| BORROWINGS |
8. 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 as of December 31, 2022 and 2021 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
|
Securities sold under agreements to repurchase |
|
$ |
142,837 |
|
$ |
117,870 |
|
Federal Funds Purchased |
|
|
160,000 |
|
|
— |
|
FHLB Advances |
|
|
1,016,000 |
|
|
— |
|
Total short-term borrowings |
|
$ |
1,318,837 |
|
$ |
117,870 |
|
|
|
|
|
|
|
|
|
Average outstanding balance during the period |
|
$ |
302,060 |
|
$ |
113,030 |
|
Average interest rate during the period |
|
|
1.79 |
% |
|
0.10 |
% |
Average interest rate at end of period |
|
|
3.89 |
% |
|
0.07 |
% |
The Company maintains federal funds lines with several correspondent banks; the available balance was $1.0 billion and $997.0 million at December 31, 2022 and 2021, respectively. The Company maintains an alternate line of credit at a correspondent bank; the available balance was $25.0 million at both December 31, 2022 and 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 December 31, 2022 and 2021. Additionally, the Company had a collateral dependent line of credit with the FHLB of up to $6.0 billion at both December 31, 2022 and 2021.
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 $12.5 million and $13.3 million at December 31, 2022 and 2021, respectively.
Total long-term borrowings consist of the following as of December 31, 2022 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spread to |
|
|
|
|
|
|
|
|
|
Principal |
|
3-Month LIBOR |
|
Rate (1) |
|
Maturity |
|
Investment (2) |
Trust Preferred Capital Securities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
Trust Preferred Capital Note - Statutory Trust I |
|
$ |
22,500 |
|
2.75 |
% |
7.52 |
% |
6/17/2034 |
|
$ |
696 |
Trust Preferred Capital Note - Statutory Trust II |
|
|
36,000 |
|
1.40 |
% |
6.17 |
% |
6/15/2036 |
|
|
1,114 |
VFG Limited Liability Trust I Indenture |
|
|
20,000 |
|
2.73 |
% |
7.50 |
% |
3/18/2034 |
|
|
619 |
FNB Statutory Trust II Indenture |
|
|
12,000 |
|
3.10 |
% |
7.87 |
% |
6/26/2033 |
|
|
372 |
Gateway Capital Statutory Trust I |
|
|
8,000 |
|
3.10 |
% |
7.87 |
% |
9/17/2033 |
|
|
248 |
Gateway Capital Statutory Trust II |
|
|
7,000 |
|
2.65 |
% |
7.42 |
% |
6/17/2034 |
|
|
217 |
Gateway Capital Statutory Trust III |
|
|
15,000 |
|
1.50 |
% |
6.27 |
% |
5/30/2036 |
|
|
464 |
Gateway Capital Statutory Trust IV |
|
|
25,000 |
|
1.55 |
% |
6.32 |
% |
7/30/2037 |
|
|
774 |
MFC Capital Trust II |
|
|
5,000 |
|
2.85 |
% |
7.62 |
% |
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) |
|
|
(15,296) |
|
|
|
|
|
|
|
|
|
Investment in Trust Preferred Capital Securities |
|
|
4,659 |
|
|
|
|
|
|
|
|
|
Total Long-term Borrowings |
|
$ |
389,863 |
|
|
|
|
|
|
|
|
|
| (1) |
Rate as of December 31, 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 December 31, 2022 is $2.8 million.
|
| (4) |
Qualifies 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 $12.5 million and $2.8 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(4) |
|
|
|
|
|
|
|
|
|
|
|
|
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) |
Qualifies 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 $13.3 million and $3.1 million on Trust Preferred Capital Securities and Subordinated Debt, respectively.
|
As of December 31, 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 |
2023 |
|
$ |
— |
|
$ |
— |
|
$ |
(1,162) |
|
$ |
(1,162) |
2024 |
|
|
— |
|
|
— |
|
|
(1,187) |
|
|
(1,187) |
2025 |
|
|
— |
|
|
— |
|
|
(1,211) |
|
|
(1,211) |
2026 |
|
|
— |
|
|
— |
|
|
(1,236) |
|
|
(1,236) |
2027 |
|
|
— |
|
|
— |
|
|
(1,263) |
|
|
(1,263) |
Thereafter |
|
|
155,159 |
|
|
250,000 |
|
|
(9,237) |
|
|
395,922 |
Total long-term borrowings |
|
$ |
155,159 |
|
$ |
250,000 |
|
$ |
(15,296) |
|
$ |
389,863 |
| (1) |
Includes discount on Trust Preferred Capital Securities and Subordinated Debt.
|
|