Note 10 - Borrowings

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 10 - BORROWINGS

The Company had $69.2 million in outstanding borrowings under the Federal Reserve Bank Term Funding Program (“BTFP”) with a weighted average borrowing rate of 4.42% at September 30, 2023 compared to $44.1 million in borrowings from the FRB discount window with a weighted average borrowing rate of 4.50% at December 31, 2022. During the first quarter of 2023, the Company elected to participate in the BTFP, allowing the Company to refinance its existing borrowings from the FRB discount window to receive a lower fixed rate. Advances made under the BTFP are for up to one year and will be extended at the one year overnight index swap ("OIS") rate as of the day the advance is made plus 10 basis points. The interest rate will be fixed for the term of the advance on the day the advance is made. To determine the rate, the BTFP will use the fixed OIS rate based on the effective federal funds rate for a one-year maturity.  Depository institutions may borrow from the FRB discount window for periods as long as 90 days, and borrowings are prepayable and renewable by the borrower daily. At  September 30, 2023, the Company had pledged as collateral for these borrowings investment securities with an amortized cost and fair value of $368.3 million and $329.4 million, compared to an amortized cost and fair value of $72.6 million and $69.2 million, respectively, at December 31, 2022, respectively.

During the third quarter of 2023, the Company entered the FRB’s Borrower-In-Custody (BIC) program, which allows for the pledging of various loan types to secure FRB borrowings. As of September 30, 2023, the Company had pledged loan collateral for FRB borrowings with an amortized cost and collateral value of $108.6 million and $73.4 million, respectively.

The Company had $19.0 million and $27.6 million in other borrowings at September 30, 2023 and December 31, 2022, respectively. These borrowings consist of short-term repurchase agreements with certain commercial demand deposit customers for sweep accounts. The repurchase agreements typically mature within one to three days and the interest rate paid on these borrowings floats monthly with money market type rates. The interest rate paid on the repurchase agreements was 1.49% at September 30, 2023 compared to 0.75% at December 31, 2022. Collateral pledged by the Company for these repurchase agreements consisted of investments with a combined amortized cost and fair value of $44.7 million and $41.2 million at September 30, 2023, and $52.3 million and $49.8 million at December 31, 2022, respectively.

There were no outstanding FHLB advances at September 30, 2023 and December 31, 2022. FHLB advances are secured by a blanket collateral agreement with the FHLB by pledging the Company’s portfolio of residential first mortgage loans and investment securities. The Company's pledged collateral for FHLB advances had an amortized cost and fair value of $54.6 million and $44.7 million at September 30, 2023, and $70.1 million and $61.1 million at December 31, 2022, respectively.