Note 7 - Borrowed Funds

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Short-Term Debt [Text Block]

7. Borrowed Funds

At March 31, 2024, the Company had $33.6 million in borrowings outstanding under the Federal Reserve Bank’s (“FRB”) Bank Term Funding Program (“BTFP”) and no outstanding advances from the FHLB.  At December 31, 2023, the Company had $21.5 million in borrowings outstanding under the FRB’s BTFP and no outstanding advances from the FHLB.  The Company had no borrowings during the three month period ended March 31, 2023.

On March 12, 2023, the FRB created the BTFP to make additional funding available to eligible depository institutions. The BTFP offers loans of up to one year in length to banks, savings associations, credit unions and other depository institutions which pledge collateral, such as U.S. Treasuries, U.S. agency notes and bonds and U.S. agency mortgage-backed securities. The collateral is valued at par, and advances under this program do not include any fees or prepayment penalties.  In January 2024, the Company repaid all outstanding borrowings under the BTFP and advances from the FHLB and then borrowed $33.6 million under the BTFP at a fixed rate of 4.85% for a one-year period. At March 31, 2024, the pledged securities had a par value of $48.9 million and a carrying value of $45.9 million.  Effective March 11, 2024, the BTFP ceased making new loans.

FHLB advances are secured under a blanket collateral agreement. At March 31, 2024, the carrying value of U.S. Treasury notes and mortgage loans pledged as security for future FHLB advances was $30.2 million and $44.2 million, respectively.  At March 31, 2024, the Company had a $49.3 million borrowing capacity limit with the FHLB based on pledged collateral.

On February 28, 2024, the Bank entered into an Overdraft Line of Credit Agreement with the FHLB which established a line of credit not to exceed $10.0 million secured under the blanket collateral agreement.  This agreement expires on February 28, 2025.  At March 31, 2024, there were no borrowings under the agreement.

During the three month period ended March 31, 2024, the Company utilized a series of short-term fixed-rate bullet and variable rate advances from the FHLB in order to meet daily liquidity requirements and to fund growth in earning assets. The fixed-rate bullet advances had an average term of seven days.

The following table sets forth information on the short-term FHLB advances and BTFP borrowings during the three month period ended March 31, 2024:

(Dollars in thousands)
FHLB variable-rate advances
Maximum balance at any month end	$	-
Average balance		1,192
Period end balance		-
Weighted average interest rate (annualized):
At end of period		0.00	%
During the period		5.78	%
FHLB fixed-rate bullet advances
Maximum balance at any month end	$	13,000
Average balance		2,220
Period end balance		-
Weighted average interest rate (annualized):
At end of period		0.00	%
During the period		5.63	%
BTFP borrowings:
Maximum balance at any month end	$	33,625
Average balance		31,908
Period end balance		33,625
Weighted average interest rate (annualized):
At end of period		4.85	%
During the period		4.81	%