BORROWED FUNDS AND REPURCHASE AGREEMENTS

12 Months Ended

Dec. 31, 2021

BORROWED FUNDS AND REPURCHASE AGREEMENTS [Abstract]

BORROWED FUNDS AND REPURCHASE AGREEMENTS

10. BORROWED FUNDS AND REPURCHASE AGREEMENTS

The following table shows the breakdown of borrowed funds as of December 31, 2021 and 2020 (dollars in thousands):

	Securities
	Sold Under			FHLB			Federal			FRB												Total
	Agreements to			Advances			Funds			BIC			Subordinated			Notes			Term			Borrowed
	Repurchase(a)			(b)			Lines (c)			Line (d)			Debt (e)			Payable (f)			Loans(g)			Funds
2021
Balance at December 31	$	16,873		$	-		$	-		$	-		$	9,879		$	7,500		$	39,725		$	73,977
Highest balance at any month-end		16,873			-			-			-			9,879			7,500			66,525			100,777
Average balance		14,726			-			-			-			7,036			7,500			55,360			84,622
Weighted average interest rate:
Paid during the year		0.06	%		0.00	%		0.51	%		0.22	%		4.17	%		3.57	%		1.26	%		1.50	%
As of year-end		0.08	%		0.00	%		0.00	%		0.00	%		4.18	%		3.57	%		1.15	%		1.56	%
2020
Balance at December 31	$	14,813		$	-		$	-		$	-		$	-		$	7,500		$	66,525		$	88,838
Highest balance at any month-end		14,813			67,106			-			-			-			7,500			79,022			168,441
Average balance		12,903			12,371			-			109			-			7,500			60,355			93,238
Weighted average interest rate:
Paid during the year		0.36	%		1.63	%		0.51	%		0.34	%		0.00	%		3.83	%		1.19	%		1.34	%
As of year-end		0.11	%		0.00	%		0.00	%		0.00	%		0.00	%		3.57	%		1.12	%		1.16	%

(a) We utilize securities sold under agreements to repurchase to facilitate the needs of our customers and to facilitate secured short-term funding needs. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. We monitor collateral levels on a continuous basis. We may be required to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents. The collateral pledged on the repurchase agreements by the remaining contractual maturity of the repurchase agreements in the Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020 is presented in the following tables (in thousands).

	Remaining Contractual Maturity of the Agreements
	Overnight and		Up to				Greater than
2021	Continuous		30 Days		30 - 90 Days		90 days		Total
Repurchase Agreements:
U.S. agency securities	$	17,155	$	-	$	-	$	-	$	17,155
Total carrying value of collateral pledged	$	17,155	$	-	$	-	$	-	$	17,155
Total liability recognized for repurchase agreements									$	16,873

	Remaining Contractual Maturity of the Agreements
	Overnight and		Up to				Greater than
2020	Continuous		30 Days		30 - 90 Days		90 days		Total
Repurchase Agreements:
U.S. agency securities	$	16,735	$	-	$	-	$	-	$	16,735
Total carrying value of collateral pledged	$	16,735	$	-	$	-	$	-	$	16,735
Total liability recognized for repurchase agreements									$	14,813

(b) FHLB Advances consist of an “Open RepoPlus” agreement with the FHLB of Pittsburgh. FHLB “Open RepoPlus” advances are short-term borrowings that bear interest based on the FHLB discount rate or Federal Funds rate, whichever is higher. The Company has a borrowing limit of $756,225,000, inclusive of any outstanding advances and letters of credit. FHLB advances are secured by a blanket security agreement that includes the Company’s FHLB stock, as well as certain investment and mortgage-backed securities held in safekeeping at the FHLB and certain residential and commercial mortgage loans. A portion of these advances, $25.0 million, are subject to interest rate swap arrangements. See Note 17 for additional information.

(c) The federal funds lines consist of unsecured lines from two third party banks at market rates. The Company has a borrowing limit totaling $34,000,000, inclusive of any outstanding balances. No specific collateral is required to be pledged for these borrowings.

(d) The Federal Reserve Bank Borrower in Custody (FRB BIC) Line consists of a borrower in custody in agreement opened in January 2010 with the Federal Reserve Bank of Philadelphia secured by municipal loans maintained in the Company’s possession. As of December 31, 2021 and 2020, the Company has a borrowing limit of $1,068,000 and $4,379,000, respectively, inclusive of any outstanding advances. The approximate carrying value of the municipal loan collateral was $1,683,000 and $12,932,000 as of December 31, 2021 and 2020, respectively.

(e) In April 2021, the Company issued $10.0 million of fixed to floating rate subordinated notes that mature on April 16, 2031, unless redeemed earlier. The notes bear interest at 4% per annum through April 16, 2026 and subsequently pay interest at the 90-day average secured overnight financing rate, determined on the determination date of the applicable interest period, plus 323 basis points. The Company may redeem the notes, in whole or in part, on or after April 16, 2026, and at any time upon the occurrence of certain events, subject in each case to the approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Issuance costs associated with the notes totaled $131,000 and were capitalized and will be amortized over the life of the note on a straight-line basis, which approximates the effective yield method. As of December 31, 2021, the net unamortized issuance costs totaled $121,000.

(f) In December 2003, the Company formed a special purpose entity (“Entity”) to issue $7,500,000 of floating rate obligated mandatory redeemable trust preferred securities as part of a pooled offering. The rate was determined quarterly and floated based on the 3 month LIBOR plus 2.80 percent. The Entity may redeem them, in whole or in part, at face value after December 17, 2008, and on a quarterly basis thereafter. The Company borrowed the proceeds of the issuance from the Entity in December 2003 in the form of a $7,500,000 note payable. Debt issue costs of $75,000 have been capitalized and fully amortized as of December 31, 2008. Under current accounting rules, the Company’s minority interest in the Entity was recorded at the initial investment amount and is included in the other assets section of the balance sheet. The Entity is not consolidated as part of the Company’s consolidated financial statements. The $7,500,000 note payable is subject to an interest rate swap arrangement. See Note 17 for additional information.

(g) Term Loans consist of separate loans with the FHLB of Pittsburgh as follows (dollars in thousands):

Interest Rate			Maturity	December 31, 2021		December31, 2020
Fixed:
	0.38	%	January 4, 2021		-		25,000
	0.26	%	January 3, 2022		25,000		-
	2.08	%	January 6, 2022		4,725		4,725
	2.46	%	March 28, 2024		5,000		5,000
	1.69	%	August 20, 2024		5,000		5,000
	2.61	%	February 3, 2021		-		2,000
	3.52	%	July 12, 2021		-		2,000
	2.37	%	August 20, 2021		-		2,800
	0.25	%	July 9, 2021		-		15,000
	1.24	%	March 3, 2025		-		5,000
Total term loans				$	39,725	$	66,525

Following are maturities of borrowed funds as of December 31, 2021 (in thousands):

2022	$	46,598
2023		-
2024		10,000
2025		-
2026		-
Thereafter		17,379
Total borrowed funds	$	73,977