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FHLB Advances and Other Borrowings | 12 Months Ended
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Dec. 31, 2023
Advance from Federal Home Loan Bank [Abstract] |
FHLB Advances and Other Borrowings | FHLB Advances and Other Borrowings The Company’s funding sources include Federal Home Loan Bank advances, borrowings from other third party correspondent financial institutions, issuance and sale of subordinated debt and other capital securities, and repurchase agreements. Information regarding each of these types of borrowings or other indebtedness is as follows:
|  | December 31,
|  | 2023 |  | 2022
|  | Principal |  | Unamortized Discount and Debt Issuance Costs |  | Principal |  | Unamortized Discount and Debt Issuance Costs
Long-term Advances from Federal Home Loan Bank collateralized by qualifying mortgages, investment securities, and mortgage-backed securities |  | $ | 50,000 |  |  | $ | — |  |  | $ | 25,000 |  |  | $ | — |
Junior Subordinated Debentures assumed from American Community Bancorp, Inc. |  | 8,248 |  |  | (1,723) |  |  | 8,248 |  |  | (1,873) |
Junior Subordinated Debentures assumed from River Valley Bancorp, Inc. |  | 7,217 |  |  | (977) |  |  | 7,217 |  |  | (1,082) |
Junior Subordinated Debentures assumed from Citizens First Corporation |  | 5,155 |  |  | (853) |  |  | 5,155 |  |  | (919) |
Junior Subordinated Debentures assumed from Citizens Union Bancorp of Shelbyville, Inc. |  | 20,600 |  |  | (1,885) |  |  | 20,600 |  |  | (2,020) |
Subordinated Debentures |  | 40,000 |  |  | (455) |  |  | 40,000 |  |  | (538) |
Finance Lease Obligation |  | 2,642 |  |  | — |  |  | 2,857 |  |  | — |
Long-term Borrowings |  | 133,862 |  |  | (5,893) |  |  | 109,077 |  |  | (6,432) |
Overnight Variable Rate Advances from Federal Home Loan Bank collateralized by qualifying mortgages, investment securities, and mortgage-backed securities |  | — |  |  | — |  |  | 25,000 |  |  | — |
Federal Funds Purchased |  | 25,000 |  |  | — |  |  | 11,200 |  |  | — |
Repurchase Agreements |  | 40,968 |  |  | — |  |  | 64,961 |  |  | — |
Short-term Borrowings |  | 65,968 |  |  | — |  |  | 101,161 |  |  | — |
Total Borrowings |  | $ | 199,830 |  |  | $ | (5,893) |  |  | $ | 210,238 |  |  | $ | (6,432) |
Repurchase agreements, which are classified as secured borrowings, generally mature within one day of the transaction date. Repurchase agreements are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the value of the underlying securities.
|  | 2023 |  | 2022
Average Daily Balance During the Year |  | $ | 51,474 |  |  | $ | 52,932 |
Average Interest Rate During the Year |  | 1.16 | % |  | 0.20 | %
Maximum Month-end Balance During the Year |  | $ | 60,055 |  |  | $ | 72,084 |
Weighted Average Interest Rate at Year-end |  | 1.44 | % |  | 0.57 | %
At December 31, 2023, interest rates on long-term FHLB Advances ranged from 1.54% to 3.57% with a weighted average rate of 2.56%. At December 31, 2022 the Company held one long-term FHLB advance with an interest rate of 1.54%. At December 31, 2023 and 2022, the Company had no advances containing options whereby the FHLB may convert a fixed rate advance to an adjustable rate advance. At December 31, 2023 and 2022, the Company had outstanding $39,545 and $39,462, respectively, in aggregate principal amount, of its 4.50% Fixed-to-Floating Rate Subordinated Notes due 2029 (the “Notes”). The Notes bear interest at a fixed annual rate of 4.50% until but excluding June 30, 2024, payable semi-annually in arrears. The indenture for the Notes contemplates that, from and including June 30, 2024 to but excluding the maturity date of June 30, 2029, or early redemption date, the interest rate will reset quarterly to an interest rate per annum equal to the then-current three-month CME Term SOFR, plus the applicable spread adjustment of 0.26161% percent, plus 2.68% percent. The Secured Overnight Financing Rate, or SOFR, is the preferred alternate rate to LIBOR, as identified by the Alternative Reference Rates Committee, a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York. The Federal Reserve subsequently adopted final regulations that, among other things, established LIBOR benchmark replacements based on SOFR under certain circumstances. See Replacement of LIBOR Benchmark below for additional information. The Notes are not subject to any sinking fund and are not convertible into or exchangeable for any other securities or assets of the Company or any of its subsidiaries. The Notes are not subject to redemption at the option of the holder. The Notes are unsecured, subordinated obligations of the Company only and are not obligations of, and are not guaranteed by, any subsidiary of the Company. The Notes rank junior in right to payment to the Company’s current and future senior indebtedness. The Notes are intended to qualify as Tier 2 capital for regulatory capital purposes for the Company. At December 31, 2023, the parent company had a $15 million line of credit with U.S. Bank National Association, which had no outstanding balance. The line of credit matures September 25, 2024. Interest on the line of credit is based upon one-month Term SOFR plus 2.10%. At December 31, 2023, scheduled principal payments on long-term borrowings, excluding the capitalized lease obligation and acquired subordinated debentures (which are discussed below) are as follows:
