Federal Home Loan Bank Advances, Other Borrowings and Subordinated Notes

The following table is a summary of notes payable, Federal Home Loan Bank advances, other borrowings and subordinated notes as of the dates shown:



(Dollars in thousands)	March 31, 2015		December 31, 2014		March 31, 2014
Federal Home Loan Bank advances	$	416,036	$	733,050	$	387,672
Other borrowings:
Notes payable	—		—		182
Securities sold under repurchase agreements	50,076		48,566		211,692
Other	18,689		18,822		19,212
Secured borrowings	118,241		129,077		—
Total other borrowings	187,006		196,465		231,086
Subordinated notes	140,000		140,000		—
Total Federal Home Loan Bank advances, other borrowings and subordinated notes	$	743,042	$	1,069,515	$	618,758

Federal Home Loan Bank Advances

Federal Home Loan Bank advances consist of obligations of the banks and are collateralized by qualifying residential real-estate and home equity loans and certain securities. FHLB advances are stated at par value of the debt adjusted for unamortized fair value adjustments recorded in connection with advances acquired through acquisitions.

Notes Payable

At March 31, 2015 and December 31, 2014, the Company had no notes payable outstanding compared to $182,000 outstanding at March 31, 2014. Notes payable represented an unsecured promissory note to a Great Lakes Advisor shareholder ("Unsecured Promissory Note") assumed by the Company as a result of the respective acquisition in 2011 and separate loan agreements with unaffiliated banks. Under the Unsecured Promissory Note, the Company made quarterly principal payments and paid interest at a rate of the federal funds rate plus 100 basis points. At March 31, 2014, this Unsecured Promissory Note had an outstanding balance of $182,000. In the second quarter of 2014, the remaining balance of the Unsecured Promissory Note was paid off.

In prior periods, the Company has had a $101.0 million loan agreement with unaffiliated banks dated as of October 30, 2009, which had been amended at least annually between 2009 and 2014. The agreement consisted of a $100.0 million revolving credit facility, maturing on October 25, 2013, and a $1.0 million term loan maturing on June 1, 2015. In 2013, the Company repaid and terminated the $1.0 million term loan, and amended the agreement, effectively extending the maturity date on the revolving credit facility from October 25, 2013 to November 6, 2014. The agreement was also amended in 2014 effectively extending the term to December 15, 2014 at which time the agreement matured. At March 31, 2014, no amount was outstanding on the $100.0 million revolving credit facility.

On December 15, 2014, the Company entered into a new $150.0 million loan agreement with unaffiliated banks. The agreement consists of a $75.0 million revolving credit facility ("Revolving Credit Facility") and a $75.0 million term facility ("Term Facility"). At March 31, 2015 and December 31, 2014, the Company had no outstanding balance under the Revolving Credit Facility or the Term Facility. All borrowings under the Revolving Credit Facility must be repaid by December 14, 2015. The Company is required to borrow the entire amount of the Term Facility no later than June 15, 2015 and all such borrowings must be repaid by June 15, 2020. Beginning September 30, 2015, the Company will be required to make straight-line quarterly amortizing payments on the Term Facility. Borrowings under the agreement that are considered “Base Rate Loans” will bear interest at a rate equal to the sum of (1) 50 basis points (in the case of a borrowing under the Revolving Credit Facility) or 75 basis points (in the case of a borrowing under the Term Facility) plus (2) the highest of (a) the federal funds rate plus 50 basis points, (b) the lender's prime rate, and (c) the Eurodollar Rate (as defined below) that would be applicable for an interest period of one month plus 100 basis points. Borrowings under the agreement that are considered “Eurodollar Rate Loans” will bear interest at a rate equal to the sum of (1) 150 basis points (in the case of a borrowing under the Revolving Credit Facility) or 175 basis points (in the case of a borrowing under the Term Facility) plus (2) the LIBOR rate for the applicable period, as adjusted for statutory reserve requirements for eurocurrency liabilities (the “Eurodollar Rate”). A commitment fee is payable quarterly equal to 0.20% of the actual daily amount by which the lenders' commitment under the Revolving Credit Facility exceeded the amount outstanding under such facility.

Borrowings under the agreement are secured by pledges of and first priority perfected security interests in the Company's equity interest in its bank subsidiaries and contain several restrictive covenants, including the maintenance of various capital adequacy levels, asset quality and profitability ratios, and certain restrictions on dividends and other indebtedness. At March 31, 2015, the Company was in compliance with all such covenants. The Revolving Credit Facility and the Term Facility are available to be utilized, as needed, to provide capital to fund continued growth at the Company’s banks and to serve as an interim source of funds for acquisitions, common stock repurchases or other general corporate purposes.

Securities Sold Under Repurchase Agreements

At March 31, 2015, December 31, 2014 and March 31, 2014, securities sold under repurchase agreements represent $50.1 million, $48.6 million and $31.7 million, respectively, of customer sweep accounts in connection with master repurchase agreements at the banks as well as $180.0 million of short-term borrowings from banks and brokers at March 31, 2014 that were paid off in the second quarter of 2014. The Company records securities sold under repurchase agreements at their gross value and does not offset positions on the Consolidated Statements of Condition. As of March 31, 2015, the Company had pledged securities related to its customer balances in sweep accounts of $78.0 million, which exceeds the outstanding borrowings resulting in no net credit exposure. Securities pledged for customer balances in sweep accounts and short-term borrowings from brokers are maintained under the Company’s control and consist of U.S. Government agency, mortgage-backed and corporate securities. These securities are included in the available-for-sale securities portfolio as reflected on the Company’s Consolidated Statements of Condition.

Other Borrowings

Other borrowings at March 31, 2015 represent a fixed-rate promissory note issued by the Company in August 2012 ("Fixed-Rate Promissory Note") related to and secured by an office building owned by the Company. At March 31, 2015, the Fixed-Rate Promissory Note had an outstanding balance of $18.7 million compared to an outstanding balance of $18.8 million and $19.2 million at December 31, 2014 and March 31, 2014, respectively. Under the Fixed-Rate Promissory Note, the Company will make monthly principal payments and pay interest at a fixed rate of 3.75% until maturity on September 1, 2017.

Secured Borrowings

In December 2014, the Company, through its subsidiary, FIFC Canada, sold an undivided co-ownership interest in all receivables owed to FIFC Canada to an unrelated third party in exchange for a cash payment of approximately C$150 million pursuant to a receivables purchase agreement (“Receivables Purchase Agreement”). The proceeds received from the transaction are reflected on the Company’s Consolidated Statements of Condition as a secured borrowing owed to the unrelated third party and translated to the Company’s reporting currency as of the respective date. At March 31, 2015 the translated balance of the secured borrowing under the Receivable Purchase Agreement totaled $118.2 million compared to $129.1 million at December 31, 2014. Additionally, the interest rate under the Receivables Purchase Agreement at March 31, 2015 was 1.6093%.

Subordinated Notes

At March 31, 2015 and December 31, 2014, the Company had outstanding subordinated notes totaling $140.0 million. In the second quarter of 2014, the Company issued $140.0 million of subordinated notes receiving $139.1 million in net proceeds. The notes have a stated interest rate of 5.00% and mature in June 2024. At March 31, 2014, the Company had no outstanding subordinated notes.