Borrowings

The Company has a maximum line of credit with the FHLB approximating 35% of eligible assets. FHLB advances are subject to collateral criteria that require the Company to pledge assets under a blanket pledge arrangement as collateral for its borrowings from the FHLB. Based on assets currently pledged and advances currently outstanding at December 31, 2016, the Company's available borrowing line is $183.4 million, representing approximately 12% of total assets. Additional advances of up to 35% of eligible assets, or $534.3 million, are dependent on the availability of acceptable collateral such as marketable securities or real estate loans, although all FHLB advances are secured by a blanket pledge of the Company’s assets. The Company has outstanding FHLB advances of $4.3 million and $2.1 million as of December 31, 2016 and 2015, respectively, which were originated to match fund low income housing projects that qualify for long term fixed interest rates. The first advance is a $2.2 million FHLB Community Investment Program advance which was originated on March 22, 2013. It has an eighteen year term with a 30 year amortization period, which mirrors the term of the term real estate loan made to the borrower, and a fixed rate of 3.12%. The other advance is a $2.3 million FHLB Community Investment Cash Advance Program advance that was originated in the second quarter of 2016. This advance has a twenty year term with a 30 year amortization period, which mirrors the term of the loan made to the borrower, and a fixed interest rate of 2.61%. Both of these FHLB advances are included in borrowings.

The Federal Reserve Bank is holding $83.7 million of loans as collateral to secure available borrowing lines through the discount window of $46.0 million at December 31, 2016. There were no discount window advances outstanding at December 31, 2016 and 2015. The Company paid less than $1,000 in 2016 and 2015 in interest on this agreement.

The Company is subject to further regulatory standards issued by the State of Alaska which, subject to certain exceptions, limit the amount of the Bank's outstanding debt to 15% of total assets or $227.4 million and $223.8 million at December 31, 2016 and 2015, respectively.

Securities sold under agreements to repurchase were $27.6 million and $31.4 million, respectively, for December 31, 2016 and 2015. The Company was paying an average rate of 0.11% and 0.10% on these agreements at December 31, 2016 and 2015, respectively. The average balance outstanding of securities sold under agreement to repurchase during 2016 and 2015 was $27.2 million and $23.7 million, respectively, and the maximum outstanding at any month-end was $30.5 million and $37.1 million, respectively, during the same time periods. The securities sold under agreement to repurchase are held by the Federal Home Loan Bank under the Company’s control.

The future principal payments that are required on the Company’s borrowings as of December 31, 2016, are as follows:



(In Thousands)
2017		$27,681
2018	101
2019	104
2020	108
2021	111
Thereafter	3,840
Total		$31,945

The Company recognized interest expense of $157,000, $469,000, and $184,000 in 2016, 2015, and 2014, respectively. The average interest rates paid on long-term debt in the same periods was 2.82%, 2.52%, and 3.51%, respectively.