FHLB and Other Borrowings
|3 Months Ended|
Mar. 31, 2021
|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 March 31, 2021 and December 31, 2020, the Company had pledged loans as collateral for FHLB advances of $971.5 million and $927.3 million, respectively. At March 31, 2021, the Company had additional capacity to borrow from the FHLB of $668.8 million.
Short-term FHLB borrowings: At March 31, 2021, the Company had no short-term FHLB borrowings. As of December 31, 2020, the Company had $10 million of short term FHLB borrowings with an average interest rate of 0.70%. All short-term FHLB borrowings outstanding at December 31, 2020 had fixed interest rates.
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 March 31, 2021 or December 30, 2020.
Long-term FHLB borrowings:
Long-term borrowings from the FHLB outstanding for the periods presented are as follows:
For the three months ended March 31, 2021 and the year ended December 31, 2020, the Company maintained long-term borrowings with the FHLB averaging $60.9 million and $65.0 million, respectively, with an average cost of approximately 2.29%. Substantially all long-term FHLB borrowings outstanding at March 31, 2021 and December 31, 2020 had fixed interest rates. At both March 31, 2021 and December 31, 2020, $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 $105.0 million as of March 31, 2021. There were no advances under these lines of credit outstanding as of March 31, 2021.
Paycheck Protection Program Liquidity Facility: In conjunction with the PPP, we are also currently participating in the Federal Reserve's PPPLF which extends loans to banks that are loaning money to small businesses under the PPP. The amount outstanding at March 31, 2021 was $100.1 million and is non-recourse and secured by the amount of the PPP loans we originated. The maturity date of a borrowing under the PPPLF is equal to 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”). The Notes 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 March 31, 2021 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 FASB ASC Topic 860, “Transfers and Servicing”, and therefore these participations sold must be accounted for as a secured borrowing. At March 31, 2021, total secured borrowings were $4.0 million which are included in loans held for investment and long-term borrowings. At December 31, 2020, total secured borrowings were $4.0 million which are included in loans held for investment and long-term borrowings. None of the secured borrowings mature in the next five years following the latest balance sheet date.
The entire disclosure of advances made and reported by Federal Home Loan Bank (FHLBank).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef