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BORROWED FUNDS AND REPURCHASE AGREEMENTS
 12 Months Ended
Dec. 31, 2023
BORROWED FUNDS AND REPURCHASE AGREEMENTS [Abstract]  
BORROWED FUNDS AND REPURCHASE AGREEMENTS
11. BORROWED FUNDS AND REPURCHASE AGREEMENTS


The following table shows the breakdown of borrowed funds as of December 31, 2023 and 2022 (dollars in thousands):

                     
Weighted average interest rate:
  
2023
  
Balance at
December 31
    
Highest balance at any month-end
    
Average
balance
    
Paid during the
year
    
As of year-
end
  
Securities Sold Under Agreements to Repurchases (a)
  
$
18,043
    
$
18,184
    
$
17,425
      
4.92
%
    
5.10
%
FHLB Advances(b)
    
135,841
      
234,310
      
192,399
      
5.43
%
    
5.68
%
Bank Federal Funds Lines (c)
    
-
      
-
      
-
      
6.53
%
    
0.00
%
FRB BIC Line (d)
    
-
      
-
      
29
      
5.24
%
    
0.00
%
Line of Credit (e)
    
12,572
      
17,500
      
5,880
      
8.48
%
    
8.50
%
FRB Term Funding Program (f)
    
20,000
      
20,000
      
329
      
4.84
%
    
4.84
%
Other Borrowings (g)
    
10,860
      
14,160
      
7,390
      
5.35
%
    
5.33
%
Subordinated Debt (h)
    
18,933
      
18,933
      
14,745
      
5.50
%
    
6.30
%
Notes Payable (i)
    
7,500
      
7,500
      
7,500
      
3.65
%
    
3.65
%
Term Loans (j)
    
98,287
      
117,775
      
80,908
      
2.30
%
    
4.94
%
Total Borrowed Funds
  
$
322,036
    
$
448,362
    
$
326,605
      
4.64
%
    
5.46
%

                     
Weighted average interest rate:
  
2022
  
Balance at
December 31
    
Highest balance at any month-end
    
Average
balance
    
Paid during the
year
    
As of year-
end
  
Securities Sold Under Agreements to Repurchases (a)
  
$
17,776
    
$
17,776
    
$
16,246
      
1.95
%
    
4.13
%
FHLB Advances(b)
    
169,110
      
171,047
      
69,571
      
3.50
%
    
4.45
%
Bank Federal Funds Lines (c)
    
-
      
-
      
3
      
1.99
%
    
0.00
%
FRB BIC Line (d)
    
-
      
-
      
49
      
1.76
%
    
0.00
%
Line of Credit (e)
    
-
      
-
      
-
      
0.00
%
    
0.00
%
FRB Term Funding Program (f)
    
-
      
-
      
-
      
0.00
%
    
0.00
%
Other Secured Borrowings (g)
    
-
      
-
      
-
      
0.00
%
    
0.00
%
Subordinated Debt (h)
    
9,892
      
9,892
      
9,885
      
4.18
%
    
4.18
%
Notes Payable (i)
    
7,500
      
7,500
      
7,500
      
3.63
%
    
3.57
%
Term Loans (j)
    
53,000
      
53,000
      
46,407
      
1.00
%
    
1.00
%
Total Borrowed Funds
  
$
257,278
    
$
259,215
    
$
149,661
      
2.61
%
    
3.66
%

(a) We utilize securities sold under agreements to repurchase to facilitate the needs of our customers and to facilitate secured short-term funding needs. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. We monitor collateral levels on a continuous basis. We may be required to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents. The collateral pledged on the repurchase agreements by the remaining contractual maturity of the repurchase agreements in the Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022 is presented in the following tables (in thousands).

 
Remaining Contractual Maturity of the Agreements
  
    Overnight and     Up to    
    Greater than    
 
2023
  
Continuous
    
30 Days
    
30 - 90 Days
    
90 days
    
Total
  
Repurchase Agreements:
                              
U.S. agency securities
  
$
19,490
    
$
-
    
$
-
    
$
-
    
$
19,490
  
Total carrying value of collateral pledged
  
$
19,490
    
$
-
    
$
-
    
$
-
    
$
19,490
  
                                         
Total liability recognized for repurchase agreements
                                  
$
18,043
  

    Remaining Contractual Maturity of the Agreements  
    Overnight and     Up to           Greater than        
2022    Continuous      30 Days      30 - 90 Days      90 days      Total  
Repurchase Agreements:
                                   
U.S. agency securities
   $ 20,371     $
-     $ -     $ -     $ 20,371  
Total carrying value of collateral pledged
   $ 20,371     $
-     $ -     $ -     $ 20,371  
                                         
Total liability recognized for repurchase agreements
                                   $ 17,776  

(b) FHLB Advances consist of an “Open RepoPlus” agreement with the FHLB of Pittsburgh. FHLB “Open RepoPlus” advances are short-term borrowings that bear interest based on the FHLB discount rate or Federal Funds rate, whichever is higher. The Company has a borrowing limit of $1,074,864,000, inclusive of any outstanding advances and letters of credit. FHLB advances are secured by a blanket security agreement that includes the Company’s FHLB stock, as well as certain investment and mortgage-backed securities held in safekeeping at the FHLB and certain residential and commercial mortgage loans. A portion of these advances, $43.0 million, are subject to interest rate swap arrangements. See Note 19 for additional information. 

