Note 11 - Borrowings -

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

1

1

– Borrowings –

The Bank had outstanding advances from the Federal Home Loan Bank (

FHLB) of

$46.4

million and

$47.7

million at

December

31,

2016

and

2015,

respectively, consisting of:

Three fixed rate loans totaling

$

30.0

million, at

December

31,

2016

and

2015,

with interest rates ranging from

2.92

%

to

3.07

%

paid monthly. Principal is due at maturity in

November

2017

with quarterly call options beginning in

2008.

One fixed rate loan of

$1.4

million

and

$2.7

million, at

December

31,

2016

and

2015,

respectively, with interest at

3.18

%

paid monthly. Principal is paid monthly and matures in

December

2017

.

One fixed rate loan of

$

15.0

million, at

December

31,

201

6

and

2015,

with interest at

1.90

%

paid monthly. Principal is due at maturity in

December

2018

with quarterly call options beginning in

2013.

These advances are collateralized by the Bank

’s investment in Federal Home Loan Bank stock and a blanket lien on qualifying loans in the Bank’s loan portfolio consisting of performing

1

-

4

family mortgages and certain small business, small farm and small agriculture loans. The blanket lien totaled approximately

$321.1

million at

December

31,

2016

with unused availability for advances and letters of credit of approximately

$193.7

million.

As a result of the merger with AGFC, the Bank assumed the outstanding FHLB advances of American Gateway Bank. These advances were recorded at fair value as of acquisition, which totaled

$41.2

million, and resulted in a market value adjustment of

$2.0

million which is being accreted over the life of the respective advances as a reduction of interest expense on borrowings. The unaccreted market value adjustment

totaled

$670,000

and

$1.4

million at

December

31,

2016

and

2015,

respectively.

The Bank has outstanding lines of credit with several of its correspondent banks available to assist in the management of short-term liquidity. These agreements provide for interest based upon the federal funds rate on the outstanding balance. Total available lines of credit as of

December

31,

201

6

and

2015

were

$109.5

million and

$83.7

million, respectively. There was

no

balance on these lines at

December

31,

2016

and

2015.

First Tennessee Bank National Association (FTN) allowed the Company to borrow on a revolving basis up to

$3.0

million. This line of credit, established on

September

3,

2015,

was unsecured, but the Company agreed that it would not pledge any of the capital stock of its wholly-owned subsidiary, Business First Bank, to secure any other obligation. The line of credit was established for the purpose of repurchasing shares of the Company

’s common stock from certain of its shareholders and for general corporate purposes. This line of credit was paid off on

September

12,

2016.

At

December

31,

2015

the line was fully funded with a balance of

$3.0

million bearing interest at a variable rate of

3

-month LIBOR plus

2.5%.

The rate was

2.93%

as

December

31,

2015,

and adjusted quarterly.

On

September

12,

2016

the Company borrowed

$3.0

million from First National Bankers Bank (FNBB) with a maturity date of

September

12,

2026.

This advance is due in

nine

annual principal payments of

$300

,000

beginning on

September

12,

2017

and

one

final principal and interest payment of

$303,000

due on

September

12,

2026.

This advance is secured by a pledge of and

security interest in the common stock of our wholly-owned subsidiary, Business First Bank. As of

December

31,

2016,

the balance outstanding was

$3.0

million. The advance carries a variable interest rate equal to the Wall Street Journal Prime rate. The rate was

3.75%

at

December

31,

2016.

The FNBB advance was established for the purpose of paying off the revolving line of credit with FTN.

First National Bankers Bank (FNBB) also allows the Company to borrow on a revolving basis up to

$5.0

million. This line of credit, established on

September

12,

2016,

is secured by a pledge of and security interest in the common stock of our wholly-owned subsidiary, Business First Bank. As of

December

31,

2016,

the balance outstanding was

$862,000.

The line of credit bears a variable interest rate equal to the Wall Street Journal Prime rate. The rate was

3.75%

at

December

31,

2016.

The FNBB line matures in

one

year and was established for the purpose of repurchasing shares of our common stock from certain of our shareholders and for general corporate purposes.