Other Borrowed Funds

9 Months Ended

Sep. 30, 2014

12. OTHER BORROWED FUNDS

Other borrowed funds as of the dates indicated were as follows:


	September 30,		December 31,
	2014		2013
	(Dollars in thousands)

Federal Home Loan Bank advances	$	-	$	46,858
Repurchase agreements		4,391		2,583
Total	$	4,391	$	49,441

Federal Home Loan Bank Advances — The Company has an available borrowing arrangement with the FHLB, which allows the Company to borrow on a collateralized basis. At September 30, 2014 and December 31, 2013, total borrowing capacity of $388.5 million and $301.0 million, respectively, was available under this arrangement. At September 30, 2014, no borrowings were outstanding. At December 31, 2013, $46.9 million was outstanding with an average interest rate of 0.32% and all of the Company’s FHLB advances mature within one year. These borrowings are collateralized by a blanket lien on certain loans. The total borrowing capacity increased due to loan portfolio growth. The Company utilizes these borrowings to meet liquidity needs and to fund certain fixed rate loans in its loan portfolio.

Federal Reserve Bank — The Company has an available borrower in custody arrangement with the Federal Reserve Bank of Dallas (the “Fed”), which allows the Company to borrow, on a collateralized basis. Certain commercial and consumer loans are pledged under this arrangement. The Company maintains this borrowing arrangement to meet liquidity needs pursuant to its contingency funding plan. At September 30, 2014 and December 31, 2013, $275.6 million and $288.6 million, respectively, were available under this arrangement and no borrowings were outstanding. The available capacity decreased due to changes in collateral margins for Fed discount window lending.

Securities Sold Under Agreements to Repurchase — Securities sold under agreements to repurchase represent the purchase of interests in securities by banking customers. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. Repurchase agreements with banking customers are settled on the following business day. All securities sold under agreements to repurchase are collateralized by pledged securities. The securities underlying the repurchase agreements are held in safekeeping by the Bank’s safekeeping agent. At September 30, 2014 and December 31, 2013, the Company had securities sold under agreements to repurchase with banking customers of $4.4 million and $2.6 million, respectively.

Federal Funds Purchased — The Company has available federal funds lines of credit with its correspondent banks. As of September 30, 2014 and December 31, 2013, there were no federal funds purchased outstanding.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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