Borrowings

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Borrowings

Note 6 – Borrowings

FHLB Borrowings

The Bank has a line of credit from the FHLB secured by pledged qualifying real estate loans and certain pledged securities. At June 30, 2022 and December 31, 2021, based on pledged collateral, the line totaled $293.9 million and $358.1 million, respectively. The FHLB will lend up to 30% of the Bank’s total assets as of the prior quarter end, subject to certain eligibility requirements, including adequate collateral. The Bank had borrowings from the FHLB that totaled $135.0 million and $10.0 million at June 30, 2022 and December 31, 2021, respectively. The interest rate on the borrowing as of June 30, 2022 was 1.82% with a maturity date of May 8, 2023. FHLB borrowings required the Bank to hold $6.5 million and $1.7 million of FHLB stock at June 30, 2022 and December 31, 2021, respectively, which is included in restricted equity investments on the consolidated balance sheets. The Bank also has letters of credit with the FHLB in the amount of $85.1 million for the purpose of collateral for public deposits with the Treasury Board of the Commonwealth of Virginia. Outstanding letters of credit reduce the available balance of the borrowing facility with the FHLB, which was $73.8 million as of June 30, 2022.

FRB Borrowings

In the second quarter of 2020, the Company began participating in the FRB’s PPPLF, which allowed banks to pledge PPP loans as collateral in exchange for advances. The PPPLF advances are at 100% of the PPP loan value and term, have a fixed annual cost of 35 basis points, and receive favorable regulatory capital treatment. As of June 30, 2022, FRB borrowings pursuant to the PPPLF totaled $60 thousand maturing June 6, 2025.

Other Borrowings

The Company had unsecured lines of credit with correspondent banks, which totaled $44.0 million at both June 30, 2022 and December 31, 2021. These lines bear interest at the prevailing rates for such loans and are cancellable any time by the correspondent bank. As of June 30, 2022 and December 31, 2021, none of these lines of credit with correspondent banks were drawn upon.

The Company had $40.0 million of subordinated notes, net, outstanding as of both June 30, 2022 and December 31, 2021. The Company's subordinated notes are comprised of an issuance in October 2019 and maturing October 15, 2029 (the “2029 Notes”) and an issuance in May 2020 and maturing June 1, 2030 (the “2030 Note”). As of June 30, 2022, the net carrying amount of the 2029 Notes was $25.2 million, inclusive of a $729 thousand purchase accounting adjustment (premium). For the three months ended June 30, 2022 and 2021, the effective interest rate on the 2029 Notes was 4.9% and 4.7%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium). For the six months ended June 30, 2022 and 2021, the effective interest rate on the 2029 Notes was 5.0% and 4.7%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium). As of June 30, 2022, the net carrying amount of the 2030 Note, including capitalized, unamortized debt issuance costs, was $14.7 million. For the three months ended June 30, 2022 and 2021, the effective interest rate on the 2030 Note was 6.1% and 6.3%, respectively. For the six months ended June 30, 2022 and 2021, the effective interest rate on the 2030 Note was 6.1% and 6.3%, respectively.