NOTE 7 — LONG-TERM BORROWINGS

Long-term borrowings are comprised of advances from the FHLB. Under terms of a blanket agreement, collateral for the FHLB loans is certain qualifying assets of the Bank. The qualifying assets are real estate mortgages and certain investment securities.

A schedule of long-term borrowings by maturity as of December 31, 2025 and 2024 follows:

(Dollars in thousands)

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The Corporation’s long-term borrowings consist of notes at fixed interest rates. Upon any default, under the terms of a master agreement, the FHLB may declare all indebtedness of the Corporation immediately due. In addition, the FHLB shall not be required to fund advances under any outstanding commitments.

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Irrevocable standby letters of credit may be issued to a customer/beneficiary by the FHLB on the Corporation’s behalf in order to secure public/municipal unit deposits, provide credit enhancement to certain transaction types, or to support payment obligations to third parties. These irrevocable standby letters of credit are supported by an irrevocable and independent guarantee by the FHLB for the Corporation’s pledging obligation to secure public/municipal unit deposits which eliminates the need for the Corporation to pledge collateral in the amount necessary to secure these funds. There were no irrevocable standby letters of credit which could be drawn on through the FHLB’s close of business on December 31, 2025 or 2024. Any irrevocable standby letters of credit are issued as necessary in an amount appropriate to secure specific public/municipal unit deposits.

Under terms of a blanket agreement, in order to retain borrowing capacity with the FHLB, the Corporation must adhere to certain collateralization requirements and must maintain member eligibility with the FHLB. Collateral for the FHLB loans and letters of credit consists of certain qualifying assets of the Bank. Principal qualifying assets are certain real estate mortgages and investment securities. Failure to abide by the covenants of the blanket agreement could result in the FHLB restricting further advances to the Corporation, the imposition of penalties, or the required acceleration of payment on the Corporation’s outstanding loans. As of December 31, 2025 and 2024, the Corporation was in compliance with the terms of its agreement with the FHLB.

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As of December 31, 2025, loans of $764,415,000 were pledged to the FHLB which resulted in an FHLB maximum borrowing capacity of $533,434,000. As of December 31, 2025, no securities were pledged as collateral to the FHLB to secure FHLB loans and letters of credit.