| BORROWINGS |
9. BORROWINGS
Short-term Borrowings
The Company classifies all borrowings that will mature within a year from the date on which the Company enters into them as short-term borrowings. Total short-term borrowings consist primarily of advances from the FHLB, federal funds purchased (which are secured overnight borrowings from other financial institutions), and other lines of credit. Also included in total short-term borrowings are securities sold under agreements to repurchase, which are secured transactions with customers and generally mature the day following the date sold.
Total short-term borrowings consist of the following as of December 31, 2020 and 2019 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
2020 |
|
2019 |
|
Securities sold under agreements to repurchase |
|
$ |
100,888 |
|
$ |
66,053 |
|
Federal Funds Purchased |
|
|
150,000 |
|
|
— |
|
FHLB Advances |
|
|
100,000 |
|
|
370,200 |
|
Total short-term borrowings |
|
$ |
350,888 |
|
$ |
436,253 |
|
|
|
|
|
|
|
|
|
Average outstanding balance during the period |
|
$ |
213,932 |
|
$ |
673,116 |
|
Average interest rate (during the period) |
|
|
0.79 |
% |
|
2.30 |
% |
Average interest rate at end of period |
|
|
0.13 |
% |
|
1.52 |
% |
The Bank maintains federal funds lines with several correspondent banks; the remaining available balance was $847.0 million and $682.0 million at December 31, 2020 and 2019 respectively. The Company maintains an alternate line of credit at a correspondent bank; the available balance was $25.0 million at both December 31, 2020 and 2019. The Company has certain restrictive covenants related to certain asset quality, capital, and profitability metrics associated with these lines and is considered to be in compliance with these covenants as of December 31, 2020 and 2019. Additionally, the Company had a collateral dependent line of credit with the FHLB of up to $6.0 billion and $5.2 billion at December 31, 2020 and 2019, respectively.
Long-term Borrowings
In connection with several previous bank acquisitions, the Company issued $58.5 million and acquired $87.0 million of trust preferred capital notes. Most recently, in connection with the acquisition of Access on February 1, 2019, the Company acquired additional trust preferred capital notes totaling $5.0 million. The remaining fair value discount on all acquired trust preferred capital notes was $14.1 million and $14.9 million at December 31, 2020 and 2019, respectively.
On August 23, 2012, the Company modified its fixed rate FHLB advances to floating rate advances, which resulted in reducing the Company’s FHLB borrowing costs. In connection with this modification, the Company incurred a prepayment penalty of $19.6 million on the original advances which was deferred and to be amortized over the term of the modified advances using the effective rate method. On August 29, 2019, the Company repaid the floating rate FHLB advances. In connection with this repayment, the remaining unamortized prepayment penalty of $7.4 million was immediately recognized as a component of noninterest expense during the third quarter of 2019.
In response to the current rate environment, the Company prepaid $550.0 million of long-term FHLB advances throughout 2020, which resulted in prepayment penalties of $31.2 million. In addition, on November 30, 2020, the Company redeemed $8.5 million in subordinated debt that was originally acquired as part of the Xenith acquisition.
