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Borrowings
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Borrowings

Note 8. Borrowings

FHLB Borrowings

The Bank has a line of credit from the FHLB secured by pledged qualifying real estate loans and securities. At December 31, 2023 and 2022, based on collateral, the line totaled $455.6 million and $525.1 million, respectively. The FHLB will lend up to 30% of the Bank’s total assets as of the prior quarter end, subject to certain eligibility requirements, including adequate collateral. The Bank had borrowings from the FHLB totaling $210.0 million and $311.7 million at December 31, 2023 and 2022, respectively. FHLB borrowings required the Bank to hold $12.3 million and $14.7 million of FHLB stock as of December 31, 2023 and 2022, respectively, which is included in restricted equity investments on the consolidated balance sheets.

 

The following table presents information regarding FHLB advances outstanding as of the date stated.

 

 

December 31, 2023

(Dollars in thousands)

 

Balance

 

 

Origination Date

 

Stated Interest Rate

 

 

Maturity Date

Daily Rate Credit

 

$

60,000

 

 

5/8/2023

 

 

5.57

%

 

5/8/2024

Fixed Rate Credit

 

 

50,000

 

 

3/15/2023

 

 

4.07

%

 

3/15/2027

Fixed Rate Credit

 

 

50,000

 

 

5/2/2023

 

 

3.87

%

 

5/3/2027

Fixed Rate Credit

 

 

50,000

 

 

5/4/2023

 

 

3.52

%

 

5/4/2028

Total FHLB borrowings

 

$

210,000

 

 

 

 

 

 

 

 

At December 31, 2023, 1-4 family residential loans classified as held for investment with a lendable value of $237.5 million, multi-family residential loans with a lendable value of $36.6 million, commercial real estate loans with a lendable value of $151.6 million, and securities with a lendable value of $29.7 million were pledged for the line of credit with the FHLB. The Bank has letters of credit outstanding with the FHLB in the amount of $110.1 million and $85.1 million as of December 31, 2023 and 2022, respectively, for the purpose of collateral for public deposits with the Treasury Board of the Commonwealth of Virginia. Outstanding letters of credit reduce the available balance of the borrowing facility with the FHLB, which were $135.5 and $128.3 million as of December 31, 2023 and 2022, respectively.

FRB Borrowings

The Company may obtain advances from the FRB through the Discount Window. The Company had secured capacity through the FRB Discount Window of $161.0 million, of which the Company had no outstanding advances as of December 31, 2023. As of December 31, 2023, the Company had secured capacity under the BTFP of $260.9 million, of which the Company had drawn one advance for $65.0 million, maturing May 10, 2024, with a fixed interest rate of 4.74%. BTFP advances can be repaid at any time without penalty. Subsequent to December 31, 2023, and in connection with the Consent Order, the Company moved collateral from the FRB BTFP to the FHLB.

Other Borrowings

The Company has unsecured lines of credit with correspondent banks available for overnight borrowing, which totaled $10.0 million and $28.0 million at December 31, 2023 and 2022, respectively. These lines bear interest at the prevailing rates for such loans and are cancelable any time by the correspondent bank. At December 31, 2023 and 2022, none of these lines of credit with correspondent banks were drawn upon.

Subordinated Notes

The Company had $39.9 million of subordinated notes, net, outstanding as of December 31, 2023 and 2022, respectively. The Company's subordinated notes are comprised of a $25 million issuance in October 2019 maturing October 15, 2029 (the “2029 Notes”) and a $15 million issuance in May 2020 maturing June 1, 2030 (the “2030 Note”).

The 2029 Notes bear interest at 5.625% per annum, through October 14, 2024, payable semi-annually in arrears. From October 15, 2024 through October 14, 2029, or up to an early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month Secured Overnight Funding Rate ("SOFR") (as defined in the 2029 Notes) plus 433.5 basis points, payable quarterly in arrears. The 2029 Notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to the Company’s existing and future senior indebtedness and rank in parity with the other subordinated notes issued by the Company. Beginning on October 15, 2024 through maturity, the 2029 Notes may be redeemed, at the Company's option, on any scheduled interest payment date. As of December 31, 2023, the net carrying amount of the 2029 Notes was $25.1 million, inclusive of a $578 thousand purchase accounting adjustment (premium) recorded at the effective date of the Bay Banks Merger (January 31, 2021). The effective interest rate on the 2029 Notes, inclusive of the amortization of the purchase accounting adjustment (premium), was 5.08% for the twelve months ended December 31, 2023 and 2022 and was 4.73% for the twelve months ended December 31 2021.

The 2030 Note bears interest at the rate of 6.00% per annum until June 1, 2025, at which date the rate will reset quarterly, equal to the three-month SOFR determined on the date of the applicable interest period plus 587 basis points. Interest on the 2030 Note is payable semi-annually in arrears. The 2030 Note is an unsecured, subordinated obligation of the Company and ranks junior in right of payment to the Company’s existing and future senior

indebtedness and ranks in parity with the other subordinated notes issued by the Company. Beginning on June 1, 2025 through maturity, the 2030 Note may be redeemed, at the Company's option, on any scheduled interest payment date. The aggregate carrying value of the 2030 Note, including unamortized debt issuance costs, was $14.8 million and $14.7 million as of December 31, 2023 and 2022, respectively. For the twelve months ended December 31, 2023, 2022, and 2021 the effective interest rate on the 2030 Note was 6.09%, 6.11%, and 6.12%, respectively.