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Borrowings and Subordinated Notes | 12 Months Ended
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Dec. 31, 2022
Debt Disclosure [Abstract] |
Borrowings and Subordinated Notes | Note 9 – Borrowings and Subordinated Notes Short Term Debt Due to the funding requirement for the acquisition of PFSB to be provided from the holding company, the Company secured borrowings from a correspondent bank. Two loans were secured, the first a $30 million 12-month term note and the second a 12-month line of credit for $10 million. Both loans were advanced on October 1, 2021. Interest on both loans is due quarterly and accrues at a rate of 2.50% per annum with reporting and capital covenants included. The structure of the acquisition required all accounting of the transaction to be recorded at the Bank level as Perpetual did not have a holding company. The Company advanced funds from the Bank to the Company to facilitate payoff of the term note and line of credit balance after regulatory approval was granted in the second quarter of 2022. The line of credit remained open for future liquidity needs. On September 29, 2022, the line of credit was advanced for $10 million for the acquisition of PFSL Interest on the line of credit is due quarterly and accrues at a rate of 5.50% per annum with reporting and capital covenants included. The line of credit matures on September 30, 2023. Long Term Debt Federal Home Loan Bank Advances Long term debt consists of various loans from the Federal Home Loan Banks. Repayment structures vary, ranging from monthly installments, annual payments or upon maturity. Interest payments are due monthly. Total borrowings were $127.4 million excluding an additional $47 thousand for fair value related to the acquisitions for December 31, 2022 compared to $23.9 million excluding $197 thousand for fair value for December 31, 2021. With the acquisition of Peoples Federal Savings and Loan Bank, the Bank undertook $965 thousand in advances with varying maturity dates from 2022 through 2028. With the acquisition of Perpetual Federal Savings Bank, the Bank undertook $6 million in advances due in 2024. The advances were secured by a pledge of $232.9 and $193.2 million of mortgage loans as of December 31, 2022 and 2021, respectively under a blanket collateral agreement. The advances are subject to pre-payment penalties and the provisions and conditions of the credit policy of the Federal Home Loan Bank. The Bank had access to $73.0 and $69.0 million unsecured borrowings through correspondent banks as of December 31, 2022 and December 31, 2021, respectively. The Bank also had access to $130.4 million and $94.2 million through a Cash Management Advance with the Federal Home Loan Bank as of December 31, 2022 and December 31, 2021 respectively. The Bank had unpledged securities, which could be sold or used as collateral, of $249.6 million and $313.6 million at the end of the same time periods, respectively. An additional $2.0 million at December 31, 2022, and $91.2 million at December 31, 2021, were available from the Federal Home Loan Bank based on current pledging. The table below shows the maturities of the borrowings exclusive of the fair value.
|  | (In Thousands) |
2023 |  | $ | 71,507 |
2024 |  |  | 32,500 |
2025 |  |  | 11,500 |
2026 |  |  | - |
2027 |  |  | 9,064 |
Thereafter |  |  | 2,867 |
Total |  | $ | 127,438 |
Subordinated Notes On July 30, 2021, the Company announced the completion of a private placement of $35 million aggregate principal amount of its 3.25% fixed-to-floating rate subordinated notes due July 30, 2031 (the “Notes”) to various accredited investors (the “Offering”). The price for the Notes was 100% of the principal amount of the Notes. The Notes are intended to qualify as Tier 2 capital for regulatory purposes. The Company intends to use the net proceeds from the Offering for general corporate purposes, including financing acquisitions and organic growth. Interest on the Notes will accrue at a rate equal to (i) 3.25% per annum from the original issue date to, but excluding, the five-year anniversary, payable semi-annually in arrears, and (ii) a floating rate per annum equal to a benchmark rate, which is expected to be the Three-Month Term SOFR (as defined in the Notes), plus a spread of 263 basis points from and including the five-year anniversary until maturity, payable quarterly in arrears. Beginning on or after the fifth anniversary of the issue date through maturity, the Notes may be redeemed, at the Company’s option, on any scheduled interest payment date. Any redemption will be at a redemption price equal to 100% of the principal amount of Notes being redeemed, plus accrued and unpaid interest.
|  | December 31, 2022 |  |  | December 31, 2021 |
(In Thousands) |  | Principal |  |  | Unamortized Note Issuance Costs |  |  | Principal |  |  | Unamortized Note Issuance Costs |
Subordinated Notes |  | $ | 35,000 |  |  | $ | (414 | ) |  | $ | 35,000 |  |  | $ | (529 | )
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- Definition The entire disclosure for borrowings under subordinated debt agreements that qualify as available in computing net capital under SEC's uniform net capital rule, including restrictive covenants, collateral, interest rates and due dates, amounts due by date and amount owed in total. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 470 -Section 45 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6479118&loc=d3e64650-112822 + Details
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