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BORROWED FUNDS AND REPURCHASE AGREEMENTS
 12 Months Ended
Dec. 31, 2022
BORROWED FUNDS AND REPURCHASE AGREEMENTS [Abstract]  
BORROWED FUNDS AND REPURCHASE AGREEMENTS
10. BORROWED FUNDS AND REPURCHASE AGREEMENTS


The following table shows the breakdown of borrowed funds as of December 31, 2022 and 2021 (dollars in thousands):

    Securities    
                                           
    Sold Under    
    Bank    
                               
   
Agreements
to
     FHLB    
Federal
Funds
     FRB     Line of
     
     Notes     Term     Total  
 
Repurchase
(a)
    
Advances
(b)
    
Lines
(c)
    
BIC
Line (d)
    
Credit
(e)
   
Subordinated
Debt (f)
    
Payable
(g)
    
Loans
(h)
    
Borrowed
Funds
  
2022
                                                      
Balance at December 31
  
$
17,776
    
$
169,110
    
$
-
    
$
-
     $ -     $ 9,892    
$
7,500
    
$
53,000
    
$
257,278
  
Highest balance at any month-end
    
17,776
      
186,626
      
-
      
-
       -       9,892      
7,500
      
53,000
      
259,215
  
Average balance
    
16,246
      
69,571
      
3
      
49
       -       9,885      
7,500
      
46,407
      
149,661
  
Weighted average interest rate:
                                                                        
Paid during the year
    
1.95
%
    
3.50
%
    
1.99
%
    
1.76
%
     0.00 %     4.18 %    
3.63
%
    
1.00
%
    
2.61
%
As of year-end
    
4.13
%
    
4.45
%
    
0.00
%
    
0.00
%
     0.00 %     4.18 %    
3.57
%
    
1.00
%
    
3.66
%
2021
                                                                        
Balance at December 31
  
$
16,873
    
$
-
    
$
-
    
$
-
     $ -     $ 9,879    
$
7,500
    
$
39,725
    
$
73,977
  
Highest balance at any month-end
    
16,873
      
-
      
-
      
-
       -       9,879      
7,500
      
66,525
      
100,777
  
Average balance
    
14,726
      
-
      
-
      
-
       -       7,036      
7,500
      
55,360
      
84,622
  
Weighted average interest rate:
                                                                        
Paid during the year
    
0.06
%
    
0.00
%
    
0.51
%
    
0.22
%
     0.00 %     4.17 %    
3.57
%
    
1.26
%
    
1.50
%
As of year-end
    
0.08
%
    
0.00
%
    
0.00
%
    
0.00
%
     0.00 %     4.18 %    
3.57
%
    
1.15
%
    
1.56
%

(a) We utilize securities sold under agreements to repurchase to facilitate the needs of our customers and to facilitate secured short-term funding needs. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. We monitor collateral levels on a continuous basis. We may be required to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents. The collateral pledged on the repurchase agreements by the remaining contractual maturity of the repurchase agreements in the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021 is presented in the following tables (in thousands).

 
Remaining Contractual Maturity of the Agreements
  
    Overnight and     Up to    
    Greater than    
 
2022
  
Continuous
    
30 Days
    
30 - 90 Days
    
90 days
    
Total
  
Repurchase Agreements:
                              
U.S. agency securities
  
$
20,371
    
$
-
    
$
-
    
$
-
    
$
20,371
  
Total carrying value of collateral pledged
  
$
20,371
    
$
-
    
$
-
    
$
-
    
$
20,371
  
                                         
Total liability recognized for repurchase agreements
                                  
$
17,776
  
                                         
2021                                        
Repurchase Agreements:
                                        
U.S. agency securities
   $ 17,155     $
-     $ -     $ -     $ 17,155  
Total carrying value of collateral pledged
   $ 17,155     $
-     $ -     $ -     $ 17,155  
                                         
Total liability recognized for repurchase agreements
                                   $ 16,873  

(b) FHLB Advances consist of an “Open RepoPlus” agreement with the FHLB of Pittsburgh. FHLB “Open RepoPlus” advances are short-term borrowings that bear interest based on the FHLB discount rate or Federal Funds rate, whichever is higher.  The Company has a borrowing limit of $871,227,000, inclusive of any outstanding advances and letters of credit. FHLB advances are secured by a blanket security agreement that includes the Company’s FHLB stock, as well as certain investment and mortgage-backed securities held in safekeeping at the FHLB and certain residential and commercial mortgage loans.  A portion of these advances, $43.0 million, are subject to interest rate swap arrangements. See Note 17 for additional information. 

