BORROWINGS

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

BORROWINGS

NOTE 6 – BORROWINGS

Federal funds purchased and retail repurchase agreements

Federal funds purchased and retail repurchase agreements as of June 30, 2024, and December 31, 2023, are listed below.

	June 30, 2024		December 31, 2023
Federal funds purchased	$	—	$	—
Retail repurchase agreements		38,031		43,582

Securities sold under agreements to repurchase (retail repurchase agreements) consist of obligations of the Company to other parties. The obligations are secured by residential mortgage-backed securities held by the Company with a fair value of $40,204 and $47,282 at June 30, 2024, and December 31, 2023. The agreements are on a day-to-day basis and can be terminated on demand.

The following table presents the borrowing usage and interest rate information for federal funds purchased and retail repurchase agreements at June 30, 2024, and December 31, 2023.

	June 30, 2024			December 31, 2023
Average daily balance during the period	$	44,136		$	43,469
Average interest rate during the period		1.83	%		1.13	%
Maximum month-end balance year-to-date	$	47,312		$	46,798
Weighted average interest rate at period-end		1.82	%		1.69	%

Federal Home Loan Bank advances

Federal Home Loan Bank advances include both draws against the Company’s line of credit and fixed rate term advances.

Federal Home Loan Bank advances as of June 30, 2024, and December 31, 2023, are as follows.

	June 30, 2024		December 31, 2023
Federal Home Loan Bank line of credit advances	$	150,306	$	—
Federal Home Loan Bank fixed-rate term advances		100,000		100,000
Total Federal Home Loan Bank advances	$	250,306	$	100,000

At June 30, 2024, and December 31, 2023, the Company had undisbursed advance commitments (letters of credit) with the Federal Home Loan Bank of $44,981 and $39,922. These letters of credit were obtained in lieu of pledging securities to secure public fund deposits that are over the FDIC insurance limit.

The advances, Mortgage Partnership Finance credit enhancement obligations and letters of credit were collateralized by certain qualifying loans of $863,207 and securities of $82,024 for a total of $945,231 at June 30, 2024, and qualifying loans of $846,601 and securities of $65,209 for a total of $911,810 at December 31, 2023. Based on this collateral and the Company’s holdings of Federal Home Loan Bank stock, the Company was eligible to borrow an additional $684,768 and $770,711 at June 30, 2024, and December 31, 2023.

Federal Reserve Bank borrowings

At June 30, 2024, and December 31, 2023, the Company had a borrowing capacity of $340,128 and $471,569, for which the Company has pledged loans with an outstanding balance of $397,225 and $394,810 and securities with a fair value of $9,620 and $155,934. At December 31, 2023 the Company held $140,000 in borrowings secured from this facility under the Federal Reserve's Bank Term Funding Program with a rate of 4.38% and maturity date of March 22, 2024. The Company repaid this borrowing at maturity and there were no outstanding borrowings at June 30, 2024.

Bank stock loan

The Company entered into an agreement with an unaffiliated financial institution that provided for an initial maximum borrowing facility of $40,000, secured by the Company’s stock in Equity Bank. Each draw of funds on the facility will create a separate note that is repayable over a term of five years. Each note will bear interest at the greater of a variable interest rate equal to the prime rate published in the “Money Rates” section of The Wall Street Journal (or any generally recognized successor), floating daily, or a floor of 3.50%. Accrued interest and principal payments will be due quarterly with one final payment of unpaid principal and interest due at the end of the five-year term of each separate note.

The loan was renewed and amended on February 11, 2022, with a new maturity date of February 11, 2023. With this amendment, the maximum borrowing amount was decreased from $40,000 to $25,000. Each note will bear interest at the greater of a variable interest rate equal to the prime rate published in the “Money Rates” section of The Wall Street Journal (or any generally recognized successor), floating daily, or a floor of 3.25%. The Company is also required to pay an unused commitment fee in an amount equal to 20 basis points per annum on the unused portion of the maximum borrowing facility due on the maturity date of the renewal.

The loan was renewed on February 10, 2023, with a new maturity date of February 10, 2024. With this renewal, the maximum borrowing amount will remain at $25,000. Each note will bear interest at the greater of a variable interest rate equal to the prime rate

published in the “Money Rates” section of The Wall Street Journal (or any generally recognized successor), floating daily, or a floor of 3.25%. The Company is also required to pay an unused commitment fee in an amount equal to 20 basis points per annum on the unused portion of the maximum borrowing facility due on the maturity date of the renewal.

The loan was renewed and amended on February 10, 2024, with the same terms as the previous renewal and a new maturity date of February 10, 2025.

There were no outstanding principal balances on the bank stock loan at June 30, 2024, and December 31, 2023.

The terms of the borrowing facility require the Company and Equity Bank to maintain minimum capital ratios and other covenants. In the event of default, the lender has the option to declare all outstanding balances immediately due. The Company believes it is in compliance with the terms of the borrowing facility and has not been otherwise notified of noncompliance.

Subordinated debt

Subordinated debt as of June 30, 2024, and December 31, 2023, are listed below.

	June 30, 2024		December 31, 2023
Subordinated debentures	$	23,769	$	23,594
Subordinated notes		73,427		73,327
Total	$	97,196	$	96,921

Subordinated debentures

In conjunction with prior acquisitions, the Company assumed certain subordinated debentures owed to special purpose unconsolidated subsidiaries that are controlled by the Company. These subordinated debentures have the same terms as the trust preferred securities issued by the special purpose unconsolidated subsidiaries.

