Note 10 - FHLB Advances

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Federal Home Loan Bank Advances, Disclosure [Text Block]

(10) FHLB Advances

Bancorp had one advance totaling $10 million outstanding as of September 30, 2021, as compared with 37 separate advances totaling $32 million as of December 31, 2020. Interest payments are due monthly with principal due at maturity for the lone advance outstanding at September 30, 2021.

Bancorp chose to pay off all outstanding advances during the second quarter with the exception of the $10 million advance noted above, which is associated with a cash flow-related interest rate swap that matures in December 2021. The advances paid off during the second quarter had an average weighted cost of 2.03% prior to their maturity and an early-termination fee of $474,000 was incurred as a result of the payoffs. Bancorp made this decision due to its excess liquidity driven by the substantial deposit growth it achieved during 2020 and the first half of 2021 combined with the near-term outlook for low interest rates. Bancorp believes it will substantially “earn back” the early termination penalty through lower interest expense over two years.

FHLB advances totaling $91 million were assumed on May 31, 2021 in relation to the KB acquisition, all of which were paid off immediately upon acquisition.

The following is a summary of the contractual maturities and average effective rates of outstanding advances:

(dollars in thousands)	As of September 30, 2021					As of December 31, 2020
Maturity			Weighted average					Weighted average
Year	Advance		Fixed Rate			Advance		Fixed Rate
2021	$	10,000		0.22		$	12,148		0.68
2022		—		—			—		—
2023		—		—			268		1.00
2024		—		—			1,389		2.36
2025		—		—			2,827		2.43
2026		—		—			5,401		1.96
2027		—		—			5,323		1.73
2028		—		—			4,283		2.27
Total	$	10,000		0.22	%	$	31,639		1.52	%

FHLB advances are collateralized by certain CRE and residential real estate mortgage loans under blanket mortgage collateral pledge agreements and FHLB stock. Bancorp views these advances as an effective lower-costing alternative to brokered deposits to fund loan growth. At September 30, 2021 and December 31, 2020, the amount of available credit from the FHLB totaled $892 million and $804 million, respectively.

Bancorp also had $80 million in FFP lines available from correspondent banks at both September 30, 2021 and December 31, 2020, respectively.