Long-Term Debt and FHLB Stock

9 Months Ended

Sep. 30, 2022

Long-Term Debt and FHLB Stock

Long-Term Debt and FHLB Stock

8.    Long-Term Debt and FHLB Stock

FHLB Borrowings and Stock

The Bank is a member of the FHLB. At September 30, 2022 and December 31, 2021, the Bank had access to a preapproved secured line of credit with the FHLB of $646,254 and $640,500, respectively. Borrowings under this line require collateralization through the pledge of specific loans and securities. At September 30, 2022 and December 31, 2021, the Bank had pledged assets of $189,287 and $170,385, respectively. At September 30, 2022 and December 31, 2021, the Bank had outstanding overnight line of credit balances with FHLB of $5,000 and $0, respectively. These borrowings mature the following business day. The interest rate on the overnight line of credit balance was 3.29% at September 30, 2022.

The outstanding principal amounts and the related terms and rates at September 30, 2022 were as follows:

Term	Principal		Maturity	Rate		Due in one year
Fixed short-term	$	5,000	October 3, 2022	2.85	%	$	5,000
Fixed short-term		5,000	November 1, 2022	3.06	%		5,000
Fixed short-term		20,000	December 21, 2022	3.76	%	$	20,000
3 year amortizing		2,541	February 28, 2023	1.32	%		2,541
Total	$	32,541	Weighted Average Rate	3.32	%	$	32,541

The Bank is required to maintain an investment in capital stock of the FHLB, as collateral, in an amount equal to a certain percentage of its outstanding debt. FHLB stock is considered restricted stock and is carried at cost. The Bank evaluates FHLB stock for impairment based on the ultimate recovery ability of the cost. No impairment was recognized at either September 30, 2022 or December 31, 2021.

Subordinated Debt

In addition to the Bank, the Company has one other wholly-owned subsidiary, RSB Capital Trust I (the “Trust”). In 2005, the Trust issued $5,000 of pooled trust preferred securities in a private placement and issued 155 shares of common stock at $1 par value per share, to the Company. The Trust, which has no independent assets or operations, was formed in 2005 for the sole purpose of issuing trust preferred securities and investing the proceeds thereof in an equivalent amount of junior subordinated debentures. The proceeds from the issuance of the trust preferred securities were down-streamed to the Bank and are currently considered Tier 1 capital for purposes of determining the Bank’s capital ratios. The duration of the Trust is 30 years.

The subordinated debt securities of $5,155 are unsecured obligations of the Company and are subordinate and junior in right of payment to all present and future senior indebtedness of the Company. The Company has entered into a guarantee, which together with its obligations under the subordinated debt securities and the declaration of trust governing the Trust, including its obligations to pay costs, expenses, debts and liabilities, provides a full and unconditional guarantee of amounts on the capital securities. The subordinated debentures, which bear interest at three month LIBOR plus 2.00% (4.96% at September 30, 2022 and 2.16% at December 31, 2021) mature on May 23, 2035.

As it is anticipated that LIBOR will be discontinued after June 2023, the Company is reviewing the agreements for the above debt to determine alternative reference rates and does not anticipate there will be a significant financial statement impact.

Other Borrowings

The Bank has an unsecured, uncommitted $10,000 line of credit with Zions Bank. There were no advances outstanding under this line of credit at either September 30, 2022 or December 31, 2021.

The Bank also has an unsecured, uncommitted $50,000 line of credit with Pacific Coast Bankers Bank. There were no advances outstanding under this line of credit at either September 30, 2022 or December 31, 2021.