Borrowings

6 Months Ended

Jun. 30, 2022

Borrowings [Abstract]

Borrowings

NOTE (7) – Borrowings

The Bank enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Bank may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Bank to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing agreements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability in the Banks’s consolidated statements of financial condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts. In other words, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. These agreements mature on a daily basis. As of June 30, 2022 securities sold under agreements to repurchase totaled $67.3 at an average rate of 0.22%. The market value of pledged totaled $72.7 million as of June 30, 2022, and included $35.1 million of U.S. Government Agency securities, $27.6 million of mortgage-backed securities, $6.2 million of SBA pool securities and $3.8 million of federal agency CMO. As of December 31, 2021, securities sold under agreements to repurchase totaled $52.0 million at an average rate of 0.10%. The market value of securities pledged totaled $53.2 million as of December 31, 2021, and included $13.3 million of U.S. Government Agency securities and $39.9 million of mortgage-backed securities.

At June 30, 2022 and December 31, 2021, the Bank had outstanding advances from the FHLB totaling $32.9 million and $86.0 million, respectively. The weighted interest rate was 1.34% and 1.85% as of June 30, 2022 and December 31, 2021, respectively. The weighted average contractual maturity was 32 months and 22 months as of June 30, 2022 and December 31, 2021, respectively. The advances were collateralized by loans with a market value of $63.4 million at June 30, 2022 and $165.0 million at December 31, 2021.  The Bank is currently approved by the FHLB of Atlanta to borrow up to 25% of total assets to the extent the Bank provides qualifying collateral and holds sufficient FHLB stock. Based on collateral pledged and FHLB stock as of June 30, 2022, the Company was eligible to borrow an additional $13.8 million as of June 30, 2022.

In connection with the New Market Tax Credit activities of the Bank, CFC 45 is a partnership whose members include CFNMA and City First New Markets Fund II, LLC. This community development entity (“CDE”) acts in effect as a pass-through for a Merrill Lynch allocation totaling $14.0 million that needed to be deployed. In December 2015, Merrill Lynch made a $14.0 million non-recourse loan to CFC 45, whereby CFC 45 passed that loan through to a Qualified Active Low-Income Business (“QALICB”). The loan to the QALICB is secured by a Leasehold Deed of Trust that, due to the pass-through, non-recourse structure, is operationally and ultimately for the benefit of Merrill Lynch rather than CFC 45. Debt service payments received by CFC 45 from the QALICB are passed through to Merrill Lynch in return for which CFC 45 receives a servicing fee. The financial statements of CFC 45 are consolidated with those of the Bank and the Company.

There are two notes for CFC 45. Note A is in the amount of $9.9 million with a fixed interest rate of 5.2% per annum. Note B is in the amount of $4.1 million with a fixed interest rate of 0.24% per annum. Quarterly interest only payments commenced in March 2016 and will continue through March 2023 for Notes A and B. Beginning in September 2023, quarterly principal and interest payments will be due for Notes A and B. Both notes will mature on December 1, 2040.