ISABELLA BANK Corp - 10-K filing on 2014-03-10

Borrowed Funds

12 Months Ended

Dec. 31, 2013

Note 10 – Borrowed Funds

Borrowed funds consist of the following obligations at December 31:



	2013				2012
	Amount		Rate		Amount		Rate
FHLB advances	$	162,000	2.02	%	$	152,000	2.05	%
Securities sold under agreements to repurchase without stated maturity dates	106,025		0.13	%	66,147		0.15	%
Securities sold under agreements to repurchase with stated maturity dates	11,301		3.30	%	16,284		3.57	%
Federal funds purchased	—		—		6,570		0.50	%
Total	$	279,326	1.35	%	$	241,001	1.59	%

The FHLB advances are collateralized by a blanket lien on all qualified 1-4 family residential real estate loans and certain mortgage-backed securities and collateralized mortgage obligations. Advances are also secured by our holdings of FHLB stock. As of December 31, 2013, we had the ability to borrow up to an additional $127,748, based on assets pledged as collateral. During the first quarter of 2013 and 2012, we reduced funding costs by modifying the term of $30,000 and $60,000, respectively, of FHLB advances.

The maturity and weighted average interest rates of FHLB advances are as follows as of December 31:



	2013				2012
	Amount		Rate		Amount		Rate
Fixed rate advances due 2014	$	10,000	0.48	%	$	10,000	0.48	%
Fixed rate advances due 2015	32,000		0.84	%	42,000		1.12	%
Fixed rate advances due 2016	10,000		2.15	%	10,000		2.15	%
Fixed rate advances due 2017	30,000		1.95	%	40,000		2.15	%
Fixed rate advances due 2018	40,000		2.35	%	20,000		2.86	%
Fixed rate advances due 2019	20,000		3.11	%	20,000		3.73	%
Fixed rate advances due 2020	10,000		1.98	%	10,000		1.98	%
Fixed rate advances due 2023	10,000		3.90	%	—		—
Total	$	162,000	2.02	%	$	152,000	2.05	%

Securities sold under agreements to repurchase are classified as secured borrowings. Securities sold under agreements to repurchase without stated maturity dates generally mature within one to four days from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The securities underlying the agreements have a carrying value and a fair value of $148,930 and $143,322 at December 31, 2013 and 2012, respectively. Such securities remain under our control. We may be required to provide additional collateral based on the fair value of underlying securities.

The maturity and weighted average interest rates of securities sold under agreements to repurchase with stated maturity dates are as follows at December 31:



	2013				2012
	Amount		Rate		Amount		Rate
Repurchase agreements due 2013	$	—	—		$	5,000	4.51	%
Repurchase agreements due 2014	10,876		3.30	%	10,872		3.15	%
Repurchase agreements due 2015	425		3.25	%	412		3.25	%
Total	$	11,301	3.30	%	$	16,284	3.57	%

Securities sold under repurchase agreements without stated maturity dates, federal funds purchased, and FRB Discount Window advances generally mature within one to four days from the transaction date. The following table provides a summary of short-term borrowings for the years ended December 31:



	2013						2012
	Maximum Month End Balance		Average Balance		Weighted Average Interest Rate During the Period		Maximum Month End Balance		Average Balance		Weighted Average Interest Rate During the Period
Securities sold under agreements to repurchase without stated maturity dates	$	106,025	$	74,602	0.15	%	$	66,117	$	57,466	0.20	%
Federal funds purchased	13,700		4,445		0.61	%	17,900		3,836		0.47	%

We had pledged certificates of deposit held in other financial institutions, trading securities, AFS securities, and 1-4 family residential real estate loans in the following amounts at December 31:



	2013		2012
Pledged to secure borrowed funds	$	320,173	$	308,628
Pledged to secure repurchase agreements	148,930		143,322
Pledged for public deposits and for other purposes necessary or required by law	20,922		22,955
Total	$	490,025	$	474,905

We had no investment securities that are restricted to be pledged for specific purposes.