LINES OF CREDIT

12 Months Ended

Dec. 31, 2021

LINES OF CREDIT

LINES OF CREDIT

NOTE 11: LINES OF CREDIT

Line of Credit

The Company has entered into a loan agreement with another financial institution, or Loan Agreement, which has been periodically amended and provides for a $30.0 million revolving line of credit. At December 31, 2021, there were no outstanding borrowings on this line of credit and the Company did not draw on this line of credit during 2021 or 2020. The Company can make draws on the line of credit for a period of 12 months, which began on December 31, 2021, after which the Company will not be permitted to make further draws and the outstanding balance will amortize over a period of 60 months. Interest accrues on outstanding borrowings at a rate equal to the maximum “Latest” U.S. prime rate of interest per annum and payable quarterly in the first 12 months, and thereafter, quarterly principal and interest payments are required over a term of 60 months. The entire outstanding balance and unpaid interest is payable in full on December 13, 2027.

The Company may prepay the principal amount of the line of credit without premium or penalty. The obligations of the Company under the Loan Agreement are secured by a valid and perfected first priority lien on all of the issued and outstanding shares of capital stock of the Bank.

Covenants made under the Loan Agreement include, among other things, the Company maintaining tangible net worth of not less than $300.0 million, the Company maintaining a free cash flow coverage ratio of not less than 1.25 to 1.00, the Bank Texas Ratio (as defined in the Loan Agreement) not to exceed 15%, the Bank’s Total Capital Ratio (as defined under the Loan Agreement) of not less than 12% and restrictions on the ability of the Company and its subsidiaries to incur certain additional debt. The Company was in compliance with these covenants at December 31, 2021.

Additional Lines of Credit

The Federal Home Loan Bank allows the Company to borrow on a blanket floating lien status collateralized by certain loans and the blanket lien amount was $999.3 million and $1.1 billion at December 31, 2021 and 2020, respectively. Federal Home Loan Bank advances outstanding totaled $50.0 million at both December 31, 2021 and 2020, and these borrowings mature as shown below. The Company did not borrow any funds under this facility during the year ended December 31, 2021.

At December 31, 2021 and 2020, there were $26.0 million and $10.8 million in letters of credit, respectively, that were issued under this agreement and used as collateral to secure certain public deposits. After considering the outstanding advances and letters of credit, the net capacity available under the Federal Home Loan Bank facility was $923.3 million and $1.0 billion at December 31, 2021 and 2020, respectively.

During the year ended December 31, 2020, the Company also borrowed under this agreement on a short-term basis. The average outstanding balance for Federal Home Loan Bank advances for the years ended December 31, 2021 and 2020 was $50.0 million and $55.2 million, respectively. The weighted-average interest rate for the years ended December 31, 2021 and 2020 was 1.77% and 1.64%, respectively.

The scheduled maturities of Federal Home Loan Bank advances as of the date indicated below were as follows:

(Dollars in thousands)	December 31, 2021
2022		10,000
2023		20,000
2024		20,000
Total	$	50,000

The Company maintained federal funds lines of credit with commercial banks that provided for the availability to borrow up to an aggregate of $65.0 million at both December 31, 2021 and 2020. There were no funds under these lines of credit outstanding at December 31, 2021 or 2020.