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Note 9 - Borrowings

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Federal Home Loan Bank Advances, Disclosure [Text Block]

Note 9 – Borrowings

Federal Home Loan Bank Advances

At December 31, advances from the FHLB were as follows:

(Dollars in thousands)		2020				2019
Maturity of November 2024 with fixed interest rate of 3.98%		$	161			$	198
Maturity of April 2020 with floating interest rate of 1.99%			-				10,000
Maturity of May 2020 with fixed interest rate of 2.16%			-				23,000
Total advances outstanding at year-end		$	161			$	33,198

Fees are charged on fixed rate advances that are paid prior to maturity. No fixed rate advances were paid prior to maturity in 2020 or 2019. Advances were secured by agricultural loans and residential real estate loans with a carrying value of approximately $158.2 million and $200.1 million at December 31, 2020 and December 31, 2019, respectively. Based on this collateral, the Bank was eligible to borrow an additional $85.6 million at year-end 2020.

The scheduled maturities of advances from the FHLB at December 31, 2020 were as follows:

(Dollars in thousands)
2021		$	39
2022			40
2023			42
2024			40
Total		$	161

Holding Company Term Loan 

ChoiceOne obtained a $10,000,000 term note in June 2020.  Part of the proceeds from the note were used to fund the cash portion of the consideration paid in the Community Shores merger.  The note matures June 2023 with quarterly principal and interest payments.  The note carries a floating rate of 2.50% over the 1-month LIBOR with a floor of 3.00%.  At December 31, 2020 the effective rate was 3.00%.  All or part of the note can be prepaid at any time. The agreement includes certain financial covenants, including minimum capital ratios, asset quality ratios, and achieving certain profitability thresholds.  ChoiceOne was in compliance with all covenants as of December 31, 2020.

At  December 31, information regarding the holding company term loan was as follows: 

(Dollars in thousands)		2020				2019
Maturity of June 2023 with floating interest rate of 3.00%		$	9,167			$	-

The scheduled maturities of the holding company term note at December 31, 2020 were as follows:

(Dollars in thousands)
2021		$	3,333
2022			3,334
2023			2,500
Total		$	9,167

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- Definition

The entire disclosure for borrowing from the Federal Home Loan Bank, including: (i) general description; (ii) title and nature of obligation; (iii) interest rate; (iv) payment terms; (v) maturity dates by year; (vi) collateral requirements; (vii) restrictive covenants; (viii) priority; (ix) conversion or redemption features; (x) carrying value of assets pledged as collateral; (xi) combined aggregate maturities for next five years; (xii) unused or available balances.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03.13(a))
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