Total long-term borrowings consist of the following as of December 31, 2020 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spread to |
|
|
|
|
|
|
|
|
|
Principal |
|
3-Month LIBOR |
|
Rate (1) |
|
Maturity |
|
Investment (2) |
Trust Preferred Capital Securities |
|
|
|
|
|
|
|
|
|
|
|
|
Trust Preferred Capital Note - Statutory Trust I |
|
$ |
22,500 |
|
2.75 |
% |
2.99 |
% |
6/17/2034 |
|
$ |
696 |
Trust Preferred Capital Note - Statutory Trust II |
|
|
36,000 |
|
1.40 |
% |
1.64 |
% |
6/15/2036 |
|
|
1,114 |
VFG Limited Liability Trust I Indenture |
|
|
20,000 |
|
2.73 |
% |
2.97 |
% |
3/18/2034 |
|
|
619 |
FNB Statutory Trust II Indenture |
|
|
12,000 |
|
3.10 |
% |
3.34 |
% |
6/26/2033 |
|
|
372 |
Gateway Capital Statutory Trust I |
|
|
8,000 |
|
3.10 |
% |
3.34 |
% |
9/17/2033 |
|
|
248 |
Gateway Capital Statutory Trust II |
|
|
7,000 |
|
2.65 |
% |
2.89 |
% |
6/17/2034 |
|
|
217 |
Gateway Capital Statutory Trust III |
|
|
15,000 |
|
1.50 |
% |
1.74 |
% |
5/30/2036 |
|
|
464 |
Gateway Capital Statutory Trust IV |
|
|
25,000 |
|
1.55 |
% |
1.79 |
% |
7/30/2037 |
|
|
774 |
MFC Capital Trust II |
|
|
5,000 |
|
2.85 |
% |
3.09 |
% |
1/23/2034 |
|
|
155 |
Total Trust Preferred Capital Securities |
|
$ |
150,500 |
|
|
|
|
|
|
|
$ |
4,659 |
FHLB Advances |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate Convertible |
|
|
200,000 |
|
- |
% |
1.78% |
% |
10/26/2028 |
|
|
|
Total FHLB Advances |
|
$ |
200,000 |
|
|
|
|
|
|
|
|
|
Subordinated Debt(3)(4) |
|
|
|
|
|
|
|
|
|
|
|
|
2026 Subordinated Debt(5) |
|
|
150,000 |
|
- |
% |
5.00 |
% |
12/15/2026 |
|
|
|
Total Subordinated Debt |
|
$ |
150,000 |
|
|
|
|
|
|
|
|
|
Fair Value Premium (Discount)(6) |
|
|
(15,330) |
|
|
|
|
|
|
|
|
|
Investment in Trust Preferred Capital Securities |
|
|
4,659 |
|
|
|
|
|
|
|
|
|
Total Long-term Borrowings |
|
$ |
489,829 |
|
|
|
|
|
|
|
|
|
| (1) |
Rate as of December 31, 2020. Calculated using non-rounded numbers. |
| (2) |
The total of the trust preferred capital securities and investments in the respective trusts represents the principal asset of the Company’s junior subordinated debt securities with like maturities and like interest rates to the capital securities. The Company’s investment in the trusts is reported in "Other Assets" on the Company’s Consolidated Balance Sheets. |
| (3) |
The remaining issuance discount as of December 31, 2020 is $1.2 million.
|
| (4) |
Subordinated notes qualify as Tier 2 capital for the Company for regulatory purposes. |
| (5) |
Fixed-to-floating rate notes. On December 15, 2021, the interest rate will change to a floating rate of LIBOR plus 3.175% through its maturity date.
|
| (6) |
Includes discount on issued subordinated notes. |
Total long-term borrowings consist of the following as of December 31, 2019 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spread to |
|
|
|
|
|
|
|
|
|
Principal |
|
3-Month LIBOR |
|
Rate (1) |
|
Maturity |
|
Investment (2) |
Trust Preferred Capital Securities |
|
|
|
|
|
|
|
|
|
|
|
|
Trust Preferred Capital Note - Statutory Trust I |
|
$ |
22,500 |
|
2.75 |
% |
4.66 |
% |
6/17/2034 |
|
$ |
696 |
Trust Preferred Capital Note - Statutory Trust II |
|
|
36,000 |
|
1.40 |
% |
3.31 |
% |
6/15/2036 |
|
|
1,114 |
VFG Limited Liability Trust I Indenture |
|
|
20,000 |
|
2.73 |
% |
4.64 |
% |
3/18/2034 |
|
|
619 |
FNB Statutory Trust II Indenture |
|
|
12,000 |
|
3.10 |
% |
5.01 |
% |
6/26/2033 |
|
|
372 |
Gateway Capital Statutory Trust I |
|
|
8,000 |
|
3.10 |
% |
5.01 |
% |
9/17/2033 |
|
|
248 |
Gateway Capital Statutory Trust II |
|
|
7,000 |
