BORROWINGS

12 Months Ended

Dec. 31, 2020

Short-term borrowings and weighted-average interest rates at December 31 are as follows:


	2020				2019
Dollars in thousands	Amount		Rate		Amount		Rate
FHLB overnight advance	$	—	—	%	$	—	—	%
Securities sold under repurchase agreements	38,464		0.12		33,435		0.12
	$	38,464	0.12	%	$	33,435	0.12	%

Under an agreement with the FHLB, the Bank has short-term borrowing capacity included within its maximum borrowing capacity. All FHLB advances are collateralized by a security agreement covering qualifying loans and unpledged U.S. Treasury, agency and mortgage-backed securities. In addition, all FHLB advances are secured by the FHLB capital stock owned by the Bank having a par value of $2,529,000 at December 31, 2020. The Corporation also has lines of credit that total $29,000,000 with correspondent banks for overnight federal funds borrowings. There were no advances on these lines at December 31, 2020 and 2019.

The Corporation enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Corporation may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Corporation to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing agreements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability in the Corporation’s consolidated statements of condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts. In other words, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. In addition, as the Corporation does not enter into reverse repurchase agreements, there is no such offsetting to be done with the repurchase agreements.

The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the repurchase agreement should the Corporation be in default (e.g., fails to make an interest payment to the counterparty). For private institution repurchase agreements, if the private institution counterparty were to default (e.g., declare bankruptcy), the Corporation could cancel the repurchase agreement (i.e., cease payment of principal and interest), and attempt collection on the amount of collateral value in excess of the repurchase agreement fair value. The collateral is held by a third-party financial institution in the counterparty’s custodial account. The counterparty has the right to sell or repledge the investment securities. For government entity repurchase agreements, the collateral is held by the Corporation in a segregated custodial account under a tri-party agreement.

The following table presents the short-term borrowings subject to an enforceable master netting arrangement or repurchase agreement as of December 31, 2020 and 2019:


								Gross Amounts Not Offset in the Statements of Condition
Dollars in thousands		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statements of Condition		Net Amounts of Liabilities Presented in the Statements of Condition		Financial Instruments		Cash Collateral Pledged		Net Amount
December 31, 2020
Repurchase agreements
Commercial customers and government entities	(a)	$	38,464	$	—	$	38,464	$	(38,464)	$	—	$	—

December 31, 2019
Repurchase agreements
Commercial customers and government entities	(a)	$	33,435	$	—	$	33,435	$	(33,435)	$	—	$	—

(a) As of December 31, 2020 and 2019, the fair value of securities pledged in connection with repurchase agreements was $54,680,000 and $34,582,000, respectively.

A summary of long-term debt as of December 31 is as follows:


	2020				2019
Dollars in thousands	Amount		Rate		Amount		Rate
FHLB fixed-rate advances maturing:
2020	$	—	—	%	$	20,000	1.87	%
2021	22,716		2.10	%	22,716		2.10	%
2022	11,000		2.69	%	11,000		2.69	%
2023	5,000		2.60	%	5,000		2.60	%



Loan payable to local bank	1,329		5.51	%	1,830		4.50	%
Loan payable to local bank	—		—	%	750		4.50	%
Loan payable variable rate	2,700		3.22	%	—		—	%
Trust preferred subordinated debt	5,000		6.39	%	5,000		6.39	%
Trust preferred subordinated debt	6,000		1.69	%	—		—	%
	$	53,745	2.76	%	$	66,296	2.58	%

The FHLB advances are collateralized by the assets defined in the security agreement and FHLB capital stock described previously. The Corporation can borrow a maximum of $847,881,000 from the FHLB, of which $791,915,000 was available at December 31, 2020.

The first loan payable to a local bank has a fixed rate of 4.50% for the first five years and a variable rate of interest with Prime Rate thereafter to final maturity in June 2028. The principal balance of this note may be prepaid at any time without penalty.

The second loan payable to a local bank is a commercial revolving line of credit which has a variable rate equal to the Wall Street Journal Prime Rate minus 0.25%. The loan payable balance was reduced to $0 in 2020.

The loan payable variable rate represents a promissory note (note) issued by FCBI in July 2011 and assumed by ACNB Corporation through the acquisition. The note has been amended from time to time through change in terms agreements. Under the current change in terms agreement, the maturity date of the note is April 10, 2021 with the rate of interest accruing on the principal balance of 3.25% per year. The note is unsecured.

The first trust preferred subordinated debt is comprised of debt securities issued by New Windsor in June 2005 and assumed by ACNB Corporation through the acquisition. New Windsor issued $5,000,000 of 6.39% fixed rate capital securities to institutional investors in a private pooled transaction. The proceeds were transferred to New Windsor as trust preferred subordinated debt under the same terms and conditions. The Corporation then contributed the full amount to the Bank in the form of Tier 1 capital. The Corporation has, through various contractual agreements, fully and unconditionally guaranteed all of the trust obligations with respect to the capital securities.

The second trust preferred subordinated debt is comprised of debt securities issued by FCBI in December 2006 and assumed by ACNB Corporation through the acquisition. FCBI completed the private placement of an aggregate of $6,000,000 of trust preferred securities. The interest rate on the subordinated debentures is currently adjusted quarterly to 163 basis points over three-month LIBOR. The debenture has a provision if LIBOR is no longer available. On June 15, 2020 the most recent interest rate reset date, the interest rate was adjusted to 1.94338% for the period ending September 14, 2020. The trust preferred securities mature on December 15, 2036, and may be redeemed at par, at the Corporation’s option, on any interest payment date. The proceeds were transferred to FCBI as trust preferred subordinated debt under the same terms and conditions. The Corporation then contributed the full amount to the Bank in the form of Tier 1 capital. The Corporation has, through various contractual agreements, fully and unconditionally guaranteed all of the trust obligations with respect to the capital securities.