FCB Capital Trust II (“CTII”): The trust preferred securities issued by CTII were initially issued to accrue and pay distributions quarterly at three-month LIBOR plus 2.00%; however on July 12, 2023, after the LIBOR transition it will now accrue and pay distributions quarterly at three-month CME term SOFR plus a tenor spread adjustment of 0.26% plus 2.00 % on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on April 15, 2035, or upon earlier redemption.

FCB Capital Trust III (“CTIII”): The trust preferred securities issued by CTIII were initially issued to accrue and pay distributions quarterly at three-month LIBOR plus 1.89%; however on September 15, 2023, after the LIBOR transition it will now accrue and pay distributions quarterly at three-month CME term SOFR plus a tenor spread adjustment of 0.26% plus 1.89% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on June 15, 2037, or upon earlier redemption.

Community First (AR) Statutory Trust I (“CFSTI”): The trust preferred securities issued by CFSTI were initially issued to accrue and pay distributions quarterly at three-month LIBOR plus 3.25%; however on September 26, 2023, after the LIBOR transition it will now accrue and pay distributions quarterly at three-month CME term SOFR plus a tenor spread adjustment of 0.26% plus 3.25% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on December 26, 2032, or upon earlier redemption.

American State Bank Statutory Trust I (“ASBSTI”): The trust preferred securities issued by ASBSTI were initially issued to accrue and pay distributions quarterly at three-month LIBOR plus 1.80%; however on September 15, 2023, after the LIBOR transition it will now accrue and pay distributions quarterly at three-month CME term SOFR plus a tenor spread adjustment of 0.26% plus 1.80% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on September 15, 2035, or upon earlier redemption.

Subordinated debentures as of June 30, 2024, and December 31, 2023, are listed below.

	June 30, 2024			Weighted Average Rate			Weighted Average Term in Years
CTII subordinated debentures	$	10,310			7.59	%		10.8
CTIII subordinated debentures		5,155			7.49	%		13.0
CFSTI subordinated debentures		5,155			8.85	%		8.5
ASBSTI subordinated debentures		7,732			7.40	%		11.2
Total contractual balance		28,352
Fair market value adjustments		(4,583	)
Total subordinated debentures	$	23,769

	December 31, 2023			Weighted Average Rate			Weighted Average Term in Years
CTII subordinated debentures	$	10,310			7.66	%	11.3
CTIII subordinated debentures		5,155			7.54	%		13.5
CFSTI subordinated debentures		5,155			8.87	%		9.0
ASBSTI subordinated debentures		7,732			7.45	%		11.7
Total contractual balance		28,352
Fair market value adjustments		(4,758	)
Total subordinated debentures	$	23,594

Subordinated notes

On June 29, 2020, the Company entered into Subordinated Note Purchase Agreements with certain qualified institutional buyers and institutional accredited investors pursuant to which the Company issued and sold $42,000 in aggregate principal amount of its 7.00% Fixed-to-Floating Rate Subordinated notes due 2030. The notes were issued under an Indenture, dated as of June 29, 2020 (the “Indenture”), by and between the Company and UMB Bank, N.A., as trustee. The notes will mature on June 30, 2030. From June 29, 2020, through June 29, 2025, the Company will pay interest on the notes semi-annually in arrears on June 30 and December 30 of each year, commencing on December 30, 2020, at a fixed interest rate of 7.00%. Beginning June 30, 2025, the notes convert to a floating interest rate, to be reset quarterly, equal to the then-current Three-Month Term SOFR, as defined in the Indenture, plus 688 basis points. Interest payments during the floating-rate period will be paid quarterly in arrears on March 30, June 30, September 30 and December 30 of each year, commencing on September 30, 2025. On July 23, 2020, the Company closed on an additional $33,000 of subordinated notes with the same terms as the June 29, 2020, issue.

Subordinated notes as of June 30, 2024, are listed below.

	June 30, 2024			Weighted Average Rate			Weighted Average Term in Years
Subordinated notes	$	75,000			7.00	%		6.0
Total principal outstanding		75,000
Debt issuance cost		(1,573	)
Total subordinated notes	$	73,427

Subordinated notes as of December 31, 2023, are listed below.

	December 31, 2023			Weighted Average Rate			Weighted Average Term in Years
Subordinated notes	$	75,000			7.00	%		6.5
Total principal outstanding		75,000
Debt issuance cost		(1,673	)
Total subordinated notes	$	73,327

Future principal repayments

Future principal repayments of the June 30, 2024, outstanding balances are as follows.

	Retail Repurchase Agreements		FHLB Advances		Subordinated Debentures		Subordinated Notes		FRB Borrowings		Total
Due in one year or less	$	38,031	$	250,306	$	—	$	—	$	—	$	288,337
Due after one year through two years		—		—		—		—		—		—
Due after two years through three years		—		—		—		—		—		—
Due after three years through four years		—		—		—		—		—		—
Due after four years through five years		—		—		—		—		—		—
Thereafter		—		—		28,352		75,000		—		103,352
Total	$	38,031	$	250,306	$	28,352	$	75,000	$	—	$	391,689