|
2.65 |
% |
4.56 |
% |
6/17/2034 |
|
|
217 |
Gateway Capital Statutory Trust III |
|
|
15,000 |
|
1.50 |
% |
3.41 |
% |
5/30/2036 |
|
|
464 |
Gateway Capital Statutory Trust IV |
|
|
25,000 |
|
1.55 |
% |
3.46 |
% |
7/30/2037 |
|
|
774 |
MFC Capital Trust II |
|
|
5,000 |
|
2.85 |
% |
4.76 |
% |
1/23/2034 |
|
|
155 |
Total Trust Preferred Capital Securities |
|
$ |
150,500 |
|
|
|
|
|
|
|
$ |
4,659 |
FHLB Advances(3) |
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Flipper |
|
$ |
50,000 |
|
(0.75) |
% |
1.16 |
% |
8/17/2029 |
|
|
|
Convertible Flipper |
|
|
200,000 |
|
(0.50) |
% |
1.41 |
% |
5/15/2024 |
|
|
|
Convertible Flipper |
|
|
150,000 |
|
(0.75) |
% |
1.16 |
% |
5/22/2029 |
|
|
|
Convertible Flipper |
|
|
50,000 |
|
(0.75) |
% |
1.16 |
% |
5/30/2029 |
|
|
|
Convertible Flipper |
|
|
100,000 |
|
(0.75) |
% |
1.16 |
% |
6/21/2029 |
|
|
|
Fixed Rate Convertible |
|
|
200,000 |
|
- |
% |
1.78 |
% |
10/26/2028 |
|
|
|
Fixed Rate Hybrid |
|
|
20,000 |
|
- |
% |
1.58 |
% |
5/18/2020 |
|
|
|
Fixed Rate Credit |
|
|
10,000 |
|
- |
% |
1.54 |
% |
10/2/2020 |
|
|
|
Total FHLB Advances |
|
$ |
780,000 |
|
|
|
|
|
|
|
|
|
Subordinated Debt(4)(5) |
|
|
|
|
|
|
|
|
|
|
|
|
2025 Subordinated Debt |
|
$ |
8,500 |
|
- |
% |
6.75 |
% |
6/30/2025 |
|
|
|
2026 Subordinated Debt(6) |
|
|
150,000 |
|
- |
% |
5.00 |
% |
12/15/2026 |
|
|
|
Total Subordinated Debt |
|
$ |
158,500 |
|
|
|
|
|
|
|
|
|
Fair Value Premium (Discount)(7) |
|
|
(16,164) |
|
|
|
|
|
|
|
|
|
Investment in Trust Preferred Capital Securities |
|
|
4,659 |
|
|
|
|
|
|
|
|
|
Total Long-term Borrowings |
|
$ |
1,077,495 |
|
|
|
|
|
|
|
|
|
| (1) |
Rate as of December 31, 2019. Calculated using non-rounded numbers. |
| (2) |
The total of the trust preferred capital securities and investments in the respective trusts represents the principal asset of the Company’s junior subordinated debt securities with like maturities and like interest rates to the capital securities. The Company’s investment in the trusts is reported in "Other Assets" on the Company’s Consolidated Balance Sheets. |
| (3) |
Convertible Flippers have interest rate floors of 0%.
|
| (4) |
The remaining issuance discount as of December 31, 2019 is $1.4 million.
|
| (5) |
Subordinated notes qualify as Tier 2 capital for the Company for regulatory purposes. |
| (6) |
Fixed-to-floating rate notes. On December 15, 2021, the interest rate will change to a floating rate of LIBOR plus 3.175% through its maturity date.
|
| (7) |
Includes discount on issued subordinated notes. |
As of December 31, 2020, the contractual maturities of long-term debt are as follows for the years ending (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust |
|
|
|
|
|
|
|
|
|
|
Preferred |
|
|
|
|
|
Fair Value |
|
Total |
|
|
Capital |
|
Subordinated |
|
FHLB |
|
Premium |
|
Long-term |
|
|
Notes |
|
Debt |
|
Advances |
|
(Discount) (1) |
|
Borrowings |
2021 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
(1,008) |
|
$ |
(1,008) |
2022 |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,030) |
|
|
(1,030) |
2023 |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,053) |
|
|
(1,053) |
2024 |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,078) |
|
|
(1,078) |
2025 |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,102) |
|
|
(1,102) |
Thereafter |
|
|
155,159 |
|
|
150,000 |
|
|
200,000 |
|
|
(10,059) |
|
|
495,100 |
Total long-term borrowings |
|
$ |
155,159 |
|
$ |
150,000 |
|
$ |
200,000 |
|
$ |
(15,330) |
|
$ |
489,829 |
|
(1) |
Includes discount on issued subordinated notes. |
|