Quarterly report pursuant to Section 13 or 15(d)

FHLB and Other Borrowings

v3.20.2
FHLB and Other Borrowings
9 Months Ended
Sep. 30, 2020
Federal Home Loan Banks [Abstract]  
FHLB and Other Borrowings

NOTE 10. FHLB AND OTHER BORROWINGS

The FHLB allows us to borrow, both short and long-term, on a blanket floating lien status collateralized by certain securities and loans. At September 30, 2020 and December 31, 2019, the Company had pledged loans as collateral for FHLB advances of $793.0 million and $668.5 million, respectively. At September 30, 2020, the Company had additional capacity to borrow from the FHLB of $522.0 million.

Short-term borrowings

Short-term FHLB borrowings: As of September 30, 2020, the Company had $10.0 million of short-term FHLB borrowings, with an average interest rate of 0.70%. All short-term FHLB borrowings outstanding at September 30, 2020 had fixed interest rates. As of December 31, 2019, the Company had no short term borrowings.   

Long-term borrowings

Line of Credit: The Company entered into an unsecured line of credit with a third party lender in May 2017 which allowed it to borrow up to $20.0 million. The interest rate on the facility is LIBOR plus 4.00% per annum, and unpaid principal and interest is due at the stated maturity on May 12, 2022. The line of credit may be prepaid at any time without penalty, so long as such prepayment includes the payment of all interest accrued through the date of the repayments, and, in the case of prepayment of the entire loan, the amount of attorneys’ fees and disbursements of the lender.  During 2019, the line of credit was increased to a total borrowing capacity of $50.0 million.  There were no outstanding advances at September 30, 2020 or December 30, 2019. 

 

Long-term FHLB borrowings:

 

Long-term borrowings from the FHLB outstanding for the periods presented are as follows:

 

 

 

 

 

 

 

Range of

 

Weighted

 

 

 

 

 

 

Range of

 

Weighted

 

 

 

September 30,

 

 

Contractual

 

Average

 

 

December 31,

 

 

Contractual

 

Average

 

 

 

2020

 

 

Interest Rates

 

Interest Rate

 

 

2019

 

 

Interest Rates

 

Interest Rate

 

 

 

(Dollars in thousands)

 

Repayable during the years

   ending December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

$

513

 

 

2.10% -2.99%

 

 

2.10

%

 

$

18,254

 

 

1.45% - 5.02%

 

 

1.58

%

2021

 

 

8,769

 

 

1.48% - 2.99%

 

 

1.73

%

 

 

11,382

 

 

1.48% - 5.02%

 

 

1.82

%

2022

 

 

4,652

 

 

2.04% - 2.99%

 

 

2.23

%

 

 

12,056

 

 

1.79% - 5.02%

 

 

2.14

%

2023

 

 

6,662

 

 

2.31% - 2.99%

 

 

2.44

%

 

 

15,868

 

 

2.05% - 5.02%

 

 

2.24

%

2024

 

 

10,836

 

 

2.07% - 2.99%

 

 

2.62

%

 

 

11,170

 

 

2.07% - 5.02%

 

 

2.62

%

2025

 

 

2,683

 

 

1.86% - 2.99%

 

 

2.26

%

 

 

1,830

 

 

2.29% - 5.02%

 

 

2.47

%

2026-2032

 

 

18,874

 

 

2.10% - 2.99%

 

 

2.26

%

 

 

19,877

 

 

2.10% - 5.02%

 

 

2.31

%

Total long-term FHLB borrowings

 

$

52,989

 

 

 

 

 

 

 

 

$

90,437

 

 

 

 

 

 

 

 

For the nine months ended September 30, 2020 and the year ended December 31, 2019, the Company maintained long-term borrowings with the FHLB averaging $69.3 million and $61.6 million, respectively, with an average cost of approximately 2.28% and 2.30% respectively. Substantially all long-term FHLB borrowings outstanding at September 30, 2020 and December 31, 2019 had fixed interest rates.  At both September 30, 2020 and December 31, 2019, $16 million of FHLB borrowings outstanding were callable.  

The Company maintained five, unsecured Federal Funds lines of credit with commercial banks which provide for extensions of credit with an availability to borrow up to an aggregate $90.0 million as of September 30, 2020. There were no advances under these lines of credit outstanding as of September 30, 2020.

Paycheck Protection Program Liquidity Facility (“PPPLF”): In conjunction with the PPP, we are also currently participating in the Federal Reserve's Paycheck Protection Program Liquidity Facility (“PPPLF”) which, through September 30, 2020, extended loans to banks that are loaning money to small businesses under the PPP. The amount outstanding at September 30, 2020, was $173.7 million and is non-recourse and secured by the amount of the PPP loans we originated. The maturity date of a borrowing under the PPP Facility is equal the maturity date of the PPP loan pledged to secure the borrowing and would be accelerated (i) if the underlying PPP loan goes into default and is sold to the SBA to realize on the SBA guarantee or (ii) to the extent that any loan forgiveness reimbursement is received from the SBA. Borrowings under the PPPLF are included in long-term liabilities on the Company’s consolidated balance sheet and bear interest at a rate of 0.35%.

Subordinated Notes: On July 24, 2020, the Company issued $37 million aggregate principal amount of 6.00% fixed-to-floating rate subordinated notes due 2030.  The Notes will initially bear interest at a fixed annual rate of 6.00%, payable quarterly, in arrears, to, but excluding, July 31, 2025. From and including July 31, 2025, to, but excluding, the maturity date or earlier redemption date, the interest rate will reset quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be the then-current three-month Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York (provided, that in the event the benchmark rate is less than zero, the benchmark rate will be deemed to be zero) plus 592 basis points, payable quarterly, in arrears. The amount outstanding at September 30, 2020, was $37.0 million.

Secured borrowings : Due to the rights retained on certain loan participations sold, the Company is deemed to have retained effective control over these loans under Financial Accounting Standards Board (“FASB”)’s Accounting Standards Codification (“ASC”) Topic 860, “Transfers and Servicing”, and therefore these participations sold must be accounted for as a secured borrowing. At September 30, 2020, total secured borrowings were $4.0 million representing an increase in loans held for investment and matching increase in long-term borrowings.  At December 31, 2019, total secured borrowings were $14.7 million representing an increase in loans held for investment and matching increase in long-term borrowings.  None of the secured borrowings mature in the next five years following the latest balance sheet date.