Short and Long-Term Borrowings

9 Months Ended

Sep. 30, 2020

Short-Term Borrowings:

Short-term borrowings include any borrowing with an original maturity of one year or less. At both September 30, 2020 and December 31, 2019, the Company did not have any outstanding short-term borrowings.

Long-Term Borrowings:

The components of long-term borrowings (borrowing with an original maturity greater than one year) were as follows.


(in thousands)	September 30, 2020		December 31, 2019
PPP Liquidity Facility (“PPPLF”)	$	333,876	$	—
FHLB advances	29,015		25,061
Junior subordinated debentures	30,935		30,575
Subordinated notes	12,000		11,993
Total long-term borrowings	$	405,826	$	67,629

PPPLF: To support the effectiveness of the PPP loans, the Federal Reserve introduced the PPPLF to extend credit to financial institutions that made PPP loans, with the related PPP loans used as collateral on the borrowings. The PPPLF borrowings have a fixed interest rate of 0.35% and a maturity date equal to the maturity date of the related PPP loans, with the PPP loans maturing either two or five years from the origination date of the PPP loan. The Company's PPP loans and related PPPLF funding have a weighted average life of approximately two years. Given the level of all other funding combined, the Company intends to repay the PPPLF during fourth quarter 2020.

FHLB Advances: The FHLB advances bear fixed rates, require interest-only monthly payments, and have maturity dates through 2027. The weighted average rate of the FHLB advances was 0.73% at September 30, 2020 and 1.57% at December 31, 2019.

Junior Subordinated Debentures: The following table shows the breakdown of junior subordinated debentures. Interest on all debentures is current. Any applicable discounts (initially recorded to carry an acquired debenture at its then estimated fair value) are being accreted to interest expense over the remaining life of the debentures. All the debentures below are currently callable and may be redeemed in part or in full at par plus any accrued but unpaid interest. The Company intends to redeem in full its 2004 Nicolet Bankshares Statutory Trust junior subordinated debentures ($6 million at 8%) on the next interest payment date of December 31, 2020, and has received all necessary regulatory approvals for such redemption. At September 30, 2020 and December 31, 2019, $29.8 million and $29.4 million, respectively, qualify as Tier 1 capital.


		Junior Subordinated Debentures
		September 30, 2020						December 31, 2019
(in thousands)	Maturity Date	Par		Unamortized Discount		Carrying Value		Carrying Value
2004 Nicolet Bankshares Statutory Trust (1)	7/15/2034	$	6,186	$	—	$	6,186	$	6,186
2005 Mid-Wisconsin Financial Services, Inc. (2)	12/15/2035	10,310		(3,022)		7,288		7,138
2006 Baylake Corp. (3)	9/30/2036	16,598		(3,706)		12,892		12,715
2004 First Menasha Bancshares, Inc. (4)	3/17/2034	5,155		(586)		4,569		4,536
Total		$	38,249	$	(7,314)	$	30,935	$	30,575

(1)The interest rate is 8.00% fixed.

(2)The debentures, assumed in April 2013 as the result of an acquisition, have a floating rate of the three-month LIBOR plus 1.43%, adjusted quarterly. The interest rates were 1.68% and 3.32% as of September 30, 2020 and December 31, 2019, respectively.

(3)The debentures, assumed in April 2016 as a result of an acquisition, have a floating rate of the three-month LIBOR plus 1.35%, adjusted quarterly. The interest rates were 1.57% and 3.31% as of September 30, 2020 and December 31, 2019, respectively.

(4)The debentures, assumed in April 2017 as the result of an acquisition, have a floating rate of the three-month LIBOR plus 2.79%, adjusted quarterly. The interest rates were 3.04% and 4.69% as of September 30, 2020 and December 31, 2019, respectively.

Subordinated Notes: In first half 2015, the Company placed an aggregate of $12 million in subordinated Notes in private placements with certain accredited investors. All Notes were issued with 10-year maturities, have a fixed annual interest rate of 5% payable quarterly, and may be called on or after the fifth anniversary of their respective issuances dates. The Company has received regulatory approval to call the Notes and has provided notice of its election to call all Notes effective November 16, 2020. The subordinated Notes qualify for Tier 2 capital for regulatory purposes, and are discounted in accordance with regulations when the debt has five years or less remaining to maturity.