NOTE 10 - BORROWINGS

FHLB Topeka Borrowings

The Bank has executed a blanket pledge and security agreement with the FHLB Topeka that requires certain loans and securities be pledged as collateral for any outstanding borrowings under the agreement. The collateral pledged as of December 31, 2019 and December 31, 2018 amounted to $515.5 million and $475.4 million, respectively. Based on this collateral and the Company’s holdings of FHLB Topeka stock, the Company was eligible to borrow an additional $349.9 million at December 31, 2019. Each advance is payable at its maturity date.

The Company had the following borrowings from FHLB Topeka at the dates noted (in thousands):


		December 31,		December 31,
Maturity Date	Rate %	2019		2018
August 2, 2019	2.65		—		5,000
August 26, 2020	1.94		10,000		10,000
Total		$	10,000	$	15,000

As of December 31, 2019, the Bank had borrowing capacity associated with three unsecured federal funds lines of credit up to $10.0 million, $19.0 million, and $25.0 million. As of December 31, 2018, the Bank had borrowing capacity associated with three unsecured federal funds lines of credit up to $10.0 million, $13.0 million, and $25.0 million. As of December 31, 2019 and December 31, 2018, there were no amounts outstanding on any of the federal funds lines.

The Company’s borrowing facilities included 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). As of December 31, 2019 and December 31, 2018, the Company was in compliance with the covenant requirements.

Subordinated Notes

As of December 31, 2019 and 2018, subordinated notes (the "2016 Sub Notes") issued to various investors totaled $6.6 million. The 2016 Sub Notes accrue interest at a rate of 7.25% per annum until December 31, 2021, at which time the rate will adjust each quarter to the then current 90 day London Interbank Offered Rate ("LIBOR") plus 587 basis points, mature on December 31, 2026, are redeemable at the option of the Company after January 1, 2022, and pay interest quarterly.

Effective July 26, 2018, the Company redeemed all of its subordinated notes due 2020 for an aggregate redemption price of $6.9 million, including accrued and unpaid interest. The subordinated notes due 2020 were redeemed using the proceeds from the Company’s initial public offering, which closed on July 23, 2018.

For the years ended December 31, 2019 and 2018, the Company recorded $0.5 million and $0.8 million, respectively, of interest expense related to the 2016 Sub Notes and 2012 Sub Notes. The 2016 Sub Notes are included in Tier 2 capital under current regulatory guidelines and interpretations, subject to limitations.

Promissory and Credit Note

On June 30, 2019, the Company entered into an Amended and Restated Promissory Note (the "Promissory Note") and an Amended and Restated Revolving Credit Note (the "Credit Note") with a correspondent lending partner. The Credit Note is secured by stock of the Bank and bears interest at the 30 day LIBOR plus 3.5%. The Promissory Note is secured by stock of the Bank and bears interest at the 30 day LIBOR plus 4.0%. As of December 31, 2019, there were no amounts outstanding on either the Promissory Note or the Credit Note and the borrowing capacity associated with these facilities was $10.0 million. As of December 31, 2018, there were no amounts outstanding on either the Promissory Note or the Credit Note and the borrowing capacity associated with these facilities was $7.2 million.