Borrowings

9 Months Ended

Sep. 30, 2020

Borrowings:

Borrowings include securities sold under agreements to repurchase, lines of credit, Federal Home Loan Bank advances, and subordinated debt.


	Outstanding Balance				Weighted Average Interest Rate
	September 30,		December 31,		September 30,		December 31,
	2020		2019		2020		2019
Securities sold under agreements to repurchase	$	32,469	$	23,745	0.61	%	0.89	%
FHLB advances	200,000		250,000		0.77	%	1.60	%
Subordinated debt	189,750		30,930		5.10	%	5.13	%
Other borrowings	16,619		—		1.88	%	—	%
	$	438,838	$	304,675

Federal Home Loan Bank Advances

As a member of the FHLB Cincinnati, the Bank receives advances from the FHLB pursuant to the terms of various agreements that assist in funding its mortgage and loan portfolio production. Under these agreements, the Company pledged qualifying loans of $2,079,975 as collateral securing a line of credit with a total borrowing capacity of $1,604,499 as of September 30, 2020. As of December 31, 2019, the Company pledged qualifying loans of $958,506 as collateral securing a line of credit with a total borrowing capacity of $760,607. Two letters of credit with the FHLB totaling $145,000 and one letter of credit with the FHLB of $75,000 was pledged to secure public funds that require collateralization at September 30, 2020 and December 31, 2019, respectively.

Borrowings against the Company's line totaled $200,000 and $250,000 as of September 30, 2020 and December 31, 2019, respectively. Total borrowings as of September 30, 2020 comprised $100,000 in long term advances, $0 in overnight cash management advances (CMAs) and $100,000 in 90 day fixed rate advances. The long-term advances as of September 30, 2020 contains putable features and is composed of $100.0 million carrying a maximum final term of 10 years. However, the FHLB owns the option to cancel the advances after one year and quarterly thereafter and carrying a fixed rate of 1.24%. During the third quarter of 2020, the Company repaid $50,000 in putable advances carrying a maximum final term of seven years. In addition to the repayment, the Company also incurred $2,593 in early termination costs associated with this advance. Subsequent to September 30, 2020, the Company elected to not renew the remaining $100,000 in outstanding FHLB 90 day fixed rate advances as discussed in Note 1, "Basis of presentation."

Maturities of FHLB advances as of September 30, 2020 are as follows:


	FHLB advances
Due on or before:
September 30, 2021	$	100,000
September 30, 2022	—
September 30, 2023	—
September 30, 2024	—
September 30, 2025	—
Due thereafter	100,000
Total	$	200,000

The Company maintained a line with the Federal Reserve Bank through the Borrower-in-Custody program in 2020 and 2019. As of September 30, 2020 and December 31, 2019, $1,378,968 and $1,407,662 of qualifying loans and $4,129 and $4,963 of investment securities were pledged to the Federal Reserve Bank through the Borrower-in-Custody program securing a line of credit of $1,001,764 and $1,013,239, respectively.

Subordinated Debt

In 2003, two separate trusts formed by the Company issued $9,000 of floating rate trust preferred securities (“Trust I”) and $21,000 of floating rate trust preferred securities (“Trust II”), respectively, as part of a pooled offering of such securities. The Company issued junior subordinated debentures of $9,280, which included proceeds of common securities purchased by the Company of $280, and junior subordinated debentures of $21,650, which included proceeds of common

securities of $650. Both issuances were to the trusts in exchange for the proceeds of the securities offerings, which represent the sole asset of the trusts. Trust I pays interest quarterly based upon the 3-month LIBOR plus 3.25%. Trust II pays interest quarterly based upon the 3-month LIBOR plus 3.15%. Rates for the two issues at September 30, 2020, were 3.56% and 3.43%, respectively. Rates for the two issues at December 31, 2019, were 5.19% and 5.10%, respectively. The Company may redeem the first junior subordinated debenture listed, in whole or in part, on any distribution payment date within 120 days of the occurrence of a special event, at the redemption price. The Company may redeem the second junior subordinated debentures listed, in whole or in part, any time after June 26, 2008, on any distribution payment date, at the redemption price. The junior subordinated debentures must be redeemed no later than 2033. The Company has classified $30,000 of subordinated debt as Tier 1 capital at both September 30, 2020 and December 31, 2019.

Additionally, in the third quarter of 2020, the Company placed $100,000 of ten year fixed-to-floating rate subordinated notes, maturing September 1, 2030. This subordinated note instrument pays interest semi-annually in arrears based on a 4.5% fixed annual interest rate for the first five years of the notes. For years six through ten, the interest rate resets on a quarterly basis, and will be based on the 3-month Secured Overnight Financing Rate plus a spread of 439 basis points. The Company is entitled to redeem the notes in whole or in part on any interest payment date on or after September 1, 2025. The Company classified the entire $100,000 placement of subordinated notes as Tier 2 capital at September 30, 2020. Under current regulatory guidelines, the instrument loses 20% of its Tier 2 capital treatment on a graded basis in the final five years prior to maturity.

The Company also assumed two issues of subordinated debt, totaling $60,000, as part of the Franklin merger. The notes, issued in 2016, feature $40,000 of 6.875% fixed-to-floating rate subordinated notes due March 30, 2026 ("March 2026 Subordinated Notes"), and $20,000 of 7% fixed-to-floating rate subordinated notes due July 1, 2026 ("July 2026 Subordinated Notes"). Both note issuances currently pay interest semi-annually, and will begin resetting interest rates on a quarterly basis after March 30, 2021 and July 1, 2021. For years six through ten, interest for the March 2026 Subordinated Notes will based on the 3-month LIBOR plus 5.636%, and interest for the July 2026 Subordinated Notes will be based on the 3-month LIBOR plus 6.04%. The Company is entitled to redeem in whole or in part after the respective fifth anniversary of each note issuance. The Company classified the entire $60,000 in subordinated notes as Tier 2 capital at September 30, 2020.