Borrowed Funds (Notes)

12 Months Ended

Dec. 31, 2014

The following table presents wholesale borrowings and long-term debt as of December 31, 2014 and 2013.



	As of December 31,
(In thousands)	2014		2013
FHLB advances	$	427,857	$	200,323
Subordinated debentures	505,192		249,928
Fixed and variable junior subordinated deferral debentures	—		74,500
Other	214		277
Total borrowed funds	$	933,263	$	525,028

FHLB advances were secured by a lien on residential and other real estate-related loans totaling $5.1 billion at December 31, 2014, and $2.4 billion at December 31, 2013. The FHLB advances have interest rates that range from 1.11% to 4.12% as of December 31, 2014.

On November 25, 2014, the Bank issued $250 million in aggregate principal of subordinated notes, due November 25, 2026, and bearing interest at an annual rate of 4.27% payable semi-annually in arrears on May 25 and November 25 of each year. The net proceeds were used to initially pay down existing federal funds purchased and securities sold under repurchase agreements, general corporate purposes, and as capital to support the Bank’s growth. The subordinated notes are not redeemable by the Bank or callable by the holders prior to maturity.

On February 4, 2013, the Corporation issued $250 million in aggregate principal of subordinated notes, due February 4, 2023, and bearing interest at an annual rate of 4.35% payable semi-annually in arrears on February 4 and August 4 of each year. The net proceeds were used to fund the Citizens acquisition.

As part of the merger with Citizens, the Corporation assumed two active wholly owned trusts formed for the purpose of issuing securities. Each of the two active trusts had issued separate offerings of trust preferred securities to investors in 2006 and 2003. In accordance with GAAP, the financial statements of the Trusts were not included in the Corporation's consolidated financial statements. In conjunction with these trusts, the Corporation assumed a variable rate junior subordinated deferrable debenture in an aggregate principal amount approximating $25.8 million. This debenture bore interest at an annual rate equal to three-month LIBOR plus 3.10%, payable quarterly. Interest was adjusted on a quarterly basis not exceeding 11.75%. The Corporation assumed a 7.50% junior subordinated debenture in an aggregate principal amount approximating $48.7 million. These trust preferred securities and the junior subordinated debentures, totaling $74.5 million, were redeemed on September 26, 2014 and the associated debentures were paid off.

Selected financial statement information pertaining to the Corporation’s borrowed funds is as follows:



	As of December 31,
(Dollars in thousands)	2014			2013			2012
Average balance during the year	$	715,383		$	474,473		$	175,989
Weighted-average annual interest rate during the year	2.80		%	3.62		%	2.51		%
Maximum month-end balance	$	973,453		$	527,155		$	178,489

The following table illustrates the contractual maturities of the Corporation's borrowed funds at December 31, 2014:



	One Year		One to		Three to		Over Five
(In thousands)	or Less		Three Years		Five Years		Years		Total
FHLB advances	$	189,808	$	212,495	$	202	$	25,352	$	427,857
Subordinated debentures	—		—		—		505,192		505,192
Other	67		147		—		—		214
Total borrowed funds	$	189,875	$	212,642	$	202	$	530,544	$	933,263

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details