Borrowed Funds And Subordinated Debt

12 Months Ended

Dec. 31, 2023

Subordinated Debt [Abstract]

Subordinated Debt

9.BORROWED FUNDS AND SUBORDINATED DEBT

Other borrowings at December 31, 2023 consisted of FRB short-term borrowings of $86 million, FHLB overnight line of credit advance of $53 million, and various FHLB advances of $6 million with fixed interest rate terms ranging from 2.28% to 3.34%.

The maturities and weighted average rates of other borrowed funds, excluding purchased discounts of less than $0.1 million, at December 31, 2023 are as follows:

		Maturities	Weighted Average Rate
		(in thousands)
2024	$	145,077		5.32	%

The Bank has the ability to borrow additional funds from the FHLB based on the securities or real estate loans that can be used as collateral and to purchase additional federal funds through one of the Bank’s correspondent banks. Given the current collateral available, additional advances of up to $364 million can be drawn on the FHLB via the Bank’s Overnight Line of Credit Agreement. There were $566 million and $495 million in residential and commercial mortgage loans pledged to FHLBNY to serve as collateral for potential borrowings as of December 31, 2023 and 2022, respectively.

As a member of the Federal Home Loan Bank System, the Bank is required to hold stock in FHLBNY. The Bank held FHLBNY stock with a carrying value of $4.9 million and $10.4 million as of December 31, 2023 and December 31, 2022, respectively.

The Bank has the ability to borrow from the Federal Reserve and participates in the Bank Term Funding Program. At December 31, 2023 the Bank had $86 million in short-term borrowings with the FRB and $3.1 million in additional availability to borrow against collateral. By placing sufficient collateral in safekeeping at the Federal Reserve Bank, the Bank could borrow at the discount window.

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The amounts and interest rates of other borrowed funds, excluding purchased discounts of less than $0.1 million, $0.3 million and $0.7 million at December 31, 2023, 2022 and 2021, respectively, were as follows:

		FHLB Overnight Line of Credit				FHLB Advances			FRB Borrowings		Total Other Borrowings
	(in thousands)
At December 31, 2023
Amount outstanding		$	53,000		$	6,077		$	86,000		$	145,077
Weighted-average interest rate			5.64	%		3.11	%		5.28	%		5.32	%
For the year ended December 31, 2023
Highest amount at a month end		$	168,000		$	19,346		$	126,000
Daily average amount outstanding		$	62,217		$	8,853		$	74,182		$	145,252
Weighted-average interest rate			5.33	%		3.00	%		4.61	%		4.82	%
At December 31, 2022
Amount outstanding		$	173,200		$	19,547		$	-		$	192,747
Weighted-average interest rate			4.61	%		2.77	%		-	%		4.42	%
For the year ended December 31, 2022
Highest amount at a month end		$	173,200		$	31,756		$	-
Daily average amount outstanding		$	24,519		$	23,721		$	-		$	48,240
Weighted-average interest rate			3.96	%		2.72	%		-	%		3.35	%
At December 31, 2021
Amount outstanding		$	-		$	32,145		$	-		$	32,145
Weighted-average interest rate			-	%		2.64	%		-	%		2.64	%
For the year ended December 31, 2021
Highest amount at a month end		$	-		$	42,434		$	-
Daily average amount outstanding		$	-		$	38,378		$	24		$	38,403
Weighted-average interest rate			-	%		2.55	%		0.35	%		2.55	%

Subordinated debt comprised $20.0 million of subordinated notes and $11.3 million of trust preferred capital securities at December 31, 2023 and 2022.

On July 9, 2020, the Company issued $20.0 million of fixed to floating rate subordinated notes. The subordinated notes have an initial fixed interest rate of 6.00% to, but excluding, July 15, 2025, payable semi-annually in arrears. From and including July 15, 2025 to but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an interest rate per annum initially equal to the then-current three-month Secured Overnight Financing Rate provided by the Federal Reserve Bank of New York plus 590 basis points, payable quarterly in arrears. The subordinated notes mature on July 15, 2030. The Company is entitled to redeem the notes, in whole or in part, at any time on or after July 15, 2025, and to redeem the subordinated notes at any time in whole upon certain other events.

On October 1, 2004, Evans Capital Trust I, a statutory business trust wholly-owned by the Company (the “Trust”), issued $11.0 million in aggregate principal amount of floating rate preferred capital securities due November 23, 2034 to various investors (the “Capital Securities”) and $0.3 million of common securities to the Company (the “Common Securities”). The Capital Securities represent preferred undivided interests in the assets of the Trust. The Common Securities represent the initial capital contribution of the Company to the Trust, which have not been consolidated and are included in “Other Assets” on the Company’s consolidated balance sheet. Under the Federal Reserve Board’s current risk-based capital guidelines, the Capital Securities are includable in the Company’s Tier 1 (Core) capital. The Common Securities are wholly-owned by the Company and are the only class of the Trust’s securities possessing general voting powers.

The Capital Securities have a distribution rate of three-month LIBOR plus 2.65%, and the distribution dates are February 23, May 23, August 23, and November 23. The distribution rate was 8.24% at December 31, 2023.

The proceeds from the issuances of the Capital Securities and Common Securities were used by the Trust to purchase $11.3 million in aggregate liquidation amount of floating rate junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of the Company, due October 1, 2037.

The Junior Subordinated Debentures represent the sole assets of the Trust, and payments under the Junior Subordinated Debentures are the sole source of cash flow for the Trust. The interest rate payable on the Junior Subordinated Debentures was 8.24% at December 31, 2023.

Holders of the Capital Securities receive preferential cumulative cash distributions on each distribution date at the stated distribution rate, unless the Company exercises its right to extend the payment of interest on the Junior Subordinated Debentures for up to twenty quarterly periods, in which case payment of distributions on the respective Capital Securities will be deferred for comparable periods. During an extended interest period, in accordance with terms as defined in the indenture relating to the Capital Securities, the Company may not pay dividends or distributions on, or repurchase, redeem, or acquire any shares of its capital stock. The agreements governing the Capital Securities, in the aggregate, provide a full, irrevocable, and unconditional guarantee by the Company of the payment of distributions on, the redemption of, and any liquidation distribution with respect to the Capital Securities. The obligations under such guarantee and the Capital Securities are subordinate and junior in right of payment to all senior indebtedness of the Company.

The Capital Securities will remain outstanding until the Junior Subordinated Debentures are repaid at maturity, are redeemed prior to maturity, or are distributed in liquidation to the Trust. The Capital Securities are mandatorily redeemable in whole, but not in part, upon repayment at the stated maturity dates of the Junior Subordinated Debentures or the earlier redemption of the Junior Subordinated Debentures in whole upon the occurrence of one or more events (“Events”) set forth in the indentures relating to the Capital Securities, and in whole or in part at any time contemporaneously with the optional redemption of the related Junior Subordinated Debentures in whole or in part. The Junior Subordinated Debentures are redeemable prior to their stated maturity dates at the Company’s option: (i) on or after the stated optional redemption dates, in whole at any time, or in part from time to time; or (ii) in whole, but not in part, at any time within 90 days following the occurrence and during the continuation of one or more of the Events, in each case subject to possible regulatory approval. The redemption price of the Capital Securities and the related Junior Subordinated Debentures upon early redemption would be at the liquidation amount plus accumulated but unpaid distributions.