Quarterly report pursuant to Section 13 or 15(d)

BORROWINGS

v3.22.2.2
BORROWINGS
9 Months Ended
Sep. 30, 2022
Borrowings [Abstract]  
BORROWINGS

6. 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 securities sold under agreements to repurchase, which are secured transactions with customers and generally mature the day following the date sold, advances from the FHLB, federal funds purchased (which are secured overnight borrowings from other financial institutions), and other lines of credit.

Total short-term borrowings consist of the following as of September 30, 2022 and December 31, 2021 (dollars in thousands):

    

September 30, 

December 31, 

 

2022

2021

 

Securities sold under agreements to repurchase

$

146,182

$

117,870

FHLB Advances

 

133,800

 

Total short-term borrowings

$

279,982

$

117,870

Average outstanding balance during the period

$

262,782

$

113,030

Average interest rate during the period

 

0.92

%  

 

0.10

%

Average interest rate at end of period

 

1.54

%  

 

0.07

%

The Bank maintains federal funds lines with several correspondent banks, the available balance was $1.0 billion and $997.0 million at September 30, 2022 and December 31, 2021 respectively. The Company maintains an alternate line of credit at a correspondent bank; the available balance was $25.0 million at both September 30, 2022 and December 31, 2021. The Company has certain restrictive covenants related to certain asset quality, capital, and profitability metrics associated with these lines and is in compliance with these covenants as of September 30, 2022 and December 31, 2021. Additionally, the Company had a collateral dependent line of credit with the FHLB of up to $5.9 billion and $6.0 billion at September 30, 2022 and December 31, 2021 respectively.

Long-term Borrowings

During the fourth quarter of 2021, the Company issued the 2031 Notes. The 2031 Notes were sold at par resulting in net proceeds, after underwriting discounts and offering expenses, of approximately $246.9 million. The Company used a portion of the net proceeds from the 2031 Notes issuance to repay its outstanding $150 million of 5.00% fixed-to-floating rate subordinated notes that were due in 2026.

In connection with several previous bank acquisitions, the Company issued $58.5 million and acquired $92.0 million of trust preferred capital notes. The remaining fair value discount on all acquired trust preferred capital notes was $12.7 million and $13.3 million at September 30, 2022 and December 31, 2021, respectively.

Total long-term borrowings consist of the following as of September 30, 2022 (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

%  

6.50

%  

6/17/2034

$

696

Trust Preferred Capital Note - Statutory Trust II

 

36,000

 

1.40

%  

5.15

%  

6/15/2036

 

1,114

VFG Limited Liability Trust I Indenture

 

20,000

 

2.73

%  

6.48

%  

3/18/2034

 

619

FNB Statutory Trust II Indenture

 

12,000

 

3.10

%  

6.85

%  

6/26/2033

 

372

Gateway Capital Statutory Trust I

 

8,000

 

3.10

%  

6.85

%  

9/17/2033

 

248

Gateway Capital Statutory Trust II

 

7,000

 

2.65

%  

6.40

%  

6/17/2034

 

217

Gateway Capital Statutory Trust III

 

15,000

 

1.50

%  

5.25

%  

5/30/2036

 

464

Gateway Capital Statutory Trust IV

 

25,000

 

1.55

%  

5.30

%  

7/30/2037

 

774

MFC Capital Trust II

 

5,000

 

2.85

%  

6.60

%  

1/23/2034

 

155

Total Trust Preferred Capital Securities

$

150,500

 

  

 

  

 

  

$

4,659

Subordinated Debt(3)(4)

2031 Subordinated Debt

250,000

-

%

2.875

%

12/15/2031

Total Subordinated Debt(5)

$

250,000

Fair Value Discount(6)

(15,583)

Investment in Trust Preferred Capital Securities

4,659

Total Long-term Borrowings

$

389,576

(1) Rate as of September 30, 2022. 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 September 30, 2022 is $2.9 million.

(4) Subordinated notes qualify as Tier 2 capital for the Company for regulatory purposes.

(5) Fixed-to-floating rate notes. On December 15, 2026, the interest rate changes to a floating rate of the then current Three-Month Term SOFR plus a spread of 186 bps through its maturity date or earlier redemption. The notes may be redeemed before maturity on any interest payment date occurring on or after December 15, 2026.

(6) Remaining discounts of $12.7 million and $2.9 million on Trust Preferred Capital Securities and Subordinated Debt, respectively.

Total long-term borrowings consist of the following as of December 31, 2021 (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

%  

2.96

%  

6/17/2034

$

696

Trust Preferred Capital Note - Statutory Trust II

 

36,000

 

1.40

%  

1.61

%  

6/15/2036

 

1,114

VFG Limited Liability Trust I Indenture

 

20,000

 

2.73

%  

2.94

%  

3/18/2034

 

619

FNB Statutory Trust II Indenture

 

12,000

 

3.10

%  

3.31

%  

6/26/2033

 

372

Gateway Capital Statutory Trust I

 

8,000

 

3.10

%  

3.31

%  

9/17/2033

 

248

Gateway Capital Statutory Trust II

 

7,000

 

2.65

%  

2.86

%  

6/17/2034

 

217

Gateway Capital Statutory Trust III

 

15,000

 

1.50

%  

1.71

%  

5/30/2036

 

464

Gateway Capital Statutory Trust IV

 

25,000

 

1.55

%  

1.76

%  

7/30/2037

 

774

MFC Capital Trust II

 

5,000

 

2.85

%  

3.06

%  

1/23/2034

 

155

Total Trust Preferred Capital Securities

$

150,500

 

  

 

  

 

  

$

4,659

Subordinated Debt(3)(4)

2031 Subordinated Debt

250,000

-

%

2.875

%

12/15/2031

Total Subordinated Debt(5)

$

250,000

Fair Value Discount(6)

(16,435)

Investment in Trust Preferred Capital Securities

4,659

Total Long-term Borrowings

$

388,724

(1) Rate as of December 31, 2021. 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, 2021 is $3.1 million.

(4) Subordinated notes qualify as Tier 2 capital for the Company for regulatory purposes.

(5) Fixed-to-floating rate notes. On December 15, 2026, the interest changes to a floating rate of the then current Three-Month Term SOFR plus a spread of 186 bps through its maturity date or earlier redemption. The notes may be redeemed before maturity on any interest payment date occurring on or after December 15, 2026.

(6) Remaining discounts of $13.3 million and $3.1 million on Trust Preferred Capital Securities and Subordinated Debt, respectively.

As of September 30, 2022, the contractual maturities of long-term debt are as follows for the years ending (dollars in thousands):

  

Trust

  

  

  

  

Preferred

  

  

  

Total

  

Capital

  

Subordinated

  

Fair Value

  

 Long-term

  

Notes

  

Debt

  

Discount (1)

  

Borrowings

For the remaining three months of 2022

$

$

$

(287)

$

(287)

2023

 

 

 

(1,162)

 

(1,162)

2024

 

 

 

(1,187)

 

(1,187)

2025

 

 

 

(1,211)

 

(1,211)

2026

 

 

 

(1,236)

 

(1,236)

Thereafter

 

155,159

 

250,000

 

(10,500)

 

394,659

Total long-term borrowings

$

155,159

$

250,000

$

(15,583)

$

389,576

(1) Includes discount on issued subordinated notes.