BORROWED FUNDS

12 Months Ended

Dec. 31, 2023

BORROWED FUNDS

BORROWED FUNDS

NOTE 7.           BORROWED FUNDS

Borrowed funds at December 31, 2023 and December 31, 2022 are summarized, as follows:

	December 31, 2023				December 31, 2022
			Weighted				Weighted
(dollars in thousands)	Carrying Value		Average Rate		Carrying Value		Average Rate
Short-term borrowings
Advances from the FHLB	$	232,300	5.46	%	$	318,000	3.84	%
Advances from the FRB BTFP		30,000	4.90			—	—
Other borrowings		8,465	0.13			13,369	0.13
Total short-term borrowings		270,765	2.88			331,369	2.20
Long-term borrowings
Advances from the FHLB		279	4.39			2,588	0.48
Subordinated borrowings		60,461	6.22			60,289	4.95
Total long-term borrowings		60,740	6.21			62,877	4.76
Total	$	331,505	3.24	%	$	394,246	2.45	%

Short-term debt includes FHLB advances with a remaining maturity of less than one year. We also maintain a $1.0 million secured line of credit with the FHLB that bears a daily adjustable rate calculated by the FHLB. There was no outstanding balance on the FHLB line of credit for the years ended December 31, 2023 and 2022.

We also have capacity to borrow funds on a secured basis utilizing the Federal Reserve Discount Window and the Bank Term Funding Program (“BTFP”). As of December 31, 2023, our available secured line of credit at the FRB was $156.6 million versus $90.4 million in 2022. The BTFP enables depository institutions to pledge eligible investment securities to the Federal Reserve with borrowing capacity based upon the par value of the collateral.

During the fourth quarter of 2023, we entered into the Bank Term Funding Program for $30 million at a fixed rate of 4.85% for a period of one year. The BTFP allows us to manage borrowing costs while obtaining favorable prepayment terms, as we may prepay at any time without penalty. There were no borrowings with the FRB at December 31, 2022.

We maintain an unused unsecured federal funds line of credit with a correspondent bank that has an aggregate overnight borrowing capacity of $50 million as of December 31, 2023 and December 31, 2022. There was no outstanding balance on the line of credit as of December 31, 2023 and December 31, 2022.

Long-term FHLB advances consist of advances with a remaining maturity of more than one year. The advances outstanding at December 31, 2023 include $279 thousand and $288 thousand in 2022 of amortizing advances. There were no callable advances in 2023 and 2022. All FHLB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally residential first mortgage loans and certain securities.

A summary of maturities of FHLB advances as of December 31, 2023 is as follows:

			Weighted Average
(in thousands, except rates)	Amount		Rate
2024	$	232,300	5.46	%
2025		—	—
2026		—	—
2027		—	—
2028		—	—
Thereafter		279	4.39
Total FHLB advances	$	232,579	5.46	%

We executed a Subordinated Note Purchase Agreement with an aggregate of $40.0 million of subordinated notes (the “Notes”) to accredited investors on November 26, 2019. The Notes have a maturity date of December 1, 2029 and bear a fixed interest rate of 4.63% through December 1, 2024 payable semi-annually in arrears. From December 1, 2024 and thereafter the interest rate shall be reset quarterly to an interest rate per annum equal to the then current three-month Secured Overnight Financing Rate (“SOFR”) plus 3.27%. We have the option beginning with the interest payment date of December 1, 2024, and on any scheduled payment date thereafter, to redeem the Notes, in whole or in part upon prior approval of the Federal Reserve. The transaction included debt issuance costs of $158 thousand and $331 thousand net of amortization as of December 31, 2023 and 2022 respectively, which are netted against the subordinated debt.

We also have $20.6 million in floating Junior Subordinated Deferrable Interest Debentures (“Debentures”) issued by NHTB Capital Trust II (“Trust II”) and NHTB Capital Trust III (“Trust III”), which are both Connecticut statutory trusts. The Debentures were issued on March 30, 2004, carry a variable interest rate of three-month SOFR plus 2.79%, and mature in 2034. The debt is callable by the Company at the time when any interest payment is made. Trust II and Trust III are considered variable interest entities for which we are not the primary beneficiary. Accordingly, Trust II and Trust III are not consolidated into our financial statements.

Repurchase Agreements

We can raise additional liquidity by entering into repurchase agreements at our discretion. In a security repurchase agreement transaction, we will generally sell a security, agreeing to repurchase either the same or substantially identical security on a specified later date, at a greater price than the original sales price. The difference between the sale price and purchase price is the cost of the proceeds, which is recorded as interest expense on the consolidated statements of income. The securities underlying the agreements are delivered to counterparties as security for the repurchase obligations. Since the securities are treated as collateral and the agreement does not qualify for a full transfer of effective control, the transactions do not meet the criteria to be classified as sales, and are therefore considered secured borrowing transactions for accounting purposes. Payments on such borrowings are interest only until the scheduled repurchase date. In a repurchase agreement, we are subject to the risk that the purchaser may default at maturity and not return the securities underlying the agreements. In order to minimize this potential risk, we either deal with established firms when entering into these transactions or with customers whose agreements stipulate that the securities underlying the agreement are not delivered to the customer and instead are held in segregated safekeeping accounts by our safekeeping agents.

Our repurchase agreements accounted for as secured borrowings, as of December 31, 2023 and December 31, 2022 are as follows:

(in thousands)	December 31, 2023		December 31, 2022
Customer Repurchase Agreements
US Government-sponsored enterprises	$	8,465	$	13,369
Total	$	8,465	$	13,369