Note 8. Warehouse Lines of Credit

As a means of financing mortgage loans held for sale, the Company utilizes line of credit agreements for the purpose of temporarily warehousing mortgage loans pending the sale of the loans.

The Company maintained a warehousing credit and security agreement with a bank whereby the Company borrowed funds to finance the origination of eligible mortgage loans. The Company paid interest equal to the greater of Prime Rate less 0.75% or 3.85% per annum. The Prime Rate as of December 31, 2021 was 3.25%. The maximum funding limit of these loans was $15.0 million at December 31, 2021. At December 31, 2021, there was no outstanding balance on this warehouse line. The agreement expired in October 2021.

The Company maintains a master loan warehouse agreement with a bank whereby the Company borrows funds to finance the origination or purchase of eligible loans. The Company pays interest equal to the greater of the mortgage interest rate of the underlying loan or 3.625%. The maximum funding of these loans was $15.0 million at December 31, 2021. At December 31, 2021, the outstanding balance on this warehouse line was approximately $4.3 million. The credit agreement requires the Company to maintain at least $1.0 million in liquid assets, a tangible net worth of $2.0 million and a debt-to-tangible net worth ratio of 12 to 1. The agreement expires in July 2022.

The Company maintains a mortgage participation purchase agreement with a bank whereby the Company borrows funds to finance the origination or purchase of eligible loans. The Company pays interest equal to the greater of the mortgage interest rate of the underlying loan or 3.5%. The maximum funding of these loans was $25.0 million at December 31, 2021. At December 31, 2021, the outstanding balance on this warehouse line was approximately $3.1 million. The credit agreement requires the Company to maintain at least $1.0 million in liquid assets, a tangible net worth of $2.5 million, a debt-to-tangible net worth ratio of 15 to 1 and a minimum profitability of $1.00 beginning as of the second quarter 2022. The agreement expires in April 2023.

The Company maintains a warehousing credit and security agreement with a bank whereby the Company borrows funds to finance the origination of eligible mortgage loans. The Company pays interest equal to the daily LIBOR rate plus 2.00% or 3.5% per annum. The Daily Adjusting LIBOR rate plus 2.00% as of December 31, 2021 was 2.09%. The maximum funding limit of these loans was $15.0 million at December 31, 2021. At December 31, 2021, the outstanding balance on this warehouse line was approximately $2.2 million. The credit agreement requires the Company to maintain at least $1.0 million in liquid assets, a tangible net worth of $3.0 million, a debt-to-tangible net worth ratio of 15 to 1 and a minimum profitability of $1.00 beginning as of July 31, 2022. The agreement expires in April 2023.

As of December 31, 2021, the Company was in compliance with all debt covenants.

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