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Borrowings
 12 Months Ended
Dec. 31, 2024
Debt Disclosure [Abstract]  
Borrowings

Note 7. Borrowings

FHLB Borrowings

The Bank has a borrowing facility from the FHLB secured by pledged qualifying commercial and residential mortgage loans and securities. At December 31, 2024 and 2023, the secured facility totaled $696.0 million and $455.6 million, respectively, based on pledged collateral. 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 $150.0 million and $210.0 million at December 31, 2024 and 2023, respectively. The FHLB borrowings required the Bank to hold $9.4 million and $12.3 million of FHLB stock as of December 31, 2024 and 2023, respectively, which is included in restricted equity investments on the consolidated balance sheets.

At December 31, 2024 and 2023, the Bank also had letters of credit outstanding with the FHLB in the amount of $51.2 million and $110.1 million, respectively, of which $50.0 million and $110.0 million were for the purpose of collateral for public deposits with the Treasury Board of the Commonwealth of Virginia as of the same dates. Outstanding letters of credit reduce the available balance of the borrowing facility with the FHLB. Available

balances on the FHLB credit facility were $494.9 million and $135.5 million as of December 31, 2024 and 2023, respectively.

The following tables present information regarding FHLB advances outstanding as of the dates stated.

 

 

December 31, 2024

(Dollars in thousands)

 

Balance

 

 

Origination Date

 

Stated Interest Rate

 

 

Maturity Date

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

 

$

150,000

 

 

 

 

 

 

 

 

 

 

 

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, 2024, 1-4 family residential loans classified as held for investment with a lendable value of $276.9 million, multi-family residential loans with a lendable value of $29.7 million, commercial real estate loans with a lendable value of $139.9 million, and securities with a lendable value of $249.6 million were pledged for the borrowing facility with the FHLB.

FRB Borrowings

The Company may obtain advances from the FRB through its Discount Window. Advances through the FRB Discount Window are secured by qualifying pledged construction and commercial and industrial loans, as well as certain qualifying investment securities. The Company had secured borrowing capacity through the FRB Discount Window of $105.7 million and $161.0 million as of December 31, 2024 and 2023, respectively, of which the Company had no outstanding advances as of both dates. As of December 31, 2024, pledged construction and commercial and industrial loans had a lendable value of $91.6 million, and pledged securities had a $14.1 million lendable value (amortized cost and fair value of $18.1 million and $16.3 million, respectively).

A $65.0 million advance was obtained from the Federal Reserve through the BTFP in the second quarter of 2023 and was repaid at its maturity in the second quarter of 2024.

Other Borrowings

The Company had an unsecured line of credit with a correspondent bank available for overnight borrowing, which totaled $10.0 million at both December 31, 2024 and 2023, respectively. The line bears interest at the prevailing rate for such loans and is cancelable any time by the correspondent bank. At December 31, 2024 and 2023, the Company had no outstanding advances on this secured line.

Subordinated Notes

The Company had $39.8 million and $39.9 million of subordinated notes, net, outstanding as of December 31, 2024 and 2023, 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 bore interest at 5.625% per annum, through October 14, 2024, payable semi-annually in arrears. From October 15, 2024 through October 15, 2029, or up to an early redemption date, the interest rate resets 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. As of December 31, 2024, the 2029 Notes bore an annual interest rate of 8.98%. 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, in whole or in part, at the Company's option, on any scheduled interest payment date. As of December 31, 2024, the net carrying amount of the 2029 Notes was $25.0 million, inclusive of a $478 thousand purchase accounting adjustment (premium) recorded at the effective date of the Bay Banks Merger. The effective interest rate on the 2029 Notes, inclusive of the amortization of the purchase accounting adjustment (premium), was 5.92% for the year ended December 31, 2024 and was 5.08% for the year ended December 31, 2023.

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. As of December 31, 2024, the 2030 Note bore an annual interest rate of 6.00%. 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, in whole or in part, 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 as of both December 31, 2024 and 2023, respectively. For the years ended December 31, 2024 and 2023, the effective interest rate on the 2030 Note was 6.08% and 6.09%, respectively.

The Company must obtain regulatory approval prior to any redemption of the 2029 Notes and the 2030 Note.