Note 10: Borrowings

The following table is a summary of borrowings as of December 31, 2016, and December 31, 2015. Junior subordinated debentures are discussed in detail in Note 11:


	2016		2015
Securities sold under repurchase agreements	$	25,715	$	34,070
FHLBC advances1		70,000		15,000
Junior subordinated debentures		57,591		57,543
Senior notes		43,998		-
Subordinated debt		-		45,000
Notes payable and other borrowings		-		500
Total borrowings	$	197,304	$	152,113

1 Included in other short-term borrowing on the balance sheet.

The Company enters into deposit sweep transactions where the transaction amounts are secured by pledged securities. These transactions consistently mature within 1 to 90 days from the transaction date and are governed by sweep repurchase agreements. All sweep repurchase agreements are treated as financings secured by U.S. government agencies and collateralized mortgage-backed securities and had a carrying amount of $25.7 million at December 31, 2016, and $34.1 million at December 31, 2015. The fair value of the pledged collateral was $43.0 million and $45.4 million at December 31, 2016 and December 31, 2015, respectively. At December 31, 2016, there were no customers with secured balances exceeding 10% of stockholders’ equity.

The following table is a summary of additional information related to repurchase agreements:


	2016			2015			2014
Average daily balance during the year	$	34,016		$	28,194		$	26,093
Average interest rate during the year		0.01	%		0.01	%		0.01	%
Maximum month-end balance during the year	$	46,606		$	34,785		$	38,133
Weighted average interest rate at year-end		0.01	%		0.01	%		0.01	%

Total borrowings are generally limited to the lower of 35% of total assets and the amount of acceptable collateral adjusted for applicable funding percentages as determined by the FHLBC. As of December 31, 2016, the Bank had outstanding advances in the amount of $70 million at an interest rate of 0.70%. At that time, FHLBC stock owned by the Bank was valued at $3.1 million, the fair value of securities pledged to the FHLBC was $63.3 million, and the principal balance of loans pledged was $168.2 million. Based on the total amount of securities and loans pledged, the Bank had total borrowing capacity of $158.0 million. Adjusting for the outstanding advances and letters of credit, the Bank had a remaining funding availability of $51.7 million on December 31, 2016.

The Company completed a debt retirement and simultaneous senior debt offering in the fourth quarter of 2016. Subordinated debt of $45.0 million and $500,000 of senior debt outstanding were paid off with the proceeds of a $45.0 million senior notes issuance and cash on hand. The senior notes mature in ten years, and terms include interest payable semiannually at 5.75% for five years. Beginning December 2021, the senior debt will pay interest at a floating rate, with interest payable quarterly at three month LIBOR plus 385 basis points. The notes are redeemable, in whole or in part, at the option of the Company, beginning with the interest payment date on December 31, 2021, and on any floating rate interest payment date thereafter, at a redemption price equal to 100% of the principal amount of the notes plus accrued and unpaid interest. Debt issuance costs incurred for the senior note issuance totaled $1.0 million, and will be deferred and recorded to expense over the ten year term of the notes.

The Company had $500,000 in principal outstanding in senior term debt and $45.0 million in principal outstanding in subordinated debt at December 31, 2015. The term debt was secured by all of the outstanding capital stock of the Bank. The subordinated debt and the senior term debt were scheduled to mature on March 31, 2018. The interest rate on the senior debt reset quarterly and at the Company’s option, was based on, the lender’s prime rate or three-month LIBOR plus 90 basis points. The interest rate on the subordinated debt reset quarterly, and was equal to three-month LIBOR plus 150 basis points. The Company has made all required interest payments on the outstanding principal balance on a timely basis.

Scheduled maturities and weighted average rates of borrowings for the years ended December 31 were as follows:


	2016				2015
			Weighted				Weighted
			Average				Average
	Balance		Rate		Balance		Rate
2016		N/A	N/A		$	49,070	0.06	%
2017	$	95,715	0.51	%		-	-
2018		-	-			45,500	1.82
2019		-	-			-	-
2020		-	-			-	-
2021		-	-			-	-
Thereafter		101,589	6.65			57,543	7.34
Total borrowings	$	197,304	3.67	%	$	152,113	3.34	%