Note 8 – Borrowings

The following table is a summary of borrowings as of June 30, 2017, and December 31, 2016. Junior subordinated debentures are discussed in detail in Note 9:


	June 30, 2017		December 31, 2016
Securities sold under repurchase agreements	$	36,361	$	25,715
FHLBC advances1		75,000		70,000
Junior subordinated debentures		57,615		57,591
Senior notes		44,008		43,998
Total borrowings	$	212,984	$	197,304

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

The Company enters into deposit sweep transactions where the transaction amounts are secured by pledged securities. These transactions consistently mature overnight 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 $36.4 million at June 30, 2017, and $25.7 million at December 31, 2016. The fair value of the pledged collateral was $44.4 million at June 30, 2017 and $43.0 million at December 31, 2016. At June 30, 2017, there were no customers with secured balances exceeding 10% of stockholders’ equity.

The Company’s borrowings at the FHLBC require the Bank to be a member and invest in the stock of the FHLBC. Total borrowings are generally limited to the lower of 35% of total assets or 60% of the book value of certain mortgage loans. As of June 30, 2017, the Bank had $75.0 million advances outstanding under the FHLBC as compared to $70.0 million outstanding as of December 31, 2016. As of June 30, 2017, FHLBC stock held was valued at $3.8 million, and any potential FHLBC advances were collateralized by securities with a fair value of $100.0 million and loans with a principal balance of $176.7 million, which carried a FHLBC calculated combined collateral value of $205.6 million. The Company had excess collateral of $94.3 million available to secure borrowings at June 30, 2017.

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 are being deferred and recorded to expense over the ten year term of the notes.