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SUBORDINATED DEBENTURES | 9 Months Ended
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Sep. 30, 2020
Debt Disclosure [Abstract] |
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER DEBT | NOTE 4 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER DEBT At September 30, 2020 and December 31, 2019, securities sold under agreements to repurchase totaled $20,520 and $11,100, respectively. The Company has an unsecured $25,000 revolving line of credit, which had a $7,000 outstanding balance at September 30, 2020, bears interest at the greater of (i) the prime rate, which was 3.25% at September 30, 2020, or (ii) the rate floor of 3.50%, with interest payable quarterly, and matures in March 2021. Federal Home Loan Bank (FHLB) advances, as of September 30, 2020, were as follows: Fixed rate advances, with monthly interest payments, principal due in:
Year |  | Current Weighted Average Rate |  |  | Principal Due |
2020 |  |  | 0.14 | % |  | $ | 65,000 |
2021 |  |  | 0.29 | % |  |  | 26,500 |
2022 |  |  | 1.99 | % |  |  | 1,500 |
2023 |  |  | — |  |  |  | — |
2024 |  |  | 1.76 | % |  |  | 6,000 |
|  |  |  |  |  |  | 99,000 |
Fixed rate advances, with monthly principal and interest payments, principal due in:
Year |  | Current Weighted Average Rate |  |  | Principal Due |
2020 |  |  | 1.38 | % |  |  | 4 |
2021 |  |  | 1.38 | % |  |  | 101 |
|  |  |  |  |  |  | 105 |
|  |  |  |  |  | $ | 99,105 |
NOTE 5 - SUBORDINATED DEBENTURES Subordinated debentures are made up of the following as of:
|  | September 30, 2020 |  |  | December 31, 2019 |
Trust II Debentures |  | $ | 3,093 |  |  | $ | 3,093 |
Trust III Debentures |  |  | 2,062 |  |  |  | 2,062 |
DCB Trust I Debentures |  |  | 5,155 |  |  |  | 5,155 |
Other debentures |  |  | 10,000 |  |  |  | 500 |
|  | $ | 20,310 |  |  | $ | 10,810 |
The Company has three trusts, Guaranty (TX) Capital Trust II (“Trust II”), Guaranty (TX) Capital Trust III (“Trust III”), and DCB Financial Trust I (“DCB Trust I”) (“Trust II”, “Trust III” and together with “DCB Trust I,” the “Trusts”). Upon formation, the Trusts issued pass-through securities (“TruPS”) with a liquidation value of $1,000 per share to third parties in private placements. Concurrently with the issuance of the TruPS, the Trusts issued common securities to the Company. The Trusts invested the proceeds of the sales of securities to the Company (“Debentures”). The Debentures mature approximately 30 years after the formation date, which may be shortened if certain conditions are met (including the Company having received prior approval of the Federal Reserve and any other required regulatory approvals).
|  | Trust II |  |  | Trust III |  |  | DCB Trust I |
Formation date |  | October 30, 2002 |  |  | July 25, 2006 |  |  | March 29, 2007 |
Capital trust pass-through securities |  |  |  |  |  |  |  |  |  |  |  |
Number of shares |  |  | 3,000 |  |  |  | 2,000 |  |  |  | 5,000 |
Original liquidation value |  | $ | 3,000 |  |  | $ | 2,000 |  |  | $ | 5,000 |
Common securities liquidation value |  |  | 93 |  |  |  | 62 |  |  |  | 155 |
The securities held by the Trusts qualify as Tier 1 capital for the Company under Federal Reserve Board guidelines. The Federal Reserve’s guidelines restrict core capital elements (including trust preferred securities and qualifying perpetual preferred stock) to 25% of all core capital elements, net of goodwill less any associated deferred tax liability. Because the Company’s aggregate amount of trust preferred securities is less than the limit of 25% of Tier 1 capital, net of goodwill, the full amount is includable in Tier 1 capital at September 30, 2020 and December 31, 2019. Additionally, the terms provide that trust preferred securities would no longer qualify for Tier 1 capital within five years of their maturity, but would be included as Tier 2 capital. However, the trust preferred securities would be amortized out of Tier 2 capital by one-fifth each year and excluded from Tier 2 capital completely during the year prior to maturity of the junior subordinated debentures. With certain exceptions, the amount of the principal and any accrued and unpaid interest on the Debentures are subordinated in right of payment to the prior payment in full of all senior indebtedness of the Company. Interest on the Debentures is payable quarterly. The interest is deferrable on a cumulative basis for up to five consecutive years following a suspension of dividend payments on all other capital stock. No principal payments are due until maturity for each of the Debentures.
|  | Trust II Debentures |  |  | Trust III Debentures |  |  | DCB Trust I Debentures |
Original amount |  | $ | 3,093 |  |  | $ | 2,062 |  |  | $ | 5,155 |
Maturity date |  | October 30, 2032 |  |  | October 1, 2036 |  |  | June 15, 2037 |
Interest due |  | Quarterly |  |  | Quarterly |  |  | Quarterly |
In accordance with ASC 810, "Consolidation," the junior subordinated debentures issued by the Company to the subsidiary trusts are shown as liabilities in the consolidated balance sheets and interest expense associated with the junior subordinated debentures is shown in the consolidated statements of earnings. Trust II Debentures Interest is payable at a variable rate per annum, reset quarterly, equal to 3 month LIBOR plus 3.35%. On any interest payment date on or after October 30, 2012 and prior to maturity date, the debentures are redeemable for cash at the option of the Company, on at least 30, but not more than 60 days’ notice, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption. Trust III Debentures Interest is payable at a variable rate per annum, reset quarterly, equal to 3 month LIBOR plus 1.67%. On any interest payment date on or after October 1, 2016 and prior to maturity date, the debentures are redeemable for cash at the option of the Company, on at least 30, but not more than 60 days’ notice, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption. DCB Trust I Debentures Interest is payable at a variable rate per annum, reset quarterly, equal to 3 month LIBOR plus 1.80%. On any interest payment date on or after June 15, 2012 and prior to maturity date, the debentures are redeemable for cash at the option of the Company, on at least 30, but not more than 60 days’ notice, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption. Other Debentures In December 2015, the Company issued $5,000 in debentures, of which $2,500 were issued to directors and other related parties. In May 2017, $2,000 of the related party debentures were repaid with a portion of the proceeds of Guaranty’s initial public offering. A further $1,000 of other debentures matured and were paid off in full in July of 2018 and another $1,000 and $500 of debentures matured and were paid off in full in July and December of 2019, respectively. The final $500 debenture was paid off during the second quarter of 2020. In May 2020, the Company issued $10,000 in debentures to directors and other related parties. The debentures were issued at a par value of $500 each with fixed annual rates between 1.00% and 4.00% and maturity dates between November 1, 2020 and November 1, 2024. At the Company’s option, and with 30 days advanced notice to the holder, the entire principal amount and all accrued interest may be paid to the holder on or before the due date of any debenture. The redemption price is equal to 100% of the face amount of the debenture redeemed, plus all accrued interest. The scheduled principal payments and weighted average rates of other debentures are as follows:
Year |  | Current Weighted Average Rate |  |  | Principal Due |
2020 |  |  | 1.00 | % |  | $ | 500 |
2021 |  |  | — |  |  |  | — |
2022 |  |  | 2.45 | % |  |  | 2,000 |
2023 |  |  | 2.85 | % |  |  | 3,500 |
2024 |  |  | 3.74 | % |  |  | 4,000 |
|  |  |  |  |  | $ | 10,000 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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