XML 39 R23.htm IDEA: XBRL DOCUMENT

Borrowings

12 Months Ended

Dec. 31, 2023

Note 13 Borrowings

Borrowings consist of securities sold under agreements to repurchase, long-term debt and FHLB advances.

Securities sold under agreements to repurchase

The following table sets forth selected information regarding repurchase agreements during 2023, 2022 and 2021:


	As of and for the years ended December 31,
	2023			2022			2021
Maximum amount of outstanding agreements at any month end during the period	$	23,768		$	25,342		$	23,574
Average amount outstanding during the period		19,346			21,298			20,338
Weighted average interest rate for the period		0.11%			0.20%			0.11%

The Company enters into repurchase agreements to facilitate the needs of its clients. As of December 31, 2023, 2022 and 2021, the Company sold securities under agreements to repurchase totaling $19.6 million, $20.2 million and $22.8 million, respectively. The Company pledged mortgage-backed securities with a fair value of approximately $30.4 million, $32.0 million and $28.8 million, as of December 31, 2023, 2022 and 2021, respectively, for these agreements. The Company monitors collateral levels on a continuous basis and may be required to provide additional collateral based on the fair value of the underlying securities. As of December 31, 2023, 2022 and 2021, the Company had $10.8 million, $11.8 million and $6.1 million, respectively, of excess collateral pledged for repurchase agreements.

The vast majority of the Company’s repurchase agreements are overnight transactions with clients that mature the day after the transaction. At December 31, 2023, 2022 and 2021, none of the Company’s repurchase agreements were for periods

longer than one day. The repurchase agreements are subject to a master netting arrangement; however, the Company has not offset any of the amounts shown in the consolidated financial statements.

Federal Home Loan Bank advances

As a member of the FHLB, the Banks have access to a line of credit and term financing from the FHLB with total available credit of $1.7 billion at December 31, 2023. The Banks may utilize the FHLB line of credit as a funding mechanism for originated loans and loans held for sale. At December 31, 2023 and 2022, the Banks had $340.0 million and $385.0 million, respectively, of outstanding borrowings with the FHLB. At December 31, 2021, the Banks had no outstanding borrowings with the FHLB. The Banks may pledge investment securities and loans as collateral for FHLB advances. There were no investment securities pledged for FHLB advances at December 31, 2023, 2022 or 2021. Loans pledged were $2.6 billion, $2.0 billion and $1.3 billion at December 31, 2023, 2022 and 2021, respectively. The Company incurred $22.0 million and $1.7 million of interest expense related to FHLB advances and other short-term borrowings for the years ended December 31, 2023 and 2022, respectively.

Long-term debt

The Company holds a subordinated note purchase agreement to issue and sell a fixed-to-floating rate note totaling $40.0 million. The balance on the note at December 31, 2023, net of long-term debt issuance costs totaling $0.3 million, totaled $39.7 million. Interest expense totaling $1.2 million and $1.2 million was recorded in the consolidated statements of operations during the years ended December 31, 2023 and 2022, respectively.

The note is subordinated, unsecured and matures on November 15, 2031. Payments consist of interest only. Interest expense on the note is payable semi-annually in arrears and will bear interest at 3.00% per annum until November 15, 2026 (or any earlier redemption date). From November 15, 2026 until November 15, 2031 (or any earlier redemption date) payments will be made quarterly in arrears, and the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month term SOFR plus 203 basis points. The Company deployed the net proceeds from the sale of the note for general corporate purposes. Prior to November 5, 2026, the Company may redeem the note only under certain limited circumstances. Beginning on November 5, 2026 through maturity, the note may be redeemed, at the Company’s option, on any scheduled interest payment date. Any redemption by the Company would be at a redemption price equal to 100% of the principal amount of the note being redeemed, together with any accrued and unpaid interest on the note being redeemed up to but excluding the date of redemption. The note is not subject to redemption at the option of the holder.

As part of the acquisition of BOJH on October 1, 2022, the Company assumed three subordinated note purchase agreements to issue and sell fixed-to-floating rate notes totaling $15.0 million. The balance on the notes at December 31, 2023, net of the fair value adjustment from the acquisition totaling $0.5 million, totaled $14.5 million. Interest expense related to the notes totaling $0.6 million and $0.2 million was recorded in the consolidated statements of operations during the years ended December 31, 2023 and 2022, respectively.

The three notes, containing similar terms, are subordinated, unsecured and mature on June 15, 2031. Payments consist of interest only. Interest expense on the notes is payable semi-annually in arrears and will bear interest at 3.75% per annum until June 15, 2026 (or any earlier redemption date). From June 15, 2026 until June 15, 2031 (or any earlier redemption date) payments will be made quarterly in arrears, and the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month term SOFR plus 306 basis points. Prior to June 15, 2026, the Company may redeem the notes only under certain limited circumstances. Beginning on June 15, 2026 through maturity, the notes may be redeemed, at the Company’s option, on any scheduled interest payment date. Any redemption by the Company would be at a redemption price equal to 100% of the principal amount of the notes being redeemed, together with any accrued and unpaid interest on the notes being redeemed up to but excluding the date of redemption. The notes are not subject to redemption at the option of the holder.