| BORROWINGS |
7. 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 September 30, 2020 and December 31, 2019 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
2020 |
|
2019 |
|
Securities sold under agreements to repurchase |
|
$ |
91,086 |
|
$ |
66,053 |
|
Federal Funds Purchased |
|
|
25,000 |
|
|
— |
|
FHLB Advances |
|
|
150,200 |
|
|
370,200 |
|
Total short-term borrowings |
|
$ |
266,286 |
|
$ |
436,253 |
|
|
|
|
|
|
|
|
|
Average outstanding balance during the period |
|
$ |
223,068 |
|
$ |
673,116 |
|
Average interest rate (during the period) |
|
|
0.96 |
% |
|
2.30 |
% |
Average interest rate at end of period |
|
|
0.25 |
% |
|
1.52 |
% |
The Bank maintains federal funds lines with several correspondent banks, the remaining available balance was $942.0 million and $682.0 million at September 30, 2020 and December 31, 2019, respectively. The Company maintains an alternate line of credit at a correspondent bank, which had an available balance of $25.0 million at both September 30, 2020 and December 31, 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 such covenants as of September 30, 2020. Additionally, the Company had a collateral dependent line of credit with the FHLB of up to $5.9 billion and $5.2 billion at September 30, 2020 and December 31, 2019, respectively.
Long-term Borrowings
In connection with several previous bank acquisitions, the Company issued and acquired trust preferred capital notes of $58.5 million and $87.0 million, respectively. 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 $14.3 million at September 30, 2020.
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.
During the second quarter of 2020, in connection with the loans originated as part of the PPP, the Company borrowed under the Federal Reserve’s PPPLF. Under the terms of the PPPLF, the Company can borrow funds which are secured by the Company’s PPP loans, and the interest rate on these borrowings is fixed.
Total long-term borrowings consist of the following as of September 30, 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 |
% |
2.98 |
% |
6/17/2034 |
|
$ |
696 |
Trust Preferred Capital Note - Statutory Trust II |
|
|
36,000 |
|
1.40 |
% |
1.63 |
% |
6/15/2036 |
|
|
1,114 |
VFG Limited Liability Trust I Indenture |
|
|
20,000 |
|
2.73 |
% |
2.96 |
% |
3/18/2034 |
|
|
619 |
FNB Statutory Trust II Indenture |
|
|
12,000 |
|
3.10 |
% |
3.33 |
% |
6/26/2033 |
|
|
372 |
Gateway Capital Statutory Trust I |
|
|
8,000 |
|
3.10 |
% |
3.33 |
% |
9/17/2033 |
|
|
248 |
Gateway Capital Statutory Trust II |
|
|
7,000 |
|
2.65 |
% |
2.88 |
% |
6/17/2034 |
|
|
217 |
Gateway Capital Statutory Trust III |
|
|
15,000 |
|
1.50 |
% |
1.73 |
% |
5/30/2036 |
|
|
464 |
Gateway Capital Statutory Trust IV |
|
|
25,000 |
|
1.55 |
% |
1.78 |
% |
7/30/2037 |
|
|
774 |
MFC Capital Trust II |
|
|
5,000 |
|
2.85 |
% |
3.08 |
% |
1/23/2034 |
|
|
155 |
Total Trust Preferred Capital Securities |
|
$ |
150,500 |
|
|
|
|
|
|
|
$ |
4,659 |
FHLB Advances(3) |
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Flipper |
|
$ |
50,000 |
|
- |
% |
0.85 |
% |
8/17/2029 |
|
|
|
Convertible Flipper |
|
|
150,000 |
|
(0.75) |
% |
- |
% |
5/22/2029 |
|
|
|
Convertible Flipper |
|
|
50,000 |
|
(0.75) |
% |
- |
% |
5/30/2029 |
|
|
|
Convertible Flipper |
|
|
100,000 |
|
(0.75) |
% |
- |
% |
6/21/2029 |
|
|
|
Fixed Rate Convertible |
|
|
200,000 |
|
- |
% |
1.78 |
% |
10/26/2028 |
|
|
|
Fixed Rate Credit |
|
|
10,000 |
|
- |
% |
1.54 |
% |
10/2/2020 |
|
|
|
Total FHLB Advances |
|
$ |
560,000 |
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
PPPLF Advances(7) |
|
|
|
|
|
|
|
|
|
|
|
|
PPPLF Advance 4/8/2022 |
|
$ |
55,422 |
|
- |
% |
0.35 |
% |
4/8/2022 |
|
|
|
PPPLF Advance 4/11/2022 |
|
|
134,523 |
|
- |
% |
0.35 |
% |
4/11/2022 |
|
|
|
Total PPPLF Advances |
|
$ |
189,945 |
|
|
|
|
|
|
|
|
|
Fair Value Premium (Discount)(8) |
|
|
(15,568) |
|
|
|
|
|
|
|
|
|
Investment in Trust Preferred Capital Securities |
|
|
4,659 |
|
|
|
|
|
|
|
|
|
Total Long-term Borrowings |
|
$ |
1,048,036 |
|
|
|
|
|
|
|
|
|
| (1) |
Rate as of September 30, 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) |
Convertible Flippers have interest rate floors of 0%.
|
| (4) |
The remaining issuance discount as of September 30, 2020 is $1.2 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) |
The Company’s available borrowing capacity under the PPPLF as of September 30, 2020 was $1.4 billion.
|
| (8) |
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 September 30, 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 |
|
PPPLF |
|
FHLB |
|
Premium |
|
Long-term |
|
|
Notes |
|
Debt |
|
Advances |
|
Advances |
|
(Discount) (1) |
|
Borrowings |
For the remaining three months of 2020 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
10,000 |
|
$ |
(238) |
|
$ |
9,762 |
2021 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,008) |
|
|
(1,008) |
2022 |
|
|
— |
|
|
— |
|
|
189,945 |
|
|
— |
|
|
(1,030) |
|
|
188,915 |
2023 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,053) |
|
|
(1,053) |
2024 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,078) |
|
|
(1,078) |
Thereafter |
|
|
155,159 |
|
|
158,500 |
|
|
— |
|
|
550,000 |
|
|
(11,161) |
|
|
852,498 |
Total long-term borrowings |
|
$ |
155,159 |
|
$ |
158,500 |
|
$ |
189,945 |
|
$ |
560,000 |
|
$ |
(15,568) |
|
$ |
1,048,036 |
| (1) |
Includes discount on issued subordinated notes. |
|