OTHER BORROWED FUNDS
FHLB, Federal Reserve Bank, and Fed Fund Borrowing Arrangements
The Bank maintained a credit arrangement with the FHLB with a maximum borrowing limit of approximately $489.5 million and $478.9 million as of December 31, 2024 and 2023, respectively, and available borrowing capacity of $467.6 million at December 31, 2024. This arrangement is subject to annual renewal and is secured by a blanket security agreement on $695.5 million of residential and commercial mortgage loans and the Bank’s investment in FHLB stock. Under this arrangement the Bank had available a variable rate line of credit in the amount of $150.0 million as of December 31, 2024 and 2023, of which, there was no outstanding balance as of December 31, 2024 and 2023. Fixed rate, long-term advances from the FHLB with remaining maturities are as follows at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 |
| December 31, | Amount | | Weighted
Average
Rate | | Amount | | Weighted
Average
Rate |
| (Dollars in Thousands) | | | | | | | |
| | | | | | | |
| Due in One Year | $ | 20,000 | | | 4.92 | % | | $ | — | | | — | % |
| Due After One Year to Two Years | — | | | — | % | | 20,000 | | | 4.92 | % |
| | | | | | | |
| | | | | | | |
| Total | $ | 20,000 | | | 4.92 | % | | $ | 20,000 | | | 4.92 | % |
As an alternative to pledging securities, the FHLB periodically provides standby letters of credit on behalf of the Bank to secure certain public deposits in excess of the level insured by the FDIC. If the FHLB is required to make payment for a beneficiary’s draw, the payment amount is converted into a collateralized advance to the Bank. There were no standby letters of credit issued on our behalf by the FHLB to secure public deposits as of December 31, 2024 and $18.9 million as of December 31, 2023.
The Bank maintains a Borrower-In-Custody of Collateral line of credit agreement with the Federal Reserve Bank (“FRB”) for $84.0 million that requires monthly certification of collateral, is subject to annual renewal and is secured by $108.3 million of commercial and consumer indirect auto loans. The Bank also maintains multiple line of credit arrangements with various unaffiliated banks totaling $50.0 million as of December 31, 2024 and 2023, respectively, of which no draws are outstanding other than the subordinated debt disclosed below.
Subordinated Debt
In December 2021, the Company entered into a term loan in the principal amount of $15.0 million, evidenced by a term note which matures on December 15, 2031 ("2031 Note"). The 2031 Note is an unsecured subordinated obligation of the Company and may be repaid in whole or in part, without penalty, on any interest payment date on or after December 15, 2026 and at any time upon the occurrence of certain events. The 2031 Note initially bears a fixed interest rate of 3.875% per year to, but excluding, December 15, 2026 and thereafter at a floating rate equal to the then-current three-month term SOFR plus 280 basis points. The 2031 Note qualifies as Tier 2 capital under regulatory guidelines. The 2031 Note is recorded on the Consolidated Statements of Financial Condition in Other Borrowed Funds, net of remaining debt issuance costs. At December 31, 2024 and 2023, the principal balance and unamortized debt issuance costs for the 2031 Note were $15.0 million, and $282,000 and $322,000, respectively.