FHLB Advances and Other Borrowings

The Company’s funding sources include Federal Home Loan Bank advances, borrowings from other third party correspondent financial institutions, issuance and sale of subordinated debt and other capital securities, and repurchase agreements. Information regarding each of these types of borrowings or other indebtedness is as follows:



	December 31,
	2014		2013
Long-term Advances from Federal Home Loan Bank collateralized by qualifying mortgages, investment securities, and mortgage-backed securities	$	51,444	$	71,483
Term Loans	4,000		7,000
Junior Subordinated Debentures assumed from American Community Bancorp, Inc.	5,174		5,024
Capital Lease Obligation	3,973		3,730
Long-term Borrowings	64,591		87,237

Overnight Variable Rate Advances from Federal Home Loan Bank collateralized by qualifying mortgages, investment securities, and mortgage-backed securities	$	89,100	$	38,000
Federal Funds Purchased	31,400		—
Repurchase Agreements	20,973		15,533
Short-term Borrowings	141,473		53,533

Total Borrowings	$	206,064	$	140,770

Repurchase agreements, which are classified as secured borrowings, generally mature within one day of the transaction date. Repurchase agreements are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the value of the underlying securities.



	2014			2013
Average Daily Balance During the Year	$	16,091		$	14,722
Average Interest Rate During the Year	0.15		%	0.20		%
Maximum Month-end Balance During the Year	$	20,973		$	17,722
Weighted Average Interest Rate at Year-end	0.15		%	0.20		%

At December 31, 2014 interest rates on the fixed rate long-term FHLB advances ranged from 0.35% to 7.22% with a weighted average rate of 1.16%. At December 31, 2013 interest rates on the fixed rate long-term FHLB advances ranged from 0.35% to 7.22% with a weighted average rate of 0.95%. At December 31, 2014 and 2013, the Company had no advances containing options whereby the FHLB may convert a fixed rate advance to an adjustable rate advance.

The long-term borrowings shown above includes $4 million and $7 million outstanding on a term loan owed by the parent company as of December 31, 2014 and 2013, respectively. At December 31, 2014 and 2013, interest on the term loan was based upon 90-day LIBOR plus 2.875%. This term loan matures December 31, 2015. At December 31, 2014 and 2013, the parent company had a $10 million line of credit with no outstanding balance. The line of credit matures December 29, 2015. Interest on the line of credit is based upon 90-day LIBOR plus 2.875% and includes an unused commitment fee of 0.25%. The line of credit was renewed and extended in December 2014 and December 2013.

At December 31, 2014, scheduled principal payments on long-term borrowings, excluding the capitalized lease obligation and acquired subordinated debentures (which are discussed below) are as follows:



2015	$	44,042
2016	45
2017	749
2018	10,027
2019	30
Thereafter	551
Total	$	55,444

The Company assumed the obligations of junior subordinated debentures through the acquisition of American Community Bancorp, Inc. The junior subordinated debentures were issued to ACB Capital Trust I and Capital Trust II. The trusts are wholly owned by the Company. In accordance with accounting guidelines, the trusts are not consolidated with the Company’s financials, but rather the subordinated debentures are shown as borrowings. The Company guarantees payment of distributions on the trust preferred securities issued by ACB Trust I and ACB Trust II. Interest is payable on a quarterly basis. These securities qualify as Tier 1 capital (with certain limitations) for regulatory purposes. $5,017 of the junior subordinated debentures were treated as Tier 1 capital for regulatory capital purposes as of December 31, 2014. $4,871 of the junior subordinated debentures were treated as Tier 1 capital for regulatory capital purposes as of December 31, 2013. As a result of the acquisition of American Community these liabilities were recorded at fair value at the acquisition date with the discount amortizing into interest expense over the life of the liability, ultimately accreting to the issuance amount disclosed below.

The following table summarizes the terms of each issuance:

Date of

Issuance

Amount

Carrying

Amount at

December 31, 2014

Variable Rate

Rate as of

December 31, 2014

Rate as of

December 31, 2013

Maturity

Date

ACB Trust I

5/6/2005

$5,155

$3,278

90 day LIBOR + 2.15%

2.41%

2.40%

May, 2035

ACB Trust II

7/15/2005

3,093

1,896

90 day LIBOR + 1.85%

2.08%

2.09%

July, 2035

See also Note 5 regarding the capital lease obligation.