Borrowings

12 Months Ended

Dec. 31, 2021

Borrowings:

Borrowings include securities sold under agreements to repurchase, lines of credit, and subordinated debt.


	Outstanding Balance				Weighted Average Interest Rate
	December 31,				December 31,
	2021		2020		2021		2020
Securities sold under agreements to repurchase	$	40,716	$	32,199	0.21	%	0.47	%

Subordinated debt	129,544		189,527		4.24	%	5.10	%
Other borrowings	1,518		16,598		1.76	%	1.88	%
Total	$	171,778	$	238,324

Securities sold under agreements to repurchase and federal funds purchased

Securities sold under agreements to repurchase are financing arrangements that mature daily. The Company enters into agreements with certain customers to sell certain securities under agreements to repurchase the securities the following day. These agreements are made to provide customers with comprehensive treasury management programs and a short-term return for their excess funds.

Information concerning securities sold under agreement to repurchase is summarized as follows:


	December 31, 2021			December 31, 2020
Balance at year end	$	40,716		$	32,199
Average daily balance during the year	36,453			32,912
Average interest rate during the year	0.27		%	0.61		%
Maximum month-end balance during the year	$	41,730		$	40,282
Weighted average interest rate at year-end	0.21		%	0.47		%

The fair value of securities pledged to secure repurchase agreements may decline. The Company manages this risk by having a policy to pledge securities valued at 100% of the outstanding balance of repurchase agreements.

The Bank maintains lines with certain correspondent banks that provide borrowing capacity in the form of federal funds purchased in the aggregate amount of $325,000 and $335,000 as of December 31, 2021 and 2020, respectively. There were no borrowings against these available lines at December 31, 2021 or 2020.

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 $2,717,967 as collateral securing a line of credit with a total borrowing capacity of $1,233,254 as of December 31, 2021. As of December 31, 2020, the Company pledged qualifying loans of $2,781,606 as collateral securing a line of credit with a total borrowing capacity of $1,276,095. There were no borrowings against the Company's

line as of December 31, 2021 or 2020. As of December 31, 2020, letters of credit in the amount of $100,000 were pledged to secure public funds that require collateralization. There were no such pledges as of December 31, 2021. Additionally, there was an additional line of $800,000 available with the FHLB for overnight borrowings as of both December 31, 2021 and 2020; however additional collateral may be needed to draw on the line.

The Company maintained a line with the Federal Reserve Bank through the Borrower-in-Custody program in 2021 and 2020. As of December 31, 2021 and 2020, $2,440,097 and $2,463,281 of qualifying loans were pledged to the Federal Reserve Bank through the Borrower-in-Custody program securing a line of credit of $1,741,192 and $1,695,639, 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 December 31, 2021, were 3.47% and 3.37%, respectively. Rates for the two issues at December 31, 2020, were 3.50% and 3.40%, 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 as of both December 31, 2021 and 2020.

Additionally, during the year ended December 31, 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 has classified the issuance, net of unamortized issuance costs of $1,386 and $1,772, as Tier 2 capital as of December 31, 2021 and 2020, respectively. 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.

During the year ended December 31, 2020, 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"). During the year ended December 31, 2021, the Company redeemed both notes in full. As of December 31, 2020, the Company classified the balance of $60,369, which includes an interest rate premium of $369, as Tier 2 capital.

Other Borrowings

During the year ended December 31, 2020, the Company initiated a credit line in the amount of $20,000 (1.75% + 1 month LIBOR in effect 2 business days prior to reprice date) and borrowed $15,000 against the line to fund the cash consideration paid in connection with the Farmers National transaction. As of December 31, 2020, an additional $5,000 was available for the Company to draw. This line of credit had a term of one year and matured on February 21, 2021.

Also included in other borrowings, was the Company's finance lease liability discussed at Note 9, "Leases", which totaled $1,518 and $1,598 as of December 31, 2021 and 2020, respectively.