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BORROWED FUNDS
 9 Months Ended
Sep. 30, 2022
BORROWED FUNDS  
BORROWED FUNDS

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NOTE 4.               BORROWED FUNDS

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Borrowed funds at September 30, 2022 and December 31, 2021 are summarized, as follows:

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September 30, 2022

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December 31, 2021

 

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Weighted

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Weighted

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(dollars in thousands)

    

Carrying Value

    

Average Rate

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Carrying Value

    

Average Rate

 

Short-term borrowings

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Advances from the FHLB

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$

167,250

 

2.95

%  

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$

75,000

 

0.30

%

Other borrowings

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18,916

 

0.14

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19,802

 

0.17

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Total short-term borrowings

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186,166

 

1.27

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94,802

 

0.21

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Long-term borrowings

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​

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Advances from the FHLB

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2,591

 

0.39

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23,598

 

1.08

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Subordinated borrowings

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60,248

 

5.05

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60,124

 

4.34

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Total long-term borrowings

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62,839

 

4.86

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83,722

 

3.42

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Total

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$

249,005

 

1.74

%  

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$

178,524

 

0.91

%

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Short-term debt includes Federal Home Loan Bank of Boston (“FHLB”) advances with a remaining maturity of less than one year. We also maintain a $1.0 million secured line of credit with the FHLB that bears a daily adjustable rate calculated by the FHLB. There was no outstanding balance on the FHLB line of credit for the periods ended September 30, 2022 and December 31, 2021.

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We have the capacity to borrow funds on a secured basis utilizing the Borrower in Custody program and the Discount Window at the Federal Reserve Bank of Boston (the “FRB”). At September 30, 2022, our available secured line of credit at the FRB was $84.1 million. We have pledged certain loans and securities to the FRB to support this arrangement. There were no borrowings with the FRB for the periods ended December 31, 2021.

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We maintain, with a correspondent bank, an unused unsecured federal funds line of credit that has an aggregate overnight borrowing capacity of $50.0 million as of September 30, 2022 and December 31, 2021. There was no outstanding balance on the line of credit as of September 30, 2022 and December 31, 2021.

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Long-term FHLB advances consist of advances with a remaining maturity of more than one year. The advances outstanding at September 30, 2022 include no callable advances and amortizing advances of $291 thousand. The advances outstanding at December 31, 2021 included $20.0 million of callable advances and $298 thousand of amortizing advances. All FHLB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally all residential first mortgage loans and certain securities.

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A summary of maturities of FHLB advances as of September 30, 2022 is, as follows:

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Weighted Average

 

(in thousands, except rates)

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Amount

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 Rate

 

2022

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$

166,250

 

2.97

%

2023

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1,000

 

—

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2024

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2,300

 

—

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2025

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—

 

—

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2026

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—

 

—

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2027 and thereafter

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291

 

3.45

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Total FHLB advances

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$

169,841

 

2.92

%

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On November 26, 2019, we entered into Subordinated Note Purchase Agreements with certain qualified institutional buyers and accredited investors pursuant to which we sold and issued $40.0 million in aggregate principal amount of subordinated notes due 2029 (the “Notes”). The Notes have a maturity date of December 1, 2029 and bear a fixed interest rate of 4.63% through December 1, 2024 payable semi-annually in arrears. From December 1, 2024 and thereafter the interest rate shall be reset quarterly to an interest rate per annum equal to the then current three-month Secured Overnight

Financing Rate (SOFR) plus 3.27%. We have the option beginning with the interest payment date of December 1, 2024, and on any scheduled payment date thereafter, to redeem the Notes, in whole or in part upon prior approval of the Federal Reserve. The transaction included debt issuance costs of $372 thousand as of September 30, 2022 and $496 thousand net of amortization as of December 31, 2021, that are netted against the subordinated debt.

We also have $20.6 million in floating Junior Subordinated Deferrable Interest Debentures (“Debentures”) issued by NHTB Capital Trust II (“Trust II”) and NHTB Capital Trust III (“Trust III”), which are both Connecticut statutory trusts. The Debentures were issued on March 30, 2004, carry a variable interest rate of three-month LIBOR plus 2.79%, and mature in 2034. The debt is callable by us at the time when any interest payment is made. Trust II and Trust III are considered variable interest entities for which we are not the primary beneficiary. Accordingly, Trust II and Trust III are not consolidated into our financial statements.

Repurchase Agreements

We can raise additional liquidity by entering into repurchase agreements at our discretion. In a security repurchase agreement transaction, we will generally sell a security, agreeing to repurchase either the same or substantially identical security on a specified later date, at a greater price than the original sales price. The difference between the sale price and purchase price is the cost of the proceeds, which is recorded as interest expense on the consolidated statements of income. The securities underlying the agreements are delivered to counterparties as security for the repurchase obligations. Since the securities are treated as collateral and the agreement does not qualify for a full transfer of effective control, the transactions do not meet the criteria to be classified as sales, and are therefore considered secured borrowing transactions for accounting purposes. Payments on such borrowings are interest only until the scheduled repurchase date. In a repurchase agreement, we are subject to the risk that the purchaser may default at maturity and not return the securities underlying the agreements. In order to minimize this potential risk, we either deal with established firms when entering into these transactions or with customers whose agreements stipulate that the securities underlying the agreement are not delivered to the customer and instead are held in segregated safekeeping accounts by our safekeeping agents.

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(in thousands)

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September 30, 2022

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December 31, 2021

Customer Repurchase Agreements

 

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US Government-sponsored enterprises

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$

18,916

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$

19,802

Total

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$

18,916

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$

19,802

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