XML 27 R14.htm IDEA: XBRL DOCUMENT

Note 7 - Borrowings

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note 7.

Borrowings

Federal Home Loan Bank borrowings

The Bank is a member of the Federal Home Loan Bank of Boston ("FHLB"). At December 31, 2015, the Bank has the ability to borrow from the FHLB based on a certain percentage of the value of the Bank's qualified collateral, as defined in the FHLB Statement of Products Policy, comprised mainly of mortgage-backed securities and loans segregated as collateral for the FHLB. The additional amount available under this agreement as of December 31, 2015 was $11.9 million. In accordance with an agreement with the FHLB, the qualified collateral must be free and clear of liens, pledges and encumbrances. In addition, the Company has a $2.0 million available line of credit with the FHLB. At December 31, 2015 and 2014, there were no advances outstanding under this line of credit. During 2015, the Bank took additional FHLB advances to increase liquidity for anticipated loan growth.

At December 31, 2015 and 2014, outstanding advances from the FHLB aggregated $132.0 million and $120.0 million respectively. The advances outstanding at December 31, 2015 had maturities ranging from thirty days to four months with fixed rates ranging from 41 basis points to 50 basis points. Advances are typically entered into at discounted rates during the FHLB “loan sales” and are structured with terms to meet balance sheet management needs. The FHLB borrowings collateral is mixture of real estate loans and securities with book value of $227.9 million.

Junior subordinated debt owed to unconsolidated trust

During 2003, the Company formed the Trust of which 100% of the Trust’s common securities are owned by the Company. The Trust has no independent assets, and exists for the sole purpose of issuing trust securities and investing the proceeds thereof in an equivalent amount of junior subordinated debentures issued by the Company. The Trust issued $8.0 million of trust preferred securities in 2003.

Trust preferred securities currently qualify for up to 25% of the Company’s Tier I Capital, with the excess qualifying as Tier 2 Capital. On March 1, 2005, the Federal Reserve Board of Governors, which is the banking regulator for the Holding Company, approved final rules that allowed for the continued inclusion of outstanding and prospective issuances of trust preferred securities in regulatory capital, subject to new, stricter limitations, which became effective March 31, 2009 and had no impact on the Company.

The subordinated debentures of $8.2 million are unsecured obligations of the Company and are subordinate and junior in right of payment to all present and future senior indebtedness of the Company. The Company has entered into a guarantee, which together with its obligations under the subordinated debentures and the declaration of trust governing the Trust provides a full and unconditional guarantee of the capital securities. The subordinated debentures, which bear interest at three-month LIBOR plus 3.15% (3.75% at December 31, 2015), mature on March 26, 2033. Beginning in the second quarter of 2009, the Company deferred quarterly interest payments on the subordinated debentures for 20 consecutive quarters as permitted under the terms of the debentures. Interest was still being accrued and charged to operations. The Company made a payment of approximately $1.6 million in June 2014, and brought the debt current as of that date and the Company deferred quarterly interest payments on the subordinated debentures for next 20 consecutive quarters as permitted under the terms of the debentures. The Company deferred interest payments in the subsequent quarters. As of December 31, 2015, the accrued interest payable was approximately $430,000 for Trust preferred.

The duration of the trust is 30 years, with an early redemption feature at the Company’s option on a quarterly basis.

Note Payable

In September 2015 the Company executed a $2.0 million Note Payable for the purchase of its Fairfield branch, which had formerly been leased. The note has a ten-year term and bears interest at a fixed rate of 1.75%. The Company makes interest and principal payments monthly. The note is secured by a first Mortgage Deed and Security Agreement on a purchase property.

Maturity of borrowings

The contractual maturities of the Company’s borrowings at December 31, 2015, by year, are as follows:

(in thousands)		2016				2017				2018				2019				2020				Thereafter				Total

FHLB Borrowings		$	132,000				-				-				-				-				-			$	132,000
Subordinated Note			-				-				-				-				-				8,248				8,248
Note Payable			170				189				192				195				199				994				1,939
Total borrowings		$	132,170			$	189			$	192			$	195			$	199			$	9,242			$	142,187