Borrowings |
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| Borrowings | Note 7 – Borrowings The following table is a summary of borrowings as of June 30, 2026, and December 31, 2025. Junior subordinated debentures are discussed in more detail in Note 8:
1 See Note 8: Junior Subordinated Debentures. 2 Long-term FHLBC advance, net of purchase accounting adjustment. The Company enters into deposit sweep transactions where the transaction amounts are secured by pledged securities. These transactions consistently mature overnight from the transaction date and are governed by sweep repurchase agreements. All sweep repurchase agreements are treated as financings secured by U.S. government agencies and collateralized mortgage-backed securities, and had a carrying amount of $23.2 million at June 30, 2026, and $23.8 million at December 31, 2025. The average amount and weighted average rate for the quarter ended June 30, 2026 was $21.3 million and 0.79% with the maximum month-end amount recorded at $23.2 million at June 30, 2026. The average amount and weighted average rate for the quarter ended June 30, 2025 was $35.4 million and 0.71% with the maximum month-end amount recorded at $47.3 million at June 30, 2025. The fair value of the pledged collateral was $73.4 million at June 30, 2026, and $74.0 million at December 31, 2025. At June 30, 2026, there were no customers with secured balances exceeding 10% of stockholders’ equity.
The Company’s borrowings at the FHLBC require the Bank to be a member and invest in the stock of the FHLBC. Total borrowings are generally limited to the lower of 35% of total assets or the book value of eligible pledged assets after application of FHLBC margins and collateral valuation adjustments. The outstanding balance of our short-term FHLBC advances was $375.0 million as of June 30, 2026, and $215.0 million as of December 31, 2025. The outstanding balance of our long-term FHLBC advances, net of purchase accounting adjustments, were $14.9 million as of June 30, 2026, and $14.8 million as of December 31, 2025. FHLBC stock held at June 30, 2026, was valued at $19.4 million, and any potential FHLBC advances were collateralized by loans and securities with a principal balance of $1.43 billion, which carried a FHLBC-calculated combined collateral value of $938.6 million. The Company had excess collateral of $547.3 million available to secure borrowings at June 30, 2026. In the second quarter of 2021, we issued $60.0 million in aggregate principal amount of our 3.50% Fixed-to-Floating Rate Subordinated Notes due April 15, 2031 (the “Notes”). The Company used the net proceeds from the offering for general corporate purposes. The Notes bear interest at a fixed annual rate of 3.50%, from and including the date of issuance to but excluding April 15, 2026, payable semi-annually in arrears. From and including April 15, 2026, to, but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an interest rate per annum equal to Term Secured Overnight Financing Rate (“SOFR”) plus 273 basis points, payable quarterly in arrears. On April 15, 2026, we redeemed $30.0 million of the total $60.0 million subordinated debt held, which was the same date this debt changed from a 3.50% fixed rate to Term SOFR plus 273 basis points. The rate in effect at June 30, 2026 is 6.41%. As of June 30, 2026, we had $29.8 million of subordinated debentures outstanding, and as of December 31, 2025, we had $59.6 million of subordinated debentures outstanding, net of deferred issuance cost. The Company also has an undrawn line of credit of $30.0 million with a correspondent bank to be used for short-term funding needs; advances under this line can be outstanding up to 360 days from the date of issuance. |
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