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Long Term Subordinated Notes
 9 Months Ended
Sep. 30, 2020
Long Term Subordinated Notes [Abstract]  
Long Term Subordinated Notes
13.
 
LONG TERM SUBORDINATED NOTES
 
 
The table
 
below displays
 
Holdings’ outstanding
 
fixed to
 
floating rate
 
long term
 
subordinated notes.
 
Market
value is
 
based on
 
quoted market
 
prices, but
 
due to
 
limited trading
 
activity, these
 
subordinated notes
 
are
considered Level 2 in the fair value hierarchy.
Maturity Date
September 30, 2020
December 31, 2019
Original
Consolidated
Balance
Consolidated
Balance
(Dollars in thousands)
Date Issued
Principal
Amount
Scheduled
Final
Sheet Amount
Market Value
Sheet Amount
Market Value
Long term subordinated notes
04-26-2007
$
400,000
05-15-2037
05-01-2067
$
223,649
$
191,301
$
236,758
$
233,191
During the fixed rate
 
interest period from
May 3, 2007
 
through
May 14, 2017
, interest was
 
at the annual rate
 
of
6.6
%, payable semi-annually in arrears on November 15 and May 15 of each year,
 
commencing on
November 15,
2007
.
 
During the floating rate interest
 
period from May 15, 2017 through maturity,
 
interest will be based on the
3 month
 
LIBOR plus
238.5
 
basis points,
 
reset quarterly,
 
payable quarterly
 
in arrears
 
on February
 
15, May
 
15,
August 15 and November
 
15 of each year,
 
subject to Holdings’ right
 
to defer interest
 
on
one
 
or more occasions
for up to
ten
 
consecutive years.
 
Deferred interest
 
will accumulate interest
 
at the applicable
 
rate compounded
quarterly for periods
 
from and including
 
May 15, 2017.
 
The reset quarterly interest
 
rate for August
 
17, 2020 to
November 15, 2020 is
2.67
%.
 
 
Holdings may redeem the long term subordinated
 
notes on or after May 15,
 
2017, in whole or in part at
100
% of
the principal amount plus accrued and unpaid interest;
 
however,
 
redemption on or after the scheduled
 
maturity
date and prior
 
to
May 1, 2047
 
is subject to
 
a replacement capital
 
covenant.
 
This covenant is
 
for the benefit
 
of
certain senior
 
note holders
 
and it
 
mandates that
 
Holdings receive
 
proceeds from
 
the sale
 
of another
subordinated debt
 
issue, of at
 
least similar size,
 
before it
 
may redeem
 
the subordinated notes.
 
Effective upon
the maturity
 
of the Company’s
5.40
% senior notes
 
on
October 15, 2014
, the
 
Company’s
4.868
% senior notes,
due on
June 1, 2044
, have
 
become the
 
Company’s long
 
term indebtedness
 
that ranks
 
senior to
 
the long term
subordinated notes.
 
 
The Company repurchased
 
and retired $
0
 
thousand and $
13,183
 
thousand of its
 
outstanding long term
subordinated notes
 
during the three
 
and nine months
 
ended September 30,
 
2020, respectively.
 
The Company
realized a
 
gain of $
0
 
thousand and $
2,536
 
thousand from the
 
repurchase of the
 
long term subordinated
 
notes
for the three and nine months ended September 30, 2020, respectively.
 
On March 19,
 
2009, Group announced
 
the commencement of
 
a cash tender
 
offer for
 
any and all
 
of the
6.60
%
fixed to
 
floating rate
 
long term
 
subordinated notes.
 
Upon expiration
 
of the
 
tender offer,
 
the Company
 
had
reduced its outstanding debt by $
161,441
 
thousand.
 
 
Interest expense
 
incurred in
 
connection with these
 
long term subordinated
 
notes is as
 
follows for
 
the periods
indicated:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(Dollars in thousands)
2020
2019
2020
2019
Interest expense incurred
$
1,587
$
2,881
$
6,126
$
8,892