. Bank is due and payable in consecutive quarterly installments in the amount of $4.7 million each on the last day of each calendar quarter commencing December 31, 2018, with the final installment due and payable on October 12, 2020. Other Liabilities. On November 23, 2004, the Company entered into an agreement with Mr. Dunson K. Cheng, pursuant to which he agreed to defer any bonus amounts in excess of $225,000 for the year ended December 31, 2005, until the later of January 1 of the first year following his separation from service from the Company or the first day of the seventh month following his separation from service from the Company. Accordingly, an amount equal to $610,000 was deferred in 2004 and was accrued in other liabilities in the consolidated balance sheet. The Company agreed to accrue interest on the deferred portion of the bonus at 7.0% per annum compounded quarterly. The deferred amount will be increased each quarter by the amount of interest computed for that quarter. On November 23, 2014, the interest rate was reset to 5.06% based on 275 basis points above the interest rate on the ten -year Treasury Note on that date. On March 13, 2014, the Compensation Committee of the Company awarded Mr. Cheng a cash bonus in the amount of $300,000 for the quarter ended December 31, 2013, and provided as part of the award that payment of the bonus would be deferred until the later of January 1 of the first year following his separation from service from the Company or the first day of the seventh month following his separation from service from the Company. The Company accrues interest on the deferred bonus at 5.02% per annum compounded quarterly. Beginning on the fifth anniversary of the agreement, the interest rate will be reset at 350 basis points above the then prevailing interest rate on the five -year Treasury Note. Interest of $92,000 during 2018, $87,000 during 2017, and $83,000 during 2016 was accrued on the deferred bonuses. The balance was $1.9 million at December 31, 2018, and $1.8 million at December 31, 2017. We established three special purpose trusts in 2003 and two in 2007 for the purpose of issuing Guaranteed Preferred Beneficial Interests in their Subordinated Debentures to outside investors (“Capital Securities”). The proceeds from the issuance of the Capital Securities as well as our purchase of the common stock of the special purpose trusts were invested in Junior Subordinated Notes of the Company (“Junior Subordinated Notes”). The trusts exist for the purpose of issuing the Capital Securities and investing in Junior Subordinated Notes. Subject to some limitations, payment of distributions out of the monies held by the trusts and payments on liquidation of the trusts, or the redemption of the Capital Securities, are guaranteed by the Company to the extent the trusts have funds on hand at such time. The obligations of the Company under the guarantees and the Junior Subordinated Notes are subordinate and junior in right of payment to all indebtedness of the Company and will be structurally subordinated to all liabilities and obligations of the Company’s subsidiaries. The Company has the right to defer payments of interest on the Junior Subordinated Notes at any time or from time to time for a period of up to twenty consecutive quarterly periods with respect to each deferral period. Under the terms of the Junior Subordinated Notes, the Company may not, with certain exceptions, declare or pay any dividends or distributions on its capital stock or purchase or acquire any of its capital stock if it has deferred payment of interest on any Junior Subordinated Notes. At December 31, 2018, Junior Subordinated Notes totaled $119.1 million with a weighted average interest rate of 4.96%, compared to $119.1 million with a weighted average rate of 3.78% at December 31, 2017. The Junior Subordinated Notes have a stated maturity term of 30 years. Interest expense, excluding impact of cash flow interest rate swaps entered into during June 2014, on the Junior Subordinated Notes was $5.2 million for 2018, $4.1 million for 2017, and $3.5 million for 2016.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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