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Borrowed Funds | 9 Months Ended
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Sep. 30, 2021
Debt Disclosure [Abstract] |
Borrowed Funds | Borrowed Funds Borrowed funds consist of the following obligations as of:
| September 30, 2021 |  | December 31, 2020
| Amount |  | Rate |  | Amount |  | Rate
Securities sold under agreements to repurchase without stated maturity dates | $ | 67,519 |  |  | 0.08 | % |  | $ | 68,747 |  |  | 0.13 | %
FHLB advances | 60,000 |  |  | 1.84 | % |  | 90,000 |  |  | 1.68 | %
Subordinated debt, net of unamortized issuance costs | 29,136 |  |  | 3.66 | % |  | — |  |  | — | %
Total | $ | 156,655 |  |  | 1.42 | % |  | $ | 158,747 |  |  | 1.01 | %
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:
| September 30, 2021 |  | December 31, 2020
| Amount |  | Rate |  | Amount |  | Rate
Fixed rate due 2021 | $ | 30,000 |  |  | 1.98 | % |  | $ | 50,000 |  |  | 1.91 | %
Variable rate due 2021 (1) | — |  |  | — | % |  | 10,000 |  |  | 0.52 | %
Fixed rate due 2022 | 20,000 |  |  | 1.97 | % |  | 20,000 |  |  | 1.97 | %
Fixed rate due 2026 | 10,000 |  |  | 1.17 | % |  | 10,000 |  |  | 1.17 | %
Total | $ | 60,000 |  |  | 1.84 | % |  | $ | 90,000 |  |  | 1.68 | %
(1)Hedged advance (see “Derivative Instruments” section below) In October, the fixed rate FHLB advance due in 2026 was put by the FHLB, reducing our total FHLB advances to $50,000. 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 $67,542 and $68,773 at September 30, 2021 and December 31, 2020, 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 federal funds purchased or FRB Discount Window advances during the three and nine-month periods ended September 30, 2021 and 2020. A summary of securities sold under repurchase agreements without stated maturity dates was as follows for the:
| Three Months Ended September 30
| 2021 |  | 2020
| 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 | $ | 67,519 |  |  | $ | 62,790 |  |  | 0.10 | % |  | $ | 33,349 |  |  | $ | 30,578 |  |  | 0.10 | %
Federal funds purchased | $ | — |  |  | $ | — |  |  | 0.52 | % |  | $ | — |  |  | $ | 5 |  |  | 0.49 | %
| Nine Months Ended September 30
| 2021 |  | 2020
| 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 | $ | 67,519 |  |  | $ | 56,422 |  |  | 0.11 | % |  | $ | 33,349 |  |  | $ | 30,845 |  |  | 0.10 | %
Federal funds purchased | $ | 80 |  |  | $ | 2 |  |  | 0.40 | % |  | $ | — |  |  | $ | 2 |  |  | 0.49 | %
We had pledged AFS securities and 1-4 family residential real estate loans in the following amounts at:
| September 30 2021 |  | December 31 2020
Pledged to secure borrowed funds | $ | 308,633 |  |  | $ | 302,041 |
Pledged to secure repurchase agreements | 67,542 |  |  | 68,773 |
Pledged for public deposits and for other purposes necessary or required by law | 28,794 |  |  | 39,641 |
Total | $ | 404,969 |  |  | $ | 410,455 |
AFS securities pledged to repurchase agreements without stated maturity dates consisted of the following at:
| September 30 2021 |  | December 31 2020
U.S. Treasury | $ | 19,782 |  |  | $ | — |
States and political subdivisions | 13,904 |  |  | 12,728 |
Mortgage-backed securities | 17,141 |  |  | 30,250 |
Collateralized mortgage obligations | 16,715 |  |  | 25,795 |
Total | $ | 67,542 |  |  | $ | 68,773 |
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 to pledge to satisfy collateral requirements. As of September 30, 2021, we had the ability to borrow up to an additional $260,815, based on assets pledged as collateral. We had no investment securities that were restricted from being pledged for specific purposes. On June 2, 2021, we completed a private placement of $30,000 in aggregate principal amount of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031 (the "Notes"). The Notes will initially bear a fixed interest rate of 3.25% until June 15, 2026, after which time until maturity on June 15, 2031, the interest rate will reset quarterly to an annual floating rate equal to the then-current 3-month SOFR plus 256 basis points. The Notes are redeemable by us at our option, in whole or in part, on or after June 15, 2026. The Notes are not subject to redemption at the option of the holders. The following is a summary of subordinated debt as of:
| September 30, 2021 |  | December 31, 2020
| Amount |  | Rate |  | Amount |  | Rate
Subordinated debt, net of unamortized issuance costs | $ | 29,136 |  |  | 3.66 | % |  | $ | — |  |  | — | %
Derivative Instruments We may use interest rate swaps to manage exposure to interest rate risk and variability in cash flows. The interest rate swap, associated with our variable rate borrowings, was designated upon inception as cash flow hedges of forecasted interest payments. We entered into a LIBOR-based interest rate swap that involves 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 table provides information on derivatives related to variable rate borrowings as of December 31, 2020. There were no derivatives related to variable rate borrowings as of September 30, 2021 as the interest rate swap related to borrowings matured during the second quarter of 2021.
| December 31, 2020
| 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 |  | 0.3 |  | $ | 10,000 |  |  | Other liabilities |  | $ | (54) |
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.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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