(c) The federal funds lines consist of unsecured lines from two third party banks at market rates.  The Bank has a borrowing limit totaling $34,000,000, inclusive of any outstanding balances.  No specific collateral is required to be pledged for these borrowings.

(d) The Federal Reserve Bank Borrower in Custody (FRB BIC) Line consists of a borrower in custody in agreement opened in January 2010 with the Federal Reserve Bank of Philadelphia secured by municipal loans maintained in the Company’s possession.  As of December 31, 2023, and 2022, the Company has a borrowing limit of $993,000 and $1,050,000, respectively, inclusive of any outstanding advances. The approximate carrying value of the municipal loan collateral was $1,230,000 and $1,360,000 as of December 31, 2023 and 2022, respectively.

(e) The Company issued a $15.0 million revolving line of credit in December 2023 with a New York community bank with a maturity date of January 1, 2026, subject to certain covenants. The line is subject to an annual fee of $20,000. Interest on outstanding borrowings is payable at prime. No specific collateral is required to be pledged for these borrowings.

(f) The Federal Reserve’s Bank Term Funding Program (BTFP) consists of a loan agreement opened in the second quarter of 2023 with the Federal Reserve Bank of Philadelphia secured by US treasury and SBA securities. The BTFP offers loans of up to one year in length. As of December 31, 2023, the Bank has a borrowing limit of $54,525,000, which also represents the par value of the pledged securities.as of December 31, 2023.  As of December 31, 2023, $20,000,000 was outstanding under the BTFP.

(g) The Company entered into an agreement with a counterparty that provides for the Company the right to obtain collateral from the counterparty depending on the value of the underlying derivative instrument. The value of the collateral obtained can fluctuate daily. A market interest is required to be paid on any collateral held. As of December 31, 2023, the Company is holding $10,860,000 of collateral, which is included in cash on the Consolidated Balance sheet.

(h) In April 2021, the Company issued $10.0 million of fixed to floating rate subordinated notes that mature on April 16, 2031, unless redeemed earlier. The notes bear interest at 4% per annum through April 16, 2026 and subsequently pay interest at the 90-day average secured overnight financing rate, determined on the determination date of the applicable interest period, plus 323 basis points. The Company may redeem the notes, in whole or in part, on or after April 16, 2026, and at any time upon the occurrence of certain events, subject in each case to the approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Issuance costs associated with the notes totaled $131,000 and were capitalized and will be amortized over the life of the note on a straight-line basis, which approximates the effective yield method. As of December 31, 2023, the net unamortized issuance costs totaled $95,000. As part of the HVBC acquisition, the Company acquired a subordinated note issued by HVBC with a par value of $10.0 million and a fair market value of $8,873,000 on the date of acquisition. This note has a maturity date of May 28, 2031, and has a coupon rate of 4.50% per annum through May 28, 2026. Thereafter, the note rate is adjustable and resets quarterly based on the then current 90-day average Secured Overnight Financing Rate (“SOFR”) plus 325 basis points for U.S. dollar denominated loans as published by the Federal Reserve Bank of New York. The Company may, at its option, at any time on an interest payment date, on or after May 28, 2026, redeem the notes, in whole or in part, at par plus accrued interest to the date of redemption. The carrying value of the note as of December 31, 2023 is $9,028,000.

(i) In December 2003, the Company formed a special purpose entity (“Entity”) to issue $7,500,000 of floating rate obligated mandatory redeemable trust preferred securities as part of a pooled offering. The rate was determined quarterly and floated based on the 3-month SOFR plus 2.80 percent.   The Entity may redeem them, in whole or in part, at face value after December 17, 2008, and on a quarterly basis thereafter. The Company borrowed the proceeds of the issuance from the Entity in December 2003 in the form of a $7,500,000 note payable. Debt issue costs of $75,000 have been capitalized and fully amortized as of December 31, 2008.  Under current accounting rules, the Company’s minority interest in the Entity was recorded at the initial investment amount and is included in the other assets section of the balance sheet. The Entity is not consolidated as part of the Company’s consolidated financial statements. The $7,500,000 note payable is subject to an interest rate swap arrangement. See Note 19 for additional information.

(j)  Term Loans consist of separate loans with the FHLB of Pittsburgh as follows (dollars in thousands):

         December 31,
    December 31,
  
Interest Rate
  
Maturity
  
2023
    
2022
  
Fixed:
                
  5.73 % January 2, 2024     25,000       -  
  5.64 % February 14, 2024     18,000       -  
  2.46 % March 28, 2024     5,000       5,000  
  1.70 % August 20, 2024     5,000       5,000  
  4.75 % November 11, 2024     5,000       -  
  4.47 % May 12, 2025     10,000       -  
  4.32 % November 12, 2025     5,000       -  
  5.03 % July 7, 2025     25,287       -  
  3.86 %
January 3, 2023
     -       25,000  
  4.57 %
February 14, 2023
     -       18,000  
Total term loans
      
$
98,287
    
$
53,000
  



Following are maturities of borrowed funds as of December 31, 2023 (in thousands):

2024
  
$
255,316
  
2025
    
40,287
  
2026
    
-
  
2027
    
-
  
2028
    
-
  
Thereafter
    
26,433
  
Total borrowed funds
  
$
322,036