Quarterly report pursuant to Section 13 or 15(d)

BORROWINGS

v3.7.0.1
BORROWINGS
3 Months Ended
Mar. 31, 2017
Debt Disclosure [Abstract]  
BORROWINGS
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 March 31, 2017 and December 31, 2016 (dollars in thousands):

 
March 31,
2017
 
December 31,
2016
Securities sold under agreements to repurchase
$
44,587

 
$
59,281

Other short-term borrowings
522,500

 
517,500

Total short-term borrowings
$
567,087

 
$
576,781

 
 
 
 
Maximum month-end outstanding balance
$
634,750

 
$
678,262

Average outstanding balance during the period
573,116

 
590,074

Average interest rate (year-to-date)
0.67
%
 
0.49
%
Average interest rate at end of period
0.71
%
 
0.60
%
 
 
 
 
Other short-term borrowings:
 

 
 

FHLB
522,500

 
517,500

Other lines of credit

 


 
The Bank maintains federal funds lines with several correspondent banks; the remaining available balance was $175.0 million at both March 31, 2017 and December 31, 2016. The Company maintains an alternate line of credit at a correspondent bank, the available balance was $25.0 million at both March 31, 2017 and December 31, 2016. 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. Additionally, the Company had a collateral dependent line of credit with the FHLB of up to $2.5 billion and $2.4 billion at March 31, 2017 and December 31, 2016, respectively.

Long-term Borrowings
 
In connection with two bank acquisitions prior to 2006, the Company issued trust preferred capital notes to fund the cash portion of those acquisitions, collectively totaling $58.5 million. In connection with the acquisition of StellarOne, the Company acquired trust preferred capital notes totaling $32.0 million with a remaining fair value discount of $6.7 million at March 31, 2017. The trust preferred capital notes currently qualify for Tier 1 capital of the Company for regulatory purposes.

 
Trust
Preferred
Capital
Securities(1)
 
Investment(1)
 
Spread to 
3-Month LIBOR
 
Rate
 
Maturity
Trust Preferred Capital Note - Statutory Trust I
$
22,500,000

 
$
696,000

 
2.75
%
 
3.90
%
 
6/17/2034
Trust Preferred Capital Note - Statutory Trust II
36,000,000

 
1,114,000

 
1.40
%
 
2.55
%
 
6/15/2036
VFG Limited Liability Trust I Indenture
20,000,000

 
619,000

 
2.73
%
 
3.88
%
 
3/18/2034
FNB Statutory Trust II Indenture
12,000,000

 
372,000

 
3.10
%
 
4.25
%
 
6/26/2033
Total
$
90,500,000

 
$
2,801,000

 
 

 
 

 
 
 
(1)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" within the Consolidated Balance Sheets.
 
During the fourth quarter of 2016, the Company issued $150.0 million of fixed-to-floating rate subordinated notes with an initial fixed interest rate of 5.00% through December 15, 2021. The interest rate then changes to a floating rate of LIBOR plus 3.175% through its maturity date in December 15, 2026. At March 31, 2017 and December 31, 2016 the carrying value of the subordinated debt was $150.0 million, with a remaining discount of $2.0 million, 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 is included as a component of long-term borrowings on the Company’s Consolidated Balance Sheets. In accordance with ASC 470-50, Modifications and Extinguishments, the Company is amortizing this prepayment penalty over the term of the modified advances using the effective rate method. The amortization expense is included as a component of interest expense on long-term borrowings on the Company’s Consolidated Statements of Income. Amortization expense for the three months ended March 31, 2017 and 2016 was $470,000 and $463,000, respectively.
 
In connection with the StellarOne acquisition, the Company assumed $70.0 million in long-term borrowings with the FHLB of which there is $20.0 million remaining at March 31, 2017 that had a remaining fair value premium of $448,000.
 
As of March 31, 2017, the Company had long-term advances from the FHLB consisting of the following (dollars in thousands):
 
Long-term Type
 
Spread to
3-Month LIBOR
 
Interest Rate (1)
 
Maturity Date
 
Advance Amount
Adjustable Rate Credit
 
0.44
%
 
1.59
%
 
8/23/2022
 
$
55,000

Adjustable Rate Credit
 
0.45
%
 
1.60
%
 
11/23/2022
 
65,000

Adjustable Rate Credit
 
0.45
%
 
1.60
%
 
11/23/2022
 
10,000

Adjustable Rate Credit
 
0.45
%
 
1.60
%
 
11/23/2022
 
10,000

Fixed Rate
 

 
3.62
%
 
11/28/2017
 
10,000

Fixed Rate
 

 
3.75
%
 
7/30/2018
 
5,000

Fixed Rate
 

 
3.97
%
 
7/30/2018
 
5,000

Fixed Rate Hybrid
 

 
0.99
%
 
10/19/2018
 
30,000

 
 
 

 
 

 
 
 
$
190,000

(1) Interest rates calculated using non-rounded numbers.
 
 
 
 
 
 
 
 
 
As of December 31, 2016, the Company had long-term advances from the FHLB consisting of the following (dollars in thousands):
 
Long-term Type
 
Spread to
3-Month LIBOR
 
Interest Rate (1)
 
Maturity Date
 
Advance Amount
 
 
 
 
 
 
 
 
 
Adjustable Rate Credit
 
0.44
%
 
1.44
%
 
8/23/2022
 
$
55,000

Adjustable Rate Credit
 
0.45
%
 
1.45
%
 
11/23/2022
 
65,000

Adjustable Rate Credit
 
0.45
%
 
1.45
%
 
11/23/2022
 
10,000

Adjustable Rate Credit
 
0.45
%
 
1.45
%
 
11/23/2022
 
10,000

Fixed Rate
 

 
3.62
%
 
11/28/2017
 
10,000

Fixed Rate
 

 
3.75
%
 
7/30/2018
 
5,000

Fixed Rate
 

 
3.97
%
 
7/30/2018
 
5,000

Fixed Rate Hybrid
 

 
0.99
%
 
10/19/2018
 
30,000

 
 
 

 
 

 
 
 
$
190,000

(1) Interest rates calculated using non-rounded numbers.
 
 
 
 
 
 
 
 


For information on the carrying value of loans and securities pledged as collateral on FHLB advances as of March 31, 2017 and December 31, 2016, refer to Note 6 "Commitments and Contingencies".
 
As of March 31, 2017, the contractual maturities of long-term debt are as follows for the years ending (dollars in thousands):
 
 
Trust
Preferred
Capital
Notes
 
Subordinated
Debt
 
FHLB
Advances
 
Fair Value 
Premium
(Discount)
 
Prepayment
Penalty
 
Total Long-term
Borrowings
For the remaining nine months of 2017
$

 
$

 
$
10,000

 
$
(28
)
 
$
(1,452
)
 
$
8,520

2018

 

 
40,000

 
(343
)
 
(1,970
)
 
37,687

2019

 

 

 
(486
)
 
(2,018
)
 
(2,504
)
2020

 

 

 
(501
)
 
(2,074
)
 
(2,575
)
2021

 

 

 
(516
)
 
(2,119
)
 
(2,635
)
Thereafter
93,301

 
150,000

 
140,000

 
(6,308
)
 
(1,707
)
 
375,286

Total Long-term borrowings
$
93,301

 
$
150,000

 
$
190,000

 
$
(8,182
)
 
$
(11,340
)
 
$
413,779