Other Borrowings

3 Months Ended

Mar. 31, 2020

Other Liabilities Disclosure [Abstract]

Other Borrowings

OTHER BORROWINGS

The following table summarizes Old National’s other borrowings:

(dollars in thousands)	March 31, 2020		December 31, 2019
Old National Bancorp:
Senior unsecured notes (fixed rate 4.125% maturing August 2024)	$	175,000	$	175,000
Unamortized debt issuance costs related to senior unsecured notes	(676)		(715)
Junior subordinated debentures (variable rates of    2.34% to 5.62%) maturing April 2032 to June 2037	45,093		52,310
Other basis adjustments	(3,082)		(2,833)
Old National Bank:
Finance lease liabilities	7,284		7,406
Subordinated debentures (fixed rate 5.75%)	12,000		12,000
Other	495		517
Total other borrowings	$	236,114	$	243,685

Contractual maturities of other borrowings at March 31, 2020 were as follows:

(dollars in thousands)
Due in 2020	$	376
Due in 2021	524
Due in 2022	553
Due in 2023	591
Due in 2024	175,643
Thereafter	61,690
Unamortized debt issuance costs and other basis adjustments	(3,263)
Total	$	236,114

Senior Notes

In August 2014, Old National issued $175.0 million of senior unsecured notes with a 4.125% interest rate.  These notes pay interest on February 15 and August 15.  The notes mature on August 15, 2024.

Junior Subordinated Debentures

Junior subordinated debentures related to trust preferred securities are classified in “other borrowings.”  On November 1, 2017, Old National acquired Anchor (MN) and exceeded $15 billion in assets.  As a result, these securities can only be treated as Tier 2 capital for regulatory purposes, subject to certain limitations.  Prior to the fourth quarter of 2017, these securities qualified as Tier 1 capital for regulatory purposes.

Through various acquisitions, Old National assumed junior subordinated debenture obligations related to various trusts that issued trust preferred securities.  Old National guarantees the payment of distributions on the trust preferred securities issued by the trusts.  Proceeds from the issuance of each of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by the trusts.

Old National, at any time, may redeem the junior subordinated debentures at par and, thereby cause a redemption of the trust preferred securities in whole or in part. In February 2020, Old National redeemed at par $4.1 million of junior subordinated debentures issued in October 2002 by Anchor Bancorp, Inc. (as successor to VFSC, Inc.), which was acquired by Old National in 2017. This subsequently caused the redemption of all of the common and capital (preferred) securities issued by VFSC Capital Trust II by the same amount in aggregate. At the time of redemption, the rate on this floating rate instrument was 5.36%. In March 2020, Old National redeemed at par $3.1 million of junior subordinated debentures issued in April 2004 by Anchor Bancorp, Inc. (as successor to VFSC, Inc.), which was acquired by Old National in 2017. This subsequently caused the redemption of all of the common and capital (preferred) securities issued by VFSC Capital Trust III by the same amount in aggregate. At the time of redemption, the rate on this floating rate instrument was 4.71%.

The following table summarizes the terms of our outstanding junior subordinated debentures:

(dollars in thousands)					Rate at
Name of Trust	Issuance Date	Issuance Amount		Rate	March 31, 2020	Maturity Date
VFSC Capital Trust I	April 2002	$	3,093	6-month LIBOR plus 3.70%	5.62%	April 22, 2032
St. Joseph Capital Trust II	March 2005	5,000		3-month LIBOR plus 1.75%	2.59%	March 17, 2035
Anchor Capital Trust III	August 2005	5,000		3-month LIBOR plus 1.55%	3.00%	September 30, 2035
Home Federal Statutory    Trust I	September 2006	15,000		3-month LIBOR plus 1.65%	2.39%	September 15, 2036
Monroe Bancorp Capital    Trust I	July 2006	3,000		3-month LIBOR plus 1.60%	3.47%	October 7, 2036
Tower Capital Trust 3	December 2006	9,000		3-month LIBOR plus 1.69%	3.27%	March 1, 2037
Monroe Bancorp Statutory    Trust II	March 2007	5,000		3-month LIBOR plus 1.60%	2.34%	June 15, 2037
Total		$	45,093

Subordinated Debentures

On November 1, 2017, Old National assumed $12.0 million of subordinated fixed-to-floating notes related to the acquisition of Anchor (MN).  The subordinated debentures have a 5.75% fixed rate of interest through October 29, 2020.  From October 30, 2020 to the October 30, 2025 maturity date, the debentures have a floating rate of interest equal to the three-month LIBOR rate plus 4.356%.

Finance Lease Liabilities

Old National has long-term finance lease liabilities for certain banking centers totaling $7.3 million.  The economic substance of these leases is that Old National is financing the acquisition of the building through the lease and accordingly, the building is recorded as a right-of-use asset in premises and equipment and the lease is recorded as a liability in other borrowings.  The right-of-use assets and lease liabilities are initially measured at the present value of the lease payments over the lease term using Old National’s incremental borrowing rate based on the information available at the commencement date of the lease.  See Note 9 to the consolidated financial statements for a maturity analysis of the Company’s finance lease liabilities.