BORROWINGS

12 Months Ended

Dec. 31, 2024

Debt Disclosure [Abstract]

BORROWINGS

BORROWINGS

The Bank has executed a blanket pledge and security agreement with the FHLB which requires certain loans and securities be pledged as collateral for any outstanding borrowings under the agreement. The collateral pledged as of December 31, 2024 and 2023 amounted to $1.30 billion and $1.31 billion, respectively. Based on this collateral and the Company’s holdings of FHLB stock, the Company was eligible to borrow an additional $582.0 million as of December 31, 2024.

On March 12, 2023, the FRB announced it would make additional funding available to eligible depository institutions to help assure banks have the ability to meet the needs of depositors made available through the creation of a new Bank Term Funding Program ("BTFP"). The BTFP was meant to be an additional resource of liquidity against high-quality securities, eliminating an institution's need to quickly sell those securities in times of stress. As of December 31, 2023, the Company had pledged a par value of $44.3 million in securities under the BTFP and borrowed $31.0 million with a maturity date of March 27, 2024. In 2024, an additional $10.0 million was borrowed and $41.0 million was repaid, resulting in no outstanding balance as of December 31, 2024.

Upon maturity, the Company renewed a three-month $50.0 million FHLB advance on October 1, 2024. The rate for the borrowing is adjusted daily based on the SOFR rate plus 15.5 basis points. The advance matured on January 2, 2025 and was renewed for an additional three months.

The Company had the following required maturities on FHLB and FRB borrowings as of the dates noted (dollars in thousands):

			December 31,
Maturity Date	Rate %		2024		2023
March 27, 2024	4.78	%	$	—	$	30,997
March 29, 2024	5.60		—		50,000
January 1, 2025(1)	4.57		5,000		41,175
January 2, 2025	4.53		50,000		—
Total			$	55,000	$	122,172

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(1)The borrowing has a one day, automatic daily renewal maturity date, subject to FHLB discretion not to renew.

To bolster the effectiveness of the SBA’s PPP, the Federal Reserve is supplying liquidity to participating financial institutions through term financing collateralized by PPP loans to small businesses. The Paycheck Protection Program Liquidity Facility ("PPPLF") extends credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value and bearing interest at 35 bps. The terms of the loans are directly tied to the underlying PPP loans, which were originated at 2 or 5 years. For the years ended December 31, 2024 and 2023, the Company had outstanding $2.0 million and $3.5 million, respectively, under the PPPLF program which is included in the FHLB and Federal Reserve borrowings line of the Consolidated Balance Sheets.

The Bank has borrowing capacity associated with two unsecured federal funds lines of credit up to $10.0 million and $19.0 million. As of December 31, 2024 and 2023, there were no amounts outstanding on any of the federal funds lines.

The following presents the Company's subordinated notes included in the Subordinated notes line of the Consolidated Balance Sheets (dollars in thousands):

Issuance Date	Stated Rate	Interest Paid	Maturity	Carrying Value		Initial Debt Issuance Costs		Remaining Net Balance as of December 31, 2024(1)
March 2020	5.125% per annum until 3/31/2025, then alternative rate plus 450 basis points until maturity	Quarterly	3/31/2030	$	8,000	$	120	$	7,994
November 2020	4.25% per annum until 12/1/2025, then SOFR plus 402 basis points until maturity	Semi-annual (Quarterly beginning 12/01/25)	12/1/2030	10,000		162		9,953
August 2021	3.25% per annum until 9/1/2026, then SOFR plus 258 basis points until maturity	Semi-annual (Quarterly beginning 09/01/26)	9/1/2031	15,000		242		14,908
December 2022	7.00% per annum until 12/15/2027, then SOFR plus 328 basis points until maturity	Semi-annual (Quarterly beginning 12/15/27)	12/15/2032	20,000		506		19,710

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(1)Remaining net balance includes amortization of debt issuance costs.

For the years ended December 31, 2024 and 2023, the Company recorded $2.7 million of interest expense related to the collective subordinated notes. The subordinated notes are included in Tier 2 capital under current regulatory guidelines and interpretations, subject to limitations.

The Company’s borrowing facilities include various financial and other covenants, including, but not limited to, a requirement that the Bank maintains regulatory capital that is deemed "well capitalized" by federal banking agencies. See Note 22 – Regulatory Capital Matters for additional information. As of December 31, 2024 and 2023, the Company was in compliance with the covenant requirements.