Note 10: Borrowings

FHLB Borrowings

As of June 30, 2018 and December 31, 2017, the Bank had $70.0 million of outstanding FHLB borrowings, consisting of two advances. Advances on the FHLB lines are secured by a blanket lien on qualified one-to-four family real estate, commercial real estate, and multifamily residential loans. Immediate available credit, as of June 30, 2018, was $172.2 million against a total line of credit of $248.2 million.

Further information regarding the two advances outstanding as of June 30, 2018 are shown in the following table.

							Maturity
	Balance		Originated	Interest Rate			Date
Adjustable rate hybrid	$	10,000	4/12/2013		4.72	%	4/13/2020
Fixed rate credit		60,000	6/4/2018		1.97	%	7/3/2018
Total FHLB borrowings	$	70,000			3.35	%

Subordinated Notes

On May 28, 2015, the Company entered into a purchase agreement with 29 accredited investors under which the Company issued an aggregate of $7.0 million of subordinated notes (the “notes”) to the accredited investors. The notes have a maturity date of May 28, 2025 and bear interest, payable on the first of March and September of each year, at a fixed interest rate of 6.50% per year. The notes are not convertible into common stock or preferred stock and are not callable by the holders. The Company has the right to redeem the notes, in whole or in part, without premium or penalty, at any interest payment date on or after May 28, 2020, but in all cases in a principal amount with integral multiples of $1,000, plus interest accrued and unpaid through the date of redemption. If an event of default occurs, such as the bankruptcy of the Company, the holder of a note may declare the principal amount of the notes to be due and immediately payable. The notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to the Company’s existing and future senior indebtedness. The notes qualify as Tier 2 capital for regulatory reporting. The aggregate carrying value of the notes, including capitalized debt issuance costs, was $6.9 million at both June 30, 2018 and December 31, 2017. For the three months ended June 30, 2018 and 2017, the effective interest rate on the notes was 6.85% and 6.93%, respectively. For the six months ended June 30, 2018 and 2017, the effective interest rate on the notes was 6.85% and 6.87%, respectively.

ESOP Debt

The aggregate carrying value of debt secured by shares of Company stock, issued and outstanding, in the Company’s ESOP was $1.0 million at June 30, 2018 and $1.1 million at December 31, 2017 and is included in other liabilities on the consolidated balance sheets. The debt is comprised of five fixed rate-amortizing notes, four of which carry an interest rate of 3.25% and one that carries an interest rate of 4.50% with maturity dates ranging from March 1, 2019 to December 31, 2027. Shares that collateralize these loans are not allocated to ESOP participants’ accounts.