BORROWINGS AND BORROWING CAPACITY

9 Months Ended

Sep. 30, 2017

The Company has an available line of credit with the Federal Home Loan Bank (“FHLB”) of Dallas, which allows the Company to borrow on a collateralized basis. FHLB advances are used to manage liquidity as needed. The advances are secured by a blanket lien on certain loans. Maturing advances are replaced by drawing on available cash, making additional borrowings or through increased customer deposits. At September 30, 2017, the Company had a total borrowing capacity of $886.6 million, of which $646.0 million was available and $240.6 million was outstanding. FHLB advances of $207.0 million were outstanding at September 30, 2017, at a weighted average interest rate of 1.32%. Letters of credit were $33.6 million at September 30, 2017, of which $25.0 million expired in October 2017 and was renewed until October 2018, $3.1 million will expire in February 2018 and $5.5 million will expire in August 2018.

In 2015, the Company borrowed an additional $18.0 million under its credit agreement with another financial institution, which was in addition to the $10.1 million of indebtedness incurred under the same credit agreement in 2014. The credit agreement matures in December 2021. The Company used the funds borrowed in 2015 to repay debt that F&M Bancshares owed and used the funds borrowed in 2014 to pay off a previous borrowing with another financial institution that had been entered into during 2013 in conjunction with the acquisition of Independence Bank. In October 2015, the Company paid down $27.5 million of the credit agreement with a portion of the proceeds from the initial public offering of Allegiance common stock. The credit agreement includes certain restrictive covenants. At September 30, 2017, the Company was in compliance with all such debt covenants, except that return on assets at the Bank was 0.47% (below the required minimum), primarily due to the unusually large provision for loan losses experienced during the quarter. Such non-compliance has been waived by the lender with respect to the quarter ended September 30, 2017. The interest rate on the outstanding debt under the revolving credit agreement is the Prime rate minus 25 basis points, or 4.00%, at September 30, 2017, and is paid quarterly. Scheduled principal maturities are as follows (dollars in thousands):



Remaining 2017	$	—
2018	—
2019	—
2020	—
2021 and thereafter	569
Total	$	569