5.BORROWINGS

 

Short-term Borrowings

 

Total short-term borrowings consist of securities sold under agreements to repurchase, which are secured transactions with customers and generally mature the day following the date sold.  Also included in total short-term borrowings are federal funds purchased, which are secured overnight borrowings from other financial institutions, and short-term FHLB advances.  Total short-term borrowings consist of the following as of September 30, 2013 and December 31, 2012 (dollars in thousands):

 

 

 

 The Bank maintains federal funds lines with several correspondent banks; the remaining available balance was $88.0 million and $87.0 million at September 30, 2013 and December 31, 2012, respectively.  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  $808.4 million and $802.2 million at September 30, 2013 and December 31, 2012, 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.  The trust preferred capital notes currently qualify for Tier 1 capital of the Company for regulatory purposes. 

 

As part of a prior acquisition, the Company assumed subordinated debt with terms of LIBOR plus 1.45%  and a maturity date of April 2016.  At September 30, 2013, the carrying value of the subordinated debt, net of the purchase accounting discount, was $16.2 million.

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 in the Company’s consolidated balance sheet.  In accordance with ASC 470-50, Modifications and Extinguishments, the Company will amortize 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 in the Company’s consolidated income statement.  Amortization expense for the three and nine months ended September 30, 2013 was $441,000 and $1.3 million,  respectively, and $0 for both three and nine months ended September 30, 2012.  

 

As of September 30, 2013, the advances from the FHLB consist of the following (dollars in thousands):

 

 

 

As of December 31, 2012, the advances from the FHLB consisted of the following (dollars in thousands):

 

 

 

The carrying value of the loans and securities pledged as collateral for FHLB advances totaled $1.1 billion and $1.0 billion as of September 30, 2013 and December 31, 2012, respectively.

 

 

 

As of September 30, 2013, the contractual maturities of long-term debt are as follows for the years ending (dollars in thousands):