BORROWINGS

6 Months Ended

Jun. 30, 2020

Short-term borrowings on the Consolidated Balance Sheets include repurchase agreements utilized for corporate sweep accounts with cash management account agreements in place, federal funds purchased, overnight advances from the FHLB and a short-term line of credit. All repurchase agreements are subject to terms and conditions agreed to by the Bank and the client. To secure its liability to the client, the Bank is authorized to sell or repurchase U.S. Treasury, government agency and mortgage-backed securities.

The following shows the remaining contractual maturity of repurchase agreements by collateral pledged:


(Dollars in thousands)	Overnight and continuous
Repurchase agreements
Mortgage-backed securities	$	26,430
Collateralized mortgage obligations	80,917
Total	$	107,347

Securities sold under agreements to repurchase were secured by securities with a carrying amount of $107.0 million and $90.2 million as of June 30, 2020 and December 31, 2019, respectively.

First Financial had $47.0 million federal funds purchased at June 30, 2020 and $165.2 million as of December 31, 2019. The Company had no short-term borrowings with the FHLB at June 30, 2020 and had $1.2 billion at December 31, 2019. These short-term borrowings are used to manage normal liquidity needs and support the Company's asset and liability management strategies.

First Financial has a $30.0 million short-term credit facility with an unaffiliated bank that matures in September 2020. This facility can have a variable or fixed interest rate and provides First Financial additional liquidity, if needed, for various corporate activities including the repurchase of First Financial common stock and the payment of dividends to shareholders. As of June 30, 2020 and December 31, 2019, there was no outstanding balance. The credit agreement requires First Financial to comply with certain covenants including those related to asset quality and capital levels, and First Financial was in compliance with all covenants associated with this facility as of June 30, 2020 and December 31, 2019.

First Financial had $1.3 billion and $414.4 million of long-term debt as of June 30, 2020 and December 31, 2019, respectively, which included FRB borrowings, subordinated notes, FHLB long term advances and an interest free loan with a municipality.

The following is a summary of First Financial's long-term debt:


	June 30, 2020						December 31, 2019
(Dollars in thousands)	Amount		Average rate		Amount		Average rate
FRB borrowings	$	811,772	0.35	%	$	0	N/A
FHLB borrowings	153,117		1.75	%	242,428		1.94	%
Subordinated notes	321,176		4.88	%	170,967		4.97	%
Unamortized debt issuance costs	(2,962)		N/A		(1,007)		N/A
Lease liability	1,889		3.81	%	1,213		4.48	%
Capital loan with municipality	775		0.00	%	775		0.00	%
Total long-term debt	$	1,285,767	1.65	%	$	414,376	3.20	%

During the second quarter of 2020 First Financial participated in the PPPLF, which is a program created by the Federal Reserve to extend credit to eligible financial institutions that originate PPP loans. The bank had outstanding PPPLF advances of $811.8 million as of June 30, 2020, with an average interest rate of 35 basis points. These borrowings are secured by pledged PPP loans and prepay in conjunction with reductions in the principal balances of those loans.

In April 2020, First Financial issued $150.0 million of fixed to floating rate subordinated notes. The subordinated notes have an initial fixed interest rate of 5.25% to, but excluding, May 15, 2025, payable semi-annually in arrears. From, and including, May 15, 2025, the interest rate on the subordinated notes will reset quarterly to a floating rate per annum equal to a benchmark rate, which is expected to be the then-current three-month term SOFR, plus 509 basis points, payable quarterly in arrears. The subordinated notes mature on May 15, 2030. These notes are redeemable by the Company in whole or in part beginning with the interest payment date of May 15, 2025.

In 2015, First Financial issued $120.0 million of subordinated notes, which have a fixed interest rate of 5.125% payable semiannually and mature in August 2025. These notes are not redeemable by the Company, or callable by the holders of the notes prior to maturity. In addition, First Financial acquired $49.5 million of variable rate subordinated notes in the MSFG merger that were issued to previously formed trusts in exchange for the trust proceeds. Interest on the acquired subordinated notes is payable quarterly, in arrears, and the Company has the option to defer interest payments for a period not to exceed 20 consecutive quarters. These acquired subordinated notes mature 30 years after the date of original issuance and may be called at par following the 5 year anniversary of issuance. First Financial also acquired $8.4 million of 6.00% fixed rate private placement subordinated debt in conjunction with the MSFG merger that was issued in 2015 and matures in 2025. These notes are redeemable by the Company at par following the 5 year anniversary of issuance. The subordinated notes are treated as Tier 2 capital for regulatory capital purposes and are included in Long-term debt on the Consolidated Balance Sheets.

In addition to subordinated notes, long-term debt included $153.1 million and $242.4 million of fixed rate FHLB long-term advances as of June 30, 2020 and December 31, 2019, respectively. As of June 30, 2020, long-term FHLB advances had a weighted average interest rate of 1.75%. These instruments are primarily utilized to reduce overnight liquidity risk and to mitigate interest rate sensitivity on the Consolidated Balance Sheets.