Borrowed Funds

Borrowed funds consist of the following obligations at December 31:



	2019				2018
	Amount		Rate		Amount		Rate
FHLB advances	$	245,000	2.32	%	$	300,000	2.20	%
Securities sold under agreements to repurchase without stated maturity dates	30,999		0.09	%	40,299		0.11	%
Total	$	275,999	2.07	%	$	340,299	1.95	%

FHLB advances are collateralized by a blanket lien on all qualified 1-4 family residential real estate loans, specific AFS securities, and FHLB stock.

The following table lists the maturities and weighted average interest rates of FHLB advances as of December 31:



	2019				2018
	Amount		Rate		Amount		Rate
Fixed rate due 2019	$	—	—	%	$	100,000	1.94	%
Fixed rate due 2020	55,000		2.18	%	55,000		2.18	%
Fixed rate due 2021	50,000		1.91	%	50,000		1.91	%
Variable rate due 2021 ⁽¹⁾	10,000		2.20	%	10,000		2.93	%
Fixed rate due 2022	20,000		1.97	%	20,000		1.97	%
Fixed rate due 2023	45,000		2.97	%	35,000		3.17	%
Fixed rate due 2024	55,000		2.68	%	20,000		2.96	%
Fixed rate due 2026	10,000		1.17	%	10,000		1.17	%
Total	$	245,000	2.32	%	$	300,000	2.20	%

⁽¹⁾ Hedged advance (see “Derivative Instruments” section below)

Securities sold under agreements to repurchase are classified as secured borrowings and are reflected at the amount of cash received in connection with the transaction. The securities underlying the agreements have a carrying value and a fair value of $31,020 and $40,316 at December 31, 2019 and 2018, respectively. Such securities remain under our control. We may be required to provide additional collateral based on the fair value of underlying securities.

Securities sold under repurchase agreements without stated maturity dates, federal funds purchased, and FRB Discount Window advances generally mature within one to four days from the transaction date. We had no FRB Discount Window advances for the years ended December 31, 2019 and 2018. The following table provides a summary of securities sold under repurchase agreements without stated maturity dates and federal funds purchased at December 31:



	2019						2018
	Maximum Month End Balance		Average Balance		Weighted Average Interest Rate During the Period		Maximum Month End Balance		Average Balance		Weighted Average Interest Rate During the Period
Securities sold under agreements to repurchase without stated maturity dates	$	37,441	$	31,406	0.10	%	$	63,133	$	38,036	0.10	%
Federal funds purchased	7,070		687		2.60	%	16,200		3,741		1.90	%

We had pledged AFS securities and 1-4 family residential real estate loans in the following amounts at December 31:



	2019		2018
Pledged to secure borrowed funds	$	368,310	$	431,430
Pledged to secure repurchase agreements	31,020		40,316
Pledged for public deposits and for other purposes necessary or required by law	59,537		58,107
Total	$	458,867	$	529,853

AFS securities pledged to repurchase agreements without stated maturity dates consisted of the following at December 31:



	2019		2018
States and political subdivisions	$	31,020	$	23,268
Mortgage-backed securities	—		10,736
Collateralized mortgage obligations	—		6,312
Total	$	31,020	$	40,316

AFS securities pledged to repurchase agreements are monitored to ensure the appropriate level is collateralized. In the event of maturities, calls, significant principal repayments, or significant decline in market values, we have an adequate level of AFS securities available to pledge to satisfy required collateral.

As of December 31, 2019, we had the ability to borrow up to an additional $132,897, based on assets pledged as collateral. We had no investment securities that were restricted to be pledged for specific purposes.

Derivative Instruments

We have entered into interest rate swaps to manage exposure to interest rate risk and variability in cash flows. The interest rate swaps, associated with our variable rate borrowings, are designated upon inception as cash flow hedges of forecasted interest payments. We have entered into LIBOR-based interest rate swaps that involve the receipt of variable amounts in exchange for fixed rate payments, in effect converting variable rate debt to fixed rate debt.

Cash flow hedges are assessed for effectiveness using regression analysis. The effective portion of changes in fair value are recorded in OCI and subsequently reclassified into interest expense in the same period in which the related interest on the variable rate borrowings affects earnings. In the event that a portion of the changes in fair value were determined to be ineffective, the ineffective amount would be recorded in earnings.

The following tables provide information on derivatives related to variable rate borrowings as of December 31:



	2019
	Pay Rate		Receive Rate	Remaining Life (Years)	Notional Amount		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Cash Flow Hedges:
Interest rate swaps	1.56	%	3-Month LIBOR	1.3	$	10,000	Other Assets	$	67



	2018
	Pay Rate		Receive Rate	Remaining Life (Years)	Notional Amount		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Cash Flow Hedges:
Interest rate swaps	1.56	%	3-Month LIBOR	2.3	$	10,000	Other Assets	$	323

Derivatives contain an element of credit risk which arises from the possibility that we will incur a loss as a result of a counterparty failing to meet its contractual obligations. Credit risk is minimized through counterparty collateral, transaction limits and monitoring procedures. We also manage dealer credit risk by entering into interest rate derivatives only with primary and highly rated counterparties, the use of ISDA master agreements, and the use of counterparty limits. We do not anticipate any losses from failure of interest rate derivative counterparties to honor their obligations.