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SHORT-TERM BORROWINGS AND LONG-TERM DEBT
 6 Months Ended
Jun. 30, 2012
SHORT-TERM BORROWINGS AND LONG-TERM DEBT  
SHORT-TERM BORROWINGS AND LONG-TERM DEBT

10.  SHORT-TERM BORROWINGS AND LONG-TERM DEBT

 

At June 30, 2012, our bank maintained a $29.6 million line of credit with the Federal Reserve discount window, of which there were no advances outstanding. As of June 30, 2012, certain commercial and commercial real estate loans totaling $49.3 million have been pledged as collateral on our line of credit with the Federal Reserve discount window. The Federal Reserve does not have the right to sell or repledge these loans. In September 2011, the bank was upgraded from the Federal Reserve’s secondary credit facility to the primary credit facility, and regained its eligibility for the Borrower-in-Custody program. As of June 30, 2012, the bank continues to have access to the primary credit facility and remains eligible for the Borrower-in-Custody program.

 

The bank is a member of and maintained an $808.4 million line of credit with the Federal Home Loan Bank of Seattle (the “FHLB”) as of June 30, 2012. Long-term borrowings under this arrangement totaled $40,000 at June 30, 2012, compared to $50.0 million at December 31, 2011. There were no short-term borrowings under this arrangement at June 30, 2012 and December 31, 2011.

 

In February 2009, the bank’s collateral arrangement with the FHLB converted from a blanket pledge arrangement to a physical possession arrangement whereby the bank was required to deliver certain original loan documents to the FHLB for the collateral securing advances. In December 2010, the FHLB expanded the physical possession collateral arrangement to require copies of all loan documents for the collateral securing advances. In September 2011, the FHLB removed the physical possession requirement and replaced it with a listing arrangement whereby the bank now only needs to provide the FHLB with a monthly list of pledged assets that will be used to secure all advances. At June 30, 2012 the bank’s pledged assets to the FHLB included investment securities with a fair value of $169.2 million and certain real estate loans totaling $986.8 million. The FHLB discounts the fair value of pledged assets, resulting in total borrowing capacity of $808.4 million, $40,000 of which was drawn at June 30, 2012.

 

On August 20, 2009, we began deferring regularly scheduled interest payments on our outstanding junior subordinated debentures relating to our trust preferred securities. The terms of the junior subordinated debentures and the trust documents allow us to defer payments of interest for up to 20 consecutive quarterly periods without default or penalty. During the deferral period, which currently stands at 12 consecutive quarters, the respective trusts have suspended the declaration and payment of dividends on the trust preferred securities. Also during the deferral period, we may not, among other things and with limited exceptions, pay cash dividends on or repurchase our common stock or make any payment on outstanding debt obligations that rank equally with or junior to the junior subordinated debentures. During the deferral period, we will continue to accrue, and reflect in our consolidated financial statements, the deferred interest payments on our junior subordinated debentures. Accrued interest on our outstanding junior subordinated debentures relating to our trust preferred securities was $10.3 million and $8.5 million at June 30, 2012 and December 31, 2011, respectively.