NOTE 11 - SHORT-TERM BORROWINGS AND LONG-TERM DEBT

The Bank’s long-term debt and short-term borrowings consist of advances from the FHLB of Atlanta. The Bank classifies debt based upon original maturity and does not reclassify debt to short-term status during its life. Long-term debt and short-term borrowings include fixed-rate long-term advances, short-term advances, daily advances, fixed-rate convertible advances, and variable-rate convertible advances.

 

Rates and maturities on long-term advances and short-term borrowings were as follows:

 

 

 

Average rates of long-term debt and short-term borrowings were as follows:

 

 

 

The Bank’s fixed-rate debt generally consists of advances with monthly interest payments and principal due at maturity.

 

The Bank’s fixed-rate convertible long-term debt is callable by the issuer, after an initial period ranging from six months to five years. The instruments are callable at the end of the initial period. As of December 31, 2015 and 2014, all fixed-rate convertible debt has passed its call date. All advances have a prepayment penalty, determined based upon prevailing interest rates.

 

Variable convertible advances have an initial variable rate based on a discount to LIBOR. Variable convertible debt is scheduled to mature in 2020. As of December 31, 2015 and 2014, all variable convertible debt has passed its call date and is fixed at 4.0%.

 

During the year ended December 31, 2015, the Bank paid off $19.0 million of maturing long-term debt. There were no long-term advances added during the year ended December 31, 2015. During the year ended December 31, 2014, the Bank added $2.0 million and $5.0 million fixed-rate advances maturing in 2015 and 2016 at rates of 0.31% and 0.52%, respectively. Additionally, the Bank paid off a $750,000 maturing five year fixed-rate advance. During the year ended December 31, 2013, the Bank added $10.0 million and $5.0 million fixed-rate advances maturing in 2017 and 2015 at rates of 0.87% and 0.41%, respectively.

 

At December 31, 2015 and 2014, $55.6 million or 100% and $74.7 million or 100%, respectively, of the Bank’s long-term debt was fixed for rate and term, as the conversion optionality of the advances have either been exercised or expired. The contractual maturities of long-term debt were as follows at December 31, 2015 and 2014:

 

 

 

The Bank also has daily advances outstanding and short-term advances with terms of less than one year, which are classified as short-term borrowings. Daily advances are repayable at the Bank’s option at any time and are re-priced daily. Daily advances were $7.0 million at December 31, 2015. There were no daily advances outstanding at December 31, 2014. The Bank had short-term advances of $29.0 million and $2.0 million, respectively, at December 31, 2015 and 2014.

 

Under the terms of an Agreement for Advances and Security Agreement with Blanket Floating Lien (the “Agreement”), the Bank maintains collateral with the FHLB consisting of one-to four-family residential first mortgage loans, second mortgage loans, commercial real estate and securities. The Agreement limits total advances to 30% of assets, which were $332.8 million and $312.2 million at December 31, 2015 and 2014, respectively.

 

At December 31, 2015, $365.4 million of loans and securities were pledged or in safekeeping at the FHLB. Loans and securities are subject to collateral eligibility rules and are adjusted for market value and collateral value factors to arrive at lendable collateral values. At December 31, 2015, FHLB lendable collateral was valued at $277.2 million. At December 31, 2015, the Bank had total lendable pledged collateral at the FHLB of $165.8 million of which $74.2 million was available to borrow in addition to outstanding advances of $91.6 million. Unpledged lendable collateral was $111.4 million, bringing total available borrowing capacity to $185.6 million at December 31, 2015.

 

At December 31, 2014, $345.0 million of loans and securities were pledged or in safekeeping at the FHLB. Loans and securities are subject to collateral eligibility rules and are adjusted for market value and collateral value factors to arrive at lendable collateral values. At December 31, 2014, FHLB lendable collateral was valued at $265.3 million. At December 31, 2014, the Bank had total lendable pledged collateral at the FHLB of $188.0 million of which $111.3 million was available to borrow in addition to outstanding advances of $76.7 million. Unpledged lendable collateral was $77.3 million, bringing total available borrowing capacity to $188.6 million at December 31, 2014.

Additionally, the Bank has established a short-term credit facility with the Federal Reserve Bank of Richmond under its Borrower in Custody program. The Bank had segregated collateral sufficient to draw $7.2 million and $10.8 million under this agreement at December 31, 2015 and 2014, respectively. In addition, the Bank has established short-term credit facilities with other commercial banks totaling $12.0 million at December 31, 2015 and 2014. No amounts were outstanding under the Borrower in Custody or commercial lines at December 31, 2015 and 2014.