(c) The federal funds lines consist of unsecured lines from two third party banks at market rates.  The Bank has a borrowing limit totaling $34,000,000, inclusive of any outstanding balances.  No specific collateral is required to be pledged for these borrowings.

(d) The Federal Reserve Bank Borrower in Custody (FRB BIC) Line consists of a borrower in custody in agreement opened in January 2010 with the Federal Reserve Bank of Philadelphia secured by municipal loans maintained in the Company’s possession.  As of December 31, 2022 and 2021, the Company has a borrowing limit of $1,050,000 and $1,068,000, respectively, inclusive of any outstanding advances. The approximate carrying value of the municipal loan collateral was $1,360,000 and $1,683,000 as of December 31, 2022 and 2021, respectively.

(e) The Company issued a $20.0 million revolving line of credit in December 2022 with a Pennsylvania community Bank with a maturity date of February 1, 2024, subject to an annual review by the lender, which may extend the line an additional year. The line is subject to an annual fee of $20,000. Interest on outstanding borrowings is payable at prime minus 0.50% No specific collateral is required to be pledged for these borrowings.

(f) In April 2021, the Company issued $10.0 million of fixed to floating rate subordinated notes that mature on April 16, 2031, unless redeemed earlier. The notes bear interest at 4% per annum through April 16, 2026 and subsequently pay interest at the 90-day average secured overnight financing rate, determined on the determination date of the applicable interest period, plus 323 basis points. The Company may redeem the notes, in whole or in part, on or after April 16, 2026, and at any time upon the occurrence of certain events, subject in each case to the approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Issuance costs associated with the notes totaled $131,000 and were capitalized and will be amortized over the life of the note on a straight-line basis, which approximates the effective yield method. As of December 31, 2022, the net unamortized issuance costs totaled $108,000.

(g) In December 2003, the Company formed a special purpose entity (“Entity”) to issue $7,500,000 of floating rate obligated mandatory redeemable trust preferred securities as part of a pooled offering.  The rate was determined quarterly and floated based on the 3 month LIBOR plus 2.80 percent.   The Entity may redeem them, in whole or in part, at face value after December 17, 2008, and on a quarterly basis thereafter.  The Company borrowed the proceeds of the issuance from the Entity in December 2003 in the form of a $7,500,000 note payable.  Debt issue costs of $75,000 have been capitalized and fully amortized as of December 31, 2008.  Under current accounting rules, the Company’s minority interest in the Entity was recorded at the initial investment amount and is included in the other assets section of the balance sheet.  The Entity is not consolidated as part of the Company’s consolidated financial statements. The $7,500,000 note payable is subject to an interest rate swap arrangement. See Note 17 for additional information.

(h)  Term Loans consist of separate loans with the FHLB of Pittsburgh as follows (dollars in thousands):

        December 31,
    December 31,
  
Interest Rate
  
Maturity
  
2022
    
2021
  
Fixed:
                
  3.86 %
January 3, 2023
     25,000       -  
  4.57 %
February 14, 2023
     18,000       -  
  2.46 %
March 28, 2024
     5,000       5,000  
  1.70 %
August 20, 2024
     5,000       5,000  
 
0.26
%
January 3, 2022
     -      
25,000
  
 
2.08
%
January 6, 2022
     -      
4,725
  
Total term loans
      
$
53,000
    
$
39,725
  



Following are maturities of borrowed funds as of December 31, 2022 (in thousands):

2023
  
$
229,886
  
2024
    
10,000
  
2025
    
-
  
2026
    
-
  
2027
    
-
  
Thereafter
    
17,392
  
Total borrowed funds
  
$
257,278