2024 |  | $ | 25,000 |
2025 |  | — |
2026 |  | — |
2027 |  | — |
2028 |  | 25,000 |
Thereafter |  | 39,545 |
Total |  | $ | 89,545 |
The Company assumed the obligations of junior subordinated debentures through the acquisitions of American Community Bancorp, Inc., River Valley Bancorp, Citizens First Corporation and Citizens Union Bancorp of Shelbyville, Inc. The junior subordinated debentures were issued to ACB Capital Trust I, ACB Capital Trust II, RIVR Statutory Trust I, Citizens First Statutory Trust I, CUB Capital Trust I and CUB Capital Trust II. The trusts are wholly owned by the Company. In accordance with accounting guidelines, the trusts are not consolidated with the Company’s financials, but rather the subordinated debentures are shown as borrowings. The Company guarantees payment of distributions on the trust preferred securities issued by the various trusts. Interest is payable on a quarterly basis. These securities qualify as Tier 1 capital (with certain limitations) for regulatory purposes. $34,829 of the junior subordinated debentures were treated as Tier 1 capital for regulatory capital purposes as of December 31, 2023. $34,378 of the junior subordinated debentures were treated as Tier 1 capital for regulatory capital purposes as of December 31, 2022. As a result of the acquisitions, these liabilities were recorded at fair value at the acquisition date with the discount amortizing into interest expense over the life of the liability, ultimately accreting to the issuance amount disclosed below. The following table summarizes the terms of each issuance:
|  | Date of Issuance |  | Issuance Amount |  | Carrying Amount at December 31, 2023 |  | Variable Rate (1) |  | Rate as of December 31, 2023 |  | Rate as of December 31, 2022 (2) |  | Maturity Date
ACB Trust I |  | 5/6/2005 |  | $ | 5,155 |  |  | $ | 4,105 |  |  | 3-Month SOFR + 2.15% |  | 7.81 | % |  | 6.90 | % |  | May 2035
ACB Trust II |  | 7/15/2005 |  | 3,093 |  |  | 2,420 |  |  | 3-Month SOFR + 1.85% |  | 7.49 | % |  | 6.54 | % |  | July 2035
RIVR Statutory Trust I |  | 3/26/2003 |  | 7,217 |  |  | 6,240 |  |  | 3-Month SOFR + 3.15% |  | 8.77 | % |  | 7.87 | % |  | March 2033
Citizens First Statutory Trust I |  | 10/16/2006 |  | 5,155 |  |  | 4,302 |  |  | 3-Month SOFR +1.65% |  | 7.31 | % |  | 5.39 | % |  | January 2037
CUB Capital Trust I |  | 10/21/2004 |  | 10,310 |  |  | 9,642 |  |  | 3-Month SOFR +2.00% |  | 7.64 | % |  | 6.69 | % |  | November 2034
CUB Capital Trust II |  | 8/17/2005 |  | 10,310 |  |  | 9,073 |  |  | 3-Month SOFR +1.50% |  | 7.16 | % |  | 5.58 | % |  | October 2035
(1) “3-Month SOFR” refers to the three-month CME Term SOFR, which became effective following the first London banking day after June 30, 2023, plus the applicable spread adjustment of 0.26161% percent. (2) Prior to CME Term SOFR becoming effective, the variable rate was based upon LIBOR rates and tenors. See Replacement of LIBOR Benchmark below for additional information. Replacement of LIBOR Benchmark: On March 15, 2022, the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) was signed into law in response to the U.K. Financial Conduct Authority, the authority regulating LIBOR, announcing that, among other things, the 1-month, 3-month, 6-month and 12-month U.S. dollar LIBOR settings would cease to exist after June 30, 2023. The LIBOR Act establishes a uniform national approach for replacing LIBOR in legacy contracts that do not provide for the use of a clearly defined replacement benchmark rate. As directed by the LIBOR Act, on December 16, 2022, the Federal Reserve issued a final rule setting forth regulations to implement the LIBOR Act, including establishing benchmark replacements based on SOFR for contracts governed by U.S. law that reference certain tenors of U.S. dollar LIBOR (the overnight and one-, three-, six-, and 12-month tenors) and that do not have terms that provide for the use of a clearly defined and practicable replacement benchmark rate (“fallback provisions”) following the first London banking day after June 30, 2023. As the junior subordinated debentures discussed above do not have LIBOR fallback provisions, after June 30, 2023, the interest paid on those debentures has been and will be based upon the CME Term SOFR, as the replacement benchmark, including a static spread adjustment for the appropriate tenor, as provided by the LIBOR Act and related Federal Reserve regulations. The relevant spread adjustment for a three-month tenor is 0.26161%.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 470 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//470/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (i) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1E -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I + Details
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